We use data from experiments on finitely repeated dilemma games with fixed matching to investigate the effect of different types of information on cooperation. The data come from 71 studies using the voluntary contributions paradigm, covering 122 data points, and from 18 studies on decision-making in oligopoly, covering another 50 data points. We find similar effects in the two sets of experimental games. We find that transparency about what everyone in a group earns reduces contributions to the public good, as well as the degree of collusion in oligopoly markets. In contrast, transparency about choices tends to lead to an increase in contributions and collusion, although the size of this effect varies somewhat between the two settings. Our results are potentially useful for policy making, because they provide guidance on the type of information to target in order to stimulate or limit cooperation.

Bidding one’s value in a second-price, private-value auction is a weakly dominant solution (Vickrey in J Finance 16(1):8–37, 1961), but repeated experimental studies find more overbidding than underbidding. We propose a model of optimistically irrational bidders who understand that there are possible gains and losses associated with higher bids but who may overestimate the additional probability of winning and/or underestimate the potential losses when bidding above value. These bidders may fail to discover the dominant strategy—despite the fact that the dominant strategy only requires rationality from bidders—but respond in a common sense way to out-of-equilibrium outcomes. By varying the monetary consequences of losing money in experimental auctions we observe more overbidding when the cost to losing money is low, and less overbidding when the cost is high. Our findings lend themselves to models in which less than fully rational bidders respond systematically to out-of-equilibrium incentives, and we find that our model better fits the effects of our manipulations than most of the existing models we consider.

Using an appropriation game setting, we examine individual responses to changes in a groups’ vulnerability to a probabilistic loss (L) of a public good. The probabilistic loss parameter entails losing 10, 50 or 90% of the value of the public good that is maintained through cooperation, where the likelihood of the loss decreases in total group cooperation. By design, the expected marginal net benefits to an individual and the expected harm to others depends endogenously on the individuals’ expectations of group cooperation and exogenously on the magnitude of the loss parameter. We find that individual cooperation is greater when forecasts of total group cooperation are greater and where the magnitude of the probabilistic loss is larger. There is, however, an interesting asymmetry in responses by two subgroups. Subjects who are pessimistic regarding total group cooperation decrease cooperation the higher the magnitude of the probabilistic loss and their decisions are tied systematically to changes in their expectations of other’s cooperation. On the other hand, subjects who are optimistic regarding total group cooperation are found to be more cooperative, but their decisions are not systematically tied to changes in expectations of others’ cooperation.

We experimentally study ways in which social preferences affect individual and group performance under indefinitely repeated relative incentives. We also identify the mediating role that communication and leadership play in generating these effects. We find other-regarding individuals tend to depress efforts by 15% on average. However, selfish individuals are nearly three times more likely to lead players to coordinate on minimal efforts when communication is possible. Hence, the other-regarding composition of a group has complex consequences for organizational performance.

This study develops a theoretical, and experimental analysis addressing the issue of premium variations on the demand for insurance. Accounting for risk attitudes, our contribution disentangles the decision to buy insurance from the conditional demand (the non-null demand for insurance). Partially validating our theoretical predictions, our experimental results show that, when it has an effect, a non-massive increase in the premium (either in the unit price or the fixed cost) exclusively results in an exit from the insurance market (the risk lovers first, then the risk averters). Moreover, our study highlights a key feature of risk-seeking agents' behavior; they exhibit behavior consistent with gambling and opportunism rather than a lack of interest in insurance.

In standard trust games, no trust is the default, and trust generates a potential gain. We investigate a reframed trust game in which full trust is default and where no trust generates a loss. We find significantly lower levels of trust and trustworthiness in the loss domain when full trust is default than in the gain domain when no trust is default. As a consequence, trust is on average profitable in the gain domain, but not in the loss domain. We also find that subjects respond more positively to higher trust in the loss domain than in the gain domain.

Pain is a highly salient and attention-demanding experience that motivates people to act. We investigated the effect of pain on decision making by delivering acute thermal pain to participants’ forearm while they made risky and intertemporal choices involving money. Participants (n = 107) were more risk seeking under pain than in a no-pain control condition when decisions involved gains but not when they involved equivalent losses. Pain also resulted in greater preference for immediate (smaller) over future (larger) monetary rewards. We interpret these results as a motivation to offset the aversive, pain-induced state, where monetary rewards become more appealing under pain than under no pain and when delivered sooner rather than later. Our findings add to the long-standing debate regarding the role of intuition and reflection in decision making.

We explore the relation between redistribution choices, source of income, and pre-redistribution inequality. Previous studies find that when income is earned through work there is less support for redistribution than when income is determined by luck. Using a lab experiment, we vary both the income-generating process (luck vs. performance) and the level of inequality (low vs. high). We find that an increase in inequality has less impact on redistribution choices when income is earned through performance than when income results from luck. This result is likely explained by individuals using income differences as a heuristic to infer relative deservingness. If people believe income inequality increases as a result of performance rather than luck, then they are likely to believe the poor deserve to stay poor and the rich deserve to stay rich.

The paper studies how common codes of artificial language in communication are developed in the laboratory. We find that codes emerging from an environment with more variable spatial positions tend to use a limited set of symbols to represent positions, whereas codes emerging from an environment with more variable geometric shapes tend to discriminate among shapes. The paper also experimentally shows that “language” affects the way its “speakers” share the view about a novel figure.

Within-group communication in competitive coordination games has been shown to increase competition between groups and lower efficiency. This study further explores potentially harmful effects of communication, by addressing the questions of (1) asymmetric communication and (2) the endogenous emergence of communication. Our theoretical analysis provides testable hypotheses regarding the effect of communication on competitive behavior and efficiency. We test these predictions using a laboratory experiment. The experiment shows that although asymmetric communication is not as harmful as symmetric communication, it leads to more aggressive competition and lower efficiency relative to the case when neither group can communicate. Moreover, groups vote to endogenously establish communication channels even though they would earn higher payoffs if jointly they chose to restrict within-group communication.

We perform laboratory experiments comparing auctions with endogenous budget constraints. A principal imposes a budget limit on a bidder (an agent) in response to a principal-agent problem. In contrast to the existing literature where budget constraints are exogenous, this theory predicts that tighter constraints will be imposed in first-price auctions than in second-price auctions, tending to offset any advantages attributable to the lower bidding strategy of the first-price auction. Our experimental findings support this theory: principals are found to set significantly lower budgets in first-price auctions. The result holds robustly, whether the principal chooses a budget for human bidders or computerized bidders. We further show that the empirical revenue difference between first- and second-price formats persists with and without budget constraints.