The delay effect, that people discount the near future more than the distant future, has not been verified rigorously. An experiment conducted by us in China confirms that, by separating the delay from the interval, the delay effect exists only within a short delay. The results are reliable,...

We analyze the choices between two technologies A and B that both exhibit network effects. We introduce a critical mass game in which coordination on either one of the standards constitutes a Nash equilibrium outcome while coordination on standard B is assumed to be payoff-dominant. We present a...

This paper tests how subjects behave in an intertemporal consumption/saving experiment when borrowing is allowed and whether subjects treat debt differently than savings. Two treatments create environments where either saving or borrowing is required for optimal consumption. Since both...

Previous experimental results (Ballinger et al., 2003 and Carbone and Hey, 2004) have found that many agents fail to correctly take into account the length of the planning horizon also finding some support (See Carbone, 2006) for descriptive models, such as the Rolling Model. This paper presents...

Observed individual behavior in the presence of ambiguity is characterized by insufficient responsiveness to changes in subjective likelihoods. Such likelihood insensitivity under ambiguity is integral to theoretical models and predictive of behavior in many important domains such as financial...

Using a revealed preference approach, we conduct an experiment where subjects make choices from linear convex budgets in the domain of risk. We find that many individuals prefer mixtures of lotteries in ways that systematically rule out expected utility behavior. We explore the extent to which...

While one might expect athletes to be strongly averse to extending their career too long when there is a chance of losing everything due to a concussion or a catastrophic injury, experimental subjects consistently played longer than the optimal amount for risk-neutral decisions. A commitment to...

The model of time-inconsistent procrastination by O'Donoughe and Rabin shows that individuals who are not aware of their present-bias (naïve) procrastinate more than individuals who are aware of it (sophisticated) or are not present-biased (time-consistent). This paper tests this prediction. We...

Money illusion refers to the tendency to evaluate economic transactions in nominal rather than real terms. One manifestation of this phenomenon is the tendency to neglect future inflation in intertemporal investment decisions. Empirical evidence for this “inflation ignorance” is hard to...

We consider an expanded notion of social norms that renders them belief-dependent and partial, formulate a series of related testable predictions, and design an experiment based on a variant of the dictator game that tests for empirical relevance. Main results: Normative beliefs influence...