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Using data aggregated from seven papers that study repeated play in standard ultimatum games with either stranger or absolute stranger matching, we show that the behavior of responders changes with experience. High offers are more likely to be accepted with experience and low offers are more likely to be rejected. At the individual level, there is a negative relationship between the likelihood that a given offer is accepted and the size of the preceding offer. We compare the results with predictions generated by static models of distributional preferences, implicitly dynamic models of preferences with reciprocity, and explicitly dynamic models of adaptive learning. The data is most consistent with models of preferences with reciprocity.

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Strive to be First or Avoid Being Last: An Experiment on Relative Performance Incentives We utilize a laboratory experiment to compare effort provision under optimal tournament contracts with different distributions of prizes which motivate agents to compete to be first, avoid being last, or both. We find that the combined tournament contract incorporating both incentives at the top and at the bottom induces the highest effort, especially in larger groups. Avoiding being last produces the lowest variance of effort and is more effective at motivating employees compared to competing for the top.

Creative teams drive the idea-economy, yet the determinants of a team's ability to create new ideas are not universally agreed upon. Group-level diversity has gained the most traction as an explanation, where a team's performance is usually attributed to diversity over observed characteristics such as race, gender, or functional expertise. Most agree that these characteristics are not especially important, but rather serve as an indicator of diversity in experiences, which is the actual mechanism that improves team ability. We formalize and test if experientially diverse groups produce more ideas. Because group assignment to projects in the field is rarely exogenous, and experiential diversity is not measured in observational data, we use a laboratory experiment to test our proposal. We find that experientially diverse teams create more ideas and also find no additional effect for gender, racial, socioeconomic, or personality diversity. Our general finding for why diversity may be important indicates that if a correlation exists between characteristic diversity and experiential diversity, the characteristically diverse team will have a higher ability. This generalization can be used to unify divergent results from prior studies and can help explain how dissimilar corporate diversity policies could be equally successful.JEL Codes: C92, J24, M50, O30, O31, O34 Wilson for very helpful suggestions. Finally, this research would not be possible without the help of Michelle Raines in coordinating laboratory use.Given the role innovation plays in economic growth, scholars have long sought to understand how new and better ideas are created. One strand of literature posits that existing ideas are combined to form the new ideas that are the driving force behind modern economic growth (e.g., Weitzman 1998).If new creative ideas are the product of one's knowledge and experiences, then greater diversity in knowledge and experiences leads to greater creativity and greater innovation. In problem-solving contexts, it has been shown that teams can be more productive than individuals (e.g., Cooper and Kagel;2006), and are increasingly used in creativity-centered applications (Jaravel, Petkova, and Bell, 2018;Singh and Fleming, 2010;Wuchty, Jones and Uzzi, 2007;Uzzi et al., 2013). Companies wishing to take advantage of this insight have touted their diversity policies; however, the issue is not settled even among innovative companies.Consider the dissimilar approaches taken by Bell Labs, originally AT&T's research lab, and Google. Bell Labs established a culture where, "eccentric theorists mingled with hands-on engineers, gnarly mechanics, and businesslike problem-solvers, encouraging the cross-fertilization of theory with engineering" (Isaacson 48). Google's Project Aristotle was meant to understand team effectiveness, where their findings were summed up by one of their analysts as: "We were pretty confident that we'd find the perfect mix of individual traits and skills necessary for a stellar team -take one Rhodes Scholar, two...

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Tournaments are widely used in organizations, explicitly or implicitly, to reward the best-performing employees, for example, by promotion or bonuses, and/or to penalize the worst-performing employees, for example, by demotion, withholding bonuses, or unfavorable job assignments. These incentive schemes can be interpreted as various prize allocations based on the employees' relative performance. While the optimal prize allocation in tournaments of symmetric agents is relatively well understood, little is known about the impact of the allocation of prizes on the effectiveness of tournament incentive schemes for heterogeneous agents. We show that while multiple prize allocation rules are equivalent when agents are symmetric in their ability, the equivalence is broken in the presence of heterogeneity. Under a wide range of conditions, loser-prize tournaments, that is, tournaments that award a low prize to relatively few bottom performers, are optimal for the firm. The reason is that low-ability agents are discouraged less in such tournaments, as compared to winner-prize tournaments awarding a high prize to few top performers, and hence can be compensated less to meet their participation constraints. (JEL M52, J33, J24)