In economic analyses of asymmetric information, better-informed agents are assumed capable of reproducing the judgments of less-informed agents. The authors discuss a systematic violation of this assumption that they call the "curse of knowledge." Better-informed agents are unable to ignore...

In subjective expected utility (SEU), the decision weights people attach to events are their beliefs about the likelihood of events. Much empirical evidence, inspired by Ellsberg (1961) and others, shows that people prefer to bet on events they know more about, even when their beliefs are held...

This chapter extends the EWA learning model to bilateral call market games (also known as the "sealed-bid mechanism" in two-person bargaining). In these games, a buyer and seller independently draw private values from commonly-known distributions and submit bids. If the buyer's bid is above the...

We use measures of neural activity provided by functional magnetic resonance imaging (fMRI) to test the "realization utility" theory of investor behavior, which posits that people derive utility directly from the act of realizing gains and losses. Subjects traded stocks in an experimental market...

What motives underlie the ways humans interact socially? Are these the same for all societies? Are these part of our nature, or influenced by our environments? Over the last decade, research in experimental economics has emphatically falsified the textbook representation of Homo economicus....