Repeat transactions are not necessarily the rule in today's global economy. Indirect reputation systems, where buyers base their decisions on a seller's previous interactions with other buyers, are a potential substitute for personal interactions - provided such information is available. This...

We experimentally examine the effects of flexible and fixed prices in markets for experience goods in which demand is driven by trust. With flexible prices, we observe low prices and high quality in competitive (oligopolistic) markets, and high prices coupled with low quality in non-competitive...

This paper examines the relationship between firms’ wage offers and workers’ supply of effort using a three-period experiment. In equilibrium, firms will offer deferred compensation: first period productivity is positive and wages are zero, while third period productivity is zero and wages...

We study a model of competition among polling stations where polling stations have to invest in counting precision to attract voters. The benchmark is the (current) monopolistic case in which there is no incentive to provide particularly good counting technologies. Unsurprisingly, we find that...

This study tries to enlarge the scope of law and economics by providing an example that legal institutions do not only have short-run effects on present behavior by changing the cost-benefit relation of different actions but can also drive the evolution of preferences. Therefore legal design has...

Often information structures are such that while individual reputation building is impossible groups of agents would have the opportunity of building up a reputation. We experimentally examine whether groups of sellers in markets that suffer from moral hazard are able to build up reputations...

In many economic contexts, an elusive variable of interest is the agent's expectation about relevant events, e.g. about other agents' behavior. Recent experimental studies as well as surveys have asked participants to state their beliefs explicitly, but little is known about the causal relation...