This paper studies psychological forward induction and the updating of beliefs in the lost wallet game (Dufwenberg & Gneezy, 2000), which is required to derive a prediction for guilt averse agents. Our experiment tests whether the second movers psychologically induct forward and update their...

The operation of the posted offer market with advance production environment, appropriately parameterized, differs from that of the market entry game, appropriately presented, only in terms of price-setting. We establish the effect of this difference in price-setting on attainment of the...

Reciprocity has been shown to be sensitive to perceived intentions, however, not much is known about the intensity of reciprocal responses to the precise nature of those intentions. For example, a person can strategically appear to be kind while being self-serving or can be selflessly...

This paper analyzes individual behavior in multi-armed bandit problems. We use a between-subjects experiment to implement four bandit problems that vary based on the horizon (indefinite or finite) and number of bandit arms (two or three). We analyze commonly suggested strategies and find that an...

This paper uses a laboratory experiment to analyze how individuals resolve an exploration versus exploitation trade-off. The experiment implements a single-agent exponential bandit model. We find that, as predicted, subjects respond to changes in the prior belief, safe action, and discount...