This paper proposes a general incomplete information framework for studying behavior in strategic games with stepwise (viz. `level-k' or `cognitive hierarchy') thinking, which has been found to describe strategic behavior well in experiments involving players' initial responses to games. It is...

This paper examines how a firm can strategically use sellouts to influence beliefs about its good's popularity. A monopolist faces a market of conformist consumers, whose willingness to pay is increasing in their beliefs about aggregate demand. Consumers are broadly rational but have limited...

Local convergence results for adaptive learning of stochastic steady states in nonlinear models are extended to the case where the exogenous observable variables follow a ?nite Markov chain. The stability conditions for the corresponding nonstochastic model and its steady states yield...

Building on Battigalli and Dufwenberg (2009)'s framework of dynamic psychological games and the recent progress in the modeling of dynamic unawareness, we provide a general framework that allows for `unawareness' in the strategic interaction of players motivated by belief-dependent psychological...

von Neumann Morgenstern utility is generalized to von Neumann Morgenstern preferences. The proof is an application of simple hyperplane theorems.

The strategic commitment moves that game theory predicts players make may sometimes seem counter-intuitive. We therefore conducted an experiment to see if people make the predicted strategic move. The experiment uses a simple bargaining situation. A player can make a strategic move of committing...

We experimentally examine the effects of flexible and fixed prices in markets for experience goods in which demand is driven by trust. With flexible prices, we observe low prices and high quality in competitive (oligopolistic) markets, and high prices coupled with low quality in non-competitive...

This paper analyzes a labor market program which enables workers to leave employment temporarily with a compensation financed by the taxpayers. The main aim of the program was to increase the chances of the unemployed finding a job. However, the empirical analysis reveals a clear negative...

This paper estimates the effect of trust on internet use by studying the general population as well as second generation immigrants in 29 European countries with ancestry in 87 nations. There is a significant positive effect of trust on internet use. The positive trust effect is not universal to...