Most real decisions, unlike those of economics texts, have a status quo alternative-that is, doing nothing or maintaining one's current or previous decision. A series of decision-making experiments shows that individuals disproportionately stick with the status quo. Data on the selections of health plans and retirement programs by faculty members reveal that the status quo bias is substantial in important real decisions. Economics, psychology, and decision theory provide possible explanations for this bias. Applications are discussed ranging from marketing techniques, to industrial organization, to the advance of science."To do nothing is within the power of all men." Samuel JohnsonHow do individuals make decisions? This question is of crucial interest to researchers in economics, political science, psychology, sociology, history, and law. Current economic thinking embraces the concept of rational choice as a prescriptive and descriptive paradigm. That is, economists believe that economic agents-individuals, managers, government regulators-should (and in large part do) choose among alternatives in accordance with well-defined preferences.In the canonical model of decision making under certainty, individuals select one of a known set of alternative choices with certain outcomes. They are endowed with preferences satisfying the basic choice axioms-that is, they have a transitive ranking of these alternatives. Rational choice simply means that they select their most preferred alternative in this ranking. If we know the decision maker's ranking, we can predict his or her choice infallibly. For instance, an individual's choice should not be affected by removing or adding an irrelevant (i.e., not top-ranked) alternative. Conversely, when we observe his or her actual choice, we know it was his or her top-ranked alternative.

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Online labor markets have great potential as platforms for conducting experiments, as they provide immediate access to a large and diverse subject pool and allow researchers to conduct randomized controlled trials. We argue that online experiments can be just as validboth internally and externally-as laboratory and field experiments, while requiring far less money and time to design and to conduct. In this paper, we first describe the benefits of conducting experiments in online labor markets; we then use one such market to replicate three classic experiments and confirm their results. We confirm that subjects (1) reverse decisions in response to how a decision-problem is framed, (2) have pro-social preferences (value payoffs to others positively), and (3) respond to priming by altering their choices. We also conduct a labor supply field experiment in which we confirm that workers have upward sloping labor supply curves. In addition to reporting these results, we discuss the unique threats to validity in an online setting and propose methods for coping with these threats. We also discuss the external validity of results from online domains and explain why online results can have external validity equal to or even better than that of traditional methods, depending on the research question. We conclude with our views on the potential role that online experiments can play within the social sciences, and then recommend software development priorities and best practices.JEL: J2, C93, C91, C92, C70

PREFACEThis Memorandum Fresents a new theoretical model of military alliances and other international organizations.The model, if correct, has important policy implications, but these implications are discussed only briefly here. Hopefully this presentation will stimulate further study of the model's application to specific policy problems.

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