Isabelle Brocas

• PhD
• Professor (Full) at University of Southern California

We study in the laboratory age-related changes in the behavior of children and adolescents (ages 7 to 16) in two repeated coordination games, stag hunt and battle of the sexes. In these games, sharing intention and beliefs helps participants reach the efficient and fair long run outcome (EFO). In stag hunt, it means coordinating on the Pareto super...

This volume brings together contributions to the burgeoning research area of behavioral economics from a number of well-known international scholars in the field. Topics covered include 'irrational' conducts; imperfect self-knowledge; imperfect memory; time and utility; and experimental practices in psychology, economics, and finance. This book wil...

One of the core questions in Neuro-economics is to determine where value is represented. To date, most studies have focused on simple options and identified the ventromedial prefrontal cortex (VMPFC) as the common value region. We report the findings of an fMRI study in which we asked participants to make pairwise comparisons involving options of v...

We study the foundations for the development of optimal randomization in mixed strategy games. We consider a population of children and adolescents (7 to 16 years old) and study in the laboratory their behavior in a nonzero sum, hide‐and‐seek game with a unique interior mixed strategy equilibrium where each location has a known but different value....

We study from a developmental viewpoint the ability to perform contingent reasoning and the cognitive abilities that facilitate optimal behavior. Individuals from 11 to 17 years old participate in a simplified version of the two-value, deterministic “acquire-a-company” adverse selection game (Charness and Levin, 2009; Martínez-Marquina et al., 2019...

We develop a theory based on the evidence reported in Hare et al. (2009) to explain consumption of goods that feature a low-order attribute (e.g., taste) and a high-order attribute (e.g., health). One brain system with access to the low-order attribute computes the goal value of consumption while another brain system can modulate this value, at a c...

Subjects 5 to 17 years old participate in two rounds of a lying game. In each round, each participant reports one outcome for themselves and one outcome for another random, anonymous person of the same age. We observe frequent but not omnipresent over-reports for oneself (self-serving lying). We also observe small aggregate levels of under-reports...

We study experimentally the decision of an individual to steal or pay for an object that is produced at a cost by another individual. We consider two conditions. In the first condition, subjects caught stealing are sanctioned with a nominal fee. In the second condition, the sanction is increased by making the identity of the individual public (sham...

Barter and commodity markets have been ubiquitous throughout history, suggesting that humans are good at exploiting profitable exchange opportunities. This paper studies our ability to trade through a developmental approach. We present a market experiment involving children who have not yet fully developed trading habits and are relatively unfamili...

We develop a graphical, non-analytical version of the two-person beauty contest game to study the developmental trajectory of instinctive behavior and learning from kindergarten to adulthood. These are captured by observing behavior when the game is played in two consecutive trials. We find that equilibrium behavior in the first trial increases sig...

Decision-making in children and adolescents is receiving increasing attention among economists. Studies shed light on opportunities for economists to understand the developmental causes of anomalous behavior in adults and to propose interventions at a young age capable of improving adult outcomes. Nevertheless, the study of children brings also new...

We conduct a dictator experiment with children (7–16 years old) and adults to study the development of the underlying motivations for other-regarding behavior. Prior to choosing the sharing rule, our participants can manipulate their access to information and remain strategically ignorant of the payoffs associated with some or all of the alternativ...

Is it possible to know which choices make sense and which ones do not? In this article we examine an important property that needs to be satisfied for a combination of choices to be rational. We also review some studies that discuss the age at which children begin to make rational choices.

How does value-based reasoning develop and how different this development is from one domain to another? We propose a novel experimental design where children 5 to 11 years old make pairwise choices in the Goods (toys), Social (sharing between self and other), and Risk (lotteries) domains, and we evaluate the consistency of their choices. The devel...

Employing a variant of GARP, we study consistency in aging by comparing the choices of younger adults (YA) and older adults (OA) in a “simple” two-good and a “complex” three-good condition. We find that OA perform worse than YA in the complex condition but similar to YA in the simple condition, both in terms of the number and severity of GARP viola...

