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.

Explicit and implicit incentives and opportunities for mutually beneficial voluntary cooperation coexist in many economic relationships. In a series of eight laboratory gift-exchange experiments, we show that incentives can lead to crowding out of voluntary cooperation even after they have been abolished. This crowding-out also occurs in repeated relationships, which otherwise strongly increase effort compared to one-shot interactions. Using a unified econometric framework, we unpack these results as a function of positive and negative reciprocity, as well as the principals’ wage offer and the incentive compatibility of the contract. Crowding-out occurs mostly due to reduced wages and not a change in reciprocal wage–effort relationships. Our systematic analysis also replicates established results on gift exchange, incentives, and crowding out of voluntary cooperation while being exposed to incentives. Overall, our findings show that the behavioral consequences of explicit incentives strongly depend on the features of the situation in which they are embedded.

Information about the consequences of our consumption choices can be unwelcome, and people sometimes avoid it. Thus, when people possess information that is inconvenient for another person, they may face a dilemma about whether to inform them. We introduce a simple and portable experimental game to analyze the transmission of inconvenient information. In this game, a Sender can, at a small cost, inform a Receiver about a negative externality associated with a tempting and profitable action for the Receiver. The results from our online experiment (N = 1,512) show that Senders transmit more information when negative externalities are larger and that Senders’ decisions are largely driven by their own preferences towards the charity and their own use of information. We do not find evidence that Senders take the Receiver’s preferences into account, as they largely ignore explicit requests for information, or ignorance, even if Receivers have the option to punish the Sender.