This experiment investigates contests between groups. Each group has one strong player, with a higher valuation for the prize, and two weak players, with lower valuations. In contests where individual efforts are perfect substitutes, all players expend significantly higher efforts than predicted...

The aim of this paper is to test the effectiveness of wage-irrelevant goal setting policies in a laboratory environment. In our design, managers can assign a goal to their workers by setting a certain level of performance on the work task. To establish our theoretical conjectures we develop a...

We study the effect of firing threats and tenure in a virtual workplace that reproduces features of existing organizations. We show that organizations in which bosses can fire up to one third of their workforce produce twice more than organizations for which firing is not possible. Firing...

On-the-job leisure is a pervasive feature of the modern workplace. We studied its impact on work performance in a laboratory experiment by either allowing or restricting Internet access. We used a 2×2 experimental design in which subjects completing real-effort work tasks could earn cash...

In this paper, we investigate the implications of the philosophical considerations presented in Nozick’s Anarchy, State, and Utopia, by examining group formation in a laboratory setting where subjects engage in both cooperative and conflictual interactions. We endow participants with a...

The ability of individuals and groups to forecast a future event, with incomplete information, by using the trading history of an asset market is analyzed in the laboratory. The results show: (1) when forecasters observe the summary of markettransacted prices, they do not perform as well as when...

This study experimentally tests the effect of information transparency on the probability of coordination failure in global games with finite signals. Prior theory has shown that in global games with unique equilibrium, the effect of information transparency is ambiguous. We find that in global...

Key differential structural characteristics of environments studied in previous market experiments have documented large divergences in their observed performance, particularly discrepancies in their convergence to expected equilibrium outcomes. We investigate why this should be so. The type of...

The subprime mortgage crisis has done more damage to the financial system than any financial crisis since the depression. This paper examines the Federal Reserve’s expansionary monetary policy during the early part of this decade, the effect of that expansionary policy on mortgage market...

This paper attempts to clarify our understanding of the everyday use of fair as we apply it to economic behavior. I first examine the decomposition of fair into its semantic primitives and discuss implications of recent research which indicates that the word is untranslatable into any other...