This paper provides a comprehensive analysis regarding strategic interaction under expectation-based loss-aversion. First, we develop a coherent framework for the analysis by extending the equilibrium concepts of Koszegi and Rabin (2006, 2007) to strategic interaction and demonstrate how to...

Extending the equilibrium concepts of Kőszegi and Rabin (2006, 2007), this paper analyzes the strategic interaction of expectation-based loss-averse players. For loss-averse players with choice-acclimating expectations the utility from playing a mixed strategy is not linear but convex in the...

Recent literature has shown that lying behavior in the laboratory can well be explained by a combination of lying costs and reputation concerns. We extend the literature on lying behavior to strategic interactions. As reciprocal behavior is important in many interactions, we study a theoretical...

In the last decade, forced ranking systems where employees' bonuses depend on their rank assigned by superiors have become less popular. Whereas the inherently competitive structure of ranking systems provides high effort incentives, it might also increase incentives for misconduct. Previous...

Recent literature has shown that lying behavior in the laboratory can well be explained by a combination of lying costs and reputation concerns. We extend the literature on lying behavior to strategic interactions. As reciprocal behavior is important in many interactions, we study a theoretical...

In the last decade, social media and the Internet have amplified the possibility to spread false information, a.k.a. fake news, which has become a serious threat to the credibility of politicians, organizations, and other decision makers. This paper proposes a framework for investigating the...

This paper examines the potential reinforcement of motivated beliefs when individuals with identical biases communicate. We propose a controlled online experiment that allows to manipulate belief biases and the communication environment. We find that communication, even among like-minded...