We seek to isolate in the laboratory factors that encourage and discourage the sunk cost fallacy. Subjects play a computer game in which they decide whether to keep digging for treasure on an island or to sink a cost (which will turn out to be either high or low) to move to another island. The...

We seek to isolate in the laboratory factors that encourage and discourage the sunk cost fallacy. Subjects play a computer game in which they decide whether to keep digging for treasure on an island or to sink a cost (which will turn out to be either high or low) to move to another island. The...

Individuals in groups must often choose between acting selfishly and cooperating for the common good. The choices they make are based on their beliefs on how they expect their actions to affect others. We show that for a broad set of beliefs and group characteristics cooperation can appear...

We present a dynamical theory of opinion formation that takes explicitly into account the structure of the social network in which individuals are embedded. The theory predicts the evolution of a set of opinions through the social network and establishes the existence of a martingale property,...

Recent developments in the global liberalization of equity and currency markets, coupled to advances in trading technologies, are making markets increasingly interdependent. This increased fluidity raises questions about the stability of the international financial system. In this paper, we show...

The tragedy of the digital commons does not prevent the copious voluntary production of content that one witnesses in the web. We show through an analysis of a massive data set from YouTube that the productivity exhibited in crowdsourcing exhibits a strong positive dependence on attention,...

We present a novel methodology for predicting future outcomes that uses small numbers of individuals participating in an imperfect information market. By determining their risk attitudes and performing a nonlinear aggregation of their predictions, we are able to assess the probability of the...

When should a necessary inconvenience be introduced gradually, and when should it be imposed all at once? The question is crucial to web content providers, who in order to generate revenue must sooner or later introduce advertisements, subscription fees, or other inconveniences. Assuming that...

Despite its haphazard growth, the Web hides powerful underlying regularities--from the organization of its links to the patterns found in its use by millions of users. Many of these regularities have been predicted on the basis of theoretical models based on a field of physics--statistical...

We present a novel methodology for predicting future outcomes that uses small numbers of individuals participating in an imperfect information market. By determining their risk attitudes and performing a nonlinear aggregation of their predictions, we are able to assess the probability of the...