We propose and experimentally test a theory of strategic behavior in which players are cognitively imprecise perceive fundamental parameter with noise. focus on 2 x coordination games, generate multiple equilibria when perception is precise. When adding small amount cognitive imprecision to the model, we obtain unique equilibrium where use simple cutoff strategy. The model further predicts that...

Pricing over multiple periods under forward-looking, strategic consumer purchasing behavior has received significant recent research attention; however, whether consumers actually benefit from this behavior and would voluntarily choose to be strategic has not been previously considered. We explore this question, and show that many consumers have lower surplus if they are strategic than if they ...

We suggest a simple asset market model in which we analyze competitive and strategic behavior simultaneously. If for competitive behavior two-fund separation holds across periods then it also holds for strategic behavior. In this case the relative prices of the assets do not depend on whether agents behave strategically or competitively. Those agents acting strategically will however invest les...

We examine prior and current sponsored search auctions and find evidence of strategic bidder behavior. Between June 15, 2002, and June 14, 2003, we estimate that Overture’s revenue from sponsored search could have been more than 60% higher if it had been able to prevent this strategic behavior. We also show that advertisers’ strategic behavior has not disappeared over time; rather, such behavio...

Centralized two-sided markets, such as the market for medical residents, often rely on a stable matching mechanism to determine a matching between participants. Because no stable matching mechanism can induce truth-telling as a dominant strategy for all participants, there is always some room in these markets for strategic misrepresentation. In this paper we study optimal strategic misrepresent...

We examine how executives’ ambivalent evaluation of a strategic issue relates to organizational actions taken in response. Ambivalence occurs when a decision maker evaluates an issue as simultaneously positive and negative, a state that has received scant attention in organizational research. We integrate findings in social psychology with the behavioral theory of the firm to suggest how execut...

When confronted with important questions we like to rely on the advice of experts. However, uncertainty can occur regarding advisors' motivation to pursue self-interest and deceive the client. This can especially occur when the advisor has the possibility to receive an incentive by recommending a certain alternative. We investigated how the possibility to pursue self-interest led to explicit st...