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Having information about an uncertain event is crucial for informed decision-making. This paper introduces a simple framework in which 1) a principal uses the reported beliefs of multiple agents to make a decision and 2) the agents reporting a belief are affected by the decision. Naturally, the...
Persistent link: https://www.econbiz.de/10014345600
Assume in a 2-person game that one player, Predictor (P), does not have a dominant strategy but can predict with probability p 1/2 the strategy choice of an opponent, Predictee (Q). Q chooses a strategy that maximizes her expected payoff, given that she knows p—but not P's prediction—and...
Persistent link: https://www.econbiz.de/10012960726
We examine the allocation of a limited pool of matching funds to public good projects using Quadratic Funding. In particular, we consider a variation of the Capital Constrained Quadratic Funding (CQF) mechanism proposed by Buterin, Hitzig and Weyl (2019) where only funds in the matching pool are...
Persistent link: https://www.econbiz.de/10014079598
We describe a new mechanism that induces accurate forecasts within an organization while reducing moral hazards and the stigma associated with negative opinions. It is based on the notion of identity escrow, whereby the identity of a forecaster is kept anonymous and only revealed when a number...
Persistent link: https://www.econbiz.de/10014106789
We analyze bubbles and crashes in a model in which some investors are partially sophisticated. While the expectations of such investors are endogenously determined in equilibrium, these are based on a coarse understanding of the market dynamics. We highlight how such investors may endogenously...
Persistent link: https://www.econbiz.de/10014184822
Information aggregation mechanisms are designed explicitly for collecting and aggregating dispersed information. An excellent example of the use of this "wisdom of crowds" is a prediction market. The purpose of our Twitter-based prediction market is to suggest that carefully designed market...
Persistent link: https://www.econbiz.de/10014040950
We analyze experimental evidence on whether untrained subjects can predict how trustworthy an individual is. Two players on a TV show play a high stakes prisoner's dilemma with pre-play communication. Our subjects report probabilistic beliefs that each player cooperates, before and after...
Persistent link: https://www.econbiz.de/10014213778
We provide a model that can explain empirically relevant variations in confidence and risk taking by combining horizon-dependent risk aversion (“anxiety”) and selective memory in a Bayesian intrapersonal game. In the time series, overconfidence is more prevalent when actual risk levels are...
Persistent link: https://www.econbiz.de/10012904438
We describe a methodology for making counterfactual predictions when the information held by strategic agents is a latent parameter. The analyst observes behavior which is rationalized by a Bayesian model in which agents maximize expected utility, given partial and differential information...
Persistent link: https://www.econbiz.de/10012892592
This paper proposes a model of how biased individuals update beliefs in the presence of informational ambiguity. Individuals are ambiguous about the actual signal-generating process and interpret signals according to the model that can best support their biases. This paper provides a complete...
Persistent link: https://www.econbiz.de/10013234442