Theory and Decision

ISSNs: 0040-5833, 1573-7187

49 found

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  1.  9
    Cost-(in)effective public good provision: an experimental exploration.Nathan W. Chan, Stephen Knowles, Ronald Peeters & Leonard Wolk - 2023 - Theory and Decision 96 (3):397-442.
    This paper investigates the determinants of cost-(in)effective giving to public goods. We conduct a pre-registered experiment to elucidate how factors at the institutional and individual levels shape individual contributions and the cost-effectiveness of those contributions in a novel public good game. In particular, we examine the role of consequential uncertainty over the value of public good contributions (institutional level) as well as individual characteristics like risk and ambiguity attitudes, giving type, and demographics (individual level). We find cost-ineffective contributions in all (...)
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  2.  6
    Differential marginality, inessential games and convex combinations of values.Zeguang Cui, Erfang Shan & Wenrong Lyu - 2023 - Theory and Decision 96 (3):463-475.
    The principle of differential marginality (Casajus in Theory and Decis 71(2):163-–174) for cooperative games is a very appealing property that requires equal productivity differentials to translate into equal payoff differentials. In this paper we apply this property to axiomatic characterizations of values. We show that differential marginality implies additivity and symmetry under certain conditions. Based on this result, we propose new characterizations of the equal division and the equal surplus division values. Finally, we characterize two classes of convex combinations of (...)
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  3.  10
    How sure are you? — the properties of self-reported conviction in the elicitation of health preferences with discrete choice experiments.Michał Jakubczyk & Michał Lewandowski - 2023 - Theory and Decision 96 (3):351-368.
    Discrete choice experiments (DCE) are often used to elicit preferences, for instance, in health preference research. However, DCEs only provide binary responses, whilst real-life choices are made with varying degrees of conviction. We aimed to verify whether eliciting self-reported convictions on a 0–100 scale adds meaningful information to the binary choice. Eighty three respondents stated their preferences for health states using DCE and the time trade-off method (TTO). In TTO, utility ranges were also elicited to account for preference imprecision. We (...)
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  4.  10
    Spillovers and strategic commitment in R&D.Huizhong Liu & Jingwen Tian - 2023 - Theory and Decision 96 (3):477-501.
    This paper considers a one-stage Cournot duopoly of R&D. We characterize the Nash equilibrium of the one-stage game and provide a comparison with the two-stage version of the same Cournot model of R&D/product market competition. We look at R&D expenditures, profits, output and welfare. Under perfect symmetry, the one-stage model always leads to higher profits when the spillover parameter is not equal to 1/2. Moreover, the one-stage model implies more R&D expenditure and higher welfare if and only if the spillover (...)
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  5.  9
    Belief-independence and (robust) strategy-proofness.Michael Müller - 2023 - Theory and Decision 96 (3):443-461.
    An important appeal of strategy-proofness is the robustness that it implies. Under a strategy-proof voting rule, every individual has an optimal strategy independently of the behavior of all other voters, namely truth-telling. In particular, optimal play is robust with respect to the beliefs voters may have about the type and the behavior of the other voters. Following Blin and Satterthwaite (Economet J Economet Soc 45(4):881–888, 1977), we call this logically weaker property “belief-independence.” In this paper, we give a number of (...)
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  6.  19
    Gender differences in temporal stability and decay in stability of trust.Hamza Umer - 2023 - Theory and Decision 96 (3):369-395.
    This study examines the stability of trust and explores whether it differs across men and women using a panel dataset. Data were first collected in 2008 and later in 2019, from 1056 male and 1113 female respondents in the Netherlands. The analysis results suggest that trust is significantly correlated over time, irrespective of gender. Similarly, the subgroup analysis restricted to respondents with low levels of trust in 2008 showed a significant correlation between trust measured in 2008 and that measured in (...)
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  7.  7
    Debreu’s choice model.Pavlo R. Blavatskyy - 2023 - Theory and Decision 96 (2):297-310.
    Debreu (American Economic Review 50:186–188, 1960) famously criticized Luce (Individual choice behavior, Wiley, New York, 1959) choice model with what became known as the red-bus blue-bus example: if a choice set contains two distinct alternatives C (car) and B (blue bus) then adding a third alternative A (red bus) that is essentially identical to B does not affect the choice probability of C but reduces the choice probability of B by half. Debreu’s critique highlights the existence of substitution effects violating (...)