We study in the laboratory three-, four- and six-player, dominance solvable games of complete information. We consider sequential and simultaneous versions of games that have the same, unique Nash equilibrium, and we use mousetracking to understand the decision making process of subjects. We find more equilibrium choices in the sequential version t...

We propose a theoretical model that places attention at the center of mental time travel (MTT) ability. This theory predicts that attention promotes a memory-based process that encodes memories of unexpected events, facilitates accurate recollection of information of such events during MTT, and optimizes subsequent decision-making. This process coe...

We conduct a controlled laboratory experiment in the spirit of Merton (1971), in which subjects dynamically choose their portfolio allocation between a risk-free and risky asset. Using the optimal allocation of an investor with hyperbolic absolute risk aversion (HARA) utility, we fit the experimental choices to characterize the risk profile of our...

We develop a theory of dishonesty based on neurophysiological evidence that supports the idea of a two-step process in the decision to cheat. Formally, decisions can be processed vía a costless “honest” channel that generates truthful behavior or vía a costly “dishonest” channel that requires attentional resources to trade-off costs and benefits of...

We investigate iterative reasoning in children from pre-kindergarten to first grade (4–7 years old). We consider two-person games that have a unique Trembling Hand Perfect Equilibrium but vary in three key features: iterative complexity (the number of iterations required to reach the equilibrium), perspective requirement (the identity of the player...

In this laboratory experiment, children and teenagers learn the composition of balls in an urn through sampling with replacement. We find significant aggregate departures from optimal Bayesian learning across all ages, but also important developmental trajectories. Two inference-based and two heuristic-based strategies capture the behavior of 65% t...

Strategic thinking is an essential component of rational decision-making. However, little is known about its developmental aspects. Here we show that preschoolers can reason strategically in simple individual decisions that require anticipating a limited number of future decisions. This ability is transferred only partially to solve more complex in...

We conduct a laboratory experiment where groups of 4 subjects constrained to obtain at most one good each, sequentially bid for three goods in first and second price auctions. Subjects learn at the beginning of each auction their valuation for the good and exit the auction once they have obtained one good. We show that, contrary to equilibrium pred...

In this paper, we study how stress affects risk taking in three tasks: individual lotteries, Stag Hunt (coordination) games, and Hawk-Dove (anti-coordination) games. Both control and stressed subjects take more risks in all three tasks when the value of the safe option is decreased and in lotteries when the expected gain is increased. Also, subject...

We conduct a laboratory experiment of second-price sealed bid auctions of a common value good with two bidders. Bidders face three different types of information: common uncertainty (unknown information), private information (known by one bidder) and public information (known by both bidders), and auctions differ on the relative importance of these...

We investigate self-awareness in time perception using three time production tasks with different rewards structures, and collect self-assessments of performance. Participants had monetary incentives to target the true time in the first (baseline) task, not to exceed the true time in the second task and not to fall below the true time in the third...

We propose a theory of "optimal memory management" that unveils causal relationships between memory systems and the characteristics of the information retrieved. Our model shows that if the declarative memory is more accurate but also more costly than the pro-cedural memory, then it is optimal to retrieve exceptional experiences with the former and...

Psychophysics studies on time perception argue that the way we represent time intervals is not linear in true time intervals. Economics research on time discounting reveals that future rewards are valued less the longer the delay involved. Here we combine both strands and present experimental data in which subjects perform two tasks. First, they pr...

Brain modularity is a key concept in neuroscience. It challenges the common view of the single coherent self adopted in many disciplines, including economics. Multi-process theories of decision-making rely on the existence of several brain systems interacting with each other to revisit standard paradigms of choice, propose choices that fit the beha...

I analyze optimal auction design in the presence of linear type-dependent negative externalities. I characterize the properties of the optimal mechanism when externalities are “strongly decreasing” and “increasing” in the agent’s valuation and I discuss its implementation with sealed-bid auctions. Interestingly, bidding strategies are not necessari...

