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Many insights regarding rank-order tournaments rest upon contestants' behavior in symmetric equilibria. As shown by Gill and Stone (Games Econ Behav 69:346–364, 2010), however, symmetric equilibria may not exist if contestants are expectation-based loss averse and have choice-acclimating expectations. We show that under choice-unacclimating—i.e., fixed—expectations both symmetric and asymmetric equilibria exist for all degrees of loss aversion. Importantly, a symmetric equilibrium also exists if players follow their preferred credible plan and the weight attached to psychological gain–loss utility does not strongly outweigh the weight put on material utility. Hence, for fixed expectations a focus on symmetric equilibria seems justifiable even if contestants are expectation-based loss averse.

We study how policy choice and political selection are affected by the concentration of political power. In a setting with inefficient policy gambles, variations in power concentration give rise to a trade-off. On the one hand, power-concentrating institutions allocate more power to the voters' preferred candidate. On the other hand, they induce the adoption of more overly risky policies and decrease the voters' capability to select well-suited politicians. We show that full concentration of power is optimal if and only if the conflict of interest between voters and politicians is small. Otherwise, an intermediate level of power concentration is optimal.

This article provides evidence that involuntary unemployment, and the segmentation of labour markets into firms offering \"good\" and \"bad\" jobs, may both arise as a consequence of contractual incompleteness. We provide a simple model that illustrates how unemployment and market segmentation may jointly emerge as part of a market equilibrium in environments where work effort is not third-party verifiable. Using experimental labour markets that differ only in the verifiability of effort, we demonstrate empirically that contractual incompleteness can cause unemployment and segmentation. Our data are also consistent with the key channels through which the model explains the emergence of both phenomena.

Eva Leitzke-Ungerer ist seit 2006 Professorin für Didaktik der romanischen Sprachen am Institut für Romanistik der Martin-Luther-Universität Halle-Wittenberg.In dieser Zeit hat sie nicht nur zahlreiche Studierende auf ihre berufliche Tätigkeit grundlegend vorbereitet, sondern durch ihre umfangreichen Forschungsarbeiten einen wesentlichen Beitrag.

This paper studies the intermediation of auto loans through auto dealers using new and comprehensive administrative data. The arrangements between auto dealers and lenders incentivize dealers to increase loan prices. We leverage details of the corresponding contracts to demonstrate that many consumers are less responsive to finance charges than to vehicle charges. Taking this behavior into account, we estimate an equilibrium model of dealer price setting and lender competition. We explore counterfactuals where dealers have no discretion to price loans and final rates are set by lenders instead. We find large gains in consumer surplus from such a policy.

This paper studies the intermediation of auto loans through auto dealers using new and comprehensive administrative data. The arrangements between auto dealers and lenders incentivize dealers to increase loan prices. We leverage details of the corresponding contracts to demonstrate that many consumers are less responsive to finance charges than to vehicle charges. Taking this behavior into account, we estimate an equilibrium model of dealer price setting and lender competition. We explore counterfactuals where dealers have no discretion to price loans and final rates are set by lenders instead. We find large gains in consumer surplus from such a policy.

This paper provides a comprehensive analysis regarding strategic interaction under expectation-based loss-aversion. First, we develop a coherent framework for the analysis by extending the equilibrium concepts of Koszegi and Rabin (2006, 2007) to strategic interaction and demonstrate how to derive equilibria. Second, we delineate how expectation-based loss-averse players differ in their strategic behavior from their counterparts with standard expected-utility preferences. Third, we analyze equilibrium play under expectation-based loss aversion and comment on the existence of equilibria.

This paper studies the effects of power-concentrating institutions on the quality of political selection, i.e., the voters' capacity to identify and empower well-suited politicians. In our model, candidates are heterogeneous in two unobservable quality aspects: ability and public-spiritedness. As voters can only base their ballots on the candidates' binding policy proposals, low-quality candidates face incentives to mimic their high-quality counterparts and a selection problem arises. We nd that powerconcentrating institutions amplify this selection problem as they increase electoral stakes and thus the incentives for mimicking. However, they also allocate more political power to the voters' preferred candidate. As a consequence, the optimal institutional setting depends on the con ict of interest between voters and candidates. The larger the con ict of interest, the smaller is the level of power concentration that maximizes voter welfare. A complete concentration of power in the hands of the election winner is optimal if and only if the con ict of interest is small.

