We introduce the notion of strategic awareness in experimental games which captures the idea that subjects realize they are playing a game and thus have to form beliefs about others' actions in order to play well. The concept differs from both, rule understanding and rationality. We then turn to...

In this note we shall discuss a concept that - despite its prominence in both Hume (1739) and Smith (1759), its obvious relevance for social behavior, and its not so infrequent use in colloquial language - has never gained a foothold in economic theory: the concept of empathy. Specifically, we...

From the regulation of sports to lawmaking in parliament, in many situations one group of people ("agents") makes decisions that affect payoffs of others ("principals") who are inactive. As the principals have a stake in the agents' decisions they face an incentive to offer payments in order to...

In many economic contexts, an elusive variable of interest is the agent's belief about relevant events, e.g. about other agents' behavior. A growing number of surveys and experiments ask participants to state beliefs explicitly but little is known about the causal relation between beliefs and...

We introduce the notion of strategic awareness in experimental games which captures the idea that subjects realize they are playing a game and thus have to form beliefs about others’ actions. The concept differs from both, rule understanding and rationality. We then turn to experimental...

From the regulation of sports to lawmaking in parliament, in many situations one group of people ("agents") make decisions that affect payoffs of others ("principals") who may offer action-contingent transfers in order to sway the agents' decisions. Prat and Rustichini (2003) characterize...

From the regulation of sports to lawmaking in parliament, in many situations one group of people ("agents") make decisions that affect the payoffs of others ("principals") who may offer action-contingent transfers in order to sway the agents' decisions. Prat and Rustichini (2003) characterize...