When agents face coordination problems their choices often impose externalities on third parties. We investigate whether such externalities can affect equilibrium selection in a series of one-shot coordination games varying the size and the sign of the externality. We find that third-party...

The paper investigates the introduction of an institution, in form of an impartial authority (third party), into a two-person situation. The impartial authority can reward a stranger for acting according to a desired behavioral norm. The reward is costly for the authority and her behavior cannot...

The paper investigates the introduction of an institution, in form of an impartial authority (third party), into a two-person situation. The impartial authority can reward a stranger for acting according to a desired behavioral norm. The reward is costly for the authority and her behavior cannot...

When agents face coordination problems their choices often impose externalities on third parties. We investigate whether such externalities can affect equilibrium selection in a series of one-shot coordination games varying the size and the sign of the externality. We find that third-party...

On the basis of problems related to asymmetric information, self-governance has been proposed and often empirically found to be superior to the external imposition of rules in social dilemma situations. The present paper suggests and experimentally analyses a different line of argument, namely...

According to Adam Smith (1790), human selfishness can be restrained by introspection. We test the effect of introspection on people's willingness to cooperate in a public good game. Drawing on the concept of identity utility (George A. Akerlof and Rachel E. Kranton, 2000), we show theoretically...

A random shock excludes reverse causality and reduces omitted variable bias. Yet a natural experiment does not identify random exposure to treatment, but the reaction to a random change from baseline to treatment. A lab experiment comparing higher certainty with higher severity of punishment for...

Controversies surrounding the European sovereign debt crisis loom prominent in the public debate. From a legal perspective, the no-bailout rule and the ban on monetary financing constitute the main principles governing the legality review of financial assistance and liquidity measures....

Controversies surrounding the European sovereign debt crisis loom prominent in the public debate. From a legal perspective, the no-bailout rule and the ban on monetary financing constitute the main principles governing the legality review of financial assistance and liquidity measures....

According to Adam Smith (1790), human selfishness can be restrained by introspection. We test the effect of introspection on people’s willingness to cooperate in a public good game. Drawing on the concept of identity utility (George A. Akerlof and Rachel E. Kranton, 2000), we show...