Credit default swaps (CDS) played an important role in the financial crisis of 2008. While CDS can be used to hedge risks, they can also be used for speculative purposes (as occurred during the financial crisis) and regulations have been proposed to limit such speculative use. Here, we provide...

We report on a series of economic decision-making experiments exploring how individuals make lifecycle consumption and saving plans when they face different income profiles. We find that for every income profile we consider, subjects on average over-consume in the early periods of life and...

We provide a direct, experimental test of the buffer stock model of savings behavior. We use a three-period inter-temporal model of consumption/savings decisions where liquidity in the second period is constrained (and, thus, borrowing is not possible). We contrast behavior in this constrained...

A growing body of evidence suggests that assets included in market indexes such as the S&P 500 trade at a premium relative to other assets. In this paper we look for evidence of such an index inclusion premium in a carefully controlled laboratory experiment. Our environment involves three assets...

We provide a model of group sorting or polarization based on group identity alone. In our model, agents differ from one another in terms of a binary group identity. Groups may also differ in terms of the distribution of abilities, but the distribution of abilities by group is uncertain and both...

We study indefinitely-lived assets in experimental markets and find that the traded prices ofthese assets are on average about 40% of the risk neutral fundamental value. Neither uncertaintyabout the value of total dividend payments nor horizon uncertainty about the duration of tradecan account...