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2017-05-11Luis Santos-Pinto(University of Lausanne) A General Equilibrium Theory of Firm Formation under Optimal Expectations. Room: E0.14, 16:00-17:15. We extend Lucas (1978) by assuming that a fraction of individuals in an economy derive anticipatory utility from entrepreneurship. We show that if these individuals are able to bias their beliefs to inaflate the anticipatory benefits they endogenously become optimists. Optimism has six main effects. First, there is a misallocation of talent which lowers output. Second, optimists are more likely to become entrepreneurs than realists. Third, entrepreneurs are more optimistic than workers. Fourth, when the fraction optimists is high, the majority of entrepreneurs are optimists. Fifth, optimism drives up the wage which makes workers better off. Sixth, optimism lowers the returns to entrepreneurship.
2017-06-01Severine Tousseart(London School of Economics) Eliciting temptation and self-control through menu choices: a lab experiment. Room: E0.15, 16:00-17:15. Unlike present-biased individuals, Gul and Pesendorfer (2001) agents may pay to restrict choice sets despite expecting to resist temptation, thus eliminating self-control costs. I design an experiment to identify these self-control types, where the temptation was to read a story during a tedious task. The identification strategy relies on a two-step procedure. First, I measure commitment demand by eliciting subjects’ preferences over menus, which did or did not allow access to the story. I then implement their preferences using a random mechanism, allowing me to observe subjects who faced the choice, yet preferred commitment. A quarter to a third of subjects can be classified as self-control types according to their preferences. Of those facing the choice, virtually all self-control types behaved as they anticipated and resisted temptation. These findings suggest that policies restricting the availability of tempting options could have much larger welfare benefits than predicted by present bias models.
2017-06-15Heikki Rantakari(University of Rochester) TBA. Room: E5.22, 16:00-17:15. No abstract available.
2017-07-10Gary Charness(UCSB) TBA. Room: E0.522, 16:00-17:15. No abstract available.