The Reduction of compound lotteries is an implicit assumption both in the statement of the St. Petersburg Paradox as well as in its resolution by Expected Utility (EU). Yet despite the pivotal role of this assumption, to date there has been no empirical substantiation of its validity. Here we...

We analyze how the redistribution of tax revenues influences tax compliance behavior by applying different reward mechanisms. In our experiment, subjects have to make two decisions. In the first stage, subjects decide on the contribution to a public good. In the second stage, subjects declare...

The St. Petersburg paradox is one of the oldest challenges of expected value theory. Thus far, explanations of the paradox aim at small probabilities being perceived as zero and the boundedness of utility of the outcome. This paper provides experimental results showing that neither diminishing...