Although the theory of optimal contracts and the principal agent model are now well established in the literature, empirical support for this theory has been mixed at best. We use economic experiments to test contract theory and assess the empirical relevance of two possible confounding factors...

When a public good is congestible, individuals wanting to provide the public good face challenges in forming groups of optimal size, selecting the members of the group, and encouraging members to contribute for the public good. We conduct a series of experiments in which subjects form groups...

The conventional wisdom in the auction design literature is that first price sealed bid auctions tend to make more money while ascending auctions tend to be more efficient. We re-examine these issues in an environment in which bidders are allowed to endogenously choose in which auction format to...

Renegotiation is a common practice in procurement auctions which allows for post-auction price adjustments and is nominally intended to deal with the problem that sellers might underestimate the eventual costs of a project during the auction. Using a combination of theory and experiments, we...

This paper presents an experiment investigating what cultural and institutional factors underlying a society might render its members more or less tolerant of inequality in favor of greater efficiency. The specific institutional factors we address concern the fairness in the procedures or...

We experimentally investigate the extent to which social observability of one’s actions and the possibility of social non-monetary judgment affect the decision to engage in rule breaking behavior. We consider three rule breaking scenarios — theft, bribery and embezzlement — in the absence...

We experimentally investigate the extent to which social obervability of one's actions and the possibility of social non-monetary judgment affect the decision to engage in rule breaking behavior.  We consider three rule bfeaking scenarios - theft, bribery and embezzlement - in the absence of...

Jump bidding is a commonly observed phenomenon that involves bidders in ascending auctions submitting bids higher than required by the auctioneer. Such behavior is typically explained as due to irrationality or to bidders signaling their value. We present field data that suggests such...