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We identify a behavioral bias in some games with completely mixed equilibria. Following (Alcocer and Jeitschko, 2014) we characterize players who, when indifferent between several optimal choices, assign an equal probability to playing any one of them. We design an experiment to test for the presence of such ‘naive’ players. Our model fits the data better than the Nash equilibrium, based on simpler behavioral assumptions than those that rely on random payoff differences. In a first session, we sort subjects into naive players and their sophisticated counterparts. Two weeks later, each group played against varying proportions of automated players (bots) that follow varying off-equilibrium mixed strategies. Subjects categorized as naive continue to tend towards uniform mixing and also are less apt to account for distortions due to off-equilibrium bots. In contrast, sophisticated players do compensate for the distortions in the game, although this compensation is not large enough to restore equilibria, implying they are not ‘exploitation-proof.’ We also isolate altruistic components of players’ strategies: behavior skews further from Nash when doing so increases the total surplus subjects collectively obtain. Lastly, we show that the probability of being categorized as naive is correlated with the performance on a cognitive test.

Improving rural credit markets requires a good understanding of the root causes of market failures and taking necessary steps to address them. This paper investigates the role of productivity shocks in borrowers' repayment choices. Using a framed field experiment that simulated a repeated interaction in an input credit market, the analysis finds strong evidence that negative productivity shocks lead to higher default, even when they do not induce negative returns. This relationship is robust to the presence of an information exchange system enforcing dynamic incentives. The findings suggest that recurrent agricultural production shocks resulting from the negative effects of climate change could exacerbate failures in rural credit markets, undermining hard-won progress toward rural financial inclusion.

Background Prescription drug abuse (PDA) disorders continue to contribute to the current American opioid crisis. Within this context, our study seeks to improve understanding about stigma associated with, and symptom recognition of, prescription drug abuse. Aims Model the stigma and symptom recognition of PDA in the general population. Methods A randomized, nation-wide, online, vignette-focused survey of the general public (N = 631) was implemented with an oversample for rural counties. Logit estimation was used for analysis, with regional and county-level sociodemographic variables as controls. Results Individual respondents that self-identify as having or having had “a prescription drug abuse issue” were less likely to correctly identify the condition and were 4 times more likely to exhibit stigma. Male respondents were approximately half as likely to correctly identify PDA as female respondents while older respondents (55+) were more likely to correctly identify PDA, relative to those aged 35–54. Being both male and younger was associated with slightly more stigma, in that they were less likely to disagree with the stigma statement. Conclusions In light of the continued risks that individuals with PDA behaviors face in potentially transitioning to illicit opioid use, the findings of this survey suggested a continued need for public education and outreach. Of particular note is the perspective of those who have self-identified with the condition, as this population faces the largest risks of adverse health outcomes from illicit drug use within the survey respondents.

Experimental auctions are a popular and useful tool in understanding demand for food and agricultural products. Bidding behavior often deviates from theoretical predictions in traditional Vickrey and Becker–DeGroot–Marschak (BDM) auction mechanisms. We propose and explore the bidding behavior and demand revealing properties of a hybrid first price‐Vickrey auction and a hybrid first price‐BDM mechanism. Results from a between‐sample, induced value experiment reveal that, relative to traditional mechanisms, the hybrid first price‐Vickrey auction and hybrid first price‐BDM mechanism significantly reduce participants’ likelihood of overbidding, and on average yield bids closer to true valuations. We discuss potential limitations to these hybrid mechanisms as well as implications for their use in eliciting homegrown values that are important for agribusiness and food marketing research. [EconLit citations: C8, C9, Q1, Q13]

This study examines how individuals’ trust levels and patience are affected by a tornado event. Affected and unaffected people were surveyed after a 2013 tornado in Moore, Oklahoma, that resulted in 24 fatalities. Findings suggest that those who self-identified as affected became more trusting in general as well as more trusting of police and fire authorities. Affected homeowners also exhibited less patience than their unaffected counterparts. The evaluation of differences in trust and patience enables us to learn about how underlying propensities to invest (or reinvest) in critical private and public infrastructure may be influenced by extreme events. Disasters alter trust levels and patience of affected residents, and documenting the direction and magnitude of these changes may help agencies involved in the recovery process.

