The focus of my dissertation is microeconomic analysis using theory and experiments with a behavioral slant. The work consists of two loosely related projects that are bound by this common theme.

The first project examines self-control and sophistication. People are often “inconsistent” in that their actions differ from their planned ideal actions, which can lead to personal welfare loss. These types of inconsistencies are often attributed to a lack of self-control that can be caused by behavioral factors such as strong emotions, temptation, or impatience. This first chapter uses proxy measures for self-control and sophistication to investigate the relationships between the magnitude of a self-control problem, the awareness of that problem, and additional behavioral and demographic factors as observed in a repeated gambles experiment. Sophistication, experience (both lab and gambling), conscientiousness (the big five trait most closely linked with self-control), and higher expected minimum session earnings are found to be positively correlated with smaller self-control problems.

The second project looks at different bargaining institutions in anticommon type settings. “Hold-up” problems may occur in any sequential economic exchange that requires agreement by multiple agents with individual incentives. When a buyer wants to purchase a complementary package of properties from different sellers, hold-ups are likely to occur because sellers gain bargaining power when the buyer purchases some of the properties. This type of issue arises frequently with patents, land redevelopment, and other “anticommon” problems.

The second chapter examines the predicted behavior and welfare of agents under several contingent purchase bargaining rules including a “sealed simultaneous bid” rule (for which the optimal linear surplus split is found) and a “sequential contingent package offer”. Independent sellers should have incentive to collectively agree to contingent bargaining as it theoretically improves their expected profits despite the perceived bargaining leverage gained from being a last seller. The third chapter shows the results of the related experiment. The empirical evidence finds considerable support for the relevant theory. Discrepancies between the relevant theory and the empirical results are also analyzed.