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on Experimental Economics |
| By: | Andrea Morone |
| Abstract: | This paper purports to provide experimental evidence explaining a number of stylized facts associated with the behaviour of financial returns, in particular, the fat tailed nature of their distribution and the persistence in their volatility. By means of a laboratory experiment, we will investigate the effect of quantity and quality of information, present in a financial market, upon its stylized facts, showing how both quality and quantity of information might have an impact on volatility clustering and the emergence of fat tail returns. |
| Keywords: | herd behaviour, fat tail volatility clustering |
| JEL: | C91 D82 D83 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:esi:discus:2005-27&r=exp |
| By: | Uwe Cantner (University of Jena, Faculty of Economics); Andreas Nicklisch (Max-Planck-Institute for Research into Collective Goods); Torsten Weiland (Max-Planck-Institute for Economics, Strategic Interactions Group) |
| Abstract: | In an experimental setting, firms in a duopoly market engage in a patent tournament and compete for profit-enhancing product advancements. The firms generate income by matching exogenously defined demand preferences with an appropriately composed product portfolio of their own. Demand preferences are initially unknown and first need to be revealed by an investigation of the possible product variations. The better firms approximate demand preferences, the higher their profits. In the ensuing innovation race, firms interact through information spillovers resulting from the imperfect appropriability of research successes. In the random period of the experiment, the continuity of the search process is disturbed by an exogenous shock that affects both the supply and demand side and again spurs research competition. Firms may henceforth explore an enlarged product space in attempting to match the equally modified demand preferences. In our analysis, we explore the behavioural regularities of agents who are engaged in innovation activities. As a key element we test to what extend relative economic performance exercises a stimulating effect on the implementation of innovation and imitation strategies. |
| Keywords: | Innovation, Imitation, Patent Tournament, Trial and Error Process |
| JEL: | D81 O31 |
| Date: | 2005–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:jen:jenasw:2005-17&r=exp |
| By: | Louis Lévy-Garboua (TEAM et CIRANO); David Masclet (CREM - Université de Rennes); Claude Montmarquette (Université de Montréal et CIRANO) |
| Abstract: | A conjecture of Laffer, which had considerable influence on fiscal doctrine, is that tax revenues of a Leviathan state eventually decrease when the tax rate exceeds a threshold value. We conduct a real effort experiment, in which a "worker" is matched with a non-working partner, to elicit the conditions under which a Laffer curve can be observed. We ran four different treatments by manipulating work opportunities and the power to tax. In the endogenous treatment, the non-working partner chooses a tax rate among the set of possibilities and receives the revenue generated by her choice and the worker's effort response to this tax rate. In the exogenous treatment, the tax rate is randomly selected by the computer and the non-working partner merely receives the revenue from taxes. The Laffer curve phenomenon cannot be observed in the exogenous treatments, but arises in endogenous treatments. Tax revenues are then maximized at a 50% tax rate. We demonstrate that an "efficiency tax" model (with or without inequity aversion) falls short of predicting our experimental Laffer curve but an alternative model of social preferences provides a micro-foundation for the latter. This new model endogenously generates a social norm of fair taxation at a 50% tax rate under asymmetric information about workers' type. Taxpayers manage to enforce this norm by working less whenever it has been violated but do not systematically reward "kind" tax setters. Workers who maximize their expected wealth adjust work to the tax rate equitably so that tax revenues remain at a fair level. Workers who respond affectively to norm violations just refuse to work so that tax revenues are cut down. Workers endowed with higher work opportunities tend to respond more emotionally to unfair taxation in our experiment, which is consistent with the observed Laffer curve and with the history of tax revolts. |
| Keywords: | Taxation and labor supply, Laffer curve, experimental economies. |
| JEL: | C72 C91 H30 J22 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:bla05071&r=exp |
| By: | Ariel Rubinstein |
| Date: | 2005–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:784828000000000539&r=exp |