Belief elicitation in economics experiments usually relies on paying subjects according to the accuracy of stated beliefs in addition to payments for other decisions. Such incentives, however, allow risk-averse subjects to hedge with their stated beliefs against adverse outcomes of other...

This paper analyzes vertical cross-shareholding, that is, the mutual holding of a minority of shares between vertically related firms. We investigate the conditions under which cross-shareholding improves efficiency. First, we explore the issue in a game-theoretic model and find that...

This paper studies the interplay between economic incentives and social norms in firms. Weintroduce a general framework to model social norms arguing that norms stem from agents’desire for, or peer pressure towards, social efficiency. In a simple model of team productionwe examine the...

We introduce a generalized theoretical approach to study imitation andsubject it to rigorous experimental testing. In our theoretical analysiswe …nd that the different predictions of previous imitation models aredue to different informational assumptions, not to different behavioralrules. It is...

We analyze the dynamics of neighbourhood watch programs in a local interaction framework. Agents can watch their neighbours' houses and thus deter burglars from breaking in....