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Recent research suggests that auction winners sometimes fall prey to a “bidder’s curse”, paying more for an item at auction than they would have paid at a posted price. One explanation for this phenomenon is that bidders are inattentive to posted prices. We develop a model in which bidders’ inattention, and subsequent overbidding, is driven by a rational response to the opportunity cost of acquiring information about the posted price. We test our model in a laboratory experiment in which subjects bid in an auction while facing an opportunity cost of looking up the posted price. We vary the opportunity cost, and we show that information acquisition decreases and consequently overbidding increases with opportunity cost as predicted.

Classroom peers are believed to influence learning by teaching each other, and the efficacy of this teaching likely depends on classroom composition in terms of peers' ability. Unfortunately, little is known about peer-to-peer teaching because it is never observed in field studies. Furthermore, identifying how peer-to-peer teaching is affected by ability tracking – grouping students of similar ability – is complicated by the fact that tracking is typically accompanied by changes in curriculum and the instructional behavior of teachers. To fill this gap, we conduct a laboratory experiment in which subjects learn to solve logic problems and examine both the importance of peer-to-peer teaching and the interaction between peer-to-peer teaching and ability tracking. While peer-to-peer teaching improves learning among low-ability subjects, the positive effects are substantially offset by tracking. Tracking reduces the frequency of peer-to-peer teaching, suggesting that low-ability subjects suffer from the absence of high-ability peers to teach them.

Recent research suggests that auction winners sometimes fall prey to a "bidder's curse", paying more for an item at auction than they would have paid at a posted price. One explanation for this phenomenon is that bidders are inattentive to posted prices. We develop a model in which bidders' inattention, and subsequent overbidding, is driven by a rational response to the opportunity cost of acquiring information about the posted price. We test our model in a laboratory experiment in which subjects bid in an auction while facing an opportunity cost of looking up the posted price. We vary the opportunity cost, and we show that information acquisition decreases and consequently overbidding increases with opportunity cost as predicted.

Rules are thought to persist to the extent that the direct benefits of having them (e.g. reducedtransactions costs) exceed the costs of enforcement and of occasional misapplications. We arguethat a second crucial role of rules is as screening mechanisms for identifying cooperative types.Thus we underestimate the social value of rules when we consider only their instrumental value insolving a particular problem. We demonstrate experimentally that costly rule-following can be usedto screen for conditional cooperators. Subjects participate in a rule-following task in which theymay incur costs to follow an arbitrary written rule in an individual choice setting. Without theirknowledge, we sort them into groups according to their willingness to follow the rule. Thesegroups then play repeated public goods or trust games. Rule-following groups sustain high publicgoods contributions over time, but in rule-breaking groups cooperation decays. Rule-followersalso reciprocate more in trust games. However, when individuals are not sorted by type, we observeno differences in the behavior of rule-followers and rule-breakers.

Spiteful, antisocial behavior undermines the moral and institutional fabric of society, producingdisorder, fear and mistrust. Previous research demonstrates the willingness of individuals to harmothers, but little is understood about how far people are willing to go in being spiteful or theirconsistency in spitefulness across repeated trials. Our experiment is the first to provideindividuals with repeated opportunities to spitefully harm anonymous others when the decisionentails zero cost to the spiter and cannot be observed by the object of spite. This method revealsthat the majority of individuals exhibit consistent (non-)spitefulness over time and that thedistribution of spitefulness is bipolar: when choosing whether to be spiteful, most individualseither avoid spite altogether or impose the maximum possible harm on their unwitting victims.

We argue that rules and rule-following provide a key means of solving social dilemmas by revealinginformation about individual willingness to cooperate, thereby facilitating assortative matchingand the exclusion of non-cooperative types. Rules impose costs on prospective entrants to anygroup and ensure thatonly those willing to pay such costs will join. To illustrate this point, we study a novel,repeated common pool resource game in which current resource stocks depend on resource extractionin previous periods. We show that for a sufficiently high regrowth rate, there is no commonsdilemma: the resource will be preserved indefinitely in equilibrium. Behavioral tests of the modelindicate that favorable ecological characteristics are necessary but insufficient to encourageeffective CPR governance. However, by screening and sorting individuals according to theirwillingness to follow costly rules in an individual choice task, we show that CPR groups composedof rule-followers are less likely to exhaust the resource than both groups of rule-breakers andmixed-type groups.