The presence of background risk increases self-protection effort or caution as long as an agent is prudent. In addition, the result extends to monetary self-protection investment if wealth and consumption are complements.

We re-examine the link between absolute prudence and self-protection activities. We show that the level of effort chosen by an agent with decreasing absolute prudence is larger than the optimal effort chosen by a risk-neutral agent if the degree of absolute prudence is less than a threshold that...

We show that there is a class of risk lovers who optimally choose a positive level of self-protection investment. In most cases, a risk lover increases his self-protection investment as he becomes less downside risk averse.

Shotgun clauses are commonly included in the business agreements of partnerships and limited liability companies (LLCs), but the role of offeror typically remains unassigned. In a common-value, one-sided asymmetric information setting, unequal and inefficient outcomes occur with an unassigned...

Using the experimental sessions of Goeree and Holt (2005), we show that step thinking fits the long-run outcome of minimum-effort and median-effort games surprisingly well for all values of the cost parameter. In the latter, the predicted discontinuous behaviour of step thinking accommodates the...

In a one-shot Prisoners’ dilemma experiment, female participants are highly sensitive to the social frame. Male participants are not.

Experimental studies have compared cooperation across different nonmarket social dilemma settings, but the experimental literature has largely overlooked comparing cooperation across market and nonmarket settings. This paper reports the results from an experiment that compares behavior in...

We investigate parochial altruism, the combination of in-group altruism and out-group hostility, in an experimental conflict game preceded by a prisoner’s dilemma. Our data are consistent with parochial altruism, but cannot be explained by in-group pro-sociality or out-group hostility alone.

Recent studies suggest that payoffs in cents, compared to dollars, produce less defection in a repeated prisoner’s dilemma game. We are unable to replicate these findings with conventional economic procedures or in a direct replication.