We study experimentally whether the endowment effect survives in a social and strategic context. Participants are asked for their Willingness-to-Accept (WTA) or Willingness-to-Pay (WTP) to play a series of 2x2 games. In the second part of the experiment, we study the endowment effect in...

Donors may often not be sure whether a recipient really deserves their help. Does this uncertainty deter generosity? In an experiment we find that, to the contrary, under most specifications of uncertainty, dictators give more, compared with the donation the same dictator makes to a recipient...

Although the role of formal and informal institutions in promoting economic growth and sustaining exchange relations is now well established, explaining and differentiating how informal and formal rules affect individual behavior remain a challenge. This study aims to distill the essential...

We study in an experiment whether humans prefer to depend on decisions of other humans (social uncertainty) or states of nature (environmental uncertainty). In the social uncertainty treatments subjects depend only on past decisions of other humans. This is the first experiment that studies...

The probability triangle (also called the Marschak-Machina triangle) allows for compact and intuitive depictions of risk preferences. Here, we develop an analogous tool for choice under uncertainty - the ambiguity triangle - and show that indifference curves in this triangle capture preferences...

Two rationality arguments are used to justify the link between conditional and unconditional preferences in decision theory: dynamic consistency and consequentialism. Dynamic consistency requires that ex ante contingent choices are respected by updated preferences. Consequentialism states that...

We investigate whether depleting people's cognitive resources (or willpower) affects the degree to which they are susceptible to framing effects. Recent research in social psychology and economics has suggested that willpower is a resource that can be temporarily depleted and that a depleted...

Prospect theory (PT) is the dominant descriptive theory of decision making under risk today. For the modeling of choices, PT relies on a psychologically founded separation of risk attitudes into attitudes towards outcomes, captured in a value function; and attitudes towards probabilities,...

This paper analyzes the effect of information overload on preference or aversion for variety. According to the model, a rational decision maker who suffers from information overload, faces a two-stage decision process, and is choosing from a set of unknown goods will find it optimal at some...

Willingness to take risk depends on whether the risk affects others as well as oneself and on how the risk affects one´s position vis-á-vis others. Taking a bet can improve one´s position relative to others or threaten it. We present an experiment that explores individual attitudes to...