This paper considers two games, a stag hunt and a prisoners' dilemma. Each game features non-binding, costless, and free-form pre-play communication. I focus on players who verbally first suggest cooperation in each game. I study experimentally whether the frequency of verbal initiative-taking...

In many scenarios such as banking and liquidity crises, inefficiencies often arise because investors face uncertainties about economic fundamentals and the strategies of other investors. How information affects fundamental uncertainty is well studied, but how information affects strategic...

One of the basic tenets of expected utility theory is the principle of invariance in stating preferences between options. The preference should not depend on the description of the options (description invariance) or on the method of elicitation (procedure invariance). In Experiment 1, the...

This paper introduces two simple betting mechanisms, Top-Flop and Threshold betting, to elicit unverifiable information from crowds. Agents are offered bets on the rating of an item about which they received a private signal versus that of a random item. We characterize conditions for the chosen...

Social interdependence is believed to play an important role in individual choice behavior. This paper outlines a simple model constructed on the premise that people are motivated by their own payoff and by how their action compares to others in their reference group. I show that conformity in...

Interest in prediction markets has increased in the last decade, driven in part by the hope that these markets will prove to be valuable tools in forecasting, decision-making and risk management - in both the public and private sectors. This paper outlines five open questions in the literature,...

This study investigates context effects in general and the compromise effect in particular. It is argued that earlier research in this area lacks realism, a shortcoming that is a major drawback to research conclusions and stated management implications. The importance of this issue is stressed...

We provide experimental evidence that panic bank runs occur in the absence of problems with fundamentals and coordination failures among depositors, the two main culprits identified in the literature. Depositors withdraw when they observe that others do so, even when theoretically they should...