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on Cognitive and Behavioural Economics |
| By: | Florian Lindner; Matthias Sutter |
| Abstract: | Arad and Rubinstein (2012a) have designed a novel game to study level-k reasoning experimentally. Just like them, we find that the depth of reasoning is very limited and clearly different from equilibrium play. We show that such behavior is even robust to repetitions, hence there is, at best, little learning. However, under time pressure, behavior is, perhaps coincidentally, closer to equilibrium play. We argue that time pressure evokes intuitive reasoning and reduces the focal attraction of choosing higher (and per se more profitable) numbers in the game. |
| Keywords: | Level-k reasoning, Time pressure, Repetition, Experiment |
| JEL: | C91 C72 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-13&r=cbe |
| By: | Cary Deck (University of Arkansas); Erik O. Kimbrough (Simon Fraser University) |
| Abstract: | Donations and volunteerism can be conceived as market transactions with zero explicit price. However, evidence suggests people may not view zero as just another price when it comes to pro-social behavior. Thus, while markets might be expected to increase the supply of assets available to those in need, some worry such financial incentives will crowd out altruistic giving. This paper reports laboratory experiments directly investigating the degree to which market incentives crowd out charity. The results suggest markets increase the supply of assets available to those in need. However, as some critics fear, market incentives disproportionately influence the relatively poor. |
| Keywords: | Pro-Social Behavior, Market Incentives, Crowding Out, Wealth Effects |
| JEL: | C9 D6 D0 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp13-05&r=cbe |
| By: | Chuang, Yating |
| Keywords: | Consumer/Household Economics, Institutional and Behavioral Economics, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150156&r=cbe |
| By: | Matthew W. McCarter (College of Business, University of Texas at San Antonio and Economic Science Institute, Chapman University); Abel M. Winn (Argyros School of Business & Economics, Chapman University); Adam D. Galinsky (Columbia Business School, Colombia University) |
| Abstract: | This article uses archival data from English auctions of animal art and eBay gift cards coupled with two laboratory experiments to study the effect of financial stakes on an interdependent decision-making phenomenon critical to organizational success: auction fever. Congruent with rational irrationality theory, we find evidence that the frequency and severity of auction fever decreases as the stakes increase, calling into question the economic significance of the phenomenon. In Study 1, we used two archival field datasets to show that the frequency and magnitude of overbidding decrease as the bidder’s willingness to pay increases. In Study 2 a laboratory experiment replicated this finding as winners make up a minority (only 15.2%) of overbidders, making losers (who incur no cost for overbidding) four-and-half times more likely to experience “auction fever”. In Study 3, we compare the frequency of auction fever between an English auction institution (where only the winner pays) and penny auction institution (where every bidder pays) – and find that the frequency of auction fever declines from 33% in English auctions to 12.7% in penny auctions. In contrast to the English auctions, bidders in the penny auction were more likely to spend beyond their initial limits when their (perceived) item values were higher; this occurs because the cost of each additional bid is smaller relative to the perceived value of the item. These results demonstrate that financial stakes of a decision may override seemingly robust psychological processes and they encourage researchers to test their ideas in contexts where the economic significance of a decision is considerable. |
| Keywords: | Auction Fever, Bidder’s Curse, Economic Significance, English Auction, Overbidding, Penny Auction, Statistical Significance |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-19&r=cbe |
| By: | Mattos, Fabio; Poirier, Jamie |
| Abstract: | This study examines formation and adaptation of reference prices by Manitoban grain producers. Research shows that preferences are reference-dependent and marketing decisions are affected by reference prices. Results suggest that Manitoban producers’ reference prices are formed primarily by an average of recent prices and the highest price to-date in the marketing window. Reference prices are found to adapt in the same direction as market prices, with adaptation to increasing prices being larger than adaptation to decreasing prices. When deciding to sell grain, producers are more likely to sell when they expect prices to decrease over the next month and when their reference price adjusts downwards towards the current price. |
| Keywords: | grain marketing, reference prices, Agribusiness, Institutional and Behavioral Economics, Marketing, C93, D03, D81, Q13, |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149672&r=cbe |
| By: | Khachatryan, Hayk; Behe, Bridget K.; Campbell, Benjamin; Hall, Charles; Dennis, Jennifer |
