We provide a hidden-action principal-agent model where the agent has referencedependent preferences. The loss-averse agent considers the base wage as reference point, and bonuses and/or penalties as gains and losses, respectively. When choosing optimal payments, the principal strategically sets...

This paper experimentally analyzes how consumers decide between entering a fixed price, an ascending auction or a BIN auction. We find that such entry decisions depend both on potential payoffs (price aspects) and consumer characteristics (non-price aspects). For values smaller than or equal to...

This paper presents a game-theoretical model of the physician-patient relationship. There is a conflict of interest between physician and patient, in that the physician prefers the patient to always obtain a particular treatment, even if the patient would not consider this treatment in his...

This paper presents a game-theoretic rationale for the beneficial effect of a common enemy on cooperation. In a defence game against a common natural threat, the value of the public good of defence is equal to the sum of the players’ defensive efforts. The game therefore takes the form of...

Horn’s rule says that messages can be kept ambiguous if only a single interpretation is plausible. Speakers only perform costly disambiguation to convey surprising information. This paper shows that, while noncooperative game theory cannot justify Horn’s rule, evolutionary game...

Let a consumer consume two goods, and let good 1 be a Giffen good. Then a wellknown necessary condition for such behaviour is that good 1 is an inferior good. This paper shows that an additional necessary for such behaviour is that good 1 is a gross substitute for good 2, and that good 2 is a...