nep-exp New Economics Papers
on Experimental Economics
Issue of 2006‒07‒21
eleven papers chosen by
Daniel Houser
George Mason University

  1. Uniform price auctions and fixed price offerings in IPOs: an experimental comparison By Ping Zhang
  2. Trust and Religion: Experimental Evidence from Bangladesh By Olof Johansson Stenman; Minhaj Mahmud; Peter Martinsson
  3. It's not how you play the game, it's winning that matters: an experimental investigation of asymmetric contests By Miguel A. Fonseca
  4. Is Satisficing Absorbable? - An Experimental Study By Werner Güth; M. Vittoria Levati; Matteo Ploner
  5. Introducing Social Norms in Game Theory By Raúl López-Pérez
  6. Design a Contract! A Simple Principal-Agent Problem as a Classroom Experiment By Simon Gaechter; Manfred Koenigstein
  7. The Paradox of Voter Participation? A Laboratory Study By David K. Levine; Thomas R. Palfrey
  8. Trust, Trust Games and Stated Trust: Evidence from Rural Bangladesh By Olof Johansson Stenman; Minhaj Mahmud; Peter Martinsson
  9. Efficiency, Equity, and Timing in Voting Mechanisms By Marco Battaglini; Rebecca Morton; Thomas R. Palfrey
  10. Group versus Individual Liability: A Field Experiment in the Philippines By Xavier Gine; Dean Karlan
  11. Heterogeneous Quantal Response Equilibrium By Colin F. Camerer; Thomas R. Palfrey; Brian W. Rogers

