The most distinctive prediction of prospect theory is the fourfold pattern (FFP) of risk attitudes. People are said to be (1) risk-seeking over low-probability gains, (2) risk-averse over low-probability losses, (3) risk-averse over high-probability gains, and (4) risk-seeking over...

Governments can and do adopt many policies that will improve the health and reduce the mortality risks of children. Given this, estimates of the value of improvements in children’s health and reductions in their mortality risk are needed so that governments can rationally choose which of the...

This paper describes some simple economic experiments that can be done using children as subjects. We argue that by conducting experiments on children economists can gain insight into the origins of preferences, the development of bargaining behavior and rationality, and into the origins of...

In this paper we study trust/reciprocity behavior in children ages eight to eighteen using an augmented version of Berg et al.’s (1995) trust game. This study is intended to inspect and reveal when certain aspects of trust behavior are formed in individuals. In addition, we examine the affect...

We report results from economic experiments that provide a direct test of the hypothesis that criminal behavior responds rationally to changes in the possible rewards and in the probability and severity of punishment. The experiments involve decisions that are best described as petty larceny,...

We study the development of bargaining behavior in children age seven through 18, using ultimatum and dictator games. We find that bargaining behavior changes substantially with age and that most of this change appears to be related to changes in preferences for fairness, rather than bargaining...

We examine rewards and punishments in a simple proposer-responder game. The proposer first makes an offer to split a fixed-sized pie. According to the 2×2 design, the responder is or is not given a costly option of increasing or decreasing the proposer's payoff. We find substantial demands for...

This paper studies how children learn to bargain. We performed simple anonymous bargaining experiments with real payoffs with 256 children from age 8 to 18. On average, offers by even the youngest children were close to optimal, given the responses. Both offers and responses were similar to the...

Determining the productivity of individual workers engaged in team production is difficult. Monitoring expenses may be high, or the observable output of the entire team may be some single product. One way to collect information about individual productivity is to observe how total output changes...

In this paper we examine how risk attitudes change with age. We present participants from age 5 to 64 with choices between simple gambles and the expected value of the gambles. The gambles are over both gains and losses, and vary in the probability of the non-zero payoff. Surprisingly, we find...