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Anthoff, David; Tol, Richard S.J - 2021

Weitzman's Dismal Theorem has that the expected net present value of a stock problem with a stochastic growth rate with unknown variance is unbounded. Cost-benefit analysis can therefore not be applied to greenhouse gas emission control. We use the Generalized Central Limit Theorem to show that...

Persistent link: https://www.econbiz.de/10013239336

Rotemberg and Imperfect Common Knowledge : A Solution Algorithm

Šauer, Radek - 2020

This paper develops an algorithm that enables to solve macroeconomic models with Rotemberg pricing and imperfect common knowledge. Under the concept of imperfect common knowledge, Rotemberg pricing requires the solution algorithm to take prices explicitly into account. The state space includes...

Persistent link: https://www.econbiz.de/10012841148

Uncertainty, Imperfect Information, and Expectation Formation Over the Firms's Life Cycle

Chen, Cheng - 2020

Using a long-panel dataset of Japanese firms that contains firm-level sales forecasts, we provide evidence on firm-level uncertainty and imperfect information over their life cycle. We find that firms make non-negligible and positively correlated forecast errors. However, they make more precise...

Persistent link: https://www.econbiz.de/10012826001

Does Tax Policy Work When Consumers Have Imperfect Price Information? Theory and Evidence

Montag, Felix; Sagimuldina, Alina; Schnitzer, Monika - 2021

We investigate how the pass-through rate of commodity taxes depends on competition in a setting where consumers have imperfect information about prices. We use a theoretical search model that has two key predictions: First, the larger the number of price sensitive consumers, the higher the...

Persistent link: https://www.econbiz.de/10013223660

Paying to Match : Decentralized Markets with Information Frictions

Agranov, Marina; Dianat, Ahrash; Samuelson, Larry; … - 2021

We experimentally study decentralized one-to-one matching markets with transfers. We vary the information available to participants, complete or incomplete, and the surplus structure, supermodular or submodular. Several insights emerge. First, while markets often culminate in efficient...

Persistent link: https://www.econbiz.de/10013250740

Insurance for Catastrophes - Indemnity vs. Parametric Insurance with Imperfect Information

Feess, Eberhard; Jordan, Cathrin; Noy, Ilan - 2022

Insurance for natural hazards - earthquakes, hurricanes, or pandemics - is rarely comprehensively adopted without intense government intervention, and even then it is often only a minority of properties or businesses that are insured. Efforts to close this insurance gap include the introduction...

Persistent link: https://www.econbiz.de/10013296268

Imperfect Signals

Graetz, Georg - 2023

A pre-condition for employer learning is that signals at labor market entry do not fully reveal graduates’ productivity. I model various distinct sources of signal imperfection—such as noise and multi-dimensional types—and characterize their implications for the private return to skill...

Persistent link: https://www.econbiz.de/10014357032

History-Based Price Discrimination with Imperfect Information Accuracy and Asymmetric Market Shares

Colombo, Stefano; Graziano, Clara; Pignataro, Aldo - 2021

The paper considers a duopoly model in which firms inherited asymmetric market shares and history-based price discrimination is viable. However, firms can identify only a share of their own consumers depending to the degree of information accuracy. We derive the pricing strategies and we analyze...

Persistent link: https://www.econbiz.de/10013229698

A Comparison of Regret Theory and Salience Theory for Decisions under Risk

Herweg, Fabian - 2020

Two non-transitive theories to model decision making under risk are regret theory (Loomes and Sugden, 1982, 1987) and … salience theory (Bordalo, Gennaioli, and Shleifer, 2012). While the psychological underpinning of these two approaches is … of choice behavior. We investigate the overlap between these theories and show that original regret theory (Loomes and …

Persistent link: https://www.econbiz.de/10012850081

Cognitive Uncertainty

Enke, Benjamin - 2019

This paper introduces a formal definition and an experimental measurement of the concept of cognitive uncertainty: people's subjective uncertainty about what the optimal action is. This concept allows us to bring together and partially explain a set of behavioral anomalies identified across four...

Persistent link: https://www.econbiz.de/10012857912

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