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Publications:

Third-party Manipulation of Conflict: An Experiment (with Umberto Garfagnini) Forthcoming, Experimental Economics

Forward Induction: Thinking and Behavior (with Aldo Rustichini) Journal of Economic Behavior & Organization, Volume 128, August 2016, Pages 195-208.

Working Papers:

Communication and Behavior in Centralized and Decentralized Coordination Games (with Umberto Garfagnini). Revise and Resubmit, Quantitative Economics.

Abstract:Using novel experimental methods, we study how communication is used to coordinate in centralized and decentralized games where players' incentives are private and misaligned. We find that subjects respond to changes in incentives to coordinate strategically. In particular, the quality of vertical communication with the principal is significantly higher than the quality of horizontal communication between agents if and only if the importance of coordination is low. Surprisingly, decisions in centralized games underweight and decisions in decentralized games overweight the importance of coordination. These distortions in decision rules account for 94% of subjects' welfare losses, with the remaining 6% due to miscommunication. The distortions can be explained by strategic uncertainty and disappear in an additional experiment with complete information and unique equilibrium predictions.

Myopic Loss Aversion or Randomness in Choice? An Experimental Investigation Update: 2/10/2017

Abstract: This paper reinterprets a well-known behavioral phenomenon, usually attributed to myopic loss aversion (MLA), through the lens of stochastic choice. First, it is argued that stochastic choice models can explain behavior in prior studies of MLA and reconcile some conflicting results in the literature. Second, the predictions of stochastic choice and MLA are contrasted in a new experiment based on simple choices between gambles and sure amounts. The results of this experiment show subjects to be more risk-averse with frequent feedback if the gamble is attractive, as in Gneezy and Potters (1997), and more risk-seeking with frequent feedback if the gamble is unattractive, as in Haisley et al. (2008). This pattern of results can be rationalized by a random utility or a random parameter model, but not MLA.

Delayed Review in Repeated Relationships Update: 5/2/2017

Abstract:Many theoretical results rely on delayed review of imperfect information for sustaining cooperative outcomes. This paper uses a laboratory experiment designed around a repeated prisoner's dilemma with imperfect monitoring to argue that delay can in practice hinder cooperation through a mechanism not captured by standard theory. The results of the experiment can be rationalized by a simple model of stochastic choice.

Cooperative Institutions (with David Rahman) Update: 8/13/2014

Abstract: This paper provides the first systematic experimental analysis of delay, communication and reaction lags in a repeated prisoner's dilemma with frequent actions and imperfect monitoring. We independently manipulate delay of information and the ability of subjects to engage in limited communication and find that subjects earn significantly more without delay, a result that cannot be explained by standard repeated games models. We also find that communication always improves welfare and that average payoffs in one of our treatments (with communication and no delay) are significantly greater than the upper bound on public Nash equilibrium payoffs. We explore the possibility that this is driven by bounded rationality in the form of reaction lags and find that slowing down the experiment has no significant effect on behavior.