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1 We examine experimentally the impact of communication on trust and cooperation. Our design admits observation of promises, lies, and beliefs. The evidence is consistent with people striving to live up to others' expectations so as to avoid guilt, as can be modeled using psychological game theory. When players exhibit such guilt aversion, communication may(More)
We experimentally test whether the possibility of building a reputation impacts behavior in the manner suggested by theory. Our design varies whether reputation building is possible or not by making the past choices of the long run player observable to the short run players or not. Our uni…ed reputation framework theoretically allows for either the good or(More)
Some current utility models presume that people are concerned with their relative standing in a reference group. If this is true, do certain types care more about this than others? Using simple binary decisions and self-reported happiness, we investigate both the prevalence of " difference aversion " and whether happiness levels influence the taste for(More)
Demands in the Ultimatum Game in its traditional form with one proposer and one responder are compared with demands in an Ultimatum Game with responder competition. In this modified form one proposer faces three responders who can accept or reject the split of the pie. Initial demands in both ultimatum games are quite similar, however in the course of the(More)
This paper attacks one of the chief limitations of the field of behavioral decision research—the past inability to use this literature to improve decision making., the current paper finds that it is possible to reduce bias in one of the most robust problems in the decision literature, the Acquiring a Company Problem (Samuelson & Bazerman, 1985). Past(More)
Many experiments have shown that human subjects do not necessarily behave in line with game theoretic assumptions and solution concepts. The reasons for this non–conformity are multiple. In this paper we study the argument whether a deviation from game theory is because subjects are rational, but doubt that others are rational as well, compared to the(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)
and the participants in a pilot session at Pompeu Fabra for their valuable comments and help. The usual disclaimer applies. gratefully acknowledge experimental funds from Spain's Ministry of Education under grants PB98-1076 and DI000216. Charness also gratefully acknowledges support from the MacArthur Foundation. Abstract: While markets are often(More)
We set out to find ways to help decision makers overcome the " winner's curse, " a phenomenon commonly observed in asymmetric information bargaining situations, and instead found strong support for its robustness. In a series of manipulations of the " Acquiring a Company Task, " we tried to enhance decision makers' cognitive understanding of the task. We(More)