nep-exp New Economics Papers
on Experimental Economics
Issue of 2005‒06‒05
nine papers chosen by
Daniel Houser
George Mason University

  1. Modeling ‘No-choice’ Responses in Attribute Based Valuation Surveys By Arianne T. de Blaeij; Paulo A.L.D. Nunes; Jeroen C.J.M. van den Bergh
  2. Preferences regarding road transports of hazardous materials using choice experiments - any sign of biases? By Hiselius, Lena Winslott
  3. Credit Registries, Relationship Banking and Loan Repayment By Martin Brown; Christian Zehnder
  4. A Market for Time: Fairness and Efficiency in Waiting Lines By Felix Oberholzer-Gee
  5. Moral Suasion: An alternative tax policy strategy? Evidence from a controlled field experiment in Switzerland By Benno Torgler
  6. Is Trust a Bad Investment? By Nava Ashraf; Iris Bohnet; Nikita Piankov
  7. Social comparisons in ultimatum bargaining By Iris Bohnet; Richard Zeckhauser
  8. Effects of Culture on Tax Compliance: A Cross Check of Experimental and Survey Evidence By Ronald G. Cummings; Jorge Martinez-Vazquez; Michael McKee; Benno Torgler
  9. ‘Just Forget It’: Memory Distortion as Bounded Rationality By Bruno S. Frey

