This paper proposes a bounded rationality approach to model equilibrium play in games. It is based on the observation that decision makers often do not seem to fully distinguish between different but seemingly similar decisions and tend to treat such similar decisions in a standardised/habitual...

In this paper, we show that moderate overconfidence in a contest can improve the agent's performance relative to an unbiased opponent and even lead to an advantage in absolute terms.

This paper suggests a potential rationale for the recent empirical finding that overconfident agents tend to self-select into more competitive environments (e.g. Dohmen and Falk, forthcoming). In particular, it shows that moderate overconfidence in a contest can improve the agent's performance...

This paper considers the endogenous formation of an institution to provide a public good. If the institution governs only its members, players have an incentive to free ride on the institution formation of others and the social dilemma is simply shifted to a higher level. Addressing this...

Purpose – The paper emphasises the general relevance of social norms and social associations for cooperative behaviour in less or non-social economic contexts, focusing in particular on economic laboratory experiments, and to illustrate the underlying psychological driving forces....

This paper reconsiders the valuation equilibrium concept (Jehiel and Samet, 2007) and proposes an additional regularity condition concerning the playersʼ equilibrium strategies. The condition, which requires equilibrium strategies to induce the same local behaviour at all nodes with...

This paper considers the e effcts of a two-period interaction on the decision of a principal to delegate authority to a potentially biased but better informed agent. Compared to the (repeated) one-period case, the agent's first period actions may also signal his type which in turn impacts wages...