We propose an experimental method to test individuals for prudence (i.e. downside risk aversion) outside the expected utility framework. Our method relies on a novel representation of compound lotteries which allows for a systematic parameterization that captures the full generality of prudence....

This paper reports the first experimental study of the serial and the average cost pricing mechanism under three different treatments: a complete information treatment and two treatments designed to simulate distributed systems like the Internet with extremely limited information, synchronous...

Tying contracts are well-known for their anti-competitive potential. This paper questions their negative image by showing that tying contracts can be necessary to implement price signals which overcome problems of asymmetric information in the introductory phase of a new durable product. The...