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RampalDissertation4_12.pdf (2.62 MB)
ETD Abstract Container
Abstract Header
Behavioral Economic Theory and Experimental Investigation
Author Info
Rampal, Jeevant
Permalink:
http://rave.ohiolink.edu/etdc/view?acc_num=osu1491972688590258
Abstract Details
Year and Degree
2017, Doctor of Philosophy, Ohio State University, Economics.
Abstract
This dissertation investigates how and why individuals’ limitations in understanding decision problems, or behavioral biases, affect their optimal choices. The first chapter defines the Limited Foresight Equilibrium, henceforth referred to as LFE. LFE provides an equilibrium assessment for a model where players can possess limited foresight and they are uncertain about the opponents' foresight while playing a finite dynamic game of perfect information. We show the existence of LFE. The LFE entails limited foresight players updating their beliefs about the opponents' foresights within the play of a game. LFE implies that the higher the foresight of a player, the more accurate his beliefs about the opponents' foresights; further, if a low foresight player finds himself at an “unexpected” position in the game, he believes that one of his opponents has higher foresight than him. Thus, high foresight types, in LFE, take reputation effects into account. In applications, LFE is shown to rationalize experimental findings on the Bargaining game and the Centipede game. The second chapter provides experimental evidence for the LFE's novel predictions in the context of a modified Race game. This experimental study investigates how and why the behavior of experienced players, who understand the “sure-win” strategy in a “winner-take-all” sequential move game, varies systematically based on two types of information about the opponent’s expertise. Treatment one: experienced subjects are told their opponent's experience-level in the game. Treatment two: a different set of experienced subjects are only shown their opponent's play against a computer. We find that both exogenous information and endogenous inference about the opponent's inexperience increase the probability with which experienced players abandon the “sure-win” strategy and try for a higher payoff attainable only by winning from a losing position, that is, a position from which one wins only if the opponent makes a mistake. A maximum likelihood analysis shows that the LFE explains the data better than the Dynamic Level-k and Agent Quantal Response Equilibrium models. The third chapter reports and models the discrepancy between the full-bidding and endow-and-upgrade findings from a willingness-to-pay (WTP) elicitation Becker-Degroot-Marschak (BDM) experiment for an improved food, conducted in rural India. We found that the distribution of the WTP for exchanging 1kg local pearl millet (LPM) for 1 kg of bio-fortified high-iron pearl millet (HIPM) dominated the distribution of the difference between the WTPs for 1kg HIPM and 1kg LPM. Thus the data rejects preferences that are standard or have status quo reference points, in favor of an expectations-based reference dependence model of loss aversion for the new product. The data is used to identify and estimate the loss aversion parameter and latent consumer valuations for HIPM in the consumer model, which point to a significant downward bias in conventional WTP estimates of HIPM using the BDM procedure, suggesting caution when one is using standard incentive compatible mechanisms for value elicitation.
Committee
James Peck, PhD (Advisor)
John Kagel, PhD (Committee Member)
Dan Levin, PhD (Committee Member)
Paul Healy, PhD (Committee Member)
Pages
171 p.
Subject Headings
Economic Theory
;
Economics
;
Experiments
Keywords
Limited Foresight
;
Bargaining
;
Centipede Game
;
Sequential Equilibrium
;
Race Game
;
Reference Dependence
;
Biofortification
;
Adding Up Test
;
Incentive Compatible
Recommended Citations
Refworks
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Citations
Rampal, J. (2017).
Behavioral Economic Theory and Experimental Investigation
[Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1491972688590258
APA Style (7th edition)
Rampal, Jeevant.
Behavioral Economic Theory and Experimental Investigation.
2017. Ohio State University, Doctoral dissertation.
OhioLINK Electronic Theses and Dissertations Center
, http://rave.ohiolink.edu/etdc/view?acc_num=osu1491972688590258.
MLA Style (8th edition)
Rampal, Jeevant. "Behavioral Economic Theory and Experimental Investigation." Doctoral dissertation, Ohio State University, 2017. http://rave.ohiolink.edu/etdc/view?acc_num=osu1491972688590258
Chicago Manual of Style (17th edition)
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Document number:
osu1491972688590258
Download Count:
410
Copyright Info
© 2017, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.