We study the effect of voting when insiders’ public goods provision may affect passive outsiders. Without voting insiders’ contributions do not differ, regardless of whether outsiders are positively or negatively affected or even unaffected. Voting on the recommended contribution level...

Public good provision is often local and also affects bystanders. Is provision harder if contributions harm bystanders, and is provision easier if outsiders gain a windfall profit? In an experiment we observe that both positive and negative externalities reduce provision levels whenever actors...

We present a field experiment to assess the effect of own and peer wage variations on actual work effort of employees with hourly wages. Work effort neither reacts to an increase of the own wage, nor to a positive or negative peer comparison. This result seems at odds with numerous laboratory...

In spring 2000, the British government auctioned off licences for Third Generation mobile telecommunications services. In the preparation of the auction, two designs involving each a hybrid of an English and a sealed-bid auction were suggested by the government: a discriminatory and a uniform...

Numerous laboratory experiments show that workers reciprocate to high wages with high effort, when there is perfect information on the surplus created. Recent field experiments, however, suggest that trust and reciprocity may be lower or absent when the information is incomplete. We report a...

Economic interactions often take place in open communities, where agents are free to leave in order to join a more preferred community. Tiebout (1956) conjectured that “voting with feet” might generate considerable efficiency gains, since individuals with different preferences sort...

The fact that all arbitrage opportunities are exploited is a fundamental assumption of option pricing theory. Empirical and experimental studies of investment decisions, however, found that arbitrage is not completely exploited by individuals. Instead, observed behavior is much better explained...

One of the key scientific challenges is the puzzle of human cooperation. Why do people cooperate? Why do people help strangers, even sometimes at a major cost to themselves? Why do people want to punish others who violate norms and undermine collective interests? Reward and punishment is a...

According to the Greek philosopher Plato “[…] if anyone at all is to have the privilege of lying the rulers of the State […] may be allowed to lie for the public good” (The Royal Lie). To investigate whether The Royal Lie may foster cooperation in public goods provision we experimentally...