This paper studies the role of consequences in a person’s decision to lie. Based on findings from an experiment with a deception game, as well as from questionnaires, I propose a simple formulation of preferences to describe deception behavior. The decision maker uses the “truth telling ” outcome as a reference level when evaluating the benefits of lying. The monetary consequences of the lie are compared to this reference level. In the formulation used in this paper the decision maker’s utility depends on her own intentions. She is selfish in the sense of maximizing her own payoffs, but sensitive to the cost her lie imposes on the other side. Sensitivity diminishes with the size of payoffs. Moreover, since perception of the counterpart’s cost is subjective. When there are differences in wealth as in employee-employer relations or a consumer-insurer interactions, the decision maker is more likely to lie the wealthier the counterpart.

We use a controlled experiment to explore whether there are gender differences in selecting into competitive environments across two distinct societies: the Maasai in Tanzania and the Khasi in India. One unique aspect of these societies is that the Maasai represent a textbook example of a patriarchal society, whereas the Khasi are matrilineal. Similar to the extant evidence drawn from experiments executed in Western cultures, Maasai men opt to compete at roughly twice the rate as Maasai women. Interestingly, this result is reversed among the Khasi, where women choose the competitive environment more often than Khasi men, and even choose to compete weakly more often than Maasai men. These results provide insights into the underpinnings of the factors hypothesized to be determinants of the observed gender differences in selecting into competitive environments.

Mistakes and overconfidence in detecting lies could help lies spread. Participants in our experiments observe videos in which senders either tell the truth or lie, and are incentivized to distinguish between them. We find that participants fail to detect lies, but are overconfident about their ability to do so. We use these findings to study the determinants of sharing and its effect on lie detection, finding that even when incentivized to share truthful videos, participants are more likely to share lies. Moreover, the receivers are more likely to believe shared videos. Combined, the tendency to believe lies increases with sharing.

This paper reviews the literature on gender differences in economic experiments. In the three main sections, we identify robust differences in risk preferences, social (other-regarding) preferences, and competitive preferences. We also speculate on the source of these differences, as well as on their implications. Our hope is that this article will serve as a resource for those seeking to understand gender differences and to use as a starting point to illuminate the debate on gender-specific outcomes in the labor and goods markets.

Economists usually assume that monetary incentives improve performance, and psychologists claim that the opposite may happen. We present and discuss a set of experiments designed to test these contrasting claims. We found that the effect of monetary compensation on performance was not monotonic. In the treatments in which money was offered, a larger amount yielded a higher performance. However, offering money did not always produce an improvement: subjects who were offered monetary incentives performed more poorly than those who were offered no compensation. Several possible interpretations of the results are discussed.

Can incentives be effective in encouraging the development of good habits? We investigate the post-intervention effects of paying people to attend a gym a number of times during one month. In two studies we find marked attendance increases after the intervention relative to attendance changes for the respective control groups. This is entirely driven by people who did not previously attend the gym on a regular basis. In our second study, we find improvements on health indicators such as weight, waist size, and pulse rate, suggesting the intervention led to a net increase in total physical activity rather than to a substitution away from nonincentivized ones. We argue that there is scope for financial intervention in habit formation, particularly in the area of health.

Recent discoveries in behavioral economics have led scholars to question the underpinnings of neoclassical economics. We use insights gained from one of the most influential lines of behavioral research—gift exchange—in an attempt to maximize worker effort in two quite distinct tasks: data entry for a university library and door-to-door fundraising for a research center. In support of the received literature, our field evidence suggests that worker effort in the first few hours on the job is considerably higher in the “gift” treatment than in the “nongift” treatment. After the initial few hours, however, no difference in outcomes is observed, and overall the gift treatment yielded inferior aggregate outcomes for the employer: with the same budget we would have logged more data for our library and raised more money for our research center by using the market-clearing wage rather than by trying to induce greater effort with a gift of higher wages.

Gender gaps may be observed in a variety of economic and social environments. One of the possible determining factors is that men are more competitive than women and so, when the competitiveness of the environment increases, the performance of men increases relative to that of women. We test this hypothesis in a field study conducted with 9-year old children, running on a track. They first run alone and then in pairs over a short distance with different gender composition of the pairs. The results support the hypothesis that performance in competition varies according to gender. When children ran alone, there was no difference in performance. In competition boys, but not girls, improved their performance. This finding relates to the discussion regarding single sex schools: the outcomes of examinations in a mixed sex school can show a gender gap in favor of boys, even when this gap does not reflect actual abilities. Girls who are as talented as boys will end up performing worse just because they are not as competitive, and will not achieve as high scores in examinations as boys.

Expected utility theory, prospect theory, and most other models of risky choice are based on the fundamental premise that individuals choose among risky prospects by balancing the value of the possible consequences. These models, therefore, require that the value of a risky prospect lie between the value of that prospect's highest and lowest outcome. Although this requirement seems essential for any theory of risky decision-making, we document a violation of this condition in which individuals value a risky prospect less than its worst possible realization. This demonstration, which we term the uncertainty effect, draws from more than 1000 experimental participants, and includes hypothetical and real pricing and choice tasks, as well as field experiments in real markets with financial incentives. Our results suggest that there are choice situations in which decision-makers discount lotteries for uncertainty in a manner that cannot be accommodated by standard models of risky choice. From the time of Bernoulli on, it has been common to argue that (a) individuals tend to display aversion to the taking of risks, and (b) that risk aversion in turn is an explanation for many observed phenomena in the economic world [Arrow 1971, p. 90].

We examine the impact of relative wages on labor supply in a laboratory experiment. We test the hypothesis that, ceteris paribus, making a given wage high (low) relative to other wage levels will lead to an increase (decrease) in labor supply. We find that labor supply does respond significantly to relative pay, and in the expected direction. However, when a strong enough reason for the relative low pay is given, this difference disappears.