We develop a theory of the emergence of merchant guilds as an efficient mechanism to foster cooperation between merchants and rulers, building on the natural complementarity between merchants’ market trading and mutual monitoring. Unlike existing models, we focus on local merchant guilds,...

IInnovative start-ups and venture capitalists are highly clustered: Silicon Valley is probably the best-known example. Clusters differ in the contracts they use, and in how they perform. I explore the link between spillovers, contractual design and performance. I find that more "incomplete"...

Standard economic models with complete information predict a positive, monotonic relationship between pay and performance. This prediction does not always hold in experimental tests: offering a small payment may result in lower performance than not offering any pay- ment. We test experimentally...

The available evidence from numerous studies in psychology suggests that overconfidence is a much more important phenomenon in North America than in Japan. Relatedly, North Americans appear to view high self-esteem much more positively than Japanese. The pattern is reversed when it comes to...

We provide an experimental test of the role of self-signaling in decisions to do- nate to charity. Our data strongly supports the theoretical prediction of a non- monotonic, hill-shaped relationship between self-confidence, proxied by the Social Potency personality trait, and prosocial behavior...

What makes individuals conform or diverge after observing prosocial or selfish behavior by others? We study experimentally how social comparison (observing a peer’s behavior) interacts with identity motives for cooperation. Participants play two games. We increase the strength of the identity...