This article develops the theoretical properties of a new incentive mechanism for regulating a monopoly seller and reports the results of laboratory experimental tests of its behavioral properties. The design of the new mechanism draws upon the results of our earlier experimental research on the...

Recent years have seen the development of new theories of market failure based on asymmetric information and network effects. According to the new paradigm, we can expect substantial failure in the markets for labor, credit, insurance, software, new technologies and even used cars, to give but a...

Rent-seeking contests between groups involve conflicts of interests at the levels of individuals, groups, and the society as a whole. We conduct a series of economic experiments to study the behavior of groups and individuals competing against each other in rent-seeking contests. We find...