The problems of how self-interested players can cooperate despite incentives to defect, and how players can coordinate despite the presence of multiple equilibria, are among the oldest and most fundamental in game theory. In this report, we demonstrate that a plausible and even natural specification of the reference outcome in a game simultaneously predicts systematic cooperation and defection in the Prisoner’s Dilemma, as well as equilibrium selection and out-of-equilibrium play in coordination games. The predictions hold even if players are purely self-interested, there are no salient labels, the game is played only once, and there is no communication of any kind. Furthermore, the predictions are unique, as opposed to the multiplicity of equilibria in the infinitely repeated Prisoner’s Dilemma and in coordination games. We apply experimental results to test the predictions of the model.

We apply the principles of the “Wisdom of Crowds (WoC)” to improve the calibration of interval estimates. Previous research has documented the significant impact of the WoC on the accuracy of point estimates but only a few studies have examined its effectiveness in aggregating interval estimates. We demonstrate that collective probability intervals obtained by several heuristics can reduce the typical overconfidence of the individual estimates. We re-analyzed data from Glaser, Langer and Weber (2013) and from Soll and Klayman (2004) and applied four heuristics Averaging, Median, Enveloping, Probability averaging-suggested by Gaba, Tsetlin and Winkler (2014) and new heuristics, Averaging with trimming and Quartiles. We used the hit rate and the Mean Squared Error (MSE) to evaluate the quality of the methods. All methods reduced miscalibration to some degree, and Quartiles was the most beneficial securing accuracy and informativeness.

Six experiments investigated how the distance between one’s initial opinion and advice relates to advice utilization. Going beyond previous research, we relate advice distance to both relative adjustments and absolute adjustments towards the advice, and we also investigate a second mode of advice utilization, namely confidence shifts due to social validation.Whereas previous research suggests that advice is weighted less the more it differs from one’s initial opinion, we consistently find evidence of a curvilinear pattern. Advice is weighted less when advice distance is low and when it is high. This is in particular because individuals are much more likely to retain their initial opinions in the light of near advice. Also, absolute opinion adjustments towards the advice increases in a monotone fashion as advice distance increases. This finding is in contrast to the predictions of the theoretical framework previous studies on advice distance are based on, social judgment theory. Instead, they data are more in line with a simple stimulus-response model suggesting that absolute adjustments towards the advice increase with advice distance but—potentially—with diminished sensitivity. Finally, our data show that advice can be utilized even when it receives zero weight during belief revision. The closer advice was to the initial opinions, the more it served as a means for social validation, increasing decision-makers’ confidence in the accuracy of their final opinions. Thus, our findings suggest that advice utilization is a more complex function of advice distance than previously assumed.

Online marketplaces allow consumers to leave reviews about the products they purchase, which are visible to potential customers and competitors. While the impact of reviews on valuations of worth and purchasing decisions has been intensively studied, little is known about how the reviews themselves are attended to, and the relation between attention and valuations. In three studies we use eye-tracking methodologies to investigate attention in subjective monetary valuations of consumer goods. We find that, when evaluating consumer goods, individuals’ attention to ratings are related to their frequencies, attention to positive or negative information is related to subjective valuations, and that perspective (owner vs.non-owner) influences the type of information attended to. These findings extend previous research regarding the valuations of risky prospects as implemented in abstract monetary gambles and suggest that similar cognitive processes might underlie both types of tasks.

We conducted an experimental study on social preferences using dictator games similar to Fehr et al. (2008). Our results show that social preferences differ between subjects who receive low-stakes monetary rewards for their decisions and subjects who consider hypothetical stakes. Our findings indicate that, apart from incentives, gender plays an important role for the categorization of different social preferences.

Krupka and Weber (2013) introduce an incentive-compatible coordination game as an alternative method for elicitation of normative judgments. I show, however, that people provide virtually the same responses in incentivized and non-incentivized versions of the Krupka-Weber game. Besides ratings of social appropriateness, I also elicit ratings of fairness of all possible offers in an ultimatum game. Ratings of social appropriateness and fairness are similar for low offers (below or equal to the equal split), but not for high offers which are judged to be more appropriate than fair.

This paper investigates choices about “distributional fairness” (sometimes called “distributive justice”), i.e., selection of the proper way for resources to be distributed in group. The study finds evidence that several of the same biases of risky decision making also apply to choices about distributional fairness, in particular focusing on the key biases that lead to prospect theory. This finding is achieved by introducing a novel thought experiment regarding the fairness of resource distributions, then manipulating the percentage of individuals who gain or lose in these distributions, and changing the sizes of gains and losses. Shared biases may mean similar heuristics are being employed. The mechanism behind this result leaves room for future exploration, as do the implications of the finding for related applications in inequality research.