Clik here to view.
Does a picture make people more cooperative
In a standard economic experiment the anonymity of subjects is paramount. This is presumably because of a fear that subjects might behave differently if they knew others were 'watching them' in some...
View ArticleClik here to view.
Measuring risk aversion the Holt and Laury way
Attitudes to risk are a key ingredient in most economic decision making. It is vital, therefore, that we have some understanding of the distribution of risk preferences in the population. And ideally...
View ArticleClik here to view.
How to get rid of an incompetent manager?
In a paper, recently published in the International Journal of Game Theory, my wife and I analyze a game called a forced contribution threshold public good game. A nice way to illustrate the game is...
View ArticleBrexit and the Condorcet Paradox
Tomorrow the government will trigger Article 50 and start the formal process of getting the UK out of the EU. So, how did we get in this mess in the first place? I think the Condorcet Paradox provides...
View ArticleClik here to view.
Will a vote for Theresa May strengthen her bargaining hand?
As the run-up to the UK's snap general election continues, the Conservative party appear content to talk about one thing and one thing only - strong and stable leadership for Brexit negotiations....
View ArticleClik here to view.
Risk aversion or loss aversion
Suppose you offer someone called Albert a gamble - if the toss of a coin comes up heads then you pay him £100 and if it comes up tails he pays you £100. The evidence suggests that most people will not...
View ArticleClik here to view.
Culture and dishonesty in banking
The film 'A Good Year' starts with a ruthless financial trader called Max, played by Russell Crowe, manipulating bond markets in order to out-maneuver his competitors and make a quick, big profit....
View ArticleClik here to view.
Honesty around the world
In my last post I looked at dishonesty in the banking industry. Sticking with a similar theme, this time I will at dishonesty across different countries. Let us start with a study by David...
View ArticleRichard Thaler and the Nobel Prize for behavioral economics
Officially, Richard Thaler won the Nobel Prize in Economics because he 'has incorporated psychologically realistic assumptions into analyses of economic decision-making. By exploring the consequences...
View ArticleClik here to view.
Rank dependent expected utility
Prospect theory is most well known for its assumption that gains are treated differently to losses. Another crucial part of the theory, namely that probabilities are weighted, typically attracts much...
View ArticleBehavioral economics or experimental economics
My holiday reading started with the book Behavioral Economics: A History by Floris Heukelom. The book provides a interesting take on how behavioral economics has grown from humble beginnings to the...
View ArticleWould you want to be an expected utility maximizer
I have finally got around to reading Richard Thaler's fantastically wonderful book on Misbehaving. One thing that surprised me in the early chapters is how Thaler backs expected utility theory as the...
View ArticleClik here to view.
How many subjects in an economic experiment?
How many subjects should there be in an economic experiment? One answer to that question would be to draw on power rules for statistical significance. In short, you need enough subjects to be able to...
View ArticleClik here to view.
Cooperation in the infinitely (or indefinitely) repeated prisoners dilemma
One of the more famous and intriguing results of game theory is that cooperation can be sustained in a repeated prisoners dilemma as long as nobody knows when the last game will be played. To set out...
View ArticleClik here to view.
Social value orientation in experimental economics, part I
The basic idea behind social value orientation (SVO) is to gain a snapshot of someone's social preferences. Are they selfish and simply do the best for themselves without caring about the payoff of...
View ArticleContestable markets: Can you have monopoly and perfect competition at the...
Last Sunday the sun was out and the children's playground was full of kids and their families. As usual the ice cream van was nearby with a steady stream of willing customers. Then something...
View ArticleClik here to view.
Experimental evidence on contagion and learning in networks
Using the workplace as an example, consider someone called Jane who interacts with different people over time on collaborative projects. For instance, this week she is working on a project with Sam,...
View ArticleDon't panic. Loss aversion does exist.
A recent paper by David Gal and Derek Rucker in the Journal of Consumer Psychology sets out a strong critique of loss aversion - one of the most 'successful' and basic ideas in behavioural economics....
View ArticleClik here to view.
Social value orientation in economics part 2 - slider method
In a previous blog post I looked at social vale orientation (SVO) and one method to measure it, namely the decomposed game or ring technique. Here I will look at a second way of measuring SVO called...
View ArticleReflections on the Rebuilding Macroeconomics Conference
Last week I had the pleasure of attending the Rebuilding Macroeconomics Conference with a theme of Bringing Psychology and Social Sciences into Macroeconomics. The basic question of the conference...
View ArticleClik here to view.
Have you heard of Berge equilibrium? And should you have?
Recently I refereed a paper on the existence of Berge equilibrium. I must confess that until reading the paper I knew nothing of Berge equilibrium. But in my defence, the equilibrium does not get a...
View ArticleClik here to view.
Is it ever optimal to play a mixed strategy?
In the early days of its (modern) history game theory focused a lot on zero-sum games. These are games in which total payoffs always add to zero no matter what the outcome. So, in a two player setting...
View ArticleClik here to view.
Some estimates of price elasticity of demand
In the textbook on Microeconomics and Behaviour with Bob Frank we have some tables giving examples of price, income and cross-price elasticities of demand. Given that most of the references are from...
View ArticleClik here to view.
Some estimates of income elasticity of demand
My previous blog looked at estimates of own price elasticity of demand. Now the focus moves on to estimates of income elasticity of demand. In a sense income elasticity should be easier to measure than...
View ArticleClik here to view.
Some estimates of cross-price elasticity
The final part of this exciting trilogy is cross-price elasticity. (See here for estimates of own price and income elasticity.) Here we are looking for how demand for one product, say cars, is...
View Article
