We experimentally study the effects of advice on decision-making in a dictator game. In the experiment, participants receive no advice, selfish advice, or fair advice before making decisions. Advisors in our experiment do not receive any financial incentives for their advice. We find that...

This paper experimentally studies the role of a compromise option in a repeated battle-of-the-sexes game. We find that in a random-matching environment, compromise serves as an effective focal point and facilitates coordination, but fails to improve efficiency. However, in a fixed-partnership...

We develop a general framework for measuring biases in expectation formation. The method is based on the insight that biases can be inferred from the response of forecast errors to past news. Empirically, biases are measured by flexibly estimating the impulse response function of forecast...

We propose a novel mechanism to mitigate the provisions of public bads in large groups. In the baseline setup, players choose their neighbors, and a greater number of neighbors brings benefits. They also decide whether to provide a public bad that yields benefits to themselves but imposes costs...