There is a large literature evaluating the dual process model of cognition, including the biases and heuristics it implies. However, our understanding of what causes effortful thinking remains incomplete. To advance this literature, we focus on what triggers decision-makers to switch from the intuitive process (System 1) to the more deliberative process (System 2). We examine how the framing of incentives (gains versus losses) influences decision processing. To evaluate this, we design experiments based on a task developed to distinguish between intuitive and deliberative thinking. Replicating previous research, we find that losses elicit more cognitive effort. Most importantly, we also find that losses differentially reduce the incidence of intuitive answers, consistent with triggering a shift between these modes of cognition. We find substantial heterogeneity in these effects, with young men being much more responsive to the loss framing. To complement these findings, we provide robustness tests of our results using aggregated data, the imposition of a constraint to hinder the activation of System 2, and an analysis of incorrect, but unintuitive, answers to inform hybrid models of choice.

$\mu$Cap is a software package (citeware) for economic experiments enabling experimenters to analyze emotional states of subjects using z-Tree and FaceReader™. $\mu$Cap is able to create videos of subjects on client computers based on stimuli shown on screen and restrict recording material to relevant time frames. Another feature of $\mu$Cap is the creation of time stamps in csv format at prespecified screens (or at prespecified points in time) during the experiment, measured on the client computer. The software makes it possible to import these markers into FaceReader™ easily. $\mu$Cap is the first program that significantly simplifies the process of connecting z-Tree and FaceReader™ with the additional benefit of extremely high precision. This paper describes the usage, underlying principles as well as advantages and limitations of $\mu$Cap. Furthermore, we give a brief outlook of how $\mu$Cap can be beneficial in other contexts.

The literature on rent-seeking primarily focuses on contests for achieving gains, although contests for avoiding losses are also omnipresent. Examples for such ‘reverse’ contests are activities to prevent the close-down of a local school or the construction of a waste disposal close-by. While under standard preferences, investments in ‘reverse’ and ‘conventional’ contests should not be different, loss aversion predicts contests for avoiding losses to be fiercer than conventional ones. In our experimental data, the difference in investments between conventional and reverse Tullock contests is small and statistically insignificant. We discuss several explanations for this remarkable finding.

People behave much more cooperatively than predicted by the self-interest hypothesis in social dilemmas such as public goods games. Some studies have suggested that many decision makers cooperate not because of genuine cooperative preferences but because they are confused about the incentive structure of the game—and therefore might not be aware of the dominant strategy. In this research, we experimentally manipulate whether decision makers receive explicit information about which strategies maximize individual income and group income or not. Our data reveal no statistically significant effects of the treatment variation, neither on elicited contribution preferences nor on unconditional contributions and beliefs in a repeated linear public goods game. We conclude that it is unlikely that confusion about optimal strategies explains the widely observed cooperation patterns in social dilemmas such as public goods games.

For the trust game, recent models of belief-dependent motivations make opposite predictions regarding the correlation between back transfers and second-order beliefs of the trustor: while reciprocity models predict a negative correlation, guilt-aversion models predict a positive one. This paper tests the hypothesis that the inconclusive results in the previous studies investigating the reaction of trustees to their beliefs are due to the fact that reciprocity and guilt aversion are behaviorally relevant for different subgroups and that their impact cancels out in the aggregate. We find little evidence in support of this hypothesis and conclude that type heterogeneity is unlikely to explain previous results.

This paper investigates the effectiveness of peer punishment in non-linear social dilemmas and replicates Cason and Gangadharan (Exp Econ 18:66–88, 2015). The contribution of this replication is that cooperation is quantified across payoff equivalent, strategically symmetric public good and common pool resource experiments. Results suggest that the cooperation-inducing effect of peer punishment is statistically equivalent across conditions. Despite this increase in cooperation, earnings are significantly lower than in the absence of punishment. Institutional features which improve the effectiveness of peer punishment in linear public good experiments may, similarly, make self-governance possible in more complex social dilemmas.

In oligopoly, imitating the most successful competitor yields very competitive outcomes. This theoretical prediction has been confirmed experimentally by a number of studies. A recent paper by Friedman et al. (J Econ Theory 155:185–205, 2015) qualifies those results in an interesting way: While they replicate the very competitive results for the first 25–50 periods, they show that when using a much longer time horizon of 1200 periods, results slowly turn to more and more collusive outcomes. We replicate their result for duopolies. However, with 4 firms, none of our oligopolies becomes permanently collusive. Instead, the average quantity always stays above the Cournot–Nash equilibrium quantity. Thus, it seems that “four remain many” even with 1200 periods.

Since Holt and Laury (Am Econ Rev 92(5):1644–1655, 2002), the multiple price list (MPL) procedure has widely been used to elicit individual risk preferences. We assess the impact of varying list order and spacing, and of presentation via text or graphs. Relative to the original MPL baseline, some non-linear transformations of lottery prices systematically increase elicited risk aversion, while some graphical displays tend to reduce it.

The famous linguistic-savings hypothesis states that languages that grammatically separate the future from the present (like English) causally induce less future-oriented behavior than languages in which speakers can refer to the future using present tense (like German or Chinese). Chen et al., European Economic Review 120 (2019) experimentally investigate the effect of using future-oriented language on incentivized intertemporal choices and find no support for the hypothesis. We replicate Chen et al., European Economic Review 120 (2019)’s study in the German-speaking context. In our experiment with 332 subjects, we randomly refer to future payments using present or future tense and find no causal effect of language on intertemporal choice. Given the importance of replications for confidence in scientific findings, our results provide corroborating evidence that the linguistic-savings hypothesis is not empirically tenable. Eventually, the results provide a methodological contribution to the conduct of experiments.

