In infinitely or indefinitely repeated games with noisy signals about others’ actions, sustaining cooperation is difficult. Theoretical work shows that cooperation can be maintained if the signals are correlated and the degree of correlation depends on the actions. In this study, we implement such an information structure in a laboratory experiment and investigate whether subjects are able to sustain cooperation by conditioning their behavior on it. A substantial number of subjects adopt strategies accounting for the correlation, but this does not increase cooperation compared to a control treatment without correlation, as behavior with independent signals is more lenient when players can communicate, while without communication cooperation remains low in both settings.

How do incentive levels affect strategic behaviour? We address this with an experiment that separately identifies own- and opponent-incentive effects in two dominance-solvable games that differ in strategic complexity. Higher own incentives favour more strategically sophisticated actions and increase best responding to stated beliefs. Beliefs shift in a parallel direction and participants expect more sophisticated opponent actions. Furthermore, although higher own incentives increase belief accuracy, opponents with higher incentives are harder to predict. Higher incentives also increase response times, and longer response times are associated with better performance and more sophisticated actions and beliefs. Taken together, the evidence suggests that incentives affect strategic behaviour through two main channels: by reducing payoff-dependent mistakes and by increasing the effort devoted to reasoning, with the returns to that effort shaped by strategic complexity of the environment.

Price-level targeting (PLT) is theoretically optimal under the full information rational expectations (FIRE) benchmark but has not been implemented in practice. We use a laboratory experiment to collect data on expectations, inflation and output dynamics under a traditional inflation targeting (IT) framework and a PLT regime with both deflationary and cost-push shocks. A heterogeneous expectation New Keynesian (HENK) model with forward-looking communication can replicate the dynamics observed in the lab. We do not observe the benefits of PLT over IT because both human subjects and HENK agents are unable to learn the history-dependent inflation path, which results in excess macroeconomic volatility. However, once augmented with an inflation guidance consistent with closing the price gap, the advantage of PLT materializes, both in the lab and in the model, and the inflation gap is minimized no matter the type of shocks. The model offers a behavioral narrative for the cross-regime differences observed in the experiment. Combining laboratory data with the HENK framework is a promising addition to the central banks’ toolkit since it offers a first test of their policies.

Motivated by the problem of organizational design, we study coordination in the network minimum game: a version of the minimum-effort game where players are connected by a directed network. We show experimentally that acyclic networks such as hierarchies are most conducive to successful coordination. Introducing a single link to complete a network cycle may drastically inhibit coordination. Furthermore, acyclic networks enable resilient coordination: initial coordination failure is often overcome (exacerbated) after repeated play in acyclic (cyclic) networks.

We present and conduct a novel experiment on a multi-period beauty contest game. Leveraging the multi-period feature, we investigate how participants revise their forecasts in periods when new information—such as shocks or announcements—arrives and how they form their expectations in the absence of new information. We make two key contributions. First, we develop a new method based on forecast revisions to evaluate whether participants behave in a forward-looking manner. The experimental results show that participants do react to anticipated shocks: namely, the announcements of future shocks. Second, we identify a new strategic environment effect during periods without new information; only when the game exhibits strategic complementarity do participants use extrapolation and expect continuously rising prices. This finding suggests that expectation formation is endogenous to the economic environment; and policy design should thus take this endogeneity into account.

In a $k$-replica Edgeworth box economy, we compare outcomes of laboratory markets in which human traders have different visualizations available on their screens. Novel visualizations include a heat map that shows at a glance the value of all feasible portfolios (i.e., final allocations); a geometric display of the order book; and order entry via point-and-click on the heat map. Efficiency metrics focus on allocations, prices and profitability. Compared to the traditional text-oriented trader screen for the continuous double auction, we find that the novel features generally increase all three efficiency metrics.

Large Language Models (LLMs) have the potential to profoundly transform and enrich experimental economic research. We propose a new software framework, “alter_ego”, which makes it easy to design experiments between LLMs and to integrate LLMs into oTree-based experiments with human subjects. Our toolkit is freely available at github.com/mrpg/ego. To illustrate, we run differently framed prisoner’s dilemmas with interacting machines as well as with human-machine interaction. Framing effects in machine-only treatments are strong and similar to those expected from previous human-only experiments, yet less pronounced and qualitatively different if machines interact with human participants.

