While experimental research on social dilemmas focuses on the distribution of gains, we analyze social preferences in the case of losses. In this experimental study, the participants share a loss in a Nash bargaining game, but waiting time, instead of monetary losses, serves as an incentive. Further, we assume that the participants prefer less, rather than more, waiting time. Our experiment consists of four versions of the Nash bargaining game to allow for a comparison of four classical negotiation concepts (Nash, equal loss, equal gain, and Kalai–Smorodinsky) and an equal split of the overall waiting time. Our experimental evidence shows that an equal split better predicts the outcome of a Nash bargaining game involving losses than classical concepts do. Furthermore, the findings support that the participants resort to equal splits at the cost of their overall welfare.

When the value of a product or service is uncertain, outcomes can be inefficient. A market for evaluations can theoretically increase efficiency by voluntarily eliciting an evaluation that would otherwise not be provided. This paper uses a controlled laboratory experiment to test the performance of four market mechanisms to provide product evaluations. The mechanisms considered are derived from the oft studied uniform price sealed bid, discriminatory price sealed bid, English clock auction, and Dutch clock auction. Our results indicate for this nonrivalrous product that (i) each of these institutions improves social welfare and (ii) the performances of the four mechanisms are equivalent. This second point is particularly noteworthy given that differing behavior is routinely observed in traditional private value auctions.

When economists comment on holiday gift-giving, it is usually to condone the healthy effect of spending on the macroeconomy. However, an important feature of gift-giving is that consumption choices are made by someone other than the final consumer. A potentially important microeconomic aspect of gift-giving is that gifts may be mismatched with the recipients' preferences. In the standard microeconomic framework of consumer choice, the best a gift-giver can do with, say, $10 is to duplicate the choice that the recipient would have made. While it is possible for a giver to choose a gift which the recipient ultimately values above its price-for example, if the recipient is not perfectly informed-it is more likely that the gift will leave the recipient worse off than if she had made her own consumption choice with an equal amount of cash. In short, gift-giving is a potential source of deadweight loss. This paper gives estimates of the deadweight loss of holiday gift-giving based on surveys given to Yale undergraduates.' I find that holiday gift-giving destroys between 10 percent and a third of the value of gifts. While these recipients may be unrepresentative of the U.S. population, their gifts are not necessarily unrepresentative. Holiday expenditures average $40 billion per year, implying that a conservative estimate of the deadweight loss of Christmas' is a tenth as large as estimates of the deadweight loss of income taxation. I also explore how deadweight loss and the tendency to give cash gifts vary with the relationship and age difference between giver and recipient. I find that gifts from friends and "significant others" are most efficient, while noncash gifts from members of the extended family are least efficient and destroy a third of their value. I develop a simple expected-utility model to explain the decision to give cash, as opposed to in-kind gifts. The data are consistent with the model: cash gifts are most common from the sorts of givers whose noncash gifts have the lowest expected value to recipients (given their cost) and high variability in recipient valuation.

We use evidence from worker turnover following M&A events to show that workers’ choices to leave the firm depend on changes in workers’ relative standing, or status, in terms of wage and rank. Our results show that social, rather than pecuniary, preference drives these choices. We also show that social preference varies with reference group. When worker's expected status within a group of co-workers in the same occupation increases, workers are less likely to quit. In contrast, when workers’ expected status compared to all workers within the same firm increases, they are more likely to quit. Moreover, for workers who lose status during M&A, the loss of social rewards is compensated by faster wage growth, suggesting a market for status.

We study the plausibility of sub-optimal Nash equilibria of the direct revelation mechanism associated with a strategy-proof social choice function. By using the recently introduced empirical equilibrium analysis (Velez and Brown, 2019, arXiv:1804.07986) we determine that this behavior is plausible only when the social choice function violates a non-bossiness condition and information is not interior. Analysis of the accumulated experimental and empirical evidence on these games supports our findings.

We set forth an argument for the integration of social science research with natural science and engineering research in major research infrastructure investments addressing water science. A program of integrated observation of water resources offers great opportunities to address several environmental “grand challenges” identified by the National Research Council, including climate variability, institutions and resource use, and land use dynamics, and their importance for hydrologic forecasting. We argue that such a program has the potential to advance both water science and the contributing disciplines. However, to realize this potential, it is essential to recognize that social science requires critical infrastructure funding on the scale of advanced research facilities in the natural sciences and engineering.

We report on the design and testing of three auction mechanisms to maximize revenue and efficiency in the sale of two vintages of nitrous oxide emission allowances by the Commonwealth of Virginia in 2004. The three mechanisms considered were a combinatorial sealed bid (CSB) auction, a sequential English clock (SEC) auction, and a combinatorial English clock (CEC) auction. We find the SEC and CEC mechanisms to be superior the CSB when demand is relatively elastic.

We model capacity expansion in oligopolistic markets, with endogenous prices, under uncertainty, considering multiple production technologies. As this environment is complex, capacity expansion is the outcome of a learning process by individual firms. We propose indirect reinforcement-learning to model the interaction between price determination and capacity decisions, in the context of an oligopoly game. We apply our model to the analysis of the Iberian electricity market, considering multiple technologies, focusing on how subsidies, the prices of CO2 emissions and gas affect the capacity expansion policies.