I find necessary and sufficient conditions for first-order stochastic dominance (FOSD) violations for choices from a budget line of Arrow securities. Applying this characterization to existing data, I compare FOSD violation rates across a broad set of risk preference elicitation tasks.

We use an experiment to evaluate the effects of participatory management on firm performance. Participants are randomly assigned roles as managers or workers in firms that generate output via real effort. To identify the causal effect of participation on effort, workers are exogenously assigned to one of the two treatments: one in which the manager implements a compensation scheme unilaterally or another in which the manager cedes control over compensation to the workers who vote to implement a scheme. We find that output is between seven and twelve percentage points higher in participatory firms.

Experiments in economics usually provide subjects with starting capital to be used in the experiment. This practice could affect decisions as there is no risk of loss. This phenomenon is known as the house-money effect. In a repeated public goods game, we test for house-money effects by paying subjects in advance an amount they could lose in the experiment. We do not find evidence of a house-money effect over time.

Misreporting—a form of lying—is common in online labor and remote work settings. We execute an experiment on Amazon MTurk to determine how ex-ante honesty oaths and worker beliefs impact lying behavior across a range of plausible and implausible lies. Using a novel quantile-style exposition of the types of lies reported, we find that oaths elicit more truthful behavior, reducing both small, plausible lies and large, implausible ones. Shirking is reduced under oath. Worker expectations of group reporting are positively related to individual reporting of plausible lies.

We test whether anchoring affects people’s elicited valuations for a bottle of wine in individual decision-making and in markets. We anchor subjects by asking them if they are willing to sell a bottle of wine for a transparently uninformative random price. We elicit subjects’ Willingness-To-Accept for the bottle before and after the market. Subjects participate in a double auction market either in a small or a large trading group. The variance in subjects’ Willingness-To-Accept shrinks within trading groups. Our evidence supports the idea that markets have the potential to diminish anchoring effects. However, the market is not needed: our anchoring manipulation failed in a large sample. In a concise meta-analysis, we identify the circumstances under which anchoring effects of preferences can be expected.

We investigate how different forms of scrutiny affect dishonesty, using Gneezy’s [Am Econ Rev 95:384–394 (2005)] deception game. We add a third player whose interests are aligned with those of the sender. We find that lying behavior is not sensitive to revealing the sender’s identity to the observer. The option for observers to communicate with the sender, and the option to reveal the sender’s lies to the receiver also do not affect lying behavior. Even more striking, senders whose identity is revealed to their observer do not lie less when their interests are misaligned with those of the observer.

Loss framing and checklist formatting are two oft-cited tools for encouraging behavior change, but there is little causal evidence on their impact in field settings. We partnered with the City of Philadelphia to test the effectiveness of these tools to increase completion of the City’s wellness program. In our experiment, 5235 City employees and retirees were randomly assigned to receive one of four postcard versions (using a 2 × 2 design), whereby we varied both framing (gain or loss) and how instructions were provided (information only or information in checklist format). Our results suggest that neither loss framing nor the checklist formatting significantly influenced the likelihood that individuals would complete the wellness tasks, or how quickly they completed the tasks. We conclude that this specific form of employee behavior may be difficult to influence through the “passive” behavioral interventions we tested, and suggest that a more “active” approach may be required in such instances.

Access to information via social media is one of the biggest differentiators of public health crises today. During the early stages of the Covid-19 outbreak in January 2020, we conducted an experiment in Wuhan, China to assess the impact of viral social media content on pro-social and trust behaviours and preferences towards risk taking with known and unknown probabilities. Prior to the experiment, participants viewed one of two videos that had been widely and anonymously shared on Chinese social media: a central government leader visiting a local hospital and supermarket, or health care volunteers transiting to Wuhan. In a control condition, participants watched a Neutral video, unrelated to the crisis. Viewing one of the leadership or volunteer videos leads to higher levels of pro-sociality and lesser willingness to take risks in an ambiguous situation relative to the control condition. The leadership video, however, induces lower levels of trust. We provide evidence from two post-experiment surveys that the video’s impact on pro-sociality is modulated by influencing the viewer’s affective emotional state.

Many studies report on the association between 2D:4D, a putative marker for prenatal testosterone exposure, and economic preferences. However, most of these studies have limited sample sizes and test multiple hypotheses (without preregistration). In this study we mainly replicate the common specifications found in the literature for the association between the 2D:4D ratio and risk taking, the willingness to compete, and dictator game giving separately. In a sample of 330 women we find no robust associations between any of these economic preferences and 2D:4D. We find no evidence of a statistically significant relation for 16 of the 18 total regressions we run. The two regression specifications which are statistically significant have not previously been reported and the associations are not in the expected direction, and therefore they are unlikely to represent a real effect.

Economists conducting laboratory experiments on cooperation and peer punishment find that a non-negligible minority of punishments is directed at cooperators rather than free riders. Such punishments have been categorized as ‘perverse’ or ‘antisocial,’ using definitions that partially overlap, but not entirely so. Which approach better identifies punishment that discourages cooperation? We analyze the data from 16 sites studied by Herrmann et al. (Science 319(5868):1362–1367, 2008) and find that when subjects are uninformed about who punished them, the recipient’s contribution relative to the group average (whether it is ‘perverse’) is a better predictor of negative impact on contribution than is her contribution relative to the punisher’s (whether it is ‘antisocial’). Regression estimates nevertheless suggest that punished subjects attempt to take relative contribution of punisher into account even if only by conjecture.