The paper considers collective agreements that are signed by a government agency and an industry which have an energy saving target. The target achievement is observable, but the energy saving actions undertaken by firms in the industry are not. We consider such agreements as firm contracts that depend on whether the industry complies with the target or not. We show that first best regulation c...

Humans involved in cooperative interactions willingly pay a cost to punish cheats. However, the proximate motives underpinning punitive behaviour are currently debated. Individuals who interact with cheats experience losses, but they also experience lower payoffs than the cheating partner. Thus, the negative emotions that trigger punishment may stem from a desire to reciprocate losses or from i...

A spate of recent investigations on reciprocation and social enforcement in humans has brought together (and sometimes divided) economists, psychologists, anthropologists, social scientists and evolutionary biologists, in addition to neurologists and students of animal behavior. Experimental work on public goods and social incentives has addressed a wealth of questions on the emotional and cogn...

This paper explores the role of fairness in consumer financial decisions. Specifically, we investigate how consumers’ perceptions of fairness for financial products can influence their willingness to purchase those products. In doing so, we also consider why perceptions of fairness for financial decisions are different from fairness concerns for other types of consumer products. We also explore...

A standard nding in the literature on political agency is that voters punish incumbents who raise taxes. Typically, only the reaction of a representative voter is considered, with the notion that all voters dislike high taxes because the revenue is, at least on the margin, spent on rent-seeking activities. In this paper we question this interpretation by considering the heterogeneous responses ...

Laboratory experiments indicate that many people willingly contribute to public goods and punish free riders at a personal cost. We hypothesize that these individuals, called strong reciprocators, allow political parties to overcome collective action problems, thereby allowing those organizations to compete for scarce resources and to produce public goods for like-minded individuals. Using a se...

Punishment has been proposed as being central to two distinctively human phenomena: cooperation in groups and morality. Here we investigate moralistic punishment, a behavior designed to inflict costs on another individual in response to a perceived moral violation. There is currently no consensus on which evolutionary model best accounts for this phenomenon in humans. Models that turn on indivi...

Understanding how effort and luck map to observed success or failure can be very difficult. However, people often have to make important judgments about punishments and/or rewards from that vantage point. In an experimental context where this judgment should be very easy to make, we study how effectively principals can punish the low effort of agents while ignoring random information. The innov...

Recent research has shown that individuals are prepared to incur costs to punish non-cooperators, even in one-shot interactions. However, why would people punish non-cooperators with no apparent benefits for the punishers themselves? This behavior is also known as altruistic punishment. When defection is discovered, an individual evaluates this act as unfair, which could result in anger. We arg...