One of the long-standing puzzles in economics is why wages do not fall sufficiently in recessions so as to avoid increases in unemployment. Put differently, if the competitive market wage declines, why don’t employers simply force their employees to accept lower wages as well? As an...

The endowment effect describes the fact that people demand much more to give up an object than they are willing to spend to acquire it. The existence of this effect has been documented in numerous experiments. We attempt to explain this effect by showing that evolution favors individuals whose...

If one abstracts from specially organized markets like stock or commodity exchanges, (international) trade relies on bargaining between the interested parties. Whereas earlier the results of bargaining were seen as unpredictable or determined by an at most vaguely defined concept of (relative)...

Rational bargaining behavior depends crucially on the rules of bargaining, especially on whether parties decide sequentially or independently. Whereas in ultimatum bargaining the proposer can exploit the responder, independent commitments result in more balanced payoffs. To limit the scope of...

The evolution of trustworthiness as a major aspect of business ethics depends crucially on whether it can be signaled. If this is impossible, only opportunistic traders will survive. Whereas previous studies have analysed detection agencies (Güth and Kliemt, 1994 and 1998) or have substituted...

The general framework of decision emergence (Güth, 2000a) is applied to the specific decision task of a proposer in ultimatum bargaining, i.e. to choosing how much the responder should be offered. For this purpose the "Master Module" as well as its submodules "New Problem Solver", "Adaptation...

Whereas orthodox game theory relies on the unrealistic assumption of (commonly known) perfect rationality, participants in game playing experiments are at best boundedly rational. This makes it necessary to supplement orthodox game theory by a behavioral theory of game playing. We first point...

Robust learning experiments confront participants with structurally different decision environments which they encounter, furthermore, repeatedly. Since the decision format does not depend on the rules (of game), forward looking deliberation (the shadow of the future) can be detected by...

Predating predators requires at least three specimen to which we refer as players 1, 2, and 3. Player 1 has simply to guess nature when trying to find food. Player 2 is hunting player 1 in the hope that 1 is well-fed but must also avoid being hunted by player 3. One major motivation is to test...