This paper investigates collective denial and willful blindness in groups, organizations and markets. Agents with anticipatory preferences, linked through an interaction structure, choose how to interpret and recall public signals about future prospects. Wishful thinking (denial of bad news) is...

Why are better educated and more risk-friendly persons more mobile across regions? To answer this question, we use micro data on internal migrants from the German Socio- Economic Panel (SOEP) 2000-2006 and merge this information with a unique proxy for region-pair-specific cultural distances...

In this paper we show that subtle forms of deceit undermine the effectiveness of incentives.We design an experiment in which the principal has an interest in underreporting the trueperformance difference between the agents in a dynamic tournament...

In many environments, tournaments can elicit more effort from workers, except perhapswhen workers can sabotage each other. Because it is hard to separate effort, ability andoutput in many real workplace settings, the empirical evidence on the incentive effect oftournaments is thin...

In public good provision, privileged groups enjoy the advantage that some of its membersfind it optimal to supply a positive amount of the public good. However, their inherentasymmetric nature may make the enforcement of cooperative behavior through informalsanctioning harder to accomplish...

We use skin conductance responses and self-reports of hedonic valence to study the emotional basis of cooperation and punishment in a social dilemma. Emotional reaction to free-riding incites individuals to apply sanctions when they are available. The application of sanctions activates a...

Conventional wisdom suggests that an increase in monetary incentives should induce agents to exert higher effort. In this paper, however, we demonstrate that this may not hold in team settings. In the context of sequential team production with positive externalities between agents, incentive...

While intuition suggests that empowering workers to have some say in the control of the firm is likely to have beneficial incentive effects, empirical evidence of such an effect is hard to come by because of numerous confounding factors in the naturally occurring data. We report evidence from a...

We present evidence from an experiment in which groups select a leader to compete against the leaders of other groups in a real-effort task that they have all performed in the past. We find that women are selected much less often as leaders than is suggested by their individual past performance....

Economic and social interaction takes place between individuals with heterogeneous characteristics. We investigate experimentally the emergence and informal enforcement of different contribution norms to a public good in homogeneous and different heterogeneous groups. When punishment is not...