The behavioral relevance of non-binding default options is well established. While most research has focused on decision makers' responses to a given default, we argue that this individual decision making perspective is incomplete. Instead, a comprehensive understanding of the foundation of default effects requires taking account of the strategic interaction between default setters and decision makers. We provide a theoretical framework to analyze which default options arise in such interactions, and which defaults are more likely to affect behavior. The key drivers are the relative level of information of default setters and decision makers, and their alignment of interests. We show that default effects are more pronounced if interests of the default setter and decision makers are more closely aligned. Moreover, decision makers are more likely to follow default options the less they are privately informed about the relevant decision environment. In the second part of the paper we experimentally test the main predictions of the model. We report evidence that both the alignment of interests as well as the relative level of information are key determinants of default effects. An important policy relevant conclusion is that potential distortions arising from default options are unlikely if decision makers are either well-informed or reflect on the interests of default setters.

Fluorouracil-based chemoradiotherapy is regarded as a standard perioperative treatment in locally advanced rectal cancer. We investigated the efficacy and safety of substituting fluorouracil with the oral prodrug capecitabine. This randomised, open-label, multicentre, non-inferiority, phase 3 trial began in March, 2002, as an adjuvant trial comparing capecitabine-based chemoradiotherapy with fluorouracil-based chemoradiotherapy, in patients aged 18 years or older with pathological stage II–III locally advanced rectal cancer from 35 German institutions. Patients in the capecitabine group were scheduled to receive two cycles of capecitabine (2500 mg/m2 days 1–14, repeated day 22), followed by chemoradiotherapy (50·4 Gy plus capecitabine 1650 mg/m2 days 1–38), then three cycles of capecitabine. Patients in the fluorouracil group received two cycles of bolus fluorouracil (500 mg/m2 days 1–5, repeated day 29), followed by chemoradiotherapy (50·4 Gy plus infusional fluorouracil 225 mg/m2 daily), then two cycles of bolus fluorouracil. The protocol was amended in March, 2005, to allow a neoadjuvant cohort in which patients in the capecitabine group received chemoradiotherapy (50·4 Gy plus capecitabine 1650 mg/m2 daily) followed by radical surgery and five cycles of capecitabine (2500 mg/m2 per day for 14 days) and patients in the fluorouracil group received chemoradiotherapy (50·4 Gy plus infusional fluorouracil 1000 mg/m2 days 1–5 and 29–33) followed by radical surgery and four cycles of bolus fluorouracil (500 mg/m2 for 5 days). Patients were randomly assigned to treatment group in a 1:1 ratio using permuted blocks, with stratification by centre and tumour stage. The primary endpoint was overall survival; analyses were done based on all patients with post-randomisation data. Non-inferiority of capecitabine in terms of 5-year overall survival was tested with a 12·5% margin. This trial is registered with ClinicalTrials.gov, number NCT01500993. Between March, 2002, and December, 2007, 401 patients were randomly allocated; 392 patients were evaluable (197 in the capecitabine group, 195 in the fluorouracil group), with a median follow-up of 52 months (IQR 41–72). 5-year overall survival in the capecitabine group was non-inferior to that in the fluorouracil group (76% [95% CI 67–82] vs 67% [58–74]; p=0·0004; post-hoc test for superiority p=0·05). 3-year disease-free survival was 75% (95% CI 68–81) in the capecitabine group and 67% (59–73) in the fluorouracil group (p=0·07). Similar numbers of patients had local recurrences in each group (12 [6%] in the capecitabine group vs 14 [7%] in the fluorouracil group, p=0·67), but fewer patients developed distant metastases in the capecitabine group (37 [19%] vs 54 [28%]; p=0·04). Diarrhoea was the most common adverse event in both groups (any grade: 104 [53%] patients in the capecitabine group vs 85 [44%] in the fluorouracil group; grade 3–4: 17 [9%] vs four [2%]). Patients in the capecitabine group had more hand-foot skin reactions (62 [31%] any grade, four [2%] grade 3–4 vs three [2%] any grade, no grade 3–4), fatigue (55 [28%] any grade, no grade 3–4 vs 29 [15%], two [1%] grade 3–4), and proctitis (31 [16%] any grade, one [<1%] grade 3–4 vs ten [5%], one [<1%] grade 3–4) than did those in the fluorouracil group, whereas leucopenia was more frequent with fluorouracil than with capecitabine (68 [35%] any grade, 16 [8%] grade 3–4 vs 50 [25%] any grade, three [2%] grade 3–4). Capecitabine could replace fluorouracil in adjuvant or neoadjuvant chemoradiotherapy regimens for patients with locally advanced rectal cancer. Roche Pharma AG (Grenzach-Wyhlen, Germany).