We report on an experiment investigating whether the Hayek Hypothesis (Smith, 1982) extends to the long run setting. We consider two environments; one with a common production technology having a U-shaped long run average cost curve and a single competitive equilibrium, and another with a common...

This paper provides experimental evidence on the formation of partial cartels with endogenous coordination. Firms face a coordination challenge when a partial cartel is to be formed as every firm is better off if it is not inside the cartel but is a free-riding outsider. We introduce a...

In this paper, we propose a new channel of contract design to boost efficiency. If deviating from one's own words induces a self-imposed moral burden, the optimal contracting procedure with regard to cheap talk shall assign the responsibility for installing the nonbinding promise in the contract...

According to the Greek philosopher Plato “[…] if anyone at all is to have the privilege of lying the rulers of the State […] may be allowed to lie for the public good” (The Royal Lie). To investigate whether The Royal Lie may foster cooperation in public goods provision we experimentally...

This paper examines the voluntary formation of centralized sanctioning institutions. We introduce a simple model to study institution formation as a second-order cooperation problem where voluntary contributions to a common fund serve as an instrument to finance centralized sanctioning...

We report on an experiment investigating whether the Hayak Hypothesis (Smith, 1982)extends to the long run setting. We consider two environments; one with a common pro-duction technology having a U-shaped long run average cost curve and a single competitive equilibrium, and another with a common...

Review of Immigrant Networks and Social Capital by Carl L. Bankston III. Cambridge, UK, and Malden, MA: Polity.

The migration of young Chinese scientists to undertake graduate studies in U.S. universities is arguably one of the most important recent episodes of skilled migration. Using a new data set covering around 16,000 Ph.D. graduates in 161 U.S. chemistry departments, we show that Chinese students...