Essays on behavioral economics
This dissertation consists of three essays on behavioral economics. The first two investigate the role of a principal in solving the collective action problem in team production, and the third essay provides a critical interpretation of John Maynard Keynes's psychological insights by comparing them with the recent evidence collected in the fields of behavioral and experimental economics.
The first essay develops a model in which workers have social preferences in the form of inequality aversion towards the principal. The workers face a "rent extractor" boss who selects in advance the fraction of total output that she wants to receive from them. The presence of this "rent extractor" boss may solve the free-rider problem in team production if: (1) workers take into account their subjective costs of effort when assessing inequality; and (2) workers are sufficiently averse towards positive inequality. The second essay is an experimental study on team production that compares the levels of contribution to a group project when workers face different types of bosses. The main result suggests that the endogenous creation of heterogeneous marginal benefits when a productive boss is present generates the highest levels of contribution when punishment is not allowed, and that the collective action problem is solved completely when this productive boss chooses to divide output equally. The third and last essay examines Keynes's hints and suggestions about what a realistic approach to behavior under uncertainty might be. It claims that Keynes was deeply conscious of the necessity to incorporate realistic behavioral assumptions in macroeconomic models that deal with judgment under uncertainty. It is found that his research program is broadly compatible with and finds support in most of the latest findings of behavioral and experimental economics, even though his inferences were largely based on "subjective impressions" rather than rigorous scientific studies.
0511: Economic theory
0623: Experimental psychology