We run a laboratory experiment that contributes to the finance literature on "return chasing behavior" studying how investors switch between mutual funds driven by past performance of the funds. The subjects in this experiment make discrete choices between several (2, 3 or 4) experimental funds...

This experiment compares the price dynamics and bubble formation in an asset market with a price adjustment rule in three treatments where subjects (1) submit a price forecast only, (2) choose quantity to buy/sell and (3) perform both tasks. We find that bubbles emerge in all these treatments,...

Recent studies suggest that the type of strategic environment or expectation feedback may have a large impact on whether the market learns the rational fundamental price. We present an experiment where the fundamental price experiences large unexpected shocks. Markets with negative expectation...

Rational Expectations (RE) models have two crucial dimensions: 1) agents correctly forecast future prices given all available information, and 2) given expectations, agents solve optimization problems and these solutions in turn determine actual price realizations. Experimental testing of such...

In this paper we want to analyze the internal divisional structure within an organi-zation in the framework of incomplete contract theory. We use the framework of Aghionand Tirole (1997) and define the managerial control structure as \sequence of search".A key feature of this paper which...

This article provides two application of incomplete contract theory to real life problems. In the privatization of public service sectors, we show that the coexistence of private and public ownership is better than either privatizing all firms or let all of them to stay un-privatized, because...

Modern economic development is accompanied by the structural transformation from an agrarian to an industrial economy. Since the 18th century, all countries that industrialized successfully have followed their comparative advantages and leveraged the latecomer advantage, including emerging...

In den vergangenen drei Dekaden haben die ostasiatischen Ökonomien als Gruppe ständig andere Entwicklungsregionen in ihrem Wirtschaftswachstum übertroffen. Die Autoren gehen vor diesem Hintergrund der Frage nach, inwieweit sich die Wirtschaftspolitik der ostasiatischen Regierungen von...