nep-exp New Economics Papers
on Experimental Economics
Issue of 2006‒10‒07
four papers chosen by
Daniel Houser
George Mason University

  1. Identity and Self-Other Differentiation in Work and Giving Behaviors: Experimental Evidence By Avner Ben-Ner; Brian P. McCall; Massoud Stephane; Hua Wang
  2. Institution Formation in Public Goods Games By Michael Kosfeld; Akira Okada; Arno Riedl
  3. The Chopstick Auction: A Study of the Exposure Problem in Multi-Unit Auctions By Florian Englmaier; Pablo Guillen; Loreto Llorente; Sander Onderstal; Rupert Sausgruber
  4. When and Why? A Critical Survey on Coordination Failure in the Laboratory By Giovanna Devetag; Andreas Ortmann

  1. By: Avner Ben-Ner (University of Minnesota); Brian P. McCall (University of Minnesota); Massoud Stephane (University of Minnesota); Hua Wang (University of Minnesota)
    Abstract: We show that the distinction between Self and Other, ‘us’ and ‘them,’ or in-group and out-group, affects significantly economic and social behavior. In a series of experiments with approximately 200 Midwestern students as our subjects, we found that they favor those who are similar to them on any of a wide range of categories of identity over those who are not like them. Whereas family and kinship are the most powerful source of identity in our sample, all 13 potential sources of identity in our experiments affect behavior. We explored individuals’ willingness to give money to imaginary people, using a dictator game setup with hypothetical money. Our experiments with hypothetical money generate essentially identical data to our experiments with actual money. We also investigated individuals’ willingness to share an office with, commute with, and work on a critical project critical to their advancement with individuals who are similar to themselves (Self) along a particular identity dimension than with individuals who are dissimilar (Other). In addition to family, our data point to other important sources of identity such as political views, religion, sports-team loyalty, and music preferences, followed by television-viewing habits, dress type preferences, birth order, body type, socio-economic status and gender. The importance of the source of identity varies with the type of behavior under consideration.
    Keywords: Identify, Diversity, Experimental Economics, Conflict
    Date: 2006–08
  2. By: Michael Kosfeld; Akira Okada; Arno Riedl
    Abstract: Centralized sanctioning institutions are of utmost importance for overcoming free-riding tendencies and enforcing outcomes that maximize group welfare in social dilemma situations. However, little is known about how such institutions come into existence. In this paper we investigate, both theoretically and experimentally, the endogenous formation of institutions in a public goods game. Our theoretical analysis shows that players may form sanctioning institutions in equilibrium, including those where institutions govern only a subset of players. The experiment confirms that institutions are formed frequently as well as that institution formation has a positive impact on cooperation rates and group welfare. However, the data clearly reveal that players are unwilling to implement institutions in which some players have the opportunity to free ride. In sum, our results show that individuals are willing and able to create sanctioning institutions, but that the institution formation process is guided by behavioral principles not taken into account by standard theory.
    Keywords: public goods, institutions, sanctions, cooperation
    JEL: C72 C92 D72
    Date: 2006
  3. By: Florian Englmaier; Pablo Guillen; Loreto Llorente; Sander Onderstal; Rupert Sausgruber
    Abstract: Multi-unit auctions are sometimes plagued by the so-called exposure problem. In this paper, we analyze a simple game called the ‘chopstick auction’ in which bidders are confronted with the exposure problem. We do so both in theory and in a laboratory experiment. In theory, the chopstick auction has an efficient equilibrium and is revenue equivalent with the second-price sealed-bid auction in which the exposure problem is not present. In the experiment, however, we find that the chopstick auction is less efficient than the second-price sealed-bid auction and that it yields more [the same] revenue if bidders are inexperienced [experienced].
    Keywords: chopstick auction, exposure problem, laboratory experiment, second-price sealed-bid auction
    JEL: C90 D44
    Date: 2006
  4. By: Giovanna Devetag; Andreas Ortmann
    Abstract: Coordination games with Pareto-ranked equilibria have attracted major theoretical attention over the past two decades. Two early path-breaking sets of experimental studies were widely interpreted as suggesting that coordination failure is a common phenomenon in the laboratory. We identify the major determinants that seem to affect the incidence, and/or emergence, of coordination failure in the lab and review critically the existing experimental studies on coordination games with Pareto-ranked equilibria since that early evidence emerged. We conclude that coordination failure is likely to be the exception rather than the rule, both in the lab and outside of it.
    Keywords: Coordination games, Pareto-ranked equilibria, Payoff-asymmetric equilibria, Stag-hunt games, Optimization incentives, Robustness, Coordination, Coordination failure
    JEL: C72 C92
    Date: 2006–09

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