Three Essays in Behavioral Economics

My dissertation consists of three essays examining economic decision making with experiments in a variety of competitive and cooperative settings. In the first essay, we examine potential explanations for the phenomenon of overbidding in rent seeking contests by eliciting the smallest share of the prize subjects will accept to avoid it. Our results show that the shares subjects demand are significantly larger than the expected monetary value of the contest, which suggests a stronger preference for costly competition than standard theory assumes. In the second essay, we examine the influence of competitive and earned entitlement on preferences for redistribution. Here we find that subjects are more likely to choose transfers that increase inequality for their reference group in competitive settings when doing so preserves their ordinal rank in the initial earnings distribution. The third essay considers the effect of endowment heterogeneity in a hold-up game conducted in the US and China. Our results show that subjects are more likely choose offers that reimburse their trading partners cost of investment when doing so results in equal payoffs for the pair. We also find significant differences in bargaining behavior with subjects that suggest stronger concerns for reciprocity among subjects in China relative to those in the US, though these differences do not result in greater efficiency.