Overconfidence can have important economic consequences, but has received little direct testing within the discipline. We test for overconfidence in forecasts of own absolute or relative performance in two unfamiliar experimental tasks. Given their choice of effort at the tasks, participants...

I consider a gamble where the sum of the distributed payoffs is proportionate to the number of participants. I show that no subset of the population can agree to participate in the bet, if the size of the group is commonly known. Repeated announcements of the number of the participants leads the...

Economists and financial analysts have begun to recognise the importance of the actions of other agents in the decision-making process. Herding is the deliberate mimicking of the decisions of other agents. Examples of mimicry range from the choice of restaurant, fash-ion and financial market...

One potential reason for bubbles evolving prior to the financial crisis was excessive risk taking stemming from option-like incentive schemes in financial institutions. By running laboratory asset markets, we investigate the impact of option-like incentives on price formation and trading...

This classroom experiment introduces students to the notion of credit risk by allowing them to trade on comparable corporate bond issues from two types of markets - investment-grade and high-yield. Investment-grade issues have a lower probability of default than high-yield issues, and thus...

A number of competing social preference models have been developed inspired by the evidence from economic experiments. We test the relative performance of some of these models using an experimental design that is aimed at capturing pure distributional concerns in a multi-person setting. We find...

By using hypothetical choice experiments, this paper presents evidence that individuals' concern for relative consumption depends on their relative consumption. Individuals with consumption levels above society's average consumption level tend to have, in general, lower concern for relative...

Credence goods markets are characterized by asymmetric information between sellers and consumers that may give rise to inefficiencies, such as under- and overtreatment or market break-down. We study in a large experiment with 936 participants the determinants for efficiency in credence goods...

In the vast majority of laboratory experiments documenting the existence of reciprocity subjects are endowed with windfall funds. In many environments with salient fairness considerations such endowments are known to inflate subjects’ other-regarding behavior, thereby creating a so-called...

We conduct a laboratory experiment to study whether giving people more time to donate to charity reduces donations. People may intend to donate, but because of the transaction costs of doing so, postpone making the payment until they are less busy, and having postponed making the donation once,...