In this Article we build on neuroscience evidence to model belief formation and study decisionmaking by judges and juries. We show that physiological constraints generate posterior beliefs with properties that are qualitatively different from traditional Bayesian theory. In particular, decisionmakers will tend to reinforce their prior beliefs and t...

A seller decides whether to allocate an item among two potential buyers. The seller and buyer 1 interact ex post in such a way that each of them suffers a negative externality if the other possesses the item. We show that the optimal allocation rule favors buyer 2, who does not interact ex-post with the seller, and in particular bidder 1 may not ob...

I study an allocation mechanism of a single item in the presence of type-dependent externalities between bidders. The type-dependency introduces countervailing incentives and the allocation sometimes requires that types in an interior subset obtain their reservation utility. Furthermore, truth-telling requires the ex-ante allocation to satisfy a no...

We build on research from neurobiology to model the process through which the brain maps outside evidence into decisions. The sensory system encodes information through cell-firing. Cell-firing is measured against a threshold, and an action is triggered depending on whether the threshold is surpassed. The decision system modulates the threshold. We...

In this paper, we analyze an intra-personal game where a decision-maker is summarized by a succession of selves. Selves may (or may not) have conflicting interests, and earlier selves may have imperfect knowledge of the preferences of future selves. At date 1, self-1 chooses a menu, at date 2, the preferences of self-2 realize and self-2 chooses an...

When an individual performs several tasks simultaneously, processing resources must be allocated to different brain systems to produce energy for neurons to fire. Following the evidence from neuroscience, we model the brain as an organization in which a coordinator allocates limited resources to the brain systems responsible for the different tasks...

To understand the thinking process in private information games, we use “Mousetracking” to record which payoffs subjects attend to. The games have three information states and vary in strategic complexity. Subjects consistently deviate from Nash equilibrium choices and often fail to look at payoffs which they need to in order to compute an equilibr...

We study in the laboratory a series of first price sealed bid auctions of a common value good. Bidders face three types of information: private information, public information and common uncertainty. Auctions are characterized by the relative size of these three information components. According to Nash Equilibrium theory, bids can be decomposed in...

In experiments, people do not always appear to think very strategically or to infer the information of others from their choices. To understand this thinking process further, we use "Mousetracking" to record which game payoffs subjects look at, for how long, in games of private information with three information states, which vary in strategic comp...

We consider a model where two adversaries can spend resources in acquiring public information about the unknown state of the world in order to influence the choice of a decision maker. We characterize the sampling strategies of the adversaries in the equilibrium of the game. We show that, as the cost of information acquisition for one adversary inc...

"This paper presents a model where individuals have imperfect information and there is an opportunity cost of learning. It shows that the endogenous decision to collect costly information before taking an action has a systematic effect on choices. More precisely, consider two alternatives with ex ante identical expected payoff but different varianc...

This article provides a motivated summary of findings in neurobiology and assesses the potential benefits of including such findings in economic decision-making models. We emphasize that the evidence supports both 'expected utility-like' theory and 'Bayesian-like' information acquisition theory. However, we report that inferences and representation...

Based on recent neuroscience evidence, we model the brain as a dual-system organization subject to three conflicts: asymmetric information, temporal horizon, and incentive salience. Under the first and second conflicts, we show that the uninformed system imposes a positive link between consumption and labor at every period. Furthermore, decreasing...

In this model, a principal decides whether to produce one indivisible good and which characteristics it contains. Agents are differentiated along two substitutable dimensions: a vertical parameter that captures their valuation for the good, and a horizontal parameter that captures their disutility when the characteristics are distant from their pre...

An individual (the leader) with free access to information decides how much public evidence to collect. Conditional on this information, another individual with conflicting preferences (the follower) undertakes an action that affects the payoff of both players. In this game of incomplete but symmetric information, we characterize the rents obtained...

We analyze optimal auction design in the presence of negative externalities. We assume that externalities are a function of both the valuation of the agent who suffers it and the valuation of the agent who obtains the good. This introduces two different sources of countervailing incentives: the reservation utility of each bidder becomes type-depend...

