Markets quickly converge to equilibrium even under information conditions that are much weaker than specified in theory. Given such conditions, how do firms set prices? We test whether, under weak information conditions, firms employ an aspiration level heuristic for price setting. Analyzing the pricing strategies of 745 used car dealers on the basis of online market data and interviews we find...

In this paper we utilise data from a unique new birth-cohort study to see how the risk preferences of young people are affected by cognitive skills and gender. We find that cognitive ability (measured by the percentile ranking for university entrance at age 18) has no effect on risk preferences measured at age 20. This is in contrast to experimental studies that use IQ measures to proxy cogniti...

The paper studies the determinants of information sharing between Swedish tax authorities and 14 EU tax authorities for value-added tax (VAT) purposes. It is shown that trade-related variables (such as the partner country’s net trade position and population size), reciprocity, and legal arrangements are significant determinants of Sweden’s trade in tax information. Countries that are net export...

A decision maker faces a decision problem, or a game against nature. For each probability distribution over the state of the world (nature’s strategies), she has a weak order over her acts (pure strategies). We formulate conditions on these weak orders guaranteeing that they can be jointly represented by expected utility maximization with respect to an almost-unique state-dependent utility, tha...

Unclear bailout policy, underinvestment and calls for bankers’ responsibility are some of the observations from the recent financial crisis. The paper explains underinvestment as an inefficient equilibrium. Under ambiguous bailout policy agents suffer from a lack of information with regards to the insolvency resolution methods. Beliefs of bankers regarding whether an insolvent bank is liquidate...

Cognitive Skills, Gender and Risk Preferences In this paper we utilise data from a unique new birth‐cohort study to see how the risk preferences of young people are affected by cognitive skills and gender. We find that cognitive ability (measured by the percentile ranking for university entrance at age 18) has no effect on risk preferences measured at age 20. This is in contrast to experimental...

In this article, I investigate how political information affects voting behavior. Specifically, I test (i) if more informed voters are more likely to vote for their closest politicians; and (ii) if this translates into a bias on the aggregate level. To do so, I use a set of Swedish individual survey data on the preferences for local public services of both politicians and voters, which provides...