This paper considers the stability of tacit collusion in price setting duopolies with repeated interaction. The minimum discount factor above which tacit collusion can be sustained in a subgame perfect equilibrium is called the critical discount factor delta*. In addition, delta* is often used...

Different information provision in experimental markets can drastically change subjects' behavior. Considering the repeated Bertrand duopoly game of Dufwenberg and Gneezy (2000), we find that population feedback about the prices in other markets outside a subjects' own current market causes...

One lingering puzzle is why voluntary contributions to public goods decline over time in experimental and real-world settings. We show that the decline of cooperation is driven by individual preferences for imperfect conditional cooperation. Many people's desire to contribute less than others,...

In this paper, we investigate the effects of competition on bargained outcomes. We show that the neglect of either fairness concerns or decision errors will prevent a satisfactory understanding of how competition affects bargaining. We conducted experiments which demonstrate that introducing a...

Recently developed models of fairness can explain a wide variety of seemingly contradictory facts. The most controversial and yet unresolved issue in the modeling of fairness preferences concerns the behavioral relevance of fairness intentions. Intuitively, fairness intentions seem to play an...

All known human societies establish social order by punishing violators of social norms. However, little is known about how the brain processes the punishment threat associated with norm violations. We use fMRI to study the neural circuitry behind social norm compliance by comparing a treatment...

Promises are one of the oldest human-specific psychological mechanisms fostering cooperation and trust. Here, we study the neural underpinnings of promise keeping and promise breaking. Subjects first make a promise decision (promise stage), then they anticipate whether the promise affects the...

We report experimental results for a simple bimatrix game between a manager and an auditor. We investigate whether the quality of audited financial statements improves if the relative proportion of perfectly honest auditors increases. We find that the quality of audited reports is higher if...

"Winner-take-all" markets (i.e., markets in which the relative and not the absolute performance is decisive) have gained in importance. Such markets have a tendency to provoke inefficiently many entries. We investigate such markets in an experiment and show that there are even more inefficient...