Peter Bohm (1935-2005) was the father of modern field experiments. He clearly understood and stated the differences between laboratory experiments and experiments with field counterparts. His research was a clear precursor to the methodology that is now becoming widely accepted as complementary to laboratory experiments.

Does monitoring past conduct facilitate intertemporal cooperation? We designed an experiment characterized by strategic uncertainty and multiple equilibria where coordinating on the efficient outcome is a challenge. Participants, interacting anonymously in a group, could pay a cost either to obtain information about their counterparts, or to create a freely available public record of individual conduct. Both monitoring institutions were actively employed. However, groups were unable to attain higher levels of cooperation compared to a treatment without monitoring. Information about past conduct alone thus appears to be ineffective in overcoming coordination challenges.

While economists recognize the important role of formal institutions in the promotion of trade, there is increasing agreement that institutions are typically endogenous to culture, making it difficult to disentangle their separate contributions. Lab experiments that assign institutions exogenously and measure and control individual cultural characteristics can allow for clean identification of the effects of institutions, conditional on culture, and help us understand the relationship between behavior and culture, under a given institutional framework. We focus on cultural tendencies toward individualism/collectivism, which social psychologists highlight as an important determinant of many behavioral differences across groups and people. We design an experiment to explore the relationship between subjects’ degree of individualism/collectivism and their willingness to abandon a repeated, bilateral exchange relationship in order to seek potentially more lucrative trade with a stranger, under enforcement institutions of varying strength. Overall, we find that individualists tend to seek out trade more often than collectivists. A diagnostic treatment and additional analysis suggests that this difference may reflect both differential altruism/favoritism to in-group members and different reactions to having been cheated in the past. This difference is mitigated somewhat as the effectiveness of enforcement institutions increases. Nevertheless we see that cultural dispositions are associated with willingness to seek out trade, regardless of institutional environment.

Many democratic decision making institutions involve quorum rules. Such rules are commonly motivated by concerns about the “legitimacy” or “representativeness” of decisions reached when only a subset of eligible voters participates. A prominent example of this can be found in the context of direct democracy mechanisms, such as referenda and initiatives. We conduct a laboratory experiment to investigate the consequences of the two most common types of quorum rules: a participation quorum and an approval quorum. We find that both types of quora lead to lower participation rates, dramatically increasing the likelihood of full-fledged electoral boycotts on the part of those who endorse the Status Quo. This discouraging effect is significantly larger under a participation quorum than under an approval quorum.

We introduce two novel matching mechanisms, Reverse Top Trading Cycles (RTTC) and Reverse Deferred Acceptance (RDA), with the purpose of challenging the idea that the theoretical property of strategy-proofness induces high rates of truth-telling in economic experiments. RTTC and RDA are identical to the celebrated Top Trading Cycles (TTC) and Deferred Acceptance (DA) mechanisms, respectively, in all their theoretical properties except that their dominant-strategy equilibrium is to report one’s preferences in the order opposite to the way they were induced. With the focal truth-telling strategy being out of equilibrium, we are able to perform a clear measurement of how much of the truth-telling reported for strategy-proof mechanisms is compatible with rational behaviour and how much of it is caused by confused decision-makers following a default, focal strategy without understanding the structure of the game. In a school-allocation setting, we find that roughly half of the observed truth-telling under TTC and DA is the result of naïve (non-strategic) behaviour. Only 14–31% of the participants choose actions in RTTC and RDA that are compatible with rational behaviour. Furthermore, by looking at the responses of those seemingly rational participants in control tasks, it becomes clear that most lack a basic understanding of the incentives of the game. We argue that the use of a default option, confusion and other behavioural biases account for the vast majority of truthful play in both TTC and DA in laboratory experiments.

Decision makers in positions of power often make unobserved choices under risk and uncertainty. In many cases, they face a trade-off between maximizing their own payoff and those of other individuals. What inferences are made in such instances about their choices when only outcomes are observable? We conduct two experiments that investigate whether outcomes are attributed to luck or choices. Decision makers choose between two investment options, where the more costly option has a higher chance of delivering a good outcome (that is, a higher payoff) for the group. We show that attribution biases exist in the evaluation of good outcomes. On average, good outcomes of decision makers are attributed more to luck as compared to bad outcomes. This asymmetry implies that decision makers get too little credit for their successes. The biases are exhibited by those individuals who make or would make the less prosocial choice for the group as decision makers, suggesting that a consensus effect may be shaping both the belief formation and updating processes.

