Essays on contract theory and behavioral economics

It is found that his research program is broadly compatible with and finds support in most of the latest findings of behavioral and experimental economics, even though his inferences were largely based on "subjective impressions" rather than rigorous scientific studies.

Social Contract Theory Essays (Examples)

The presence of this "rent extractor" boss may solve the free-rider problem in team production if: The model assumes that people have preferences over their own attributes and can, to some extent, manipulate their memories. Some titles may also be available free of charge in our Open Access Dissertation Collectionso please check there first.

The main result suggests that the endogenous creation of heterogeneous marginal benefits when a productive boss is present generates the highest levels of contribution when punishment is not allowed, and that the collective action problem is solved completely when this productive boss Essays on contract theory and behavioral economics to divide output equally.

Chapter 1 proposes a model of choice under risk based on imperfect memory and self-deception. The model also produces testable implications consistent with evidence on the GED: Chapter 3 is based on a joint work with Aloisio Araujo and Humberto Moreira.

Chapter 2 develops a model of competition with non-exclusive contracts in a market where consumers are time-inconsistent. The model implies that behavior will converge to the one predicted by expected utility theory after a choice has been made a sufficiently large number of times.

The model is employed to study countersignalling signals nonmonotonic in ability and the GED exam. The workers face a "rent extractor" boss who selects in advance the fraction of total output that she wants to receive from them.

It leads to a non-expected utility representation and provides a unified explanation for several empirical regularities: The second essay is an experimental study on team production that compares the levels of contribution to a group project when workers face different types of bosses.

It also leads to endowment and sunk cost effects. Any function from the space of types to the space of actions and an increasing transfer schedule can be rationalized as an equilibrium profile of many signaling models.

It claims that Keynes was deeply conscious of the necessity to incorporate realistic behavioral assumptions in macroeconomic models that deal with judgment under uncertainty.

Apart from the monotonicity of transfers in actions, I obtain an additional necessary and sufficient condition in the case of screening. Non-UMass Amherst users, please click the view more button below to purchase a copy of this dissertation from Proquest.

Massachusetts Institute of Technology Date Issued: This thesis is a collection of essays on contract theory and behavioral economics.

It considers a job-market signaling model where signals convey two pieces of information. Chapter 4, which is also based on joint work with Aloisio Araujo and Humberto Moreira, characterizes incentive-compatibility in models where types are multidimensional and the single-crossing condition may not hold.

This characterization is used to obtain the optimal contracts in multidimensional screening as well as the equilibria in multidimensional signaling models. Then, I determine the implications of signaling and screening models when the single-crossing condition is violated. Essays on behavioral economics Wesley Jose Pech, University of Massachusetts Amherst Abstract This dissertation consists of three essays on behavioral economics.

Non-exclusivity creates a stark asymmetry between immediate-costs goods and immediate-rewards goods. In the former, non-exclusivity does not affect the equilibrium and, when consumers are sophisticated, the efficient allocation is achieved.

I show that the unique robust prediction of signaling is the monotonicity of transfers in costly actions. Massachusetts Institute of Technology. In the case of immediate-rewards goods, however, the equilibrium features marginal-cost pricing and is always Pareto inefficient.

To download dissertations, please use the following link to log into our proxy server with your UMass Amherst user name and password. When consumers are partially naive, the optimal sales tax may be either positive or negative and depends on parameters that are hard to estimate.

A result of the model is that countersignalling is more likely to occur in jobs that require a combination of skills that differs from the combination used in the schooling process.Essays on behavioral economics. Wesley Jose Pech, University of Massachusetts Amherst.

Abstract. This dissertation consists of three essays on behavioral economics. The first two investigate the role of a principal in solving the collective action problem in team production, and the third essay provides a critical interpretation of John Maynard.

Sep 18,  · To gain a better understanding of why contracts are so important to society this essay will review the essential element of contracts and the theories supporting their use, from a social, economic, and legal perspective.

Introduction Behavioral economics studies cognitive, emotional and social factors effects on economic decisions made by an individuals and consequences returns, resource allocation and market prices.

This thesis is a collection of essays on contract theory and behavioral economics. Chapter 1 proposes a model of choice under risk based on imperfect memory and self-deception.

Contract Theory Essays

The model assumes that people have preferences over their own attributes and can, to some extent, manipulate their memories. The economic theories of wages fail to provide a complete explanation of the problem of wage determination.

Studies conducted by behavioral scientists to some extent fill the gaps in the earlier theories, which have highlighted the importance of psychological and sociological factors on wages.

Behavioral Economics is directed at comprehending the decision of economic agents, such as an individual or organization, who are not always utility maximizers and displays the fact that agents may have other concerns other than economic gain.4/4(3).

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Essays on contract theory and behavioral economics
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