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I. INTRODUCTION This paper focuses on household decisions regarding tax filing and aims to detect nonminimizing income tax behavior among cohabiting couples with children. In France and the United States [...], This paper examines the tax returns of French cohabiting couples with children. These couples form two separate tax units and must optimally assign their children to the tax unit of one of the parents to optimize tax rebates. We find that children are allocated in a way that minimizes tax liability in 75 percent of cohabiting households. The 25 percent of households that fail to minimize their liability appear to use heuristics, are influenced by inertia, and possibly fail to fully cooperate as suboptimal couples tend to separate more and marry less in the subsequent period. Keywords: efficiency, noncooperative model, income taxation, learning, tax returns JEL Codes: D13, D61, H31

Contents I An Australian Conversation about Judicial Productivity II Insights from Behavioural Economics III Two Definitions and One Explanation IV The Ecological Rationality of a Common Law System V Inherent [...], Justice Gageler explores how lessons from behavioural economics are reflected in the institutional structure in which the judicial function is performed. The structure has what the economist Vernon Smith would call an ecological rationality', an internal logic that minimises errors in human judgement. Features of the structure which combine to have this effect include the appointment of judges from senior ranks of the legal profession, the security of judicial tenure and remuneration, the decisional independence of the judge, the personal discipline of the judge, the requirement to give reasons, and the appellate process. These structural features also carry risks to the quality of adjudication, calling for what Smith would call 'constructivist' intervention. Delay in the production of judgments is one of those risks. The challenge in designing a constructivist solution to the problem of delay in the production of judgments is that of striking an appropriate balance between speed and correctness without compromising decisional independence.

I INTRODUCTION Consider a 10,000-word article. Estimate the number of words whose second to last letter is "n'". Now estimate the number of words which end with "-ing". Most people [...], The most interesting recent developments in economics have come from behavioural economics, which attempts to model how people will behave in real life situations. The insights offered by behavioural economics can also be applied to law. This article discusses law and behavioural economics generally, and then applies it to the New Zealand high-cost loan industry. The high-cost loan industry is responsible for a great deal of harm in New Zealand, and in 2019 Parliament passed sweeping amendments to the Credit Contracts and Consumer Finance Act 2003 to insulate consumers from that harm. Law and behavioural economics suggest alternative strategies to those amendments that can address the harms while retaining the benefits that high-cost loans can provide. This article designed an experimental survey to test one such strategy, and the results and implications for policy are discussed.

I. INTRODUCTION Among the most important anti-poverty programs in the United States today is the Earned Income Tax Credit (EITC). Over 27 million households received an income transfer through the [...], Incomplete take-up of the Earned Income Tax Credit (EITC) is a source of persistent policy concern, with an estimated one-fifth of eligible households failing to claim the credit. To promote take-up, a growing number of jurisdictions require employers to provide EITC information to employees. We study the effect of these requirements, linking state and time variation in the adoption of the notification laws to administrative tax data. Our preferred specification yields precise null effects on EITC claiming, filing behavior, and labor force participation. The results cast doubt on the effectiveness of the notice requirements as implemented and suggest further research into other avenues for increasing tax benefit take-up. Keywords: EITC, welfare programs, information provision, notification law JEL Codes: K34, H53

We study the price-setting behavior in a competitive market for used cars and provide empirical evidence for coarse information processing. Based on detailed field data from one of Europe's largest online marketplaces for automotive vehicles, we document systematic and sizable price discontinuities at salient car-age and mileage thresholds. The price difference between two otherwise identical cars across registration years (where one was first registered in January and the other in December of the previous year) is up to five times larger than that between two cars first registered in any two subsequent months within a registration year. A similar pattern can be observed in the mileage dimension at 10,000-km odometer marks, which is in line with earlier findings in the literature. Being able to study discontinuities along two dimensions of the same good allows us to further our understanding toward a more general notion of inattentive behavior. While our results are compatible with a behavioral model of limited attention, we also provide evidence for a more traditional explanation based on search frictions. History: Accepted by Uri Gneezy, behavioral economics. Funding: This research was partially funded by the German Research Foundation [Grant SFB/TR-15], Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/ mnsc.2016.2714. Keywords: price discontinuities * behavioral bias * bounded rationality * inattention * heuristics * search cost * Internet markets, 1. Introduction Economic theory suggests that a rational agent should incorporate all relevant information when making a decision. However, at least since Simon (1955), economists have proposed models that relax [...]

