The generalized second price (GSP) auction allocates billions of dollars of advertising via position auctions. Theory tells us that the GSP achieves the efficiency of the Vickrey-Clarke-Groves mechanism but with greater revenue, provided better positions increase click-through-rate by the same...

We study an observable risk-return tradeoff for which risk "preferences" are normatively prescribed by the desire to win the game. The choice is whether to shoot a 2-pointer or a 3-pointer in professional (NBA) basketball. When trailing, teams should get more risk-loving as they fall further...

We study how reference dependence and loss aversion motivate highly experienced agents, professional basketball players. Loss aversion predicts losing motivates if the reference point is fixed and losing discourages if it adjusts quickly. We find a “losing motivates effect” so large that an...