121 research outputs found

    The Non-Linear Cournot Model as a Best-Response Potential Game

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    potential function, potential game, Cournot oligopoly

    Impatience, Anticipatory Feelings and Uncertainty: A Dynamic Experiment on Time Preferences

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    We study time preferences in a real-effort experiment with a one-month horizon. We report that two thirds of choices suggest negative time preferences. Moreover, choice reversal over time is common even if temptation plays no role. We propose and measure three distinct concepts of choice reversal over time to study time consistency. This evidence calls for an important role for anticipatory feelings and uncertainty in intertemporal behavior.negative time preferences, choice reversal, risk, time inconsistency, real-effort experiment

    Thinness and Obesity: A Model of Food Consumption, Health Concerns, and Social Pressure

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    The increasing concern of the policy maker about eating behavior has focused on thespread of obesity and on the evidence of a consistent number of individuals dietingdespite being underweight. As the latter behavior is often attributed to the socialpressure to be thin, some governments have already taken actions to ban ultra-thinideals and testimonials. Assuming that people are heterogeneous in their healthyweights, but are exposed to the same ideal body weight, this paper proposes atheoretical framework to assess whether increasing the ideal body weight is sociallydesirable, both from a welfare and from a health point of view. If being overweightis the average condition and the ideal body weight is thin, increasing the ideal bodyweight may increase welfare by reducing social pressure. By contrast, health is onaverage reduced, since people depart even further from their healthy weight. Giventhat in the US and in Europe people are on average overweight, we conclude thatthese policies, even when are welfare improving, may foster the obesity epidemic.Body Weight, Diet, Obesity, Social Pressure, Underweight.

    An experiment on experimental instructions

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    In this paper we treat instructions as an experimental variable. Using a public good game, we study how the instructions' format affects the participants' understanding of the experiment, their speed of play and their experimental behavior. We show that longer instructions do not significantly improve the subjects' understanding of the experiment; on-screen instructions shorten average decision times with respect to on-paper instructions, and requiring forced inputs reduces waiting times, in particular for the slowest subjects. Consistent with cognitive load theory, we find that short, on-screen instructions which require forced inputs improve on subjects' comprehension and familiarity with the experimental task, and they contribute to reduce both decision and waiting times without affecting the overall pattern of contributions.Cognitive load theory, Comprehension, Distraction, Experimental instructions

    On the non existence of cyclical food-consumption patterns in a model of non-addictive eating

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    In a paper previously published in this journal, Levy (2002) [Levy A., 2002, Rational eating: can it lead to overweightness or underweightness? Journal of Health Economics 21, 887.899] presents a model of rational non-addictive eating that is claimed to explain cyclical food-consumption patterns where binges and strict diets alternate. I show that the model admits no oscillation at all, as the unique internal steady state has saddle point stability

    Incoerenza dinamica ed autocontrollo: proposta per un'analisi interdisciplinare

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    In the last 25 years, a vast empirical literature has seriously chal- lenged many assumptions on which the standard microeconomic approach is based. Inspired by this evidence, behavioural economics suggests that a research program that integrates the economic, psychological and neuro- scientific literature can provide a theory of human decision-making with stronger descriptive, predictive and normative power. This interdisci- plinary approach does not necessarily imply abandoning the neoclassical modelling tools and losing analytical tractability. As an example, the evo- lution of the economic theory on intertemporal choice is presented, show- ing that some standard economic assumptions can be viewed as special cases in which self-control and dynamic consistency are always guaran- teed

    Should One Sell Domestic Firms to Foreign Ones? A Tale of Delegation, Acquisition and Collusion

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    In a model of repeated Cournot competition under complete information, I show how the existence of a fringe of managerial firms affects the stability of a cartel of strict profit-maximizing firms. There always exists a critical dimension of the fringe that makes the cartel unstable, and this dimension is non-monotone in the total number of Ă–rms. By appropriately selecting the dimension of the fringe, a policy maker can affect the equilibrium outcome. As an example, I consider the case of a domestic authority that is contemplating whether to allow entry of a fringe of managerial foreign firms in the domestic market to increase the competitive pressure, thereby enhancing domestic welfare

    Endogenous Attention Costs and Intertemporal Decision-Making

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    Recent contributions on intertemporal decision-making and self-control have focused on the impact of cognitive constraints on the way people behave over time. In particular there is evidence on the fact that exerting cognitive effort on the job, adhering to some specific behavioral plan and self-regulating behavior is fatiguing so that, unless sufficient rest is allowed for, the performance on these tasks degrades over time. In this paper I propose an intertemporal decision-making model to determine the optimal path of effort that a worker should exert on a cognitively demanding task. In this environment the worker trades-off current performance with the endogenous accumulation of fatigue; consequently multitasking or exogenous cognitively demanding factors (like stress or noise) play a critical role, and they can induce the decision-maker to optimally take rest-breaks in order to save on the cognitive resources to be used in the future. In the model multiple equilibria and thresholds can emerge, with the consequence that the long-term outcome toward which the agent converges critically hinges on the initial condition of fatigue of the worker. When this is the case, it can be optimal to force the agent to take a rest break, or a holiday, in order to allow her to recover and to converge toward the desirable long-term outcome in which she is more productive and more rested. These results highlight the importance of cognitive constraints in the study of intertemporal behavior and they suggest an alternative explanation for the evidence of preferences for improving consumption profiles and the evidence of (apparent) time-inconsistent behavior. More generally, this paper shows that the assessment of how people evaluate intertemporal utility profiles, on which the economic literature has mainly focused, should be complemented by considering also cognitive constraints, since they may limit the set of feasible paths of behavior that people can implement over time much in a way as a budget constraint limits the set of feasible alternatives in a standard decisionmaking model

    Testing Rational Addiction: When Lifetime is Uncertain, One Lag is Enough

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    The rational addiction model is usually tested by estimating a linear second-order difference Euler equation, which may produce unreliable estimates. We show that a linear first-order difference equation is a better alternative. This empirical specification is appropriate under the reasonable assumption that people are uncertain about the time of their death, it is based on the same structural assumptions used in the literature, and it retains all policy implications of the deterministic rational addiction model. It is also empirically convenient because it is simple, it allows using efficient estimation strategies that do not require instrumental variables, and it is robust to the possible non-stationarity of the data. As an application we estimate the demand for smoking in the US from 1970 to 2016, and we show that it is consistent with the rational addiction model
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