Why is private investment so low in Gulf compared to Western countries? We investigate cross-regional differences in trust and reference points for trustworthiness as possible factors. Experiments controlling for cross-regional differences in institutions and beliefs about trustworthiness reveal...

We study the problem of allocating multiple items to two agents whose cardinal preferences are private information. If money is available, Bayesian incentive compatibility and ex-ante Pareto efficiency can be achieved using the Expected Externality Mechanism (EEM). Absent money, under certain...

A single large loss may impact our networked financial system significantly differently than would a same cumulative magnitude sequence of moderate losses. Banks can choose whether to bail out their creditors after each loss in a sequence, or to walk away. Banks make bailout decisions...

Ordeals are burdens placed on individuals that yield no direct benefits to others. They represent a dead-weight loss. Ordeals – the most common being waiting time – play a prominent role in health care. Their goal is to direct scarce resources to recipients receiving greater value from them,...

This paper argues that historical analysis, necessarily written with hindsight, often underestimates the uncertainties of the past. We call this tendency explanation bias. This bias leads individuals – including professional historians – to imply greater certainty in causal analyses than the...

The audit policy of a tax authority can signal its audit effectiveness. We model this process and show that in limited circumstances an ineffective authority can masquerade as being effective. We show that high maximal penalties imply underreporting of income

Workers respond to the output choices of their peers. What explains this well documented phenomenon of peer effects? Do workers value equity, fear punishment from equity-minded peers, or does output from peers teach them about employers' expectations? We test these alternative explanations in a...

We document a common type of deception in interpersonal contexts: paltering, the active use of truthful statements to convey a mistaken impression. Paltering is distinct from lies of commission in that it involves only truthful statements. It is distinct from lies of omission in that it involves...

Recent medical literature suggests that vitamin D supplementation protects against acute respiratory tract infection. Humans exposed to sunlight produce vitamin D directly. This paper investigates how differences in sunlight, as measured over several years within states and during the same...

Nation 1 is seeking to join the nuclear club. Nation 2, its enemy, would like to prevent this, and has the potential to destroy 1's bomb-making facilities. It is uncertain whether 1 has a bomb. So are its intentions. 1 could be seeking to deter an attack. Alternatively, if no bomb is present, 1...