Articles

Aleksander Berentsen, Michael McBride, Guillaume Rocheteau. Limelight on Dark Markets: An Experimental Study of Liquidity and Information.

The goal of this paper is to study how informational frictions affect asset liquidity in OTC markets in a laboratory setting. The experiments replicate an OTC market similar to the one used in monetary and financial economics (Shi, 1995; Trejos and Wright, 1995; Duffie, Garleanu, and Pedersen, 2005): individuals are matched bilaterally and at random, there are gains from trades due to differences in technologies and endowments, and the terms of trade are determined through a simple bargaining protoco...

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Björn Bartling, Florian Engl, Roberto A. Weber. Does Willful Ignorance Deflect Punishment? – An Experimental Study.

This paper studies whether people can avoid punishment by remaining willfully ignorant about possible negative consequences of their actions for others. We employ a laboratory experiment, using modified dictator games in which a dictator can remain willfully ignorant about the payoff consequences of his decision for a receiver. A third party can punish the dictator after observing the dictator’s decision and the resulting payoffs. On the one hand, willfully ignorant dictators are punished less i...

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Nadine Riedel, Hannah Schildberg-Hörisch. Asymmetric Obligations.

We use a laboratory experiment to investigate the behavioral effects of obligations that are not backed by binding deterrent incentives. To implement such ‘expressive law’ we introduce different levels of very weakly incentivized, symmetric and asymmetric minimum contribution levels (obligations) in a repeated public goods experiment. The results provide evidence for a weak expressive function of law: while the initial impact of high obligations on behavior is strong, it decreases over time. Asy...

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Steffen Altmann, Armin Falk, Matthias Wibral. Promotions and Incentives: The Case of Multistage Elimination Tournaments

Promotions play an important role for the provision of incentives in firms. We analyze incentives in multistage elimination tournaments with controlled laboratory experiments. In our two main treatments, we compare a two-stage tournament to a one-stage tournament. Subjects in the two-stage treatment provide excess effort in the first stage, both with respect to Nash predictions and compared to the strategically equivalent one-stage tournament. Additional control treatments confirm that excess effor...

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Hannah Schildberg-Hörisch. Less fighting than expected. Experiments with wars of attrition and all-pay auctions.

While all-pay auctions are well researched experimentally, we do not have much laboratory evidence on wars of attrition. This paper tries to fill this gap. Technically, there are only a few differences between wars of attrition and all-pay auctions. Behaviorally, however, we find striking differences: As many studies, our experiment finds overbidding in all-pay auctions. In contrast, in wars of attrition we observe systematic underbidding. We study bids and expenditures in different experimental...

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Benjamin Enke, Florian Zimmermann. Correlation Neglect in Belief Formation.

A frequent feature of information structures is that incoming signals are not mutually independent, but rather rely on a common set of underlying signals. Using a simple experimental design, we show that in such contexts many people neglect correlations in the updating process, leading to systematically “overshooting” beliefs. This bias is significantly associated with low cognitive ability. In an experimental market setting, we demonstrate that correlation neglect not only drives overoptimism ...

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