This study presents a laboratory experiment of the first and second price sealed bid auctions with independent private values, where the distribution of bidder valuations may be unknown. In our experimental setting, in first price auctions, bids are lower with the presence of ambiguity. This result is consistent with ambiguity loving in a model that allows for different ambiguity attitudes. We ...

We assess the predictive power of a model of other-regarding preferences—inequality aversion—using a within-subjects design. We run four different experiments (ultimatum game, dictator game, sequential-move prisoners’ dilemma and public-good game) with the same sample of subjects. We elicit two parameters of inequality aversion to test several hypotheses across games. We find that within-subjec...

People tend to value objects more simply because they own them. Prior research indicates that people underestimate the impact of this endowment effect on both their own and other people’s preferences. We show that underestimating the endowment effect and hence owners’ selling prices can lead to suboptimal behavior in settings with economic consequences. Subjects acting as “buyer’s agents” made ...

Informational asymmetries abound in economic decision making and often provide an incentive for deception through telling a lie or misrepresenting information. In this paper I use a cheap-talk sender-receiver experiment to show that telling the truth should be classified as deception too if the sender chooses the true message with the expectation that the receiver will not follow the sender’s (...

In an experiment on sequential rent seeking, we find that the theoretically predicted first-mover advantage does not exist empirically. Rather, a second-mover advantage can be observed. Though the subgame perfect equilibrium can not prevail in experiment, individual behavior is highly reasonable nevertheless, such that subjects appear to play a reduced form of the original game. We also observe...

Risk and time are intertwined. The present is known while the future is inherently risky. This is problematic when studying time preferences since uncontrolled risk can generate apparently present-biased behavior. We systematically manipulate risk in an intertemporal choice experiment. Discounted expected utility performs well with risk, but when certainty is added common ratio predictions fail...

We present an experiment investigating the effects of having an individual identified as a singleton group. The presence of a singleton group reduces trustworthiness. The majority group members discriminate against the singled out group member when they are not responsible of the distinct status of this person. When the singleton group member is identified based on negative characteristics, he ...

Experimental and empirical evidence shows that the utility an individual derives from a certain state depends on the reference state she compares it to. According to economic theory, this reference state is determined by the past, present and future outcomes of either the individual herself or her reference group. The experiment described in this paper suggests that, in addition, reference stat...

This paper presents experimental evidence concerned with behavior in indefinite horizon two-person dynamic favor exchange games. Subjects interact in pairs in continuous time and occasionally one of them receives opportunity to provide a favor to her partner. The effects of changing the benefit of receiving a favor and the arrival rate of opportunities to do a favor are studied when the opportu...

We extend experience-weighted attraction (EWA) learning to games in which only the set of possible foregone payoffs from unchosen strategies are known, and estimate parameters separately for each player to study heterogeneity. We assume players estimate unknown foregone payoffs from a strategy, by substituting the last payoff actually received from that strategy, by clairvoyantly guessing the a...