We present an economic experiment on network formation, in which subjects can decide to form links to one another. Direct links are costly but being connected is valuable. The game-theoretic basis for our experiment is the model of Bala and Goyal (2000). They distinguish between two scenarios...

In this paper we study experimentally four remedies to overcome inefficiencies that arise from the incompleteness of contracts. These remedies are reciprocity, repeated game effects, social embeddedness, and incentive contracts. In our baseline treatment we find that reciprocity is a powerful...

Field evidence suggests that agents belonging to the same group tend to behave similarly, i.e., behavior exhibits social interaction effects. Testing for such effects raises severe identification problems. We conduct an experiment that avoids these problems. The main design feature is that each...

We provide experimental evidence that contractual incompleteness, i.e., the absence of third party enforcement of workers’ effort or the quality of the good traded, causes a fundamental change in the nature of market interactions. If contracts are complete the vast majority of trades are...

In this paper, we suggest a novel approach to program evaluation that allows identification of the causal effect of a training program on the likelihood of being invited to a job interview under weak assumptions. The idea is to measure the program-effects by pre- and post-treatment data that are...

This paper provides field experimental evidence on the prevalence and determinants of discrimination and in-group favoritism in trust decisions. We observe choices of about 1,000 inhabitants of the city of Zurich who take part in a sequential trust game, in which first movers can condition their...

A growing economic literature recognizes and deals with the fact that economic agents' utility and well-being is not solely determined by absolute achievements, but also by achievements relative to a reference standard or reference group. In this literature it is assumed that the reference...

Politik und öffentliches Bewusstsein werden zunehmend durch ökonomische Theorien und Handlungsvorschläge mitbestimmt. Kaum ein anderes erkenntnis- und handlungsleitendes Modell hat daher einen vergleichbaren Einfluss wie das Konzept des Homo Oeconomicus. Durch die Entwicklung experimenteller...

In this paper we show that a simple model of reciprocal preferences explains major experimental regularities of common pool resource (CPR) experiments. The evidence indicates that in standard CPR games without communication and without sanctioning possibilities inefficient excess appropriation...

The prevailing labor market models assume that minimum wages do not affect the labor supply schedule. We challenge this view in this paper by showing experimentally that minimum wages have significant and lasting effects on subjects’ reservation wages. The temporary introduction of a minimum...