We explore a location-based game concept that encourages real-world interactions and gamifies daily commuting activities. Enhanced with augmented reality technology, we create an immersive, pervasive trading game called Gnome Trader, where the player engages with the game by physically traveling to predefined locations in the city and trading resources with virtual gnomes. As the virtual market is a crucial component of the game, we take special care to analyze various economic game mechanics. We explore the parameter space of different economic models using a simulation of the virtual economy. We evaluate the overall gameplay as well as the technical functionality through several play tests.

We exploit the principles of choice architecture to evaluate interventions in the market for reloadable prepaid cards. Participants are randomized into three card menu presentation treatments - the market status quo, a regulation-inspired reform, or an enhanced reform designed to minimize attribute overload - and offered choices based on prior structural estimation of individual preferences. Consumers routinely choose incorrectly under the status quo, with tentative evidence the regulation-inspired presentation may increase best card choice, and clear evidence the enhanced reform reduces worst card choice. Welfare analysis suggests the regulation-inspired presentation offers modest gains, while the enhanced policy generates substantial benefits.

We examine theoretically and experimentally the implications of trust arising under sequential and simultaneous designs, where one player makes an investment choice, and another player decides whether to share the investment gains. We show analytically that in some cases the sequential design may be outperformed by the simultaneous design. In an experiment we find that the investment levels and sharing rates are higher in the sequential design, but there are no corresponding differences in beliefs. We conjecture that this happens because in the sequential design substantially more trust is necessary to induce cooperation. Our data strongly support this conjecture.

We construct asset markets that are similar to those studied by Smith, Suchanek and Williams (Econometrica. 56, 1119–1151) in which bubbles and crashes tended to occur. The main difference between the markets studied here and those studied by Smith et al. is that in the markets studied here, the fundamental value of the asset is constant over the entire life of the asset. In four of the eight sessions reported here, we observe bubbles, which are prices considerably higher than fundamental values. The data suggest that the frequent payment of dividends is a major cause of bubble formation. The property that the fundamental value remains constant over the course of the trading horizon is not sufficient to eliminate the possibility of a bubble.

We analyze the bidding behavior in a single sided uniform auction and in a pay-as-bid auction using an experimental approach. This study focuses on the impact of the risk attitude of participating subjects. The experiments are conducted under a stable demand environment and with homogeneous groups consisting each of five participants either with a complete risk seeking or a complete risk averse attitude. The results show that a uniform auction is significantly affected by risk attitude of the participants. Standard deviation of efficiency and prices are higher when playing with risk averse participants. Compared to other existing literature on experimental economics, our results differ substantially and show that risk attitude of participants is a factor that needs to be taken into account especially when conducting experiments with small groups.

Various models of individual motivations are confronted with evidence from different kinds of laboratory experiments. The motivations distinguished are categorized as selfish, other regarding, or cooperative. The experimental evidence shows that the traditional, selfish model is too limited, but that the alternative models that have been suggested each have shortcomings of their own.

Using mergers and acquisitions as a natural experiment, this paper analyzes how changes in workers?status in the workplace affect their turnover decisions. The evidence suggests that workers have different preferences for status depending on reference group. When compared with co-workers in the same occupation, workers positively value their status. However, when compared with workers in other occupations in the same firm, workers negatively value their status. Workers seem to give up absolute wage increase for higher status within occupation, which suggests that preference for status stems from status?social value, not from its instrumental value for future income.

Understanding how individuals and organizations make financial decisions under uncertainty and with different information settings is fundamental to informing the theory and practice of information management. Due to limitations on cognitive ability and problems of information overload, complex information sets may not be fully understood, resulting in suboptimal economic decision-making. We have applied visual analytics (VA), which enables users to interactively discover information from large information sets, to improve the financial decision-making process. Using an experimental methodology, we find evidence that VA reduces the cost of obtaining information, improves decisions, and increases confidence of users in a range of different financial decision tasks involving risk. This is a nascent area of research, and additional work is needed to develop and evaluate VA tools for financial decision-making and risk management. Best practices guidelines for presenting complex information sets may only develop through rigorous evaluation of the effect of information presentation on actual choice. In addition, the impact of VA in collaborative decision-making environments is not fully understood. The future of applied VA for financial decision-making and risk management must involve an interdisciplinary team of behavioural economists, VA researchers, computer scientists, and cognitive scientists.

