We prove that the English auction (with bidders that need not be ex ante identical and may have interdependent valuations) has an efficient ex post equilibrium. We establish this result for environments where it has not been previously obtained. We also prove two versions of the...

We conduct two experiements of the claim that people are overconfident. We develop new tests of overplacement which are based on a formal Bayesian model. Our two experiments, on easy quizzes, find overplacement. More precisely, we find apparently overconfident data that cannot be accounted for...

Numerous experiments have demonstrated the possibility of attitude polarization. For instance, Lord, Ross & Lepper (1979) partitioned subjects into two groups, according to whether or not they believed the death penalty had a deterrent effect, and presented them with a set of studies on the...

We propose a model where voters experience an emotional cost when they observe a firm that has displayed insufficient concern for other people's welfare (altruism) in the process of making high profits. Even when there exist few truly altruistic firms, an equilibrium may emerge where all firms...

We observe that countries where belief in the "American dream" (i.e., effort pays) prevails also set harsher punishment for criminals. We know from previous work that beliefs are also correlated with several features of the economic system (taxation, social insurance, etc). Our objective is to...

Many disasters are foreshadowed by insufficient preventative care. In this paper, we argue that there is a true problem of prevention, in that insufficient care is often the result of rational calculations on the part of agents. We identify three factors that lead to dubious efforts in care....

Many studies have shown that people display an apparent overconfidence. In particular, it is common for a majority of people to describe themselves as better-than-average. The literature takes for granted that this better-than-average is problematic. We argue, however, that, even accepting these...

Many studies have shown that people display an apparent overconfidence. In particular, it is common for a majority of people to describe themselves as better than average. The literature takes for granted that this better-than-average effect is problematic. We argue, however, that, even...

Many studies have shown that people display an apparent overconfidence. In particular, it is common for a majority of people to describe themselves as better-than-average. The literature takes for granted that this better-than-average effect is problematic. We argue, however, that, even...

Arrow argues that the biggest failures of economic theory are: our failure to explain the business cycle; the missing explanations for the size of fluctuations of prices; our failure to explain the causes of growth and of the spread of innovation. He then discusses several of the existing...