Economic rationality dictates that only incremental costs and benefits should affect decisions. Observed behavior often seems to violate this principle, resulting in unwarranted commitment to past choices and their escalation. In this paper, we present experimental results that show that...

In this paper, we document a “play-out” effect in preference reversal experiments. We compare data where preferences are elicited using (1) purely hypothetical gambles, (2) played-out, but unpaid gambles and (3) played-out gambles with truth-revealing monetary payments. We ask whether a...

Researchers vigorously debate the impact of incentives in preference reversal experiments. Do incentives alter behavior and generate economically consistent choices? Lichtenstein and Slovic (1971) document inconsistencies (reversals) in revealed preference in gamble pairs across paired choice...

We examine the effect of higher order beliefs on the ability of decentralized decision makers to coordinate and take advantage of improvements in information transparency that can increase welfare. Theories that address this question have not been empirically explored. We study coordination in a...

This study experimentally tests the effect of information transparency on the probability of coordination failure in global games with finite signals. Prior theory has shown that in global games with unique equilibrium, the effect of information transparency is ambiguous. We find that in global...

We test the effect of information transparency on the probability of coordination failure in games with finite signals. Prior theory has shown that the effect of information transparency is ambiguous. Our study is based on two insights. Where signal space is finite, increased transparency...

"Prediction markets" are designed specifically to forecast events such as elections. Though election prediction markets have been being conducted for almost twenty years, to date nearly all of the evidence on efficiency compares election eve forecasts with final pre-election polls and actual...