This paper presents a simple model in which research universities stock their libraries with academic journals by picking a threshold level of quality below which no subscriptions are ordered. This framework is used to analyze two sets of initiatives aimed at dealing with journal-price...

Under the assumption of perfect competition, it is difficult to avoid the conclusion that abandoned properties and long undeveloped neighborhoods remain that way because they are unprofitable. In contrast, this paper introduces a model in which firms systematically overlook neighborhoods with...

Subjective beliefs and behavior regarding the Prostate Specific Antigen (PSA) test for prostate cancer were surveyed among attendees of the 2006 meeting of the American Economic Association. Logical inconsistency was measured in percentage deviations from a restriction imposed by Bayes’ Rule...

This paper addresses the question of why, in spite of its recent success, behavioral economics does not influence most discussions about how economic policy ought to be made. Failing to penetrate into contemporary discourse on leading policy issues is a serious problem, because behavioral...

Non-response bias refers to the mistake one expects to make in estimating a population characteristic based on a sample of survey data in which, due to non-response, certain types of survey respondents are under-represented. Social scientists often attempt to make inferences about a population...

Behavioral economists increasingly argue that violations of rationality axioms provide a new rationale for paternalism - to “de-bias” individuals who exhibit errors, biases and other allegedly pathological psychological regularities associated with Tversky and Kahneman’s (in Science...

Schelling (1969, 1971a, b, 1978) observed that macro-level patterns do not necessarily reflect micro-level intentions, desires or goals. In his classic model on neighborhood segregation which initiated a large and influential literature, individuals with no desire to be segregated from those who...

We introduce a game theory model of individual decisions to cooperate by contributing personal resources to group decisions versus by free-riding on the contributions of other members. In contrast to most public-goods games that assume group returns are linear in individual contributions, the...

Given free information and unlimited processing power, should decision algorithms use as much information as possible? A formal model of the decision making environment is developed to address this question and provide conditions under which informationally frugal algorithms, without any...

This paper addresses the question of whether the findings of behavioral economics imply that techniques used in cost-benefit analysis should be modified. The findings of behavioral economics considered include the status-quo effect, loss-aversion, overconfidence and hyperbolic discounting. These...