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Departures from self-interest in economic experiments have recently inspired models of " social preferences ". We design a range of simple experimental games that test these theories more directly than existing experiments. Our experiments show that subjects are more concerned with increasing social welfare—sacrificing to increase the payoffs for all(More)
It is standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. Yet it may be useful to consider social preferences in mechanism design and contract theory. We devise an experiment to explore optimal contracts in an adverse-selection context. A principal offers one of(More)
Examination of the effect of information concerning foregone pay-offs on choice behavior reveals a complex pattern. Depending on the environment , this information can facilitate or impair maximization. Our study of nine experimental tasks suggests that the complex pattern can be summarized with the assumption that initially people tend to be highly(More)
We test a mechanism whereby groups are formed endogenously, through the use of voting. Once formed, groups play a public-goods game, where there are economies of scale: in two treatments the social value of an incremental contribution to the group account increases with the size of the group, but in the second treatment, the social value is capped once a(More)
We explore the effects of social distance on reciprocal behavior in an experiment conducted over the Internet on three continents and in classroom laboratory sessions conducted in Israel and Spain. Our design elicits individual behavior profiles over a range of contingencies, enabling us to identify hetero-geneity among our participants. We find that many(More)
The current research examines tacit coordination behavior in a lottery selection task. Two hundred participants in each of three experiments and 100 in a fourth choose to participate in one of two lotteries, where one lottery has a larger prize than the other. Independent of variations in the complexity of the mechanism of prize allocation, the prize(More)
Rights of first refusal are contract clauses that, recognizing the incompleteness of contracts, are intended to provide the holder of a license or lease with some protection when the contract comes to an end. The simplest right of first refusal gives the right holder the ability to act after potential competitors. However, another common implementation of a(More)
Costless and non-binding pre-play communication (cheap talk) has been found to often be effective in achieving efficient outcomes in experimental games. However, in previous two-player experimental games each player was informed about both his payoff and the action of the other player in the pair. In the field, people may engage in cheap talk and(More)