This paper investigates the effectiveness of two instruments designed to defer termination in the centipede game: an insurance against termination by the opponent, and an option to offer the opponent a bonus for not terminating the game. The rational prediction in both cases is passing until...

A one-dimensional model of spatial political competition with endogenous party formation is developed. It is proved that at equilibrium there are only two parties. These parties propose alternatives in the extreme positions of the policy space. The adopted policy, however, is a compromise...

We provide theoretical conjectures about and experimental evidence on the emergence of redistributive societies. Individuals first vote on a distribution rule with their feet and then invest and redistribute total income according to the chosen rule. We vary the individuals’ information about...

We provide experimental evidence on the emergence of redistributive societies. Individuals first vote on redistribution by feet and then learn their productivity and invest. We vary the individuals' information about their productivities at the time when they choose a distribution rule and find...

We provide experimental evidence on the emergence of redistributive societies. Individuals first vote on redistribution by feet and then learn their productivity and invest. We vary the individuals ́information about their productivities at the time when they choose a distribution rule and find...