There is a debate about whether risk aversion is the main source of overbidding in a first-price independent private values auction. As an alternative, we adopt a non-expected utility framework, and identify an interpretable property on the probability weighting function which always induces...

Abstract This paper proposes an analysis of both doctors and patients' behavior in an agency model that accounts for the interplay between two highly debated health issues: drug advertising toward doctors and/or patients, and the serious problem of patients' noncompliance with their doctors'...

In the application of auction theory to the real world, practitioners must choose ex ante which of the common value or the private values paradigm applies. Since intuition may fail, some authors have proposed to decide statistically between the two models. These studies, however, did not confirm...

We compare the performance of liability rules for managing environmental disasters when third parties are harmed and cannot always be compensated. A firm can invest in safety to reduce the likelihood of accidents. The firm’s investment is unobservable to authorities. The presence of...

While incentive framing has been shown to promote workers’ effort, little is known about how it affects other dimensions of the employer-employee relationship. This paper examines whether incentive framing can also influence workers propensity to engage in an activity disloyal to their...