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on Experimental Economics |
| By: | Albert Ballinger; Gerald P. Dwyer, Jr.; Ann B. Gillette |
| Abstract: | We provide substantial evidence that the futures market for West Texas Intermediate crude oil increased the short-term volatility of the cash price of crude oil. We show that the variability of prices increased using both published posted prices and transaction prices for producers. This increased volatility in the price of crude oil may reflect information aggregated into the price, an increase the variance of shocks to the price of crude oil, or noise in the futures price that affects the cash price. We present evidence from experiments consistent with the interpretation that information aggregation not feasible in a posted-price market can explain at least part of the increase in variance. This evidence supports the proposition that information not previously aggregated into the cash price for crude oil is at least part of the reason for the greater variability of the cash price after the opening of the futures market and provides at least one example in which a futures market increased the volatility of the cash market, and prices became more efficient. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2004-28&r=exp |
| By: | Lucy F. Ackert; Jorge Martinez-Vazquez; Mark Rider |
| Abstract: | This paper reports the results of experiments designed to examine whether a taste for fairness affects people’s preferred tax structure. Building on the Fehr and Schmidt (1999) model, we devise a simple test for the presence of social preferences in voting for alternative tax structures. The experimental results show that individuals demonstrate concern for their own payoff and inequality aversion in choosing among alternative tax structures. However, concern for redistribution decreases when it leads to increasing deadweight losses. Our findings have important implications for the design of optimal tax theory. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2004-33&r=exp |
| By: | Hägglund, Pathric (Swedish Institute for Social Research) |
| Abstract: | This paper reports the experience from a randomised experiment offering voluntary job search assistance on the Internet to job seekers at Swedish public employment offices. Among those applying for participation, youth, highly educated and people living in big city areas were overrepresented. The evidence suggests that common difficulties inherent in the experimental approach, such as ethical concerns, bureaucratic behaviour and randomisation bias, have been circumvented. However, due to the voluntariness, the programme suffers from compliance problems in terms of both no-shows and drop-outs. The experimental intent-to-treat impact estimate fail to reject the hypothesis of a zero programme effect. Finally, a methodological comparison suggests that standard nonexperimental <p> techniques succeed in reproducing the nonbiased experimental results. |
| Keywords: | Internet job search; policy evaluation; social experiment |
| JEL: | C93 J64 |
| Date: | 2005–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2005_003&r=exp |
| By: | Massimo Finocchiaro Castro (Royal Holloway, University of London; and DEMQ, University of Catania) |
| Abstract: | In a two-stage public goods experiment, we study the effect that subjects’ possibility of contributing to a public good in the first stage of the game has on the voluntary contributions to the second public good. Our results show that subjects do not follow either the Nash strategy or the Pareto efficient strategy and that they perceive the two public goods as substitutes. |
| Keywords: | public goods, experiments, voluntary provision. |
| JEL: | A13 H41 C92 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:hol:holodi:0505&r=exp |
| By: | Massimo Finocchiaro Castro (Royal Holloway, University of London; and DEMQ, University of Catania) |
| Abstract: | In a two-stage public goods experiment, we study the framing effect due to the adoption of a cultural context. Our results show a slight increase in the allocations of subjects’ endowments to the cultural good when the cultural context is implemented in the laboratory. In particular, in one treatment, the framing effect has a strong impact in the last two periods only. |
| Keywords: | cultural education, cultural good, framing, experiments, voluntary provision. |
| JEL: | A13 H41 C92 Z10 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:hol:holodi:0506&r=exp |
| By: | Juan Camilo Cardenas; Jeffrey P. Carpenter |
| Abstract: | Along with the traditional primitives of economic development (material preferences, technology, and endowments), there is a growing interest in exploring how psychological and sociological factores (e.g., bounded rationality, norms, or social preferences) also influence economic decisions, the evolution of institutions, and outcomes. Simultaneously, a vast literature has arisen arguing that economic experiments are important tools in identifying and quantifying the role of institutions, socialnorms and preferences on behavior and outcomes. Reflecting on our experience conducting experiments in the field over more than five years, we survey the growing literature at the intersection of these two research areas. Our review has four components. In the introduction we set the stage identifying a set of behavioral factors that seem to be central for understanding growth and economic development./ We then divide the existing literature in two piles: standard experiments conducted in the field and on how to econometrically identify sociological factors in experimental data. We conclude by suggesting topics for future research. |
