We report experimental evidence on the effect of observability of actions on bank runs. We model depositors’ decision-making in a sequential framework, with three depositors located at the nodes of a network. Depositors observe the other depositors’ actions only if connected by the network....

We study the individual behavior of students and workers in an experiment where they repeatedly face the same cooperative task. The data show that clerical workers differ from college students in overall cooperation rates, strategy adoption and use of punishment opportunities. Students cooperate...

Trust is a central component of social and economic interactions among humans. While rational self-interest dictates that “investors” should not be trusting and “trustees” should not be trustworthy in one-shot anonymous interactions, behavioral experiments with the “trust game” have...

We study the process of equilibrium selection in games when players have social preferences of the type discussed, among others, by Rabin (1993) and Segal and Sobel (2007). To this end, we employ a standard noisy version of the best response dynamics. We obtain several results concerning some...

Empirical research suggests that – despite strengthening conventional incentives to put in effort – exerting control might reduce worker performance. The present paper shows that intention-based reciprocity can explain such hidden costs of control if individuals differ in their propensity...

We present a model of credence goods in which the consumers are heterogenous in terms of the valuation they place for getting a serious problem fixed. We introduce consumer information into this framework by assuming that, prior to visiting an expert, some consumers receive an information signal...

We focus on aspects of differential awareness that give rise to contractual disputes. Parties to a contract are boundedly rational as the state space available to them is coarser than the complete state space. Hence, they may disagree as to which state of the world has occurred, and therefore as...

We examine the roles and values of honesty and advocacy in communication by studying two closely-related variants of the standard cheap-talk game. In the honesty model, the sender is behavioral and honestly reveals the state with a positive probability. In the advocacy model, the sender is...

Credence goods, such as car repairs or medical services, are characterized by severe informational asymmetries between sellers and consumers, leading to fraud in the form of provision of insufficient service (undertreatment), provision of unnecessary service (overtreatment) and charging too much...

A biased, perfectly informed expert advises a partially and privately informed decision maker using cheap-talk message. The decision maker can tell whether the state is “high” or “low” relative to a private threshold that divides the unit-interval state space into two subintervals. The...