We use survey and experimental methods to examine how residents’ risk, loss, and ambiguity aversion are affected by a tornado event. We survey residents of the Oklahoma City area where a 2013 tornado resulted in massive damage and 24 fatalities. Our evaluation shows that risk aversion increased for those who were injured by the tornado. However, persons who lost a friend or neighbor were emboldened, experiencing reduced risk aversion. Ambiguity aversion increased for those who lost their residence or had property damage, and loss aversion increased for those who lost a friend or neighbor. Risk preferences of individual citizens in disasters are affected in important and intricate ways, and these alterations may influence choices such as how and when to rebuild private homes, businesses and invest in a region’s critical public infrastructure.

Tornadoes are the most frequent of the natural hazards in the United States, causing significant yearly human and economic losses. Given the potential destructive power of tornado events and their largely unpredictable nature, it is important to identify the major determinants of vulnerability. To date, only a limited number of studies have empirically investigated the determinants of tornado-induced deaths. Based on a conceptual framework where risk is considered to be a function of physically defined natural hazards and socially constructed vulnerability, we extend previous empirical studies by examining a wider range of potential socio-economic, governmental, and housing factors that determine tornado-induced fatalities. Using detailed county-level data for years 1980–2014, we find that counties with higher per capita income and per capita government spending on public safety and welfare have fewer deaths, whereas counties with greater income disparity are more vulnerable to tornadoes. We explore which aspects of poverty seem most associated with fatalities. Housing quality (measured by mobile homes as a proportion of housing units) is a critical factor in explaining tornado-induced fatalities.

We investigate the correlation between membership to different types of groups and levels of trust by using a field-based trust experiment and attitudinal trust questions. We find that membership in a group promoted by a development project is positively correlated with revealed trust, whereas membership in a community group is negatively correlated with revealed trust, but these correlations are relatively weak (p value = 0.10). This suggests that trusting individuals do not necessarily self-select to participate in group-based interventions, that participation in community groups might not enhance trust and that community group membership may be driven by other motives. Copyright © 2017 John Wiley & Sons, Ltd.

Financial incentives are commonly used to promote voluntary adoption of agricultural best management practices (BMPs), but little is known about farmer preferences among alternative incentives. Using experimental procurement auctions, we evaluate how different conservation incentives affect farmer willingness to adopt BMPs that reduce phosphorus (P) runoff, a major driver of harmful algal blooms in Lake Erie. We rank incentives (e.g., payment, BMP insurance, tax credit, and certification price premium) by the cost per pound of P runoff reduction. Payments and tax credits that target high impact areas of the watershed are more cost-effective than untargeted price premiums for product certification. Farmers demand higher payments for contracts offering BMP insurance (i.e., protection against yield loss from BMP use) due to uncertainty about how the program will be implemented and the reliability of indemnities, as well as anticipated transaction costs associated with the program. Understanding farmer preferences for different types of conservation incentives is critical to design agri-environmental programs that engage more farmers and cost-effectively enhance ecosystem services.

Descriptive and injunctive social norms communicated among groups are known to influence behavior, yet little is known about how they evolve over time and how financial incentives influence norms. This article tests hypotheses about the ways in which monetary incentives can disrupt normative impact while facilitating cooperative behavior. The results of a public goods experiment indicate that the presence of a financial incentive for behavior can reduce the impact of perceived descriptive norms on behavior, and this reduction continues once the incentive is removed. The findings show that group identification enhances the effects of perceived descriptive norms on contribution behavior. The study results form the basis for theory building on the role of financial incentives in normative systems (FINS).

In a world free of transaction costs, reverse auctions can cost-effectively allocate payment for environmental service contracts by targeting projects that provide the most benefit per dollar spent. However, auctions only succeed if enough farmers choose to bid so that the auctioneer can evaluate numerous projects for targeted funding. A 2014 conservation auction to allocate payments for phosphorus reduction practices in NW Ohio experienced very thin bidding. According to a follow-up survey, auction participation was deterred by the complexity of the bidding process and the need to negotiate with renters. Due to low participation, the actual conservation auction made payments for phosphorus reduction that were surprisingly costly at the margin. Applying a farmer behavioral model to the Western Lake Erie Basin, we simulate participation choice and cost-effectiveness of environmental outcomes in reverse auctions and uniform payment conservation programs. Results reveal that when perceived transaction costs of bid preparation are high, reverse auctions are less cost-effective than spatially targeted, uniform payment programs that attract higher participation. Keywords: reverse auctions, transaction costs, cost-effective, conservation programs, endogenous participation

We investigate the effect of voice exercised through comment-based participation on individual public goods provision. We implement a modified linear public goods game with treatments along two dimensions. First, we introduce a comment mechanism where individuals can provide unstructured feedback to influence a third-party rule-maker who determines a minimum contribution rule (MCR) at the beginning of the game. Second, we implement a probabilistic sanctioning mechanism for individuals who do not contribute at least the MCR. We find that without punishment, comments are insufficient to maintain high contribution levels over time. However, when enforcement is present, comment-based participation has a positive effect on players’ contributions to the public good and on their probability of compliance with the MCR. Comments also have a large positive effect on the MCR set by the rule-maker; players, in turn, respond to an increase in the MCR by making larger contributions to the public good.

