Gift giving is thought to be welfare decreasing. This claim rests on two key assumptions, namely, full information as to the whereabouts of all goods and the ability to reach the stores that carry desired goods costlessly. We replace these two assumptions with the more realistic assumptions of...

Most previous experiments attempting to establish the existence of the self-serving bias have confounded it with strategic behavior. We design an experiment that controls for strategic behavior (Haman effects), and isolates the bias itself. The self-serving bias that we measure concerns beliefs...

Both oligopoly theory and experiments are concerned almost uniquely with sellers' behavior. Buyers' ability to exhibit non-trivial behavior in different market institutions remains unaddressed. This paper investigates the impact of three variables (number of buyers, surplus division at the...

A basic tenet in elementary microeconomics is tax incidence equivalence. This tenet holds that the burden of a unit tax on buyers and sellers is independent of who actually pays the tax. By contrast, policymakers and the public often mistake statutory incidence for economic incidence. Recent...

We introduce a two-player, binary-choice game in which both players have a privately known incentive to enter, yet the combined surplus is highest if only one enters. Repetition of this game admits two distinct ways to cooperate: turn taking and cutoffs, which rely on the player's private value...

The rise of mega-retailers and industry concentration levels has recently generated an interest among economists and antitrust policymakers in the effects of buyer countervailing power. There exists a considerable theoretical literature offering a range of sources of powerful buyers' ability to...

A number of recent theoretical papers have shown that for buyer-size discounts to emerge in a bargaining model, the total surplus function over which parties bargain must have certain nonlinearities. We test the theory in an experimental setting in which a seller bargains with a number of buyers...

Time-consuming and costly religious rituals pose a puzzle for economists committed to the idea of rational economic behavior. We propose that religious rituals promote in-group trust and cooperation that help to overcome collective-action problems. We test this hypothesis on communal societies...

There exist numerous theories that attempt to explain the ubiquitous 99-cent price ending. Most of these theories either do not hold up to inspection or posit irrational consumers who serve as a money pump for firms. We offer an experimental test of Basu's (1997) rational expectations...

We introduce a Bayesian method to infer repeated-game strategies that best describe individuals' observed actions. We apply this method to buyer behavior in posted-offer market experiments. While the strategies of one-quarter of the buyers in our experiments correspond to the game-theoretic...