We study experimentally a two-stage compensation mechanism for promoting cooperation in prisoner's dilemma games. In stage 1, players simultaneously choose binding non-negative amounts to pay their counterparts for cooperating in a given prisoner's dilemma game, and then play the prisoner's...

Coordinating activity among members is an important problem faced by organizations. When firms, or units within firms, are stuck in bad equilibria, managers may turn to the temporary use of simple incentives - flat punishments or rewards - in an attempt to transition the firm or unit to a more...

This paper develops an occupational choice model in which entrepreneurs, who are initially uncertain about their true talent, learn from experience. As a consequence, both optimistic bias in talent beliefs and uncertainty diminish with experience. The model gives rise naturally to a...

This paper reports laboratory experiments investigating behavior when players may make inferences about the intentions behind others' prior actions based on higher- or lower-accuracy information about those actions. We investigate a trust game with first mover trembling, a game in which nature...

Previous research on gender differences in behavior has led to seemingly contradictory findings about generosity. From data generated by 290 subject pairs, we find that women are more sensitive than men to the costs of generous actions when deciding whether or not to be generous. The factors...

This paper uses laboratory experiments to investigate compliance behavior when returns are selected for audit based upon the deviation of each individual's tax report from the average report of all other taxpayers. Our experimental results indicate that individuals find it difficult to...

This paper addresses the external validity of experiments investigating the characteristics of altruism in the voluntary provision of public goods. We conduct two related experiments that allow us to examine whether individuals who act more altruistically in the context free environment are also...

This paper tests whether the use of endogenous risk categorization by insurers enables consumers to make better-informed decisions even if they do not choose to purchase insurance. We do so by adding a simple insurance market to an experimental test of optimal (Bayesian) updating. In some...