Trendsetters wish to be perceived as the type that defines normative behavior. Incorporating norm formation in Bernheim (1994)’s model yields equilibria with social considerations concentrating behavior, allowing multiple conformist pools. Refinements link each pooling equilibrium to a unique...

This paper investigates whether a contest organizer should disclose private information about bidders’ abilities in a multi-prize all-pay auction. Bidders’ abilities are randomly distributed and observed by the contest organizer; the organizer decides whether to disclose this information...

Under reduced-form learning, agents are endowed with an aggregate model, and rational expectations are then replaced with subjective expectations. This paper demonstrates that the reduced-form learning approach may be arbitrary in that a particular representation of aggregate dynamics has...

“Overbidding” with respect to risk-neutral Nash predictions in first-price auction experiments has been consistently reported in the literature. One possible explanation for overbidding is that participants in these experiments do not have a clear perception of probabilities, which causes...

Paying an insurance premium but not needing to claim is sometimes viewed as pouring money down the drain. Aversion to the perceived waste may lead to the rejection of fair insurance. Although policies paying rebates if no claim is made are not attractive to expected utility maximisers, this...

We study the impact of coupling a decision maker’s lottery payoffs to those of a peer on the preferred level of risk by means of a lab experiment. Compared to the benchmark where the lotteries are paid off individually, symmetrically coupled payoffs increase the willingness to take risks,...

Ellison and Pearlman (2011) show that determinacy implies e-stability under both full and lagged information if (1) subjective expectations are consistent with a structural model and unbiased, and (2) a learning process is given by the saddlepath relationship. This study clarifies that their...

It is shown that rent-seeking contests with continuous and independent type distributions possess a unique pure-strategy Nash equilibrium.

We introduce a competitive framing in the mini-ultimatum game utilizing chess puzzles. Therein, our chess playing participants accept low offers significantly more often compared to a neutral framing. We conclude that in familiar competitive surroundings egoistic behavior is more acceptable.