scholarly journals Optimal Management of Evolving Hierarchies

2021 ◽  
Author(s):  
Jens Leth Hougaard ◽  
Juan D. Moreno-Ternero ◽  
Lars Peter Østerdal
Keyword(s):  
Behavioral Economics ◽  
Decision Analysis ◽  
Private Information ◽  
Joint Venture ◽  
Social Mobilization ◽  
Optimal Management ◽  
Allocation Scheme ◽  
Multilevel Marketing ◽  
Potential Applications

We study the optimal management of evolving hierarchies of revenue-generating agents. The initiator invests into expanding the hierarchy by adding another agent, who will bring revenues to the joint venture and who will invest herself into expanding the hierarchy further, and so on. The higher the investments (which are private information), the higher the probability of expanding the hierarchy. An allocation scheme specifies how revenues are distributed, as the hierarchy evolves. We obtain schemes that are socially optimal and initiator-optimal, respectively. Our results have potential applications for blockchain, cryptocurrencies, social mobilization, and multilevel marketing. This paper was accepted by Manel Baucells, behavioral economics and decision analysis.

Complex Disclosure

2021 ◽  
Author(s):  
Ginger Zhe Jin ◽  
Michael Luca ◽  
Daniel Martin
Keyword(s):  
Structural Analysis ◽  
Behavioral Economics ◽  
Decision Analysis ◽  
Laboratory Experiment ◽  
Private Information ◽  
Present Evidence ◽  
Complex Information ◽  
Strategic Incentives

We present evidence that unnecessarily complex disclosure can result from strategic incentives to shroud information. In our laboratory experiment, senders are required to report their private information truthfully but can choose how complex to make their reports. We find that senders use complex disclosure more than half the time. This obfuscation is profitable because receivers make systematic mistakes in assessing complex reports. Regression and structural analysis suggest that these mistakes could be driven by receivers who are naive about the strategic use of complexity or overconfident about their ability to process complex information. This paper was accepted by Yan Chen, behavioral economics and decision analysis.

Talking Behind Your Back: Communication and Team Cooperation

2021 ◽  
Author(s):  
Klaus Abbink ◽  
Lu Dong ◽  
Lingbo Huang
Keyword(s):  
Behavioral Economics ◽  
Decision Analysis ◽  
Experimental Evidence ◽  
Team Communication ◽  
Team Cooperation ◽  
Profit Allocation ◽  
Asymmetric Communication ◽  
Present Experimental Evidence

Communication is one of the most effective devices in promoting team cooperation. However, asymmetric communication sometimes breeds collusion and hurts team efficiency. Here, we present experimental evidence showing that excluding one member from team communication hurts team cooperation; the communicating partners collude in profit allocation against the excluded member, and the latter reacts by exerting less effort. Allowing the partners to reach out to the excluded member partially restores cooperation and fairness in profit allocation, but it does not stop the partners from talking behind that member’s back even when they could have talked publicly. The partners sometimes game the system by tricking the excluded member into contributing but then grabbing all profits for themselves. This paper was accepted by Axel Ockenfels, behavioral economics and decision analysis.

scholarly journals The Attraction and Compromise Effects in Bargaining: Experimental Evidence

2021 ◽  
Author(s):  
Fabio Galeotti ◽  
Maria Montero ◽  
Anders Poulsen
Keyword(s):  
Behavioral Economics ◽  
Decision Analysis ◽  
Experimental Evidence ◽  
Attraction Effect ◽  
Compromise Effect

We experimentally investigate, in an unstructured bargaining environment with commonly known money payoffs, the attraction effect and compromise effect (AE and CE) in bargaining, namely, a tendency for bargainers to agree to an intermediate option (CE) or to an option that dominates another option (AE). We conjecture that the relevance of the AE and CE in bargaining is constrained by how focal the feasible agreements’ payoffs are. We indeed observe that there are significant AEs and CEs, but these effects are mediated by the efficiency and equality properties of the feasible agreements. Due to the allure of equality, the effects are harder to observe when an equal earnings contract is available. Decoys are more effective in shifting agreements from a very unequal contract to a less unequal one rather than the reverse. This paper was accepted by Yuval Rottenstreich, behavioral economics and decision analysis.

