The article presents a theory that I denote “Relative Thinking Theory,” which claims that people consider relative differences and not only absolute differences when making various economics decisions, even in those cases where the rational model dictates that people should consider only...

Tipping is a multi-billion-dollar phenomenon that standard economic models find hard to explain. I discuss several aspects of tipping and divide tipping to six different categories: reward-tipping, price- tipping, tipping-in-advance, bribery-tipping, holiday-tipping and gift- tipping, and...

An important question about social norms is whether they are created to increase welfare; I address it by examining the characteristics of tipped and non-tipped occupations. Tipping prevalence is negatively correlated with worker’s income and consumer’s monitoring ability and positively with...

Numerous laboratory studies find that minor nuances of presentation and description change behavior in ways that are inconsistent with standard economic models. How much do these context effects matter in natural settings, when consumers make large, real decisions and have the opportunity to...

This paper presents experimental evidence about how individuals learn from information that comes from inside versus outside their ethnic group. In the experiment, Thai subjects observed information that came from Americans and other Thais that they could use to help them answer a series of...

In many research contexts it is necessary to group experimental subjects into behavioral “types.” Usually, this is done by pre-specifying a set of candidate decision-making heuristics and then assigning each subject to the heuristic that best describes his/her behavior. Such approaches might...