Amnon Rapoport made seminal contributions to research on investment decision-making and individual decision-making under risk. To build on his seminal work, this paper explores the impact of social influence on risk-taking. First, to build predictions for experimental testing, we modify a standard expected utility model by introducing a social norm variable. Using a standard 10-decision paired lottery choice task, we report the results from three experiments with different manipulations to test whether social influence information affects subjects’ own lottery choices. In Experiment 1, we find that participants are more likely to switch to choosing the risky option earlier if they are told that a large majority (>75%) of a large group (N = 100) of others have also chosen the risky option in the past. In Experiment 2, we find there is no effect if the social influence prompt is framed as a small group (N = 10) or the choice of one (N = 1) successful lottery participant, but there is an effect when participants are provided information about the consistently risky choices of one (N = 1) person in the past. In Experiment 3, using an in-person subject pool, we find some mixed effects on risk-taking when the social information is framed as a small group (N = 10) of peers (other students). Altogether, this paper demonstrates that social influence can impact risk-taking in line with a socially normed expected utility model.

Alternative disposable dinnerware treatments to per- and polyfluoroalkyl substances (PFAS) are under development. A discrete choice experiment of 1,304 U.S. consumers addressed the market’s response to bio-based alternatives. Information nudges were used to assess the impact of health and environmental information on behavior. Data were analyzed using mixed logit models. Bio-based treated plates generated premiums compared to the PFAS-treated plates. Participants exposed to either environmental or health information were willing to pay a price premium of $2.0-$2.12 for bio-based treatments. Both information nudges generated premiums for the USDA Certified Bio-based products relative to the control.

Many societies allocate wealth and status through competitions. These competitions may be seen as unfair if the playing field is uneven or if the competitors are of unequal strength. We run two experiments to document the extent to which people are willing to compete against others in situations with varying fairness concerns. In a between-subject experiment, we show that people’s willingness to compete is largely unaffected by the impact their choice has on the payoff of an opponent, no matter whether the opponent had a choice about whether to compete or not. In a within-subject experiment, we show that most people are willing to compete against opponents who have been exogenously disadvantaged or are known to be weaker. People who choose competition against weak or disadvantaged opponents are also more willing to give themselves an advantage by sabotaging the performance of their opponent.

We report the results of an experiment on selective exposure to information. A decision maker interested in learning about an uncertain state of the world can acquire information from one of two sources that have opposite biases: when informed on the state, they report it truthfully; when uninformed, they report their favorite state. A Bayesian decision-maker is better off seeking confirmatory information unless the source biased against the prior is sufficiently more reliable. In line with the theory, subjects are more likely to seek confirmatory information when sources are symmetrically reliable. On the other hand, when sources are asymmetrically reliable, subjects are more likely to consult the more reliable source even when prior beliefs are strongly unbalanced and this source is less informative. Our experiment suggests that base rate neglect and simple heuristics (e.g., listen to the most reliable source) are important drivers of the endogenous acquisition of information.

Incorrect estimation of own absolute and relative abilities is common and can have detrimental effects on a person’s educational, social, employment, and financial outcomes. It is not yet fully understood from where interpersonal differences in overconfidence emerge. In this paper, we estimate the heritability of two types of overconfidence, overestimation, and overplacement, in a sample of 1120 twins. We find that the genetic heritability of overestimation (overplacement) is about 19% (17%) and that most of the interindividual variation in overconfidence is due to individual-specific environmental factors.

We study experimentally contests in which players make investment decisions sequentially, and information on prior investments is revealed between stages. Using a between-subject design, we consider all possible sequences in contests of three players and test two major comparative statics of the subgame-perfect Nash equilibrium: The positive effect of the number of stages on aggregate investment and earlier-mover advantage. The former prediction is decidedly rejected, as we observe a reduction in aggregate investment when more sequential information disclosure stages are added to the contest. The evidence on earlier mover advantage is mixed but mostly does not support theory as well. Both predictions rely critically on large preemptive investment by first movers and accommodation by later movers, which does not materialize. Instead, later movers respond aggressively, and reciprocally, to first movers’ investments, while first movers learn to invest less to accommodate those responses.

Our study contributes to the literature on choice shifts in group decision-making by analyzing how the level of risk-taking within a group is influenced by its gender composition. In particular, we investigate experimentally whether group composition affects how preferences ‘shift’ when comparing individual and group choices. Consistent with hypotheses derived from previous literature, we show that male-dominated groups shift toward riskier decisions in a way that is not explained by any simple preference aggregation mechanism. We discuss potential channels for the observed pattern of choice shifts.

