We use instrumental variables for estimating the causal effect of beliefs on contributions in repeated public good games. The effect is about half as large as suggested by ordinary least squares. Thus, we present evidence that beliefs have a causal effect on contributions, but also that beliefs are endogenous. We compare the causal, belief-based model of contributions to alternative models based on matching the previous contributions of others and responding to one’s deviation from the average in the previous round. The causal, belief-based model performs well, indicating that beliefs have a central role in determining contributions.

Bayesian updating remains the benchmark for dynamic modeling under uncertainty within economics. Recent theory and evidence suggest individuals may process information asymmetrically when it relates to personal characteristics or future life outcomes, with good news receiving more weight than bad news. I examine information processing across a broad set of contexts: (1) ego relevant, (2) financially relevant, and (3) non value relevant. In the first two cases, information about outcomes is valenced, containing either good or bad news. In the third case, information is value neutral. In contrast to a number of previous studies I do not find differences in belief updating across valenced and value neutral settings. Updating across all contexts is asymmetric and conservative: the former is influenced by sequences of signals received, a new variation of confirmation bias, while the latter is driven by non-updates. Despite this, posteriors are well approximated by those calculated using Bayes’ rule. Most importantly these patterns are present across all contexts, cautioning against the interpretation of asymmetric updating or other deviations from Bayes’ rule as being motivated by psychological biases.

We report on an experiment examining behavior and equilibrium selection in two similar, infinitely repeated games, Stag Hunt and Prisoner’s Dilemma under anonymous random matching. We are interested in the role that historical precedents may play for equilibrium selection between these two repeated games. We find that a precedent for efficient play in the repeated Stag Hunt game does not carry over to the repeated Prisoner’s Dilemma game despite the possibility that efficient play can be sustained as an equilibrium of the indefinitely repeated game. Similarly, a precedent for inefficient play in the repeated Prisoner’s Dilemma game does not extend to the repeated Stag Hunt game. We conclude that equilibrium selection between similar repeated games may have less to do with historical precedents and might instead depend more on strategic considerations associated with the different payoffs of these similar repeated games.

We examine strategic sophistication using eight two-person 3 × 3 one-shot games. To facilitate strategic thinking, we design a ‘structured’ environment where subjects first assign subjective values to the payoff pairs and state their beliefs about their counterparts’ probable strategies, before selecting their own strategies in light of those deliberations. Our results show that a majority of strategy choices are inconsistent with the equilibrium prediction, and that only just over half of strategy choices constitute best responses to subjects’ stated beliefs. Allowing for other-regarding considerations increases best responding significantly, but the increase is rather small. We further compare patterns of strategies with those made in an ‘unstructured’ environment in which subjects are not specifically directed to think strategically. Our data suggest that structuring the pre-decision deliberation process does not affect strategic sophistication.

We study learning and selection and their implications for possible effort escalation in a simple game of dynamic property rights conflict: a multi-stage contest with random resolve. Accounting for the empirically well-documented heterogeneity of behavioral motives of players in such games turns the interaction into a dynamic game of incomplete information. In contrast to the standard benchmark with complete information, the perfect Bayesian equilibrium features social projection and type-dependent escalation of efforts caused by learning. A corresponding experimental setup provides evidence for type heterogeneity, for belief formation and updating, for self-selection and for escalation of efforts in later stages.

We examine strategic awareness in experimental games, that is, the question of whether subjects realize they are playing a game and thus have to form beliefs about others’ actions. We conduct a beauty contest game and elicit measures of cognitive ability and beliefs about others’ cognitive ability. We show that the effect of cognitive ability is highly non-linear. Subjects below a certain threshold choose numbers in the whole interval and their behavior does not correlate with beliefs about others’ ability. In contrast, subjects who exceed the threshold avoid choices above 50 and react very sensitively to beliefs about the cognitive ability of others.

This paper analyzes if men and women are expected to behave differently regarding altruism. Since the dictator game provides the most suitable design for studying altruism and generosity in the lab setting, we use a modified version to study the beliefs involved in the game. Our results are substantial: men and women are expected to behave differently. Moreover, while women believe that women are more generous, men consider that women are as generous as men.

In this paper, we use experimental data to study players’ stability in normal-form games where subjects have to report beliefs and choose actions. Subjects saw each of 12 games four times in a regular or isomorphic form spread over two days without feedback. We document a high degree of stability within the same (strategically equivalent) game, although time and changes in the presentation of the game do lead to less stability. To look at stability across different games, we adopt the level-k theory, and show that stability of both beliefs and actions is significantly lower. Finally, we estimate a structural model in which players either apply a consistent level of reasoning across strategically different games, or reasoning levels change from game to game. Our results show that approximately 23% of subjects apply a consistent level of reasoning across the 12 games, but that they assign a low level of sophistication to their opponent. The remaining 77% apply different levels of reasoning to different games. We show that this may be due to subjects being attracted to the action with the highest possible payoff.

We report the results of experiments conducted over the internet between two different laboratories. Each subject at one site is matched with a subject at another site in a trust game experiment. We investigate whether subjects believe they are really matched with another person, and suggest a methodology for ensuring that subjects’ beliefs are accurate. Results show that skepticism can lead to misleading results. If subjects do not believe they are matched with a real person, they trust too much: i.e., they trust the experimenter rather than their partner.

