Players often engage in high-profile public communications to demonstrate their confidence in winning before they carry out actual competitive activities. We investigate players’ incentives to engage in such pre-contest communication. Our key assumption is that a player suffers a cost when he...

The market for retail financial products (e.g., investment funds or insurances) is marred by information asymmetries. Clients are not well informed about the quality of these products. They have to rely on the recommendations of advisors. Incentives of advisors and clients may not be aligned,...

In an experiment with professionals from the financial services sector, we investigate the impact of a team incentive scheme on the recommendation quality of investment products when advisors benefit from advising lower quality products. Experimental results reveal that, when group affiliation...

We examine subjects’ behavior in sender–receiver games where there are gains from trade and alignment of interests in one of the two states. We elicit subjects’ beliefs, risk and other-regarding preferences. Our design also allows us to examine the behavior of subjects in both roles, to...

Microfinance has been identified as an important tool in increasing the productivity of the poor and in aiding economic development. However, a large proportion of the poor are practicing Muslims, and are thus unable to take advantage of traditional microfinance contracts which involve the...

Confessions after failures are socially desirable. However, confessions also bear the risk of punishment. In a laboratory experiment I examine how confessions work. I analyze whether the willingness to punish harmful failures depends on how the harmed party has learned about the outcome. The...

Humans often lie strategically. We study this problem in an ultimatum game with an informed proposer and an uninformed responder, where the former can send an unverifiable statement about his endowment. A simple message game with heterogenous players with respect to lying costs shows that in...

In his classic article “An Essay on Bargaining” Schelling (1956) argues that ignorance might actually be strength rather than weakness. We test and confirm Schelling's conjecture in a simple take-it-or-leave-it bargaining experiment where the proposer can choose between two possible offers....

Asymmetric information in economic relationships often provides incentives to deceive. Previous findings show that ex ante disclosure of conflicts of interest not only fails to improve these relationships but also leads to even more deception. This study proposes that providing ex post...

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...