Showing 1 - 10 of 597
This paper demonstrates the importance of simultaneously considering two behavioral biases, correlation neglect and overprecision, in characterizing belief formation. Our laboratory experiments reveal that, relative to independent signals, subjects overvalue moderately or strongly correlated...
Persistent link: https://www.econbiz.de/10012851813
Bayes' Theorem has an implicit, fundamental rule of how subjects should incorporate informationally equivalent signals of opposite direction: two opposite-directional signals should cancel out such that prior beliefs remain constant. In this study, we test whether agents always follow this...
Persistent link: https://www.econbiz.de/10012829080
Do experts form rational beliefs when making split-second, sophisticated judgments? A long literature suggests not: individuals often form prior beliefs from biased sampling and update those beliefs by improperly weighting new information. This paper studies belief formation by professional...
Persistent link: https://www.econbiz.de/10012934664
We suggest that one individual holds multiple degrees of belief about an outcome, given the evidence. We then investigate the implications of such noisy probabilities for a buyer and a seller of binary options and find the odds agreed upon to ensure zero-expectation betting, differ from those...
Persistent link: https://www.econbiz.de/10012907302
Persistent link: https://www.econbiz.de/10012842492
We propose that there are three determinants of sender behavior in trust games: Beliefs re-garding the amounts returned, risk aversion, and reciprocity. Particularly, we are interested in the role of reciprocity because the possibility of negative expected reciprocal utility may lead to...
Persistent link: https://www.econbiz.de/10013056469
The present paper introduces a model of dynamic equilibrium in a market, based on game theoretic approach, with specific development for capital markets and corporate strategies. The model allows to study some aspects of structural change in markets, both its dynamics and qualitative aspects. An...
Persistent link: https://www.econbiz.de/10013159928
Consider an infinitely repeated game where each player is characterized by a "type" which may be unknown to the other players in the game. Suppose further that each player's belief about others is independent of that player's type. Impose an absolute continuity condition on the ex ante beliefs...
Persistent link: https://www.econbiz.de/10014060416
Starting with a simple economic model of the value of civil litigation from each side's perspective, this paper analyses a wide range of potential litigation cost strategies, settlement offers and negotiations, together with relevant applications and insights from game theory. Specific issues...
Persistent link: https://www.econbiz.de/10014026078
Inspired by the social psychology literature, we study the implications of categorical thinking on decision making in the context of a large normal form game. Every agent has a categorization (partition) of her opponents and can only observe the average behavior in each category. A strategy...
Persistent link: https://www.econbiz.de/10014049187