The existing literature acknowledges that a mismatch between the experimenter's and the subjects' models of an experimental task can adversely affect the interpretation of data from laboratory experiments. We discuss why the two common experimental designs (between-subjects and within-subjects)...

The existing literature acknowledges that a mismatch between the experimenter's and the subjects' models of an experimental task can adversely affect the interpretation of data from laboratory experiments. We discuss why the two common experimental designs (between-subjects and within-subjects)...

Recent literature has questioned the existence of a learning foundationfor the partially cursed equilibrium. This paper closes the gap by showingthat a partially cursed equilibrium corresponds to a particular analogy-based expectation equilibrium.

In line with the widely applied principle of just deserts, we assume that the severityof the penalty on a contract offender increases in the harm on the other. Whenthis principle holds, the influence of the efficiency of the agreement on the incentivesto abide by it crucially depends on whether...

As firms implement tournament bonus reward schemes, mainly the idea is to introduce competition amongst their agents in the order to promote their performance.Tournaments in which agents compete for a bonus by investing effort, are frequentlyapplied, e.g., in development races, political...

When two or more agents compete for a bonus and the agents' productivity in each of several possible occurrences depends stochastically on (constant) effort, the number of times that are checked to assign the bonus affects the level of un-certainty in the selection process. Uncertainty, in turn,...

Can two negotiators fail to agree when both the size of the surplus and the rationalityof the negotiators are common knowledge? We show that the answer is affirmative.When the negotiators can make irrevocable commitments at a low but positive cost,the unique symmetric equilibrium entails...

We consider guilt averse agents and principals and study the effects ofguilt on optimal behavior of the principal and the agent in a moral hazardmodel.The principal’s contract proposal contains a target effort in addition tothe monetary incentive scheme. By accepting the agreement, the...

Experiments suggest that communication increases the contribution topublic goods (Ledyard, 1995). There is also evidence that, when contemplatinga lie, people trade off their private benefit from the lie with theharm it inflicts on others (Gneezy, 2005). We develop a model of bilateralpre-play...

In the Yes/No game, like in the ultimatum game, proposer and respondercan share a monetary reward. In both games the proposer suggests a rewarddistribution which the responder can accept or reject (yielding 0-payoffs). Thegames only differ in that the responder does (not) learn the suggested...