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,...

We model deferred compensation as a share of an uncertain futureprofit granted by a financially constrained employer to her employeein mutual agreement. Deferred compensation serves as a retentionmechanism, helping the employer to avoid bankruptcy. The optimalcombination of cash and deferred...

Unlike previous attempts to implement cooperation in a prisoners’ dilemma gamewith an infinite horizon in the laboratory, we focus on extended prisoners’ dilemmagames in which a second (pure strategy) equilibrium allows for voluntary cooperationin all but the last round. Our four main...

We analyze the effects of asymmetric information concerning thesize of a pie on proposer behavior in three different bargaining situations:the ultimatum game, the Yes-No-game and the dictator game.Our data show that (a) irrespective of the information condition, proposergenerosity increases with...

In the framework of expected utility theory, risk attitudes are entirely capturedby the curvature of the utility function. In cumulative prospect theory (CPT) riskattitudes have an additional dimension: the weighting of probabilities. With thismodication, one question arises naturally: since...

We replicate three pricing tasks of Gneezy, List and Wu (2006) for which they document the so called uncertainty effect, namely that people value a binary lottery over non-monetary outcomes less than other people value the lottery’s worse outcome. Unlike the authors who implement a verbal...

One may hope to capture the behavioral and emotional eects of downsizingthe labor force in rather abstract settings as an ultimatum game (see Fischeret al. (2008)), or try to explore downsizing in its more natural principalagentscenario with a labor market background. We pursue the latter...

In this paper, we experimentally test the Modigliani-Miller theorem. Applying ageneral equilibrium approach and not allowing for arbitrage among ¯rms with differ-ent capital structure, we are able to address a question fundamental to the valuationof firms: does capital structure affect the...

We experimentally investigate how affective processes influence proposers’and responders’ behaviour in the Ultimatum Game. Using a dualsystemapproach, we tax cognitive resources through time pressure andcognitive load to enhance the influence of affective processes on behaviour.We find that...