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The two faces of independence: betweenness and homotheticity

Burghart, Daniel R.; Epper, Thomas; Fehr, Ernst - Institut für Volkswirtschaftslehre, … - 2014

Many studies document failures of expected utility’s key assumption, the independence axiom. Here, we show that independence can be decomposed into two distinct axioms – betweenness and homotheticity – and that these two axioms are necessary and sufficient for independence. Thus,...

Persistent link: https://www.econbiz.de/10011074871

Testing the Predictions of Decision Theories in a Natural Experiment When Half a Million Is at Stake

Blavatskyy, Pavlo; Pogrebna, Ganna - Institut für Volkswirtschaftslehre, … - 2006

In the television show Affari Tuoi an individual faces a sequence of binary choices between a risky lottery with equiprobable prizes of up to half a million euros and a monetary amount for certain. The decisions of 114 show participants are used to test the predictions of ten decision theories:...

Persistent link: https://www.econbiz.de/10005627782

Reference points in renegotiations: The role of contracts and competition

Schmidt, Klaus M.; Bartling, Björn - Institut für Volkswirtschaftslehre, … - 2012

Several recent papers argue that contracts provide reference points that affect ex post behavior. We test this … effect of contracts on bargaining threatpoints. We compare situations in which an initial contract is renegotiated to …

Persistent link: https://www.econbiz.de/10010604136

More Order with Less Law: On Contract Enforcement, Trust, and Crowding

Bohnet, Iris; Frey, Bruno S.; Huck, Steffen - Institut für Volkswirtschaftslehre, …

Most contracts, whether between voters and politicians or between house owners and contractors, are incomplete. "More …

Persistent link: https://www.econbiz.de/10005585611

Psychological Foundations of Incentives

Fehr, Ernst; Falk, Armin - Institut für Volkswirtschaftslehre, …

During the last two decades economists have made much progress in understanding incentives, contracts and organisations …

Persistent link: https://www.econbiz.de/10005627964

Contracts as reference points – experimental evidence

Fehr, Ernst; Hart, Oliver; Zehnder, Christian - Institut für Volkswirtschaftslehre, … - 2008

In a recent paper, Hart and Moore (2008) introduce new behavioral assumptions that can explain long term contracts and … and, in particular, Hart and Moore’s notion that contracts provide reference points. In this paper, we examine … tradeoff between rigidity and flexibility in a trading environment with incomplete contracts and ex ante uncertainty about the …

Persistent link: https://www.econbiz.de/10005627985

Theories of Fairness and Reciprocity - Evidence and Economic Applications

Fehr, Ernst; Schmidt, Klaus M. - Institut für Volkswirtschaftslehre, …

Most economic models are based on the self-interest hypothesis that assumes that all people are exclusively motivated by their material self-interest. In recent years experimental economists have gathered overwhelming evidence that systematically refutes the self-interest hypothesis and suggests...

Persistent link: https://www.econbiz.de/10005627998