The three papers below form the chapters of my PhD thesis in behavioral and experimental economics.
The Strategic Use of Decoy Effect in Bargaining
(with F. Feri and A. Gartner)
The decoy effect describes how preferences shift when additional options are introduced, challenging the notion of rational choice. This cognitive bias can impact
decisions in both individual and strategic contexts. In a bargaining setting, a decoy may help a party secure a better outcome. We explore whether stakeholders
in two-person bargaining attempt to strategically exploit others’ cognitive biases by incorporating a decoy in order to shift the bargaining outcome to their favorite original alternative.
Our findings reveal that over one-third of participants opt to add a decoy, despite the small cost it incurs. We examine decoys that create attraction
or compromise effects, and we vary the payoff levels of alternatives. Belief elicitation indicates that decoys creating a compromise effect are chosen with self-serving
intentions to achieve more favorable outcomes, while decoys creating an attraction effect are also chosen because they are considered an acceptable agreement.
Pushing the Limit: The Different Effects of Threshold Proximity and Competitiveness
(with A. Chevalier, F. Feri, and E. Turrini)
This paper examines how performance thresholds interact with competitiveness and gender to influence effort and goal achievement. In a laboratory experiment, participants complete a baseline task, reveal their willingness to compete through an incentive-choice decision, and then face a personalized performance target of varying difficulty. The results show clear gender differences: men are more likely to choose competitive incentives, respond more strongly to the introduction of a goal, and achieve targets at higher rates than women, despite similar baseline performance. More attainable goals independently increase effort and success for all participants. While competitiveness is positively related to goal achievement, mediation analysis indicates that it does not account for the gender gap in outcomes. Robustness checks suggest that individual traits, such as self-confidence, play an additional role. Overall, the findings demonstrate that performance thresholds are not neutral incentives and that their effectiveness depends on both goal design and individual characteristics.
Local Winner's Curse
(with F. Feri and M. Melendez)
Draft available upon request.
We study whether local ranking information biases investment decisions even when objective success probabilities are held constant. In a laboratory experiment, participants decide whether to invest in a lottery that pays off only if their randomly assigned card ranks among the five smallest out of one hundred. Before deciding, participants are informed of their card’s rank within a randomly drawn subsample, generating variation in local rank while keeping winning probabilities approximately equal across treatments. Across the full sample, investment rates do not differ significantly by local rank. However, generalized structural equation and mediation analyses reveal important heterogeneity. In a restricted sample with more distinct top ranks, we find that being assigned the best local rank increases investment among participants with relatively low subjective winning beliefs, operating primarily through a direct effect rather than belief updating. These results suggest that local rankings can distort economic decisions for a subset of individuals, even in settings where rational benchmarks predict uniform behavior.