Published since January 1, 2001

The B.E. Journal of Theoretical Economics

ISSN: 1935-1704

Editor-in-chief: Burkhard C. Schipper

Edited by: Yuk-fai Fong, Ronald Peeters, Daniela Puzzello, Javier Rivas, Jan Wenzelburger

Impact Factor: 0.288

About this journal

Objective
The B.E. Journal of Theoretical Economics (BEJTE) welcomes submissions in all areas of economic theory, both applied and pure theory, as well as submissions on economic experiments that feature substantial theory components. The journal especially welcomes novel approaches and interdisciplinary work on economic theory. The editors of the BEJTE understand that novel and interdisciplinary approaches may be difficult to evaluate, that their relationship to standard approaches may not be entirely clear yet, and that not all potential applications of such novel and interdisciplinary have been fully developed yet. Pure theory papers to be published in the BEJTE include, but are by no means limited to, those in behavioral economics, decision theory, game theory, general equilibrium theory, information economics, mechanism design, matching theory, networks, and entirely new fields yet to be created. Applications could encompass, but are not restricted to, contract theory, financial economics, industrial organization, internet economics, labor economics, law and economics, personnel economics, public finance, and novel applications yet to be developed.

Topics

behavioral economics
decision theory
game theory
general equilibrium theory
information economics
mechanism design
contract theory
matching theory
social networks

Article formats
BEJTE recently switched from the previous four-tier system (Frontiers, Advances, Contributions, and Topics) to a two-tier system. Besides "Research Articles" we publish now also "Notes", which typically are more concise manuscripts.

> Information on submission process

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Leading venue for top-notch economic theory
Interdisciplinary approaches
Pure and applied theory
Top innovative content
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Internationally renowned Editorial Board

History

Content available since 2001 (Volume 1, Issue 1)

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Supplementary Materials

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Volume 22 Issue 2

June 2022

Publicly Available June 23, 2022

Frontmatter

Page range: i-iv

Download PDF

Research Articles

March 19, 2021

Skepticism and Credulity: A Model and Applications to Political Spin, Belief Formation, and Decision Weights

James David Campbell

Page range: 329-367

Abstract

In this paper I model a decision maker who forms beliefs and opinions using a dialectic heuristic that depends on their degree of skepticism or credulity. In an application to political spin, two competing parties choose how to frame commonly observed evidence. If the receiver is sufficiently credulous, equilibrium spin is maximally extreme and generates short, superficial news cycles. When receivers vary in their skepticism, there is partisan sorting by skepticism parameter: the more credulous group systematically favors one party and displays hostility to evidence and a media they see as biased. In behavioral applications in which the frames arise from the decision maker’s internal deliberation, a decision maker with the same credulous nature would display known behavioral anomalies in forming beliefs and forming decision weights from stated probabilities. The dialectic model therefore captures a simple psychological mechanism and matches closely some stylized facts across these three disparate applications.

June 21, 2021

Expert Panels with Selective Investigation

Qiang Gong, Huanxing Yang

Page range: 369-404

Abstract

In a model of information disclosure with multiple experts we compare homogeneous panels and diverse panels. The distinguishing feature of our model is selective investigation: there are multiple aspects relevant to decision making and each expert can strategically choose some aspects to investigate. We show that homogeneous panels lead to unbalanced investigation and unbalanced action, while under diverse panels both investigations and actions are balanced. In most circumstances, diverse panels perform better than homogeneous panels.

June 11, 2021

Self-Control Preferences and Status-Quo Bias

Guy Barokas

Page range: 405-429

Abstract

In a setting of choice with an observable status quo, we model an agent who struggles with temptation by exercising (costly) self-control, and who views the status quo as a commitment opportunity that allows him to avoid the self-control costs incurred when making an active choice. Our model is rational in that the agent always maximizes the same ex-post utility function; hence, when the standard indirect utility property holds, the model reduces to classic rational choice model. However, when we allow for costly self-control, our theory provides a rationale for three well-documented phenomena that cannot be captured by the standard model: the status-quo bias, the compromise effect, and the satisficing choice procedure (when ignoring the information on the status quo). A notable feature of our theory is that while it relaxes the indirect utility property, it still allows for a complete identification of an agent’s preference relation over menus. This is found to be important in many practical situations.

July 19, 2021

Passive Cross-Holding in a Stackelberg Oligopoly

Hongkun Ma, Chenhang Zeng

Page range: 431-452

Abstract

We show that bilateral cross-holding can be profitable for firms with symmetric technologies in a Stackelberg oligopoly. Furthermore, if firms involved in cross-holding obtain a strategic advantage to be the leaders (i.e. Stackelberg leadership through cross-holding), such cross-holding will improve both consumer surplus and social welfare. We also discuss robustness of our main results with respect to convex costs and product differentiation.

