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Rechts- und Staatswissenschaftliche Fakultät - Jahrgang 2012

 

Titel Overcon dence and Loss Aversion in Economic Decision Making
Autor Mara Ewers
Publikationsform Dissertation
Abstract In chapter one, we ask if reports of private information about skills, abilities or achievements are affected by image concerns. We develop a simple model that illustrates how image utility can lead to misreporting of private information in contexts where truthful reports maximize monetary outcomes. In addition, we test the model's predictions in a controlled lab experiment. In the experiment, all subjects go through a series of quiz questions and subsequently report a performance measure. We vary if reports are made to an audience or not and find evidence for image effects. In the audience treatment, stated reports are significantly higher than in the private treatment. This suggests that overconfident appearance might be a consequence of social approval seeking. We also find that men state higher self-assessments than women. This gender difference seems to be driven by men responding more strongly to the presence of an audience.
Chapter two studies the influence of information on entry choices in a competition with a controlled laboratory experiment. We investigate whether information provision attracts mainly high productivity individuals and reduces competition failure, where competition failure occurs when an individual loses the competition because the opponent holds a higher productivity. In the experiment, subjects face the choice between a competition game and a safe outside option. We analyze subjects’ entry behavior with a benchmark treatment without information and three treatments, where we exogenously manipulate the information on the opponents. Information on the opponent is a promising nudge to raise individuals’ awareness towards the complexity of the decision problem and to update beliefs about success. Our results are, (1) information on the productivity distribution of all potential opponents reduces competition failures by more than 50%, (2) information on the distribution is sufficient, i.e. precise information on the matched opponent’s type does not further diminish failure rates.
In chapter three, we theoretically and experimentally study independent private value auctions in the presence of bidders who are loss averse in the sense of Köszegi and Rabin (2007). In one specification, we consider gains and losses in two dimensions separately, about whether they receive the object or not, and how much they pay (narrow bracketing of gains and losses); in the other specification, we consider gains and losses over the entire risk neutral pay off, i.e. the valuation less the bid (wide bracketing of gains and losses). With wide bracketing, we show that the expected revenue for the auctioneer is higher in the first price auction than in the all pay auction, and with narrow bracketing, we show that the opposite is true for the revenue ranking between the first price auction and the all pay auction. In order to test the theoretical predictions, we conduct laboratory experiments, in which money and a real object is auctioned in both a first price auction and an all pay auction. In both settings, the average revenue is significantly higher in the first price auction, suggesting that bidders may behave according to the one dimensional model, although a real object is auctioned. Whereas our findings are inconsistent with narrow bracketing of gains and losses, they are consistent with wide bracketing of gains and losses.
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© Universitäts- und Landesbibliothek Bonn | Veröffentlicht: 21.12.2012