Many resource allocation contests have the property that individuals undertake costly actions to appropriate a potentially divisible resource. We design an experiment to compare individuals’ decisions across three resource allocation contests which are isomorphic under risk-neutrality. The results indicate that in aggregate the single-prize contest generates lower expenditures than either the proportional-prize or the multi-prize contest. Interestingly, while the aggregate results indicate similar behavior in the proportional-prize and multi-prize contests, individual level analysis indicates that the behavior in the single-prize contest is more similar to the behavior in the multi-prize contest than in the proportional-prize contest. We also elicit preferences toward risk, ambiguity and losses, and find that while such preferences cannot explain individual behavior in the proportional-prize contest, preferences with regard to losses are predictive of behavior in both the single-prize and multiple-prize contests. Therefore, it appears that loss aversion is correlated with behavior in the single-prize and multi-prize contests where losses are likely to occur, but not in the proportional-prize contest where losses are unlikely.

We compare several risk preference elicitation methods – including incentivised, non-incentivised, and framed methods as well as a traditional Likert survey question – in a developing country and empirically test how well consequent measures of risk attitudes predict risk taking behaviour. We find that Likert scale and non-incentivised framed survey questions are not sufficient substitutes for costlier incentivised methods in rural Niger. Instead, the incentivised framed question works best while a simplified incentivised lottery question works almost as well. More risk and ambiguity averse farmers are less likely to adopt fertiliser microdosing indicating the importance of insurance and strategies to promote learning.

This paper examines the behavior in multilateral bargaining experiments with alternating offers and asymmetric information. In all experiments, a single buyer has up to ten bargaining periods to purchase one unit of a good from each of two sellers. Treatments vary based on who makes the first offer (buyer or sellers), timing (consistent buyer-offer/sellers-demand or alternating), and information (buyer’s value and sellers’ costs are known or come from a uniform distribution). We find that actual bargaining outcomes are virtually identical when offers alternate, regardless of which player makes the first offer. We find that alternating offers reduce bargaining delay slightly compared to treatments in which one side or the other makes repeated take-it-or-leave-it offers. Finally, we find that incomplete information increases bargaining delay and the likelihood of failed agreements.

This study measures the relative importance of selfishness and social capital motives using resource allocation data collected in hypothetical surveys and non-hypothetical experiments. Social capital motives allow an agent's well-being to be influenced by his sympathetic relationships with others. The assumption that selfishness can explain nearly all resource allocations is rejected.

This paper presents the first known assessment of cheap talk effectiveness in a choice experiment conducted online with a focus on the distinction between impacts on stated willingness to pay at the population mean and in targeted sub-samples. Utilizing a large national survey and split-sample experimental design, we find cheap talk scripts may not only influence the level of willingness to pay estimated for representative consumers, but also may produce more reliable estimates. The magnitude of the impact that cheap talk has on willingness to pay is found to depend on the evaluated respondent sub-sample. Copyright 2011, Oxford University Press.

The expected utility (EU) model is widely used for predicting and describing choices under uncertainty. Its usefulness, however, is limited because of its widely acknowledged inconsistencies and paradoxes. This paper describes how important EU model paradoxes can be resolved by accounting for the influences of socio-emotional goods (SEGs) embedded in word and other symbolic frames.

