We present a new theory of decision under risk called third-generation prospect theory. A novel feature of our version of prospect theory is that, by allowing reference points to be uncertain, it is able to accommodate the phenomenon of preference reversal. While several previous theories of...

We analyze voting in private and public committees whose members care about the selected decision and the rewards which outsiders pay for representing their interests. We characterize the voting pattern and performance in both committees; and we test these implications on the voting patterns of...

We use an experiment to compare two institutions for allocating the proceeds of team production. Under revenue-sharing, each team member receives an equal share of team output; under leader-determined shares, a team leader has the power to implement her own allocation. Both arrangements are...

We analyze optimal appointments to a committee whose members play an admissibly coalition proof equilibrium. The nominator may appoint a candidate with the opposite preference ordering over the agenda, as the committee would then reach the nominator’s top ranked decision by divide and rule:...

One lingering puzzle is why voluntary contributions to public goods decline over time in experimental and real-world settings. We show that the decline of cooperation is driven by individual preferences for imperfect conditional cooperation. Many people’s desire to contribute less than others,...

This paper provides sufficient and partially necessary conditions for the equivalence of Nash and evolutionary equilibrium in symmetric games played by finite populations. The focus is on symmetric equilibria in pure strategies. The conditions are based on properties of the payoff function that...

This paper extends the Baron-Ferejohn model of legislative bargaining to general weighted majority games with two modifications: first, payoff division can only be agreed upon after the coalition has formed (two-stage bargaining); second, negotiations in the coalition can break down, in which...

We study a majoritarian bargaining model in which the parties make payoff demands in decreasing order of voting weight. If the game is constant-sum and homogeneous, the unique subgame perfect equilibrium is such that the minimal winning coalition of the players who move first forms and payoffs...

According to conventional wisdom, raising the quota either causes a committee to retain the status quo or has no effect on its performance; so a committee which would otherwise reach good decisions should operate with a low quota. We show, per contra, that reducing the quota may improve the...

This paper presents theory and experiments to investigate how network architecture influences route-choice behavior by comparing outcomes across several different networks. The network changes we consider are based on abstract examples illustrating the Pigou-Knight-Downs and Braess Paradoxes. We...