nep-cbe New Economics Papers
on All new papers
Issue of 2014‒09‒08
ten papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Cheating and loss aversion: do people lie more to avoid a loss? By Grolleau, Gilles; Kocher, Martin G.; Sutan, Angela
  2. Donations, risk attitudes and time preferences: A study on altruism in primary school children By Silvia Angerer; Daniela Glätzle-Rützler; Philipp Lergetporer; Matthias Sutter
  3. Heterogeneity in preferences towards complexity By Peter G. Moffatt; Stefania Sitzia; Daniel John Zizzo
  4. Do Personality Traits Affect Productivity? Evidence from the Lab By Maria Cubel; Ana Nuevo-Chiquero; Santiago Sanchez-Pages; Marian Vidal-Fernandez
  5. Testing the strength and robustness of the attraction effect in consumer decision making By Crosetto, P.; Gaudeul, A.
  6. Handing Out Guns at a Knife Fight: Behavioral Limitations of Subgame-Perfect Implementation By Fehr, Ernst; Powell, Michael; Wilkening, Tom
  7. Time preferences, study effort, and academic performance By Non J.A.; Tempelaar D.T.
  8. Eliciting and aggregating individual expectations: An experimental study By Peeters R.J.A.P.; Wolk K.L.
  9. Tax Compliance and Enforcement in the Pampas: Evidence from a Field Experiment By Lucio Castro; Carlos Scartascini
  10. Matching protocol in contest experiments By Kyung Hwan Baik; Subhasish M. Chowdhury; Abhijit Ramalingam

  1. By: Grolleau, Gilles; Kocher, Martin G.; Sutan, Angela
    Abstract: Does the extent of cheating depend on a proper reference point? We use a real effort task that implements a two (gain versus loss frame) times two (monitored performance versus unmonitored performance) between-subjects design to examine whether cheating is reference-dependent. Our experimental findings show that self-reported performance in the unmonitored condition is significantly higher than actual performance in the monitored condition - a clear indication for cheating. However, the level of cheating is by far higher in the loss frame than in the gain frame. Furthermore, men are much more strongly affected by the framing than women.
    Keywords: Cheating; Lying; Loss aversion; Experiment
    JEL: C91 D03
    Date: 2014–08–25
  2. By: Silvia Angerer; Daniela Glätzle-Rützler; Philipp Lergetporer; Matthias Sutter
    Abstract: We study in a sample of 1,070 primary school children, aged seven to eleven years, how altruism in a donation experiment is related to children’s risk attitudes and intertemporal choices. Examining such a relationship is motivated by theories of reciprocal altruism that provide a cornerstone for understanding human social behavior. We find that higher risk tolerance and patience in intertemporal choice increase, in general, the level of donations, albeit the effects are non-linear. We confirm earlier results that altruism increases with age during childhood and that girls are more altruistic than boys. Having older brothers makes subjects less altruistic.
    Keywords: Altruism, donations, risk attitudes, intertemporal choices, experiment, children
    JEL: C91 D03 D63 D64
    Date: 2014–08
  3. By: Peter G. Moffatt (University of East Anglia); Stefania Sitzia (University of East Anglia); Daniel John Zizzo (University of East Anglia)
    Abstract: We analyze lottery-choice data in a way that separately estimates the effects of risk aversion and complexity aversion, and allows both both of these to vary between individuals, and also to change with experience. The data is from an experiment in which 80 subjects engage in a sequence of 54 choices between pairs of lotteries. The lotteries always have the same expected value, but they differ in terms of variance and the level of complexity. Complexity is represented by the number of different outcomes in the lottery, and is either 1 (sure win), 3 (simple), 6 (complex) or 27 (very complex). A finite mixture random effects model is estimated which assumes that a proportion of the population are complexity neutral, and we find that around 32% of the population are complexity neutral. In those subjects who do react to complexity, there is a bias towards complexity aversion at the start of the experiment, but complexity aversion reduces with experience, to the extent that the average subject is complexity neutral by the end of the experiment. Around 23% of subjects appear complexity loving. Some of these findings are consistent with switching patterns seen in the choice data. Complexity aversion is found to increase with age, and is found to be higher for non-UK students than for UK students.
    Keywords: complexity aversion, complexity preferences, risk preferences, mixture models, learning
    JEL: C91 D03 D81
    Date: 2014
  4. By: Maria Cubel (University of Barcelona and IEB); Ana Nuevo-Chiquero (University of Sheffield); Santiago Sanchez-Pages (Edinburgh School of Economics and University of Barcelona); Marian Vidal-Fernandez (University of New South Wales and IZA)
    Abstract: While survey data supports a strong relationship between personality and labor market outcomes, the exact mechanisms behind this association remain unexplored. In this paper, we take advantage of a controlled laboratory set-up to test whether this relationship operates through productivity, and isolate this mechanism from other channels such as bargaining ability or self-selection into jobs. Using a gender neutral real-effort task, we analyse the impact of the Big Five personality traits on performance. We find that more neurotic subjects perform worse, and that more conscientious individuals perform better. These findings are in line with previous survey studies and suggest that at least part of the effect of personality on labor market outcomes operates through productivity. In addition, we find evidence that gender and university major affect the impact of the Big Five personality traits on performance.
