Individuals have opportunities to behave pro-socially at different points in time. This study investigates the interdependence between temporarily separated good deeds and their effect on individual pro-social behavior. In a multi-session laboratory experiment, subjects play a donation dictator game. The first group of subjects runs through two sessions on the same day. For the second group, there is a time-lag of one week between sessions. In both treatments, subjects decrease their donation decision in the second session. Spillover effects of pro-social behavior, however, decrease over time as the reduction in donations is smaller for subjects with larger time-lag between decisions.

Evidence from response time studies and time pressure experiments has led several authors to conclude that “fairness is intuitive”. In light of conflicting findings, we provide theoretical arguments showing under which conditions an increase in “fairness” due to time pressure indeed provides unambiguous evidence in favor of the “fairness is intuitive” hypothesis. Drawing on recent applications of the Drift Diffusion Model (Krajbich et al. in Nat Commun 6:7455, 2015a), we demonstrate how the subjective difficulty of making a choice affects decisions under time pressure and time delay, thereby making an unambiguous interpretation of time pressure effects contingent on the choice situation. To explore our theoretical considerations and to retest the “fairness is intuitive” hypothesis, we analyze choices in two-person binary dictator and prisoner’s dilemma games under time pressure or time delay. In addition, we manipulate the subjective difficulty of choosing the fair relative to the selfish option. Our main finding is that time pressure does not consistently promote fairness in situations where this would be predicted after accounting for choice difficulty. Hence, our results cast doubt on the hypothesis that “fairness is intuitive”.

Decisions to trust in strategic situations involve ambiguity (unknown probabilities). Despite many theoretical studies on ambiguity in game theory, empirical studies have lagged behind due to a lack of measurement methods, where separating ambiguity attitudes from beliefs is crucial. Baillon et al. (Econometrica, 2018b) introduced a method that allows for such a separation for individual choice. We extend this method to strategic situations and apply it to the trust game, providing new insights. People’s ambiguity attitudes and beliefs both matter for their trust decisions. People who are more ambiguity averse decide to trust less, and people with more optimistic beliefs about others’ trustworthiness decide to trust more. However, people who are more a-insensitive (insufficient discrimination between different likelihood levels) are less likely to act upon their beliefs. Our measurement of beliefs, free from contamination by ambiguity attitudes, shows that traditional introspective trust survey measures capture trust in the commonly accepted sense of belief in trustworthiness of others. Further, trustworthy people also decide to trust more due to their beliefs that others are similar to themselves. This paper shows that applications of ambiguity theories to game theory can bring useful new empirical insights.

With a novel experimental design we investigate whether risk perception, return expectations, and investment propensity are influenced by the scale of the vertical axis in charts. We explore this for two presentation formats, namely return charts and price charts, where we depict low- and high-volatility assets with distinct trends. We find that varying the scale strongly affects people’s risk perception, as a narrower scale of the vertical axis leads to significantly higher perceived riskiness of an asset even if the underlying volatility is the same. Furthermore, past returns predict future return expectations almost perfectly. In our setting perceived profitability was considered more important than perceived riskiness when making investment choices. Overall we show that adapting the scale of a chart makes it easier to recognize yearly return variations within a single security, but at the same time makes it harder to identify differences between dissimilar securities. This is something regulators should be aware of and take into account in the rules they set.

We examine the interplay between unethical behaviour and competition with a lab experiment. Subjects play the role of firms in monopoly, weak competition (Bertrand–Edgeworth duopoly) or strong competition (Bertrand duopoly). Costs are determined either by a computer draw or a self-reported die roll, and pricing decisions are made with knowledge of one’s own costs and—in duopoly—the rival firm’s costs. Under self-reporting, lying is profitable and undetectable except statistically. We find that competition and lying are mutually reinforcing. We observe strong evidence that (behavioural) competition in both duopoly treatments is more intense when lying is possible: prices are significantly lower than when lying is impossible, even controlling for differences in costs. We also observe more lying under duopoly than monopoly—despite the greater monetary incentives to lie in the monopoly case—though these differences are not always significant.