I. INTRODUCTIONA growing body of evidence suggests that the presentation of a tax affects taxpayer decision-making. With respect to commodity taxes, several studies suggest that consumers fail to fully account [...], Recent evidence suggests consumers fail to account for taxes that are excluded from a good's displayed price. What is less understood is whether and how such 'salience effects ' depend on the magnitude of the tax. We conduct a laboratory shopping experiment with real stakes to study the effect of tax size on salience. We find no evidence that salience effects decline as the tax rate increases; we document a statistically significant salience effect at a tax rate that is considerably larger than the lax rates at which such effects have been previously documented. In fact, our results are more consistent with the hypothesis that higher taxes make consumers less attentive (at least for the range of taxes we consider). This result can be explained by a confirmation bias theory of salience: consumers tend to disregard information (like a tax) that does not align with their intention to purchase an item, and this lack of alignment increases in the size of the tax.Keywords: confirmation bias, sales tax, salienceJEL Codes: C91, D91, H31

We use novel data on individual activity in a sports betting market to study the effect of past performance sequences on individual behavior in a real market. The idiosyncratic nature of risk in this market and the revelation of assets' true terminal values enables us to disentangle whether behavior is caused by sentiment or by superior information about market mispricings and to cleanly test two prominent theories of momentum and reversals--the regime-shifting model of Barberis et al. [Barberis N, Shleifer A, Vishny R (1998) A model of investor sentiment. J. Financial Econom. 49(3):307-343] and the gambler's/hot-hand fallacy model of Rabin [Rabin M (2002) Inference by believers in the law of small numbers. Quart. J. Econom. 117(3):775-816]. Furthermore, our long panel enables us to study the prevalence across individuals of each type of behavior. We find that (i) three-quarters of individuals exhibit trend-chasing behavior, (ii) seven times as many individuals exhibit behavior consistent with Barberis et al. (1998) as exhibit behavior consistent with Rabin (2002), and (iii) no individuals earn superior returns from momentum trading. History: Accepted by Lauren Cohen, finance. Keywords: momentum * individual decision making * heterogeneity * behavioral biases * sports betting, A large literature in finance has uncovered various predictable patterns in stock returns. Two of the most robust patterns are short-run momentum and long-run reversals: assets with good recent performance [...]

Inattention and imperfect information bias behavior toward the salient and immediately visible. This distortion creates costs for individuals, the organizations in which they work, and society at large. We show that an effective way to overcome this bias is by making the implications of one's behavior salient in real time, while individuals can directly adapt. In a large-scale field experiment, we gave participants real- time feedback on the resource consumption of a daily, energy-intensive activity (showering). We find that real-time feedback reduced resource consumption for the target behavior by 22%. At the household level, this led to much larger conservation gains in absolute terms than conventional policy interventions that provide aggregate feedback on resource use. High baseline users displayed a larger conservation effect, in line with the notion that real-time feedback helps eliminate 'slack' in resource use. The approach is cost effective, is technically applicable to the vast majority of households, and generated savings of 1.2 kWh per day and household, which exceeds the average energy use for lighting. The intervention also shows how digitalization in our everyday lives makes information available that can help individuals overcome salience bias and act more in line with their preferences. History: Accepted by Uri Gneezy, behavioral economics. Open Access Statement: This work is licensed under a Creative Commons Attribution-NonCommercial! ShareAlike 4.0 International License. You are free to download this work and share with others for any purpose, except commercially, if you distribute your contributions under the same license as the original, and you must attribute this work as 'Management Science. Copyright [C] 2016, The Author(s). https://doi.org/10.1287/mnsc.2016.2646, used under a Creative Commons Attribution License: https://creativecommons.org/licenses/by-nc-sa/4.0/.' Funding: Financial support was provided by the Swiss Federal Office of Energy [Grant 8100087/500791-01] and Zurich's utility company ewz. Supplemental Material: The supplementary information is available at https://doi.org/10.1287/ mnsc.2016.2646. Keywords: salience of information * digitalization * real-time feedback * green information systems * decision making * energy conservation * water conservation * environmental behavior * randomized controlled trials, 1. Introduction Living up to our ideals can be challenging. Most people want to protect the environment, lead healthy lives, and manage their businesses effectively--and yet often fail to do [...]

