We develop a framework for categorization in games, applicable both to multistage games of complete information and static games of incomplete information. Players use categories to form coarse beliefs about their opponents' behavior. Players best-respond given these beliefs, as in analogy-based...

The internal control system (ICS) plays a crucial role in safeguarding firms against risks that could hinder the achievement of business objectives. However, implementing an effective ICS in small and medium-sized enterprises (SMEs) poses unique challenges, including a lack of skilled personnel...

We introduce an information provision experiment into a standard dynamic rational inattention model. We derive analytical results about how the treatment effect varies with characteristics of the environment and the individual. We use these results to discuss findings in the empirical literature...

Inadequate financial literacy and overconfidence in financial knowledge, coupled with the use of mobile payments (MPs), may contribute to harmful financial behaviors. While the relationship between financial knowledge confidence and financial behaviors is well documented, there is limited...

Understanding disparities in contest success is central to explaining how competition shapes the distribution of rewards, influence, or market shares. We introduce the Proportional Play Equilibrium (PPE), a boundedly rational alternative to Nash Equilibrium (NE) grounded in the Illusion of...

We introduce an information provision experiment into a standard dynamic rational inattention model. We derive analytical results about how the treatment effect varies with characteristics of the environment and the individual. We use these results to discuss findings in the empirical literature...

People often form mental models based on incomplete information, revising them as new relevant data becomes available. In this paper, we experimentally investigate how individuals update their models when data on predictive variables are gradually revealed. We find that people's models tend to...

Purpose This study aims to elucidate the dynamics of monetary and fiscal policy interactions in Brazil, focusing on the impacts of positive shocks in government consumption and interest rates. By comparing rational and behavioral agent responses, it clarifies how these frameworks influence gross...

Current time allocation and household production models face three major weaknesses: First, they only describe the average time allocation. Thus, information about the order of activities is lost. Therefore, it is impossible to describe the influence of activities on later ones. Such...

We present a geometric approach to the finite Rational Inattention (RI) model, recasting it as a convex optimization problem with reduced dimensionality that is well suited to numerical methods. We provide an algorithm that outperforms existing RI computation techniques in terms of both speed...

We experimentally study how people form predictive models of simple data generating processes (DGPs), by showing subjects data sets and asking them to predict future outputs. We find that subjects: (i) often fail to predict in this task, indicating a failure to form a model, (ii) often cannot...