Competition and Incentives

Project summary

Product market competition affects the behavior of managers and employees within firms, the interaction between firms, and the relations between firms and their customers. Project B01 analyzes the impact of behavioral biases such as loss aversion, social preferences, and consumer naïveté on this behavior, and how contracts and other incentive mechanisms should take these effects into account. It combines the theoretical analysis of individual and firm behavior (using contract theory, industrial organization, and behavioral economics) with laboratory experiments in order to identify causal relationships.