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  8.  8
    1-Convex Extensions of Incomplete Cooperative Games and the Average Value.Martin Černý & Jan Bok - 2023 - Theory and Decision 96 (2):239-268.
    The model of incomplete cooperative games incorporates uncertainty into the classical model of cooperative games by considering a partial characteristic function. Thus the values for some of the coalitions are not known. The main focus of this paper is 1-convexity under this framework. We are interested in two heavily intertwined questions. First, given an incomplete game, how can we fill in the missing values to obtain a complete 1-convex game? Second, how to determine in a rational, fair, and efficient way (...)
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  9.  9
    Social influence in committee deliberation.Chaim Fershtman & Uzi Segal - 2023 - Theory and Decision 96 (2):185-207.
    Committee protocols typically involve a deliberation stage in which members try to influence and convince other regarding the “right” decision. Beyond information exchange, such deliberations also aim to affect the preferences and the votes of other members. Using a model of social influence, we demonstrate how deliberation procedures affect the voting outcome and how different protocols of consultation by committees’ chairs may affect their decisions. We then analyze the ability of a “designer” to control the deliberation protocol and to manipulate (...)
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  10.  15
    Trust towards migrants.Néstor Gandelman & Diego Lamé - 2023 - Theory and Decision 96 (2):311-331.
    Using a standard trust game, we elicit trust and reciprocity measures in a representative sample of adult players in Montevideo, the capital city of Uruguay, a country that received a sizeable influx of Venezuelan and Cuban migrants, has lower internal disparities than other Latin American countries and exhibits relatively better levels of tolerance towards migrants. We find no statistically significant differences in trust levels of Uruguayans towards countrymen versus migrants and mixed results regarding reciprocity, with migrants exhibiting a flatter response (...)
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  11.  13
    Bargaining on monotonic social choice environments.Vincent Martinet, Pedro Gajardo & Michel De Lara - 2023 - Theory and Decision 96 (2):209-238.
    Applying the solutions defined in the axiomatic bargaining theory to actual bargaining problems is a challenge when the problem is not described by its Utility Possibility Set (UPS) but as a social choice environment specifying the set of alternatives and utility profile underlying the UPS. It requires computing the UPS, which is an operational challenge, and then identifying at least one alternative that actually achieves the bargained solution’s outcome. We introduce the axioms of Independence of Non-Strongly-Efficient Alternatives (resp. Weakly) and (...)
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  12.  6
    Dynamic decision-making when ambiguity attitudes depend on exogenous events.Olivier Renault, Meglena Jeleva & Johanna Etner - 2023 - Theory and Decision 96 (2):269-295.
    The aim of this paper is to propose a preferences representation model where ambiguity attitudes can be exogenous events or past experience-dependent. We adapt the Recursive Smooth Ambiguity model proposed by Klibanoff (Journal of Economic Theory 144:930-976, 2009) by introducing past experience described by a sequence of neutral events occurring up to the moment of the decision. These neutral events do not provide any information on the true process, but are likely to strengthen or weaken the decision-maker’s ambiguity aversion degree (...)
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  13.  6
    Exploiting homogeneity in games with non-homogeneous revenue functions.Antoni Rubí-Barceló & Walter Ferrarese - 2023 - Theory and Decision 96 (2):333-349.
    We exploit the properties of homogeneous functions to characterize the symmetric pure-strategy Nash equilibria of n-player symmetric games in which each player’s revenue function is not homogeneous but it can be decomposed into the sum of homogeneous functions with different degrees of homogeneity. Our results aim to provide a pathway for an easy computation of symmetric equilibria for this type of games. We discuss our results in a Cournot game, a contest game, and a public good game.
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  14.  15
    Harmonic choice model.Pavlo R. Blavatskyy - 2023 - Theory and Decision 96 (1):49-69.
    For decades, discrete choice modelling was practically dominated by only two models: multinomial probit and logit. This paper presents a novel alternative—harmonic choice model. It is qualitatively similar to multinomial probit and logit: if one choice alternative greatly exceeds all (falls below at least one of) other alternatives in terms of utility then it is chosen with probability close to one (zero). Compared to probit and logit, the new model has relatively flat tails and it is steeper in the neighborhood (...)
