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on Evolutionary Economics |
| By: | Felix Ebeling |
| Abstract: | Conditional cooperation (CC) is one of the most persistent behaviors in charitable giving. The laboratory experiment presented in this paper is designed to explore two questions: First, whether heterogeneous endowments of donors affect conditional cooperative giving. Second, whether potential donors exploit ambiguity about other donors’ endowments in a self-serving manner to justify lower giving. We find that heterogeneous endowments affect giving in a way that suggests individuals concern for equality of donors’ earnings after giving. Furthermore, the results do not confirm the exploitation of ambiguity about other donors’ endowments. Individuals do not bias beliefs about other donors’ endowments in a self-serving manner to justify lower giving. |
| Keywords: | public good, donation, conditional cooperation, social norms, ambiguity |
| JEL: | C91 D63 H41 |
| Date: | 2013–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0058&r=evo |
| By: | Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University) |
| Abstract: | We provide an overview of experimental literature on contests and point out the two main phenomena observed in most contest experiments- (i) overbidding relative to the standard Nash equilibrium prediction and (ii) heterogeneous behavior of ex-ante symmetric contestants. Based on the sample of contest experiments that we review, the median overbidding rate is 72%. We provide different explanations for the overbidding phenomenon, including bounded rationality, utility of winning, other-regarding preferences, probability distortion, and the shape of the payoff function. We also provide explanations for heterogeneous behavior of contestants based on differences in preferences towards winning, inequality, risk and losses, and demographic differences. Furthermore, we suggest mechanisms that can reduce overbidding and induce more homogeneous behavior. Finally, we discuss directions for future research. |
| Keywords: | experiments, contests, overbidding, heterogeneous behavior |
| JEL: | C72 C91 C92 D72 D74 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-06&r=evo |
| By: | Giovanna Devetag; Sibilla Di Guida; Luca Polonio |
| Abstract: | We analyze subjects’ eye movements while they make decisions in a series of one-shot games. The majority of them perform a partial and selective analysis of the payoff matrix, often ignoring the payoffs of the opponent and/or paying attention only to specific cells. Our results suggest that subjects apply boundedly rational decision heuristics that involve best responding to a simplification of the decision problem, obtained either by ignoring the other players’ motivations or by considering them only for a subset of outcomes. Finally, we find a correlation between types of eye movements observed and choices in the games. |
| Keywords: | one-shot games, eye-tracking, similarity, categorization, focal points, individual behavior, experimental economics, behavioral economics |
| JEL: | C72 C91 D01 D83 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:1301&r=evo |
| By: | Thomas Stöckl; Jürgen Huber; Michael Kirchler; Florian Lindner |
| Abstract: | In laboratory experiments we explore the effects of communication and group decision making on investment behavior and on subjects’ proneness to behavioral biases. Most importantly, we show that communication and group decision making does not impact subjects’ overall proneness to biases like gambler’s fallacy and hot hand belief. However, groups decide differently than individuals as they rely significantly less on useless outside advice from “experts” and choose the risk-free option less frequently. Finally, we document gender differences in investment behavior: groups of two female subjects choose the risk-free investment more often and are slightly more prone to the hot hand belief than groups of two male subjects. |
| Keywords: | Hot hand belief, Gambler’s fallacy, Experimental finance, Experts, Team decision making |
| JEL: | C91 C92 D81 G10 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-04&r=evo |
| By: | Choy, James (University of Warwick) |
| Abstract: | Informal, kin-based groups play an important role in developing country economies. I point out two facts: communities are divided into smaller groups, and many groups prohibit interactions with outsiders. These facts are rationalized in a model in which division of the community into non-interacting groups allows agents to support higher levels of cooperation. Group segregation is sustained in equilibrium through a reputation eect. I test the empirical implication that there should be less cooperation between members of groups that make up a larger percentage of their communities. I discuss implications for underinvestment in education, misallocation of resources, and institutional change. |
| Keywords: | Cooperation, Caste, Social Institution |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:114&r=evo |
| By: | David Gill; Victoria Prowse |
| Abstract: | In this paper we investigate how cognitive ability influences behavior, success and theevolution of play towards Nash equilibrium in repeated strategic interactions. We study behaviorin a p-beauty contest experiment and find striking differences according to cognitiveability: more cognitively able subjects choose numbers closer to equilibrium, converge morefrequently to equilibrium play and earn more even as behavior approaches the equilibriumprediction. To understand better how subjects with different cognitive abilities learn differently,we estimate a structural model of learning based on level-k reasoning. We find asystematic positive relationship between cognitive ability and levels; furthermore, the averagelevel of more cognitively able subjects responds positively to the cognitive ability of theiropponents, while the average level of less cognitively able subjects does not respond at all.Our results suggest that, in strategic environments, higher cognitive ability translates intobetter analytic reasoning and a better ‘theory of mind’. |
| Keywords: | Cognitive ability, bounded rationality, level-k, convergence, learning non-equilibrium behavior, beauty contest, repeated games, structural modeling, theory of mind, intelligence, Raven test |
| JEL: | C92 C73 D83 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:641&r=evo |
| By: | Binzel, Christine (University of Heidelberg); Fehr, Dietmar (WZB - Social Science Research Center Berlin) |
| Abstract: | While strong social ties help individuals cope with missing institutions, trade is essentially limited to those who are part of the social network. We examine what makes the decision to trust a stranger different from the decision to trust a member of a given social network (a friend), by comparing the determinants of these two decisions for the same individual. We implement a binary trust game with hidden action in a lab-in-the-field experiment with residents of an informal housing area in Cairo. Our results show that trust is higher among friends than among strangers and that higher trust among friends is related to the principal's belief of trustworthiness. However, on average a principal underestimates her friend's trustworthiness leading to inefficient outcomes. Our findings suggest that even within a social network, trade may often be limited to exchanges with few information asymmetries. |
| Keywords: | trust, social distance, hidden action, solidarity, economic development |
| JEL: | C72 C93 D82 O12 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7183&r=evo |