We analyze the strategic behavior of firms when demand is determined by a rule of thumb behavior of consumers. We assume consumer dynamics where individual consumers follow simple behavioral decision rules governed by imitation and habit as suggested in consumer research. On this basis, we...

This experiment explores whether individuals know that other people are biased. We confirm that overestimation of abilities is a pervasive problem, but observe that most people are not aware of it, i.e. they think others are unbiased. We investigate several explanations for this result. As a...

everal empirical findings have challenged the traditional trade-off between risk and incentives. By combining risk aversion and limited liability in a standard principal-agent model the empirical puzzle on the positive relationship between risk and incentives can be explained.

Many information structures generate correlated rather than mutually independent signals, the news media being a prime example. This paper shows experimentally that in such context many people neglect these correlations in the updating process and treat correlated information as independent. In...

I consider a situation, where the agent can acquire payoff-relevant information either before or after the contract is signed. To raise efficiency, the principal might solicit information; to retain all surplus, however, she must prevent precontractual information gathering. The following class...

This paper analyzes optimal incentive contracts for information acquisition and revelation. A decision maker faces the problem to design a contract that provides an expert with incentives to acquire and reveal information. We show that it is in general not optimal to reward the expert if his...

This paper analyzes truthtelling incentives in pre-vote communication in heterogeneous committees. We generalize the classical Condorcet jury model by introducing a new informational structure that captures consistency of information. In contrast to the impossibility result shown by Coughlan...

We formulate a dynamic learning-and-adjustment model of a market in which sellers choose signals that potentially reveal their types. If the dynamic process selects a unique limiting outcome, then that outcome must be an undefeated equilibrium; though to be undefeated does not suffice to be the...

The paper re-expresses arguments against the normative validity of expected utility theory in Robin Pope (1983, 1991a, 1991b, 1985, 1995, 2000, 2001, 2005, 2006, 2007). These concern the neglect of the evolving stages of knowledge ahead (stages of what the future will bring). Such evolution is...

This paper’s objective is to use SKAT, the author’s Stages of Knowledge Ahead Theory of risk, to shed fresh light on the treatment and prevention of mental disorders. SKAT employs a broad definition of risk that allows for nice – not merely nasty – possibilities. SKAT is here shown to...