Numerous gift-exchange experiments have found a positive wage–effort relationship. In (almost) all these experiments the employer both owns and controls the firm. This paper explores to what extent the separation of ownership and control affects the wage–effort relationship. We compare the...

We propose an equilibrium model of duopolistic dynamic pricing in which a buyer alternates between two sellers for price offers over a finite time horizon. The game ends when the buyer accepts a price offer or the selling season is over, whichever comes first. Previous research (Granot et al.,...

This article explores the effect of a subset of symmetric bidders joining to bid together. Possible applications include mergers, collusion and joint-bidding arrangements. The change produces a “strong” party with a more advantageous value distribution than the remaining “weak”...

In empirical analyses of games, preferences and beliefs are typically treated as independent. However, if beliefs and preferences interact, this may have implications for the interpretation of observed behavior. Our sequential social dilemma experiment allows us to separate different interaction...

We study, theoretically and experimentally, sealed-bid first-price auctions with and without package bidding. In the model, a global bidder bids for multiple items and can benefit from synergies, while local bidders bid for a single item. In the equilibrium, package bidding improves (hurts)...

By incorporating reciprocity in an otherwise standard principal–agent model, I investigate the relation between monetary gift-exchange and incentive pay, while allowing for worker heterogeneity. I assume that some, but not all, workers care more for their principal when they are convinced that...

We consider repeated trust game experiments to study the interplay between explicit and relational incentives. After having gained experience with two payoff variations of the trust game, subjects in the final part explicitly choose which of these two variants to play. Theory predicts that...

Correlation of players' actions may evolve in the common course of the play of a repeated game with perfect monitoring (“online correlation”). In this paper we study the concealment of such correlation from a boundedly rational player. We show that “strong” players, i.e., players whose...

In repeated games, subgame perfection requires all continuation strategy profiles must be effective to enforce the equilibrium; they serve as punishments should deviations occur. It does not require whether a punishment can be justified for the deviation, which creates a great deal of freedom in...

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 asks participants to state beliefs explicitly but little is known about the causal relation between beliefs and...