This study evaluates consumer perceptions of what "sustainably produced" food labels imply and estimates corresponding demand for products carrying these labels. Results suggest that the typical U.S. consumer is not willing to pay a positive premium for beef, tomatoes, or apple products labeled as "sustainably produced." Demand is particularly sensitive to inferences consumers make regarding what a "sustainably produced" food label implies. Suggestions for future work and implications of standardizing the definition of sustainability are provided. Key Words: consumer perceptions, credence labeling, production practices, sustainable, U.S. consumer demand, willingness to pay (ProQuest: ... denotes formulae omitted.) Food produced using "sustainable" production practices is receiving increasing degrees of attention in both public and private arenas. More food products are being marketed using "sustainable" or "sustainably produced" labeling claims, and the public sector is increasingly investing in the adoption of sustainable production practices [i.e., USDA-SARE (Sustainable Agriculture Research and Education) program]. A search of the Mintel Global New Products Database identifies 483 new food products, introduced in North America between January 2007 and January 2009, that carry "sustainable" or "sustainably produced" phrases in their labels. As interest in sustainably produced food increases, questions arise about what consumers perceive when faced with "sustainably produced" labels. For instance, consider an example product description as identified by Mintel: "World Berries Organic Inca Berries, also known as gooseberries, is vegan raw food, produced by sustainable methods, and sourced from all over the world." A reasonable question to ask is: What do consumers infer from labeling claims of "produced by sustainable methods"? Moreover, what is the corresponding demand for products carrying such labels? Estimation of not only acceptable price premiums, but consumer-specific determinants of these premiums are vital to the success of firms interested in building and maintaining a profitable market for their product. If consumers'willingness to pay (WTP) for sustainably produced food is primarily driven by implicit inferences from incomplete labels, the profitability of products labeled as "sustainably produced" may be particularly sensitive to any efforts to standardize labeling. Additionally, answers to open questions such as these will help inform public resource allocation decisions related to sustainability. In particular, public sector officials interested in efficient markets and the welfare impacts of alternative food labeling strategies will benefit from additional insights regarding consumer demands for and perceptions of "sustainably produced"products. Accordingly, the core objective of this article is to initiate the process of examining consumer inferences and valuations of food products carrying "sustainably produced" labels. Using stated preference data obtained in a national survey of U.S. consumers, we investigate consumer perceptions regarding definitions of "sustainable production" and estimate consumer WTP for beef, tomatoes, and apples carrying corresponding labels. The rest of the article is organized as follows. A brief summary of the literature is provided, followed by a review of the contingent valuation methods used and a description of the national survey-based data used. The last two sections outline the results and findings of the study and provide a discussion of this study's implications as well as some suggestions for future research that would leverage our initial findings. Background Surprisingly, relatively little economic research has focused on sustainability in the context of agricultural production practices. Some exceptions are: 1) Calker et al. (2005), who surveyed experts in a variety of technical fields to examine the extent to which production practices can be considered sustainable; 2) Callens and Tyteca (1999), who suggest a framework for evaluating (using economic, social, and environmental metrics) the productive efficiency of agricultural firms in the context of overall sustainability; and 3) Rigby and Caceres (2001) and Rigby et al. …

Student volunteers at the U.S. Naval Academy (USNA) participated in one of the following one-shot games: a dictator game, an ultimatum game, a trust game, or a prisoner's dilemma game. We find limited support for the importance of personality type for explaining subjects’ decisions. With controls for personality preferences, we find little evidence of behavioral differences between males and females. Furthermore, we conclude that seniority breeds feelings of entitlement—seniors at USNA generally exhibited the least cooperative or other-regarding behavior.

In a laboratory ultimatum bargaining experiment, responder behavior is more consistent with game-theoretic predictions when responders indicate a binding minimum acceptable offer (MAO) or when rejection penalizes a “hostage” third player. In general, female subjects indicated higher MAOs but had a much greater reaction than males to the presence of a third player. Offers increase in the presence of a binding MAO but are not affected by a third player. Behavior in our experiment is also generally consistent with hypotheses based on a popular personality test instrument.

This paper examines behavior in a three-player ultimatum game. The payoff to the non-decision-making player (the “hostage”) is separate from the bargaining pie and varies. We find that while responders may behave altruistically towards the hostage, they are more likely to reject a given offer if it leaves them with a more inequitable payoff relative to the hostage. Offers appear to be unaffected by the presence of a hostage. Though not a direct test of the Fehr and Schmidt [Fehr, E., Schmidt, K.M., 1999. A theory of fairness, competition, and cooperation. Quarterly Journal of Economics 114 (3), 817–868] and Bolton and Ockenfels [Bolton, G., Ockenfels, A., 2000. ERC: a theory of equity, reciprocity, and competition. American Economic Review 90, 166–193] models, our results are qualitatively consistent with their predictions.

The majority of theoretical and experimental research stemming from Tullock’s (1980) model of rent-seeking considers static, single-period contests. This paper contributes to a growing body of research on multi-period rent-seeking contests by developing and experimentally testing a model in which a player’s effort affects the probability of winning a contest in both the current and future periods. Theory predicts that rent-seeking effort will be shifted forward from later to earlier periods, with no change in overall rent-seeking expenditures relative to the static contest. Experimental results indicate a significant shift forward when “carryover” is present and that the amount shifted is directly related to the carryover rate. Finally, although experimental expenditures are greater than the equilibrium predictions, overall rent-seeking effort in the carryover contests is lower than in similar static contests.

