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Conflicting evidence and decisions by agency professionals: an experimental test in the context of merger regulation

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  • Bruce Lyons
  • Gordon Menzies
  • Daniel Zizzo

Abstract

Many important regulatory decisions are taken by professionals employing limited and conflicting evidence. We conduct an experiment in a merger regulation setting, identifying the role of different standards of proof, volumes of evidence, cost of error and professional or lay decision making. The experiment was conducted on current practitioners from 11 different jurisdictions, in addition to student subjects. Legal standards of proof significantly affect decisions. There are specific differences because of professional judgment, including in how error costs and volume of evidence are taken into account. We narrow the range of explanations for why professional decision making matters. Copyright Springer Science+Business Media, LLC. 2012

Suggested Citation

  • Bruce Lyons & Gordon Menzies & Daniel Zizzo, 2012. "Conflicting evidence and decisions by agency professionals: an experimental test in the context of merger regulation," Theory and Decision, Springer, vol. 73(3), pages 465-499, September.
    • Handle: RePEc:kap:theord:v:73:y:2012:i:3:p:465-499
    DOI: 10.1007/s11238-011-9258-3
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    Cited by:

    1. Timo Henckel & Gordon D. Menzies & Daniel J. Zizzo, 2013. "The Great Recession and the Two Dimensions of European Central Bank Credibility," CAMA Working Papers 2013-55, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Timo Henckel & Gordon Menzies & Peter Moffat & Daniel J. Zizzo, 2017. "Sticky Belief Adjustment: A Double Hurdle Model and Experimental Evidence," Working Paper Series 40, Economics Discipline Group, UTS Business School, University of Technology, Sydney.

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    More about this item

    Keywords

    Belief conservatism; Experiment; Merger control; Professionalism; Standard of proof; L33; L40; L50; C91;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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