# Tag Info

6

There is no apparent overlap between the two theories. I shall demonstrate their disparities in two ways: Way number 1: In the former, agents have no awareness of probability of outcome, and thus cannot make a decision based on that. In the latter, agents have awareness of the probability of outcome for one of two bets, and prefer to choose it over the other ...

6

There are a lot of game theorists quite open to many versions of behavioral economics. That being said, I think there are some reasons why these are still fairly separate areas. I will focus in particular on the issue of rationality. Parts of behavioral economics simply do standard economics with somewhat different preferences, such as other-regarding ...

6

Disclaimer: My academic coming of age was in an environment where behavioral economics played only a minor role. My research is theoretical, both "behavioral and non-behavioral", economics. I believe it is incorrect to say that game theorists (or economists) in general are not convinced by behavioral economics. You can easily see it is considered ...

5

Pluralistic ignorance is a theory explaining why social practices continue to be perpetuated when almost no individual seems to support them. When pluralistic ignorance is at play, agents act in the way they envision others want them to act, so as not to lose their social standing by acting as they wished. Some examples in the indirect economic world include:...

4

The two (pure) Nash equilibrium in this game is (Betray, Silent) and (Silent, Betray). Let us see why (Betray, Silent) is an equilibrium. Let us look at person A. Person B is playing Silent. If she plays Betray, she gets $2$. If she deviates to Silent, she gets $1$. So she would not play Silent. Now consider person B. Person A is playing Betray. If she ...

2

A related concept you might be looking for could be "mental accounting", first introduced by Richard Thaler. According to mental accounting, people treat money as less fungible than it really is. Fungibility means that, all money is the same, regardless of any other factors, including intended use. However, people often budget money into mental ...

2

The standard elasticity still makes sense. Elasticity is not necessarily constant. Also, I am not sure what sort of formula you learned at your college but elasticity is rigorously defined (and also taught at college level for econ majors) as $EL = \frac{df(x)}{dx}\frac{x}{f(x)}$ for some function $f(x)$ (see Essential Mathematics for Economic Analysis by ...

2

It seems that there is already some prior work on theory of gamification from game theory perspective. For example, Easley & Ghosh (2016), provide theory on optimal badge design even explicitly mentioning sites like StackOverflow and their paper seems to be highly cited. Hamari, Huotari & Tolvanen (2015) have article titled "Gamification and ...

2

A study of Gopi Shah Goda, Matthew Levy, Colleen Flaherty Manchester, Aaron Sojourner, and Joshua Tasoff (2015) The Role of Time Preferences and Exponential-Growth Bias in Retirement Savings showed that in the US the most important cognitive bias is the exponential growth bias. Exponential growth bias is bias that occurs because people intuitively do not ...

1

I'd suggest you to read Vernon Smith's work on experimental economics (that is the application of experimental methods to study economic question also on an individual level); and also Kanheman (that is Smith's doctoral student)

1

Elasticity of demand is normally considered in relation to market demand for a good, that is, the sum of individual customer demands. Different customers will probably respond in different ways to a price increase. If the increase is 5%, especially on a low value item, very likely many customers will not notice, some will notice but not change their buying ...

1

The claim that financial markets are efficient is backed by an implicit argument that misinformed "noise traders" can have little influence on asset prices in equilibrium. If noise traders' beliefs are sufficiently different from those of rational agents to significantly affect prices, then noise traders will buy high and sell low. They will then ...

Only top voted, non community-wiki answers of a minimum length are eligible