Norms play an important role in establishing social order. Thecurrent literature focuses on the emergence, maintenance and impactof norms with regard to coordination and cooperation. However, theissue of norm-related conict deserves more attention. We develop ageneral theory of \normative...

We study ultimatum and dictator experiments where the first moverchooses the amount of money to be distributed between the playerswithin a given interval, knowing that her own share is fixed. Thus, thefirst mover is faced with scarcity, but not with the typical trade-off betweenher own and the...

Recent research has cast some doubt on the general validity of outcome-basedmodels of social preferences. We develop a model based on cognitive dissonance thatfocuses on the importance of self-image. An experiment (a dictator game variant)tests the model.First, we nd that subjects whose choices...

We exploit a controlled frameless laboratory experiment to study settlement negoti-ations and the plainti¤’s decision to raise a lawsuit in case of an impasse. We …nd thatgreater variance in court outcomes increases the litigation rate and lowers the settlementrate. This latter …nding goes...

We present an experiment designed to test the Modigliani-Miller theorem. Applyinga general equilibrium approach and not allowing for arbitrage among firmswith different capital structures, we find that, in accordance with the theorem, participantswell recognize changes in the systematic risk of...

Loewenstein (1996, 2005) identifies an intrapersonal empathy gap. In the respectiveexperiments, subjects make choices with delayed consequences. When enteringthe state where these consequences would unfold, they get the possibility to revisetheir initial choice. Revisions are more substantial...

Why is it that well-intentioned actions can create persistent conflicts? While norms are widely regarded as a source for cooperation,this article proposes a novel theory in which the emergence of normscan be understood as a bargaining process in which normative conflicts explain the nally...

According to the accountability principle a person’s fair allocation takes into accountthe input-relevant variables she can influence, like effort, but not the variablesshe cannot influence, like a randomly assigned exogenous factor. This study is basedon a real effort-task experiment, where...

One-way communication has been found to substantially increasecontributions in linear voluntary contribution mechanisms. We confirmthe robustness of this result in the presence of income heterogeneity.

Whether behavior converges toward rational play or fair play in repeated ultimatum games depends on which player yields first. If responders concede first by accepting low offers, proposers would not need to learn to offer more, and play would converge toward unequal sharing. By the same token,...