This paper presents results from a series of experiments designed to test the impact on subject behavior of changes in the risk dominance and payoff dominance characteristics of two player coordination games. The main finding is that changes in risk dominance significantly affect play of the subjects, whereas changes in the level of payoff dominance do not. Observed history of play also has an important influence on subject behavior, both when subjects are randomly rematched after each game and when they remain matched with the same individual for a sequence of games.

This study examines the impact of changes in pecuniary payoffs and the linkages between players in the game environment on strategy choice in repeated PD games. Rates of cooperation are found to be correlated with variations in game parameters related to concepts of Fear, Greed, and Cooperators’ Gain. In addition, rates of cooperation are affected by the information that subjects have regarding the history of play of their counterparts, as well as the protocol used for matching subjects across decision rounds.

The impact of the cardinal relationships amongpecuniary payoffs, and of social history and reputation, on thechoice of strategies in four one-shot Prisoner's Dilemma games isexperimentally examined. The results suggest that normalized payoffvalues linked to ``fear'' and ``greed'' are important as predictorsof behavior in the PD games. Success in coordinating on the payoffdominant equilibrium in previous plays of coordination games alsoincreases the probability of cooperative play in the PD games. Theeffect of past play is strongest when individuals are matchedrepeatedly with the same person in previous play, as contrasted tobeing matched randomly with another player.

Bilateral monopoly, land assembly, and unanimous-consent Coasian bargaining present interesting strategic questions because they involve division of an economic surplus without competition to temper bargaining demands. We present a behavioral bargaining model in which payoff-maximizing proposers make offers to divide a surplus with one or more responders who are assumed to behave either strategically, or sincerely according to a minimum acceptable offer rule. We characterize equilibrium proposer and responder decisions under various scenarios regarding the number and type of responders, the number of bargaining periods, and the cost of delay. The model predictions are consistent with data from laboratory experiments.

Conventional wisdom as well as economic theory suggests it is more costly to reassemble fragmented land due to transactions costs and strategic bargaining costs. Both costs are expected to increase with the number of sellers. Inefficient allocation of land resources may result including property entropy ( Parisi, 2002 ), urban sprawl ( Miceli and Sirmans, 2007 ) and deteriorating inner cities. Given the difficulty of observing actual values attached by buyers and sellers to land, little empirical evidence exists to support the conventional wisdom and theoretical work. We use experimental methods to examine transactions costs and strategic bargaining costs in a land-assembly market game with one buyer, 1–4 sellers, and complementary exchanges. The buyer’s final earnings vary inversely with the number of sellers, ceteris paribus, indicating an incentive to purchase consolidated land. Delay costs reduce holdout, but result in lower payoffs for both buyers and sellers. Competition between sellers reduces holdout and the buyer’s total purchase price.

When an economic exchange requires agreement by multiple independent parties, the potential exists for an individual to strategically delay agreement in an attempt to capture a greater share of the surplus created by the exchange. This "holdout problem" is a common feature of the land assembly literature because development frequently requires the assembly of multiple parcels of land. We use experimental methods to examine holdout behavior in a laboratory bargaining game that involves multi-person groups, complementary exchanges, and holdout externalities. The results of six treatments that vary the bargaining institution, number of bargaining periods, and the cost of delay demonstrate that holdout is common across institutions and is, on average, a payoff-improving strategy for responders. Both proposers and responders take a more aggressive initial bargaining stance in multi-period bargaining treatments relative to single-period treatments, but take a less aggressive bargaining stance when delay is costly. Nearly all exchanges eventually occur in our multi-period treatments, leading to higher overall efficiency relative to the single-period treatments, both with and without delay costs.

