We test whether large but purely nominal shocks affect real asset market prices. We subject a laboratory asset market to an exogenous shock, which either inflates or deflates the nominal fundamental value of the asset, while holding the real fundamental value constant. After an inflationary...

According to economists, severe legal sanctions deter violations of the law. According to legal scholars, people may obey law backed by mild sanctions because of norm-activation. We experimentally investigate the effects of mild and severe legal sanctions in the provision of public goods. The...

Money illusion means that people behave differently when the same objective situation is represented in nominal or in real terms. To examine the behavioral impact of money illusion we studied the adjustment process of nominal prices after a fully anticipated negative nominal shock in an...