  1. By: Arianne T. de Blaeij (Centre Utrecht (URU), Utrecht University); Paulo A.L.D. Nunes (Free University); Jeroen C.J.M. van den Bergh (Free University)
    Abstract: We examine the impact of providing a ‘no-choice’ option in an attribute based valuation experiment. The aim of the experiment was to assess monetary values of cockle fishery management practices in the Dutch Wadden Sea for different stakeholder groups, namely Dutch citizens, local residents, and tourists. The current policy debate about the management of the Wadden Sea stresses the fact that individual preferences with respect to cockle-fishery differ. The aim of this paper is to analyze the individual preferences in an objective way. Special attention is given to the influence of including a ‘no-choice option’, which is analyzed using a nested logit model. We test whether the full set of policy options can be considered as close substitutes. The estimation results show that the influence of including the no choice option differs among the stakeholders considered.
    Keywords: Stakeholder valuation, Stated choice method, Multinomial logit model, Binary logit model
    JEL: C25 C29 Q22 Q25 Q51
    Date: 2005–05
  2. By: Hiselius, Lena Winslott (Department of Economics, Lund University)
    Abstract: This paper uses the choice experiment approach to assess people's preferences regarding road transports of hazardous materials. In a mail survey, carried out in Stockholm, the capital of Sweden, changes in exposure to hazardous materials are used as a proxy for changes in accident risk. The results are analysed in the light of an earlier study on transports of hazardous materials by rail. Special attention is given to biases associated with the choice experiment method. The presence of hypothetical bias is studied by the use of self-reported degree of confidence that the respondent would vote the same way in a real referendum. The presence of a focusing effect is studied by an inclusion of information on other fatal risks. The indication is that there are no major differences in individual preferences for hazmat transported by rail or road. The estimates are also dependent on the confidence of stated choices and interpreting this dependence as a hypothetical bias, suggest that this type of bias tends to push estimated values downwards. The findings show that individual background data regarding transports of hazardous materials affect individuals in expected ways and there is no focusing effect.
    Keywords: Biases; Hazardous materials; Risk; Choice experiments
    JEL: C25 D61 D81 R41
    Date: 2005–05–23
  3. By: Martin Brown; Christian Zehnder
    Abstract: This paper examines the impact of a public credit registry on the repayment behavior of borrowers. We implement an experimental credit market in which loan repayment is not third-party enforceable. We compare market outcome with a credit registry to that without a credit registry. This experiment is conducted for two market environments: first a market in which interactions between borrowers and lenders are one-o. and, second, a market in which borrowers and lenders can choose to trade repeatedly with each other. In the market with one-o. interactions the credit market collapses without a credit registry as lenders rightly fear that borrowers will default. The introduction of a registry in this environment significantly raises repayment rates and the credit volume extende by lenders. In the market where repeat transactions are possible a credit registry is not necessary to sustain high market performance. In such an environment relationship banking enforces repayment even when lenders cannot share information, so that there is little value added of a public credit registry.
    Keywords: Credit Market, Information Sharing, Relationship Banking
    JEL: G21 G28 D82
  4. By: Felix Oberholzer-Gee
    Abstract: In situations of excess demand, many firms use waiting lists to allocate products and services among their customers. The resulting allocation is likely to be inefficient, creating opportunities for Pareto improving trades among those who are waiting in line. Yet, in the queuing context, the trading of places is rare and inefficiencies often persist over time. In this paper, I report the results of a field experiment which allows randomly selected customers to earn up to $10 for letting a stranger cut in line. The higher the offer, the more likely it is that individuals let someone cut in. But while a majority agrees to wait longer, only a small minority accepts the monetary reward. Trading in this market is constrained by multiple social concerns. The obligation not to exploit situations of excess demand and efficiency considerations influence the willingness to let a stranger jump the queue.
    Keywords: Fairness; rationing; social norms
    Date: 2003–09
  5. By: Benno Torgler
    Abstract: In a controlled field experiment in Switzerland this paper analyses the effects of moral suasion on the timely paying and filling out of the tax form 2001, and the honesty regarding the declaration of domestic income from capital gains, lottery winnings, and certain insurance benefits. Comparisons of different tax filling years and multiple regression estimations have been done using these three factors as dependent variables to check if there is a significant difference between the control group and the treatment group, controlling for additional factors that might influence compliance behaviour. In February 2002 the treatment group received a letter signed by the commune’s fiscal commissioner containing normative appeals. Results indicate that moral suasion has hardly any effect on taxpayers’ compliance behaviour. The strongest effect can be observed for the variable tax payments.
    Keywords: tax compliance; morale suasion; field experiment
    JEL: H26 H71
    Date: 2004–01
  6. By: Nava Ashraf; Iris Bohnet; Nikita Piankov
    Abstract: This paper examines whether trust is an investment decision under uncertainty, based on the expectation of trustworthiness, and whether trustworthiness is reciprocity, conditional on one’s counterpart’s behavior. In trust experiments in Russia, South Africa and the United States, two thirds of the subjects who trust do not expect trust to pay monetarily. We find substantial heterogeneity in motivation: Expectations of return account for most of women’s trust, and reciprocity for most of Americans’ trustworthiness. Men’s trust and Russians’ and South Africans’ trustworthiness are significantly related to unconditional kindness as measured by subjects’ behavior in dictator games, us ing a within-subject design.
    Keywords: Trust; kindness; reciprocity; gender; cross-cultural experiments.
    JEL: C72 C91
    Date: 2004–05
  7. By: Iris Bohnet; Richard Zeckhauser
    Abstract: This paper employs experiments to examine the effects of social comparisons in ultimatum bargaining. We inform responders on the average offer before they decide whether to accept or reject their specific offer. To provide a metric for social comparison effects, we compare them with another change in informational conditions, asymmetric information on the pie size. Knowing comparable offers or knowing the pie size increases offers and rejection probabilities by similar magnitudes. Our results are consistent with people disliking deviations from the norm of equity but inconsistent with fairness theories, where people dislike income disparity between themselves and their referents.
    Keywords: Experimental bargaining; social comparisons; asymmetric information; ultimatum game.
    JEL: C91
    Date: 2004–06
  8. By: Ronald G. Cummings; Jorge Martinez-Vazquez; Michael McKee; Benno Torgler
    Abstract: There is considerable evidence that enforcement efforts can increase tax compliance. However, there must be other forces at work because observed compliance levels cannot be fully explained by the level of enforcement actions typical of most tax authorities. Further, there are observed differences, not related to enforcement effort, in the levels of compliance across countries and cultures. To fully understand differences in compliance behavior across cultures one needs to understand differences in tax administration and citizen attitudes toward governments. The working hypothesis is that cross-cultural differences in behavior have foundations in these institutions. Tax compliance is a complex behavioral issue and its investigation requires the use of a variety of methods and data sources. Results from laboratory experiments conducted in different countries demonstrate that observed differences in tax compliance levels can be explained by differences in the fairness of tax administration, in the perceived fiscal exchange, and in the overall attitude towards the respective governments. These experimental results are shown to be robust by replicating them for the same countries using survey response measures of “tax morale.”
    Keywords: Tax Compliance; Tax Evasion; Tax Morale; Culture
    JEL: H26 C91
    Date: 2004–06
  9. By: Bruno S. Frey
    Abstract: Distortions in memory impose important bounds on rationality but have been largely disregarded in economics. While it is possible to learn, it is more difficult, and sometimes impossible, to unlearn. This retention effect lowers individual utility directly or via reduced productivity, and adds costs to principal-agent relationships. The imprinting effect states that the more one tries to forget a piece of information the more vivid it stays in memory, leading to a paradoxical outcome. The effects are based on, and are supported by, psychological experiments, and it is shown that they are relevant in many economic situations and beyond.
    Keywords: Memory; bounded rationality; learning; retention; ironic process theory; principalagency theory
    JEL: D11 D83 J2 M20 Z00
    Date: 2004–06

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