July 19, 2021

A Rehabilitation of the Law of Diminishing Marginal Utility: An Ordinal Marginal Utility Approach

Chung-Cheng Lin, Shi-Shu Peng

Page range: 453-481

Abstract

The model in which an individual maximizes his ordinal or cardinal total utility has long been the paradigm of individual choice theory. However, the two mainstream utility theories, the ordinal and cardinal total utility theories, have caused a dilemma, i.e. one has to sacrifice one of the following two: the good property of utility ordinality, or common-sense notions such as the law of diminishing marginal utility. Ordinal theory keeps the former but gives up the latter, while cardinal theory keeps the latter but sacrifices the former. We propose an ordinal marginal utility approach aiming to solve this dilemma by changing the very first assumption regarding individual choice.

August 20, 2021

Workplace Heterogeneity and the Returns to Versatility

Damir Stijepic

Page range: 483-508

Abstract

In the canonical random on-the-job search model with continuous firm heterogeneity, I show that a mean-preserving spread of the firm-productivity distribution raises the returns to mobility, i.e., the inter-firm mobility of workers as measured by the number of outside contacts per employment spell. Both sorting and rent-share mechanisms play a role. In a further contribution, I distinguish frictional and structural impediments to mobility in order to establish a link between mobility and skills via the concept of versatility. Versatility enhances a person’s mobility since a mismatch between job requirements and the person’s skill set is less likely to occur. I provide some statistics in support of the discussed mechanisms. The findings are particularly intriguing in light of the concurrent rise in the productivity dispersion across firms and in the skill premium in many countries.

October 25, 2021

Single- and Double-Elimination Tournaments under Psychological Momentum

Bo Chen, Xiandeng Jiang, Zijia Wang

Page range: 509-525

Abstract

This paper studies the effects of “psychological momentum” on strategic behavior in single- and double-elimination tournaments. We show that in presence of both positive and negative momentum a single-elimination tournament elicits a higher total effort than that of a double-elimination tournament if and only if the positive momentum is insignificant and the negative momentum is significant. Regardless of momentum effects, a single-elimination tournament elicits a higher average effort per match than a double-elimination tournament does.

Open Access August 27, 2021

Cheap Talk with Multiple Experts and Uncertain Biases

Gülen Karakoç

Page range: 527-556

More Download PDF

Abstract

A decision maker solicits information from two partially informed experts and then makes a choice under uncertainty. The experts can be either moderately or extremely biased relative to the decision maker, which is their private information. I investigate the incentives of the experts to share their private information with the decision maker and analyze the resulting effects on information transmission. I show that it may be optimal to consult a single expert rather than two experts if the decision maker is sufficiently concerned about taking advice from extremely biased experts. In contrast to what may be expected, this result suggests that getting a second opinion may not always be helpful for decision making.

September 1, 2021

Legal Environment and Contractual Choice

Ho Cheung Cheng

Page range: 557-577

Abstract

This paper considers contractual choice under imperfect legal systems, in particular, contracts with different timing of payment. Ex-ante payment contracts are risky for the buyer, because the seller may shirk. Ex-post payment contracts are risky for the seller, as the buyer may default. Optimal contract is solved for any given legal environment. Exchanges with lower gains from trade tend to adopt ex-post payment contracts. The seller is a better proposer than the buyer in terms of the efficiency of the proposed contract. Surprisingly, offering ex-ante payment contracts is not strictly better for the seller under any legal environment. Moreover, mixed payment contracts are also analyzed and shown to never be optimal.

November 24, 2021

Politically Connected Firms and the Environment

Haowei Yu, Lin Zhang

Page range: 579-602

Abstract

This paper examines the environmental effect of political connections at the individual and organizational levels. We integrate political connections at both levels in a four-stage game-theoretic framework to study the political interplay between an entrepreneur, a bureaucrat and a government. We distinguish individual-level political connections from bribery and argue that while the latter is generally more efficient for the firm aiming to reduce environmental tax payments, political connections become more appealing when the bureaucrat places a higher value on indirect non-monetary benefits. We find that individual-level political connections are associated with more emission discharges by the firm, while the effect of organizational-level political connections on emissions depends on a negative interaction effect between political connections at different levels and a positive resource-reallocation effect between abatement activities and production.

Open Access September 28, 2021

Injurers versus Victims: (A)Symmetric Reactions to Symmetric Risks

Alice Guerra, Francesco Parisi

Page range: 603-620

More Download PDF

Abstract

Tort models assume symmetry in the behavior of injurers and victims when faced by a threat of liability and a risk of harm without compensation, respectively. This assumption has never been empirically validated. Using a novel experimental design, we study the behavior of injurers and victims when facing symmetric accident risks. Experimental results provide qualified support for the symmetric behavior hypothesis.

