Essays in Experimental and Behavioral Economics

In this thesis I investigate people's behavior in laboratory experiments. The aim of my investigation is to improve our understanding on people's preferences and behavior. My work is comprised of two separate studies. The first study investigates preferences, with special attention to preferences for equity or guilt avoidance, in the context of a Trust Game. In this study I propose a design able to test two theories one against the other, and all my predictions are justified by a rigorous theoretical analysis. In this study I further investigate the findings of Charness & Dufewnberg (2006), a paper in which the authors presented evidences in favor of the model of guilt aversion, but their interpretation was lately challenged. This study contributes to the theoretical literature on psychological games and on exotic preferences. I show, with a theoretical analysis, that guilt and inequity aversion models behave in opposite ways when the game's payoffs are manipulated. Moreover I designed an experiment to test the two models that relies on a simple payoff manipulation. The second study proposes a framing able to increase cooperation in a Prisoner's Dilemma. The framing proposed is the one of a Tournament. In this tournament a pair of subjects may coordinate in order to defeat the opposing pair. This framing aligns the incentives of the two players involved, since they became allies fighting a common enemy. This framing prove itself very successful in coordinating the two players and it leads to a higher cooperation, mitigating the undesirable social dilemma associated with games like the Prisoner's Dilemma. The findings of this study are meaningful because the competitive framing can be easily implemented in various real life situations, and possibly, it can deliver desirable results.