Showing 1 - 9 of 9
We study the properties of decisions made by committees who select alternatives by constructing shortlists. We find that even when committees are themselves rational, such procedures may not give rise to rational choices. A necessary condition for this to occur is disagreement between...
Persistent link: https://www.econbiz.de/10005125914
We consider an alternating offer bargaining model in which the players may agree to call in an arbitrator in case of disagreement. The main message of our study is that the mere presence of an arbitrator - who can only become active with the consent of both parties - in the background of...
Persistent link: https://www.econbiz.de/10005407526
We study how social norms and individual rationality in the process of coalition formation sustain a particular form of collective inefficiency, namely excessive entry in the joint production and exploitation of an excludable good. We term this phenomenon the `tragedy of the clubs'. We model...
Persistent link: https://www.econbiz.de/10005407545
A characteristic of many bargaining situations is that the negotiators represents the interests of a set of parties (trade unions, political parties, etc.) with composite interests, whose bargaining behaviour is regulated by some collective decision mechanism. In this paper we provide a natural...
Persistent link: https://www.econbiz.de/10005550932
We propose a new theory of choice between lotteries, which combines an 'economic’ view of decision making - based on a rational, though incomplete, ordering - with a 'psychological’ view - based on heuristics. This theory can explain observed violations of EU theory, namely all cyclical...
Persistent link: https://www.econbiz.de/10005118528
What can it mean for preferences to be rational when transitivity or completenss are not assumed? In this paper we provide a framework and a set of conditions to deal with this question. We provide representation results in terms of a pair of functions, a utility function and a vagueness function.
Persistent link: https://www.econbiz.de/10005118532
We propose a novel approach to modelling time preferences, based on a cognitive shortcoming of human decision makers: the perception of future events becomes increasingly `blurred' as the events are pushed further in time. Our model explains behavioural `anomalies' such as preference reversals...
Persistent link: https://www.econbiz.de/10005118559
Several contractual situations are such that the parties may `step out' of negotiations and take up outside opportunities only if there is mutual consent to do so. Examples include some forms of employer- employee negotiations, divorce procedures and arbitration. To analyse such cases we develop...
Persistent link: https://www.econbiz.de/10005118571
A Rational Shortlist Method (RSM) translates into economic language some sequential choice heuristics studied in psychology. We show that the use of this boundedly rational procedure can be detected from observed choice data through tests that are very similar to those used to detect `rational'...
Persistent link: https://www.econbiz.de/10005561780