Standard economic theory makes an allowance for the agency problem, but not the compounding of moral hazard in the presence of informational opacity, particularly in what concerns high-impact events in fat tailed domains (under slowness of convergence for the law of large numbers). Nor did it...

Under its conventional positive interpretation, game theory makes predictions about the mixed strategy profile of the players in a noncooperative game by specifying a "solution set" of such profiles, e.g., the set of Nash equilibria of that game. Profiles outside of that set are implicitly...

For over a century, English husbands sold their wives at auctions. We argue that wife sales were an institutional response to an unusual constellation of property rights in Industrial Revolution-era English law. That constellation simultaneously required most wives to obtain their husbands'...

Prevailing economic models of consumer behavior completely ignore the well-documented link between context and evaluation. We propose and test a theory that explicitly incorporates this link. Changes in one group's spending shift the frame of reference that defines consumption standards for...

When asking for donations, charitable organizations often suggest a potential amount to contribute. However, the evidence concerning the effects of such suggestions is scarce and inconsistent. Unlike the majority of earlier studies concerned with small-money solicitations, we examine the effect...

This paper develops a theory of rational human sacrifice: the purchase and ritual slaughter of innocent persons to appease divinities. I argue that human sacrifice is a technology for protecting property rights. It improves property protection by destroying part of sacrificing communities'...

Why do prison gangs exist? Despite the prominence of formal governance mechanisms, inmates also require self-governance institutions to facilitate illicit trade. This article examines how inmates enforce agreements in the illicit contraband trade and how they resolve social disputes. We first...

Our primary purpose in this article is to draw upon the literature of classical liberal economy to show how it informs and is informed by the results from experimental economics. Adam Smith's first great book, <italic>The Theory of Moral Sentiments</italic>, serves as our chief source of insights for...