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Hidden Skewness: On the Difficulty of Multiplicative Compounding under Random Shocks
Ensthaler, Ludwig; Nottmeyer, Olga; Weizsäcker, Georg; … - CESifo - 2014
Multiplicative growth processes that are subject to random shocks often have a skewed distribution of outcomes. In a number of incentivized laboratory experiments we show that a large majority of participants either strongly underestimate skewness or ignore it completely. Participants...
Persistent link: https://www.econbiz.de/10010764292
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Peer Effects in Risk Taking
Lahno, Amrei M.; Serra-Garcia, Marta - CESifo - 2012
We examine peer effects in risk taking with complete information and compare explanations for peer effects based on relative payoff concerns to explanations that allow peer choices to matter. We vary experimentally whether individuals can condition a simple lottery choice on the lottery choice,...
Persistent link: https://www.econbiz.de/10010739341
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Expectations as Reference Points: Field Evidence from Experienced Subjects in a Competitive, High-Stakes Environment
Bartling, Björn; Brandes, Leif; Schunk, Daniel - CESifo - 2012
We show that professional soccer players exhibit reference-dependent behavior during matches. Controlling for the state of the match and for unobserved heterogeneity, we show on a minute-by-minute basis that a player breaches the rules of the game, measured by the referee’s assignment of...
Persistent link: https://www.econbiz.de/10010551016
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Correlation Neglect in Belief Formation
Enke, Benjamin; Zimmermann, Florian - CESifo - 2013
Many information structures generate correlated rather than mutually independent signals, the news media being a prime example. This paper shows experimentally that in such contexts many people neglect these correlations in the updating process and treat correlated information as independent. In...
Persistent link: https://www.econbiz.de/10010718532
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Overconfidence in a Career-Concerns Setting
Rosa, Leonidas Enrique De La - CESifo - 2008
We study the effects of overconfidence in a two-period investment-decision agency setting. Under common priors, agent … profitability of the investment decision conditional on a given public signal. An overconfident agent believes that the principal … from first-period investment. This implies that agent overconfidence mitigates the agency problems arising from the agent …
Persistent link: https://www.econbiz.de/10005406373
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Controlling Product Risks when Consumers are Heterogeneously Overconfident: Producer Liability vs. Minimum Quality Standard Regulation
Baniak, Andrzej; Grajzl, Peter - CESifo - 2014
Contributing to the literature on the consequences of behavioral biases for market outcomes and institutional design, we contrast producer liability and minimum quality standard regulation as alternative means of social control of product-related torts when consumers are heterogeneously...
Persistent link: https://www.econbiz.de/10010948857
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Auctions vs. Negotiations: The Effects of Inefficient Renegotiation
Herweg, Fabian; Schmidt, Klaus - CESifo - 2015
For the procurement of complex goods the early exchange of information is important to avoid costly renegotiation ex post. We show that this is achieved by bilateral negotiations but not by auctions. Negotiations strictly outperforms auctions if sellers are likely to have superior information...
Persistent link: https://www.econbiz.de/10011210403
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Reference Points and Effort Provision
Abeler, Johannes; Falk, Armin; Götte, Lorenz; Huffman, … - CESifo - 2009
candidate is expectations: what people expect could affect how they feel about what actually occurs. In a real-effort experiment …
Persistent link: https://www.econbiz.de/10005051581
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Smoking Today and Stopping Tomorrow: A Limited Foresight Perspective
Jehiel, Philippe; Lilico, Andrew - CESifo - 2009
This paper considers an intertemporal decision problem in which the agent has limited foresight. It offers an …
Persistent link: https://www.econbiz.de/10005000391
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Measuring Strategic Uncertainty in Coordination Games
Heinemann, Frank; Nagel, Rosemarie; Ockenfels, Peter - CESifo - 2004
subjective beliefs of players. In a laboratory experiment we measure subjects’ certainty equivalents for three coordination games … probabilistic decision models, we show that the quality of predictions can be improved when individual characteristics are taken …
Persistent link: https://www.econbiz.de/10005094385