We consider guilt averse agents and principals and study the effects of guilt on optimal behavior of the principal and the agent in a moral hazard model. The principal's contract proposal contains a target effort in addition to the monetary incentive scheme. By accepting the agreement, the...

In line with the widely applied principle of just deserts, we assume that the severity of the penalty on a contract offender increases in the harm on the other. When this principle holds, the influence of the efficiency of the agreement on the incentives to abide by it crucially depends on...

Recent literature has questioned the existence of a learning foundation for the partially cursed equilibrium. This paper closes the gap by showing that a partially cursed equilibrium corresponds to a particular analogy-based expectation equilibrium.

Most research in economics models agents somehow motivated by outcomes. Here, we model agents motivated by procedures instead, where procedures are defined independently of an outcome. To that end, we design procedures which yield the same expected outcomes or carry the same information on...

The privatisation process that began in Finland in the 1980s has continued during the past decade. Finnish state-owned companies are going through a strong reforming process. This survey looks at the changes in their objective setting. It also compares the changes to those that are privately...

Distributive justice principles are commonly used in societal debates to support policy positions and argue for their legitimacy. Prominent formal incarnations of such principles are the Rawlsian, Utilitarian, Efficient transfer (e.g. Pigou-Dalton), and Leaky-bucket transfer (e.g. Hammond)...

We theoretically investigate the effects of strategic pre-commitment in multilateral dynamic bargaining. Each round features a commitment stage in which players can declare that they will reject any proposal giving them less than a self-imposed threshold. Such declarations bind in the ensuing...

Received wisdom holds that income rank matters for life satisfaction. In much of the literature, however, income comparisons are limited to the national population and evidence is correlational. In this paper, we investigate differences in the causal effects of rank information across reference...

We theoretically investigate how the application of unanimity rule can lead to inefficient delay in collective decision making. We do so in the context of a distributive multilateral bargaining model featuring strategic pre-commitment. Prior to each bargaining round, players can declare a...

Received wisdom holds that income rank matters for life satisfaction. In much of the literature, however, income comparisons are limited to the national population and evidence is correlational. In this paper, we investigate differences in the causal effects of rank information across reference...