Free riding can be made more costly by increasing either the probability of being caught or the severity of the punishment. However, neither option is without cost. What is the tradeoff between these strategies? In this study, we introduce an exogenous punishment mechanism that varies the...

Research has shown that natural language communication is more effective than intention-signaling in promoting coordination. Our paper studies the reasons behind this finding. We hypothesize that, when communicating with natural language, people use and respond to both intentions and attitudes,...

According to the “relative income hypothesis,” decision makers derive positive utility from identifying with a group that performs more poorly than they do. We hypothesize that decision makers simultaneously derive negative utility from identifying with such a group. The reason is that...

We investigate the optimal shape of organizations to reduce embezzlement. In a stylized synthesis of a common pool resource and ultimatum game, agents move sequentially along an organizational architecture, can take a share of the available resources, and can choose to "blow the whistle", an...

We conducted a multi-country experiment on whether a reminder of the Islamic prohibition on interest induces lenders to choose Profit-Loss Sharing arrangements (PLS) as an alternative. We find that 1) Muslims are more likely to choose PLS than non-Muslims; 2) they do so when interest rates are...

Using a dynamic theory of preference formation, we investigate how information avoidance depends on whether the source is exogenous or endogenous (i.e. identical or tailored to individuals). Our model suggests that when information is exogenous, open-minded people are less likely to avoid...