78,793 research outputs found
Opinion Polarization by Learning from Social Feedback
We explore a new mechanism to explain polarization phenomena in opinion
dynamics in which agents evaluate alternative views on the basis of the social
feedback obtained on expressing them. High support of the favored opinion in
the social environment, is treated as a positive feedback which reinforces the
value associated to this opinion. In connected networks of sufficiently high
modularity, different groups of agents can form strong convictions of competing
opinions. Linking the social feedback process to standard equilibrium concepts
we analytically characterize sufficient conditions for the stability of
bi-polarization. While previous models have emphasized the polarization effects
of deliberative argument-based communication, our model highlights an affective
experience-based route to polarization, without assumptions about negative
influence or bounded confidence.Comment: Presented at the Social Simulation Conference (Dublin 2017
A Test of the Rational Expectations Hypothesis using data from a Natural Experiment
Data on contestants' choices in Italian Game Show Affari Tuoi are analysed in a way that separates the effect of risk attitude (preferences) from that of beliefs concerning the amount of money that will be offered to contestants in future rounds. The most important issue addressed in the paper is what belief function is actually being used by contestants. The parameters of this function are estimated freely along with the parameters of a choice model. Separate identification of the belief function and preferences is possible by virtue of the fact that at a certain stage of the game, beliefs are not relevant, and risk attitude is the sole determinant of choice. The rational expectations hypothesis is tested by comparing the estimated belief function with the "true" offer function which is estimated using data on offers actually made to contestants. We find that there is a significant difference between these two functions, and hence we reject the rational expectations hypothesis. However, when a simpler "rule-of-thumb" structure is as- sumed for the belief function, we find a correspondence to the function obtained from data on actual offers. Our overall conclusion is that contestants are rational to the extent that they make use of all available relevant information, but are not fully rational because they are not processing the information in an optimal way. The importance of belief-formation is confirmed by the estimation of a mixture model which establishes that the vast majority of contestants are forward-looking as opposed to myopic.Beliefs, Discrete choice models, Method of simulated likelihood, Natural Experiments, rational expectations, risky choice
Price formation in a sequential selling mechanism
This paper analyzes the trade of an indivisible good within a two-stage mechanism, where a seller first negotiates with one potential buyer about the price of the good. If the negotiation fails to produce a sale, a secondâprice sealedâbid auction with an additional buyer is conducted. The theoretical model predicts that with risk neutral agents all sales take place in the auction rendering the negotiation prior to the auction obsolete. An experimental test of the model provides evidence that average prices and profits are quite precisely predicted by the theoretical benchmark. However, a significant large amount of sales occurs already during the negotiation stage. We show that risk preferences can theoretically account for the existence of sales during the negotiation stage, improve the fit for buyersâ behavior, but is not sufficient to explain sellersâ decisions. We discuss other behavioral explanations that could account for the observed deviations
Experimental economics: science or what?
Do we want experimental economics to evolve into a genuine
science? This paper uses the literature on inequity aversion as a case study in
warning that we are at risk of losing the respect of other scientific disciplines if
we continue to accept the wide claims about human behavior that are currently
being advanced without examining either the data from which the claims are
supposedly derived or the methodology employed in analyzing the data
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