Punishment typically involves depriving violators of resources they own such as money or labor. These resources can become revenue for authorities and thus motivate profitseeking punishment. In this paper, we design a novel experiment to provide direct evidence on the role punishment plays in communicating norms. More importantly, we provide experimental evidence indicating that if people know ...

This paper reports an experiment designed to assess the effects of a rotation in the marginal cost curve on convergence in a repeated Cournot triopoly. Increasing the cost curve’s slope both reduces the serially-undominated set to the Nash prediction, and increases the peakedness of earnings. We observe higher rates of Nash equilibrium play in the design with the steeper marginal cost schedule,...

Using controlled experiments, we examine how individuals make choices when faced with multiple options. Choice tasks are designed to mimic the selection of health insurance, prescription drug, or retirement savings plans. In our experiment, available options can be objectively ranked allowing us to examine optimal decision making. First, the probability of a person selecting the optimal option ...

Organizations, Diffused Pivotality and Immoral Outcomes This paper studies how organizational design affects moral outcomes. Subjects face the decision to either kill mice for money or to save mice. We compare a Baseline treatment where subjects are fully pivotal to a Diffused-Pivotality treatment where subjects simultaneously choose in groups of eight. In the latter condition eight mice are ki...

While widely accepted models of labor market search imply a constant reservation wage policy, the empirical evidence strongly suggests that reservation wages decline in search duration. This paper reports the results of the rst realtime-search laboratory experiment. The controlled environment subjects face is stationary, and the payoff-maximizing reservation wage is constant. Nevertheless, subj...

We examine the influence of guilt and trust on the performance of credence goods markets. An expert can make a promise to a consumer first, whereupon the consumer can express her trust by paying an interaction price before the expert’s provision and charging decisions. We argue that the expert’s promise induces a commitment that triggers guilt if the promise is broken, and guilt is exacerbated ...

We investigate experimentally whether emotions affect bidding behavior in a first price auction. To induce emotions, we confront subjects after a first auction series with a positive or negative random economic shock. We then explore the relation between emotions and bidding behavior in a second auction series. Our main results are: (i) the economic shock has a substantial impact on the experie...

Prediction markets have proven successful in large-scale applications such as elections and sporting events. Consequently, several large corporations have adopted prediction markets for smaller-scale internal applications where information may be complex and the number of traders small. Using laboratory experiments we test the performance of the standard prediction market in complex environment...

We study a model in which individual agents use simple linear first order price forecasting rules, adapting them to the complex evolving market environment with a smart Genetic Algorithm optimization procedure. The novelties are: (1) a parsimonious experimental foundation of individual forecasting behaviour; (2) an explanation of individual and aggregate behavior in four different experimental ...

The present study attempts to connect cooperative behavior in the repeated play prisoner’s dilemma (RPPD) with ‘‘trusting’’ and ‘‘reciprocal’’ behavior. Our goal is to see if people with different propensities to cooperate exhibit differing degrees of trust and reciprocity. We find the subjects who choose to cooperate in a RPPD game exhibit higher levels of trust. However when it comes to recip...