This article explores the use of alternative payment mechanisms to overcome the holdout problem when multiple parcels of land must be acquired to complete a real-estate development project. Purchase offers contingent upon successful land aggregation are compared to combination offers containing...

A classic theory of corporate governance holds that when cash flow is high and investment opportunities scarce, takeover threats reduce managerial self-dealing and encourage dividend payment to owners. I conduct laboratory experiments studying the effect of cash flow on selfdealing and the...

This paper describes a classroom game that illustrates the effects of asymmetric information and adverse selection in health insurance markets. The first part of this game simulates a market in which buyers can purchase insurance from sellers; in some periods, government regulation prevents...

Experiments can be used not only to test theory but also to measure preferences and assess heterogeneity of behavior. I discuss the design of experimental measures of altruism and trust, as well as their uses in assessing how behavior varies across individuals, and across partners that a given...

We study the effect of demand structure on the ability of subjects to tacitly collude on prices by considering Bertrand substitutes and Bertrand complements. We find evidence of collusion in the complements treatment, but no such evidence is found in the substitutes treatment. This finding is...

The trust game has been widely studied in the laboratory and is often presented as a model of exchange with incomplete contracting. The standard presentation of the game differs in three potentially important ways from the naturally occurring transactions it represents: buyer-seller framing,...

In recent years there has been increased behavioral research in virtual reality and virtual worlds. While these experiments could offer substantial advantages to researchers, they might also pose risks. We begin by identifying key concepts in virtual experimental research. Then we review the...

The decision to undertake risk is often made by pairs (dyads), while much of the economics literature on risk taking focuses on the individual. We report the results of controlled laboratory experiments that compare behavior between individuals and pairs. Using the Holt and Laury (2002)...

When an economic exchange requires agreement by multiple independent parties, the potential exists for an individual to strategically delay agreement in an attempt to capture a greater share of the surplus created by the exchange. This ‘‘holdout problem’’ is a common feature of the...

Experimental work in economics prompted the development of theories of other-regarding behavior. In this article we reanalyze two classic public goods experiments and focus on the nature of individuals’ responses to others’ behavior in order to help distinguish alternative motives for...