We show how bounds around preferences parameters can be estimated under various levels of assumptions concerning the beliefs of senders in the investment game. We contrast these bounds with point estimates of the preference parameters obtained using non-incentivized subjective belief data. Our point estimates suggest that expected responses and social preferences both play a significant role in determining investment in the game. Moreover, these point estimates fall within our most reasonable bounds. This suggests that credible inferences can be obtained using non-incentivized beliefs.

We study beliefs and actions in a repeated normal-form game. Using a level-k model of limited strategic reasoning and allowing for other-regarding preferences, we classify action and belief choices with regard to their strategic sophistication and study their development over time. In addition to a baseline treatment with common knowledge of the game structure, feedback about actions in the previous period and random matching, we run treatments (i) with fixed matching, (ii) without information about the other player’s payoffs, and (iii) without feedback about previous play. In all treatments with feedback, we observe more strategic play (increasing by 15 percent) and higher-level beliefs (increasing by 18 percent) over time. Without feedback, neither beliefs nor actions reach significantly higher levels of reasoning (with increases of 2 percentage points for actions and 6 percentage points for beliefs). The levels of reasoning reflected in actions and beliefs are highly consistent, but less so for types with lower levels of reasoning.

Coordination problems are ubiquitous in social and economic life. Political mass demonstrations, the decision whether to join a speculative currency attack, investment in a risky venture, and capital flight from a particular country are all characterized by coordination problems. Furthermore, all these events have a dynamic nature which has been largely omitted from previous experimental studies. Here I use a two-stage variant of a dynamic global game to study experimentally how the arrival of information in a dynamic setting affects the relative aggressiveness of speculators. In the first stage, subjects exhibit excess aggressiveness, which appears to be driven by beliefs about others’ actions rather than an intrinsic taste for attacking. However, following a failed first-stage attack, subjects learn to be less aggressive in the second stage. On the other hand, the arrival of new, more precise information after a failed attack leads to an increase in subjects’ aggressiveness. Beliefs, again, play a crucial role in explaining how the arrival of information affects attacking behavior.

Belief elicitation is an important methodological issue for experimental economists. There are two generic questions: 1) Do incentives increase belief accuracy? 2) Are there interaction effects of beliefs and decisions? We investigate these questions in the case of finitely repeated public goods experiments. We find that belief accuracy is significantly higher when beliefs are incentivized. The relationship between contributions and beliefs is slightly steeper under incentives. However, we find that incentivized beliefs tend to lead to higher contribution levels than either non-incentivized beliefs or no beliefs at all. We discuss the implications of our results for the design of public good experiments.

Experimental work using real married couples has shown that efficiency in intra-household allocations is influenced by information asymmetry between spouses. We conduct a lab-in-the-field experiment in rural India to test the extent to which lack of complete information on spousal preferences related to a bundle of private goods can affect allocation dynamics as well as expectations about allocations. We first show that there exist information asymmetries in spousal preferences, and that our information intervention helps reduce gendered misperception in beliefs about allocations and actual allocations, especially for men. However, information on spousal preferences does not significantly affect the final allocation decision, suggesting that husbands and wives may be responding to existing gender norms. We outline implications for experimental work on intra-household bargaining, and for policy.

We compare different implementations of the Stochastic Becker–DeGroot–Marschak (SBDM) belief elicitation mechanism, which is theoretically elegant but challenging to implement. In a first experiment, we compare three common formats of the mechanism in terms of speed and data quality. We find that all formats yield reports with similar levels of accuracy and precision, but that the instructions and reporting format adapted from Hao and Houser (J Risk Uncertain 44(2):161–180 2012) is significantly faster to implement. We use this format in a second experiment in which we vary the delivery method and quiz procedure. Dropping the pre-experiment quiz significantly compromises the accuracy of subject’s reports and leads to a dramatic spike in boundary reports. However, switching between electronic and paper-based instructions and quizzes does not affect the accuracy or precision of subjects’ reports.

This essay is in celebration of the contributions of Mario Rizzo. I argue that among contemporary economists in the Austrian School of Economics tradition it is Rizzo that advanced, more than his contemporaries, the scientific research program of rational choice as if the choosers were human beings; the dynamic subjectivism and the agony of choice and social interaction; the causal processes and the institutional dynamics that make up a complex social order; and the role of law, politics and civil society in shaping commercial life. In making this argument, I attempt to arbitrage the contributions of two essays of Rizzo’s: ‘Law Amid Flux’ and ‘The Genetic-Causal Tradition and Modern Economic Theory’.

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.

Consider the following argument: (1) Whether, or the degree, persons are morally culpable ultimately depends on the (final) reasons that motivate their actions; (2) The degree to which persons are morally culpable should be a central concern of criminal law; (3) Criminal law in many countries focuses more on the beliefs and intentions of agents and less on their motivating reasons; therefore (4) Criminal law in many countries is unjust and should be revised. The premises of this argument are appealing and widely accepted, yet its conclusion is radical. Therefore, the argument is interesting and important. However, the argument is not entirely clear in several respects, and the attempt to clarify it reveals several significant (although not necessarily decisive) doubts regarding its soundness. In this paper, I examine these doubts as well as a related, more general, lesson concerning normative arguments about the law.