This paper examines experimentally two common conjectures in the popular literature on financial markets: that they are swayed by emotion and that they behave like a 'crowd'. We find consistent evidence that deviations of prices from fundamental value depend on the emotion of excitement and on...

We propose that the formation of beliefs be treated as statistical hypothesis tests, and label such beliefs inferential expectations. If a belief is overturned due to sufficient contrarian evidence, we assume agents switch to the rational expectation. We build a state dependent Phillips curve,...

The paper presents an experiment testing the hypothesis that, if consumers do not have well defined preferences and as a result their valuation of a new product is shaped by past experiences of prices, it may be more profitable for firms to follow a strategy of pricing high and then lower. We...

The key general problem in design, evaluating and defending an experimental design is to determine whether there are factors affecting experimental behavior that are not being duly taken into account. We present a relevance, distinctiveness and plausibility (RDP) framework for systematically...

We assess the extent of preferences for employment in a collective wage bargaining situation with heterogeneous workers. We vary the size of the union and introduce a treatment mechanism transforming the voting game into an individual allocation task. Our results show that highly productive...

Vendettas occur in many real world settings where rivals compete for a prize, e.g., winning a competitive promotion or retaining a job, by engaging in aggressive retaliatory behavior. We present a benchmark experiment where two players have an initial probability of winning a prize. Retaliatory...

If principals are allowed to choose between a revenue sharing, a bonus and a trust contract, a large majority of experimental subjects choose the revenue sharing contract. We find that this choice is the most efficient while at the same time being fair in the Paretian sense that on average...

This paper examines the impact of envy or related social preferences on agricultural innovation in Ethiopia by combining experimental and household survey data. In the first stage of a money burning game, income inequality is induced by providing differential endowments and enabling subjects to...

In-group favouritism, the practice of treating fellow members of a group better than outsiders is commonplace in social life. It has been observed in the field and the laboratory. Treating people differently in this way is not only a source of tension between groups, when conflict occurs between...