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a b s t r a c tThe past decade has witnessed an explosion of interest in the scientific study of happiness. Economists, in particular, find that happiness increases in income but decreases in income aspirations, and this work prompts examination of how aspirations form and adapt over time. This paper presents results from the first experimental study of how multiple factors-past payments, social comparisons, and expectations-influence aspiration formation and reported satisfaction. I find that expectations and social comparisons significantly affect reported satisfaction, and that subjects choose to compare themselves with similar subjects when possible. These findings support an aspirations-based theory of happiness.

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In many instances of potential violent and non-violent conflict the future strategic positions of adversaries are very di erent when there is open conflict than when there is settlement. Then, as the future becomes more important, open conflict becomes more likely than settlement. We theoretically demonstrate this result and discuss its applicability in war, litigation, and other settings. We test for this e ect in a laboratory experiment and find that subjects are more likely to engage in risky conflict as the shadow of the future increases.JEL Classifications: C72, C91, D01, D74.

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A discrete public good is provided when total contributions equal or exceed the contribution threshold. Recent theoretical work shows that an increase in threshold uncertainty will increase (decrease) equilibrium contributions when the public good value is sufficiently high (low). In an experiment designed to test these predictions, I find only limited verification of the prediction. Using elicited beliefs data to represent subjects' beliefs, I find that behavior is not consistent with expected payoff maximization, however, contributions are increasing in subjects' subjective pivotalness. Thus, wider threshold uncertainty will sometimes-but not alwayshinder collective action.

We explore how peace or war can occur in the presence of commitment problems. These problems can be reduced by institutions of good governance or, alternatively, state capacity which (a) can be considered a collective good and (b) can be improved through investments. We show how the likelihood of a peace agreement depends on the level of state capacity and on investments in state capacity made by adversaries. In accordance with existing evidence but contrary to various theories of conflict, we find that income levels unambiguously increase the chance of peace. Among other issues, we discuss the critical role of external actors in encouraging or discouraging commitment and in developing good governance institutions.Civil wars and other internal conflicts typically take long to resolve. For instance, the median length of a civil war in the post-World War II period has been more than seven years and persistence has been high as well (Collier et al. 2003, 80). Why wars last for as long as they do is akin to asking why conflict occurs in the first place. Answers that have been proposed in the literature include incomplete or asymmetric information; indivisibilities or increasing returns on matters of contention;

Economic growth has not led to a decline in religion despite past predictions that it would. Using a formal model of religious competition, I show how economic growth produces counteracting effects on religious activity in an open religious market, and that it has little effect in a religious market that is already secularized due to regulations that prohibit religious competition or in a highly religious market with regulations that inhibit secular activities. Theories predicting the decline of religion due to rising opportunity costs of religious demand and supply ignore countervailing influences. Copyright (c) The London School of Economics and Political Science 2008.