In a game with costly information acquisition, the ability of one player to acquire information directly affects her opponent’s incentives for gathering information. Rational inattention theory then posits the opponent’s information-acquisition strategy is a direct function of these incentives. This paper argues that people are cognitively limited in predicting their opponent’s level of information, and hence lack the strategic sophistication that the theory requires. In an experiment involving a real-effort attention task and a simple two-player trading game, I study the ability of subjects to (1) anticipate the information acquisition of opponents in this strategic game, and (2) best respond to this information acquisition when acquiring their own costly information. I study this by exogenously manipulating the difficulty of the attention task for both the player and their opponent. Predictions of behavior are generated by a novel theoretical model in which Level-K agents can acquire information à la rational inattention. I find an out-sized lack of strategic sophistication, driven largely by the cognitive difficulties of predicting opponent information. These results suggest a necessary integration of the theories of rational inattention and costly sophistication in strategic settings.

Across three studies involving more than 5,000 participants, we provide a comprehensive analysis of the effects of incentivizing responses in the Krupka-Weber norm elicitation task. We consider both the potential benefits of incentivization (higher response quality and mitigation of response biases) and its possible drawbacks (distortion of responses in the direction of norm-unrelated focal points and materialistic values). We find no evidence of undesirable effects of incentives. While we report only modest improvements in response quality, we also show that incentives effectively mitigate response biases that arise when participants’ self-serving motivations conflict with accurate responding.

Legitimizing property rights over the resources that participants use in dictator and ultimatum games has been shown to significantly alter behavior. However, a similar impact has not been observed in public good experiments. We employ an interior public good design with thirty periods of peer punishment, which allows groups to choose between plausible contribution norms without conflicting with efficiency. Across our Unearned and Earned treatments, endowments are randomly allocated or earned through a real effort task. In Unearned, both High and Low types adhere to a norm of contributing an equal proportion of one’s endowment. In contrast, in Earned, only Low types adhere to the proportional contribution norm, while High types contribute less than an equal proportion. Notably, deviations from the proportional contribution by High types are punished significantly less in Earned, suggesting a greater tolerance to such deviations when property rights are earned.

We design an experiment to study the effect of asymmetry in the context of group lending with joint liability. The performance of group loan contracts crucially hinges on borrowers engaging in peer monitoring and the common practice is to offer participants of a group loan symmetric contract terms. Our experiment shows that asymmetric contracts, in which monitoring is a dominant strategy for one borrower, increase the monitoring rate, and thus the repayment rate, without leaving borrowers substantially worse off. In addition, asymmetric contracting also raises expected profits of the lending institution. Overall, our experiment reveals that asymmetric group loan contracts are worth considering as part of a policy to maintain both financial stability and higher lender profits.

Reverse auctions, also known as procurement auctions, are used in various fields by public or corporate buyers to purchase goods and services from multiple sellers at the best price. Unlike in selling auctions, in reverse auctions a budget constraint rather than a target quantity is often announced by the auctioneer. However, in auction theory no equilibrium bidding strategy has yet been found in the case when a budget constraint is announced. Here we compare the two auction formats in an online experiment with 329 participants. We use the strategy method to obtain participants’ bidding strategies from which we run exhaustive simulations of auction outcomes to define equivalent target and budget constraints. This original methodology allows to overcome the issue of randomness of the auction outcome related to bidders’ values and to compare the two formats in a rigorous way. When each bidder has a single unit to sell, from the buyer’s perspective, we find that, on average, the budget-constrained auction format outperforms the target-constrained auction format.

We design an experiment to study the implications of introducing position uncertainty in a social dilemma where eight players decide to contribute to a public good sequentially. Contributions are significantly higher when players make sequential decisions to contribute or not, are uncertain about their position in the sequence, and observe a sample of their predecessors’ choices compared to the simultaneous-move game. Yet, contribution rates remain invariant to the number of agents sampled. Consequently, contributions don’t unravel even with position certainty, and there is no incremental benefit of introducing position uncertainty, contrary to the theoretical prediction. Furthermore, controlling for the sum of contributions observed, individuals contribute less the later in the sequence they are.

While market design advocates for the importance of good design to achieve desirable properties, experiments on coalition formation theory have shown fragility in proposed mechanisms to do so. We experimentally investigate the effectiveness of “structured” mechanisms that implement the Shapley value as an ex ante equilibrium outcome with those of corresponding “semi-structured” bargaining procedures. We find a significantly higher frequency of grand coalition formation and higher efficiency in the semi-structured than in the structured procedures regardless of whether they are demand-based or offer-based. While significant differences in the resulting allocations are observed between the two structured procedures, little difference is observed between the two semi-structured procedures. Finally, the possibility of free-form chat induces an equal division more frequently than occurs without it. Our results suggest that when it comes to bargaining and coalition formation, not having various restrictions imposed by different mechanisms may lead to more desirable outcomes.