Choice lists with random incentives are widely used for preference elicitation. It is commonly assumed that subjects choose the same option in each question as they would have if it were the only question, but recent findings challenge this assumption. We conduct a large sample experiment varying incentives and presentation independently, and examine choices both near and away from certainty. We consistently find more risk taking when a choice between a safe prize and a risky lottery is embedded in a choice list than when it is presented on its own. This difference remains when we inform subjects of the paid choice in advance, implying that isolation fails not because of the random incentives scheme, but simply because the choice appears in a list together with others. We conjecture that subjects are uncertain about their preferences, reduce this uncertainty through considering the choices that confront them, and make cautious decisions in the interim. Other conditions and non-choice data support this interpretation. Our results open up the possibility that preferences inferred from choice lists offer a better indication of informed preferences than preferences inferred from single choices.

We use different incentive schemes to study truth-telling in a die-roll task when people are asked to reveal the number rolled privately. We find no significant evidence of cheating when there are no financial incentives associated with the reports, but do find evidence of such when the reports determine financial gains or losses (in different treatments). We find no evidence of loss aversion in the standard case in which subjects receive their earnings in a sealed envelope at the end of the session. When subjects manipulate the possible earnings, we find evidence of less cheating, particularly in the loss setting; in fact, there is no significant difference in behavior between the non-incentivized case and the loss setting with money manipulation. We interpret our findings in terms of the moral cost of cheating and differences in the perceived trust and beliefs in the gain and the loss frames.

We investigate the effects of centrality on cooperation in groups. Players with centrality keep a group together by having a pivotal position in a network. In some of our experimental treatments, players can vote to exclude others and prevent them from further participation in the group. We find that, in the presence of exclusion, central players contribute significantly less than others, and that this is tolerated by those others. Because of this tolerance, groups with centrality manage to maintain high levels of cooperation.

This paper provides experimental evidence of the role of higher order risk attitudes—especially prudence—in prevention behavior. Prudence, under an expected utility framework, increases (decreases) self-protection effort compared to the risk neutral level when the risk of losing part of an income exists in a future (the same) period. Motivated by these predictions that give the exact test on prudence, an experiment was designed where subjects go through higher order risk attitude elicitation and make a self-protection decision. In contrast to the expected utility theory, the observed efforts are less than the risk neutral level, regardless of the timing of loss. This violation of expected utility predictions can be explained by probability weighting.

Time pressure is a central aspect of economic decision making nowadays. It is therefore natural to ask how time pressure affects decisions, and how to detect individual heterogeneity in the ability to successfully cope with time pressure. In the context of risky decisions, we ask whether a person’s performance under time pressure can be predicted by measurable behavior and traits, and whether such measurement itself may be affected by selection issues. We find that the ability to cope with time pressure varies significantly across decision makers, leading to selected subgroups that differ in terms of their observed behaviors and personal traits. Moreover, measures of cognitive ability and intellectual efficiency jointly predict individuals’ decision quality and ability to keep their decision strategy under time pressure.

A marketable permit system (MPS) has been suggested as a solution to environmental problems. Although the properties of MPSs under non-trader settings, in which each player is exclusively either a seller or a buyer, are well documented, little research has explored how MPSs perform under trader settings, in which each player can be both a seller and a buyer. We institute two auctions of trader settings in MPS experiments: a double auction (DA) and a uniform price auction (UPA). We then evaluate and compare their performances both with each other and with those under non-trader settings. The main results are as follows: DAs under trader settings perform much worse than do DAs under non-trader settings, whereas UPAs perform well, regardless of the trader and non-trader settings. UPAs are more efficient and generate more stable prices than do DAs under trader settings, and a considerable proportion of trades in DAs under trader settings consist of “flips” that could be considered speculation or errors. Thus, UPAs are likely to work better than DAs under trader settings.

We develop a mechanism based on the Colonel Blotto game to elicit (subjective) expectations in a group-based manner. In this game, two players allocate resources over possible future events. A fixed prize is awarded based on the amounts the players allocate to the realized event. We consider two payoff variations: under the proportional-prize rule, the award is split proportionally to the resources that players allocate to the realized event; under the winner-takes-all rule, the full award is given to the player who allocate the most resources to the realized event. When probabilities by which events realize are common knowledge to the players, both games are Bayesian–Nash incentive compatible in the sense that (expected) equilibrium allocations perfectly reflect the true realization probabilities. By means of a laboratory experiment, we find that in a setting where realization probabilities are common knowledge the game with the proportional-prize rule (Prop) elicits better distributions compared to both the winner-takes-all variation (Win) and a benchmark mechanism based on an individual-based proper scoring rule (Ind). Without common knowledge of realization probabilities Prop is at least as good as Ind, showing that it is possible to use a game to elicit expectations in a similar fashion to using a proper scoring rule.