Theories of expectations-based reference-dependent preferences have provided a critical modeling innovation, incorporating a structured theory of the formation of reference points. An important prediction of thesemodels is a monotone response in behavior to changes in expectations. To test such models we conduct a real-effort experiment manipulating expectations and examining consequences on ef...

An experiment tested whether and in what circumstances people are more likely to believe an event simply because it makes them better off. Subjects observed a financial asset’s historical price chart, and received both an accuracy bonus for predicting the price at some future point, and an unconditional award that was either increasing or decreasing in this price. Despite incentives for hedging...

Outcome bias occurs when an evaluator considers ex-post outcomes when judging whether a choice was correct, ex-ante. We formalize this cognitive bias in a simple model of distorted Bayesian updating. We then examine strategy changes made by professional football coaches. We find they are more likely to revise their strategy after a loss than a win — even for narrow losses, which are uninformati...

Time Preferences and Lifetime Outcomes This paper investigates the relationship between time preferences and lifetime social and economic behavior. We use a Swedish longitudinal dataset that links information from a large survey on children’s time preferences at age 13 to administrative registers spanning over five decades. Our results indicate a substantial adverse relationship between high di...

We experimentally investigate information aggregation through majority voting when some voters are biased. In such situations, majority voting can have a “dark side,”that is, result in groups making choices inferior to those made by individuals acting alone. In line with theoretical predictions, information on the popularity of policy choices is beneficial when a minority of voters is biased, b...

We study the willingness to compete of 588 children and teenagers aged ten to seventeen. We replicate the gender difference in tournament entry choices usually found in the literature for adults. We then show that policy interventions like quotas and preferential treatment help to close down the gender gap without leading to losses in efficiency, during or after a tournament. Given that differe...

The paper reports the results of two experiments in which people who first made an immoral choice were then more likely to donate to charity than those who did not. In addition, those who knew that a donation opportunity would follow the potential moral transgression were more likely to behave immorally than those who were not told of the donation option. We interpret this increase in charitabl...

This study extends a bilateral gift exchange experiment by Clark et al. (2010) who investigate how feedback of information about wages paid in the market affects both employers’ wage setting and workers’ performance. We provide either quantitative or qualitative information on the average wage paid in all worker-employer-relationships, and we also study repeated relationships (fixedmatching). W...

Beauty Queens and Battling Knights: Risk Taking and Attractiveness in Chess We explore the relationship between attractiveness and risk taking in chess. We use a large international panel dataset on chess competitions which includes a control for the players’ skill in chess. This data is combined with results from a survey on an online labor market where participants were asked to rate the phot...

Indemnifying smallholder farmers against crop loss is thought to be infeasible due to information problems. Consequently there is interest in developing alternative, partial, insurance products. Examples include rainfall insurance and the limited liability inherent in credit contracts. I argue that while these products may reduce information asymmetry, ambiguity averse farmers struggle to asses...