Applied Economics: Dominance-seeking and the economics of exclusion
Published: 21 January 2022
26 January. Dr Alex Imas, Booth School of Business, University of Chicago
Dr Alex Imas, Booth School of Business, University of Chicago
'Dominance-Seeking and the Economics of Exclusion' (co authored by K. Madarasz)
Wednesday 26 January, 3pm - 4.30pm
Zoom online seminar
Abstract
We propose that a person's valuation from consuming an object or possessing an attribute is increasing in others' unmet excess desire for it. Such dominance-seeking helps explain a host of market anomalies and generates novel predictions in a variety of domains. In bilateral exchange, there is a reluctance to trade, and people exhibit a social endowment effect. The value of consuming a good increases in its scarcity, which generates a motive for exclusion. Randomly excluding potential consumers from the opportunity to acquire a product will increase profits for a classic monopolist and a seller's revenue in first-price auctions. We test the predictions of the model empirically in both competitive and non-competitive environments. When auctioning a private good, randomly excluding people from the opportunity to bid substantially increases bids amongst those who retain this option. Exclusion leads to bigger gains in expected revenue than increasing competition through inclusion. Such effects are absent when those excluded are known to have lower valuations. In basic exchange, a person's willingness to pay for a good increases substantially when others are excluded from the opportunity of buying the same kind of good. Jointly, our two experiments also allow us to rule out a host of alternative explanations. Dominance-seeking has implications for both non-price and price based methods of exclusion: the model generates 'Veblen effects,' rationalises attitudes against redistribution, immigration, and trade, and provides a novel motive for social stratification and discrimination.
Biography
Alex Imas is an Assistant Professor of Behavioral Science at the University of Chicago Booth School of Business, where he has taught Negotiations and Behavioural Economics. Previously, he was the William S. Dietrich II Assistant Professor of Behavioural Economics at Carnegie Mellon University, where he taught Behavioural Economics and Human Judgment and Decision Making. Imas’ research spans a variety of topics across economics and psychology. He has explored the role of incorrect beliefs in discrimination, the prevalence of behavioural biases amongst expert and non-expert investors, and how to better motivate performance by incorporating psychology into incentives. His research has been published in the American Economic Review, Proceedings of the National Academy of Sciences, and Management Science, among others. Imas is the recipient of the New Investigator Award from the Behavioral Science and Policy Association, the Hillel Einhorn New Investigator Award from the Society of Judgment and Decision Making, the Distinguished CESifo Affiliate Award, and the NSF Graduate Research Fellowship. Imas was born in Bender, Moldova. He gained his PhD in Economics at the University of California, San Diego and earned a BA from Northwestern University. Prior to graduate school, Imas helped found a startup and co-authored several patents as part of its intellectual property strategy.
Further information: business-events@glasgow.ac.uk
First published: 21 January 2022
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