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  15.  8
    The lattice of envy-free many-to-many matchings with contracts.Agustin G. Bonifacio, Nadia Guiñazú, Noelia Juarez, Pablo Neme & Jorge Oviedo - 2023 - Theory and Decision 96 (1):113-134.
    We study envy-free allocations in a many-to-many matching model with contracts in which agents on one side of the market (doctors) are endowed with substitutable choice functions and agents on the other side of the market (hospitals) are endowed with responsive preferences. Envy-freeness is a weakening of stability that allows blocking contracts involving a hospital with a vacant position and a doctor that does not envy any of the doctors that the hospital currently employs. We show that the set of (...)
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  16.  11
    Bounded rationality for relaxing best response and mutual consistency: the quantal hierarchy model of decision making.Benjamin Patrick Evans & Mikhail Prokopenko - 2023 - Theory and Decision 96 (1):71-111.
    While game theory has been transformative for decision making, the assumptions made can be overly restrictive in certain instances. In this work, we investigate some of the underlying assumptions of rationality, such as mutual consistency and best response, and consider ways to relax these assumptions using concepts from level-k reasoning and quantal response equilibrium (QRE) respectively. Specifically, we propose an information-theoretic two-parameter model called the quantal hierarchy model, which can relax both mutual consistency and best response while still approximating level-k, (...)
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  17.  9
    Who accepts Savage’s axiom now?Steven J. Humphrey & Nadia-Yasmine Kruse - 2023 - Theory and Decision 96 (1):1-17.
    We report the results of an experimental test of whether preaching the normative appeal of the sure-thing principle leads decision-makers to make choices that satisfy it. We use Allais-type decision problems to observe the incentive-compatible choices of 147 subjects, which either violate the sure-thing principle or adhere to it. Subjects are presented with normative arguments that support the counterfactual behaviour and then repeat their decisions. We observe violations of the sure-thing principle are robust to its normative justification. This result replicates (...)
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  18.  8
    The leveling axiom.Leo Katz & Alvaro Sandroni - 2023 - Theory and Decision 96 (1):135-152.
    We characterize general constraints under which rational choices are characterized by asymmetric revealed preferences. A key feature of our main characterization result is expressed by the leveling axiom. We also consider the special case of a law-abiding decision maker who chooses optimally among legal options. We show that the law does not necessarily satisfy the leveling axiom and, therefore, transitivity adds empirical content to law-abiding choices.
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  19.  9
    Compassion and envy in distributional comparisons.Flaviana Palmisano - 2023 - Theory and Decision 96 (1):153-184.
    Normative-based distributional comparisons across countries and over time build upon the assumption that individuals are selfish. However, there is a consolidated evidence that individuals also care about what others have. In this paper, we propose a framework for comparing and ranking distributions that includes non-individualistic possibilities. Specifically, we consider ranking criteria that account, in one case, for the feeling of compassion and, in the other case, for the feeling of envy. These feelings are generated respectively by those having lower resources (...)
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  20.  8
    The value of information under ambiguity: a theoretical and experimental study on pest management in agriculture.Pascal Toquebeuf, Sabrina Teyssier, Stéphane Lemarié & Stéphane Couture - 2023 - Theory and Decision 96 (1):19-47.
    This article addresses the value of information that affects the ambiguity faced by a decision maker. Our analysis is applied to the case of a farmer whose production can be damaged by a pest attack with unknown probability, this damage being reduced if the farmer decides to use a pesticide. Early warning systems have precisely been implemented in many countries to help farmers avoid inappropriate decisions in terms of pesticide use. We investigate, both theoretically and experimentally, how farmers value these (...)
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  21.  16
    Meta-Inductive Probability Aggregation.Christian J. Feldbacher-Escamilla & Gerhard Schurz - 2023 - Theory and Decision 95 (4):663-689.
    There is a plurality of formal constraints for aggregating probabilities of a group of individuals. Different constraints characterise different families of aggregation rules. In this paper, we focus on the families of linear and geometric opinion pooling rules which consist in linear, respectively, geometric weighted averaging of the individuals’ probabilities. For these families, it is debated which weights exactly are to be chosen. By applying the results of the theory of meta-induction, we want to provide a general rationale, namely, optimality, (...)
