Exploiting naiveté: On the interaction of boundedly rational agents with sophisticated ones

• Applicant: Dr. Tobias Gamp
• Subject Area: Economic Theory
• Term: from 2016 to 2018
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 327804135

How do humans make decisions in complicated situations? What determines their choices and what shortcomings do these exhibit? In this research project I want to examine the way in which the answers to these questions affect outcomes, when naive agents interact with others in complex strategic environments. In particular, I address, in three subprojects, how sophisticated agents exploit naive ones and how naive agents can be protected. The first subproject studies how naive agents are exploited by firms with deceptive products in markets with search frictions. The second subproject develops a model of self-similarity heuristics, which captures the agents inability to take the point of view of others, and explores the consequences of such behavior in areas such as pro-social behavior and industrial organization. The third subproject examines how politicians use dubious arguments targeted at naive voters in political debates and seeks to find debating formats which help naive voters to make better choices.

• DFG Programme: Research Fellowships
• International Connection: United Kingdom
• Host: Ran Spiegler