2017 - Working Papers: Managerial Economics
The effects of mandatory disclosure of supermarket prices, 45 pp.
I. Ater and O. Rigbi
(Working Paper no. 4/2017)
Research no.: 07870100
We study how mandatory online disclosure of supermarket prices affects prices and price dispersion in brick-and-mortar stores. Using data collected before and after a transparency regulation went into effect in the Israeli food retail market, multiple complementary control groups and relying on a differences-in-differences research design, we document a sharp decline in price dispersion and a 4% to 5% drop in prices following the transparency regulation. The price drop varied across stores and products; it was smaller among branded products than among private-label products, and it was smaller among stores and products that were likely to have been associated with more intense search patterns even before prices became transparent (e.g., products in heavy-discount chains; popular products; products that meet stringent kosher requirements). Finally, we show that prices declined as more consumers used price-comparison websites, and we highlight the role of media coverage in encouraging retailers to set lower prices.
Multi-dimensional reasoning in games: Framework, equilibrium and applications, 31 pp.
Arad and A. Rubinstein
(Working Paper no. 12/2017)
Research no.: 00170100
We develop a framework for analyzing multi-dimensional reasoning in strategic interactions, motivated by the following experimental findings: (a) in games with a large and complex space of strategies, players tend to think in terms of strategy characteristics rather than the strategies themselves, and (b) in choosing between strategies with a number of characteristics, players consider one characteristic at a time. The solution concept captures Nash-like stability of a choice of features of strategies rather than of strategies. The concept is applied to a number of economic interactions, where stable modes of behavior are identified.
