We present an experimental test of a shirking model where monitoring intensityis endogenous and effort a continuous variable. Wage level, monitoring intensityand consequently the desired enforceable effort level are jointly determined bythe maximization problem of the firm. As a result,...

To explain potential sources of wage rigidity this article analyzes a model of reciprocalkindness applied to a repeated ultimatum game with changing and nonzeroconflict payoffs. The model is also tested in a laboratory experiment. The resultsare compatible with the rentsharingapproach to wage...

This paper revisits and extends the experiment on the solidarity game by Selten and Ockenfels (1998). We replicate the basic design of the solidarity game and extend it in order to test the robustness of the 'fixed total sacrifice' effect and the applied strategy method. Our results only...

Norms play an important role in establishing social order. Thecurrent literature focuses on the emergence, maintenance and impactof norms with regard to coordination and cooperation. However, theissue of norm-related conict deserves more attention. We develop ageneral theory of \normative...

We study ultimatum and dictator experiments where the first moverchooses the amount of money to be distributed between the playerswithin a given interval, knowing that her own share is fixed. Thus, thefirst mover is faced with scarcity, but not with the typical trade-off betweenher own and the...

Recent research has cast some doubt on the general validity of outcome-basedmodels of social preferences. We develop a model based on cognitive dissonance thatfocuses on the importance of self-image. An experiment (a dictator game variant)tests the model.First, we nd that subjects whose choices...

We exploit a controlled frameless laboratory experiment to study settlement negoti-ations and the plainti¤’s decision to raise a lawsuit in case of an impasse. We …nd thatgreater variance in court outcomes increases the litigation rate and lowers the settlementrate. This latter …nding goes...

We present an experiment designed to test the Modigliani-Miller theorem. Applyinga general equilibrium approach and not allowing for arbitrage among firmswith different capital structures, we find that, in accordance with the theorem, participantswell recognize changes in the systematic risk of...

Loewenstein (1996, 2005) identifies an intrapersonal empathy gap. In the respectiveexperiments, subjects make choices with delayed consequences. When enteringthe state where these consequences would unfold, they get the possibility to revisetheir initial choice. Revisions are more substantial...

Why is it that well-intentioned actions can create persistent conflicts? While norms are widely regarded as a source for cooperation,this article proposes a novel theory in which the emergence of normscan be understood as a bargaining process in which normative conflicts explain the nally...