We study endogenous group formation in tournaments employing experimental threeplayer contests. We find that players in endogenously formed alliances cope better with the moral hazard problem in groups than players who are forced into an alliance. Also, players who are committed to expending...

Ethnic diversity is typically measured by the well-known Hirschman-Herfindahl Index. This paper discusses the merits of an alternative approach, which is in our view better suited to tease out why and how ethnic diversity matters. The approach consists of two elements. First, all existing...

We investigate experimentally whether individuals or groups are more lied to, and how lying depends on the group size and the monetary loss inflicted by the lie. We employ an observed cheating game, where an individual's misreport of a privately observed number can monetarily benefit her while...