Market forces meet behavioral biases: cost
misallocation and irrational pricing.
by Najjar, Nabil Al-^Baliga, Sandeep^Besanko, David
* Northwestern University; al-najjar@kellogg.northwestern.edu;
baliga@kellogg.northwestern.edu; d-besanko@ kellogg.northwestern.edu.
TABLE 1 Price and Distortions for Different Values of N and [theta]
[theta] N = 2 N = 3 N = 5
[right arrow] 0 [p.sup.0] 160.00 160.00 160.00
[s.sup.*] 0 0 0
[p.sup.*] 160.00 160.00 160.00
0.10 [p.sup.0] 152.11 145.00 132.73
[s.sup.*] 0.71 1.17 1.65
[p.sup.*] 152.45 145.65 133.71
0.20 [p.sup.0] 143.33 130.00 110.00
[s.sup.*] 2.70 3.70 3.95
[p.sup.*] 144.83 132.22 112.63
0.40 [p.sup.0] 122.50 100.00 74.29
[s.sup.*] 9.47 9.18 6.29
[p.sup.*] 128.42 106.43 79.23
0.60 [p.sup.0] 95.71 70.00 47.50
[s.sup.*] 17.70 12.05 5.76
[p.sup.*] 108.36 79.64 52.54
0.80 [p.sup.0] 60.00 40.00 26.67
[s.sup.*] 21.82 9.88 3.40
[p.sup.*] 78.18 48.89 29.88
0.90 [p.sup.0] 37.27 25.00 17.89
[s.sup.*] 17.48 6.12 1.80
[p.sup.*] 53.17 30.81 19.64
[right arrow] 1 [p.sup.0] 10.00 10.00 10.00
[s.sup.*] 0 0 0
[p.sup.*] 10.00 10.00 10.00
[theta] N = 10 N = 100
[right arrow] 0 [p.sup.0] 160.00 160.00
[s.sup.*] 0 0
[p.sup.*] 160.00 160.00
0.10 [p.sup.0] 110.00 33.08
[s.sup.*] 1.81 0.18
[p.sup.*] 111.20 33.24
0.20 [p.sup.0] 80.59 21.21
[s.sup.*] 2.80 0.10
[p.sup.*] 82.73 21.31
0.40 [p.sup.0] 47.50 14.41
[s.sup.*] 2.62 0.04
[p.sup.*] 49.80 14.45
0.60 [p.sup.0] 29.35 11.99
[s.sup.*] 1.72 0.02
[p.sup.*] 30.97 12.01
0.80 [p.sup.0] 17.89 10.75
[s.sup.*] 0.80 0.01
[p.sup.*] 18.68
0.90 [p.sup.0] 13.61 10.34
[s.sup.*] 0.39 [approximately
equal to] 0
[p.sup.*] 14.00 10.34
[right arrow] 1 [p.sup.0] 10.00 10.00
[s.sup.*] 0 0
[p.sup.*] 10.00 10.00
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