We study the inference and experimentation problem of an agent in a situation where the outcomes depend on the individual\'s intrinsic ability and on an external variable. We analyze the mistakes made by decision-makers who hold inaccurate prior beliefs about their ability. Overconfident...

In this paper I consider a dynamically complete market model without intrinsic uncertainty. The only uncertainty is modelled by sunspots. Agents' beliefs are heterogeneous, but eventually become homogeneous in the sense that agents' beliefs are identical in the limit. I show that if some states...

Within the setting of two simple two-person coordinationgames the formation of subjective strategies is observed experimentally.Though the structure of the game is unknown playersuse their actions in order to coordinate on a specific equilibrium.Strategies enable them to interpret the...

Auditing institutions, such as the German Federal Court of Audit (BRH), provide information on public revenue and public spending. The question of how to increase tax compliance has been of frequent interest. Unfortunately, information from German taxpayers? declaration behaviour (beyond the...

El Salvador, Honduras and Guatemala count among today's most violent countries of the world. Qualitative research has claimed that large-scale deportations of Central American convicts have played an important role for the spread of gangs and rampant violence in the region. Using a novel...

Internationally, there is no consensus concerning the legal and moral judgment of prostitution. Nevertheless, there is an overwhelming agreement on the need to fight sexual slavery. We analyze how a law - introduced to punish clients of commercial sex services - affects market outcomes. More...

We study a theoretical general equilibrium environment in which the only activity of interest is armed robbery. Agents choose whether to be citizens or robbers, and whether to purchase handguns. Armed citizens can protect themselves from robbery but any armed agent runs the risk of accidentally...