[cid:image002.png@01CEBF6B.D0B28790] VIENNA JOINT ECONOMICS SEMINAR INVITATION R E M I N D E R The University of Vienna and the Department of Economics and Finance at the Institute for Advanced Studies cordially invite you to the following Vienna Joint Economics Seminar <http://www.ihs.ac.at/vienna/resources/Economics/Papers/20130226_Paper_Zimmermann.pdf> Thursday, March 3, 2015 University of Vienna, Oskar-Morgenstern-Platz 1, 1090 Vienna, HS 15, 2nd floor 4:00 pm Rosemarie Nagel<http://www.econ.upf.edu/~nagel/> and Dov Samet<http://www.tau.ac.il/~samet/> U Pompeu Fabra Tel Aviv U De-Framing the Rules to (De)-Anchor Beliefs in Beauty Contest Games (Rosemarie Nagel) Abstract: In many situations people choose badly because of misguiding focal points or limited depth of reasoning. The beauty contest (BC) has been one core example to show such behavior. In this paper we modify the Keynesian beauty contest game by removing the bounded choice interval thereby disabling the possibility of iteratively eliminating dominated strategies. We further eliminate the tournament payoff structure. These two changes do not change the equilibrium but change quite dramatically the behavior. However, in order to further increase the payoffs in the first instance, we add correlated, idiosyncratic signals of the likely state of the world; these signals can be viewed as idiosyncratic sentiments or interpretations of news and can serve as an equilibrium coordinating device. We report experimental evidence showing that the distance to the unique Pareto optimal equilibrium of the model without signals is closer when subjects are first exposed to this signaling environment with an unbounded choice interval relative to similar environments without signals. We conclude that we can turn on or off level-k reasoning depending on the information structure of the game. Paper jointly with Jess Benhabib (NYU) and John Duffy (UC Irvine) and The sure-thing principle as originally intended (Dov Samet) Abstract: Savage introduced the sure-thing principle in terms of the dependence of decisions on knowledge, but gave up on formalizing it in epistemic terms for lack of a formal definition of knowledge. Using a standard model of knowledge, the partition model, we examine the sure-thing principle, presenting two ways to capture it. One is in terms of knowledge operators, which we call the principle of follow the knowledgeable; the other is in terms of kens--bodies of agents' knowledge--which we call independence of irrelevant knowledge. We show that the two principles are equivalent. We present a stronger version of the independence of irrelevant knowledge and show that it is equivalent to the impossibility of agreeing to disagree on the decision made by agents, namely the impossibility of different decisions made by agents being common knowledge. We are looking forward to seeing you! 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