In the context of an allocation game, this paper analyses the proposer's reported beliefs about the responder's willingness to accept (or reject) the proposed split of the pie. The proposer's beliefs are elicited via a quadratic scoring rule. An econometric model of the proposer's beliefs is...

Two pairs of two participants each interact repeatedly in two structurally independent but informationally linked Prisoner's Dilemma games. Neither pair receives feedback about past choices by their own partner but is fully informed about the choices by the other pair. Considering this as a...

We study two person-betting games with inconsistent commonly know beliefs, using an experimental approach. In our experimental games, participants bet against one another, each bettor choosing one of two possible outcomes, and payoff odds are know at the time bets are placed. Bettors' beliefs...

The higher our aspirations, the higher the probability that we have to adjust them downwards when forming more realistic expectations later on. This paper shows that the costs induced by high aspirations are not trivial. We ?rst develop a theoretical framework to identify the factors that...

Based on the aggregated insights of the existing theories related to multiple sources of efficacy and locus of control, we introduce the theory of mixed control, a model of compound-risk perception. This theory considers outcome expectancies as being composed of expectancies regarding three...

In-group favoritism in social dilemma situations is one of the main findings of studies in Social Identity Theory. We investigate what causes the in-group bias: is it due to mere group affiliation or, alternatively, is guilt-aversion a possible explanation? We induce group membership in a...

Empirical studies show that decisions deviate from the predictions of expected utility theory and violate the axiomatic foundations. Hence, many generalizations to non-expected utility theory have been developped. But empirically they did not provide an improvement over the standard approach. In...

Empirical studies show that agents often violate Bayes' rule in updating probability expectations. This paper deals with errors in combining observations with prior knowledge. Such errors neccessarily occur when agents have limited information-processing capacities. It is shown that rational...

The paper introduces the concept of adjustment utility, that is, reference-dependent utility from expectations. It offers an explanation for observed preferences that cannot be explained with existing models, and yields new predictions for individual decision making. The model gives a simple...

Using a symmetric 2-person prisoners' dilemma as the base game, each player receives a signal for the number of rounds to be played with the same partner. The actual number of rounds (the length of the supergame) is determined by the maximal signal where each player expects the other's signal to...