Using an experiment with material incentives, this paper investigates the violation of Lorenz relations in the case of dominant and single-crossing Lorenz curves. Our experimental design consists of two treatments: an income distribution treatment and a lottery treatment. Both treatments were...

There is a substantial literature examining coordination in public goods games. We conducted an experiment to explore how varying patterns of thresholds affect the willingness of subjects to contribute to a public good. We had subjects play a multiperiod game where each subject was allocated an...

We analyze a market game where firms choose capacities under uncertainty about future market conditions and make output choices after uncertainty has unraveled. We show existence and uniqueness of equilibrium under imperfect competition and establish that capacity choices by strategic firms are...

Efficiency wage effects of profit sharing are combined with option values related to stochastic future pofit variations. These option effects occur if the workers' profit share is fixed by long-term contracts. The Pareto-improving optimal level of the sharing ratio is calculated for two...

In a society composed of a ruler and its citizens: what are the determinants of the political equilibrium between these two? This paper approaches this problem as a game played between a ruler who has to decide the distribution of the aggregate income and a group of agents/citizens who have the...

Least-Unmatched Price Auctions have become a popular format of TV and radio shows. Increasingly, they are also applied in internet trading. In these auctions the lowest single (unique) bid wins. We analyze the game-theoretic solution of least unmatched price auctions when prize, bidding cost and...

This paper uses a unified treatment of real options and game theory to examine value appropriation in takeovers within a competitive environment of imperfect information. The integrated model considers a potential target as a shared real option on a bundle of resources. Competing potential...

We examine the risky choices of contestants in the popular TV game show “Deal or No Deal” and related classroom experiments. Contrary to the traditional view of expected utility theory, the choices can be explained in large part by previous outcomes experienced during the game. Risk aversion...

In this paper we propose the use of preferred outcome distributions as a new method to elicit individuals' value and probability weighting functions in decisions under risk. Extant approaches for the elicitation of these two key ingredients of individuals' risk attitude typically rely on a long,...

This paper presents a model of Rule of Law in which a continuum of agents plays against the State for the appropriation of the economic assets of a stylised economy. The model shows how each agent can either challenge the State or acquiesce, with the latter having the choice of either protecting...