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We use a laboratory experiment to understand the channels through which honesty oaths can affect behavior and credibility. Using a game with asymmetric information in a financial market setting that captures some important features of advisor-investor interactions, we manipulate the common...
Persistent link: https://www.econbiz.de/10014380769
This paper characterizes the optimal first-price auction (FPA) and second-price auction (SPA) for selling rights, contracts, or licenses that involve ensuing payoff uncertainty for the winning bidder. The distribution of the random payoff is common knowledge, except that bidders have private...
Persistent link: https://www.econbiz.de/10011374400
Theory predicts that entrepreneurs have distinct attitudes towards risk and uncertainty, but empirical evidence is mixed. To better understand the unique behavioral characteristics of entrepreneurs and the causes of these mixed results, we perform a large "lab-in-the-field" experiment comparing...
Persistent link: https://www.econbiz.de/10010415523
We show that if an agent is uncertain about the precise form of his utility function, his actual relative risk aversion may depend on wealth even if he knows his utility function lies in the class of constant relative risk aversion (CRRA) utility functions. We illustrate the consequences of this...
Persistent link: https://www.econbiz.de/10011382430
Higher order risk preferences are important determinants of economic behaviour. We apply behavioural insights to this topic: we measure higher order risk preferences for pure gains and pure losses by controlling the reference point. We find a reflection effect not only for second order risk...
Persistent link: https://www.econbiz.de/10011924804
encourage cooperation may actually hurt morale, by convincing opportunistic team members to imitate and later take advantage of …This paper studies how morale in teams can break down. It interprets high morale as team members working together … productively, either because of a sense of fairness or because of implicit incentives from repeated interactions. Team members …
Persistent link: https://www.econbiz.de/10011377833
Persistent link: https://www.econbiz.de/10001732783
Persistent link: https://www.econbiz.de/10008771804
We focus on the effect of preference specifications on the current day valuation of future outcomes. Specifically, we analyze the effect of risk aversion, ambiguity aversion and the elasticity of intertemporal substitution on the willingness to pay to avoid climate change risk. The first part of...
Persistent link: https://www.econbiz.de/10012024032
This paper demonstrates that well-established biases in decision making under uncertainty can generate poverty traps. A theoretical framework is developed to demonstrate that: i) probability weighting and ambiguity attitude can lead individuals to erroneously undervalue profitable investments,...
Persistent link: https://www.econbiz.de/10015062969