nep-exp New Economics Papers
on Experimental Economics
Issue of 2007‒02‒10
nine papers chosen by
Daniel Houser
George Mason University

  1. Affective Match: Leader Emotional Displays, Follower Positive Affect, and Follower Performance By Damen, F.J.A.; Knippenberg, B. van; Knippenberg, D.L. van
  2. Look-ups as the Windows of the Strategic Soul: Studying Cognition via Information Search in Game Experiments By Vincent P. Crawford
  3. On the Value of Participation: Endogenous Emergence of Social Norms in a Three-Player Ultimatum Game By Grimalda, Gianluca; Kar, Anirban; Proto, Eugenio
  4. Social Preferences and Public Economics: Are good laws a substitute for good citizens? By Samuel Bowles
  5. Social identity and trust - An experimental investigation By Werner Güth; M. Vittoria Levati; Matteo Ploner
  6. Do subsidies increase charitable giving in the long run?: matching donations in a field experiment By Stephan Meier
  7. Intentions, Trust and Frames: A note on Sociality and the Theory of Games By Vittorio Pelligra
  8. Managing a 401(k) Account: An Experiment on Asset Allocation By James Sundali; Federico Guerrero
  9. Guessing Games and People Behaviours: What Can we Learn? By Andrea Morone; Piergiuseppe Morone