Optimal management of patients with operable pancreatic head cancer: A Markov decision analysis

2021 ◽  
Author(s):  
Caroline J. Rieser ◽  
Sowmya Narayanan ◽  
Nathan Bahary ◽  
David L. Bartlett ◽  
Kenneth K. Lee ◽  
...  
Keyword(s):  
Decision Analysis ◽  
Pancreatic Head ◽  
Optimal Management ◽  
Head Cancer ◽  
Pancreatic Head Cancer ◽  
Markov Decision

Geeksploitation: Optimism and Monitoring-Aversion in Agency Relationships

2010 ◽  
Vol 22 (1) ◽  
pp. 133-156
Author(s):  
Michael J. Smith
Keyword(s):  
Behavioral Economics ◽  
Private Information ◽  
New Economy ◽  
Work Setting ◽  
Behavioral Traits ◽  
Younger Workers ◽  
Agency Relationships ◽  
Monetary Compensation ◽  
Flexible Organizations ◽  
Reservation Utility

ABSTRACT: This paper addresses the contracting implications of New Economy firms: informal, flexible organizations predominantly staffed by younger workers. The model incorporates two findings from the behavioral economics literature. First, workers may overestimate their own productivity (optimism). Second, workers may be monitoring-averse, with intense monitoring undermining intrinsic motivation. The combination of behavioral traits and work setting has deleterious consequences for workers. Despite higher monetary compensation and sometimes weaker incentives, they work harder in equilibrium, experience a higher disutility of effort than conventional workers, and also have a utility realization that is lower on average than their reservation utility. Optimism and monitoring-aversion are mutually reinforcing. When private information is introduced, both high- and low-productivity unconventional workers benefit, in contrast to standard agency models with asymmetric information. Both types of agents still experience a utility shortfall, however.

scholarly journals Optimal Management of High-Risk T1G3 Bladder Cancer: A Decision Analysis

PLoS Medicine ◽  
2007 ◽  
Vol 4 (9) ◽  
pp. e284 ◽  
Author(s):  
Girish S Kulkarni ◽  
Antonio Finelli ◽  
Neil E Fleshner ◽  
Michael A. S Jewett ◽  
Steven R Lopushinsky ◽  
...  
Keyword(s):  
Bladder Cancer ◽  
High Risk ◽  
Decision Analysis ◽  
Optimal Management ◽  
T1g3 Bladder Cancer

scholarly journals On the Fair Division of a Random Object

2021 ◽  
Author(s):  
Anna Bogomolnaia ◽  
Hervé Moulin ◽  
Fedor Sandomirskiy
Keyword(s):  
Probability Distribution ◽  
Behavioral Economics ◽  
Decision Analysis ◽  
Expected Utility ◽  
Design Problem ◽  
Fair Division ◽  
Statistical Information ◽  
Equal Division ◽  
Fair Share ◽  
The Mean

Ann likes oranges much more than apples; Bob likes apples much more than oranges. Tomorrow they will receive one fruit that will be an orange or an apple with equal probability. Giving one half to each agent is fair for each realization of the fruit. However, agreeing that whatever fruit appears will go to the agent who likes it more gives a higher expected utility to each agent and is fair in the average sense: in expectation, each agent prefers the allocation to the equal division of the fruit; that is, the agent gets a fair share. We turn this familiar observation into an economic design problem: upon drawing a random object (the fruit), we learn the realized utility of each agent and can compare it to the mean of the agent’s distribution of utilities; no other statistical information about the distribution is available. We fully characterize the division rules using only this sparse information in the most efficient possible way while giving everyone a fair share. Although the probability distribution of individual utilities is arbitrary and mostly unknown to the manager, these rules perform in the same range as the best rule when the manager has full access to this distribution. This paper was accepted by Ilia Tsetlin, behavioral economics and decision analysis.

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