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An Economic Analysis of Exclusion Restrictions for Instrumental Variable Estimation

den Berg, Gerard J van - C.E.P.R. Discussion Papers - 2007

information on the value of the IV. This leads to violation of the exclusion restriction. We analyze this in a dynamic economic …

Persistent link: https://www.econbiz.de/10005792073

Asset Pricing under Rational Learning about Rare Disasters

Koulovatianos, Christos; Wieland, Volker - C.E.P.R. Discussion Papers - 2011

account that investors' information about fundamentals driving rare downward jumps in the dividend process is not perfect …

Persistent link: https://www.econbiz.de/10009201120

Cognitive Ability and Paternalism

Saint-Paul, Gilles - C.E.P.R. Discussion Papers - 2002

This Paper analyses the welfare effects of price restrictions on private contracting in a world where agents have a limited cognitive ability. People compute the costs and benefits of entering a transaction with an error. The government knows the distribution of true costs and benefits as well...

Persistent link: https://www.econbiz.de/10005662402

The role of intuition and reasoning in driving aversion to risk and ambiguity

Butler, Jeff; Guiso, Luigi; Jappelli, Tullio - C.E.P.R. Discussion Papers - 2011

Using a large sample of retail investors as well as experimental data we find that risk and ambiguity aversion are positively correlated. We show the common link is decision style: intuitive thinkers tolerate more risk and ambiguity than effortful reasoners. One interpretation is that intuitive...

Persistent link: https://www.econbiz.de/10008915807

Bailout Uncertainty in a Microfounded General Equilibrium Model of the Financial System

Cukierman, Alex; Izhakian, Yehuda - C.E.P.R. Discussion Papers - 2011

This paper develops a micro-founded general equilibrium model of the financial system composed of ultimate borrowers, ultimate lenders and financial intermediaries. The model is used to investigate the impact of uncertainty about the likelihood of governmental bailouts on leverage, interest...

Persistent link: https://www.econbiz.de/10009144737

Manipulating Reliance on Intuition Reduces Risk and Ambiguity Aversion.

Butler, Jeff; Guiso, Luigi; Jappelli, Tullio - C.E.P.R. Discussion Papers - 2013

Prior research suggests that those who rely on intuition rather than effortful reasoning when making decisions are less averse to risk and ambiguity. The evidence is largely correlational, however, leaving open the question of the direction of causality. In this paper, we present experimental...

Persistent link: https://www.econbiz.de/10011083555

Perceiving Prospects Properly

Steiner, Jakub; Stewart, Colin - C.E.P.R. Discussion Papers - 2014

When an agent chooses between prospects, noise in information processing generates an effect akin to the winner’s curse …

Persistent link: https://www.econbiz.de/10011083577

Banker Compensation and Confirmation Bias

Sabourian, Hamid; Sibert, Anne - C.E.P.R. Discussion Papers - 2009

Confirmation bias refers to cognitive errors that bias one towards one's own prior beliefs. A vast empirical literature documents its existence and psychologists identify it as one of the most problematic aspects of human reasoning. In this paper, we present three related scenarios where...

Persistent link: https://www.econbiz.de/10005661569

Information in Mechanism Design

Bergemann, Dirk; Välimäki, Juuso - C.E.P.R. Discussion Papers - 2006

We survey the recent literature on the role of information in mechanism design. First, we discuss an emerging … literature on the role of endogenous payoff and strategic information for the design and the efficiency of the mechanism. We … specifically consider information management in the form of acquisition of new information or disclosure of existing information …

Persistent link: https://www.econbiz.de/10005123850

Do Consumers Search for the Highest Price? Equilibrium and Monopolistic Optimum in Differentiated Products Markets

Schulz, Norbert; Stahl, Konrad - C.E.P.R. Discussion Papers - 1995

We develop a model of search among substitutes for the best combination of commodity variant and price, in which the structure of search costs can be manipulated by the suppliers of these variants, e.g. by joining an existing market or opening a new one. We analyse the subgame perfect equilibria...

Persistent link: https://www.econbiz.de/10005136540

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