We study, theoretically and experimentally, sealed-bid first-price auctions with and without package bidding. In the model, a global bidder bids for multiple items and can benefit from synergies, while local bidders bid for a single item. In the equilibrium, package bidding improves (hurts)...

This paper experimentally tests a moral hazard model with inequity aversion. In the model, the probability of high and low employer's revenues is determined by actions of the worker. The employer offers a revenue-dependent wage to an inequity-averse worker. In contrast to the models that assume...

This article explores the effect of a subset of symmetric bidders joining to bid together. Possible applications include mergers, collusion and legal joint-bidding arrangements. The change produces a "strong" party with a more advantageous value distribution than the remaining "weak" bidder(s)....

We experimentally study behavior in an endogenous-timing herding game. We find that subjects respond to their type and to observed investment activity in a sensible way, but there are also substantial departures from Nash Equilibrium. Some departures can be viewed as mere noise in decision...

This paper reports the results of experiments designed to test whether and to what extent individuals succumb to the conjunction fallacy. Using the Kahneman and Tversky (1983) experimental design, we find that given mild incentives, the proportion of individuals who violate the conjunction...

Substantial evidence in field, lab and thought experiments in multiple disciplines, shows that decision makers often choose a dominated strategy, which contradicts with current economic theory. To bridge this gap between theory and evidence, first, we propose two alternative axiomatic...