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We investigate costly yet futile attempts at self-control when consumption of a harmful product has a binary breakdown/no-breakdown nature and individuals tend to underestimate their need for self-control. Considering time-inconsistent preferences as well as temptation disutility, we show that...
Persistent link: https://www.econbiz.de/10004992792
Early results of evolutionary game theory showed that the risk dominant equilibrium is uniquely selected in the long run under the best-response dynamics with mutation. Bergin and Lipman (1996) qualified this result by showing that for a given population size, the evolutionary process can select...
Persistent link: https://www.econbiz.de/10009458221
Persistent link: https://www.econbiz.de/10005531883
What is the effect of imports on productivity? To answer this question, we estimate a structural model of producers using product-level import data for a panel of Hungarian manufacturing firms from 1992 to 2001. In our model with heterogenous firms, producers choose to import or purchase...
Persistent link: https://www.econbiz.de/10005497802
The present Paper investigates the effects of incorporating illiquidity in a standard dynamic portfolio choice problem. Lack of liquidity means that an asset cannot be immediately traded at any point in time. We find the portfolio share of financial wealth invested in illiquid assets given the...
Persistent link: https://www.econbiz.de/10005498092
This paper builds a theory of trust based on informal contract enforcement in social networks. In our model, network connections between individuals can be used as social collateral to secure informal borrowing. We de…ne network-based trust as the highest amount one agent can borrow from...
Persistent link: https://www.econbiz.de/10005433170
Persistent link: https://www.econbiz.de/10005408906
We build a model of social capital in networks based on repeated interactions. The strength of a relationship in part derives from the value of transactions it enables in the future. We show that shocks can be amplified through a network multiplier, because trust withdrawal that constrains...
Persistent link: https://www.econbiz.de/10011080602
double-counting.
Persistent link: https://www.econbiz.de/10011080760
We present a theory of individual choice in which the decisionmaker focuses more on, and hence weights more heavily, attributes on which the options in her consideration set are more different. Consistent with evidence on salience in monetary choices, our model predicts that the decisionmaker is...
Persistent link: https://www.econbiz.de/10011081443