A computer-controlled portfolio selection task with three risky assets and either with or without a riskless asset was devised to test experimentally assumptions underlying the separation theorem and the capital asset pricing model. Two differently paid groups of subjects completed individually up to 300 portfolio selection problems. Although most of the subjects diversified among the risky assets, the introduction of a riskless asset did not have the effect predicted by the separation theorem, nor were the subjects affected by systematic changes in the variance-covariance matrix governing the risky returns. However, performance improved as the reward was increased tenfold.

We study the departure time decisions of commuters traversing a traffic network with the goal of arriving at a common destination at a specified time. There are costs associated with arriving either too early or too late, and with delays experienced at bottlenecks. Our main hypothesis, based on the Nash equilibrium distribution of departure times, implies that, for certain parameter values, expanding the capacity of an upstream bottleneck can increase the total travel costs in the network. We report the results of a large-group laboratory experiment, which are strongly supportive of this counterintuitive hypothesis, and we discuss the implications.