| Abstract: | Although consumer behavior research has investigated impulsive buying behavior since the early 1950s, no studies explored the relationship between eye gaze metrics, buying impulsiveness scores and purchase decisions. The present study is a preliminary approach to setting consumer purchase decisions as a function of not only product attributes, but also individuals’ buying impulsiveness and eye gaze measures, which were collected using an eye tracking device during choice experiments. Specifically, we investigated the moderation effects of eye gaze measures on the relationship between buying impulsiveness and plants (woody ornamental shrubs, perennials, vegetable, herbs, annuals, etc.) purchase decisions. The results showed that impulsive buying scores were negatively related to purchase decisions, and that eye gaze fixation duration (when viewing plant displays) magnified or mitigated that relationship, depending on the type of the display information viewed. Marketing implications for developing effective plant sales efforts are discussed. |
| Keywords: | Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150333&r=cbe |
| By: | Silvester Van Koten (CERGE-EI and Department of Institutional Economics, University of Economics, Prague); Andreas Ortmann (School of Economics, the University of New South Wales) |
| Abstract: | Self-regulatory organizations (SROs) can be found in education, healthcare, and other not-for-profit sectors as well as the accounting, financial, and legal professions. DeMarzo et al. (2005) show theoretically that SROs can create monopoly market power for their affiliated agents, but that governmental oversight, even if less efficient than oversight by the SRO, can largely offset the market power. We provide an experimental test of this conjecture. For carefully rationalized parameterizations and implementation details, we find that the predictions of DeMarzo et al. (2005) are borne out. |
| Keywords: | Experimental Economics, Self-regulating organizations, Governmental oversight |
| JEL: | C90 L44 G18 G28 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2013-13&r=cbe |
| By: | Huang, Lu; Liu, Yizao |
| Abstract: | This paper examines the impact of consumer learning behavior on the rising bottled water consumption. Consumers are assumed with initial prior beliefs about the distribution of health effect of beverages and update their beliefs using health information in a Baysian manner. We find that the health effect perception for bottled water is much higher than for sugar sweetened soft drinks, which can explain the increase in bottled water consumption over time. According to our findings, health information can promote healthy diet and reduce sugar intake through consumers’ learning behavior. This finding helps policy makers develop more effective obesity control programs. |
| Keywords: | Consumer learning, Information Economics, Bottled Water, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, D12, D83, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150217&r=cbe |
| By: | Ellison, Brenna; Lusk, Jayson |
| Abstract: | Current research has focused on whether nutrition labeling and pricing policies (i.e., soda taxes) influence food decisions; however, less attention has been given to how peers influence one’s food decisions. This study uses sales receipts from a full-service restaurant to take a closer look at how people order in groups. Results of the study revealed people may be less variety-seeking than previous research suggests; in fact, diners were more likely to seek variety when choosing an individual item, but not when choosing a menu category. In other words, diners wanted to be different from their dining companions, but not too different. This result was further confirmed with a model of food choice which shows diners derived more utility from an entrée when a fellow diner ordered an entrée in the same category. Interestingly, the presence of calorie labels on menus did not change the marginal utility of calories, suggesting peer effects may outweigh the effects of nutritional information. |
| Keywords: | food decisions, group ordering behavior, variety-seeking vs. conformism, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150266&r=cbe |
| By: | Newman, Constance; Guthrie, Joanne; Mancino, Lisa; Snelling, Anastasia |
| Abstract: | As of fall 2012, school food services have needed to provide vegetables in greater quantities and diversity to fulfill new USDA requirements for the National School Lunch Program (NSLP) and School Breakfast Program (SBP). This paper summarizes the results of a set of experiments conducted in four DC public schools that provided taste tests of new vegetables to NSLP participants. Using a basic difference-in-difference design, the results found that a simple taste test led to higher consumption among students of collard greens, and a more elaborate taste test that allowed students to vote on their favorite style of preparation led to higher consumption of sweet potatoes, a starchy vegetable that was surprisingly unpopular at the beginning of the year. The small numbers of schools included in the study limits the tests somewhat, but the positive and significant results suggest that exposing children to new vegetables, and especially giving them some ownership in how the vegetables are prepared, can lead to more children eating new vegetables. |
