The experiment is performed with individuals and teams. We introduce a team decision algorithm, excess-risk vetoing, that combines simple majority voting with the right to veto alternatives providing additional risk that is not compensated by additional expected value. We find that the results of our experiment are well explained by the excess-risk vetoing. The paper deals with bounded rationality understood in the tradition of H.A. Simon. Fundamental problems and theoretical issues are discussed.
Special emphasis is put on aspiration adaptation theory.
We separate the influences of these factors in an experiment. In a two-player game reciprocation is economically inefficient through negative externalities. A control treatment without externalities is also conducted. In a third, so-called sudden death treatment, corrupt pairs face a low probability of exclusion from the experiment without payment. The results show that reciprocity can establish bribery relationships, where negative externalities have no apparent effect.