nep-exp New Economics Papers
on Experimental Economics
Issue of 2006‒10‒28
ten papers chosen by
Daniel Houser
George Mason University

  1. Ex Interim Voting in Public Good Provision By Sven Fischer; Andreas Nicklisch
  2. On Public Opinion Polls and Voters' Turnout By Klor, Esteban F; Winter, Eyal
  3. (In)Transparency of Information Acquisition: A Bargaining Experiment By Gehrig, Thomas; Güth, Werner; Levínsky, René
  4. Grow Rich While You Sleep: Selection in Experiments with Voluntary Participation By Pieter A. Gautier; Bas van der Klaauw
  5. Seemingly Irrelevant Events Affect Perceptions and Expectations - The FIFA World Cup 2006 as a Natural Experiment By Dohmen, Thomas J; Falk, Armin; Huffman, David; Sunde, Uwe
  6. How Context Matters: A Survey Based Experiment on Distributive Justice By Marco Faravelli
  7. On the Empirical Content of Quantal Response Equilibrium By Philip A. Haile; Ali Hortacsu; Grigory Kosenok
  8. The Intergenerational Transmission of Risk and Trust Attitudes By Thomas Dohmen; Armin Falk; David Huffman; Uwe Sunde
  9. Rebate or Bait? A Model of Regret and Time Inconsistency in Consumer Behaviour By Drago, Francesco; Kadar, Dora
  10. Can Anyone Be “The” One? Evidence on Mate Selection from Speed Dating By Michèle Belot; Marco Francesconi

