Previous research has suggested that communication and especially promises in-crease cooperation in laboratory experiments. This has been taken as evidence for internal motivations such as guilt aversion or preference for promise keeping. The goals of this paper are to examine messages under a...

The hold-up problem has played a central role in the study of firm boundaries, which is a fundamental element of the economic study of organizations. We study a previously unex-plored mechanism by which integration between two parties could resolve the problem. Based on the social identity...

This paper tests Psychological Forward Induction in the Lost Wallet Game, in an attempt to explain an empirical puzzle observed by Dufwenberg & Gneezy (2000) that the size of the outside option forgone by the first mover does not affect the behavior of the second mover. This is puzzling as...

Employing a two-by-two factorial design that manipulates whether dictator groups are single or mixed-sex and whether procedures are single or double-blind, we examine gender effects in a standard dictator game. No gender effects were found in any of the experimental treatments. Moreover, neither...

We demonstrate that effectiveness of performance-contingent incentives is inversely related to individual risk-aversion levels through two mechanisms: 1) rational optimizing decisions about the amount of effort to supply when effort is positively correlated with risk exposure and 2) the possibly...

We examine equilibrium selection in a two-stage sequential elimination contest in which contestants compete for a single prize. This game has a continuum of equilibria, only one of which satisfies the Coalition-Proof Nash Equilibrium (CPNE) refinement. That equilibrium involves “burning out”...

In this paper we assume that a public project creates different payoffs to different contributors. Within this environment we study two institutions: Rank Order Voluntary Contribution Mechanism (Rank-Order-VCM) and Random Order Voluntary Contribution Mechanism (Random-Order-VCM). In...

Employing a two-by-two factorial design that manipulates whether dictator groups are single or mixed-sex and whether procedures are single or double-blind, we examine gender effect in a standard dictator game. No gender effect was found in any of the experimental treatments. Moreover, neither...

The hold-up problem has played a central role in the study of firm boundaries that originated with the pathbreaking essay by Coase (1937). This paper studies a previously unexplored mechanism through which integration could resolve the hold-up problem. Based on Tajfel and Turner’s (1979)...

We contribute to the theory of the firm by experimentally investigating a bilateral trade relationship in which standard theory assuming self-regarding preferences predicts that the seller will be better off by investing in the outside option to improve his bargaining position. The seller’s...