Partition-dependent framing effects in lab and field prediction markets

Many psychology experiments show that individually judged probabilities of the same event can vary depending on the partition of the state space (a framing effect called "partition-dependence"). We show that these biases transfer to competitive prediction markets in which multiple informed traders are provided economic incentives to bet on their beliefs about events. We report results of a short controlled lab study, a longer field experiment (betting on the NBA playoffs and the FIFA World Cup), and naturally-occurring trading in macro-economic derivatives. The combined evidence suggests that partition-dependence can exist and persist in lab and field prediction markets

Logistic mixed models to investigate implicit and explicit belief tracking

We investigated the proposition of a two-systems Theory of Mind in adults’ belief tracking. A sample of N = 45 participants predicted the choice of one of two opponent players after observing several rounds in an animated card game. Three matches of this card game were played and initial gaze direction on target and subsequent choice predictions were recorded for each belief task and participant. We conducted logistic regressions with mixed effects on the binary data and developed Bayesian logistic mixed models to infer implicit and explicit mentalizing in true belief and false belief tasks. Although logistic regressions with mixed effects predicted the data well a Bayesian logistic mixed model with latent task- and subject-specific parameters gave a better account of the data. As expected explicit choice predictions suggested a clear understanding of true and false beliefs (TB/FB). Surprisingly, however, model parameters for initial gaze direction also indicated belief tracking. We discuss why task-specific parameters for initial gaze directions are different from choice predictions yet reflect second-order perspective taking

The Error Theory of Contract

Many people have false beliefs about contract doctrine. That pervasive phenomenon has profound practical, theoretical, and normative implications that neither courts nor scholars have recognized. This Article will make three contributions to fill that gap. First, it will establish just how widespread the phenomenon is among non-lawyers. After synthesizing the existing evidence of false beliefs about contract law, it will contribute a new empirical study showing that between one-third and one-half of people falsely believe specific performance rather than damages is the remedy for breach. The Article will then argue that people’s false beliefs about contract doctrine pose a fundamental challenge to prominent promise- and consent-based theories of contract, which serve as the principal theoretical alternative to law and economics theories of contract. Because people have false beliefs about aspects of contract doctrine that affect the value of the contract, the law enforces a bargain materially different from the one to which people thought they agreed. For example, they pay a contract price they think purchases them a guarantee of performance, but the law ultimately provides them only with money damages for breach. People thus did not actually promise or consent to the bargain the law enforces. For that reason, the normative justification for existing contract doctrine cannot be grounded in promise or consent. Finally, the Article will explore the implications of that conclusion for ongoing doctrinal disputes. First, by removing promise or consent as a potential normative basis for contract doctrine, we may finally have grounds to settle long-standing disputes that ultimately depend on our choice of normative foundations about doctrines like consideration, mitigation, and unconscionability. Second, by failing to recognize the phenomenon of legal ignorance, the current debate about boilerplate misunderstood the problem it poses. If people are ignorant of, and, therefore, do not consent to, both boilerplate contract terms and the background law that would apply if boilerplate were not enforced, then refusing to enforce boilerplate does not solve the problem of lack of consent—it simply moves it from a lack of consent to fine-print terms to a lack of consent to gap-filling background law. The problem of the lack of consent is, therefore, one that banning boilerplate cannot solve. Instead, reform should focus on the remaining problem that boilerplate is substantively biased in favor of the firms that draft it. The solution, then, may be to allow boilerplate, but to regulate its content to ensure it offers terms that are not too slanted in the firms’ favor

Łódź Leisure Time Space as Perceived by Liceum Students and Members of the ‘Universities of the Third Age’

The article is a summary of research into the perception of leisure time space, conducted in 2014 among Liceum students (aged 16-19) and members of the ‘Universities of the Third Age’ (U3A) in Łódź. The author compared perceptions of the idea of leisure time by both of these groups, studied how they spent it and described the factors which have a significant influence. Next, he analysed different approaches to the urban space of Łódź as well as comparing them to the spatial range and the types of visited places and events

Original and Derived Judgment An Entrepreneurial Theory of Economic Organization

Recent work links entrepreneurship to the economic theory of firm using the Knightian concept of entrepreneurship as judgment. When judgment is complementary to other assets, and these assets or their services are traded in well-functioning markets, it makes sense for entrepreneurs to hire labor and own assets. The entrepreneur’s role, then, is to arrange or organize the human and capital assets under his control. We extend this Knightian concept of the firm by developing a theory of delegation under Knightian uncertainty. What we call original judgment belongs exclusively to owners, but owners may delegate a wide range of decision rights to subordinates, who exercise derived judgment. We call these employees “proxy-entrepreneurs,” and ask how the firm’s organizational structure — its formal and informal systems of rewards and punishments, rules for settling disputes and renegotiating agreements, means of evaluating performance, and so on — can be designed to encourage forms of proxy-entrepreneurship that increase firm value while discouraging actions that destroy value. Building on key ideas from the entrepreneurship literature, Austrian economics, and the economic theory of the firm we develop a framework for analyzing the tradeoff between productive and destructive proxy-entrepreneurship. We link this analysis to the employment relation and ownership structure, providing new insights into these and related issues in the economic theory of the firm.Judgment, entrepreneur, delegation, employment relation, ownership