| Keywords: | Agricultural and Food Policy, Crop Production/Industries, Food Consumption/Nutrition/Food Safety, Public Economics, |
| Date: | 2013–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150504&r=cbe |
| By: | Loureiro, Maria L.; Rahmani, Djamal |
| Abstract: | We conducted a survey and a randomized natural experiment with the same subjects to investigate the effect of information about calorie intake on fast food choices. This combined approach allows us to maximize both internal and external research validity and test consistency of findings. We find that providing information about calories in a survey context for fast food menus has a moderate effect on calorie consumption, decreasing on average by 2.96 percent the amount of calories of the selected food choices. However, the same nutritional information had no significant impact on actual purchases in the restaurant context. Among the possible menus, the salad menu (the healthiest menu) was the most preferred option by those respondents who received nutritional information in the survey context; whereas in the restaurant, the most popular choice for the same group of people was the “Double bacon burger option” (the least healthy option). Finally, we find that the average calorie content of participants’ actual purchases increases significantly (0.17%) with the number of days elapsed between the day when the survey took place (and information was provided) and the actual purchase day at the restaurant. These results show large discrepancies between stated preferences and actual market behavior. These findings may be justified by the existence of projection bias and subjects acting under rational ignorance. |
| Keywords: | actual market behavior, labeling, stated preferences, self-control, projection bias, rational ignorance, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Marketing, 3C, 9I, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150622&r=cbe |
| By: | Markus Schaffner |
| Abstract: | The field of experimental economics is past its 50th anniversary and is celebrating its 2nd Nobel prize winner. By far the largest number of economic experiments are now conducted in computer labs, although there is a wide array of settings, ranging from pen-and-paper to elaborate field settings. The controlled environment of the computer lab remains a strong foothold for experimental research. On top of the high level of control, including the standardisation of recruitment protocol and software used, the ease of data collection singles out the lab environment as a key instrument for the testing of economic theory and market mechanics. A number of tools and procedures have developed over the recent decades shaping how experiments are conducted. Z-tree (Fischbacher, 2007) has been established as the quasi-standard tool to conduct experiments. This paper introduces a novel view on how to approach programming for experiments, specically it introduces a number of innovations from professional software development into the programming of economic experiments. Finally the lightweight experimental software framework CORAL will be introduced. |
| Keywords: | Experimental Economics, Programming, CORAL |
| Date: | 2013–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:qut:qubewp:wp015&r=cbe |
| By: | Thorsten Chmura (Centre for Decision Research and Experimental Economics, University of Nottigham); Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Markus Englerth |
| Abstract: | For a rational choice theorist, the absence of crime is more difficult to explain than its presence. Arguably, the expected value of criminal sanctions, i.e. the product of severity times certainty, is often below the expected benefit. We rely on a standard theory from behavioral economics, inequity aversion, to offer an explanation. This theory could also explain how imperfect criminal sanctions deter crime. The critical component of the theory is aversion against outperforming others. To test this theory, we exploit that it posits inequity aversion to be a personality trait. We can therefore test it in a very simple standard game. Inequity averse individuals give a fraction of their endowment to another anonymous, unendowed participant. We have prisoners play this game, and compare results to findings from a meta-study of more than 100 dictator games with non-prisoners. Surprisingly, results do not differ, not even if we only compare with other dictator games among close-knit groups. To exclude social proximity as an explanation, we retest prisoners on a second dictator game where the recipient is a charity. Prisoners give more, not less. |
| Keywords: | crime, imperfect sanctions, selfishness, inequity aversion, dictator game, social proximity, charity |
| JEL: | A12 C91 C93 D03 D63 K14 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_05&r=cbe |