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  22.  7
    Multiattribute regret: theory and experimental study.Yoichiro Fujii, Hajime Murakami, Yutaka Nakamura & Kazuhisa Takemura - 2023 - Theory and Decision 95 (4):623-662.
    This paper generalizes the simple regret model by Bell in Operations Research 30(5), 961-981 and Loomes and Sugden in The Economic Journal 92(368), 805-824 to cope with the situation in which decision outcomes are multi-attributed. We propose a model that combines the simple regret model for ex ante preferences and the additive difference representation for ex post preferences. We first present a necessary and sufficient axiomatization of our model in Savage’s framework. The proposed model is composed of three types of (...)
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  23.  8
    The precautionary principle when project implementation capacity is congestible.Anthony Heyes & Sandeep Kapur - 2023 - Theory and Decision 95 (4):691-711.
    The precautionary principle justifies postponing the implementation of development projects to await better information about their environmental impacts. But if implementation capacity is congestible, as is often the case in practical settings, a postponed project may have to vie for implementation priority with projects that arrive later. Limitations of implementation capacity create two risks. First, it may sometimes not make sense to go back to a postponed project, even if it is later revealed to be a good one. Second, the (...)
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  24.  7
    A new axiomatization of discounted expected utility.Berenice Anne Neumann & Marc Oliver Rieger - 2023 - Theory and Decision 95 (4):515-537.
    We present a new axiomatization of the classical discounted expected utility model, which is primarily used as a decision model for consumption streams under risk. This new axiomatization characterizes discounted expected utility as a model that satisfies natural extensions of standard axioms as in the one-period case and two additional axioms. The first axiom is a weak form of time separability. It only requires that the choice between certain constant consumption streams and lotteries should be made by just taking into (...)
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  25.  5
    On the Ellsberg and Machina paradoxes.Keiran Sharpe - 2023 - Theory and Decision 95 (4):539-573.
    This paper constructs a simple model of decision-making that accounts for the paradoxes of Ellsberg and Machina. It does so by representing decision makers’ beliefs on the vector space $${\mathbb{R}}\times {\mathbb{R}}$$ R × R and by providing a reasonable decision rule with axiomatic foundations. Moreover, the model allows for a characterization that clearly distinguishes between the two paradoxes. The interesting feature of the paper is that the ‘resolution’ of the paradoxes is along the lines suggested by the eponymous authors themselves. (...)
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  26.  58
    Acting on belief functions.Nicholas J. J. Smith - 2023 - Theory and Decision 95 (4):575-621.
    The degrees of belief of rational agents should be guided by the evidence available to them. This paper takes as a starting point the view—argued elsewhere—that the formal model best able to capture this idea is one that represents degrees of belief using Dempster–Shafer belief functions. However degrees of belief should not only respect evidence: they also guide decision and action. Whatever formal model of degrees of belief we adopt, we need a decision theory that works with it: that takes (...)
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  27.  9
    Axiomatic characterizations of the constrained probabilistic serial mechanism.Mustafa Oğuz Afacan - 2023 - Theory and Decision 95 (3):465-484.
    Afacan (Games and Economic Behavior 110: 71-89, 2018) introduces an object allocation with random priorities problem. He proposes the constrained probabilistic serial (CPS) mechanism. This study, for the first time in the literature, provides axiomatic characterizations of CPS. The first result characterizes it via non-wastefulness, claimwise stability, constrained ordinal fairness, and surplus invariance to truncations. The other axiomatizes CPS via constrained stochastic efficiency, claimwise stability, and constrained ordinal fairness. The independence of the axioms is provided.
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  28.  5
    An experimental investigation of social risk preferences for health.Arthur E. Attema, Olivier L’Haridon & Gijs van de Kuilen - 2023 - Theory and Decision 95 (3):379-403.
