infonet-economy

When markets are incomplete, the competitive equilibria considered so far are not constrained Pareto–efficient, production efficiency breaks down and shareholders no longer agree on the objective function of the firm. We first show by way of an example that these inefficiencies can result from the double role of firms in incomplete markets: providing high market value and providing...

Pay-per-bid auctions are a popular new type of Internet auction that is unique because a fee is charged for each bid that is placed. This paper uses a theoretical model and three large empirical data sets with 44,614 ascending and 1,460 descending pay-per-bid auctions to compare the economic effects of different pay-per-bid auction formats, such as different price increments and...

Neuromodulators such as serotonin, oxytocin, and testosterone play an important role in social behavior. Studies examining the effects of these neuromodulators and others on social cognition and behavior, and their neural underpinnings, are becoming increasingly common. Here, we provide an overview of methodological considerations for those wishing to evaluate or conduct empirical...

In this chapter, we present a set of concepts and tools for defining and examining strategic choice that are drawn from behavioral economics and discuss how they can be applied to and tested with neuroscience techniques. The standard language for studying strategic choice in economics is game theory. Game theory provides concrete mathematical formulas for linking strategic actions to...

In order to choose advantageously in many circumstances, the values of choice alternatives have to be learned from experience. We provide an introduction to theoretical and experimental work on reinforcement learning, that is, trial-and-error learning to obtain rewards or avoid punishments. We introduce one version, the temporal-difference learning model, and review evidence that its...

Risk is an important factor impacting financial decisions. Risk can be processed objectively, e.g. as variance across possible outcomes of a choice option or subjectively, e.g. as value of that variance to a given individual. The aim of the present study was to test the potential of functional near-infrared spectroscopy (fNIRS) in assessing these different ways of processing risk...