The endowment effect describes the fact that people demand much more to give up an object than they are willing to spend to acquire it. The existence of this effect has been documented in numerous experiments. We attempt to explain this effect by showing that evolution favors individuals whose...

In a two-level ultimatum game, one player offers an amount to two other players who then, in the case of acceptance, divide this amount by playing an ultimatum game. The first offer has to be accepted by the second proposer. Only the first proposer knew the true cake size whose a priori...

We report on an experiment designed to compare Stackelberg and Cournot duopoly markets with quantity competition. We implement both a random matching and a fixed-pairs version for each market. Stackelberg markets yield, regardless of the matching scheme, higher outputs than Cournot markets and,...

We propose a dynamic model of neighbourhood watch schemes. While the state chooses punishment levels, apprehension of criminals depends on the watchfulness of citizens. We show that, contrary to standard intuition, crime levels can increase in punishments. This is because neighbourhood watch...

We study the merger paradox, a relative of Harsanyi's bargaining paradox, in an experiment. We examine bilateral mergers in experimental Cournot markets with initially three or four firms. Standard Cournot-Nash equilibrium predicts total outputs well. However, merged firms produce significantly...

This experiment was designed to test various learning theories in the context of a Cournot oligopoly. The authors derive theoretical predictions for the learning theories and test these predictions by varying the information given to subjects. The results show that some subjects imitate...