In this paper, we develop and apply certain tools to evaluate the strengths and weaknesses of dynamic stochastic general equilibrium (DSGE) models. In particular, this paper makes three contributions: One, it argues the need for such tools to evaluate the usefulness of the these models; two, it defines these tools which take the form of prior and particularly posterior predictive analysis and p...

We present a theory of interpersonal economic changes based on three simplest elements: Positive Sum Games, Zero-Sum and Games «with subtraction». This proposal integrates Menger’s Mises’s theories; it includes also the distinction made by Böhm-Bawerk between goods promises. On such ground we comprehensive explanation for boom-burst cycle processes, distinguishing where is damaging character re...

In important situations, individual decision-making is systematically biased. When deciding (rather than consuming), extrinsic attributes of choice options are more salient than intrinsic attributes. People overestimate extrinsic attributes and therefore put too much effort into acquiring income and gaining status, lowering their utility level. These mistakes are accentuated in authoritarian sy...

In many business transactions, in labor-management relations, in international conflicts, and welfare state reforms bargainers hold strong entitlements that are often generated by claims that are not feasible any more. These entitlements seem to considerably shape negotiation behavior. By using the novel setup of a ‘bargaining with claims’ experiment we provide new systematic evidence tracking ...

In important situations, individual decision-making is systematically biased. When deciding (rather than consuming), extrinsic attributes of choice options are more salient than intrinsic attributes. People overestimate extrinsic attributes and therefore put too much effort into acquiring income and gaining status, lowering their utility level. These mistakes are accentuated in authoritarian sy...

In this paper we present an original model of sequential problem choice within scientific communities. Disciplinary knowledge is accumulated in the form of a growing tree-like web of research areas. Knowledge production is sequential since the problems addressed generate new problems that may in turn be handled. This model allows us to study how the reward system in science influences the scien...

We investigate experimentally whether emotions affect bidding behavior in a first price auction. To induce emotions, we confront subjects after a first auction series with a positive or negative random economic shock. We then explore the relation between emotions and bidding behavior in a second auction series. Our main results are: (i) the economic shock has a substantial impact on the experie...

This paper studies children’s behavior in a prisoner’s dilemma game. I attempted to teach children cooperation by means of a short moral lecture. Over the period of 12 months, I experimented with 196 children between the ages of six and eleven. The experimental findings are as follows. (1) In support of the developmental psychology theories, the proportions of cooperation are indeed higher for ...

A Vague Theory of Choice over Time We propose a novel approach to modelling time preferences, based on a cognitive shortcoming of human decision makers: the perception of future events becomes increasingly ‘blurred’ as the events are pushed further in time. We axiomatise a class of preference representations which can be specialised to rationalise ‘anomalies’ such as preference reversals and cy...