Two previous surveys used to measure the welfare implications of Christmas gift-giving in the United States have reached opposite conclusions. Joel Waldfogel (1993) finds a welfare reduction of 13 percent or more associated with Christmas giving. Curiously, Sara J. Solnick and David Hemenway’s (1996) (henceforth, SH) replication of Waldfogel’s survey turns up just the opposite result: a 214-percent welfare gain. We design a series of controlled laboratory experiments to determine why the two papers arrive at opposite conclusions. We do not produce our own estimate of the deadweight loss of gift-giving; rather, our aim is to understand how, and which among, the differences in methodology between the two studies account for their divergent findings. Waldfogel (1993) surveyed 58 students enrolled in an intermediate microeconomics class about specific gifts they had received for Christmas. He asked recipients to estimate the amount paid by the giver for each gift received. Recipients were then asked to place a value on each gift they received. Respondents were instructed to estimate the value of a gift as the “...amount of cash such that you are indifferent between the gift and the cash, not counting the sentimental value of the gift” (p. 1331). Waldfogel measures the welfare yield of a gift as the difference between the recipient’s valuation and her cost estimate of the gift. Based on 278 gifts reported, Waldfogel finds that gifts have an average yield of 87.1 percent, indicating that gifts lose about 13 percent of their value in the exchange from giver to receiver. When cash gifts are excluded, the average yield falls further to 83.9 percent. SH were intrigued enough by Waldfogel’s results to replicate his study. Contrary to Waldfogel, SH find that gift-giving is actually welfare improving with an average yield of 214 percent (median yield 111 percent). They claim that a broader subject pool than that questioned by Waldfogel explains the reversal. Concerned that undergraduates in an intermediate microeconomics class may be unrepresentative, SH administered their survey to members of the general public at train stations and airports and to staff and graduate students enrolled in a biostatistics or an economics class at the Harvard School of Public Health. They also altered the question used to elicit respondents’ valuations of gifts received. Their survey question reads as follows (p. 1300): “Aside from any sentimental value, if, without the giver ever knowing, you could receive an amount of money instead of the gift, what is the minimum amount of money that would make you equally happy?” The change in wording from “the amount of cash such that you are indifferent” to the “amount of money that would make you equally happy” was prompted by a concern that “indifference” is a technical word familiar only to economists. It remains to be seen whether SH’s “equally happy” question is substantially equivalent to the “indifference” version of the question or whether they have introduced a greater change than they realize. An additional methodological concern is that the cost estimates always precede respondents’ valuations in both studies. Order effects are well documented in the social psychology literature: cost estimates may influence valuations. In particular, costs may serve as a judgmental anchor upon which to base value estimates. Reversing the order of the questions is a technique common to survey and experimental methods in the social sciences to balance the researcher’s design and offset possible order effects. * Ruffle: Department of Economics, Ben Gurion University, P.O.B. 653, Beer Sheva, 84105, Israel (e-mail: bradley@bgumail.bgu.ac.il); Tykocinski: Department of Behavioral Sciences, Ben Gurion University, Beer Sheva, 84105, Israel (e-mail: oritt@bgumail.bgu.ac.il). We thank Tomer Bakalash for research assistance and Sara Solnick, Todd Kaplan, three anonymous referees of this journal, and seminar participants at Ben Gurion University, Universite Louis Pasteur, and the 1998 ESA meetings in Mannheim for comments. 1 Howard Schuman and Stanley Presser (1981) provide a good starting point in this literature.

This research uses a randomized, two-sample, post-test experiment to pit the alertness perspective against a new approach for searching systematically for venture ideas to create new wealth. The new approach uses self-selected consideration sets to constrain an entrepreneur’s search domain, which makes it possible to maximize the search results. The constrained domain conforms to the behavior of repeat entrepreneurs who do not search the whole world for venture ideas. Subjects in the treatment group were successful 60% of the time compared with 6.25% success rate for the control group. Fourteen percent of control group emulated the treatment group without receiving instructions to do so.

This paper presents several ideas for combining experimental economics (EXP) with multi-agent simulation (MAS) more effectively. It argues that from an epistemological perspective a closer integration of both methods allows for a better use of their complementary advantages and can accelerate scientific progress. To realize this potential, we suggest an iterative, incremental procedural model as a framework for the collaboration between researchers. To further foster the integration, we recommend a higher level of documentation and standardization with respect to model and result description. An example from prediction markets research illustrates our methodological considerations. It can be shown how the suggested model and result documentations align research efforts and facilitate the transfer of results between EXP and MAS and how the procedural research model augments the scientific contributions of both methods.

This paper investigates whether since the 1980s neoclassical economics has been in the process of being supplanted as the dominant research programme in economics by a collection of competing research approaches which share relatively little in common with each other or with neoclassical economics. A shortlist of the new approaches in recent economics includes game theory, experimental economics, behavioral economics, evolutionary economics, neuroeconomics, and non-linear complexity theory. Two hypotheses are advanced – one regarding the relation between economics instruction and economics research and one regarding the nature of the economics research frontier – to describe social-institutional practices that contribute to the replication of economics as a field. Two further hypotheses are advanced – one regarding the boundaries of the field and one regarding how the field appraises itself – to create a historical–methodological framework for evaluating the question of change in economics and change in recent economics in particular. Finally, the paper distinguishes three leading explanations – the ‘breakdown’ view, the ‘takeover’ view, and the ‘maturity’ view – of why neoclassical economics no longer dominates a mainstream economics.