Cooperation between individuals requires the ability to infer each other’s mental states to form shared expectations over mutual gains and make cooperative choices that realize these gains. From evidence that the ability for mental state attribution involves the use of prefrontal cortex, we...

It is well-known in evolutionary game theory that population clustering in Prisoner's Dilemma games allows some cooperative strategies to invade populations of stable defecting strategies. We adapt this idea of population clustering to a two-person trust game. Without knowing it, players are...

Several scholars have argued that abundant natural resources can be harmful to economic performance under bad institutions and helpful when institutions are good. These arguments have either been theoretical or based on naturally-occurring variation in natural resource wealth. We test this...

A new mechanism that substantially mitigates social dilemmas is examined theoretically and experimentally. It resembles the voluntary contribution mechanism (VCM) except that in each decision round subjects are ranked and then grouped according to their public contribution. The game has multiple...

According to theory a pure meritocracy is efficient because individual members are competitively rewarded according to their individual contributions to society. However, purely individually based meritocracies seldom occur. We introduce a new model of social production called “team-based...

We design an experiment to examine behavior and welfare in a multi-level trust game representing a pass through investment in an intermediated market. In a repeated game, an investor invests via an intermediary who lends to a borrower. A pre-experiment one-shot version of the game serves as a...