Despite its central role in the theory of incentives, empirical evidence of a tradeoff between risk and incentives remains scarce. We reexamine this empirical puzzle in a controlled laboratory environment so as to isolate possible confounding factors encountered in the field. In line with the...

Motivated by research reporting positive price reactions to adoption of performance-based compensation plans, we examine price reactions to compensation contracting in experimental markets. The design allows us to manipulate variables separately and study issues of adverse selection (sorting)...

Holmström (1982) established that free riding behaviors are pervasive whenever people are paid according to aggregate measures of output such as team incentives. However, team incentives have been found to be particularly effective both in the lab and in the field. In this paper we show, in...

On-the-job leisure is a pervasive feature of the modern workplace. We studied its impact on work performance in a laboratory experiment by either allowing or restricting Internet access. We used a 2×2 experimental design in which subjects completing real-effort work tasks could earn cash...

We report an experiment designed to study whether inecient rms are systematically driven from overcrowded markets. We implement a series of 3800 wars of attrition of a type modeled in Fudenberg and Tirole (1986). Exit tends to be ecient and exit times conform reasonably well to point predictions...

In this paper, we generalize the General Lotto game (budget constraints satisfied in expectation) and the Colonel Blotto game (budget constraints hold with probability one) to allow for battlefield valuations that are heterogeneous across battlefields and asymmetric across players, and for the...

We experimentally investigate the effect of social identification and information feedback on individual behavior in contests. Identifying subjects through photo display decreases efforts. Providing information feedback about others’ effort does not affect the aggregate effort levels but it...

We design an experiment to explore the impact of earned entitlements on the frequency and intensity of conflicts in a two-stage bargaining and conflict game with side-payments. In this game, residents (Proposers) make side-payment offers and contestants (Responders) decide whether to accept the...

This study examines behavior of subjects in simultaneous and sequential multi-battle contests. In simultaneous contests, subjects make positive bids in each battle 80% of the time and bids fall within the predicted boundaries. However, 35% of the time subjects make positive bids in only two,...

Many economic interactions are characterized by “all or nothing” action spaces that may limit a demonstrable index of trust and, therefore, the propensity to reciprocate. In two experimental trust games, the action space governing investments was manipulated to examine the effects on...