  1. By: Ping Zhang (University of Nottingham)
    Abstract: We compare the performances of uniform price auctions with fixed price offerings using laboratory experiments. In the uniform treatment, there is no evidence that the tacit collusion equilibria, which predict symmetric behaviors among bidders, have been achieved. On the contrary, in accordance with another set of equilibria, subjects with higher expected value bid more aggressively and obtain a higher allocation. The resulting market price increases with the market value and is significantly higher than the expected value of a bidder with a low value signal. As a consequence, our experiment suggests that the uniform price auctions are superior to fixed price offerings in terms of raising revenues.
    Keywords: experiment, IPO, uniform price auction, fixed price offering, share auction
    JEL: D44 G12 C91
    Date: 2006–04
  2. By: Olof Johansson Stenman (Göteborg University); Minhaj Mahmud (Keele University, Centre for Economic Research and School of Economic and Management Studies); Peter Martinsson (Göteborg University)
    Abstract: Trust is measured using both survey questions and a standard trust experiment among a random sample of Muslim and Hindu household heads in rural Bangladesh. We found no significant effect of the social distance between Hindus and Muslims in the trust experiment in terms of fractions sent or returned, but the responses to the survey questions do indicate significant differences. Hindus, the minority, trust other people less in general, while Hindus trust Muslims more than Muslims trust Hindus.
    Keywords: Social capital; Trust; Social distance; Religion; Trust game; field experiment; Bangladesh.
    JEL: C93 Z12 Z13
    Date: 2006–06
  3. By: Miguel A. Fonseca
    Abstract: This paper reports an experimental test of asymmetric Tullock contests. Both the simultaneous-move and sequential-move frameworks are considered. The introduction of asymmetries in the contest function generates experimental behavior qualitatively consistent with the theoretical predictions. However, especially in the simultaneous-move framework, average bidding levels are in excess of the risk-neutral predictions. We conjecture that the reason behind this behavior lies in subjects attaching positive utility to victory in the contest.
    Date: 2006–02–03
  4. By: Werner Güth; M. Vittoria Levati; Matteo Ploner
    Abstract: We experimentally investigate whether the satisficing approach is absorbable, i.e., whether it still applies after participants become aware of it. In a setting where an investor decides between a riskless bond and either one or two risky assets, we familiarize participants with the satisficing calculus applied to specific portfolio selection tasks. After experiencing this calculus repeatedly, participants are free to use it or to select their portfolio freely. The results support, to some extent, the absorbability of the satisficing approach.
    Keywords: Theory absorption; Satisficing behavior; Portfolio selection
    JEL: C91 D81 G11
    Date: 2006–07
  5. By: Raúl López-Pérez
    Abstract: This paper explicitly introduces norms in games, assuming that they shape (some) players’ utility and beliefs. People feel badly when they deviate from a binding norm, and the less other players deviate, the more badly they feel. Further, people anger at transgressors and get pleasure from punishing them. I then study how social norms and emotions affect cooperation, coordination, and punishment in a variety of games. The model is consistent with abundant experimental evidence that alternative models of social preferences cannot explain.
    Keywords: Cooperation, Emotions, Focal Points, Punishment, Reciprocity, Social Norms
    JEL: C72 D02 D62 D64 Z13
    Date: 2006–06
  6. By: Simon Gaechter (University of Nottingham); Manfred Koenigstein (University of Erfurt)
    Abstract: We present a simple classroom principal-agent experiment that can effectively be used as a teaching device to introduce important concepts of organizational economics and contracting. In a first part, students take the role of a principal and design a contract that consists of a fixed payment and an incentive component. In the second part, students take the role of agents and decide on an effort level. The experiment can be used to introduce students to the concepts of efficiency, incentive compatibility, outside options and participation constraints, the Coase theorem, and fairness and reciprocity in contracting.
    Keywords: Classroom experiments; post-contractual opportunism; incentive contracts; efficiency; reciprocity; Coase theorem
    JEL: A22 C92
    Date: 2006–04
  7. By: David K. Levine; Thomas R. Palfrey
    Date: 2006–07–15
  8. By: Olof Johansson Stenman (Göteborg University); Minhaj Mahmud (Keele University, Centre for Economic Research and School of Economic and Management Studies); Peter Martinsson (Göteborg University)
    Abstract: Levels of trust are measured by asking standard survey questions on trust and by observing the behaviour in a trust game using a random sample in rural Bangladesh. Follow-up questions and correlations between stated expectations and the sent amount in the trust game reveal that the amount sent in the trust game is a weak measure of trust. The fear of future punishment, either during or after this life, for not being sufficiently generous to others, was the most frequently stated motive behind the respondents' behaviour, highlighting the potential importance of motives that cannot be inferred directly from people's behaviour.
    Keywords: Trust; trust game; social capital; motivations; Bangladesh.
    JEL: C93 Z13
    Date: 2006–06
  9. By: Marco Battaglini; Rebecca Morton; Thomas R. Palfrey
    Date: 2006–07–15
  10. By: Xavier Gine (World Bank); Dean Karlan (Economic Growth Center, Yale University)
    Abstract: Group liability is often portrayed as the key innovation that led to the explosion of the microcredit movement, which started with the Grameen Bank in the 1970s and continues on today with hundreds of institutions around the world. Group lending claims to improve repayment rates and lower transaction costs when lending to the poor by providing incentives for peers to screen, monitor and enforce each other’s loans. However, some argue that group liability creates excessive pressure and discourages good clients from borrowing, jeopardizing both growth and sustainability. Therefore, it remains unclear whether group liability improves the lender’s overall profitability and the poor’s access to financial markets. We worked with a bank in the Philippines to conduct a field experiment to examine these issues. We randomly assigned half of the 169 pre-existing group liability “centers” of approximately twenty women to individual-liability centers (treatment) and kept the other half as-is with group liability (control). We find that the conversion to individual liability does not affect the repayment rate, and leads to higher growth in center size by attracting new clients.
    Keywords: Microfinance, group liability, joint liability, social capital, micro-enterprises, informal economies
    JEL: C93 D71 D82 D91 G21 O12 O16 O17
  11. By: Colin F. Camerer; Thomas R. Palfrey; Brian W. Rogers
    Date: 2006–07–15

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