We present evidence that intrinsic demand for information about the future is increasing in expected future consumption utility. In the first experiment, subjects may resolve a lottery now or later. The information is useless for decision making, but the larger the reward, the more likely subjects are to pay to resolve the lottery early. In the second experiment, subjects may pay to avoid being tested for herpes simplex virus type 1 (HSV-1) and the more highly feared type 2 (HSV-2). Subjects are three times more likely to avoid testing for HSV-2, suggesting that more aversive outcomes lead to more information avoidance. In a third experiment, subjects make choices about when to get tested for a fictional disease. Some subjects behave in a way consistent with expected utility theory, and others exhibit greater delay of information for more severe diseases. We also find that information choice is correlated with positive affect, ambiguity aversion, and time preference, as some theories predict. History: Accepted by Teck-Hua Ho, behavioral economics. Funding: The authors gratefully acknowledge the financial support of a Biais Foundation Challenge Award from Claremont Graduate University and faculty research funding from Claremont McKenna College. Institutional Review Board (IRB) approval was obtained from Claremont Graduate University [IRB 1935] with cross approval from Claremont McKenna College. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/ mnsc.2016.2550. Keywords: anticipatory utility * intrinsic information preferences * information aversion * information avoidance * information-consumption complementarity * information-present consumption substitutability * positive affect * sexually transmitted diseases * ostrich effect * time preferences, 1. Introduction Expected utility theory predicts that the demand for information in a nonstrategic environment depends only on its usefulness. An expected utility maximizer would never incur costs to avoid [...]

Uncertain outcomes are an inevitable feature of policy choices and their public support often depends on their perceived justice. We theoretically and experimentally explore just allocations when recipients are exposed to certainty and uncertainty. In the experiment, uninvolved participants unequivocally choose to allocate resources equally between recipients, when there is certainty. In stark contrast, with uncertainty just allocations are widely dispersed and recipients exposed to higher degrees of uncertainty are allocated less. The observed allocations can be well organized by four different theoretical views of justice, indicating that uninvolved participants differ fundamentally in their views on justice under uncertainty. History: Accepted by Uri Gneezy, behavioral economics. Funding: The research documented in this paper was partly financed by the Oesterreichische Nationalbank [Project 11429] and financial support was received from the Netherlands Organisation for Scientific Research (NWO) [Project 400-09-451]. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/ mnsc.2016.2535. Keywords: justice * uncertainty . experiment, 1. Introduction The perceived justice of policy choices is often of paramount importance for the public and political acceptance of the planned or implemented policy. This is exemplified by the [...]

The consequences of many economic decisions materialize only in the future. To make informed choices in such decision problems, consumers need to anticipate the likelihood of future states of the world, the state dependence of their preferences, and the choice alternatives that may become relevant. This complex task may expose consumers to psychological biases like extrapolative expectations, projection bias, or salience. We test whether customers are affected by such biases when they buy advance tickets for an outdoor movie theater, a real-world situation that, because of the availability of reliable weather forecasts, closely resembles a stylized decision problem under risk. We find that customers' decisions are heavily influenced by the weather at the time of purchase, even though the latter is irrelevant for the experience of visiting the theater in the future. The empirical evidence cannot be fully explained by a range of candidate rational explanations, but is consistent with the presence of the aforementioned psychological mechanisms. History: Accepted by John List, behavioral economics. Funding: Financial support from the Deutsche Forschungsgemeinschaft [Grants SFB/TR 15 (L. Buchheim) and GRK 801 (T. Kolaska)] is gratefully acknowledged. Supplemental Material: The Web appendix is available at https://doi.org/10.1287/mnsc.2016.2524. Keywords: projection bias * salience * extrapolative expectations * behavioral economics * consumer behavior, 1. Introduction The consequences of many economic decisions materialize only in the future. Examples of such decision problems include weekly grocery shopping, planning a summer vacation months ahead, and making [...]