    In this paper, we use the risk apportionment technique of Eeckhoudt, Rey and Schlesinger (2007) to study higher order risk preferences for others’ health as well as ex-ante and ex-post inequality preferences for social risky distributions, and their interaction. In an experiment on a sample of university students acting as impartial spectators, we observe risk aversion towards social health losses and a dislike of ex-ante inequality. In addition, evidence for ex-post inequality seeking is much weaker than evidence for ex-ante inequality (...)
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  29.  10
    Socially interdependent risk taking.Alexandros Karakostas, Giles Morgan & Daniel John Zizzo - 2023 - Theory and Decision 95 (3):365-378.
    We report the results of an experiment on how individual risk taking clusters together when subjects are informed of peers’ previous risk taking decisions. Subjects are asked how much of their endowment they wish to allocate in a lottery in which there is a 50% chance the amount they invest will be tripled and a 50% chance their investment will be lost. We use a 2 × 2 factorial design varying: (i) whether the subjects initially observed high or low investment (...)
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  30.  9
    Punishing the weakest link - Voluntary sanctions and efficient coordination in the minimum effort game.Fabrice Le Lec, Astrid Matthey & Ondřej Rydval - 2023 - Theory and Decision 95 (3):429-456.
    Using a laboratory experiment, we examine whether voluntary sanctions induce subjects to coordinate more efficiently in a repeated minimum-effort game. While most groups first experience Pareto inferior coordination in a baseline treatment, the level of effort increases substantially once ex post sanctioning opportunities are introduced, that is, when one can assign costly punishment points to other group members to reduce their payoffs. We compare the effect of this voluntary punishment possibility with the effect of ex post costless communication, which in (...)
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  31.  12
    Reasonable doubt.Liqun Liu - 2023 - Theory and Decision 95 (3):485-514.
    We study the strategic interactions within testing in a model of political agency. A principal decides between convicting and acquitting an agent of unknown innocence based on a noisy signal that is manipulable by the agent’s unobserved actions. We identify conditions under which the principal sets a threshold conviction strategy in the form of “beyond a reasonable doubt.” We show that, in spite of strategic concerns, the amount of information that a principal can glean from the test is entirely determined (...)
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  32.  7
    Voluntary play increases cooperation in the presence of punishment: a lab in the field experiment.Francesca Pancotto, Simone Righi & Károly Takács - 2023 - Theory and Decision 95 (3):405-428.
    Problems of cooperation have often been simplified as the choice between defection and cooperation, although in many empirical situations it is also possible to walk away from the interaction. We present the results of two lab-in-the-field experiments with a diverse pool of subjects who play optional and compulsory public goods games both with and without punishment. We find that the most important institution to foster cooperation is punishment, which is more effective in a compulsory game. In contrast to Rand and (...)
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  33.  11
    The Nash bargaining solution: sometimes more utilitarian, sometimes more egalitarian.Shiran Rachmilevitch - 2023 - Theory and Decision 95 (3):457-464.
    The first-order condition of the Nash bargaining solution equates the ratio of utilities to the ratio of marginal utilities. It turns out that this common ratio plays a role in determining whether the Nash solution, roughly speaking, is “more utilitarian” or “more egalitarian.” More specifically, I propose a sense of proximity to utilitarianism and/or egalitarianism according to which, in bargaining problems with distinct utilitarian and egalitarian points, the Nash solution is closer to utilitarianism if the aforementioned ratio is smaller than (...)
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  34.  9
    Social evaluation functionals with an arbitrary set of alternatives.Juan C. Candeal - 2023 - Theory and Decision 95 (2):255-271.
    This paper explores the concept of a social evaluation functional in the case of an arbitrary set of alternatives. In the first part, a characterization of projective social evaluations functionals is shown whenever the common restricted domain is the set of all bounded utility functions equipped with the supremum norm topology. The result makes a crucial use, among others, of a continuity axiom. In the second part, a comparison meaningful property is introduced for a social evaluation functional which allows us (...)
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  35.  11
    On the possibility of Paretian liberalism: a comment.Wulf Gaertner - 2023 - Theory and Decision 95 (2):361-363.
    In 1981, the property of self-supporting preferences was shown to be a sufficient condition to circumvent Sen’s famous impossibility result on Paretian liberalism. A similar condition was proposed by Dougherty and Edward in a very recent issue of this journal. The present comment sheds light on the logical connection between these two findings.
