This classroom experiment introduces students to the concept of double marginalization, i.e. the exercise of market power at successive vertical layers in a supply chain. By taking on roles of firms, students determine how the mark-ups are set at each successive production stage. They learn that final retail prices tend to be higher than if the firms were vertically integrated. Students compare the welfare implications of two potential solutions to the double marginalization problem: acquisition and franchise fees. The experiment also can stimulate a discussion of two-part tariffs, transfer pricing, contracting, and the Coase theorem. Veconlab website

Are beautiful people better negotiators? I present evidence from a simple bargaining game where players can listen to pre-recorded “speeches” and see the pictures of other players. I find that physically attractive players receive a greater share of the surplus if the partner can both listen to their speech and view their picture. This effect is strongest when the listening partner is female. These results suggest new directions for experimental and empirical research on the role of non-resume characteristics on labor market outcomes and give new perspectives to practitioners in negotiations involving extreme power imbalance.

We decompose the beauty premium in an experimental labor market where "employers" determine wages of "workers" who perform a maze-solving task. This task requires a true skill which we show to be una®ected by physical attractiveness. We find a sizable beauty premium and can identify three transmission channels. (1) Physically-attractive workers are more confident and higher confidence increases wages. (2) For a given level of confidence, physically-attractive workers are (wrongly) considered more able by employers. (3) Controlling for worker confidence, physically-attractive workers have oral skills (such as communication and social skills) that raise their wages when they interact with employers. Our methodology can be adapted to study the sources of discriminatory pay differentials in other settings.

We introduce a simple web-based classroom experiment in which students learn the Ricardian model of international trade. Students are assigned to countries and then make individual production, trade and consumption decisions. The analysis of experimental data introduces students to the concepts of absolute and comparative advantage, relative prices, production possibility frontier, specialization, gains from trade, utility maximization and general equilibrium. Students learn about the relationship between individual decision-making and aggregate economic activity. The associated software, Ricardian Explorer, is easy to setup and requires minimal preparation time for instructors. The game is developed as a tool to complement courses in international trade, but it can be used in introductory and intermediate microeconomics courses as well. The analysis of teaching effectiveness has demonstrated that integration of this experiment in the curriculum enhances student learning.

Advances in communication and transportation technologies have the potential to bring people closer together and create a ‘global village’. However, they also allow heterogenous agents to segregate along special interests which gives rise to communities fragmented by type rather than geography. We show that lower communication costs should always decrease separation between individual agents even as group-based separation increases. Each measure of separation is pertinent for distinct types of social interaction. A group-based measure captures the diversity of group preferences that can have an impact on the provision of public goods. An individual measure correlates with the speed of information transmission through the social network that affects, for example, learning about job opportunities and new technologies. We test the model by looking at coauthoring between academic economists before and during the rise of the Internet in the 1990s.