nep-exp New Economics Papers
on Experimental Economics
Issue of 2006‒08‒26
nine papers chosen by
Daniel Houser
George Mason University

  1. Are preferences complete? An experimental measurement of indecisiveness under risk By Eric Danan; Anthony Ziegelmeyer
  2. Bad luck vs. self-inflicted neediness – An experimental investigation of gift giving in a solidarity game By Nadja Trhal; Ralf Radermacher
  3. Gender, Risk and Stereotypes By Daruvala, Dinky
  4. Competing Against Simulated EquilibriumPrice Dispersions: An Experiment OnInternet-Assisted Search Markets By Aurora García-Gallego; Nikolaos Georgantzís; Pedro Pereira; José C. Pernías-Cerrillo
  5. Would The Right Social Preference Model Please Stand Up! By Daruvala, Dinky
  6. An Experimental Test of Criminal Behavior Among Juveniles and Young Adults By Michael S. Visser; William T. Harbaugh; Naci Mocan
  7. The Science Game: An Experiment on Reducing errors in Forensic Science and Other Areas By R.Koppl
  8. An Experimental Test of the Impact of Overconfidence and Gender on Trading Activity By Richard Deaves; Erik Lüders; Guo Ying Luo
  9. Risk Attitudes and Internet Search Engines: Theory and Experimental Evidence By Aurora García-Gallego; Nikolaos Georgantzís; Pedro Pereira; José C. Pernías-Cerrillo

