Institutions for co-financing agreements often exist to encourage public good investment. Can such frameworks deliver maximal investment when agents are motivated by reciprocity? We demonstrate that indeed they can, but not in the way one might expect. If maximal investment is impossible in the...

The mathematical framework of psychological game theory is useful for describing many forms of motivation where preferences depend directly on own or others’ beliefs. It allows for incorporating, e.g., emotions, reciprocity, image concerns, and self-esteem in economic analysis. We explain how...

Does market interaction influence morality? We study a particular angle of this classic question theoretically and experimentally. The novelty of our approach is to posit that people are motivated by reciprocity; an urge many argued affects humans. We scrutinize how this shapes interaction in...

This paper shows that electoral incentives affect the occurrence of trade disputes. Focusing on WTO disputes filed by the United States during the 1995-2012 period, we show that U.S. presidents are more likely to initiate a dispute in the year preceding their re-election date. Moreover, disputes...