Issue 2

Christian Michel
We analyze how firms can design contracts to strategically induce consumer misperceptions. A fraction of consumers is naive and underestimates the costs of claiming a warranty payment in the event of product breakdown. This leads to an inference error that makes consumers prone to overpredict product quality, which a firm can profitably exploit.

Elias Carroni
Two media platforms compete for heterogeneous users bothered by commercials and sell advertising spaces to firms. Within-group price discrimination intensifies media competition on the firms' side, as some firms advertise only on one media outlet (single-home), where they can meet early users and switchers. However, price discrimination also induces stronger within-group competition to poach the rival's users. Depending on the balance between these two forces, conditioning subscription prices on past behavior might be beneficial or detrimental to users, whereas it is always detrimental to platforms.

Jurjen J.A. Kamphorst Otto H. Swank
Workers' rewards and career perspectives often depend on how their supervisors perceive their performance. However, evaluating a worker's performance is often difficult. Supervisors give, on average, “too” positive appraisals, and both positive and negative feedback can (de)motivate workers.

Richard Gilbert and Eirik Gaard Kristiansen
Licensing promotes technology transfer and innovation, but enforcement of licensing contracts is often imperfect. We model contract enforcement as a game with perfect information but probabilistic enforcement and explore the implications of weak enforcement on the design of licensing contracts, the conduct of firms, and market performance.