This paper investigates two channels of prosociality: indirect reciprocity and charitable giving. We conducted a natural field experiment in a hair salon in Hamburg, Germany, over the course of four months. In the baseline, we collected data on customers' tips--a scenario absent indirect reciprocity and donations. In two treatments we had the hairdresser collect donations to a charity. In one treatment the hairdresser pointed out the opportunity to donate. Our data indicate that the voluntary activity of collecting donations in the salon led to greater tips for the hairdresser and significant donations. In the second treatment, the hairdresser unconditionally donated to the charity before the customers could. This donation did not increase tips further compared with the collection-only treatment. Our data indicate that indirect reciprocity works in the field. We find evidence that indirect reciprocity and charitable giving work as complements. History: Accepted by Uri Gneezy, behavioral economics. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/mnsc.2016.2519. Keywords: indirect reciprocity * charitable giving * tipping * donation . natural field experiment, 1. Introduction Indirect reciprocity has been identified as a possible channel through which cooperative behavior has emerged as an evolutionary stable strategy in human societies (Nowak and Sigmund 1998, 2005). [...]

We estimate and compare the effect of increased time costs on consumer satisfaction and behavior. We are able to move beyond the existing literature, which focuses on satisfaction and intention, and estimate the effect of waiting time on return behavior. Further, we do so in a prosocial context and our measure of cost is the length of time a blood donor spends waiting. We find that relying on satisfaction data masks important time cost sensitivities; namely, it is not how the donor feels about the wait time that matters for return behavior, but rather the actual duration of the wait. Consistent with theory we develop, our results indicate that waiting has a significant longer-term social cost: we estimate that a 38% increase (equivalent to one standard deviation) in the average wait would result in a 10% decrease in donations per year. History: Accepted by Uri Gneezy, behavioral economics. Funding: The authors greatly appreciate the generous financial support of the Australian Research Council [Grant 1095222] and the Australian Red Cross Blood Service (Blood Service) for their continuous support. Supplemental Material: The supplementary material is available at https://doi.org/10.1287/ mnsc.2016.2504. Keywords: time costs * prosocial behavior * blood donation * return behavior * waiting * stated and revealed preferences, 1. Introduction We consider the role of time costs on economic behavior. Unlike many costs people face in everyday transactions that are observable to researchers, time costs are often ignored [...]

We study the effects of reminders on people's behavior in investment activities characterized by up-front costs and delayed benefits, such as getting an education and maintaining a healthy lifestyle. We conduct a field experiment and show that simple weekly reminders induce users of a gym to substantially increase their gym attendance over an extensive period. Users' response to reminders is immediate (within hours) and recurrent for any subsequent reminder, which can be explained by limited attention. We find some evidence of habit formation, leading to more frequent physical activity also after treatment, although with an effect smaller than during treatment. Simple reminders are thus a cost-effective policy tool. History: Accepted by Uri Gneezy, behavioral economics. Funding: The authors are grateful to Einaudi Institute for Economics and Finance (EIEF) for financial support of the field experiment and David Kovo for excellent research assistance. This paper is part of the SONIC project on behavioral and experimental economics at the University of Bologna [Miur Firb Grant RBFR084L83]. This is a thorough revision of our previous working paper, 'Nudging with Information: A Randomized Field Experiment' (CEPR Discussion papers, n. 8571). Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/ mnsc.2016.2499. Keywords: field experiment * limited attention * reminders * habit-formation * exercise * gym * cost-effective policy, 1. Introduction When individuals perform activities involving immediate costs or effort, but promising future benefits only (i.e., 'investment activities'), they may underinvest and perform poorly even by their own judgment. [...]

This paper studies the role of consistency as a signaling device. We propose a two-period model that highlights the informativeness of consistency as a signal of skills and allows for the analysis of consequences for behavior. In a simple principal-agent experiment, we test the basic intuition of the model. We show that consistency is indeed associated with skills. Consequently, consistency is valued by others, inducing people to act consistently. History: Accepted by Uri Gneezy, behavioral economics. Funding: A. Falk acknowledges financial support from the European Research Council [Starting Grant ERC 209214], Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/ mnsc.2016.2459. Keywords: consistency * signaling * image concerns * experiments * leadership * principal-agent relationships, 1. Introduction The desire to behave and appear consistently is often viewed as a key driver of behavior (Cialdini 1984). A potential explanation for this desire could be that violations [...]

Using coordination games, we elicit social norms directly for two different games where either an agreement to take the first best action has been reached or where no such agreement exists. We combine the norms data with separately measured choice data to predict changes in behavior. We demonstrate that including social norms as a utility component significantly improves predictive performance. Then we compare social norms to guilt aversion and lying aversion. We estimate that honoring an agreement in the double dictator game is worth giving up approximately 10% of total earnings and more than 120% in the Bertrand game. We show that informal agreements affect behavior through their direct effect on social norms as well as through an indirect effect on beliefs. History: Accepted by Uri Gneezy, behavioral economics. Funding: Funding for this research was provided by the University of Michigan School of Information and the Ross School of Business as part of E. L. Krupka and S. Leider's research support. Supplemental Material: The online appendices are available at https://doi.org/10.1287/mnsc.2016.2429. Keywords: economics * behavior and behavioral decision making * social norms * informal agreements, 1. Introduction Many transactions are supported by verbal promises or other informal agreements rather than formal contracts. (1) For example, the motto of the London Stock Exchange is 'My word [...]

