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201
Understanding the Determinants of Managerial Ownership and the Link Between Ownership and Performance
, 1999
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Speculation Duopoly with Agreement to Disagree: Can Overconfidence Survive the Market Test?
- Journal of Finance
, 1997
"... In a duopoly model of informed speculation, we show that overconfidence may strictly dominate rationality since an overconfident trader may not only generate higher expected profit and utility than his rational opponent, but also higher than if he were also rational. This occurs because overconfiden ..."
Abstract
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Cited by 178 (2 self)
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In a duopoly model of informed speculation, we show that overconfidence may strictly dominate rationality since an overconfident trader may not only generate higher expected profit and utility than his rational opponent, but also higher than if he were also rational. This occurs because overconfidence acts like a commitment device in a standard Cournot duopoly. As a result, for some parameter values the Nash equilibrium of a two-fund game is a Prisoner's Dilemma in which both funds hire overconfident managers. Thus, overconfidence can persist and survive in the long run. 2 The rational expectations hypothesis implies that economic agents make decisions as though they know a correct probability distribution of the underlying uncertainty. According to the traditional view (Alchian (1950) and Friedman (1953)), the rational expectations hypothesis is empirically plausible because rational beliefs are better able to survive the market test than irrational beliefs. Yet, the empirical liter...
Equilibrium Vertical Foreclosure
- in: American Economic Review
, 1990
"... comments from Louis Kaplow, Jean Tirole, and other participants at a conference ..."
Abstract
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Cited by 78 (0 self)
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comments from Louis Kaplow, Jean Tirole, and other participants at a conference
Pragmatic Beliefs and Overconfidence
- Journal of Economic Behavior and Organization
, 2002
"... Several studies indicate that humans are overconfident about their own (relative) abilities. We propose a notion of pragmatic beliefs, and show through an example that this concept can shed light on why overconfidence emerges. Through the example, we also shed light on the idea that that ’bounded ra ..."
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Cited by 30 (1 self)
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Several studies indicate that humans are overconfident about their own (relative) abilities. We propose a notion of pragmatic beliefs, and show through an example that this concept can shed light on why overconfidence emerges. Through the example, we also shed light on the idea that that ’bounded rationality ’ may arise endogenously in a game- without assuming complexity costs.
The Equivalence of Price and Quantity Competition with Incentive Scheme Commitment
, 2001
"... We consider a two stage dierentiated products duopoly model (with linear demand and constant marginal cost). In the first stage profit maximizing owners choose incentive schemes in order to induce their managers to exhibit a certain type of behavior. In the second stage the managers compete either i ..."
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Cited by 21 (0 self)
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We consider a two stage dierentiated products duopoly model (with linear demand and constant marginal cost). In the first stage profit maximizing owners choose incentive schemes in order to induce their managers to exhibit a certain type of behavior. In the second stage the managers compete either in prices or in quantities. In contrast to Singh and Vives (1984), we show that if the owners have sufficient power to manipulate the incentives of their managers, the equilibrium outcome is the same regardless of whether the firms compete in prices or in quantities. Basing the manager's objective function on a convex combination of own profit and the difference between own profit and the rival firm's profit is sufficient for the equivalence result to hold.
Stock-related compensation and product-market competition
, 2000
"... I show that as long as the stock market has perfect foresight, profits are distributed as dividends, and incentives are paid more than once or are deferred, stock-related compensation packages are strong incentives for managers to support tacit collusive agreements in repeated oligopolies. The stoc ..."
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Cited by 18 (1 self)
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I show that as long as the stock market has perfect foresight, profits are distributed as dividends, and incentives are paid more than once or are deferred, stock-related compensation packages are strong incentives for managers to support tacit collusive agreements in repeated oligopolies. The stock market anticipates the losses from punishment phases and discounts them on stock prices, reducing managers ’ short-run gains from any deviation. When deferred, stock-related incentives may remove all managers ’ shortrun gains from deviation, making collusion supportable at any discount factor. The results hold with managerial contracts of any length.
Ceo pay and the lake wobegon effect
- Journal of Financial Economics
, 2009
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When Good News about your Rival is Good for You: The Effect of Third-Party INFORMATION ON THE DIVISION OF CHANNEL PROFITS
- MARKETING SCIENCE
, 2002
"... The Internet has led to a large number of third-party sources that offer high-quality information about firms’s products at little or no cost to consumers. As a result, many of these sources have grown in popularity, extending well-beyond the usual reach of traditional third parties such as Consumer ..."
Abstract
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Cited by 15 (2 self)
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The Internet has led to a large number of third-party sources that offer high-quality information about firms’s products at little or no cost to consumers. As a result, many of these sources have grown in popularity, extending well-beyond the usual reach of traditional third parties such as Consumer Reports and Kelly’s Blue Book. For example, the online version of Edmunds offers, at no cost to consumers, information about new products, existing products, long-term tests, and buyers ’ guides, all relating to the automotive industry. AvWeb.com delivers weekly aviation news and new product reviews to its readers, and a large number of websites follow developments on computer platforms such as the Apple Macintosh. In this paper we analyze how the provision of third-party information affects the division of profits in a multiproduct distribution channel. To illustrate, consider the competition between