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  36.  9
    Games with possibly naive present-biased players.Marco A. Haan & Dominic Hauck - 2023 - Theory and Decision 95 (2):173-203.
    We propose a solution concept for games that are played among players with present-biased preferences that are possibly naive about their own, or about their opponent’s future time inconsistency. Our perception-perfect outcome essentially requires each player to take an action consistent with the subgame perfect equilibrium, given her perceptions concerning future types, and under the assumption that other present and future players have the same perceptions. Applications include a common pool problem and Rubinstein bargaining. When players are naive about their (...)
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  37.  8
    Possibilistic beliefs in strategic games.Jaeok Park & Doo Hyung Yun - 2023 - Theory and Decision 95 (2):205-228.
    We introduce possibilistic beliefs into strategic games, describing a player’s belief about his opponents’ strategies as the set of their strategies he regards as possible. We formulate possibilistic strategic games where each player has preferences over his own strategies conditional on his possibilistic belief about his opponents’ strategies. We define several solution concepts for possibilistic strategic games such as (strict) equilibria, rationalizable sets, iterated elimination of never-best responses, and iterated elimination of strictly dominated strategies, and we study their properties and (...)
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  38.  9
    On the predictions of cumulative prospect theory for third and fourth order risk preferences.Ivan Paya, David A. Peel & Konstantinos Georgalos - 2023 - Theory and Decision 95 (2):337-359.
    In this paper, we analyse higher-order risky choices by the representative cumulative prospect theory (CPT) decision maker from three alternative reference points. These are the status quo, average payout and maxmin. The choice tasks we consider in our analysis include binary risks, and are the ones employed in the experimental literature on higher order risk preferences. We demonstrate that the choices made by the representative subject depend on the reference point. If the reference point is the status quo and the (...)
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  39.  13
    Care and anger motives in social dilemmas.Patrick Ring, Christoph A. Schütt & Dennis J. Snower - 2023 - Theory and Decision 95 (2):273-308.
    This paper provides evidence for the following novel insights: (1) People’s economic decisions depend on their psychological motives, which are shaped predictably by the social context. (2) In particular, the social context influences people’s other-regarding preferences, their beliefs and their perceptions. (3) The influence of the social context on psychological motives can be measured experimentally by priming two antagonistic motives—care and anger—in one player towards another by means of an observance or a violation of a fairness norm. Using a mediation (...)
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  40.  13
    Bargaining for assembly.Soumendu Sarkar & Dhritiman Gupta - 2023 - Theory and Decision 95 (2):229-254.
    We study a multilateral bargaining problem, where the buyer intends to purchase a subset of available items, each owned by a seller. The subset purchased must satisfy a notion of contiguity, which is modeled using graphs. The graph theoretic approach allows us to study different degrees of complementarity and substitutability between items. It also allows us to examine how degrees of complementarity and substitutability affect the share of surplus obtained by the buyer in the equilibrium of the bargaining game. We (...)
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  41.  15
    Rationalizable behavior in the Hotelling–Downs model of spatial competition.Joep van Sloun - 2023 - Theory and Decision 95 (2):309-335.
    We consider two scenarios of the Hotelling–Downs model of spatial competition. This setting has typically been explored using pure Nash equilibrium, but this paper uses point rationalizability (Bernheim, Econometrica J Economet Soc 52(4):1007–1028, 1984) instead. Pure Nash equilibrium imposes a correct beliefs assumption, which may rule out perfectly reasonable choices in a game. Point rationalizability does not have this correct beliefs assumption, which makes this solution concept more natural and permissive. The first scenario is the original Hotelling–Downs model with an (...)
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  42.  7
    Evaluating opportunities when more is less.Yukinori Iwata - 2023 - Theory and Decision 95 (1):109-130.
    There exists psychological evidence that consumers do not consider all available items in the market, which can lead to the “more-is-less” effect, a phenomenon where having more options causes a welfare reduction (Llears et al. in J Econ Theory 170:70–85, 2017). Under this more-is-less effect, we face a dilemma that adding new opportunities may both improve and worsen individual well-being. This study proposes a hypothesis that “more is always better,” which implies that adding new opportunities cannot worsen individual well-being, is (...)
