To explore damage rules' deterrent effect, we use a public good experiment to tailor allowable punishment to rules used in actual civil litigation. The experimental treatments are analogous to: (1) damages limited to harm to an individual litigant, (2) damages limited to harm to a group...

While humans often care about sunk investment, animals are not subject to this sort of sunk cost behavior or "Concorde fallacy". This paper investigates a simple two stage decision problem under uncertainty. At the second stage, subjects can commit the Concorde fallacy by sticking to the first...

This paper studies a firm´s optimal capital structure in an environment, where the firm´s stock price serves as a public signal for its credit worthiness. In equilibrium, equity investors choose how much information to acquire privately, which induces a positive relation between the amount of...

This paper develops a strategic model of procrastination in which present-biased agents prefer to do an onerous task in the company of someone else. This turns their decision of when to do the task into a procrastination game { a dynamic coordination game between present-biased players. The...

This paper develops a strategic model of procrastination in which present-biased agents prefer to do an onerous task in the company of someone else. This turns their decision of when to do the task into a procrastination game { a dynamic coordination game between present-biased players. The...

To explore damage rules’ deterrent effect, we use a public good experiment to tailor allowable punishment to rules used in actual civil litigation. The experimental treatments are analogous to: (1) damages limited to harm to an individual litigant, (2) damages limited to harm to a group...

This paper studies a firmś optimal capital structure in an environment, where the firmś stock price serves as a public signal for its credit worthiness. In equilibrium, equity investors choose how much information to acquire privately, which induces a positive relation between the amount of...

The imperfect appropriability of revenues from innovation affects the incentives of firms to invest, and to disclose information about their innovative productivity. It creates a free-rider effect in the competition for the innovation that countervails the familiar business-stealing effect....

We modify the principal-agent model with moral hazard by assuming that the agent is expectation-based loss averse according to Köszegi and Rabin (2006, 2007). The optimal contract is a binary payment scheme even for a rich performance measure, where standard preferences predict a fully...

We propose a new approach to the normative analysis of public-good provision. In addition to individual incentive compatibility, we impose conditions of robust implementability and coalition proofness. Under these additional conditions, participants' contributions can only depend on the level of...