A pervasive feature in the finance industry is relative performance, which can include extrinsic (money), intrinsic (self-image), and reputational (status) motives. In this paper, we model a portfolio decision with two assets and investigate how reputational motives (i.e., the public...

The expanding literature on lying has exclusively considered lying behavior within a one-dimensional context. While this has been an important first step, many real-world contexts involve the possibility of simultaneously lying in more than one dimension (e.g., reporting one's income and...

Human interaction often appears to be random and at times even chaotic. We use game theory, the mathematical study of interactive decision making, to explain the role of rationality and randomness in strategic behavior. In many of these situations, humans deliberately create randomness as a best...

We develop a model of social preferences for network games and study its predictions in a local public goods game with multiple equilibria. The key feature of our model is that players' social preferences are heterogeneous. This gives room for disagreement between players about the “right”...

This paper analyzes the effects of network positions and individual risk attitudes on individuals' strategic decisions in an experiment where actions are strategic substitutes. The game theoretic basis for our experiment is the model of Bramoulleacute; and Kranton (2007). In particular, we are...

We model takeovers as a bargaining process and explain termination fees for, both, the target and the acquirer, subject to parties' bargaining power and outside options. In equilibrium, termination fees are offered by firms with outside options in exchange for a greater share of merger...

Compliance requirements, such as active job search, in combination with monitoring and sanctions are a commonly used tool to induce effort among social assistance claimants and achieve reemployment as quickly as possible. We conduct a randomized field experiment in the Netherlands to test two...