A decision maker (DM) considers the acquisition of a multi-attribute object with uncertain qualities which can be discovered at a cost. DM's problem is to decide how much to invest in the discovery and whether to adopt or discard based on partial information. We characterize the solution in some...

Rule learning posits that decision makers, rather than choosing over actions, choose over behavioral rules with different levels of sophistication. Rules are reinforced over time based on their historically observed payoffs in a given game. Past works on rule learning have shown that when...

Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that...

We study first- and second-order subjective expectations (beliefs) in strategic decision-making. We elicit probabilistically both first- and second-order beliefs and apply the method to a Hide-and-Seek experiment. We study the relationship between choice and beliefs in terms of whether observed...

In this paper we study market environments where information is costly to acquire and is also useful to potential competitors. Agents may sell, or buy, reports over the information acquired and choose their trades in the market on the basis of what they learnt. Reports are unverifiable – cheap...

This paper investigates the possibility that people discover effective heuristics when playing similar perfect information games of varying complexity. We call this discovery experience Eureka Learning. We use a change-point analysis to identify 35 percent of our subjects as Eureka Learners.

We experimentally assess the predictive power of two equilibrium selection principles for binary N-player entry games with strategic complementarities. In static entry games, we test the theory of global games which posits that players play games of complete information as if they were playing a...

Asymmetric awareness of the contracting parties regarding the uncertainty surrounding them is proposed as a reason for incompleteness in contractual forms. An insurance problem is studied between a risk neutral insurer, who has superior awareness regarding the nature of the uncertainty, and a...

We experimentally investigate the fundamental element of the level-k model of reasoning, the level-0 actions and beliefs. We use data from a novel experimental design that allows us to obtain incentivised written accounts of individuals' reasoning. In particular, these accounts allow to infer...

We report on an experiment comparing compulsory and voluntary voting institutions in a voting game with common preferences. Rational choice theory predicts sharp differences in voter behavior between these two institutions. If voting is compulsory, then voters may find it rational to vote...