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on Experimental Economics |
| By: | M. Keith Chen (School of Management, Yale University); Venkat Lakshminarayanan; Laurie Santos |
| Abstract: | Behavioral economics has demonstrated systematic decision-making biases in both lab and field data. But are these biases learned or innate? We investigate this question using experiments on a novel set of subjects — capuchin monkeys. By introducing a fiat currency and trade to a capuchin colony, we are able to recover their preferences over a wide range of goods and risky choices. We show that standard price theory does a remarkably good job of describing capuchin purchasing behavior; capuchin monkeys react rationally to both price and wealth shocks. However, when capuchins are faced with more complex choices including risky gambles, they display many of the hallmark biases of human behavior, including reference-dependent choices and loss-aversion. Given that capuchins demonstrate little to no social learning and lack experience with abstract gambles, these results suggest that certain biases such as loss-aversion are an innate function of how our brains code experiences, rather than learned behavior or the result of misapplied heuristics. |
| Keywords: | Prospect theory, Loss aversion, Reference dependence, Evolution, Neuroeconomics, Capuchin monkeys, Monkey business |
| JEL: | C91 C99 D12 D46 D80 D81 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1524&r=exp |
| By: | Nikos Nikiforakis (Department of Economics, Royal Holloway, University of London); Hans-Theo Normann (Department of Economics, Royal Holloway, University of London) |
| Abstract: | This paper provides a comparative statics analysis of punishment in public-good experiments. We vary systematically the effectiveness of punishment, that is, the factor by which punishment reduces the punished player’s income, and we find that contributions to the public good increase monotonically in effectiveness. High effectiveness leads to near complete contribution rates and welfare improvements. Below a certain threshold, however, punishment cannot prevent the decay of cooperation found in the public-good game without punishment. In these cases, the possibility to punish may even worsen welfare. Finally, we show that punishment is a normal and inferior good. |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:hol:holodi:0507&r=exp |
| By: | Avner Ben-Ner; Brian McCall; Massoud Stephane; Hua Wang |
| Abstract: | The asumption that behavior is independent of the identity of those who participate in an economic interaction is fundamental to economists’ understanding of how markets operate, how firms work internally, how nations trade with each other, and much else. In this paper, we show that the distinction between Self and Other, ‘us’ and ‘them,’ or in-group and out-group, affects significantly economic and social behavior. In a series of experiments with approximately 200 Midwestern students as our subjects, we found that they favor those who are similar to them on any of a wide range of categories of identity over those who are not like them. Whereas family and kinship are the most powerful source of identity in our sample, all 13 potential sources of identity in our experiments affect behavior. We explored individuals’ willingness to give money to imaginary people, using a dictator game setup with hypothetical money. Our experiments with hypothetical money generate essentially identical data to our experiments with actual money. We also investigated individuals’ willingness to share an office with, commute with, and work on a critical project critical to their advancement with individuals who are similar to themselves (Self) along a particular identity dimension than with individuals who are dissimilar (Other). In addition to family, our data point to other important sources of identity such as political views, religion, sports-team loyalty, and music preferences, followed by television-viewing habits, dress type preferences, birth order, body type, socio-economic status and gender, albeit statistically significant, sources of differentiation between Self and Other. The importance of the source of identity varies with the type of behavior under consideration. |
| URL: | http://d.repec.org/n?u=RePEc:hrr:papers:0805&r=exp |
| By: | Ivan Moscati (Bocconi University - IEP) |
| Abstract: | This paper reconstructs the history of experimental research on consumer demand behavior between 1930 and 1970. The backgrounds of the experiments and their impact on the development of consumption theory are also investigated. Among other things, the paper shows that in fact many prominent economists of the period were involved in this stream of research. |
| JEL: | B21 B31 C91 D12 |
| Date: | 2005–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpmh:0506003&r=exp |