Essays in Behavioral and Experimental Economics
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My dissertation, Essays in Behavioral and Experiment economics, is composed by three different research studies. In Chapter 1, the study offers an alternative theory of decision making under uncertainty. The presence of some perceived ambiguity together with some ambiguity tolerance leads a risk-averse decision-maker with diminishing marginal utility over all income levels to nonetheless take a chance. This alternative theory also provides an explanation for the equity premium puzzle, and for why a risk-averse buyer of insurance may also exhibit loss aversion. In Chapter 2, the study examines the effects of punishment, communication, and the interaction of these mechanisms on trusting and trustworthy behaviors in a laboratory experiment. The results suggest that the presence of both punishment and communication options places a downward pressure on the trustee to reduce trustworthy behaviors. However, if trustor expresses the highest level of trust accompanied by communication without implementing any punishment threat, the trustee’s trustworthiness significantly increases. In Chapter 3, the study presents a theoretical model of play in the trust game that specifically features the potential which proposing equality has for promoting positive reciprocal behavior. The model proposes the utility function where the second mover appreciates the first mover that intends to split all earnings equally, and rewards this intention with positive reciprocity.