By providing incentives for sellers to act in a trustworthy manner, reputation mechanisms can mitigate moral-hazard problems when particular buyers and sellers interact infrequently. However, these mechanisms rely on buyers sharing their private information about sellers, and thus may suffer from too little feedback when provision is costly. We experimentally compare a standard feedback mechanism to one in which sellers can inspect a buyer's feedback-provision history, thus providing incentives to share private information even when costly. We find fairly high trust and trustworthiness in all markets, with buyers providing costly feedback, especially negative, sufficient to induce trustworthiness. However, feedback-provision histories did not improve outcomes, and at least weakly decreased trustworthiness with experienced participants, as this information enabled sellers to discriminate and ship less frequently to buyers lacking a reputation for information sharing.

In this study, we use a novel design to test for directional behavioral spillover and cognitive load effects in a set of multiple repeated games. Specifically, in our experiment, each subject plays a common historical game with two different matches for 100 rounds. After 100 rounds, the subject switches to a new game with one match and continues playing the historical game with the other match. This design allows us to identify the direction of any behavioral spillover. Our results show that participants exhibit both behavioral spillover and cognitive load effects. First, for pairs of Prisoners’ Dilemma and Alternation games, we find that subjects apply strategies from the historical game when playing the new game. Second, we find that those who participate in a Self Interest game as either their historical or new game achieve Pareto efficient outcomes more often in the Prisoners’ Dilemma and Alternation games compared to their control counterparts. Overall, our results show that, when faced with a new game, participants use strategies that reflect both behavioral spillover and cognitive load effects.

We report the results from an experimental study of how problem solving behavior is affected by financial rewards. We formulate three alternative hypotheses: costly rationality, extrinsic/intrinsic trade-off, and distraction effects. Subjects play a computerized version of the Tower-of-Hanoi game and report their beliefs about the optimal solution through a quadratic scoring rule. Subjects participate in one of two treatments: a high penalty and a low penalty. We find that eliciting beliefs, in addition to observing playing behavior, reveals useful information about subjects’ cognitive behavior. We reject our hypothesis that the increase in the extrinsic penalty affects the intrinsic valuation in such a way as to decrease the amount of effort applied.

Parliamentary democracies use the vote of confidence procedure, which links the survival of a government with that of a bill, in order to discipline members of the majority. In this paper I investigate the role that the vote of confidence procedure has on public good provision and show that it has unintended negative consequences: even when efficient, public goods may be turned down in favor of earmarked projects. I use a laboratory experiment to test my model and show that the increase in voting cohesion comes at the cost of a 23 % reduction in public good provision and more unequal earmarking.

We test the turnout predictions of the canonical costly voting model through a large-scale, real effort experiment. We recruit 1200 participants through Amazon’s Mechanical Turk and employ a $2\times 2$ between subjects design encompassing small ($N=30$) and large ($N=300$) elections, as well as close and lopsided. As predicted, participants with a higher opportunity cost are less likely to vote; turnout rate decreases as the electorate size increases in lopsided elections and increases the closer the election is in large elections. However, in the large lopsided election the majority turns out to vote at a higher rate than the minority. We rationalize these results as the equilibrium outcome of a model in which voters obtain a small non-monetary utility if they vote and their party wins.

Laboratory experiments are used to evaluate the extent to which players in games can coordinate investments that diminish the probability of losses due to security breaches or terrorist attacks. In this environment, economically sensible investments may be foregone if their potential benefits are negated by failures to invest in security at other sites. The result is a coordination game with a desirable high- payoff, high-security equilibrium and an undesirable low-security equilibrium that may result if players do not expect others to invest in security. One unique feature of this coordination situation is that investment in security by one player generates a positive externality such that all other players’ expected payoffs are increased, regardless of those other players’ investment decisions. Coordination failures are pervasive in a baseline experiment with simultaneous decisions, but coordination is improved if players are allowed to move in an endogenously determined sequence. In addition, coordinated security investments are observed more often when the largest single security threat to individuals is preventable by their own decisions to invest in security. The security coordination game is a “potential game,” and the success of coordination on the more secure equilibrium is related to the notion of potential function maximization and basin of attraction.

There is ample evidence that people differ considerably in their preferences. We identify individual heterogeneity in type and strength of social preferences in a series of binary three-person dictator games. Based on this identification, we analyze response times in another series of games to investigate the cognitive processes of distributional preferences. We find that response time increases with the number of conflicts between individually relevant motives and decreases with the utility difference between choice options. The selfish motive is more intuitive for subjects who are more selfish. Our findings indicate that the sequential sampling process and the intuition of selfishness jointly produce distribution decisions, and provide an explanation for the mixed results on the correlations between response time and prosociality. Our results also show that it is important to take heterogeneity of preferences into account when investigating the cognitive processes of social decision making.

