Through a series of decision tasks involving colored cards, we provide separate measures of Bayesian updating and non-probabilistic reasoning skills. We apply these measures to (and are the first to study) a common-value Dutch auction. This format is more salient than the strategically...

We consider a two-stage game in which firms simultaneously select prices and capacities (or equivalently, outputs). Then, a random number of consumers attend the market, and each consumer selects a firm to visit. Consumers know all prices and quantities but not the realization of aggregate...

We examine price formation in a simple static model with asymmetric information, a countable number of risk neutral traders and without noise traders. Prices can exhibit excess volatility (the variance of prices exceeds the variance of dividends), even in such a simple model. More generally, we...

The Winner s Curse (WC) is a non-equilibrium behavior in common-value auctions involving systematic and persistent overbidding that often results in signi ficant losses. It is one of the most robust fi ndings in laboratory experiments. We developed an auction mechanism with a payment rule that...

This paper reports the results of experiments designed to test (a) whether and to what extent individuals display non-neutral ambiguity attitudes in their choice behavior and (b) if and how do ambiguity attitudes change as a result of interpersonal interactions and persuasion. To address the...

This paper reports the results of a series of experiments designed to test whether and to what extent individuals succumb to the conjunction fallacy. Using an experimental design of Kahneman and Tversky (1983), it finds that given mild incentives, the proportion of individuals who violate the...