Counterproductive reactions to unfavorable trading prices can cause inefficiencies in economic exchange. This paper studies whether the use of a competitive pricing mechanism reduces such wasteful activities. We report data from a laboratory experiment where a powerful buyer can trade with one...

Although conflicts typically lead to a waste of resources, organizations may still benefit from a corporate culture that tolerates or even encourages conflicts. The reason is that coordinated conflicts may help to enforce informal contracts and foster cooperation. In this paper we report results...

We empirically assess whether hindsight bias has consequences on how citizens evaluate their political actors. Using an incentivized elicitation technique, we demonstrate that people systematically misremember their past policy preferences regarding how to best fight the Covid-19 pandemic. At...

Social preference research has received considerable attention among economists in recent years. However, the empirical foundation of social preferences is largely based on laboratory experiments with self-selected students as participants. This is potentially problematic as students...

Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that...

This paper develops a novel positive model of informal contracting in which rewards and punishments are not determined by an ex ante optimal plan but instead express the ex post moral sentiments of an arbitrating party. Specifically, we consider a third party arbitrator mediating a one-shot...

AbstractAlthough moral cleansing—a form of self-regulation—has frequently been studied, existing evidence is mixed and its prerequisites remain unclear. We hypothesize that large, salient deviations from self-defined morality require regulation through moral cleansing, whereas small,...

We empirically assess whether hindsight bias has consequences on how citizens evaluate their political actors. Using an incentivized elicitation technique, we demonstrate that people systematically misremember their past policy preferences regarding how to best fight the Covid-19 pandemic. At...