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Miscellaneous Models

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Social Norms, Bounded Rationality and Optimal Contracts

Part of the book series: Studies in Economic Theory ((ECON.THEORY,volume 30))

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Abstract

In this chapter I will deal with models, which are difficult to fit within any of the categories discussed above.

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Notes

  1. 1.

    Except for the Richter (2011) paper, where this choice itself is driven by an independent preference relation.

  2. 2.

    Numerous papers demonstrate that habits may play an important role in a variety of economic contexts. Examples can be drawn from fields as diverse as consumption and saving decisions (Faria 2001; McKenzie 2001) and brand choice decisions (Chintagunta et al. 2001).

  3. 3.

    In the limit of the infinitely patient monopolist the value of the initial demand and the price ceiling are irrelevant, since the long-term price, \(p^{*},\) does not depend on them.

  4. 4.

    The total amount of resources should itself be a solution to an optimization problem. I do not model this choice explicitly here.

  5. 5.

    Think of a dictator who shoots the expert if he did not win, but the price was below her valuation.

  6. 6.

    In Basov and Danilkina (2007a) a consumer behaves according to the rational addiction model as long as consumption capital, S, is below a certain threshold, and behave in boundedly rational way once the threshold is passed. The consumer, however, cannot foresee the change in her behavior.

  7. 7.

    A subscript accompanying a function, as usually, denotes a derivative with respect to the corresponding variable.

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Authors and Affiliations

  1. Centre for Economics and Financial Econometrics Research, Deakin University, Burwood, VIC, Australia

    Suren Basov

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  1. Suren Basov
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Correspondence to Suren Basov .

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Basov, S. (2016). Miscellaneous Models. In: Social Norms, Bounded Rationality and Optimal Contracts. Studies in Economic Theory, vol 30. Springer, Singapore. https://doi.org/10.1007/978-981-10-1041-5_8

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