Behavioral Game Theory

There has been a lot of media coverage recently on the cost of attending Premier League football matches. One particular focal point was a protest by Liverpool supporters over plans to charge £77 for a ticket. In response to this protest the owners of Liverpool back-tracked and said they would keep prices pegged at current levels (where the highest price is £59). But, why should prices not go higher?           The data on Premier League attendances shows that, for the vast majority of games, stadia are full. And there is no doubt that many more would attend if they could get tickets. Such excess demand clearly means that plenty of people are willing to pay high prices. This gives a strong rationale for clubs to push prices higher and increase profit. Indeed, it is what the economic textbook says they should do.         But, the main consequence of an increase in prices is to extract surplus from supporters. Essentially supporters are pushed to the point where they are only just

A recent  study by Maxwell Burton-Chelle, Claire El Mouden and Stuart West, published in the Proceedings of the National Academy of Sciences , challenges one of experimental economics most robust findings. They argue that conditional cooperation reflects subjects confusion over experimental instructions and not social preferences. So, what to make of this result?        Let me begin by providing a little background on conditional cooperation. A  study by Urs Fischbacher, Simon Gachter and Ernst Fehr, published in Economics Letters 2001, looked at how people behave in a pubic good game when they get to see the contributions of others. More specifically:         They considered a setting with 4 people. Each person could contribute up to 20 tokens into a public project. Any tokens not contributed were worth, say, $1 to that person. Any tokens contributed were worth $0.40 to everyone in the group. For example, if a person keeps 5 tokens and total contributions to the group (includ