| Keywords: | experimental economics, behavioral economics, institutions, social preferences, poverty, development |
| JEL: | C9 O1 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:0505&r=exp |
| By: | Daniel Levy (Bar-Ilan University); Mark Bergen (University of Minnesota) |
| Abstract: | We describe a multiproduct barter trading experiment in which students exchange real goods in an open market based on their own personal preference. The experiment is designed for simulating a pure exchange market in order to demonstrate the role of money and its functions in real economies by showing the limitations and inefficiencies of the traditional barter economy. In addition, the simulation is very effective in highlighting some of the key features that an object that serves as money needs to possess in order to function as an efficient medium of exchange, unit of account, and store of value. |
| Keywords: | Roles of Money, Functions of Money, Barter, Exchange Economy, Medium of Exchange, Store of Value, Unit of Account, Experiment, Efficient and Inefficient Medium of Exchange, Types of Money, Fiat Money, Commodity Money, Features of Money, Homogeneity, Divisibility, Durability, Storability, Portability, Scarcity, Efficiency versus Equity, Information Cost |
| JEL: | A22 C90 C91 C92 E40 E41 E42 |
| Date: | 2005–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpex:0505002&r=exp |
| By: | Harold Fried (Union College); Daniel Levy (Bar-Ilan University) |
| Abstract: | This note describes an experiment, which is an extension of the experiment proposed by Levy and Bergen (1993). The experiment is designed to simulate an environment where something that is very similar to fiat money (i.e., is homogenous, durable, portable, storable, divisible, has no intrinsic value of its own, etc.) will be accepted in market transactions and thus will have a “value.” This is accomplished through an implementation of a taxation mechanism in the spirit of legal restriction theory of monetary economics. |
| Keywords: | Roles of Money, Functions of Money, Barter, Exchange Economy, Medium of Exchange, Store of Value, Unit of Account, Experiment, Efficient and Inefficient Medium of Exchange, Types of Money, Fiat Money, Commodity Money, Features of Money, Homogeneity, Divisibility, Durability, Storability, Portability, Scarcity, Efficiency versus Equity, Information Cost |
| JEL: | A22 C90 C91 C92 E40 E41 E42 |
| Date: | 2005–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpgt:0505001&r=exp |
| By: | Swee Hoon Chuah (Nottingham University Business School); Robert Hoffmann (Nottingham University Business School); Martin Jones (Department of Economic Studies, University of Dundee); Geoffrey Williams (Nottingham University Business School) |
| Abstract: | The processes by which culture influences economic variables need to be exposed in order for the concept to be a useful tool for prediction and policy formulation. We investigate the attitudes and experimental behaviour of Malaysian and UK subjects to shed light on the nature of culture and the mechanisms by which it aects economic behaviour. Attitudinal dimensions of culture which significantly influence experimental game play are identified. This approach is offered towards a method to suitably quantify culture for economic analysis. |
| Keywords: | culture, ultimatum game, attitudes, world values survey, experiments |
| JEL: | C72 C91 D64 |
| Date: | 2005–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:nub:occpap:13&r=exp |
| By: | Uri Benzion (The Technion-Israel Institute of Technology and Department of Economics, Ben-Gurion University); Yochanan Shachmurove (Department of Economics, University of Pennsylvania and City College of the City University of New York); Joseph Yagil (The Graduate School of Business, Haifa University and Columbia University) |
| Abstract: | This paper estimates the degree of the exponential-function misvaluation, its variation with given product price level, and its expected growth rate. The paper examines whether other mathematical functions, such as linear, quadratic and cubic functions, conform to the discounting and compounding processes of individual decision makers. Using subjects familiar with the exponential function discounting formula, this study finds that individuals undervalue the compound interest discounting formula given by the exponential function and overvalue the simple interest discounting formula given by the linear function. These findings can be attributed to the overreaction, overconfidence, mental accounting and narrow-framing behaviors discussed in psychology. |
| Keywords: | Exponential Discount Function; Experimental Subjective Discount Rates; Linear, Quadratic and Cubic Functions; overreaction, overconfidence, mental accounting and narrow-framing behavior; Economic Psychology. |
| JEL: | D90 G00 |
| Date: | 2003–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:03-015&r=exp |