The strategic implications of sunk costs: a behavioral perspective

Article Abstract:

The 'sunk cost phenomenon' refers to the tendency of companies to invest repeatedly in previously committed projects. The strategic impact of this case of 'throwing good money after bad' in sequential allocation decisions is examined. It is shown that the sunk cost effect is a form of strategic preference manipulation that both the sunk cost players and their opponents can use to their advantage. Behavioral predictions and prescriptive recommendations are presented.

Analysis, Investments, Corporations, Capital investments, Costs, Industrial, Industrial costs

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Strategic vote manipulation in a simple democracy

Article Abstract:

An analysis of wage determination based on employee votes is presented. The analysis focuses on cases involving employee stock ownership plans and employee buyouts, where income from wages and share profits are considered. It is shown that selling capital stock shares to non-risk-loving workers influences voting for the lowest possible wages. In addition, employee competition for shares makes them equally worse off.

Research, Employee stock ownership plans

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Contracting in strategic situations

Article Abstract:

An analysis of contract design in a two-player strategic situation is presented. The analysis applies the distinction between cooperative and non-cooperative games and their ability in establishing binding pre-play agreements. It is shown that contract enforcment in the event of a breach is possible. In addition, such contracts are generally assumed incomplete and generate diverse actions for various states.

Economic aspects, Contracts

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