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Much of economics assumes that higher incentives increase participation in a transaction only because they exceed more … costly, higher incentives also change reservation prices to further increase participation. A higher incentive makes people …. Hence, incentives change not only what people choose, but also what they believe their choices entail. This result informs …
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There is now an extensive literature on "gift exchange" showing that when principals and agents can trade "gifts" (rewards that should not emerge in a competitive equilibrium), exchange becomes more efficient. However, it is not obvious how gift exchange should be organized if the principal's...
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To test and replicate the superstar effect reported by Brown (2011) we empirically study contests where a single entrant has an endogenously higher probability of winning. Unlike the previous literature, we test for the presence of the superstar effect in several different contexts. Ultimately,...
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