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The curse of knowledge increases self-selection into competition: Experimental evidence

Danz, David - Verein für Socialpolitik - VfS - 2014

The psychology literature provides ample evidence that people have difficulties taking the perspective of less informed others. This paper presents a controlled experiment showing that this "curse of knowledge" can cause comparative overconfidence and overentry into competition. In a broader...

Persistent link: https://www.econbiz.de/10011163925

Efficient Bargaining in a Dynamic Macroeconomic Model

Claas, Oliver; Böhm, Volker - Verein für Socialpolitik - VfS - 2013

This paper analyzes the implications of bilateral bargaining over wages and employment between a producer and a union representing a finite number of identical workers in a monetary macroeconomic model of the AS AD type with government activity. Wages and aggregate employment levels are set...

Persistent link: https://www.econbiz.de/10010986037

Assortative matching through signals

Poeschel, Friedrich - Verein für Socialpolitik - VfS - 2012

equilibrium with perfect sorting arises despite frictions. We find that supermodularity of the match production function is a … necessary and sufficient condition. This is a weaker condition than is needed for sorting in models without signals, which may … explain why sorting is much more widespread in reality than existing models would suggest. Supermodularity functions here as …

Persistent link: https://www.econbiz.de/10010955206

Incomplete Contracting, Renegotiation, and Expectation-Based Loss Aversion

Herweg, Fabian; Karle, Heiko; Müller, Daniel - Verein für Socialpolitik - VfS - 2014

We consider a simple trading relationship between an expectation-based loss-averse buyer and profit-maximizing sellers. When writing a long-term contract the parties have to rely on renegotiations in order to ensure materially efficient trade ex post. The type of the concluded long-term contract...

Persistent link: https://www.econbiz.de/10011164074

Old Money, the Nouveau Riche and Brunhilde's Marriage Dilemma

Bronsert, Anne-Kathrin; Glazer, Amihai; Konrad, Kai A. - Verein für Socialpolitik - VfS - 2014

This paper proposes a screening approach to explain why dating is associated with purchasing status products and conspicuous gift giving. A potential bride searching for a husband may seek to screen candidates whose income is only partially observable. Taking into account that she also bears...

Persistent link: https://www.econbiz.de/10011164023

Smooth, strategic communication

Deimen, Inga; Szalay, Dezsö - Verein für Socialpolitik - VfS - 2014

We study strategic communication between a Sender and Receiver who are both uncertain about their preferred actions. The Sender observes noisy signals about both players' ideal policies and then communicates with the Receiver. Even though Sender and Receiver disagree about ideal policies as a...

Persistent link: https://www.econbiz.de/10011164084

Bargaining behavior in insurance markets

Wagner, Lilo; Baumann, Julian - Verein für Socialpolitik - VfS - 2013

We rationalize a special type of sharing information which can typically be found in markets for occupational disability insurances. There, firms share information about acceptances and rejections of an applicant. We set up a multiple-step signalling model with uninformed agents and endogenize...

Persistent link: https://www.econbiz.de/10010958116

Loss Aversion and Inefficient Renegotiation

Schmidt, Klaus; Herweg, Fabian - Verein für Socialpolitik - VfS - 2014

We propose a theory of inefficient renegotiation that is based on loss aversion. When two parties write a long-term contract that has to be renegoti- ated after the realization of the state of the world, they take the initial contract as a reference point to which they compare gains and losses...

Persistent link: https://www.econbiz.de/10011164113

Matching Allocation Problems with Endogenous Information Acquisition

Bade, Sophie - Verein für Socialpolitik - VfS - 2011

The paper introduces the assumption of costly information acquisition to the theory of mechanism design for matching …

Persistent link: https://www.econbiz.de/10010957291

Loss Aversion and Ex Post Inefficient Renegotiation

Herweg, Fabian; Schmidt, Klaus - Verein für Socialpolitik - VfS - 2013

We propose a theory of ex post inefficient renegotiation that is based on loss aversion. When two parties write a long-term contract that has to be renegotiated after the realization of the state of the world, they take the initial contract as a reference point to which they compare gains and...

Persistent link: https://www.econbiz.de/10010957990

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