We model mental states as part of an equilibrium notion. In a mental equilibrium each player 'selects' an emotional state that determines the player's preferences over the outcomes of the game. These preferences typically differ from the players' material preferences. The emotional states interact to play a Nash equilibrium and, in addition, each player's mental state must be a best response to the mental states of the others (in the sense of maximizing material payoffs). We discuss the concept behind the definition of mental equilibrium and examine it in the context of some of the most popular games discussed in the experimental economics literature. In particular, our approach allows us to identify the mental states (the psychology) that lead players to play various prominent experimental outcomes. We provide necessary and sufficient conditions for mental equilibria to be sustained by material preferences. Finally, we discuss the concept of collective emotions, which is based on the idea that players can coordinate their mental states. History: Accepted by Uri Gneezy, behavioral economics. Funding: I. Garcia-Jurado acknowledges the financial support of Ministerio de Economia y Competitividad [Projects MTM2011-27731-C03 and MTM2014-53395-C3-1-P], E. Winter is grateful for financial support by the German-Israeli Foundation and by Google. Keywords: games * equilibrium * behavioral economics * emotions, 1. Introduction Over the past three decades several interesting and important models have been developed to reconcile the discrepancy between experimental economic results and game-theoretic predictions, without neglecting the idea [...]

Using data from a university, we analyze a policy designed to increase employer-sponsored life insurance. The university increased basic life insurance holdings, which nudged employees with supplemental coverage to have more life insurance. In large part due to inertia, the nudge increased life insurance holdings one-for-one for those who could have undone it. Additionally, we find that expanding coverage options significantly increased total life insurance holdings for new hires who were not subject to inertia. These policy changes reduced uninsured vulnerabilities for two-thirds of employees. Our findings have important policy implications for addressing widespread disparities in life insurance coverage. (JEL D31, G22, D03, J32, J33, J38, H20), I. INTRODUCTION Life insurance ownership is at a 50-year low and sales have declined 45% since the mid-1980s (Prudential 2013; Seism 2014). Large disparities exist between life insurance holdings and [...]

Firms tracking consumer purchase information often use behavior-based pricing (BBP), i.e., price discriminate between consumers based on preferences revealed from purchase histories. However, behavioral research has shown that such pricing practices can lead to perceptions of unfairness when consumers are charged a higher price than other consumers for the same product. This paper studies the impact of consumers' fairness concerns on firms' behavior-based pricing strategy, profits, consumer surplus, and social welfare. Prior research shows that BBP often yields lower profits than profits without customer recognition or behavior-based price discrimination. By contrast, we find that firms' profits from conducting BBP increase with consumers' fairness concerns. When fairness concerns are sufficiently strong, practicing BBP is more profitable than without customer recognition. However, consumers' fairness concerns decrease consumer surplus. In addition, when consumers' fairness concerns are sufficiently strong, they reduce inefficient switching and improve social welfare. Keywords: fairness; behavior-based pricing; dynamic pricing; game theory; behavioral economics History: Received February 24, 2014; accepted March 18, 2015, by J. Miguel Villas-Boas, marketing. Published online in Articles in Advance December 28, 2015., 1. Introduction Firms often use Internet cookies, IP addresses, loyalty cards, and user log-ins to track and store information about an individual customer's purchase history. This enables the firms to [...]

Do higher wages elicit reciprocity and lead to increased productivity? In a field experiment with 266 employees, we find that paying higher wages, per se, does not have a discernible effect on productivity in a context with no future employment opportunities. However, structuring a portion of the wage as a clear and unexpected gift--by offering an unconditional raise after the employee has accepted the contract--leads to higher productivity for the duration of the job. Gifts are roughly as efficient as hiring more workers. Keywords: economics; behavior and behavioral decision making; microeconomic behavior; labor; IT policy and management; electronic commerce; electronic markets and auctions; organizational studies; motivation-incentives History: Received July 1, 2014; accepted May 9, 2015, by Uri Gneezy, behavioral economics. Published online in Articles in Advance January 19, 2016., 1. Introduction Economists have long recognized that employees are often paid more than the market clearing wage and that unemployed workers do not bid wages down to the point where [...]

