Passive behavior is ubiquitous - even when facing various alternatives to choose from, people commonly fail to take decisions. This paper provides evidence on the cognitive foundations of such "passive choices" and studies implications for policies that encourage active decision-making. In an...

We study the effects of two widely observed behavioral policy interventions⸻the simplification of complex decisions and the implementation of high-quality defaults. Based on a laboratory experiment featuring a dual-task paradigm, we demonstrate that these policies do not only improve decisions...

The "iteration argument" presented in Schlicht (1996) shows that the allocation of property rights may generate inefficiencies, contrary to what the "Coase Theorem", as commonly understood, asserts. The argument may be summarized by saying that markets (and bargaining) cease to function properly...

The elegant economic picture of rational consumers achieving Pareto optimality through trade in decentralized self-organized markets is blurred by market imperfections and choices inconsistent with consumer self-interest. Behavioral economics has documented these errors in choice, and considered...

We test whether and, if so, how incentives to promote pro-social behavior affect the extent to which it spills over to subsequent charitable giving. To do so, we conduct a two-period artefactual field experiment to study repeated donation decisions of more than 700 participants. We vary how...

Strong growth in disposable income has inflated consumption to unprecedented, but not sustainable levels. In this process consumer behavior has been changing. To explain the driving forces of this development, the paper introduces a theory of evolving consumer preferences that is molded in an...

Social preferences facilitate the internalization of health externalities, for example by reducing mobility during a pandemic. We test this hypothesis using mobility data from 258 cities worldwide alongside experimentally validated measures of social preferences. Controlling for time-varying...

We study cheating as a collective-risk social dilemma in a group setting in which individuals are asked to report their actual outcomes. Misreporting their outcomes increases the individual's earnings but when the sum of claims in the group reaches a certain threshold, a risk of collective...

Many consumers care about climate change and other externalities associated with their purchases. We analyze the behavior and market effects of such "socially responsible consumers" in three parts. First, we develop a flexible theoretical framework to study competitive equilibria with rational...

Governments worldwide have set targets to reduce greenhouse gas emissions from the residential sector to zero. Policy instruments, such as carbon pricing or subsidies, are being discussed and implemented to achieve these targets. If individuals exhibit present bias, Heutel (2015) has shown that...