While individuals are expected to perceive similarly identical quantities, regardless of the used units (e.g., 1 ton or 1000 kg), several scholars suggest that consumers over-infer quantities when they are presented in bigger and phonetically longer numbers. In two experimental studies, we examine this numerosity bias in the context of household food waste. Unlike previous scholars, manipulating numerosity revealed no effect: perceptions of food waste volume and likelihood to reduce it are not influenced by the used numeric value (2500 g vs. 2.5 kg; Study 1) nor the number of syllables (two kilos eight hundred seventy-five grams vs. three kilograms; Study 2).

In the presence of a default option, the optimal search rule for an agent with a reference-dependent utility and a search cost predicts: (i) the default increases the reservation utility due to the reference effect, leading to a better choice, and (ii) those with higher reservation utility will self-select into search and are more likely to find a superior option. Our experiments document the presence of both effects. Those who reject the default are likely to find higher-ranked options in their active search, supporting the self-selection effect. Even when the self-selection channel is shut down, the reference effect remains.

We report a lab experiment to study subjects’ preferences over their ordinal rank in an earnings distribution. Following an assignment of unequal earnings, subjects can select a monetary transfer from exactly one individual to another, not including themselves. This can potentially change their own position in the distribution, as well as influence overall inequality. The experiment varies whether the initial earnings assignment is random or is affected by preliminary competition. It also varies the reference group from a complete to a partial network. A majority of observed transfers reduce inequality by moving earnings from those with the highest rank to the lowest rank in the distribution. Rank-improving transfers are substantially more common for preliminary competition losers than winners. Transfers to individuals outside of the reference group are not uncommon, and they usually target as the source the individuals high in the income distribution. While generally weak overall, own rank preferences appear to be more common among men than women.

Previous studies have shown that an oath can reduce lying in individual settings. Can it reduce lying in groups, a context where lying is more prevalent? Results from a lab experiment reveal that the impact depends on the incentive structures and procedures. A mandatory oath reduces lying when group members’ payoffs are independent, but only has a marginal effect when payoffs are dependent. Voluntary oath-taking enhances the effectiveness under both incentive structures by fostering intrinsic motivation to keep promises. The findings highlight the importance of peer effects and oath-taking procedures on the effectiveness of an oath in group settings.

Although evidence suggests men are more generous to women than to men, it may stem from paternalism and could reverse when women excel in important skills for one’s career success, such as cognitive skills. Using a dictator game, this paper studies whether male dictators allocate less to female receivers than to male receivers when these receivers have higher intelligence quotients (IQs) than dictators. By exogenously varying the receivers’ IQ relative to the dictators’, I do not find evidence consistent with this hypothesis; if anything, male dictators allocate slightly more to female receivers with higher IQs than to male receivers with equivalent IQs. The results hold both in mean and distribution and are robust to the so-called “beauty premium.” Also, female dictators’ allocations are qualitatively similar to male dictators. These findings suggest that women who excel in cognitive skills may not receive less favorable treatment than equally intelligent men in the labor market.

People, across a wide range of personal and professional domains, need to accurately detect whether the state of the world has changed. Previous research has documented a systematic pattern of over- and under-reaction to signals of change due to system neglect, the tendency to overweight the signals and underweight the system producing the signals. We investigate whether experience, and hence the potential to learn, improves people’s ability to detect change. Participants in our study made probabilistic judgments across 20 trials, each consisting of 10 periods, all in a single system that crossed three levels of diagnosticity (a measure of the informativeness of the signal) with four levels of transition probability (a measure of the stability of the environment). We found that the system-neglect pattern was only modestly attenuated by experience. Although average performance did not increase with experience overall, the degree of learning varied substantially across the 12 systems we investigated, with participants showing significant improvement in some high diagnosticity conditions and none in others. We examine this variation in learning through the lens of a simple linear adjustment heuristic, which we term the “δ-ϵ” model. We show that some systems produce consistent feedback in the sense that the best δ and ϵ responses for one trial also do well on other trials. We show that learning is related to the consistency of feedback, as well as a participant’s “scope for learning” how close their initial judgments are to optimal behavior.

We report two meta-analyses on the determinants of antisocial behavior in experimental settings in which such behavior is not rationally motivated by pecuniary incentives. The first meta-analysis employs aggregate data from 95 published and unpublished studies (24,086 participants), using laboratory, field and online experiments carried out since 2000. We find that antisocial behavior depends significantly on the experimental setting, being highest in vendetta games and lowest in social dilemmas. As we find significant heterogeneity across the studies, including across game classes, in the second meta-analysis, we focus only on “Joy of Destruction” (JoD) and money-burning (MB) experiments, for which we have the most observations, 51 studies and around 16,784 participants. Overall, our findings suggest that procedural fairness and being observed by others reduce the frequency of antisocial behavior. Online and field experiments display more antisocial behavior than laboratory experiments. We also find that the strategy method biases antisocial behavior upward. However, we do not find evidence for a positive publication bias being correlated with higher destructive behavior, either in the general meta-analysis or in relation to JoD/MB experiments; if anything, there is evidence of a negative publication bias. The JoD/MB meta-analysis finds evidence of a price effect for destruction frequency, negative discrimination against outsiders, within-subject designs underestimating destructive behavior, and more antisocial behavior in one-shot interactions. Collectively, our results point to the value of more laboratory experiments that systematically build on paradigmatic experimental designs to enable comparability and the identification of key economic drivers of antisocial behavior.

