Although neoclassical economic theory predicts that fixed cost magnitude and fixed cost reporting format will not influence short-term pricing decisions, these factors systematically affected pricing decisions in a duopoly experiment. Increasing fixed cost magnitude (a pure sunk cost in this...

Although neoclassical economic theory predicts that fixed cost magnitude and fixed cost reporting format will not influence short-term pricing decisions, these factors systematically affected pricing decisions in a duopoly experiment. Increasing fixed cost magnitude (a pure sunk cost in this...

Game theorists typically assume that changing a game's payoff levels - by adding the same constant to, or subtracting it from, all payoffs - should not affect behavior. While this invariance is an implication of the theory when payoffs mirror expected utilities, it is an empirical question when...