| This Thesis contains three essays on the economic behavior of individuals. The first essay, co-authored with Andreas Blume and Douglas DeJong is an experimental investigation into the contribution of cognition in a strategic setting where the goal is to coordinate by choosing different courses of action. Specifically, we study whether cognitive limits affect the ability of agents to achieve dispersion outcomes and further, how these limits affect the means by which dispersion outcomes are attained.We find that in the self-play treatment when agents are allowed to play against themselves, dispersion outcomes are relatively easy to obtain however, when paired with others, cognitive differences increase the difficulty in achieving a dispersion outcome. When we relax the cognitive constraints, the ability of participants to achieve dispersion outcomes increases to approximately the same level as those in the self-play treatment further, the means by which dispersion outcomes are achieved does not differ from those in the self-play treatment.In the second essay I investigate how noise impacts incentives provided by contracts that are structured with option-style payoffs. Existing theory suggest that one cannot commit to not renegotiate based on the receipt of a non-contractible signal however, others suggest that in the presence of a noise in the non-contractible signal may not result in partners wanting to renegotiate since the initial contract may still provide incentives for subsequent periods.Using an experimental economics approach I find that players who receive a perfect non-contractible signal do not put forth high effort in a subsequent period however, the presence of noise in the signal may result in players continuing to put forth high effort in a subsequent period. A behavioral explanation is provided for these observations.In the final essay for which this Thesis is named, I employ a field study methodology to investigate the incremental role that social capital plays in both individual lending decisions and outcomes. I find that lenders are more likely to choose borrowers who have social capital however, social capital does not impact the interest rate that borrowers pay or the rate of default. |
