Actual behaviour is inuenced in important ways by moral emotions,for instance guilt or shame (see among others Tangney et al., 2007). Belief-dependant models of social preferences using the framework of psycho-logical games aim to consider such emotions to explain other-regardingbehaviour. Our...

Recent research has cast some doubt on the general validity of outcome-basedmodels of social preferences. We develop a model based on cognitive dissonance thatfocuses on the importance of self-image. An experiment (a dictator game variant)tests the model.First, we nd that subjects whose choices...

We exploit a controlled frameless laboratory experiment to study settlement negoti-ations and the plainti¤’s decision to raise a lawsuit in case of an impasse. We …nd thatgreater variance in court outcomes increases the litigation rate and lowers the settlementrate. This latter …nding goes...

We present an experiment designed to test the Modigliani-Miller theorem. Applyinga general equilibrium approach and not allowing for arbitrage among firmswith different capital structures, we find that, in accordance with the theorem, participantswell recognize changes in the systematic risk of...

Different evaluators typically disagree how to rank different candidates since theycare more or less for the various qualities of the candidates. It is assumed that allevaluators submit vector bids assigning a monetary bid for each possible rank order.The rules must specify for all possible...

Loewenstein (1996, 2005) identifies an intrapersonal empathy gap. In the respectiveexperiments, subjects make choices with delayed consequences. When enteringthe state where these consequences would unfold, they get the possibility to revisetheir initial choice. Revisions are more substantial...

Why is it that well-intentioned actions can create persistent conflicts? While norms are widely regarded as a source for cooperation,this article proposes a novel theory in which the emergence of normscan be understood as a bargaining process in which normative conflicts explain the nally...

Unanimous voting as the fundamental procedural source of political legitimacy grants vetopower to each individual. We present an axiomatic characterization of a class of biddingprocesses to spell out the underlying egalitarian values for collective projects of a“productive state”. At heart...

A decision maker (DM) wishes to select a competent candidate to …ll a position.However, since the wage and task of the position is predetermined, the DM cannot usecontract as a screening device. This paper formulates the problem as a class of selectionproblem and derives the optimal selection...

Empirical evidences show that investors tend to be biased toward investing indomestic (home bias) and local (local bias) stocks. Familiarity is considered to be one of thereasons. A similar concept was proposed by Goldstein and Gigerenzer (1999, 2002), known asthe recognition heuristic: “when...