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  43.  17
    Asymmetric guessing games.Zafer Akin - 2023 - Theory and Decision 94 (4):637-676.
    This paper theoretically and experimentally investigates the behavior of asymmetric players in guessing games. The asymmetry is created by introducing r>1\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$r>1$$\end{document} replicas of one of the players. Two-player and restricted N-player cases are examined in detail. Based on the model parameters, the equilibrium is either unique in which all players choose zero or mixed in which the weak player (r=1\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$r=1$$\end{document}) imitates the strong (...)
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  44.  23
    On stability of economic networks.Hamid Beladi, Xiao Luo, Reza Oladi & Nicholas S. P. Tay - 2023 - Theory and Decision 94 (4):677-691.
    In the spirit of Von Neumann and Morgenstern (Theory of games and economic behavior, Princeton University Press, Princeton, 1944), we introduce a notion of network stability. We study the structure of stable economic networks and their associated stable payoff allocations by analyzing the conditions under which complete networks and star networks (both with desirable property of inclusiveness) are stable. We also address conditions for existence and uniqueness of stable set of networks.
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  45.  20
    Prospect theory in multiple price list experiments: further insights on behaviour in the loss domain.Géraldine Bocquého, Julien Jacob & Marielle Brunette - 2023 - Theory and Decision 94 (4):593-636.
    In the theoretical description of prospect theory, distinct sets of parameters can control the curvature of the value function and the shape of the probability weighting function. There is one for the gain domain and one for the loss domain. However, in most estimations, behaviour over losses is assumed to perfectly reflect behaviour over gains, through a unique set of parameters. We examine the consequences of relaxing this simplifying assumption in the context of Tanaka et al.’s (Am Econ Rev 100(1):557–571, (...)
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  46.  22
    Rationality applied: resolving the two envelopes problem.Christian Hugo Hoffmann - 2023 - Theory and Decision 94 (4):555-573.
    The Two Envelopes Problem is a beautiful and quite confusing problem in decision theory which is ca. 35 years old and has provoked at least 150 papers directly addressing the problem and displaying a surprising variety of different responses. This paper finds decisive progress in an approach of Priest and Restall in 2003, contends that the recent papers having appeared since did not really go beyond that paper, argues further that Priest’s and Restall’s solution is still not complete, and proposes (...)
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  47.  17
    Hold-up induced by demand for fairness: theory and experimental evidence.Raghabendra Pratap Kc, Dominique Olié Lauga & Vincent Mak - 2023 - Theory and Decision 94 (4):721-750.
    Research in recent years suggests that fairness concerns could mitigate hold-up problems. In this study, we report theoretical analysis and experimental evidence on an opposite possibility: that fairness concerns could also induce hold-up problems. In our setup, hold-up problems will not occur with purely self-interested agents, but theoretically could be induced by demand for distributional fairness among agents without sufficiently strong counteracting factors such as intention-based reciprocity. We observe a widespread occurrence of hold-up in our experiment. Relationship-specific investments occurred less (...)
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  48.  18
    A Misfit model: irrational deterrence and bounded rationality.Karl Sörenson - 2023 - Theory and Decision 94 (4):575-591.
    Contemporary theories of deterrence place a strong emphasis on coherency between model and theory. Schelling’s contention of irrational threats for successful deterrence abandons the rationality assumption to explain how a player can deter, thereby departing from the standard game theoretic solution concepts. It is a misfit model in relation to a deterrence theory and, therefore, excluded. The article defends and remodels Schelling’s intuition by employing the level-k model. It is shown that an unsophisticated player that randomizes over its strategies brings (...)
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  49.  9
    When punishers might be loved: fourth-party choices and third-party punishment in a delegation game.Yuzhen Li, Jun Luo, He Niu & Hang Ye - 2023 - Theory and Decision 94 (3):423-465.
    Third-party punishment (TPP) has been shown to be an effective mechanism for maintaining human cooperation. However, it is puzzling how third-party punishment can be maintained, as punishers take on personal costs to punish defectors. Although there is evidence that punishers are preferred as partners because third-party punishment is regarded by bystanders as a costly signal of trustworthiness, other studies show that this signaling value of punishment can be severely attenuated because third-party helping is viewed as a stronger signal of trustworthiness (...)
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