The paper introduces the assumption of costly information acquisition to the theory of mechanism design for matching allocation problems. It is shown that the assumption of endogenous information acquisition greatly changes some of the cherished results in that theory: in particular, the...

Although intuitive-automatic processes sometimes lead to systematic biases in judgment and choice, in many situations especially this kind of processes enables people to approximate rational choices. In complex base-rate tasks with repeated outcome feedback we observed choices which were in line...

The purpose of this article is to provide an alternative antitrust model to the mainstream model that is used in competition policy. I call it the Institutional-Evolutionary Antitrust Model. In order to construct an antitrust model one needs both empirical knowledge and considerations of how to...

Broken Windows: the metaphor has changed New York and Los Angeles. Yet it is far from undisputed whether the broken windows policy was causal for reducing crime. In a series of lab experiments we put two components of the theory to the test. We show that first impressions and early punishment of...

This paper discusses the relationship between bank size and risk-taking under Pillar I of the New Basel Capital Accord. Using a model with imperfect competition and moral hazard, we find that small banks (and hence small borrowers) may profit from the introduction of an internal ratings based...

We report an experiment designed to test the influence of noisy commitments on efficiency in a simple bargaining game. We investigate two different levels of commitment reliability in a variant of the peasant-dictator game. Theoretical analysis suggests that the reliability of commitments in...

This paper deals with second-best pollution taxation by investigating allocations instead of the corresponding tax rates. Assuming certain restrictions on utility and that the marginal revenue from environmental taxation is positive, it is shown that environmental quality is higher in second...

Should government be allowed to spend tax payers’ money on public relations? If one frames the question that way, the negative answer suggests itself. Yet government communication serves more purposes. These purposes may be analysed in terms of behavioural economics and psychology. In moral...

Competition between parallel infrastructures incorporates opposing welfare effects. The gain from reduced deadweight loss might be outweighed by the inefficient duplication of an existing infrastructure. Using data from broadband internet access for Western Europe 2000-2004, this paper...

The seasonal demand for natural gas requires supply flexibility. This “swing” is now largely provided in northwestern Europe by indigenous production. Declining reserves will increase the dependency on imports from far-off sources, which are less flexible. Hence, flexibility must be provided...