Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people's willingness to engage in those activities voluntarily. We propose a simple rationale for this `crowding out' phenomenon, using standard economic arguments. The...

As illustrated by the famous Ellsberg paradox, many subjects prefer to bet on events with known rather than with unknown probabilities, i.e., they are ambiguity averse. In an experiment, we examine subjects’ choices when there is an additional source of ambiguity, namely, when they do not know...

Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people's willingness to engage in those activities voluntarily. We propose a simple rationale for this 'crowding out' phenomenon, using standard economic arguments. The...

Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people׳s willingness to engage in those activities voluntarily. We propose a simple rationale for this ‘crowding out’ phenomenon using standard economic arguments. The...

Bubbles in asset markets have been documented in numerous experiments. Most experiments in which bubbles occur feature a declining fundamental value. This feature has been criticized for being atypical of real financial markets. Here, we experimentally study other ingredients for bubble...

Incentives often distort behavior: they induce agents to exert effort but this effort is not employed optimally. This paper proposes a theory of incentive design allowing for such distorted behavior. At the heart of the theory is a trade-off between getting the agent to exert effort and ensuring...

Teams are formed because input from different people is needed. Providing incentives to team members, however, can be difficult. According to received wisdom, declaring all members responsible fails because real responsibility for team output "diffuses." But why? And why and when does formally...

Teams are formed because input from different people is needed. Providing incentives to team members, however, can be diffcult. According to received wisdom, declaring all members responsible fails because real responsibility for team output 'diffuses'. But why? And why and when does formally...