Comparative payment schemes and tournament-style promotion mechanisms are pervasive in the workplace. We test experimentally whether they have a negative impact on people's willingness to cooperate. Participants first perform in a simple task and then participate in a public goods game. The payment scheme for the task varies across treatment groups. Compared with a piece-rate scheme, individuals in a winner-takes-all competition are significantly less cooperative in the public goods game. A lottery treatment, where the winner is decided by luck, has the same effect. In a competition treatment with feedback, winners cooperate as little as participants in the other treatments, whereas losers cooperate even less. All three treatments lead to substantial losses in the realised social surplus from the public good while having no significant impact on performance. In a complementary experiment, we aim to shed light on the psychological mechanisms behind our results. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2015.2257. Keywords: economics; behavior and behavioral decision making; game theory and bargaining theory; comparative pay; competition; cooperation; gender differences; incentive schemes History: Received December 3, 2013; accepted May 17, 2015, by Teck-Hua Ho, behavioral economics. Published online in Articles in Advance November 23, 2015., Introduction Many companies use relative reward schemes whereby employees earn a bonus if they perform better than their colleagues. Moreover, hierarchical structures mean that in many organisations, employees find themselves [...]

In an experiment with 739 subjects, we study whether and how different interventions might have an influence on the degree of moral behavior when subjects make decisions that can generate negative externalities on uninvolved parties. Particularly, subjects can either take money for themselves or donate it to UNICEF for measles vaccines. By considering two fairly different institutional regimes--one with individual decision making, one with a double-auction market--we expose the different interventions to a kind of robustness check. We find that the threat of monetary punishment promotes moral behavior in both regimes. Getting subjects more involved with the traded good has no effect, though, in both regimes. Only the removal of anonymity, thus making subjects identifiable, has different effects across regimes, which we explain by different perceptions of responsibility. Keywords: morals; market design; experiment; behavioral economics; punishment History: Received December 23, 2013; accepted April 9, 2015, by Uri Gneezy, behavioral economics. Published online in Articles in Advance November 24, 2015., 1. Introduction The question whether markets erode moral values is one of the most controversially discussed issues in philosophy and in the social sciences (Marx 1904, Weber 1978, Simmel 1990, [...]

An exchange promotion allows consumers to turn in an old good and receive a discount toward the purchase of a new product. The old good that is turned in can [...]

2. Ex Ante Exclusions The legal limitations on point-of-treatment utilization review by insurers contrast starkly with the fact that, in most cases, insurers may legally refuse to pay for interventions [...]

With the Patient Protection and Affordable Care Act ("ACA") set to dramatically increase access to medical care, the problem of rising costs will move center stage in health law and [...]

Applying behavioral economic theories, we hypothesize that consumers have sticky reference prices for individual information goods, but their perceived value for customizable bundle offers can be significantly influenced by the [...]

Recent discoveries in behavioral economics have led to important new insights concerning what can happen in markets. Such gains in knowledge have come primarily via laboratory experiments--a missing piece of the puzzle in many cases is parallel evidence drawn from naturally occurring field counterparts. We provide a small movement in this direction by taking advantage of a unique opportunity to work with a Chinese high-tech manufacturing facility. Our study revolves around using insights gained from one of the most influential lines of behavioral research--framing manipulations--in an attempt to increase worker productivity in the facility. Using a natural field experiment, we report several insights. For example, conditional incentives framed as both 'losses' and 'gains' increase productivity for both individuals and teams. In addition, teams more acutely respond to bonuses posed as losses than as comparable bonuses posed as gains. The magnitude of this framing effect is roughly 1%: that is, total team productivity is enhanced by 1% purely due to the framing manipulation. Importantly, we find that neither the framing nor the incentive effect lose their significance over time; rather, the effects are observed over the entire sample period. Moreover, we learn that repeated interaction with workers and conditionality of the bonus contract are substitutes for sustenance of incentive effects in the long run. Key words: framing effect; natural field experiment; worker productivity; loss aversion History: Received July 6, 2011; accepted February 3, 2012, by Gerard P. Cachon, decision analysis. Published online in Articles in Advance July 18, 2012., 1. Introduction One of the pillars within an entrenched branch of behavioral research is the power of framing: The manner in which a choice set is presented has been found [...]

