When prospect theory (PT) is applied in a dynamic context, the probability weighting component brings new challenges. We study PT agents facing optimal timing decisions and consider the impact of allowing them to follow randomized strategies. In a continuous-time model of gambling and optimal stopping, Ebert and Strack (2015) show that a naive PT investor with access only to pure strategies nev...

Previous studies have demonstrated that a multitude of options can lead to choice overload, reducing decision quality. Through controlled experiments, we examine sequential choice architectures that enable the choice set to remain large while potentially reducing the effect of choice overload. A specific tournament-style architecture achieves this goal. An alternate architecture in which subjec...

Firms exhibit heterogeneity in size, productivity, and internal structure, and this is true even within the same industry. Our paper provides evidence of a link between an organization’s culture—specifically the trust environment—and its level of specialization. We show experimentally that exogenously imposed culture endogenously leads to variation in organizational form. We prime trust and dem...

A B S T R KMetanol sebagai salah satu bahan kimia dasar dapat digunakan secara langsung campuran bakar untuk internal combustion engines atau baku antara (intermediate chemicals) memproduksi beragam penting seperti formaldehyde, asam asetat, dimethyl ether (DME), dan methyl tertiary butyl (MTBE). PT. KMI metanol dengan gas alam melalui proses steam reforming. Penelitian ini bertujuan mendapatka...

We assemble two reference point based concepts of utility in our empirical study: the own status quo and social comparisons. We explore the relative relevance of these concepts for total compensation as well as for different parts of the compensation package of managers. Making use of a unique panel data set of managers of the German chemical sector, we find that social comparisons of compensat...

Decision making of agents who are members of a society is analyzed from the point of view of quantum decision theory. This generalizes the approach, developed earlier by the authors for separate individuals, to decision making under the influence of social interactions. The generalized approach not only avoids paradoxes, typical of classical decision making based on utility theory, but also exp...

The ability to accurately assess others’ intents, beliefs, and emotions – called Theory of Mind (ToM) – is conjectured to be important for social cooperation. We study the role of ToM ability in fostering cooperation in the simultaneous and sequential prisoners dilemma (PD) games. Our norm-based model predicts that high ToM ability individuals will believe in more cooperation and cooperate at h...

Why Do People Pay for Useless Advice? Implications of Gambler’s and Hot-Hand Fallacies in False-Expert Setting We investigated experimentally whether people can be induced to believe in a non-existent expert, and subsequently pay for what can only be described as transparently useless advice about future chance events. Consistent with the theoretical predictions made by Rabin (2002) and Rabin a...

We conduct a real-effort task experiment where subjects’ performance translates into a donation to a charity. In a within-subjects design we vary the visibility of the donation (no/private/public feedback). Confirming previous studies, we find that subjects’ performance increases, that is, they donate more to charity, when their relative performance is made public. In line with the competitive ...

There is evidence that bidders fall prey to the winner’s curse because they fail to extract information from hypothetical events like winning an auction. This paper investigates experimentally whether bidders in a common value auction perform better when the requirements for this cognitive issue also denoted by contingent reasoning are relaxed, leaving all other parameters unchanged. The overal...