We consider a brand manufacturer who can offer, next to its high-quality product, also a decoy good and faces competition by a competitive fringe that produces low quality. We show that the brand manufacturer optimally provides a decoy good to boost the demand for its main product if consumers'...

In this study, we enrich a standard principal-agent model with hidden action by introducing salience-biased perception on the agent's side. The agent's misguided focus on salient payoffs, which leads the agent's and the principal's probability assessments to diverge, has two effects: First, the...

Introduction -- A Research Framework of VLE Design Characteristics -- Theoretical Background and Outline of the Integrated Research Models -- Elicitation of VLE Design Characteristics -- Evaluation of VLE Design Characteristics.- Conclusions

We investigate whether violations of canonical axioms of choice under risk are mistakes or a manifestation of true preferences. First, we elicit axiom and gamble preferences and then allow subjects to revise their potentially conflicting preferences. Among the behavioral patterns that allow for...

We investigate whether violations of canonical axioms of choice under risk are mistakes or a manifestation of true preferences. First, we elicit axiom and gamble preferences and then allow subjects to revise their potentially conflicting preferences. Among the behavioral patterns that allow for...

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.