We conducted an experiment to describe how social learners use information about the relation between payoffs and behavior. Players chose between twontechnologies repeatedly. Payoffs were random, but one technology was better because its expected payoff was higher. Players were divided into two groups:n1) individual learners who knew their realized payoffs after each choice andn2) social learners, who had no private feedback about their own payoffs, but in each period could choose to learn which behavior had produced the lowestnpayoff among the individual learners or which behavior had produced the highest payoff. When social learners chose to know the behavior producing the highest payoff, a model of imitating this successful behavior matches the data verynclosely. When social learners chose to know the behavior producing the lowest payoff, they tended to choose the opposite behavior in early periods, while increasingly choosing the same behavior in late periods. This kind of rapidntemporal heterogeneity in the use of social information has received little or no attention in the theoretical study of social learning.
It has often been pointed out in the literature that a symbiotic relationship exists betweennterrorist groups and the media. As yet, however, no formal model has been built based on thisnissue and only very little empirical research has been done in this field. The presentncontribution builds a simple game theoretic model, focussing on the social interactionsnbetween terrorists and the media. The model has features of a common-interest-game andnresults in multiple equilibria. After a discussion of the policy implications of the model, annempirical analysis is performed. Using newspaper coverage, terror incidents and terror fatalities data, it is shown that media attention and terrorism do mutually Granger cause eachnother, as predicted by the model. Moreover, it is explained why terror attacks tend to ben“bloodier” in developing countries than in Europe and the United States.
The traditional economic approach to tax evasion does not appear to be particularly successful in explaining the extent of tax compliance. We argue instead that a psychological tax contractnwhich establishes a fiscal exchange between the state and the citizens shapes tax compliance to a large extent. In that respect, a case study of Switzerland is useful because the small size of the cantons and their direct democratic political systems procedurally establish a close exchangenrelationship between taxpayers and tax authorities. In this paper, evidence is discussednon how tax evasion and tax morale in Switzerland evolved over time. In addition, the impact of economic, legal, socio-demographic, psychological and institutional factors on Swiss tax evasion is discussed.
In this paper we present a two period model, where the agent'snpreferences are described by prospect theory as proposed by Kahneman and Tversky. We solve for the agent's portfolio decision. Our findings are that the changes in portfolio weights depend crucially on the reference point and the ratio between the reference point and the current wealth, and thus only indirectly on the performance of the risky asset. Our model explains why investor keep on holding, or even buy, loosing investments.
"In this paper, we propose a decision framework where people are individually asked to either actively consent or dissent to some pro-social behavior. We hypothesize that confronting individuals with the choice of engaging in a specific pro-social behavior contributes to the formation of issue-specific altruistic preferences while simultaneouslyninvolving a commitment. The hypothesis is tested in a large-scale field experiment on blood donation. We find that this ""active-decision"" intervention substantially increases the stated willingness to donate blood, as well as the actual donation behavior of people who have not fully formed preferences beforehand."
STATA ist eine umfangreiche Statistiksoftware, welche sich sowohl zur Verwaltung von umfangreichen Datenbeständen als auch zur statistischen Analyse eignet. Diese kurze Einführungngibt einen ¨Uberblick¨uber die allgemeine Syntax des Programmes sowie die wichtigsten Anweisungen zur Datenaufbereitung und –analyse. Diese Einführung dient der selbstädigen Einarbeitungnin das Programm. Anhand eines Beispieldatensatzes können die meisten der beschriebenennBefehle angewendet und nachvollzogen werden.
Sorting of people on the labor market not only assures the most productive use of valuable skills but also generates individual utility gains if people experience an optimal match between job characteristics and their preferences. Based on individual data on reported satisfaction with life it is possible to assess these latter gains from matching. We introduce a two-equation ordered probit model with endogenous switching and study self-selection into government and private sector jobs. We find considerable gains from matching amounting to an increase in the fraction of very satisfied workers from 53.8 to 58.8 percent relative to a hypothetical random allocationnof workers to the two sectors.
In the television show Affari Tuoi a contestant is endowed with a sealed box containing anmonetary prize between one cent and half a million euros. In the course of the show the contestant is offered to exchange her box for another sealed box with the samendistribution of possible monetary prizes inside. This offers a unique natural laboratory for testing the predictions of expected utility theory versus prospect theory using lotteries with large stakes. While expected utility theory predicts that an individual is exactly indifferent between accepting and rejecting the exchange offer, prospect theory predictsnthat an individual should always reject the exchange offer due to the assumption of loss aversion. We find that the assumption of loss aversion is violated by 46 percent of all contestants in our recorded sample. Thus, contestants do not appear to be predominantly loss averse when dealing with lotteries involving large stakes.
An individual makes random errors when evaluating the expected utility of a risky lottery. Errors are symmetrically distributed around zero as long as an individual does not make transparentnmistakes such as choosing a risky lottery over its highest possible outcome for certain. This stochastic decision theory explains many well-known violations of expected utility theory such as the fourfold pattern of risk attitudes, the discrepancy between certainty equivalent and probability equivalent elicitation methods, the preference reversal phenomenon, the generalizedncommon consequence effect (the Allais paradox), the common ratio effect and the violations of the betweenness.
Stylized facts of empirical assets log-returns include the existence of semi heavy tailedndistributions and a non-linear spectrum of Hurst exponents. Empirical datanconsidered are daily prices from 10 large indices from 01/01/1990 to 12/31/2004. We propose a stylized model of price dynamics which is driven by expectations. The model is a multiplicative random process with a stochastic, state-dependent growth rate which establishes a negative feedback component in the price dynamics. This 0-order modelnimplies that the distribution of log-returns is Laplacian, whose single parameter can be regarded as a measure for the long-time averaged liquidity in the respective market. A comparison with the (more general) Weibull distribution shows that empirical log returns are close to being Laplacian distributed. The spectra of Hurst exponents of both, empirical data and simulated data due to our model, are compared. Due to the finding of non-linear Hurst spectra, the Renyi entropy is considered. An explicit functional form of the RE for an exponential distribution is derived. Theoretical of simulated asset return trails are in good agreement with the estimated from empirical returns.n
