We experimentally investigate in village India how belief systems that hierarchize social groups affect the groups’ responses to economic opportunities. Earlier we found that making caste salient hurt low caste performance both absolutely and relative to the high caste’s. To examine the possible role of mistrust, we manipulate the scope for discretion in rewarding performance. When offered a ga...

We investigate the outcome of bargaining when a player’s pay-off from agreement is risky. We find that a risk-averse player typically increases his equilibrium receipts when his pay-off is made risky. This is because the presence of risk makes individuals behave “more patiently” in bargaining. Strong analogies are drawn to the precautionary saving literature. We show that the effect of risk on ...

Experiments have shown that people have a natural taste for cooperation. This paper takes a first step in understanding how formal and informal institutions might be designed to utilize these private tastes to facilitate more efficient economic interactions. We examine a twice-played prisoner’ dilemma in which the total of the stakes in the two periods is fixed, but the distribution of these st...

Self-selection can bias estimates of treatment effects from randomized experiments if one is interested not merely in the effect of treatment on the treated, but in extrapolating results to the general population. This paper employs the Roy model to study this problem in the context of medical trials. The main insight is that, as the probability of receiving active treatment rises, patients who...

An important feature of bond markets is the relationship between initial public offering prices and the probability of the issuer defaulting. First, this probability affects bond prices. Second, IPO prices determine the default probability. Though the market equilibrium has been shown to predict well for other assets, it is a priori unclear whether markets will yield competitive prices when suc...

Information provision experiments allow researchers to test economic theories and answer policy-relevant questions by varying the information set available respondents. We survey emerging literature using in economics discuss applications macroeconomics, finance, political economy, public economics, labor health economics. also design considerations provide best-practice recommendations on how ...

This paper proposes a geometric delineation of distributional preference types and a non-parametric approach for their identification in a two-person context. It starts with a small set of assumptions on preferences and shows that this set (i) naturally results in a taxonomy of distributional archetypes that nests all empirically relevant types considered in previous work in economics and socia...

Heterogeneity in Risky Choice Behaviour in a Broad Population We analyse risk preferences using an experiment with real incentives in a representative sample of 1,422 Dutch respondents. Our econometric model incorporates four structural parameters that vary with observed and unobserved characteristics: Utility curvature, loss aversion, preferences towards the timing of uncertainty resolution, a...

In this paper, we present the results of two experiments on social sampling, where people make a risky decision after they have sampled the behavior of others who have done exactly the same problem before them. In an individual decision making problem as well as in the takeover game, the simple behavioral rule of imitating the best appears to be a robust description of behavior despite the fact...

Consider a symmetric 2-player game of complete information. Consider an arbitrary Bayesian extension of that game with payoff-irrelevant types, independent random matching, and anonymity (private types). We show that, in this setting, while strategies in a Bayesian Nash equilibrium of that game can differ across types, aggregate play in any such equilibrium must coincide with a symmetric Nash e...