  1. By: Eric Danan; Anthony Ziegelmeyer
    Abstract: We propose an experimental design allowing a behavioral test of the axiom of completeness of individual preferences. The central feature of our design consists in enabling subjects to postpone commitment at a small cost. Our main result is that preferences are significantly incomplete. We use lotteries as choice alternatives and we find that risk aversion is globally robust to preference incompleteness.
    Keywords: Incomplete preferences, preference for flexibility, risk aversion, indecisiveness, indifference
    JEL: C91 D11
    Date: 2006–08
  2. By: Nadja Trhal; Ralf Radermacher
    Abstract: We experimentally examine the impact of self-inflicted neediness on the solidarity behavior of subjects. In one treatment in our solidarity experiment all subjects face the same probability of becoming needy, in the other treatment subjects have the choice between a secure payment and a lottery including a certain probability of becoming needy. Then we ask all subjects how much they will give to losers in their group thus investigating if people are willing to give the same gifts whether or not subjects are responsible for inequality in payoffs. We found evidence for allocative as well as for procedural utility concerns.
    Keywords: solidarity game, self-inflicted neediness, responsibility, procedural utility
    JEL: C91 D63
    Date: 2006–08–21
  3. By: Daruvala, Dinky (Karlstad University)
    Abstract: This paper reports results from an economic experiment where respondents are asked to make choices between risky outcomes for themselves and others. In addition, we elicit information about the respondents’ perception of others risk preferences. We investigate whether subjects’ own risk preferences and gender stereotypes are reflected in the prediction they make for the risk preferences of others and the way this occurs. We find no significant difference in risk preferences between men and women in the experiment. However, both men and women perceive women to be more risk averse than men. When predicting other people’s risk preferences, the respondents tend to use a combination of their own risk preferences and stereotypes. Moreover, when making risky choices for others, the respondents generally use a combination of their own risk preferences and their average predicted risk preference of the targeted group. <p>
    Keywords: gender; risk aversion; risk predictions
    JEL: A12 C91 D81 J16
    Date: 2006–08–14
  4. By: Aurora García-Gallego (Universitat Jaume I); Nikolaos Georgantzís (Universitat Jaume I); Pedro Pereira (Autoridade da Concorrência); José C. Pernías-Cerrillo (LINEEX, Universitat de Valencia)
    Abstract: In a four-treatment experiment, we test some of the hypotheses in García-Gallego et al. (2004) concerning competition among a number of firms of which some (or all) are indexed by a price-comparison engine facilitating buyers’ search process. In this paper, we isolate individual behavior from noise due to other players’ actions and learning, facing each subject with simulated rivals whose prices are extracted from mixed strategy equilibrium distributions. We find systematic deviations from both theoretical distributions and previous data obtained in sessions where all players were human. Specifically, departures of experimental data from the corresponding theoretical predictions are enhanced in this setting as compared to our previous research in which all agents were represented by human players. This suggests that the divergence between theoretical and observed price reported there should not be attributed to noisy learning and strategic uncertainty due to subjects’ interaction with other players. Furthermore, economic tests on players’ risk attitudes oganize pricing behavior in meaningful, although not always compatible, ways.
    JEL: C91 D43 D83 L13
    Date: 2005–10
  5. By: Daruvala, Dinky (Karlstad University)
    Abstract: A number of competing social preference models have been developed inspired by the evidence from economic experiments. We test the relative performance of some of these models using an experimental design that is aimed at capturing pure distributional concerns in a multi-person setting. We find that the individuals in this study are heterogeneous and that they do not follow any single notion of fairness or inequality aversion. In addition, the results suggest that efficiency concerns are not confined to students of economics but are important to students of all disciplines. <p>
    Keywords: Difference Aversion; Efficiency; Inequality Aversion; Maximin Criterion; Social Preferences
    JEL: A13 C91 D63
    Date: 2006–08–14
  6. By: Michael S. Visser; William T. Harbaugh; Naci Mocan (University of Oregon Economics Department)
    Abstract: We report results from economic experiments that provide a direct test of the hypothesis that criminal behavior responds rationally to changes in the possible rewards and in the probability and severity of punishment. The experiments involve decisions that are best described as petty larceny, and are done using high school and college students who can anonymously take real money from each other. We find that decisions about whether and how much to steal are, in general, rational and responsive to the variations in tradeoffs, and sometimes, though not always, to the overall availability of criminal opportunities.
    Keywords: crime, rational choice, revealed preference
    Date: 2006–08–18
  7. By: R.Koppl
    Abstract: In “monopoly epistemics,” one privileged actor is asked to identify the truth. In “democratic epistemics,” several independent parties are asked. In an experiment contrasting them, democratic epistemics reduced the systemic error rate by two-thirds, supporting the claim that replacing monopoly epistemics with democratic epistemics would reduce error rates in forensic science and other areas. It also suggests first, the potential of “epistemic systems design,” which employs the techniques of economic systems design to address issues of veracity, rather than efficiency, and second, the value of “experimental epistemology,” which employs experimental techniques in the study of science. Research of the sort described here puts evolutionary epistemology into practice by seeking to find the proper design principles for error-correcting social institutions. Length 52 pages
    Date: 2006–07
  8. By: Richard Deaves; Erik Lüders (Pinehill Capital and Laval University); Guo Ying Luo
    Date: 2005–09
  9. By: Aurora García-Gallego (Universitat Jaume I (Castellón, Spain)); Nikolaos Georgantzís (Universitat Jaume I (Castellón, Spain)); Pedro Pereira (Autoridade da Concorrência (Portugal)); José C. Pernías-Cerrillo (Universitat Jaume I (Castellón, Spain))
    Abstract: This paper analyzes the impact on consumer prices of the size and biases of price comparison search engines. We develop several theoretical predictions, in the context of a model related to Burdett and Judd (1983) and Varian (1980), and test them experimentally. The data supports the model’s predictions regarding the impact of the number of firms, and the type of bias of the search engine. The data does not support the model’s predictions regarding the impact of the size of the search engine. We identified several data patterns, and developed an econometric model for the price distributions. Variables accounting for risk attitudes improved significantly the explanatory power of the econometric model.
    Keywords: Search engines, incomplete information, biased information, price levels, experiments
    JEL: D43 D83 L13
    Date: 2004–10

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