In a finitely repeated game with asymmetric information, we experimentally study how individuals adapt the nature of their lies when settings allow for reputation building. Although some lies can be ...detected ex post by the uninformed party, others remain deniable. We find that traditional market mechanisms, such as reputation, generate strong changes in the way people lie and lead to strategies in which individuals can maintain plausible deniability; people simply hide their lies better by substituting deniable lies for detectable lies. Our results highlight the limitations of reputation to root out fraud when a deniable lie strategy is available.
The availability of consumer data is inducing a growing number of firms to adopt more personalized pricing policies. This affects both the performance of, and the competition between, alternative ...distribution channels, which in turn has implications for firms’ distribution strategies. We develop a formal model to examine a brand manufacturer’s choice between mono distribution (selling only through its own direct channel) or dual distribution (selling through an independent retailer as well). We consider different demand patterns, covering both horizontal and vertical differentiation and different pricing regimes, with the manufacturer and retailer each charging personalized prices or a uniform price. We show that dual distribution is optimal for a large number of cases. In particular, this is always the case when the channels are horizontally differentiated, regardless of the pricing regime; moreover, if both firms charge personalized prices, a well-designed wholesale tariff allows them to extract the entire consumer surplus. These insights obtained here for the case of intrabrand competition between vertically related firms are thus in stark contrast to those obtained for interbrand competition, where personalized pricing dissipates industry profit. With vertical differentiation, dual distribution remains optimal if the manufacturer charges a uniform price. By contrast, under personalized pricing, mono distribution can be optimal when the retailer does not expand demand sufficiently. Interestingly, the industry profit may be largest in a hybrid pricing regime, in which the manufacturer forgoes the use of personalized pricing and only the retailer charges personalized prices. This paper was accepted by Joshua Gans, business strategy. Funding: The financial support of the European Research Council under the European Union’s Horizon 2020 research and innovation programme Grant Agreement 670494 and of the Agence nationale de la recherche (ANR) Grant ANITI (ANR Grant 3IA) and Grant CHESS ANR-17-EURE-0010 (Investissements d’Avenir program) is gratefully acknowledged. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4437 .
Unraveling Ambiguity Aversion Aydogan, Ilke; Berger, Loïc; Bosetti, Valentina
The review of economics and statistics,
07/2023
Journal Article
Peer reviewed
Open access
We report the results of two experiments designed to better understand the mechanisms driving decision-making under ambiguity. We elicit individual preferences over different sources of uncertainty, ...entailing different degrees of complexity, from subjects with different sophistication levels. We show that (1) ambiguity aversion is robust to sophistication, but the strong relationship previously reported between attitudes toward ambiguity and compound risk is not. (2) Ellsberg ambiguity attitude can be partly explained by attitudes toward complexity for less sophisticated subjects only. Overall, regardless of the subject's sophistication level, the main driver of Ellsberg ambiguity attitude is a specific treatment of unknown probabilities.
Unraveling Ambiguity Aversion Aydogan, Ilke; Berger, Loïc; Bosetti, Valentina
The review of economics and statistics,
07/2023
Journal Article
Peer reviewed
Open access
Abstract
We report the results of two experiments designed to better understand the mechanisms driving decision-making under ambiguity. We elicit individual preferences over different sources of ...uncertainty, entailing different degrees of complexity, from subjects with different sophistication levels. We show that (1) ambiguity aversion is robust to sophistication, but the strong relationship previously reported between attitudes toward ambiguity and compound risk is not. (2) Ellsberg ambiguity attitude can be partly explained by attitudes toward complexity for less sophisticated subjects only. Overall, regardless of the subject's sophistication level, the main driver of Ellsberg ambiguity attitude is a specific treatment of unknown probabilities.
