We study the effect of financial resources on decision-making. Low-income U.S. households are randomly assigned to receive an online survey before or after payday. The survey collects measures of cognitive function and administers risk and intertemporal choice tasks. The study design generates variation in cash, checking and savings balances, and expenditures. Before-payday participants behave as if they are more present-biased when making intertemporal choices about monetary rewards but not when making intertemporal choices about non-monetary real-effort tasks. Nor do we find before-after differences in risk-taking, the quality of decision-making, the performance in cognitive function tasks, or in heuristic judgments.

To understand the thinking process in private information games, we use "Mousetracking" to record which payoffs subjects attend to. The games have three information states and vary in strategic complexity. Subjects consistently deviate from Nash equilibrium choices and often fail to look at payoffs which they need to in order to compute an equilibrium response. Choices and lookups are similar when stakes are higher. When cluster analysis is used to group subjects according to lookup patterns and choices, three clusters appear to correspond approximately to level-3, level-2, and level-1 thinking in level-k models, and a fourth cluster is consistent with inferential mistakes (as, for example, in QRE or Cursed Equilibrium theories). Deviations from Nash play are associated with failure to look at the necessary payoffs. The time durations of looking at key payoffs can predict choices, to some extent, at the individual level and at the trial-by-trial level. Downloaded fromBROCAS ET AL. STRATEGIC THINKING IN PRIVATE INFORMATION GAMES 945players do not make rational inferences in private information games. Understanding strategic thinking in private information games is important because they are such popular tools for modelling contracting, bargaining, consumer and financial markets, and political interactions. If there is widespread strategic naïvete, then distortions due to hidden information can be larger than predicted by equilibrium analysis, and ideal policy responses may be different (e.g. Crawford, 2003).In this article, we consider two-person betting games with three states and two-sided private information. Players privately observe a state-partition (either one or two of the three states) and choose whether to bet or not bet. Unless both players bet, they earn a known sure payoff. If both bet, they earn the payoff corresponding to the realized state. These games capture the essence of two-sided adverse selection. We also get information about decision processes by hiding the payoffs in opaque boxes. These are only revealed by a 'lookup', when the computer mouse is moved into the box and a mouse button is held down. As in earlier experiments, subjects get feedback about the state after each trial, so they can learn.Lab and field evidence suggest there are strategic thinking limits in many different games with private information. 1 This evidence can be explained by two types of theories. (1) Imperfect choice; or (2) Imperfect attention.By imperfect choice, we mean stochastic response to payoffs (rather than optimization) or a simplification of some structural feature of likely behaviour. Quantal response equilibrium (QRE) assumes players' beliefs are statistically accurate but players respond noisily to expected payoffs (McKelvey and Palfrey, 1995). Two other theories assume optimization, but also assume an imperfection in recognizing aspects of behaviour. In cursed equilibrium (CE), players correctly forecast the distribution of actions chosen by other players, but underestimate the link between the private...

a b s t r a c tSeveral recent studies in experimental economics have tried to measure beliefs of subjects engaged in strategic games with other subjects. Using data from one such study we conduct an experiment where our experienced subjects observe early rounds of strategy choices from that study and are given monetary incentives to report forecasts of choices in later rounds. We elicit beliefs using three different scoring rules: linear, logarithmic, and quadratic. We compare forecasts across the scoring rules and compare the forecasts of our trained observers to forecasts of the actual players in the original experiment. We find significant differences across scoring rules. The improper linear scoring rule produces forecasts closer to 0 and 1 than the proper rules, and these forecasts are poorly calibrated. The two proper scoring rules induce significantly different distributions of forecasts. We find that forecasts by observers under both proper scoring rules are significantly different from the forecasts of the actual players, in terms of accuracy, calibration, and the distribution of forecasts. We also find evidence for belief convergence among the observers.

Real-effort experiments are frequently used when examining a response to incentives. For a real-effort task to be well suited for such an exercise its measurable output must be sufficiently elastic over the incentives considered. The popular slider task in Gill and Prowse (Am Econ Rev 102(1):469-503, 2012) has been characterized as satisfying this requirement, and the task is increasingly used to investigate the response to incentives. However, a between-subject examination of the slider task's response to incentives has not been conducted. We provide such an examination with three different piece-rate incentives: half a cent, two cents, and eight cents per slider completed. We find only a small increase in performance: despite a 1500 % increase in the incentives, output only increases by 5 %. With such an inelastic response we caution that for typical experimental sample sizes and incentives the slider task is unlikely to demonstrate a meaningful and statistically significant performance response. Keywords Real-effort Á Slider task Á Incentives JEL Classification C90 Á D01 Á J30 This paper was written as a joint classroom project among faculty and students for a graduate course in experimental economics at the University of Pittsburgh.

In visual search tasks, if a set of items is presented for 1 s before another set of new items (containing the target) is added, search can be restricted to the new set. The process that eliminates old items from search is visual marking. This study investigates the kind of memory that distinguishes the old items from the new items during search. Using an accuracy paradigm in which perfect marking results in 100% accuracy and lack of marking results in near chance performance, the authors show that search can be restricted to new items not by visual short-term memory (VSTM) of old locations but by a limited capacity and slow-decaying VSTM of new locations and a high capacity and fast-decaying memory for asynchrony.

We introduce, test, and compare two auction-based methods for eliciting discount rates. In these ''patience auctions'', participants bid the smallest future sum they would prefer -or-the longest time they would wait for a reward, rather than receive a smaller, immediate payoff. The most patient bidder receives the delayed reward; all others receive the immediate payoff. These auctions allow us to compare discounting when participants' attention is focused on the temporal versus monetary dimension of delayed rewards. We find that the estimated parameters in the three most commonly used discount functions (exponential, hyperbolic, and quasi-hyperbolic) differ across these two bidding methods (time-bids vs. money-bids). Specifically, our participants tend to show more impatience under time-bids. Furthermore, we find that people are more likely to exhibit exponential (as opposed to hyperbolic) discounting and exhibit less present bias under time-bids, compared to money-bids. To our knowledge, this paper is the first to directly compare time versus money preference elicitations, within the same subjects, using an incentivecompatible mechanism.Electronic supplementary material The online version of this article (

We study popular attitudes in Germany, Spain, the Philippines, and the United States toward three controversial markets—prostitution, surrogacy, and global kidney exchange (GKE). Of those markets, only prostitution is banned in the United States and the Philippines, and only prostitution is allowed in Germany and Spain. Unlike prostitution, majorities support legalization of surrogacy and GKE in all four countries. So, there is not a simple relation between public support for markets, or bans, and their legal and regulatory status. Because both markets and bans on markets require social support to work well, this sheds light on the prospects for effective regulation of controversial markets.

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