| By: | Antonio M. Espín (GLOBE, Departamento de Teoría e Historia Económica, Universidad de Granada); Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies, Istanbul Bilgi University); Benedikt Herrmann (Institute for Health and Consumer Protection, Joint Research Centre, European Commission); Pablo Brañas-Garza (Economic Science Institute, and Department of Economics and International Development, Middlesex University Business School) |
| Abstract: | The ultimatum game (UG) is widely used to study human bargaining behavior and fairness norms. In this game, two players have to agree on how to split a sum of money. The proposer makes an offer, which the responder can accept or reject. If the responder rejects, neither player gets anything. The prevailing view is that, beyond self-interest, the desire to equalize both players’ payoffs (i.e., fairness) is the crucial motivation in the UG. Based on this view, previous research suggests that responders follow short-run psychological incentives when imposing fairness through the rejection of low offers. However, competitive spite, which reflects the desire to reduce others’ payoffs, can also account for the behavior observed in the UG, and has been linked to short-run, present-oriented aspirations as well. In this paper, we explore the relationship between individuals’ inter-temporal preferences and their behavior in a large-scale dual-role UG experiment. We find that impatience (present orientation) predicts the rejection of low, “unfair” offers as responders and the proposal of low, “unfair” offers as proposers, which is consistent with spite but inconsistent with fairness motivations. This behavior systematically reduces the payoffs of those who interact with impatient individuals. Thus, impatient individuals appear to be keen on reducing their partners’ share of the pie, even at the risk of destroying it. These findings indicate that competitive spite, rather than fairness, is the short-run motivation in ultimatum bargaining. |
| Keywords: | ultimatum game, costly punishment, delay discounting, impatience, fairness, spite, cooperation, competition |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-17&r=cbe |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | Sanctions are often so weak that a money maximizing individual would not be deterred. In this paper I show that they may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity. Using the Fehr/Schmidt model (QJE 1999) I define three alternative channels: (a) identical preferences are common knowledge, but inequity is not pronounced enough to sustain cooperation; (b) heterogeneous preferences are common knowledge; (c) there is preference uncertainty. In a linear public good with punishment meted out by a disinterested participant, I test two implications of the model: (a) participants increase contributions in reaction to imperfect punishment; (b) imperfect punishment helps sustain cooperation if participants experience free-riding |
| Keywords: | Deterrence, Public Good Experiment, Inequity Aversion, imperfect sanction, Fehr/Schmidt preferences, centralized punishement |
| JEL: | H41 D63 K42 C91 D03 K14 K13 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_09&r=cbe |
| By: | Sven Fischer (Max Planck Institute for Research on Collective Goods, Bonn); Kristoffel Grechenig (Max Planck Institute for Research on Collective Goods, Bonn); Nicolas Meier |
| Abstract: | We run several experiments which allow us to compare cooperation under perfect and imperfect information and under a centralized and decentralized punishment regime. We nd that (1) centralization by itself does not improve cooperation and welfare compared to an informal, peer-to-peer punishment regime and (2) centralized punishment is equally sensitive to noise as decentralized punishment, that is, it leads to signicantly lower cooperation and welfare (total prots). Our results shed critical light on the widespread conjecture that the centralization of punishment institutions is welfare increasing in itself. |
| Keywords: | Public Goods, cooperation, centralized punishment, imperfect information, decentralized punishment, peer to peer punishment |
| JEL: | C92 K42 H42 D03 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_06&r=cbe |
| By: | Hugh-Jones, David; Kurino, Morimitsu; Vanberg, Christoph |
| Abstract: | We report an experiment on the Probabilistic Serial (PS) mechanism for allocating indivisible goods. The PS mechanism, a recently discovered alternative to the widely used Random Serial Dictatorship mechanism, has attractive fairness and efficiency properties if people report their preferences truthfully. However, the mechanism is not strategy-proof, so participants may not truthfully report their preferences. We investigate misreporting in a set of simple applications of the PS mechanism. We confront subjects with situations in which theory suggests that there is an incentive or no incentive to misreport. We find little misreporting in situations where misreporting is a Nash equilibrium. However, we also find a significant degree of misreporting in situations where there is actually no benefit in doing so. These findings suggest that the PS mechanism may have problems in terms of truthful elicitation. -- |
| Keywords: | probabilistic serial mechanism,incentives |
| JEL: | C78 C91 C92 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2013204&r=cbe |