Economics students have been shown to exhibit more selfishness than other students. Because the literature identifies the impact of long-term exposure to economics instruction (e.g., taking a course), it cannot isolate the specific course content responsible; nor can selection, peer effects, or...

This paper presents a formal theory of reciprocity. Reciprocity means that people reward kind actions and punish unkind ones. The theory takes into account that people evaluate the kindness of an action not only by its consequences but also by the intention underlying this action. The theory...

In this paper we show that a simple model of fairness preferences explains major experimental regularities of common pool resource (CPR) experiments. The evidence indicates that in standard CPR games without communication and without sanctioning possibilities inefficient excess appropriation is...

Standard equilibrium concepts in game theory find it difficult to explain the empirical evidence from a large number of static games, including the prisoner's dilemma game, the hawk-dove game, voting games, public goods games and oligopoly games. Under uncertainty about what others will do in...

A firm with stochastic demand can rely on hired hands when demand is low and rent additionallabour when demand is higher. For high demand this implies the co-employmentof hired hands, paid directly by the firm, and of rented hands who are paid by a rentalagency. This may cause severe problems if...

In two-person generosity games the proposer's agreement payoffis exogenously given whereas that of the responder is endogenouslydetermined by the proposer's choice of the pie size. Earlier resultsfor two-person generosity games show that participants seem to caremore for eciency than for equity....

Sick-pay is a common provision in labor contracts. It insures workersagainst a sudden loss of income due to unexpected absences andhelps them smooth consumption. Therefore, many governments findsick-pay socially desirable and choose to mandate its provision. Butsick-pay is not without its...

Established already in the Biblical times, the Matthew effect stands for the fact that in societies rich tend to get richer and the potent even more powerful. Here we investigate a game theoretical model describing the evolution of cooperation on structured populations where the distribution of...

We contrast a standard deterministic signaling game with a variant where the signal-generating mechanism is subject to stochastic perturbations. In the theoretical part, we obtain a unique equilibrium with stochastic signals. This equilibrium is separating and has intuitive comparative-static...

In this paper we experimentally test a theory of boundedly rational behavior in a lemons market. We analyzed two different market designs, for which perfect rationality implies complete and partial market collapse, respectively. Our empirical observations deviate substantially from these...