In addition to their direct effects, episodes of financial instability may decrease investor confidence. Measuring the impact of a crisis on investor confidence is complicated by the fact that it is difficult to disentangle the effect of investor confidence from coincident direct effects of the crisis. In order to isolate the effects of financial crises on investor confidence, we study the inve...

The sanctioning of norm-violating behavior by an effective formal authority is an efficient solution for social dilemmas. It is in the self-interest of voters and is often favorably contrasted with letting citizens take punishment into their own hands. Allowing informal sanctions, by contrast, not only comes with a danger that punishments will be misapplied, but also should have no efficiency b...

According to standard dynamic choice theories, patience is a key driving factor behind the accumulation of the proximate determinants of economic development. Using a novel representative data set on time preferences from 80,000 individuals in 76 countries, we investigate the empirical relevance of this hypothesis in the context of a development accounting framework. We find a significant reduc...

This paper tests experiential learning as a debiasing tool against gambling behavior in South Africa. We implement a simple, interactive game that simulates the odds of winning the national lottery through dice rolling. Participants roll one and two dice until they obtain simultaneous sixes and are then informed that the odds of winning the jackpot is equivalent to rolling all sixes with nine d...

In a multi-agent setting, individuals often compare own performance with that of their peers. These comparisons in‡uence agents’ incentives and lead to a noncooperative game, even if the agents have to complete independent tasks. I show that depending on the interplay of the peer e¤ects, agents’ e¤orts are either strategic complements or strategic substitutes. I solve for the optimal monetary i...

The notion of contracts as reference points provides the basis for a deeper understanding of important phenomena such as the employment contract, vertical integration, firm scope, authority, and delegation. Previous experiments lend support to this notion but they ignore realistic aspects of trading relationships such as informal agreements and ex-post renegotiation or revision. Here we show th...

Gender in Jeopardy!: The Role of Opponent Gender in High-Stakes Competition* Using 4,279 episodes of the popular US game show Jeopardy!, we analyze whether the opponents’ gender is able to explain the gender gap in competitive behavior. Our findings indicate that gender differences disappear when women compete against men. This result is surprising, but emerges with remarkable consistency for t...

Do People Seek to Maximize Their Subjective Well‐Being?* In a new survey we ask respondents, after a standard Subjective Well‐Being (SWB) question, if they can think of changes in their lives that would improve their SWB score. If the SWB score is just one argument among others in the respondents’ goals in life, they should easily find ways to improve it, at the expense of other dimensions they...

We explore situations in which a decision-maker bears responsibility for somebody else's outcomes as well as for her own. We study such choices for gains and losses, and for different gain probabilities. For 50-50 lotteries over gains we find that being responsible for somebody else's payoffs increases risk aversion. In the loss domain, on the other hand, we find significantly different behavio...

This paper argues that the relation between temptations and the level of consumption plays a key role in explaining the observed behaviors of the poor. Temptation goods are defined to be the set of goods that generate positive utility for the self that consumes them, but not for any previous self that anticipates that they will be consumed in the future. We show that the assumption of declining...