nep-exp New Economics Papers
on Experimental Economics
Issue of 2006‒06‒17
five papers chosen by
Daniel Houser
George Mason University

  1. Investment Incentives in Auctions: An Experiment By Veronika Grimm; Friederike Mengel; Giovanni Ponti; Lari Arthur Viianto
  2. What’s love got to do with it ? An experimental test of household models in East Uganda. By Alistair Munro; Bereket Kebede; Vegard Iversen; Cecile Jackson; Arjan Verschoor
  3. Empirics of Social Interactions By Yannis Ioannides
  4. Household versus individual valuation: what’s the difference? By Alistair Munro; Ian J. Bateman
  5. Testing Preference Axioms in Discrete Choice experiments: A Reappraisal By Jens Leth Hougaard; Tue Tjur; Lars Peter Østerdal

  1. By: Veronika Grimm; Friederike Mengel; Giovanni Ponti; Lari Arthur Viianto
    Abstract: We experimentally analyze first and second price auctions where one bidder can achieve a comparative advantage by investment prior to the auction. We find that, as predicted by theory, bidders invest more often prior to second price auctions than prior to first price auctions. In both auction formats bidding is more aggressive than the equilibrium prediction. However, bidding is closer to equilibrium than in control treatments where the comparative advantage is exogenous.
    Keywords: Auctions, Investment Incentives, Asymmetric Auctions, Experimental Economics
    JEL: D44 C91
    Date: 2006–06–06
  2. By: Alistair Munro (Department of Economics, Royal Holloway, University of London); Bereket Kebede (School of Development Studies, University of East Anglia, Norwich, UK); Vegard Iversen (School of Development Studies, University of East Anglia, Norwich, UK); Cecile Jackson (School of Development Studies, University of East Anglia, Norwich, UK); Arjan Verschoor (School of Development Studies, University of East Anglia, Norwich, UK)
    Abstract: We test core theories of the household using variants of a public good game and experimental data from 240 couples in rural Uganda. Spouses do not maximise surplus from cooperation and realise a greater surplus when women are in charge. This violates assumptions of unitary and cooperative models. When women control the common account, they receive less than when men control it; this contradicts standard bargaining models. Women contribute less than men and are rewarded more generously by men than vice versa. This casts doubt on postulates in Sen (1990). While the absence of altruism is rejected, we find evidence for opportunism. The results are put in a socioeconomic context using quantitative and qualitative survey data. Assortative matching and correlates of bargaining power influence behaviour within the experiments. Our findings suggest that a ‘one-size fits all’ model of the household is unlikely to be satisfactory.
    Keywords: experiment, household theories, Uganda, unitary model, cooperative model
    JEL: D13 C92 C93
    Date: 2006–02
  3. By: Yannis Ioannides
    Abstract: Empirical studies of social interactions address a multitude of definitional, econometric and measurement issues associated with role of interpersonal and social group influences in economic decisions. Applications range from studies of crime patterns, neighborhood influences on upbringing and conformist behavior, mutual influences among classmates and keeping up with roommates in colleges regarding academic and social activities, to herding and to learning about social services. The entry reviews several instances of successful identification of effects emanating from others' behavior as distinct from characteristics of others. Data sets with increasingly rich contextual information will allow estimation of complex models of economic decisions.
    Keywords: Social interactions, peer effects, contextual effects, neighborhood choice, neighbors, neighborhoods, neighborhood effects, laboratory experiments, field experiments, self selection, social networks.
    JEL: C25 I30 R00
    Date: 2006
  4. By: Alistair Munro (Department of Economics, Royal Holloway, University of London); Ian J. Bateman (School of Environmental Sciences, University of East Anglia, Norwich, UK)
    Abstract: Standard practice in stated preference typically blurs the distinction between household and individual responses, but without a clear theoretical or empirical justification for this approach. To date there have been no empirical tests of whether values for say a two adult household elicited by interviewing one randomly selected adult are the same as the values generated by interviewing both adults simultaneously. Using cohabiting couples, we conduct a choice experiment field study valuing reductions in dietary health risks. In one treatment a random individual is chosen from the couple and interviewed alone; in the other treatment, both partners are questioned jointly. We find significant differences in household values calculated from joint as opposed to individual responses, with further variation between the values elicited from men and women. Our results question the assumption, implicit in common practice, that differences between individually and jointly elicited estimates of household values can effectively be ignored.
    Keywords: Household values, choice experiment, contingent valuation, food and health risks
    JEL: C92 D13 D80
    Date: 2006–02
  5. By: Jens Leth Hougaard (Department of Economics, University of Copenhagen); Tue Tjur (Copenhagen Business School); Lars Peter Østerdal (Department of Economics, University of Copenhagen)
    Abstract: Recent studies have tested the preference axioms of completeness and transitivity, and have detected other preference phenomena such as unstability, learning- and tiredness effects, ordering effects and dominance, in stated preference discrete choice experiments. However, it has not been explicitly addressed in these studies which preference models are actually being tested, and the connection between the statistical tests performed and the relevant underlying models of respondent behavior has not been explored further. This paper tries to fill that gap. We specifically analyze the meaning and role of the preference axioms and other preference phenomena in the context of stated preference discrete choice experiments, and examine whether or how these can be subject to meaningful (statistical) tests.
    Keywords: stated preference discrete choice experiments; completeness; transitivity; random utility; statistical tests
    JEL: B41 C52 D01
    Date: 2006–06

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