Narrow bracketers who are myopic in specific decisions would fail to consider preexisting risks in investment and neglect hedging opportunities. Growing evidence has demonstrated the relevance of narrow bracketing. We take a step further in empirical investigation and study individual heterogeneity in narrow bracketing. Specifically, we use a lab experiment in investment and hedging that elicits subjects’ preferences on rich occasions to uncover the individual degree of narrow bracketing without imposing distributional assumptions. Combining prospect theory and narrow bracketing can explain our findings: Subjects who invest more also insure more, and subjects insure significantly less in the loss domain than in the gain domain. More importantly, we show that the distribution of the individual degree of narrow bracketing is skewed at two extremes, yet with a substantial share of people in the middle who partially suffer from narrow bracketing. Neglecting this aspect, we would overestimate the severity of narrow bracketing and misinterpret its relation with individual characteristics.

Research on individual decisions from experience reveals a robust tendency to behave as if rare events are underweighted. Experimental studies of strategic interactions often exclude probabilistic outcomes, thus neglecting the potential extension of this tendency to strategic games. Our study addresses this gap by examining how players in games adjust their strategies when confronted with low-probability, high-impact outcomes. We introduce two finitely repeated, asymmetric games with lottery-based payoffs. These games, when simplified by replacing lotteries with their expected values, yield straightforward equilibrium predictions based on dominant strategies. However, results from three experiments reveal players strongly deviate from these predictions, instead behaving consistently with underweighting of rare events. The results additionally indicate that social preferences also play a role in shaping behavior. To explain these observations, we propose the simplistic Reciprocal Altruistic Sampler (REALS) model. This model posits that players’ decisions are a result of the interplay between reliance on small samples of past experiences, altruistic tendencies, and strategic considerations. We experimentally compare behavior in variants of the games that disentangle the behavior to these three components, and show that the REALS model, despite its simplicity, effectively captures their complex interactions. Our results additionally demonstrate that players can often choose strictly dominated strategies in a sophisticated effort to react to underweighting of rare events by other players. Overall, this study enhances our understanding of strategic decision making by highlighting the crucial impact of rare events and the interplay of different uncertainties in influencing players’ choices.

Using a laboratory experiment, we investigate complexity in decision problems as a cause of failures in contingent reasoning. For this purpose, we introduce three dimensions of complexity to a decision problem: the number of contingencies, the dominance property of choices, and reducible states. Each decision problem is designed to reflect variations in complexity across the three dimensions. Experimental results show that the number of contingencies has the most significant effect on failures in contingent reasoning. The second dimension, the dominance property of choices, also has a statistically significant effect, though the effect size is smaller than in the existing literature. In contrast, the third complexity dimension has no impact; presenting the decision problem in a reduced or reducible form does not change subjects’ performance on contingent reasoning. Additionally, we examine the Power of Certainty and show its existence. This effect is particularly pronounced when the number of contingencies is large.

Disappointment aversion has been suggested as an explanation for non-truthful rankings in strategy-proof school-choice matching mechanisms. We test this hypothesis using a novel experimental design that eliminates important alternative causes of non-truthful rankings. The design uses a simple contingent choice task with only two possible outcomes. Between two treatments, we manipulate the possibility for disappointment aversion to have an effect on ranking. We find a small and statistically marginally significant treatment effect in the direction predicted by disappointment aversion. We therefore conclude that disappointment aversion is a minor contributor to non-truthful rankings in strategy-proof school-choice matching mechanisms.

We investigate the role of visual attention in risky choice in a rich experimental dataset that includes eye-tracking data. We first show that attention is not reducible to individual and contextual variables, which explain only 20% of attentional variation. We then decompose attentional variation into individual average attention and trial-wise deviations of attention to capture different cognitive processes. Individual average attention varies by individual, and can proxy for individual preferences or goals (as in models of “rational inattention” or goal-directed attention). Trial-wise deviations of attention vary within subjects and depend on contextual factors (as in models of “salience” or stimulus-driven attention). We find that both types of attention predict behavior: average individual attention patterns are correlated with individual levels of loss aversion and capture part of this individual heterogeneity. Adding trial-wise deviations of attention further improves model fit. Our results show that a decomposition of attention into individual average attention and trial-wise deviations of attention can capture separable cognitive components of decision making and provides a useful tool for economists and researchers from related fields interested in decision-making and attention.