This paper develops a novel approach to estimate how contract and principal-agent characteristics influence a post-auction outcome when the matching between agents and principals derives from an ...auction process. We propose a control-function approach to account jointly for the endogeneity of contracts and matching. This consists of, first, estimating the primitives of an interdependent values auction model-which is shown to be non-parametrically identified from the bidding data-second, constructing control functions based on the distribution of the unobserved private signals conditional on the auction outcome. A Monte Carlo study shows that our augmented outcome equation corrects the endogeneity biases well, even in small samples. We apply our methodology to a labor market application and estimate the effect of sports players' auction-determined wages on their individual performances. We also use our structural estimates to evaluate the strength of matching inefficiencies and assess counterfactual reservation wage policies.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
This article studies trade-offs of farms in terms of economic sustainability (proxied here by technical efficiency), environmental sustainability (proxied here by farmers’ commitment towards the ...environment) and social sustainability (proxied here by farmers’ contribution to on farm well-being and communities’ well-being). We use the latent class stochastic frontier model and create classes based on three separating variables, representing farms’ environmental sustainability and social sustainability. The application to a sample of Spanish crop farms shows that more environmentally sustainable farms are likely to have lower levels of technical efficiency. However, improvements in social concerns, both towards own farm and the larger community, may lead to improved technical efficiency levels. In general, our study provides evidence of trade-offs for farms between economic sustainability and environmental sustainability, but also between environmental sustainability and social sustainability.
Cet article étudie les compromis des exploitations agricoles en termes de durabilité économique (représentée ici par l'efficacité technique), de durabilité environnementale (représentée ici par l'engagement des agriculteurs envers l'environnement) et de durabilité sociale (représentée ici par la contribution des agriculteurs au bien-être de l'exploitation et des communautés). Nous utilisons le modèle de frontière stochastique à classes latentes et créons des classes basées sur trois variables séparatrices, représentant la durabilité environnementale et la durabilité sociale des exploitations. L'application à un échantillon d'exploitations agricoles espagnoles montre que les exploitations plus durables sur le plan environnemental sont susceptibles d'avoir des niveaux d'efficacité technique plus faibles. Toutefois, l'amélioration des préoccupations sociales, tant à l'égard de l'exploitation elle-même que de la communauté dans son ensemble, peut conduire à une amélioration des niveaux d'efficacité technique. En général, notre étude fournit des preuves de compromis pour les exploitations agricoles entre la durabilité économique et la durabilité environnementale, mais aussi entre la durabilité environnementale et la durabilité sociale.
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DOBA, IZUM, KILJ, NUK, PILJ, PNG, SAZU, SIK, UILJ, UKNU, UL, UM, UPUK
Equal Access to the COVID-19 vaccine for all remains a major public health issue. The current study compared the prevalence of vaccination reluctance in general and COVID-19 vaccine hesitancy and ...social and health factors associated with intentions to receive the vaccine. A random socio-epidemiological population-based survey was conducted in France in November 2020, in which 85,855 adults participants were included in this study. We used logistic regressions to study being "not at all in favor" to vaccination in general, and being "certainly not" willing to get vaccinated against Covid-19. Our analysis highlighted a gendered reluctance toward vaccination in general but even more so regarding vaccination against COVID-19 (OR = 1.88 (95% CI: 1.79–1.97)). We also found that people at the bottom of the social hierarchy, in terms of level of education, financial resources, were more likely to refuse the COVID-19 vaccine (from OR = 1.22 (95% CI:1.10–1.35) for respondents without diploma to OR = 0.52 (95% CI:0.47–0.57) for High school +5 or more years level). People from the French overseas departments, immigrants and descendants of immigrants, were all more reluctant to the Covid-19 vaccine (first-generation Africa/Asia immigrants OR = 1.16 (95% CI:1.04–1.30)) versus OR = 2.19 (95% CI:1.96–2.43) for the majority population). Finally, our analysis showed that those who reported not trusting the government were more likely to be Covid-19 vaccine-reluctant (OR = 3.29 (95% CI: 3.13–3.45)). Specific campaigns should be thought beforehand to reach women and people at the bottom of the social hierarchy to avoid furthering social inequalities in terms of morbidity and mortality.
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DOBA, IZUM, KILJ, NUK, PILJ, PNG, SAZU, SIK, UILJ, UKNU, UL, UM, UPUK
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