Why do farm households inefficiently allocate resources across the plots they cultivate? We explore how these production inefficiencies relate to consumption decisions and information sharing within the household. In a lab-in-the-field experiment, male producers allocate too few inputs to their...

Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inefficient equilibrium; however, if we lift the veil of money by...

When public goods can only be provided when donations cross a minimum threshold, this creates an advantage in that Pareto Efficient outcomes can be Nash Equilibria. Despite this, experiments have shown that groups struggle to coordinate on one of the many efficient equilibria. We apply a...

The common prior assumption is pervasive in game-theoretic models with incomplete information. This paper investigates experimentally the importance of inducing a correct common prior in a two-person signaling game. Equilibrium selection arguments predict that different equilibria may be...

Price-matching guarantees have been alleged to sustain collusive prices in a homogenous product market. Theories in this literature also suggest that there exist multiple equilibria (i.e., a set of price equilibria between the competitive and the monopoly price) when all sellers adopt these...

We use a laboratory experiment to study bargaining with random implementation. We modify the standard Nash demand game so that incompatible demands do not necessarily lead to the disagreement outcome. Rather, with exogenous probability q, one bargainer receives his/her demand, with the other...

Institutions may rely on fundamental principles, e.g., of legal philosophy, but may also have evolved according to institutional fitness, as gauged by a society's well-being. In our stylized framework where two fundamental principles, equality and efficiency, conflict with each other, one of the...