  1. By: Sven Fischer; Andreas Nicklisch
    Abstract: We report the results of an experimental study that compares voting mechanisms in the provision of public goods. Subjects can freely decide how much they want to contribute. Whether the public good is finally provided is decided by a referendum under full information about all contributions. If provision is rejected, contributions are reduced by a fee and reimbursed. We compare unanimity with majority voting and both to the baseline of cheap talk. Contributions are highest under unanimity. Yet, results concerning overall efficiency are mixed. When provision occurs, only unanimity enhances efficiency. Overall, however, unanimity leads to too many rejections.
    Keywords: competition, collusion, auction, bidding, public procurement
    JEL: C72 C91 H41
    Date: 2006–10
  2. By: Klor, Esteban F; Winter, Eyal
    Abstract: This paper studies the effects that the revelation of information on the electorate's preferences has on voters' turnout decisions. The experimental data show that closeness in the division of preferences induces a significant increase in turnout. Moreover, for closely divided electorates (and only for these electorates) the provision of information significantly raises the participation of subjects supporting the slightly larger team relative to the smaller team. This behaviour contradicts the qualitative predictions of the unique quasi-symmetric Nash equilibrium of the theoretical model. We show that the heterogeneous effect of information on the participation of subjects in different teams is driven by the subjects' (incorrect) beliefs of casting a pivotal vote. Simply put, subjects overestimate the probability of casting a pivotal vote when they belong to the team with a slight majority, and choose the strategy that maximizes their utility based on their inflated probability assessment. Empirical evidence on gubernatorial elections in the U.S. between 1990 and 2005 is consistent with our main experimental result. Namely, we observe that the difference in the actual vote tally between the party leading according to the polls and the other party is larger than the one predicted by the polls only in closely divided electorates. We provide a behavioural model that explains the main findings of our experimental and empirical analyses.
    Keywords: experimental economics; public opinion polls; voter turnout
    JEL: C72 C92 D72 H41
    Date: 2006–05
  3. By: Gehrig, Thomas; Güth, Werner; Levínsky, René
    Abstract: We analyze how transparency affects information acquisition in a bargaining context, where proposers may chose to purchase information about the unknown outside option of their bargaining partner. Although information acquisition is excessive in all our scenarios we find that the bargaining outcome depends crucially on the transparency of the bargaining environment. In transparent games, when responders can observe whether proposers have acquired information, acceptance rates are higher. Accordingly, in transparent bargaining environments information is more valuable, both individually and socially.
    Keywords: information acquisition; transparency; ultimatum experiment
    JEL: C91 D82
    Date: 2006–09
  4. By: Pieter A. Gautier (Free University of Amsterdam, Tinbergen Institute and IZA Bonn); Bas van der Klaauw (Free University of Amsterdam, Tinbergen Institute and IZA Bonn)
    Abstract: We use data from a promotion campaign of NH-Hoteles to study self-selection of participants in a gift-exchange experiment. The promotion campaign allowed guests to pay any non negative amount of money for a stay in one of 36 hotels in Belgium and the Netherlands. The data allow us to distinguish between ‘regular guests’, who booked prior to the announcement of the promotion campaign and guests who booked after the campaign was announced. During the promotion campaign we varied the posted price of a room that was communicated to the guests. Only the regular guests respond to the exogenous variation in the posted price and they pay substantially more on average. This different behavior cannot be explained by differences in satisfaction or observed compositional differences between both groups. We argue that the promotion campaign mainly attracted individuals who find it relatively unimportant to be viewed as prosocial.
    Keywords: field experiment, gift-exchange game, self-selection
    JEL: C93
    Date: 2006–10
  5. By: Dohmen, Thomas J; Falk, Armin; Huffman, David; Sunde, Uwe
    Abstract: Prominent economic theories have emphasized the role of commonly held perceptions and expectations for determining macroeconomic outcomes. A key empirical question is how such collectively held beliefs are formed. We use the FIFA World Cup 2006 as a natural experiment. We provide direct evidence that seemingly irrelevant events (the outcomes of soccer matches) can systematically affect individual perceptions about economic prospects, both on a personal and economy-wide level.
    Keywords: expectation formation; macroeconomic outcomes; psychology; soccer World Cup; sunspots
    JEL: D0 D8 E0
    Date: 2006–09
  6. By: Marco Faravelli
    Abstract: We explore distributive justice and perception of fairness using survey data from freshmen and senior students of economics and sociology. We analyse the impact of context and education on their preferences over a hypothetical distribution of resources between individuals which presents a trade off between efficiency and equality. With context giving minimal information, economics students are less likely to favour equality; studying economics influences the preferences of the subjects, increasing this difference. However, when the same problem is inserted into a meaningful context, the difference disappears. Four distribution mechanisms are analysed: egalitarianism, maximin, utilitarianism and utilitarianism with a floor constraint.
  7. By: Philip A. Haile (Department of Economics and Cowles Foundation, Yale University, and NBER); Ali Hortacsu (University of Chicago and NBER); Grigory Kosenok (NES)
    Abstract: The quantal response equilibrium (QRE) notion of McKelvey and Palfrey (1995) has recently attracted considerable attention, due in part to its widely documented ability to rationalize observed behavior in games played by experimental subjects. However, even with strong a priori restrictions on unobservables, QRE imposes no falsifiable restrictions: it can rationalize any distribution of behavior in any normal form game. After demonstrating this, we discuss several approaches to testing QRE under additional maintained assumptions.
    Keywords: quantal response equilibrium, falsifiability, testable restrictions, regular quantal response equilibrium, rank-cumulative probabilities, Block-Marschak polynomials
    Date: 2006–08
  8. By: Thomas Dohmen (IZA Bonn); Armin Falk (IZA Bonn, University of Bonn, and CEPR); David Huffman (IZA Bonn); Uwe Sunde (IZA Bonn, University of Bonn, and CEPR)
    Abstract: We investigate whether two crucial determinants of economic decision making – willingness to take risks and willingness to trust other people – are transmitted from parents to children. Our evidence is based on survey questions that ask about these attitudes directly, and are good measures in the sense that they reliably predict actual risk-taking and trusting behavior in large-scale, incentive compatible field experiments. We find a strong, significant, and robust correlation between the responses of parents and their children. Exploring heterogeneity in the strength of transmission, we find that gender of the child does not matter, but that children with fewer siblings, and firstborn children, are more strongly influenced by parents in terms of risk attitudes. Interestingly, for trust there is no impact of family size or birth order. There is some evidence of ‘receptive’ types: children who are similar to the father are similar to the mother, and children who are similar to parents in terms of risk are similar in terms of trust. We find that the transmission from parents to children is relatively specific, judging by questions that ask about willingness to take risks in specific contexts – financial matters, health, career, car driving, and leisure activities. Finally, we provide evidence of positive assortative mating based on risk and trust attitudes, which reinforces the impact of parents on children. Our results have potentially important implications for understanding the mechanisms underlying cultural transmission, social mobility, and persistent differences in behavior across countries. More generally, our findings shed light on the basic question of where attitudes towards risk and trust come from.
    Keywords: risk preferences, trust, intergenerational transmission, cultural transmission, assortative mating, social mobility, GSOEP
    JEL: D1 D8 J12 J13 J62 Z13
    Date: 2006–10
  9. By: Drago, Francesco; Kadar, Dora
    Abstract: In this paper we develop a theory of time-inconsistency and regret that is motivated by evidence on a 'price discrimination' technique widespread in the United States, namely mail-in-rebate promotions. Our model combines partial naivete about future self-control problems and the sunk-cost effect (regret). We assume that agents deviating from their past choices suffer a certain emotional disutility from having brought a bad decision in the past and that this emotional disutility is negatively related to the length of the period between the choice made and the deviation from it. In the context of our application the model explains why in a multi period setting a large number of consumers respond to the rebate offers intending to redeem the rebate and then fail to provide the necessary effort when it comes to collect their money. Moreover, consumer failure to accomplish a task planned in the past (e.g. redeeming the rebate) is more likely when the deadline of completion is longer. This prediction is supported by experimental studies on various forms of procrastination and by field and experimental evidence on mail-in-rebates. We review a number of areas for which the theory may have important implications.
    Keywords: mail-in-rebate; naivete; regret; time inconsistency
    JEL: C70 D11 D91
    Date: 2006–07
  10. By: Michèle Belot (University of Essex); Marco Francesconi (University of Essex and IZA Bonn)
    Abstract: Marriage data show a strong degree of positive assortative mating along a variety of attributes. But since marriage is an equilibrium outcome, it is unclear whether positive sorting is the result of preferences rather than opportunities. We assess the relative importance of preferences and opportunities in dating behaviour, using unique data from a large commercial speed dating agency. While the speed dating design gives us a direct observation of individual preferences, the random allocation of participants across events generates an exogenous source of variation in opportunities and allows us to identify the role of opportunities separately from that of preferences. We find that both women and men equally value physical attributes, such as age and weight, and that there is positive sorting along age, height, and education. The role of individual preferences, however, is outplayed by that of opportunities. Along some attributes (such as occupation, height and smoking) opportunities explain almost all the estimated variation in demand. Along other attributes (such as age), the role of preferences is more substantial, but never dominant. Despite this, preferences have a part when we observe a match, i.e., when two individuals propose to one another.
    Keywords: mate selection, assortative mating, marriage market, speed dating, randomized experiments
    JEL: D1 J1
    Date: 2006–10

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