This paper presents an experimental study of dynamic indefinite horizon R&D races with uncertainty and multiple prizes. The theoretical predictions are highly sensitive: small parameter changes determine whether technological competition is sustained, or converges into a market structure with an entrenched leadership and lower aggregate R&D. The subjects’ strategies are far less sensitive. In m...

Economic decisions have been shown to depend on actual outcomes as well as perceived intentions. In this paper, we examine whether and how the relative importance of outcomes or intentions for economic decisions develops with age. We report the results of ultimatum games with children, teens and students. We find that children and teens react systematically to perceived intentions, like student...

We undertook the first market trading experiments that allowed heterogeneously informed subjects to trade in endogenous time, collecting over 2000 observed trades. Subjects’ decisions were generally in line with the predictions of exogenous-time financial herding theory when that theory is adjusted to allow rational informational herding and contrarianism. While herding and contrarianism did no...

We test for behavioral differences between groups and individuals in giftexchange experiments. Related studies establish group behavior as typically closer to the game-theoretic equilibrium. We show that this result may depend crucially on the decision making procedure within groups. A novel decision making protocol opens up the black box of group decision making and allows to track important f...

We introduce the moonlighting game. Player A can take money from or pass money to player B, who can either return money or punish player A. Thus, our game allows to study both positively and negatively reciprocal behaviour. One-shot experiments were conducted with and without the possibility of making non-binding contracts beforehand. We find that retribution is much more compelling than recipr...

We examine conflict resolution via a random device. We model conflict as a two-agent rent-seeking contest for a fixed prize. Before conflict arises, both agents may agree to allocate the prize by coin flip to avoid the costs of conflict. In equilibrium, risk-neutral agents with relatively symmetric conflict capabilities agree to resolve the conflict by randomization. However, with sufficiently ...

Risk-Taking Tournaments: Theory and Experimental Evidence We study risk-taking behavior in a simple two person tournament in a theoretical model as well as a laboratory experiment. First, a model is analyzed in which two agents simultaneously decide between a risky and a safe strategy and we allow for all possible degrees of correlation between the outcomes of the risky strategies. We show that...

We present experimental evidence from a bilingual city in Northern Italy on whether the language spoken by a partner in a prisoner’s dilemma game affects behavior and leads to discrimination. Running a framed field experiment with 828 sixto eleven-year old primary school children in the city of Meran, we find that cooperation generally increases with age, but that the gap between cooperation am...

Using a computational testbed, we theoretically predict and experimentally show that in the minimum effort coordination game, as the cost of effort increases, 1) the game converges to lower effort levels, 2) the convergence speed increases, and 3) the average payoff is not monotonically decreasing. In fact, the average profit is an U-shaped curve as a function of cost. Therefore, contrary to th...

Other-Regarding Preferences and Leadership Styles We use a laboratory experiment to examine whether and to what extent other-regarding preferences of team leaders influence their leadership style in choice under risk. We find that leaders who prefer efficiency or report high levels of selfishness are more likely to exercise an autocratic leadership style by ignoring preferences of the other tea...