This introduction presents the two-part Special Issue of honoring the life and work of Amnon Rapoport (1936–2022), a pioneering scholar whose six decades of research shaped experimental studies of interactive decision making. Rapoport’s hallmark was the interplay between formal game-theoretic modeling and rigorous laboratory testing, advancing understanding in coalition formation, social dilemmas, market entry, traffic networks, decision timing, resource dilemmas, behavioral operations, and methodological innovation. The 27 articles collected across the volumes revisit and extend these themes, offering fresh insights into how rationality assumptions succeed and fail in predicting human behavior. Together, the contributions reflect both continuity with Rapoport’s intellectual credo—“model first, test second, refine third”—and renewal through new methods and applications. Beyond scholarship, the issue pays tribute to Rapoport’s extraordinary role as a mentor and his enduring influence on the evolution of behavioral and experimental economics

An abundance of statistics has shown gender disparity in hiring decisions. This paper shows that a previously unexplored factor, the decision-making process utilized by a hiring committee, plays a crucial role. Using a laboratory experiment, we find that gender disparity is eliminated when hiring decisions are made unanimously by a group. By comparison, we find that gender disparity is largest when decisions are made by a leader who volunteers. We do not find evidence of heterogeneity by gender as the results persist regardless of the number of women in the group or the leader’s gender. The experimental design allows us to rule out several possible mechanisms including differences in leadership characteristics and communication styles.

We introduce a novel scenario that embeds the Downs-Thomson paradox in the context of departure-time choice during the morning commute. Commuters, departing from a common origin and traveling to a common destination, must choose between a congestible mode (car, road) and a non-congestible mode (train, railway). Those choosing the road must also select their departure times independently and anonymously. This decision involves a trade-off between the cost of queuing at the bottleneck and the cost of schedule delay (i.e., deviation from the desired arrival time). We numerically derive a symmetric mixed-strategy equilibrium that characterizes both mode and departure-time choices. We then examine how improvements to either the road or the railway affect mean travel costs. Our laboratory experiment shows that, consistent with the paradox, improving the railway lowers mean travel cost; however, contrary to the paradox, improving the road also reduces mean travel cost. These findings suggest that the Downs-Thomson paradox may fail to emerge fully when commuters must coordinate multiple strategic dimensions under intertemporal congestion externalities.

We conduct an economic experiment to examine the causal impact of social ties on the preference for competition. Participants decide whether to engage in a competition or not. Across four treatments, potential competitors vary based on their relationship with the decision-maker: whether they had a conversation with the decision-maker prior to the competition, whether they are expected to chat after the competition, or both, or neither. We find that the process of chatting increases social closeness. This increase in social closeness tends to reduce the preference for competition when participants are expected to meet again after the competition. However, it does not change the likelihood of opting for competition if there is no prospect of further interaction. Through this experiment, we thus uncover previously unknown implications of managerial practices, such as team-building exercises and remote work options, that influence the formation of social ties.

We compare different forms of communication in the context of cheap talk sender-receiver games. While previous experiments find evidence supporting the comparative statics prediction that more preference divergence leads to less information transmission, there is also a consistent pattern of overcommunication and exaggeration, not predicted by theory, in which subjects convey more information than predicted in equilibrium. The latter of these findings may be due to the restricted nature of the message space in most experimental cheap talk games, encouraging subjects to engage in exaggeration artificially, rather than allowing it to emerge naturally. We tested this hypothesis with an incentivized lab experiment, and found evidence both phenomena persist with natural language (text-based) communication. Moreover, we probe the consequences of this expanded message space for outcomes, showing that senders benefit more than receivers, but that the most notable effect is that text messages improve efficiency.

This paper is a single-project meta-analysis of four experiments that model charitable giving as individual contributions to a multiplicity of competing threshold public goods. We pool 17,136 observations at the individual level to summarize the project and investigate the role of learning, gender, and risk attitude, since the included studies are inconclusive in this regard. We find that equally effective coordination devices are the existence of a single contribution option that stands out on its merits, learning, and delegation as long as the intermediary is formally obliged to pass along a high enough percentage of the transferred resources. Women delegate less than men, and consequently prefer direct contributions. Risk tolerance increases overall donations but decreases individual earnings. We discuss possible implications of our findings.