Do employers and workers underbid prevailing wages if there is unemployment? Do employers take advantage of workers' underbidding by lowering wages? We hypothesize that under conditions of incomplete labor contracts, wage levels may positively affect workers' propensity to cooperate. This, in...

This article studies how a taste for consistency affects decision making. Our application is response behavior in surveys. In particular, we show that the inclusion of questions can affect answers to subsequent related questions. The reason is that participants want to respond in a consistent...

Many economic decisions involve a substantial amount of uncertainty, and therefore crucially depend on how individuals process probabilistic information. In this paper, we investigate the capability for probability judgment in a representative sample of the German population. Our results show...

A growing economic literature stresses the importance of relative comparisons, e.g., for savings and consumption or happiness. In this literature it is usually assumed that reference standards against which people compare themselves are exogenously given. In contrast, findings from social...