We experimentally test whether a class of monetary policy decision rules describes decision making in a population of inexperienced central bankers. In our experiments, subjects repeatedly set the short-term interest rate for a computer economy with inflation as their target. A large majority of...

The article presents a theory that I denote “Relative Thinking Theory,” which claims that people consider relative differences and not only absolute differences when making various economics decisions, even in those cases where the rational model dictates that people should consider only...

This paper reports the findings of a meta-analysis of 37 papers with 75 results from ultimatum game experiments. We find that on average the proposer offers 40% of the pie to the responder. This share tends is smaller for larger pie sizes and larger when a strategy method is used or when...

This paper presents the results of an experiment performed to test the properties of an innovative bargaining mechanism (called automated negotiation) used to resolve disputes arising from Internet-based transactions. Automated negotiation is an online sealed-bid process in which an automated...

We study search behavior in a generalized "secretary problem" environment in which consumers search sequentially for the best alternative from a known and finite set of multi-attribute alternatives. In contrast to most previous studies, we make no distributional assumptions about the quality of...

This paper explores, through a series of experiments, the effect of shill bidding upon revenues and prices in auctions. We study the practice of shill bidding in a common value framework. Our findings are consistent with the theoretical prediction that, if bidders are aware of the possibility of...

The Hayek Hypothesis holds that prices contain enough information to direct the resources in the economy to their most efficient use. In a series of experiments, Vernon Smith [1987] found that with the right trading institutions, a market with agents that know only their own valuations of a good...

While many learning models have been proposed in the game theoretic literature to track individuals’ behavior, surprisingly little research has focused on how well these models describe human adaptation in changing dynamic environments. Analysis of human behavior demonstrates that people are...

We present an experimental study on the wasted resources associated with tax evasion. This waste arises from taxpayers and tax authorities investing costly effort in the concealment and detection of tax evasion. We show that these socially inefficient efforts - as well as the frequency of tax...

In many research contexts it is necessary to group experimental subjects into behavioral “types.” Usually, this is done by pre-specifying a set of candidate decision-making heuristics and then assigning each subject to the heuristic that best describes his/her behavior. Such approaches might...