Three Essays on Experimental and Microeconomics

This dissertation contains three chapters on experimental economics and microeconomics. In the first chapter, Dynamic Investment and Preferences over the Resolution of Risk, I report the results of a laboratory experiment which attempts to explain the finding that individuals invest less in risky assets when risk is gradually resolved over time, rather than all at once. Though the literature has traditionally attributed this behavior to a cognitive error, Koszegi and Rabin (2009) recently characterized this finding as the result of non-standard preferences over the resolution of risk. My results reject the traditional "cognitive errors" explanation in favor of Koszegi and Rabin's "non-standard preferences" explanation. In the second chapter, Kidney Co-operative: A Mechanism to Improve on Human Kidney Markets, myself and coauthors propose a mechanism called the kidney co-operative which is designed to provide sufficient incentives to alleviate the human kidney shortage, while at the same time addressing the concerns regarding the potential losers to such a reform. We show that it is reasonable to expect that the number of transplants will be larger under the kidney co-operative mechanism than under either the status quo or the conventional market mechanism. In the third chapter, Charity in the Laboratory:Matching, Competition, and Group Identity, myself and a coauthor study the effects of donation matching, competition, and group membership on charitable donations using a laboratory experiment. We find that providing matching donations to all subjects orhaving individuals compete for the privilege to have their donations matched (we match the top half of donations in each session), raises donation levels modestly. However, arbitrarily assigning subjects to teams which competed for matching funds substantially raised donation levels. We appeal to the notions of group identity and team dynamics to explain our results