Building on evidence from neurobiology and neuroscience, we model the physiological limitations faced by individuals in the process of decision-making that starts with sensory perception and ends in action selection. The brain sets a neuronal threshold, observes whether the neuronal cell firing activity reaches the threshold or not, and takes the o...

While many believe that money does buy happiness, research shows that richer people aren't necessarily happier people, especially in the United States.

We study an R&D game in which a research unit undertakes a (non-observable) research effort and, if an innovation is obtained, auctions licenses to a pool of producers. Each producer has a private valuation for the license and suffers a negative externality when a competitor becomes a licensee. We compare the optimal rule for the allocation of lice...

We model the brain as a multi-agent organization. Based on recent neuroscience evidence, we assume that different systems of the brain have different time-horizons and different access to information. Introducing asymmetric information as a restriction on optimal choices generates endogenous constraints in decision-making. In this game played betwe...

I consider a model where a principal decides whether to produce one unit of an indivisible good (e.g. a private school) and which characteristics it will contain (emphasis on language or science). Agents (parents) are differentiated along two substitutable dimensions: a vertical parameter that captures their privately known valuation for the good (...

This paper presents a model where individuals have imperfect information about their preferences (or the environment) and there is an opportunity cost of learning. It shows that the endogenous decision to collect information before taking an action creates a systematic bias in the aggregate behavior of a population of rational, profit-maximizing ag...

An agent undertakes a nonobservable first-stage effort. The principal observes whether the effort results in a successful project or not. If the project succeeds, only the firm observes its interim quality, and can further improve it with a nonobservable second-stage effort. If the agent accepts penalties when the first-stage fails, moral hazard an...

We consider a hyperbolic discounting agent. At each period, he can undertake an irreversible consumption decision that yields an uncertain current benefit and a delayed cost. If he decides to defer consumption for the future, some information exogenously flows in. We show that the agent may rationally decide to consume with negative expected net pr...

We analyze an agency model where one individual decides how much evidence he collects. We assume that he has free access to information, but all the news acquired become automatically public. Conditional on the information disclosed, a second individual with conflicting preferences undertakes an action that a ects the payo of both agents. In this g...

This volume brings together contributions to the burgeoning research area of behavioral economics from a number of well-known international scholars in the field. Topics covered include 'irrational' conducts; imperfect self-knowledge; imperfect memory; time and utility; and experimental practices in psychology, economics, and finance. This book wil...

In everyday decision-making, most choices made by individuals involve intertemporal tradeoffs between immediate and delayed gratification (eating, drinking, and smoking versus abstinence to keep a healthy state, current consumption versus saving for the future, leisure versus work to increase wealth, etc.). Traditional economic analyses capture the...

This volume brings together contributions to the burgeoning research area of behavioral economics from a number of well-known international scholars in the field. Topics covered include 'irrational' conducts; imperfect self-knowledge; imperfect memory; time and utility; and experimental practices in psychology, economics, and finance. This book wil...

This volume brings together contributions to the burgeoning research area of behavioral economics from a number of well-known international scholars in the field. Topics covered include 'irrational' conducts; imperfect self-knowledge; imperfect memory; time and utility; and experimental practices in psychology, economics, and finance. This book wil...

We analyze investment by a population of hyperbolic discounting entrepreneurs. In order to avoid inefficient procrastination, agents with good prospects about their chances of success may choose to forego free information and to invest boldly. This explains an excessive level of investment in the economy. Building on this observation, we show that...

This article argues that a rigorous application of simple game theory tools may provide unambiguous predictions about the behavior of teams in sports. As an illustration, the authors analyze the merits of two controversial changes in soccer rules, namely, the “three-point victory” and the “golden goal.” Building on well-accepted premises, the autho...

A regulator offers a cooperation contract to two firms to develop a research project. The contract provides incentives to encourage skill-sharing and coordinate subsequent efforts. Innovators must get informational rents to disclose their privately known skills, which results in distorting R&D efforts with respect to the first-best level. When effo...

