This paper examines the research area identified by Frey and Gallus (Aggregate Effects of Behavioral Anomalies: A New Research Area, 2014) and the relationship between it and the choices that economists make. It supports the Frey and Gallus view that, as a consequence of individuals employing...

We compare and critique two measures of risk perception. We suggest that a single question --- ``How risky is the situation?'' --- captures the concept of risk perception more accurately than the multiple-item measure used by Sitkin and Weingart (1995). In fact, this latter measure inadvertently...

Experimental evidence suggests that consumers are affected by reference prices and by relative price differences (“relative thinking”). A linear-city model of two retailers that sell two goods suggests how this consumer behavior affects firm strategy and market outcomes. A simple model...

Many studies have shown that decision makers have a tendency to choose the default or standard action among several possible actions. The article develops a model to explore under what conditions it is optimal for a firm facing a strategic decision problem to choose the default action without...

Should fear guide our actions and governments’ political decisions? A leitmotiv of common sense is that emotions are tricky, they blur our rational capacity of estimating utilities in order to plan action and thus they should be banned from any account of our rational expectations. In this...