Sönje Reiche

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This paper provides a theoretical rationale for three experimental results of Prospect Theory: risk preferences are over gains and losses, loss aversion, and diminishing sensitivity. We consider a (boundedly rational) decisionmaker who does not Ž nd her new optimal consumption bundle with certainty when she is faced with a new income level. This alters her(More)
We present a dynamic agency model in which changes in the structure of a firm affect its value due to altered incentives. There may be disadvantages in merging two firms even when such a merger allows the internalization of externalities between the two firms. Merging, by making unprofitable certain decisions, increases the cost of inducing managers to(More)
We characterize decision rules which are implementable in mechanism design settings when, after the play of a mechanism, the uninformed party can propose a new mechanism to the informed party. The necessary and sufficient conditions are, essentially, that the rule would be implementable if parties could commit not to renegotiate the mechanism, that for each(More)
Vickrey-Clarke-Groves and d’Apresmont Gerard-Varet mechanisms implement efficient social choice by paying each agent the externality her report imposes on all other agents. This paper provides an alternative mechanism, where each pair of agents directly compensates each other according to the externalities they impose. In the new mechanism any agent can(More)
We study a contract design setting in which the contracting parties cannot commit not to renegotiate previous contract agreements. In particular, we characterize the outcome functions that are implementable for an uninformed principal and an informed agent if, having observed the agent’s contract choice, the principal can offer a new menu of contracts in(More)
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