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Is beauty contagious? : how higher-order uncertainty can drive asset prices

Jann, Ole - 2019

I show how irrational ideas and rumors can drive asset prices - not because anyone believes them, but because they are commonly known without being common knowledge. The phenomenon is driven by short-term market participants who are well-informed about the information that others have, and who...

Persistent link: https://www.econbiz.de/10012304729

Public statistics and private experience : varying feedback information in a take-or-pass game

Danz, David; Huck, Steffen; Jehiel, Philippe - 2015

We study how subjects in an experiment use different forms of public information about their opponents' past behavior. In the absence of public information, subjects appear to use rather detailed statistics summarizing their private experiences. If they have additional public information, they...

Persistent link: https://www.econbiz.de/10011437784

Behavioral and experimental macroeconomics and policy analysis : a complex systems approach

Hommes, Cars H. - 2018

This survey discusses behavioral and experimental macroeconomics emphasizing a complex systems perspective. The economy consists of boundedly rational heterogeneous agents who do not fully understand their complex environment and use simple decision heuristics. Central to our survey is the...

Persistent link: https://www.econbiz.de/10011929804

From self-fulfilling mistakes to behavioral learning equilibria

Hommes, Cars H. - 2017

This essay links some of my own work on expectations, learning and bounded rationality to the inspiring ideas of Jean …-Michel Grandmont. In particular, my work on consistent expectations and behavioral learning equilibria may be seen as formalizations of … JMG's ideas of self-fulfilling mistakes. Some of our learning-to-forecast laboratory experiments with human subjects have …

Persistent link: https://www.econbiz.de/10011590425

Litigation Cost Strategies, Settlement Offers and Game Theory

Macey-Dare, Rupert - 2011

Starting with a simple economic model of the value of civil litigation from each side's perspective, this paper analyses a wide range of potential litigation cost strategies, settlement offers and negotiations, together with relevant applications and insights from game theory. Specific issues...

Persistent link: https://www.econbiz.de/10014026078

The Hidden Value of Lying : Evasion of Guilt in Expert Advice

Khalmetski, Kiryl - 2014

I develop a model of strategic communication between an uninformed receiver and a partially informed sender who is averse to lying. The sender's cost of lying is endogenous, depending on the receiver's beliefs induced by the sender's message, rather than on its exogenous formulation. Such...

Persistent link: https://www.econbiz.de/10013062525

Random inspections and periodic reviews : optimal dynamic monitoring

Varas, Felipe; Marinovic, Iván; Skrzypacz, Andrzej - 2018

We study the design of monitoring in dynamic settings with moral hazard. An agent (e.g. a firm) benefits from reputation for quality, and a principal (e.g. a regulator) can learn the agent's quality via costly inspections. Monitoring plays two roles: an incentive role, because outcomes of...

Persistent link: https://www.econbiz.de/10011865082

The credibility of financial reporting : a reputation-based approach

Liang, Ying; Marinovic, Iván; Varas, Felipe - 2017

This paper studies the reliability of financial reporting when the credibility of the manager, represented by his misreporting propensity, is unknown. We show that credibility concerns affect the time-series of reported earnings, book values, and stock prices in ways that seem consistent with...

Persistent link: https://www.econbiz.de/10011646596

Noisy Signaling in Monopoly

Mirman, Leonard J. - 2013

We study the informational role of prices in a stochastic environment. We provide a closed-form solution of the monopoly problem when the price imperfectly signals quality to the uninformed buyers. We then study the effect of noise on output, market price, information flows, and expected...

Persistent link: https://www.econbiz.de/10013093809

Exposita Notes : Bayesian Learning and Convergence to Nash Equilibria Without Common Priors

Nyarko, Yaw - 1998

Consider an infinitely repeated game where each player is characterized by a "type" which may be unknown to the other players in the game. Suppose further that each player's belief about others is independent of that player's type. Impose an absolute continuity condition on the ex ante beliefs...

Persistent link: https://www.econbiz.de/10014060416