We analyze a game where one agent (the "leader") decides first how much free information he collects, and then how much of this information he transmits to another agent (the "decision-maker"). Conditional on the information disclosed, the decision-maker undertakes an action that affects the payoff of both agents. We assume a conflict of preference...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

Nobody doubts that the behavior of agents often violates the most basic premises of rationality imposed in economics. Examples of such violations are provided in some of the essays in this volume. They suggest that looking for a purely rational explanation is sometimes either hopeless or absurd. On the other hand, labeling as irrational any conduct...

A collection of carefully selected contributions to behavioral economics from some of the leading international scholars in the field. Designed to fully complement Volume One, topics covered include preferences, behavioral game theory, motivated mental states and emotions and decision making.

In this paper, two upstream innovators invest to improve process innovations used by two downstream producers. At the beginning of the game, each innovator licenses its technology to one producer and they can agree to integrate vertically. Then, investment takes place and successful innovators choose their licensees. When technologies are not costl...

Cette analyse s’intéresse à déterminer les enjeux de la réglementation de la recherche et développement. Nous observons dans un premier temps l’environnement dans lequel cette activité a lieu et tentons de mettre en évidence les éléments fondamentaux qui doivent être pris en compte par le régulateur afin de donner les meilleures incitations aux inn...

This Paper studies a model where individuals have imperfect self-knowledge and learning is costly. It shows that the endogenous decision to collect information before taking an action creates a systematic and testable bias in the aggregate behaviour of agents in the economy. More precisely, individuals distort the information acquisition procedure...

This note argues that a rigorous application of simple game theory may provide unambiguous yet non-trivial theoretical insights about the behaviour of players in simple games. This contrasts with a commonly held view that many predictions in applied game theory are either obvious or inconclusive. To illustrate our point, we analyse the merits of tw...

We analyze the decision of individuals with time-inconsistent preferences to invest in projects yielding either current costs and future benefits or current benefits and future costs. We show that competition between agents for the same project mitigates the tendency to procrastinate on the first type of activities (i.e. to undertake them "too late...

The paper reviews the main findings on individual decision making under time inconsistent preferences, incomplete information, and different learning environments. First, when agents choose whether to learn or not, avoiding costless information can be their optimal strategy. Strategic ignorance predicts a systematic bias in the agents’ perceived pa...

Self-regulation is a complex process that involves consumers’ persistence, strength, motivation, and commitment in order to be able to override short-term impulses. In order to be able to pursue their long-term goals, consumers typically need to forgo immediate pleasurable experiences that are detrimental to reach their overarching goals. Although...

Self-regulation is a complex process that involves consumers’ persistence, strength, motivation, and commitment in order to be able to override short-term impulses. In order to be able to pursue their long-term goals, consumers typically need to forgo immediate pleasurable experiences that are detrimental to reach their overarching goals. Although...

We consider the decision of an agent with time inconsistent preferences to undertake an irreversible investment that yields an uncertain current benefit and a delayed cost. We show that, if the flow of information revealed between periods when the investment is postponed is sufficiently high, there is an expected positive information value of waiti...

I consider a model where a principal decides whether to produce one unit of an indi-visible good (e.g. a private school) and which characteristics (emphasis on language or science) it will contain. Agents (parents) are differentiated along two dimensions: a vertical parameter that captures their privately known valuation for the good (demand for pr...

We build on evidence from neurobiology to model the process through which the brain maps evidence received from the outside world into decisions. This mechanism can be represented by a decision-threshold model. The sensory system encodes information in the form of cell-firing. Cell-firing is then measured against a threshold and an action is trigge...

I study an allocation mechanism of a single item in the presence of type-dependent externalities between bidders. The type-dependency introduces countervailing in-centives and the allocation sometimes requires that types in an interior subset obtain their reservation utility. Furthermore, truth-telling requires the ex-ante al-location to satisfy a...

Economic agents often fail to make 'rational' decisions. They are subject to multiple biases that affect the way they perceive events, act upon them and learn from experience. Most of these anomalies are extraordinarily recurrent and documented in real world and laboratory environments by behavioral data at the individual and aggregate levels. To c...

Thesis (doctoral)--Université des sciences sociales de Toulouse, 1997.