The embedding effect has frequently been observed in willingness to pay (WTP) studies.Since policy implications of valuation studies can be very sensitive to the composition of thepackage being valued, respondents’ apparent insensitivity to such fundamental characteristicssuggests that it is...

In this paper, we match data on student performance in a multiple-choice exam with data on student risk preferences that are extracted from a classroom experiment. We find that more-loss-averse students leave more questions unanswered and perform worse in the multiple-choice exam when giving an...

Least-Unmatched Price Auctions have become a popular format of TV and radio shows. Increasingly,they are also applied in internet trading. In these auctions the lowest single (unique)bid wins. We analyze the game-theoretic solution of least unmatched price auctions when prize,bidding cost and...

We present evidence from a natural field experiment designed to shed light on whether individual behavior is consistent with a neoclassical model of utility maximization subject to budget constraints. We do this through the lens of a field experiment on charitable giving. We find that the...

We show how sanctioning is more effective in increasing cooperation between groups than within groups. We study this using a trust game among ethnically diverse subjects in Afghanistan. In the experiment, we manipulate i) sanctioning and ii) ethnic identity. We find that sanctioning increases...

Loss aversion postulates that people prefer avoiding losses over acquiring gains of equal size. It is a central part of prospect theory and, according to Daniel Kahneman, "the most significant contribution of psychology to behavioral economics" (Kahneman, 2011, p. 300). It has powerful...

Perceived urgency and regret are common in many sequential search processes; for example, sellers often pressure buyers in search of the best offer, both time-wise and in terms of potential regret of forgoing unique purchasing opportunities. theoretically, these strategies result in anticipated...

Round numbers affect behavior in various domains, e.g., as prominent thresholds or focal points in bargaining. In line with earlier findings, residential real estate transactions in Germany cluster at round-number prices, but there are also interesting (presumably cultural) differences. We...

Game-theoretic analyses of communication rely on beliefs – especially, the receiver's belief about the truth status of an utterance and the sender's belief about the reaction to the utterance – but research that provides measurements of such beliefs is still in its infancy. Our experiment...

We examine the additivity of stock-market expectations over different time intervals. When asked about a ten-year interval, survey respondents expect a stock-price change that is not equal to, but closer to zero than, the sum of their expectations over two shorter time intervals that cover the...