Notes

August 17, 2021

On an “Important Principle” of Arrow and Debreu

Arnis Vilks

Page range: 621-627

Abstract

In their seminal 1954 paper on the existence of competitive equilibrium, Arrow and Debreu state what they call an “important principle”, namely that it is necessary for the existence of equilibrium that every consumer has some asset or can supply some labour service which has a positive price at equilibrium. It does not seem to have been noticed that this claim is incorrect. We provide a very simple model of a private ownership economy with three goods where a competitive equilibrium exists, but consumers who have nothing to sell but their labour end up with zero wealth in equilibrium. As zero wealth must be taken to mean non-survival, and the Arrow–Debreu model is frequently interpreted as assuming that all consumers can survive without trade, we also briefly discuss the issue of non-survival in equilibrium. We finally point out that our example illustrates the possibility that technological progress may result in a situation where the value of work becomes negligible.

August 25, 2021

A Note on the Existence of the Competitive Equilibrium in Grossman and Shapiro (1984)

Anthony Creane

Page range: 629-647

Abstract

In their seminal paper, Grossman, G. M., and C. Shapiro. 1984. “Informative Advertising with Differentiated Products.” The Review of Economic Studies 51: 63–81 assume that it is not profitable for a firm to deviate to the supercompetitive price of Salop, S. C. 1979. “Monopolistic Competition with outside Goods.” The Bell Journal of Economics 10: 141–56. In this note, it is shown that this assumption is violated if, roughly, each firm reaches less than half of all consumers unless it is a duopoly. This implies that most of the simulations in Grossman, G. M., and C. Shapiro. 1984. “Informative Advertising with Differentiated Products.” The Review of Economic Studies 51: 63–81 are not actually equilibria. More importantly, this implies that for their equilibrium to exist nearly all consumers must receive at least one ad. For example, with just four firms in the market, at least 96% of the consumers must receive at least one ad, and this percentage increases with the number of firms in the market.

November 29, 2021

Endogenous Expectations Management with Network Effects: A Note

Kangsik Choi, Seonyoung Lim

Page range: 649-668

Abstract

We examine the endogenous choice of commitment device to consumers’ expectations with network effects. Under Cournot competition, we show that choosing commitment to expectations for each firm is a dominant strategy regardless of the strength of network effects. However, under Bertrand competition, three types of commitment with both/no commitment/multiple emerge in equilibrium depending on the strength of network effects. Thus, we obtain different Pareto efficiency between Bertrand and Cournot competition, depending on the intensity of competition.

Ahead of Print / Just Accepted

Ahead of Print / Just Accepted

Volume 22 (2022)

Volume 21 (2021)

Volume 20 (2020)

Volume 19 (2019)

Volume 18 (2018)

Volume 17 (2017)

Volume 16 (2016)

Volume 15 (2015)

Volume 9 (2009)

Volume 8 (2008)

Issue 1

Volume 7 (2007)

Issue 1

Volume 6 (2006)

Issue 1

Volume 2 (2006)

Volume 5 (2005)

Issue 1

Volume 4 (2004)

Issue 1

Volume 3 (2003)

Issue 1

Volume 1 (2001)

5-year Impact Factor	0.366
Cite Score	0.7
European Reference Index for the Humanities
Impact Factor	0.288
Journal Citation Indicator	0.11
Mathematical Citation Quotient	0.05
SCImago Journal Rank	0.195
Source Normalized Impact per Paper	0.331

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Editorial

Editors
Yuk-fai Fong, Hong Kong University of Science and Technology, Business School, Hong Kong
Ronald Peeters, University of Otago, New Zealand
Daniela Puzzello, Indiana University, USA
Javier Rivas, University of Bath, UK
Burkhard C. Schipper, University of California–Davis, USA
Jan Wenzelburger, Technische Universitat, Kaiserslautern, Germany

(Deutsch)

Online ISSN: 1935-1704
Type: Journal
Language: English
Publisher: De Gruyter
First published: January 1, 2001
Publication Frequency: 2 Issues per Year
Audience: researchers and professionals in the field of industrial organization, public finance, labor and law and economics

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The B.E. Journal of Theoretical Economics

Frontmatter

Skepticism and Credulity: A Model and Applications to Political Spin, Belief Formation, and Decision Weights

Abstract

Expert Panels with Selective Investigation

Abstract

Self-Control Preferences and Status-Quo Bias

Abstract

Passive Cross-Holding in a Stackelberg Oligopoly

Abstract

A Rehabilitation of the Law of Diminishing Marginal Utility: An Ordinal Marginal Utility Approach

Abstract

Workplace Heterogeneity and the Returns to Versatility

Abstract

Single- and Double-Elimination Tournaments under Psychological Momentum

Abstract

Cheap Talk with Multiple Experts and Uncertain Biases

Abstract

Legal Environment and Contractual Choice

Abstract

Politically Connected Firms and the Environment

Abstract

Injurers versus Victims: (A)Symmetric Reactions to Symmetric Risks

Abstract

On an “Important Principle” of Arrow and Debreu

Abstract

A Note on the Existence of the Competitive Equilibrium in Grossman and Shapiro (1984)

Abstract

Endogenous Expectations Management with Network Effects: A Note

Abstract