Suppose that individual payoffs depend on the network connecting them. Consider the following simultaneous move game of network formation: players announce independently the links they wish to form, and links are formed only under mutual consent. We provide necessary and sufficient conditions on...

We use experimental data to obtain a detailed description of individuals' pro-sociality. Participants are faced with a large number of decisions involving variations in the tradeoffs between own and others' payoffs, as well as in other potentially important factors like individuals' positions...

While the theoretical industrial organization literature has long argued that excess capacity can be used to deter entry into markets, there is little empirical evidence that incumbent firms effectively behave in this way. Bagwell and Ramey (1996) propose a game with a specific sequence of moves...

We study how the heterogeneity of agents affects the extent to which changes in financial incentives can pull a group out of a situation of coordination failure. We focus on the connections between cost asymmetries and leadership. Experimental subjects interact in groups of four in a series of...

We introduce a model of strategic thinking in games of initial response. Unlike standard level-k models, in this framework the player's `depth of reasoning' is endogenously determined, and it can be disentangled from his beliefs over his opponent's cognitive bound. In our approach, individuals...

In contrast to the simplifying assumption of selfishness, social incentives have been shown to play a role in economic interactions. Before incorporating social incentives into models and policies, however, one needs to know their efficiency relative to standard pay-for-performance incentives....

We extend Aumann's theorem [Aumann 1987], deriving correlated equilibria as a consequence of common priors and common knowledge of rationality, by explicitly allowing for non-rational behavior. We replace the assumption of common knowledge of rationality with a substantially weaker one, joint...

We study competition in experimental markets in which two incumbents face entry by three other firms. Our treatments vary with respect to three factors: sequential vs. block or simultaneous entry, the cost functions of entrants and the amount of time during which incumbents are protected from...

We compare behavior in modified dictator games with and without role uncertainty. Subjects choose between a selfish action, a costly surplus creating action (altruistic behavior) and a costly surplus destroying action (spiteful behavior). While costly surplus creating actions are most frequent...

We study the effectiveness of leaders for inducing coordinated organizational change to a more efficient equilibrium, i.e., a turnaround. We compare communication from leaders to incentive increases and also compare the effectiveness of randomly selected and elected leaders. While all...