We use incentivized economics experiments to test both the point predictions and comparative static predictions of optimal transfer pricing models, comparing behavior under varying conditions, including wholly versus partially-owned subsidiaries and different tariff and tax rates. As predicted,...

We show how experience and dynamic learning processes reduce the obstacles to optimization imposed by information frictions when individuals newly enter the formal sector economy. Most importantly, we provide causal evidence on the exact mechanisms through which individuals learn about the...

We show how experience and dynamic learning processes reduce the obstacles to optimization imposed by information frictions when individuals newly enter the formal sector economy. Most importantly, we provide causal evidence on the exact mechanisms through which individuals learn about the...

We study experimentally whether heterogeneity of behavior in the Centipede game can be interpreted as the result of a learning process of individuals with different preference types (more and less pro-social) and coarse information regarding the opponent's past behavior. We manipulate the...

Using belief elicitation, the paper investigates the formation and the evolution of beliefs in a signalling game in which a common prior on Sender's type is not induced. Beliefs are elicited about the type of the Sender and about the strategies of the players. The experimental subjects often...