Can “house money” explain asset market bubbles? We test this hypothesis in an asset market experiment with a certain dividend. We compare experiments where the initial portfolio of cash and shares is given to subjects, i.e. house money, to a treatment in which individual initial portfolios...

Several situations in our daily interactions are characterized by uncertainty and asymmetric information regarding the final outcomes. For example, an investor may overstate a project’s value, or a superior may choose to under, or over, state the gains from a project to a subordinate. We...

List, or retail, pricing is a widely used trading institution where firms announce a price that may be discounted at a later stage. Competition authorities view list pricing and discounting as a procompetitive practice. We modify the standard Bertrand-Edgeworth duopoly model to include list...

This paper analyzes cognitive effort in 6 different oneshot p-beauty games. We use both Raven and Cognitive Reflection tests to identify subjects’ abilities. We find that the Raven test does not provide any insight on Beauty Contest Game playing but CRT does: subjects with higher scores on...

Using detailed firm-level data, we analyze Spain’s Pharmaceutical Research Program, and find differences between the ex ante announced evaluation criteria and their ex post implementation. By studying the program’s implementation, we also uncover that the apparent discrimination against...

This paper highlights the importance of product differentiation and endogenous R&D in determining the optimal R&D policy, in a model where investment in cost reducing R&D is committed before firms compete in a differentiated-goods third-country export market. R&D is always taxed in oligopolies...

Economic loss to society due to dishonesty can be quite large. Policy makers use several international indices that characterize countries according to the quality of their institutions. However, no effort has been made to study how the honesty of citizens varies across sixteen countries. This...