    Keywords: Big-Five; personality traits; experiment; labour productivity; performance
    JEL: C91 D03 J3 M5
    Date: 2014–08
  5. By: Crosetto, P.; Gaudeul, A.
    Abstract: We report the results of an original experiment that was designed to test the strength and robustness of the attraction effect. Rather than the usual simple tests for this effect, we consider a conceptually simple consumer purchasing task where alternatives are however difficult to evaluate. For the attraction effect to be observed, the consumer must go through two steps: the first is to find out that two or more options are comparable, which leads him to exclude the dominated alternatives. The second is to favor the dominant option over those that are not comparable. Our experiment allows us to determine whether and how many individuals stop before each of those two steps. The results confirm the existence of an attraction effect in our setting, but the effect is not strong. Indeed, only a minority of subjects perform the second step. The effect is not robust to introducing larger differences in prices among options and to widening the range of options to choose from. We conclude by showing that our subjects would benefit from relying more on performing asymmetric dominance editing rather than on their skills in the purchasing task.
    JEL: C91 D12 D83
    Date: 2014
  6. By: Fehr, Ernst (University of Zurich); Powell, Michael (Northwestern University); Wilkening, Tom (University of Melbourne)
    Abstract: The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational and institutional economics. However, subgame-perfect implementation (SPI) mechanisms – which are based on off-equilibrium arbitration clauses that impose fines for lying and the inappropriate use of arbitration – can be used to render payoff-relevant observable information verifiable. Thus, if SPI mechanisms work as predicted, they undermine the foundations of important economic results based on the observable but non-verifiable assumption. Empirical evidence on the effectiveness of SPI mechanisms is, however, scarce. In this paper we show experimentally that SPI mechanisms have severe behavioral limitations. They induce retaliation against legitimate uses of arbitration and thus make the parties reluctant to trigger arbitration. The inconsistent use of arbitration eliminates the incentives to take first-best actions and leads to costly disagreements such that individuals – if given the choice – opt out of the mechanism in the majority of the cases. Incentive compatible redesigns of the mechanism solve some of these problems but generate new ones such that the overall performance of the redesigned mechanisms remains low. Our results indicate that there is little hope for SPI mechanisms to solve verifiability problems unless they are made retaliation-proof and, more generally, robust to other-regarding preferences.
    Keywords: implementation theory, incomplete contracts, experiments
    JEL: D23 D71 D86 C92
    Date: 2014–08
  7. By: Non J.A.; Tempelaar D.T. (ROA)
    Abstract: We analyze the relation between time preferences, study effort, and academic performance among first-year Business and Economics students. Time preferences are measured by stated preferences for an immediate payment over larger delayed payments. Data on study efforts are derived from an electronic learning environment, which records the amount of time students are logged in and the fraction of exercises completed. Our third measure of study effort is participation in an on-line summer course. We find that impatient students show weaker performance, but the consequences are relatively mild. Impatient students obtain lower grades and fail first sit exams more often, but they do not obtain significantly fewer study credits, nor are they more likely to drop out as a result of obtaining fewer study credits than required. We find a weak negative relationship between impatience and study effort. Differences in study effort therefore cannot explain impatient students lower academic performance.
    Keywords: Behavioral Economics: Underlying Principles; Intertemporal Choice and Growth: General; Analysis of Education;
    JEL: D03 D90 I21
    Date: 2014
  8. By: Peeters R.J.A.P.; Wolk K.L. (GSBE)
    Abstract: In this paper we present a mechanism to elicit and aggregate dispersed information. Our mechanism relies on the aggregation of intervals elicited using an interval scoring rule. We test our mechanism by eliciting beliefs about the termination times of a stochastic process in an experimental setting. We conduct two treatments, one with high and one with low volatility.Increasing the underlying volatility affects the location of the interval, yet it does not significantly affect its length. Consequently, individuals perform significantly better in the low volatility treatment than in the high volatility treatment. Next, we construct distributions by aggregating intervals across different individuals. Our results reveal that the predictive quality of the aggregated intervals as measured by the Hellinger distance to the true distribution increases by more than 30 when increasing the aggregation level from two to eight individuals. This shows that aggregating individual intervals may be an attractive solution when market mechanisms are infeasible.
    Keywords: Forecasting and Prediction Methods; Simulation Methods ; Design of Experiments: Laboratory, Individual; Expectations; Speculations;
    JEL: C53 D84 C91
    Date: 2014
  9. By: Lucio Castro; Carlos Scartascini
    Abstract: Tax evasion is a pervasive problem in many countries. In particular, some developing countries do not collect even half of what they would if taxpayers complied with the written letter of the law. The academic literature has not been oblivious to the need to explain why people pay (or do not pay) taxes. However, the empirical literature has not yet reached consensus. This paper reports the results of a large field experiment that tried to affect compliance by influencing property tax taxpayers’ beliefs regarding the levels of enforcement, equity, and fairness of the tax system in a municipality in Argentina. Results indicate that the most effective message was one that stated the actual fines and potential legal consequences taxpayers may face in the case of noncompliance (tax compliance increased by more than 4 percentage points). No average effects are found for the treatments designed to affect beliefs about the equity and fairness of the system. However, the evidence also points out that not every taxpayer updates his or her beliefs in the same direction, as relevant heterogeneous effects are found across the population. The evidence in this paper advances the state of knowledge and may help to reconcile some of the different results in the literature.
    JEL: C93 D03 H26 H41
    Date: 2013–12
  10. By: Kyung Hwan Baik (Sungkyunkwan University); Subhasish M. Chowdhury (University of East Anglia); Abhijit Ramalingam (University of East Anglia)
    Abstract: We investigate the effects of Partner and Stranger matching in contest experiments and find no difference in the level or distribution of bids across matching protocols. However, demographic and individual strategy effects are different with different matching. Hence, unless one is interested in the demographic effects, or a Stranger matching is needed for the specific research, using a Partner matching is preferred since it allows more flexibility in logistics and data analysis.
    Keywords: contest, experiment, matching protocol, economic methodology
    JEL: B41 C72 C91
    Date: 2013

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