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Changes in consumer surplus have been approached in two different ways [1,2]: one is the compensating variation (CV), which is the amount of income that an individual is ready to pay to keep his utility as it was before a change; the other is the equivalent variation (EV), which is the amount of money the individual is ready to accept for the change. For welfare gains, CV and EV are known as willingness to pay (to attain the gain, WTP) and willingness to accept (to accept the absence of the gain, WTA) respectively; but for a welfare loss, CV and EV refer to WTA (to compensate the loss) and WTP (to prevent the loss).

This paper experimentally investigates “small decision-making” (SDM) problems on the ground that many common activities include those problems. SDM problems are defined by three main properties [2]. First, they include repeated tasks; the decision makers (DMs) face the same choice problem many times in similar situations. Second, each single choice is not very essential; the alternatives tend to have similar expected value (EV) that may be fairly small. Finally, the DMs do not have objective prior information as to payoff distribution. In choosing among the possible alternatives, the DMs will have to rely on the immediate and unbiased feedback obtained in similar situations in the past.

This study focuses on the effect of inter-group competition in the prisoner’s dilemma game. Recent experimental studies have investigated inter-group competitions in which matched teams compete against each other to produce larger contributions (cooperation within one’s group). Bornstein et al. and Goren (Bornstein [3], Bornstein and Ben-Yossef [2], Bornstein, Erev and Goren [3], Goren [6], Goren and Bornstein [6]) investigate the inter-group competition of a special prisoner’s dilemma. Features of their game fit the examples of lobbying, wars, and similar forms of competition: 1) no contribution is a dominant strategy for all players in the game, 2) no contribution is the collectively (i.e., Pareto) efficient outcome of the game. The studies also show that competition has a positive effect on the cooperative decision, but that the effect does not last when the game is repeated.

A number of experimental studies on public goods have shown that many people prefer to cooperate with others in the beginning, but this tendency diminishes as they interact with others in the course of the experiments (e.g. Andreoni [1]). Most experimental works on public goods games have so far tried to eliminate social interaction among subjects as much as possible. The purpose of such artificial procedures is to observe people’s selfish motivation uncontaminated by social norms. However, this sort of approach might be misleading if one wants to understand how people successfully produce or maintain a public good in reality.

In practice, a manager of a firm needs to decide on behalf of his/her firm whether to trust a competitor and accept its proposal to collaborate on the development of a new product. In situations like this, such an individual is viewed as the agent of the group and the individual s decision could have important implications for everyone in the firm. In many other situations, decisions to trust or reciprocate in inter-group exchange can also be made by groups themselves, such as committees, or management boards, who spend time examining an issue together in order to reach a group-level consensus decision via a collective process. These scenarios raise many interesting and important theoretical questions: Do individuals trust / reciprocate more (or less) when they are given the responsibility to act on behalf of their groups in contrast to when they represent solely themselves? Do groups trust / reciprocate more (or less) in contrast to their individual members? Is there relationship between the trust and reciprocity exhibited by individuals, group agents, and consensus committees?

Economists are proud of being able to point to situations in which the fundamental forces identified by economic analysis work inexorably. One such case is the effect that supply reductions have on prices in the international oil market. One can safely predict that prices will increase and that any attempts by politicians and journalists to prevent the increase by presenting the situation in a particular light will not work. It is known, however, that things are not always that simple. Numerous studies have shown that behaviour often depends on the way in which logically equivalent choice situations and strategically equivalent situations are described or presented to people. Such so-called framing effects have been identified in a number of different contexts. Kuhberger [8] surveys some of the relevant literature.

We study the interaction between internet service providers who lease bandwidth from owners of individual network links to form desired routes. Bandwidth markets were pioneered by Enron in the late 1990s by providing pooling points for switching and interconnecting. Williams Communications and RateExchange followed suit with their own markets [1]. Unfortunately, market dynamics, technical difficulties, and the collapse of Enron have brought these markets to an end. Two main factors hampered the implementation of these markets [2]. The first one has to do with the excessive time needed to disseminate new routing information, which is an artifact of the bilateral nature of contracting for routes. The second has to do with balance loading once carriers become multi-connected. These dynamic markets were setup to deal with the inefficient bilateral negotiations used in the industry. The inefficiency of bilateral contracting is due to the exposure effect from not being able to form attractive routes from individually leased links. This is a more general problem identified with markets of complementary goods/services. The combinatorial auction market mechanism has been proposed to alleviate the exposure effect [9]. Combinatorial auctions have been recently theoretically explored as a mechanism for bandwidth allocation [3, 7, 5]. Jain and Varaiya [5] propose a double-sided combinatorial auction mechanism for bandwidth trading whose implementation properties we explore using economic experiments in this paper.

In economic experiments, spontaneous emergence of cooperation in social dilemmas has been shown to arise if individuals can impose pecuniary sanctions on others. Reciprocal individuals are willing to punish free riders even if they themselves incur costs when doing so (Ostrom et al. [10], Fehr and Gächter [3]). Although such direct pecuniary punishments occur in the real world (Cordell and McKean [2]), ordinary citizens usually do not have the right to destroy another person’s property, nor do they have the authority to impose fines. What citizens can do, however, is to cease interaction with individuals who free ride in the social dilemma situation, and refuse to cooperate with them in social or economic circumstances in which they meet. Indeed, our everyday interactions are embedded in a system of interpersonal relations (Granovetter [6]) that require cooperation by two or more individuals (cf. Bowles and Gintis [1]). For example, Japanese villagers, Irish fishermen, and inhabitants of the Solomon Islands have in common that they cut contact with fellow villagers who free ride with respect to fishing, thus denying them the benefits of cooperation in other economic activities (McKean [9], Taylor [13], and Hviding and Baines [7]).

This paper describes how durable goods can be recycled.

This study examines a co-creative decision-making method of artifactual systems for creating effective solutions under incomplete conditions by introducing bounded rationality as a characteristic of agents.