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learning. In repeat-choice situations, such learning brings value. If probabilities appear favorable (unfavorable), a choice …, decision makers often prove to be blind to the learning opportunities offered by uncertain probabilities. They forgo …, many make choices contrary to learning. Priming with optimal strategies offers little improvement. Such decision makers …
Persistent link: https://www.econbiz.de/10011049682
We analyze fiscal consolidations using a New Keynesian model where agents have heterogeneous expectations and are uncertain about the composition of consolidations. We look at spending-based and tax-based consolidations and analyze their effects separately. We find that the effects of...
Persistent link: https://www.econbiz.de/10011770688
We everyday engage in the 'Small Decision Making (SDM).' This paper presents an experiment on SDM that consists of the two treatments: (1) the search treatment in the context of SDM under uncertainty, where the decision makers are not disclosed the payoff structure; (2) the choice treatment in...
Persistent link: https://www.econbiz.de/10013156244
of optimal learning under tail risk …
Persistent link: https://www.econbiz.de/10012936033
We design and conduct an economic experiment to investigate the learning process of agents under compound risk and … environments. Specifically, even after controlling for the initial prior, we and that when learning under ambiguity, subjects … significantly overweight the new signal, while when learning under compound risk, subjects are essentially Bayesian …
Persistent link: https://www.econbiz.de/10012856105
The Holt-Laury measure for risk aversion has been used extensively in economic studies to measure individuals' risk aversion. The idea behind this measure is that individuals have stable risk preferences when making decisions under risk. We show that having repeated experiences with the...
Persistent link: https://www.econbiz.de/10012985632
Overconfidence is one of the most ubiquitous cognitive bias. There is copious evidence of overconfidence being relevant in a diverse set of economic domains. In this paper, we relate the recent concept of cognitive uncertainty with overconfidence. Cognitive uncertainty represents a decision...
Persistent link: https://www.econbiz.de/10013257953
We run a laboratory experiment with a two-person game with unique pure Nash equilibrium which is also the solution of the iterative elimination of strictly dominated strategies. The subjects are asked to commit to a device that randomly picks one of three symmetric outcomes in this game...
Persistent link: https://www.econbiz.de/10011962034
Principal-agent problems can reduce gains from exchange available in long distance trade. One solution to mitigate this problem is multilateral punishment, whereby groups of principals jointly punish cheating agents by giving them bad reputations. But how does such punishment work when there is...
Persistent link: https://www.econbiz.de/10012950453
In traditional sequential search models, players face ex ante uncertainty prior to each search but obtain certain outcomes after the search. The players' reservation value tends to decrease with their level of risk aversion. We propose a modified sequential search model with ex post uncertainty...
Persistent link: https://www.econbiz.de/10014082556