nep-exp New Economics Papers
on Experimental Economics
Issue of 2005‒07‒03
seven papers chosen by
Daniel Houser
George Mason University

  1. Encouraging a Coalition Formation By Michael Maschler
  2. Law and Behaviours in Social Dilemmas: Testing the Effect of Obligations on Cooperation By Roberto Galbiati; Pietro Vertova
  3. Negative Stereotypes and Willingness to Change Them: Testing Theories of Discrimination in South Africa By Jorge Aguero
  4. Examining the Role of Fairness in High Stakes Allocation Decisions By Todd L. Cherry; John A. List
  5. Consumer Benefits of Labels and Bans on GMO Foods: An Emprical Analysis Using Choice Experiments By Fredrik Carlsson; Peter Frykblom; Carl-Johan Lagerkvist
  6. Gender, financial risk, and probability weights By Helga Fehr-Duda; Manuele de Gennaro; Renate Schubert
  7. Private Provision of Public Goods : Incentives for Donations By Karen Pittel; Dirk T.G. Rübbelke

  1. By: Michael Maschler
    Abstract: A 4-person quota game is analyzed and discussed, in which players find it beneficial to pay others, in order to encourage favorable coalition structure.
    Keywords: game theory; cooperative games; power of a coalition; coalition formations; experiments in game theory
    Date: 2004
  2. By: Roberto Galbiati; Pietro Vertova
    Abstract: Laws consist of two components: the ‘obligations’ they express and the ‘incentives’ designed to enforce them. In this paper we run a public good experiment to test whether or not obligations have any independent effect on cooperation in social dilemmas. The results show that, for given marginal incentives, different levels of minimum contribution required by obligation determine significantly different levels of average contributions. Moreover, unexpected changes in the minimum contribution set up by obligation have asymmetric dynamic effects on the levels of cooperation: a reduction does not alter the descending trend of cooperation, whereas an increase induces a temporary re-start in the average level of cooperation. Nonetheless, obligations per se cannot sustain cooperation over time.
    Keywords: Obligation, Incentives, Public Good Game, Experiments.
    JEL: K40 H26 C92 C91
    Date: 2005–04
  3. By: Jorge Aguero (University of Wisconsin-Madison)
    Abstract: This paper proposes a new test to distinguish between the two leading theories of discrimination: preference versus information. Discrimination based on preferences occurs when people behave as if they refuse to change their stereotypes about the capabilities of discriminated individuals. Those who discriminate based on information are willing to alter their stereotypes. Using data from a quasi- experiment in South Africa, I test for discrimination against women and non-whites. The preliminary results show no discrimination against the former. In the case of racial discrimination, players’ stereotypes benefit non-whites instead of white opponents, but they are reluctant to change their impression for the former. However, they are willing to change their initial impression about white opponents. This has severe implications about the permanency of affirmative action policies.
    Keywords: Theories of Discrimination, South Africa, Experiments, Bayesian Learning
    JEL: J7 J79 C99 N37
    Date: 2005–06–30
  4. By: Todd L. Cherry (Appalachian State University); John A. List
    Abstract: Recent experimental evidence has led to a debate about the nature of utility functions in which people are concerned about the amount others earn, and what factors heighten or diminish social preference. We explore fairness by examining behavior across three variants of the dictator game. Using data from nearly 200 dictators allocating as much as $100 each, we observe that fairness considerations are very powerful—when subjects could reasonably believe that disproportionately low offers are “fair”, only 8-12 percent of dictators make positive offers. Examining the comparative static results from these allocation decisions, we find that recent theoretical models of inequality do a respectable job of explaining the data patterns.
    Date: 2004
  5. By: Fredrik Carlsson; Peter Frykblom (Appalachian State University); Carl-Johan Lagerkvist
    Abstract: Applying a choice experiment on the choice of consumer goods we show that Swedish consumers do not regard GMO food as being equivalent to conventional food. A central argument by proponents of GMO is that the end products are identical to those where GMO has not been used. That respondents in our survey disagree with this argument is supported by two observations. First, a positive significant WTP is found for a mandatory labeling policy. This result confirms previous observations that GMO food can be a credence good causing a market failure. Second, consumers are also willing to pay a significantly higher product price to ensure a total ban on the use of GMO in animal fodder. Even if scientists and politicians argue that most of today’s GMO food is indistinguishable from GMO free food, the consumers disagree.
    Date: 2004
  6. By: Helga Fehr-Duda (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH)); Manuele de Gennaro; Renate Schubert (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: Women are commonly stereotyped as more risk averse than men in financial decision making. In this paper we examine whether this stereotype reflects actual differences in risk taking behavior by means of a laboratory experiment with monetary incentives. Gender differences in risk taking may be due to differences in subjects’ valuations of outcomes or to the way probabilities are processed. The results of our experiment indicate that men and women differ in their probability weighting schemes; however, we do not find a significant difference in the value functions. Women tend to be less sensitive to probability changes and also tend to underestimate large probabilities of gains to a higher degree than do men, i.e. women are more pessimistic in the gain domain. The combination of both effects results in significant gender differences in average probability weights in lotteries framed as investment decisions. Women’s relative insensitivity to probabilities combined with pessimism may indeed lead to higher risk aversion.
    Keywords: Gender Differences, Risk Aversion, Financial Decision Making, Prospect Theory
    JEL: D81 C91 C92
    Date: 2004–05
  7. By: Karen Pittel (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH)); Dirk T.G. Rübbelke (Department of Economics, Chemnitz University of Technology)
    Abstract: In many countries the government supports individuals' and companies' donations dedicated to charity organizations or { more general { to public goods. Yet the effects of governmental support with respect to the provision of public goods has been and still is subject to an extensive debate in the economic literature. Starting from Warr's (1982, 1983) famous neutrality result an array of conditions has been identified under which this result holds or not. In this paper we examine the commonly used policy approach to subsi- dize the private provision of public goods by granting agents deductions with respect to their income or corporate tax burden. We especially take into ac- count that most income tax schemes are progressive and that deductibility is limited. The problems that arise from these specific properties of the con- sidered tax-refund schemes are pointed out first. We then turn towards the effects which such a tax-refund scheme has with respect to the provision of the public good on the one hand and individual as well as aggregate wel- fare on the other hand. We show that the effects of this commonly practised method of supporting private public good provision depend crucially on the specific properties of the progressive tax scheme and the preference structure of agents. While Pareto-improvements and even Pareto-efficiency can result from the implementation of such a scheme, it is also conceivable that at least some agents perceive a utility reduction. Due to the dependency of welfare effects on the tariff structure, income tax reforms as they are planned in many countries might not only induce a reduction in private public good provision, but might also alter the induced welfare effects.
    Keywords: public goods, sponsoring, neutrality
    JEL: H23 H42
    Date: 2004–08

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