This paper investigates in a principal-agent environment whether and how group membership influences the effectiveness of incentives and when incentives can have “hidden costs”, i.e., a detrimental effect. We show experimentally that in all interactions control mechanisms can have hidden...

This paper investigates in a principal-agent environment whether and how group membership influences the effectiveness of incentives and when incentives can have "hidden costs", i.e., a detrimental effect. We show experimentally that in all interactions control mechanisms can have hidden costs...

Club goods are ubiquitous: Parks, roads, tunnels, airports, bridges, sports clubs etc. These goods are often provided by governments. A key question is, should a club good be provided or not? To make an efficient provision decision, the government needs access to the private information people...

The provision of public goods is a challenge for societies. The mechanism design literature has proposed allocation procedures which help to make efficient provision decisions when information is private. Despite its theoretical appeal and the wider acceptance of mechanisms in other areas, in...

Beginning with Herbert Simon, the literature on bounded rationality has investigated in great detail how internal limitations affect an agent's choice process. The structure of the choice environment, deemed as important as internal limitations by Simon, has been mostly ignored. We introduce a...

During the Great Recession mass demonstrations indicated weakened political support in Europe. We show that growing dissatisfaction often reflects poor economic conditions and unemployment is particularly important. Using individual level data for 16 Western European countries for 1976-2010, we...

In most laboratory experiments concerning prosocial behavior subjects are fully informed how their decision influences the payoff of other players. Outside the laboratory, however, individuals typically have to decide without such detailed knowledge. To assess the effect of information...