Unexpected variation in emissions can have a substantial impact on the prices and efficiency of tradable emission permit markets. In this paper we report results from a laboratory experiment in which subjects participate in an emissions trading market in the presence of emissions uncertainty....

The herding of expert opinions is often rationalized as the outcome of social learning. However, experts are typically individuals with career concerns. As a result,herding can also arise from the fear of opposing consensus opinion and the potential career consequences of being wrong. We...

This paper presents a model and an experiment, both suggesting that wishful thinking is a pervasive phenomenon that aect decisions large and small. Agents in the model start out with state-dependent payos, and behave as if high-payo states are more likely. Subsequent choices maximize...

This paper considers the question whether it is possible, using information about only the distribution of earnings, to identify some of the labour supply incentive effects of a tax and transfer system.

Institutions that form to reduce moral hazard often eliminate discretion and pool the actions of heterogeneous agents. An unintended consequence of this pooling is that agents' types cannot be determined by their actions. While in the short run such mechanisms may be optimal, in the long run...

A normative conflict arises when there exist multiple plausible norms of behavior. In such cases, norm enforcement can lead to a sequence of mutual retaliatory sanctions, which we refer to as a feud. We investigate the hypothesis that normative conflict enhances the likelihood of a feud in a...

Authority and power permeate political, social, and economic life but there is limited empirical knowledge about the motivational origins and consequences of authority. We experimentally study the motivation and incentive effects of authority in an authority-delegation game. Individuals exhibit...

The study addresses the issue of sustainability of collusion in one-sided auctions. Earlier experimental studies indicate that, in double oral auctions, collusion is hard to sustain even if conspiracy is allowed and quotation improvement rules are absent. We investigate the role of similar...

We use the voluntary contribution mechanism to investigate whether smaller action sets lead to higher cooperation rates. We ?nd that this is the case for groups of four players.

A number of studies have shown that peer punishment can sustain cooperation in public good games. This paper shows that the format used to give subjects feedback is critical for the e¢ cacy of punishment. Providing subjects with infor- mation about the earnings of their peers leads to lower...