The Dixit (1980) hypothesis that incumbents use investment in capacity to deter potential entrants has found little empirical support. Bagwell and Ramey (1996) propose a model where, in the unique game-theoretic prediction based on forward induction or iterated elimination of weakly-dominated...

We study how two dimensions of market conditions affect behavior in experimental gift-exchange markets with repeated interaction. First, we consider the impact of competitive imbalance, by varying whether there is an excess supply of firms or an excess supply of workers in the market. Second, we...

In experiments with two-person sequential games we analyze whether responses to favorable and unfavorable actions depend on the elicitation procedure. In our 'hot' treatment the second player responds to the first player's observed action while in our 'cold' treatment we follow the 'strategy...