Many empirical studies investigate the relationships between economic development, inequality, and democracy survival; however, establishing causal links with naturally occurring cross-country data is problematic. We address this question in a laboratory experiment, where in democracy citizens can invest in profitable projects and vote on income taxation. In the alternative regime—autocracy—efficient investment levels and equitable redistribution are implemented exogenously, but there is a risk of resources being partially expropriated. Citizens can voluntarily switch from democracy to autocracy by a majority vote, which mimics recent historical examples, where voters voluntarily delegate political powers to an autocrat in exchange for a promise of high taxation and redistribution. We find that the likelihood of democracy breakdown increases with the degree of inequality but does not vary with productivity. The link between productivity and democracy survival depends critically on the degree of sophistication of the median voter.

An experimental approach is used to examine how money denomination and the choice between or availability of coins and banknotes may influence consumers’ purchasing behaviour. Evidence shows that for small amounts of money, consumers may prefer a smaller monetary value in banknotes rather than a higher value in coins. Findings also suggest that people carrying coins are more likely to make a purchase of small value than people not carrying coins.

We investigate in a laboratory experiment whether procedural fairness concerns affect how well individuals are able to solve a coordination problem in a two-player Volunteer’s Dilemma. Subjects receive external action recommendations, either to volunteer or to abstain from it, in order to facilitate coordination and improve efficiency. We manipulate the fairness of the recommendation procedure by varying the probabilities of receiving the disadvantageous recommendation to volunteer between players. We find evidence that while recommendations improve overall efficiency regardless of their implications for expected payoffs, there are behavioural asymmetries depending on the recommendation: advantageous recommendations are followed less frequently than disadvantageous ones and beliefs about others’ actions are more pessimistic in the treatment with recommendations inducing unequal expected payoffs.

Bayesian optimal experiments that maximize the information gained from collected data are critical to efficiently identify behavioral models. We extend a seminal method for designing Bayesian optimal experiments by introducing two computational improvements that make the procedure tractable: (1) a search algorithm from artificial intelligence that efficiently explores the space of possible design parameters, and (2) a sampling procedure which evaluates each design parameter combination more efficiently. We apply our procedure to a game of imperfect information to evaluate and quantify the computational improvements. We then collect data across five different experimental designs to compare the ability of the optimal experimental design to discriminate among competing behavioral models against the experimental designs chosen by a “wisdom of experts” prediction experiment. We find that data from the experiment suggested by the optimal design approach requires significantly less data to distinguish behavioral models (i.e., test hypotheses) than data from the experiment suggested by experts. Substantively, we find that reinforcement learning best explains human decision-making in the imperfect information game and that behavior is not adequately described by the Bayesian Nash equilibrium. Our procedure is general and computationally efficient and can be applied to dynamically optimize online experiments.

This paper studies the effect of social relations on convergence to the efficient equilibrium in 2 × 2 coordination games from an experimental perspective. We employ a 2 × 2 factorial design in which we explore two different games with asymmetric payoffs and two matching protocols: “friends” versus “strangers”. In the first game, payoffs by the worse-off player are the same in the two equilibria, whereas in the second game, this player will receive lower payoffs in the efficient equilibrium. Surprisingly, the results show that “strangers” coordinate more frequently in the efficient equilibrium than “friends” in both games. Network measures such as in-degree, out-degree and betweenness are all positively correlated with playing the strategy which leads to the efficient outcome but clustering is not. In addition, ‘envy’ explains no convergence to the efficient outcome.

We investigate the role of endowment inequality in a local and global public goods setting with multiple group membership and examine the effect of temporal role reversal on cooperation decisions. Subjects can contribute to a global public good which benefits all subjects and two local public goods which benefit only subjects of either their own group or the group of the other endowment type. Endowment inequality per-se decreases contributions of subjects with a high endowment to the global public good, but increases cooperation of subjects with a low endowment on their local public good, thereby aggravating income disparities. Exogenously induced role reversal for several periods affects cooperation behavior of subjects with a high endowment positively and induces them to contribute more to the global good. Cooperation in unequal environments thus appears to be more stable when all parties have experienced the public goods game from the disadvantageous perspective.

This paper examines the Dirty Faces problem as a Bayesian game. The equilibrium in the general form of the game requires the extreme assumption of common knowledge of rationality. However, for any finite number of players, the exact number of steps of iterated rationality necessary for the equilibrium to arise depends on the number of players of a particular type, allowing the game to be used to bound the number of steps satisfied by actual players. The game differs from other games used to study iterated rationality in that all players are better off when common knowledge of rationality is satisfied. While behavior in experiments is inconsistent with the game-theoretic prediction at the group level, individual level behavior shows a greater degree of consistency with theory and with previous results on iterated rationality. Finally, there is some evidence of learning in repeated play.