  1. By: Damen, F.J.A.; Knippenberg, B. van; Knippenberg, D.L. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Leader emotions may play an important role in leadership effectiveness. Extending this earlier research on leader emotional displays and leadership effectiveness, we propose that the ?affective match? between follower positive affect (PA) and leaders? emotional displays moderates the effectiveness of leader emotional displays. Leader display of emotions has more positive effects on follower behavior if the match between the valence of leader emotion and follower PA is strong rather than weak. Support for this hypothesis was found in two experiments. The congruency between leader emotional displays and follower PA determined follower task performance and extra-role compliance. Results from the second experiment indicated that this effect is due to the affective aspects of leader behavior and not to the valence of the content of the message.
    Keywords: Leadership Effectiveness;Emotions;Positive Affect;
    Date: 2006–07–18
  2. By: Vincent P. Crawford
    Date: 2007–01–26
  3. By: Grimalda, Gianluca; Kar, Anirban; Proto, Eugenio
    Abstract: We report results from two different settings of a 3-player ultimatum game. Under the monocratic rule, a player is randomly selected to make an offer to two receivers. Under the democratic rule, all three players make a proposal, and one proposal is then extracted. A majority vote is required to implement the proposal. Although the two rules are strategically equivalent, different patterns of behaviour seem to emerge as the number of interactions increase. Under the monocratic rule proposers seem to be entitled to claim a larger share of the pie, and receivers more likely to accept, in comparison with the democratic rule. We speculate that ‘institutions’ allowing more participation in the process of collective choice lead to more ‘socially responsible’ behaviour in the players.
    Keywords: Majority ultimatum; participation; institutions; social norms
    JEL: D72 C92 C78
    Date: 2006–12–27
  4. By: Samuel Bowles (Santa Fe Institute, University of Siena and University of Massachusetts)
    Abstract: Laws and policies designed to harness self-regarding preferences to public ends may fail when they compromise the beneficial effects of pro-social preferences. Experimental evidence indicates that incentives that appeal to self interest may reduce the salience of intrinsic motivation, reciprocity, and other civic motives. Motivational crowding in also occurs. The evidence for these processes is reviewed and a model of optimal explicit incentives is presented. JEL Categories: D64, D52, H41, H21, Z13, C92
    Keywords: Social preferences, implementation theory, incentive contracts, incomplete contracts, framing, behavioral experiments, motivational crowding out, ethical norms, constitutions
    Date: 2007–01
  5. By: Werner Güth; M. Vittoria Levati; Matteo Ploner
    Abstract: We experimentally examine how group identity affects trust behavior in an investment game. In one treatment, group identity is induced purely by minimal groups. In other treatments, group members are additionally related by outcome interdependence established in a prior public goods game. Moving from the standard investment game (where no group identity is prompted) to minimal group identity to two-dimensional group identity, we find no significant differences in trust decisions. However, trust is significantly and positively correlated with contribution decisions, suggesting that "social" trust is behaviorally important.
    Keywords: Experiment; Investment game; Trust; Group identity
    JEL: C72 C92
    Date: 2007–01
  6. By: Stephan Meier
    Abstract: Subsidizing charitable giving, for example, for victims of natural disasters, is very popular, not only with governments but also with private organizations. Many companies, for example, match their employees’ charitable contributions, hoping that this will foster the willingness to contribute. However, systematic analyses of the effect of such a matching mechanism are still lacking. ; This paper tests the effect of matching charitable giving in a randomized field experiment in the short and the long run. The donations of a randomly selected group were matched by contributions from an anonymous donor. The results support the hypothesis that a matching mechanism increases contributions to a public good. However, in the periods after the experiment, when matching donations have been stopped, the contribution rate declines for the treatment group. The matching mechanism leads to a negative net effect on the participation rate. The field experiment therefore provides evidence suggesting that the willingness to contribute may be undermined by a matching mechanism in the long run.
    Keywords: Charitable bequests
    Date: 2006
  7. By: Vittorio Pelligra
    Abstract: Psychological Game Theory (PGT) extends classical game theory allowing for the formal analysis of belief-dependent sentiments and emotions such as resentment, pride, shame, gratefulness, and the like. PGT incorporates these factors by relating agents' subjective expected utility to players' strategies, to their beliefs about others' strategies, but also to their beliefs about others' beliefs about their strategies, and so on. This paper argues that, thanks to the epistemic consequences of this hierarchy of beliefs, PGT is well-endowed to address, and to some extent solve three of the most challenging problems recently emerged in classical game theory, namely, the problem of intentions, that of trust and that of decision frames.
    Keywords: Psychological games, intentions, trust, decision frames.
    JEL: C72 C79 C9
    Date: 2007
  8. By: James Sundali (Managerial Sciences Department, University of Nevada, Reno); Federico Guerrero (Department of Economics, University of Nevada, Reno)
    Abstract: The study reports the results of an asset allocation experiment in which subjects managed an endowment of money over a 20 "year" time period. While grounded in theory, the study takes an applied look at the ability of subjects to efficiently and effectively make asset allocation decisions similar to those found in 401(k) accounts. The main conclusions are as follows. First, efficient portfolios are more easily created when the set of assets to choose from is carefully constructed. Thus, financial engineers should be given the responsibility for choosing the assets available to plan participants and ensuring that combinations of these assets will fall on the efficient frontier. If followed, this advice would likely significantly reduce the amount of individual company stock offered in Defined Contribution (DC) plans in place of well-constructed low cost index funds from multiple asset classes. Second, if the assets selected for inclusion in DC plans allow the investor to easily create portfolios on the efficient frontier, then the challenge for the investor is not how to get onto the frontier but where to locate on it. The simplistic surveys that are commonly used by DC plan providers to determine risk tolerance and to recommend asset allocations are woefully inadequate for this task. More sophisticated and theoretically driven instruments must be created to educate investors on the risks and the benefits available at different points along the efficient frontier.
    Keywords: 401(k) accounts, asset allocation
    JEL: G11 G23
    Date: 2006–12
  9. By: Andrea Morone (University of Bari.); Piergiuseppe Morone (University of Foggia.)
    Abstract: In this paper we address the topic of guessing games. By developing a generalised theory of naïveté, we show how Güth et al..s result (i.e. convergence toward interior equilibria is faster than convergence toward boundary equilibria) is compatible with Nagel.s theory of boundedly rational behaviour. However, we also show how, under new model parameterisation, neither Güth et al..s story of convergence towards interior equilibria, nor Nagel.s theory of boundedly rational behaviour are verified. We conclude that the results of Nagel (1995) and Güth et al. (2002), however interesting, are severely affected by the ad hoc parameterisation chosen for the game.
    Keywords: Guessing game, p-beauty contest, individual behaviour.
    JEL: C72 C91
    Date: 2007–02

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