It is widely believed that an environmental tax (price regulation) and cap-and-trade (quantity regulation) are equally efficient in controlling pollution when there is no uncertainty. We show that this is not the case if some consumers (firms, local governments) are morally concerned about...

We study the optimal R&D trajectory in a setting where new technologiesare never perfect backstops in the sense that there is no perfectlyclean technology that eventually solves the pollution problem once andfor all. New technologies have stings attached, i.e. each emits a specificstock...

The study investigates protective responses in low probability and high loss risk situations.Particularly, it (1) detects individual protection valuations to variations in probability versus tovariations in loss for payment decisions and choice decisions, (2) elicits the thresholdprobability in...

This experimental study investigates whether individuals preferbounded rationality over rational choice theory when facing simpleinvestment tasks. First, participants state some personal parametersthat serve as an input to render a theoretical approach, namelysatisficing or optimality,...

We experimentally investigate whether the satisficing approach isabsorbable, i.e., whether it still applies after participants become awareof it. In a setting where an investor decides between a riskless bondand either one or two risky assets, we familiarize participants with thesatisficing...

The paper explores the applicability of the satisficing approach. Inparticular, we investigate whether basic principles of aspiration formationand satisficing behavior are transferable between similar situations.Individuals are sequentially confronted with two risky investmenttasks, a simple and...

In this note we establish that rational demand expectations willtypically not evolve in an evolutionary model. In an evolutionarymodel beliefs act like a commitment device to more aggressive be-havior. This commitment effect has the same direction for strategicsubstitutes and complements and...

We examine the explanatory power of cascade models by implementing the BDM-mechanism in a simple cascade experiment in which subject have to decide on the prediction of a randomly choasen urn. Assigned price limits to participate in the prediction game are used as indicators of subjective...

This paper investigates (i) the robustness of hindsight bias in experimental assetmarkets, (ii) the time invariance of the different experimental risk elicitationmethods of certainty equivalents and binary lottery choices, and (iii) their correspondence.The results of our within-subjects...

We experimentally test overconfidence in investment decisions by offering participants the possibility to substitute their own for alternative investment choices.Overall, 149 subjects participated in two experiments, one with just one risky asset, the other with two risky assets. Overconfidence...