Essays in Behavioral Microeconomic Theory

Abstract

In this dissertation, I contribute to the literature on Behavioral Microeconomic Theory by analyzing the consequences of well-established departures from rationality and their remedies in strategic interactions. More precisely, I investigate credulity, reduced sensitivity to partitioned prices, and correlation neglect in models of democratic elections, imperfect competition, and contracting under hidden action. Moreover, to facilitate the analysis of other departures from rationality and their impact on economic well-being, I define a solution concept for games between players with dual-selves and discuss its relations to existing equilibrium concepts in the literature on Behavioral Economic Theory.