The story goes that tuition voucher schools and charter schools are creatures of the spirit of capitalism (1) and that public funding of them will increase competition, making all schools [...]

The emerging discipline of behavioural economics has established that humans do not follow the canonical rules of rational utility maximization that were the foundation of neoclassical economics. If people were rational economic agents, their behaviour would be highly predictable. No unifying predictive framework for actual economic behaviour has emerged to replace the canonical assumption of utility maximization. I suggest here that evolutionary biology can play a role in forging a new theoretical framework for behavioural economics. I argue that some apparently irrational economic behaviours can be understood as products of the hunter-gatherer ecology in which humans evolved. I discuss three examples of anomalous behaviour: hyperbolic time discounting, contextdependent preferences and contribution to public goods. In each case, 'irrational' decisions are less surprizing when we recognize the evolutionary roots of the behaviour. Cultural effects remain relevant in an evolutionary account of economic behaviour. Indeed, an evolutionary perspective may help us anticipate economic behaviour and create sustainable societies in the novel, globalized economy that we have created. Keywords behavioural economics; cooperation; human ecology; rationality; utility maximization, INTRODUCTION The sustainability of our societies depends, to a great extent, on how we behave as economic actors, that is, how we choose among alternative potential uses of our time [...]

Theoretical models suggest that social networks influence the evolution of cooperation, but to date there have been few experimental studies. Observational data suggest that a wide variety of behaviors may spread in human social networks, but subjects in such studies can choose to befriend people with similar behaviors, posing difficulty for causal inference. Here, we exploit a seminal set of laboratory experiments that originally showed that voluntary costly punishment can help sustain cooperation. In these experiments, subjects were randomly assigned to a sequence of different groups to play a series of single-shot public goods games with strangers; this feature allowed us to draw networks of interactions to explore how cooperative and uncooperative behaviors spread from person to person to person. We show that, in both an ordinary public goods game and in a public goods game with punishment, focal individuals are influenced by fellow group members' contribution behavior in future interactions with other individuals who were not a party to the initial interaction. Furthermore, this influence persists for multiple periods and spreads u p to three degrees of separation (from person to person to person to person). The results suggest that each additional contribution a subject makes to the public good in the first period is tripled over the course of the experiment by other subjects who are directly or indirectly influenced to contribute more as a consequence. These results show experimentally that cooperative behavior cascades in human social networks. behavioral economics | cooperation | public goods | social influence | pay-it-forward www.pnas.org/cgi/doi/10.1073/pnas.0913149107

ABSTRACT Much employment discrimination law is premised on a purely money-focused "reasonable" employee, the sort who can be made whole with damages equal to lost wages, and who does not [...]

We conducted preference assessments with 4 typically developing children to identify potential reinforcers and assessed the reinforcing efficacy of those stimuli. Next, we tested two predictions of economic theory: that overall consumption (reinforcers obtained) would decrease as the unit price (response requirement per reinforcer) increased and that the cost and benefit components that defined unit price would not influence overall consumption considerably when unit price values were equal. We tested these predictions by arranging unit price such that the denominator was one (e.g., two responses produced one reinforcer) or two (e.g., four responses produced two reinforcers). Results showed that consumption decreased as unit price increased and that unit price values with different components produced similar consumption. DESCRIPTORS: behavioral economics, costs and benefits, preference assessment, reinforcer demand, unit price

A study was conducted to propose behavioral equilibrium, a new solution concept to study environments with players who are naive. It is argued that the adverse selection problem is aggravated when naive players fail to account for selection. It is concluded that beliefs about both fundamentals and strategies are jointly restricted.

A study was conducted to introduce the concept of self in economics. A formalization of the authoritative approach in empirical psychology called 'Self Determination Theory' (SDT) is provided. It is concluded that this model can be applied to cases where material incentives and costs fail to account for expected behaviors such as addiction and self-destructive behavior.

Behavioral Ecology of Consumption is a foraging theory model of human decision-making in an online environment. Results suggest the generality of hyperbolic discounting and matching in human decision-making.

ABSTRACT Recent work at the intersection of law and behavioral biology has suggested numerous contexts in which legal thinking could benefit by integrating knowledge from behavioral biology. In one of [...]