To explain potential sources of wage rigidity this article analyzes a model of reciprocal kindness applied to a repeated ultimatum game with changing and nonzero conflict payoffs. The model is also tested in a laboratory experiment. The results are compatible with the rentsharing approach to...

We present a model where compensation within a workteam is determined endogenously by the use of a rank-order tournament. Team members compete in their efforts for the right to propose the distribution of a prize within the team. The implementation of a proposal requires the approval of other...

We examine the strategic behavior of leaders and followers in sequential duopoly experiments in which followers either perfectly observe the leaders’ actions or else observe nothing. Our experiments show that consistent with the theory, leaders enjoy a greater …rst-mover advantage when...

We examine the degree of trust and reciprocity in an experimental trust game with 662 participants from six different age groups, ranging from 8 year old primary school children to retired persons in their late sixties. Although both trust and reciprocity have been identified as fundamental...

We test for behavioral differences between groups and individuals in gift-exchange experiments. Related studies establish group behavior as typically closer to the game-theoretic equilibrium. We show that this result may depend crucially on the decision making procedure within groups. A novel...

Many decisions in economics and finance have to be made under severe time pressure. Furthermore, payoffs frequently depend on the speed of decision-making, like, for instance, when buying and selling stocks. In this paper, we examine the influence of time pressure and time-dependent incentive...

Economics has devoted little attention so far as to whether the type of decision maker matters for economic decisions. However, many important decisions like those on monetary policy or a company's business strategy are made by (small) groups rather than an individual. We compare behaviour of...

A cyclical network of indirect reciprocity is derived organizing 3- or 6-person groups into rings of social interaction where the first individual can help the second, the second the third, and so on till the last, who in return can help the first. Mutual cooperation is triggered by assuming...

We examine the influence of team size on decision making in a beauty-contest experiment. Teams with four members outperform teams with two members and single persons significantly, whereas the latter two types of decision makers do not differ.