2020 - Reprints: Managerial Economics

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Multidimensional reasoning in games: Framework, equilibrium, and applications, American Economic Journal: Microeconomics, 11(3): 285-318, 2019
A. Arad and A. Rubinstein
(Reprint no. 365)
Research no.: 00170100

We develop a framework for analyzing multidimensional reasoning in strategic interactions, which is motivated by two experimental findings: (i) in games with a large and complex strategy space, players tend to think in terms of strategy characteristics rather than the strategies themselves; (ii) in their strategic deliberation, players consider one characteristic at a time. A multidimensional equilibrium is a vector of characteristics representing a stable mode of behavior: a player does not wish to modify any one characteristic. The concept is applied to several economic interactions, where a vector of characteristics, rather than a distribution of strategies, is identified as stable.

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The people’s perspective on libertarian-paternalistic policies, Journal of Law and Economics, 61(2), 311-333, 2018
A. Arad and A. Rubinstein
(Reprint no. 366)
Research no.: 00130100

We examine the views toward libertarian-paternalistic (soft) governmental interventions in a series of online experiments conducted in three countries. We use both standard and new methods to elicit attitudes toward soft interventions in various hypothetical scenarios. The majority of the participants accept these types of interventions by the government. However, a substantial proportion opposes them and would prefer that the government simply provide information to help the public make the right choice rather than use a more effective choice architecture intervention. Some even refuse to make the choice that the government promotes, although they would have done so in the absence of the intervention. The opposition to soft interventions appears to be driven by concerns about manipulation and the fear of a slippery slope to nonconsensual interventions. Opposition to soft interventions is reduced when they are implemented by employers rather than the government.

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Influence of the “benefit of the doubt” in online auctions, Marketing Letters, 30, 245-260, 2019
Y. Steinhart, M. Kamins and D. Mazursky
(Reprint no. 372)
Research no. :  01590100

In online auctions, as well as in other purchase settings, there are conditions when consumers embrace uncertainty instead of avoiding it. In these cases, consumers prefer not to know the true value of a product they are purchasing, thereby enjoying the “benefit of the doubt” that they may have come across an incredible buy. We demonstrate in a field study on eBay and in lab experiments that consumers are more likely to prefer a state of uncertainty regarding the likelihood of knowing an item’s true value (the Benefit-of-the-Doubt effect) when the seller has low rather than high categorical expertise and when it is more difficult to determine the item’s true value. We show that optimism about the true value of the item drives the Benefit-of-the-Doubt effect.  

 

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