I. INTRODUCTION The experimental literature on voluntary public goods provision shows that groups attain better outcomes than implied by economic models based on individuals maximizing own-monetary earnings. At the same time, however, groups uniformly fail to achieve optimal outcomes, suggesting that incentives to free ride are important. Moreover, when the decision situation is repeated, the group outcome often deteriorates with repetition, suggesting that, in many settings, a group's ability to overcome free-rider incentives may be transitory as explained in Andreoni and Miller (1993), Croson (1998), Isaac, Walker, and Williams (1994). In this paper we report an experiment examining the impact of introducing opportunities for individuals to reward or sanction other group members after observing their decisions. This institutional change is motivated by the observation that such opportunities are commonplace in field settings. In many group or team situations, individuals observe the actions of others, and individuals often have rich opportunities for reacting to others' behavior in ways that may impose costs or benefits on both parties. There is abundant anecdotal evidence that individuals sanction those who engage in selfish activities at the expense of other group members. For example, people who violate social norms are often ostracized. Similarly, there is strong anecdotal evidence that people are prepared to make sacrifices to help others on a quid pro quo basis. (1) Recent experiments with simple proposer-responder games also demonstrate that responders are willing to depart from own-earnings maximization by rewarding more generous proposers or sanctioning less generous proposers as seen in Andreoni, Harbaugh, and Vesterlund (2003) and Offerman (2002). Given this evidence, it is quite plausible that individuals will sanction or reward other group members based upon their contributions to a public good in a laboratory setting. In turn, the possibility of receiving such sanctions or rewards may affect contributions. Such contributions could be viewed as a response to the threat of negative reciprocation, in the case of sanctions, or the expectation of positive reciprocation, in the case of rewards. Our experiment directly compares the effectiveness of such negative and positive reciprocation in maintaining contributions to public goods. (2) In our experiment, groups of four subjects make contribution decisions in a sequence of ten public goods games without opportunities to reward or sanction. These subjects then play an additional ten games in which a second stage is added at the end of each game. Depending on treatment, in the second stage, subjects are given an opportunity to reward, sanction, or both reward and sanction other group members on the basis of their contribution decisions. When neither rewards nor sanctions are available, our results mirror those of previous experiments: contributions and earnings steadily diminish with repetition. In the other treatments, the introductions of opportunities to reward and/or sanction initially increase contributions. However, in the reward treatment, contributions subsequently decrease to a level below that observed in the absence of opportunities to reward. Thus, the opportunity to reward by itself is insufficient to sustain contributions. In contrast, we find that sanctioning sustains public goods provision at a level above that observed in the absence of sanctioning opportunities, and so sanctioning appears to be a more effective mechanism for sustaining contributions. However, opportunities to sanction initially result in a loss of efficiency as the direct costs associated with sanctioning outweigh the effect of increased contributions. Only in later rounds, where it appears that the mere threat of being sanctioned sustains contributions, does the opportunity to sanction enhance group performance. Our treatment allowing both sanctions and rewards suggests a synergistic relationship between the two, insofar as this treatment generates the highest contributions and earnings. …

Across many forms of rent seeking contests, the impact of risk aversion on equilibrium play is indeterminate. We design an experiment to compare individuals’ decisions across three contests which are isomorphic under risk-neutrality, but are typically not isomorphic under other risk preferences. The pattern of individual play across our contests is not consistent with a Bayes-Nash equilibrium for any distribution of risk preferences. We show that replacing the Bayes-Nash equilibrium concept with the quantal response equilibrium, along with heterogeneous risk preferences can produce equilibrium patterns of play that are very similar to the patterns we observe.

This paper uses responder pre-commitment and the Jungian theory of mental activity and psychological type, as measured by the widely-used Myers-Briggs Type Indicator (MBTI), to gain insight into subject behavior in a laboratory ultimatum bargaining experiment. Three experiment design details are noteworthy: (1) one design requires responders to make a nonbinding pre-commitment rejection level prior to seeing the offer, (2) one design requires responders to make a binding pre-commitment rejection level, and (3) one design includes a third person (or “hostage”) who makes no decision, but whose payment depends on the proposal being accepted. In general, we find behavior in our experiment to be consistent with hypotheses based on theoretical underpinnings of the MBTI and its descriptions of psychological type.

The risk prefer ences of thr ee-person group s a nd individuals are compar ed using a non- sequential repeated-measures lottery exp eriment w ith $20 per-player win pe rcentages varying from 10% to 90%. Analysis based on independent samples of certainty equivalent ratios (certainty equivalent/expected value) elicited using a maximum willingness-to-pay mechanism for fifty-two individuals and sixteen groups reveals that: 1) certainty equi valent ratios ( CERs) va ry significantly a cross lottery win percentages, 2) CER dispersion tends to decline as the lottery win percentage increases and is significantly smaller for groups than individuals in seven of the nine lotteries, 3) for the highest-risk lotteries, the average CERs submitted by groups are significantly smaller (more risk averse) than the average CERs submitted by individuals, 4) for the lowest-risk lotteries, the average CERs submitted by groups are approximately risk-neutral (CER=1) and somewhat larger than the average CERs submitted by individuals.