According to several psychological and economic studies, non-binding communication can be an effective tool to increase trust and enhance cooperation. This paper focuses on reasons why people stick to a given promise and analyzes to what extent image concerns of being perceived as a promise...

According to several psychological and economic studies, non-binding communication can be an effective tool to increase trust and enhance cooperation. This paper focuses on reasons why people stick to a given promise and analyzes to what extent image concerns of being perceived as a promise...

Multiplicative growth processes that are subject to random shocks often have a skewed distribution of outcomes. In a number of incentivized laboratory experiments we show that a large majority of participants either strongly underestimate skewness or ignore it completely. Participants...

Credence goods markets suffer from inefficiencies caused by superior information of sellers about the surplus-maximizing quality. While standard theory predicts that equal mark-up prices solve the credence goods problem if customers can verify the quality received, experimental evidence...

In this paper, we shed light on the different moral costs of dishonesty and stealing. To accomplish this, we set up a die-rolling task which allowed participants to increase their own payout through dishonesty or theft. The results show that participants have fewer reservations about dishonesty...

A growing literature has shown that behavioral biases influence consumer choices. Such socalled internalities are ubiquitous in many settings, including energy efficiency investments and the consumption of sin goods, such as cigarettes and sugar. In this paper, we use a mechanism design approach...

We study antisocial preferences in simple money-burning tasks. A decision maker can choose whether or not to reduce another person’s payoff at an own cost. We vary across tasks the initial endowment of the decider and the victim. We find that most conventional expectations are refuted:...

We study and compare the behavioral consequences of honesty and white lie in communication. An honest agent always recommends the ex post optimal policy to the principal, while a white liar may manipulate information but only for the sake of the principal. We identify the effects of honesty and...

Many studies have shown that people display an apparent overconfidence. In particular, it is common for a majority of people to describe themselves as better than average. The literature takes for granted that this better-than-average effect is problematic. We argue, however, that, even...

We propose and initiate the study of privacy elasticity—the responsiveness of economic variables to small changes in the level of privacy given to participants in an economic system. Individuals rarely experience either full privacy or a complete lack of privacy; we propose to use differential...