nep-exp New Economics Papers
on Experimental Economics
Issue of 2007‒02‒03
three papers chosen by
Daniel Houser
George Mason University
  1. EXCHANGE RATE MARKETS AND CONSERVATIVE INFERENTIAL EXPECTATIONS By Gordon Menzies; Daniel Zizzo
  2. Procurement When Price and Quality Matter By John Asker; Estelle Cantillon
  3. A Model of Reciprocal Fairness: Application to the Labour Contract By Stéphane Mahuteau
  1. By: Gordon Menzies; Daniel Zizzo
    Abstract: We present a macroeconomic market experiment on the financial determination of exchange rates, and consider whether the assumption that belief formation be treated as a classical hypothesis test, which we label inferential expectations, can explain the effect of uncertainty on exchange rates. In a non-stochastic environment, exchange rates closely follow standard predictions. In our stochastic environment, inferential expectations with a low test size alpha (conservative inferential expectations) predict exchange rates better than rational expectations in ten sessions out of twelve. Belief conservatism appears magnified rather than diminished at the market level, and the degree of belief conservatism seems connected to the failure of uncovered interest rate parity regressions.
    JEL: C91 D84 E50 F31
    Date: 2006–12
    URL: http://d.repec.org/n?u=RePEc:pas:camaaa:2007-02&r=exp
  2. By: John Asker; Estelle Cantillon
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:ste:nystbu:06-24&r=exp
  3. By: Stéphane Mahuteau (Department of Economics, Macquarie University)
    Abstract: We investigate to what extent reciprocity, exhibited by employers and employees, lead to stable gift exchange practices in the labour contract, giving rise to non-compensating wage differentials among industries and firms. We use the concept of Sequential Reciprocity Equilibrium (Dufwenberg and Kirchsteiger 1998, 2004) to incorporate players’ preferences for reciprocity in their utility function. We show that successful gift exchange practices may arise if both players actually care for reciprocity. We test the predictions of the model using a matched employer-employee French dataset. Our results show that French employers and employees’ decisions are influenced by reciprocity concerns.
    Keywords: reciprocity, fairness, sequential game, cheap-talk, efficiency wages
    JEL: C72 J33 J41
    Date: 2006–11
    URL: http://d.repec.org/n?u=RePEc:mac:wpaper:0609&r=exp
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