nep-exp New Economics Papers
on Experimental Economics
Issue of 2007‒05‒04
three papers chosen by
Daniel Houser
George Mason University

  1. Do Managers Reciprocate? Field Experimental Evidence From a Competitive Market By Michel André Maréchal; Christian Thöni
  2. Insidious Discrimination? Disentangling the Beauty Premium on a Game Show By Belot, Michèle; Bhaskar, Venkataraman; Van de Ven, Jeroen
  3. A Subsidized Vickrey Auction for Cost Sharing By Jesse A. Schwartz; Quan Wen

  1. By: Michel André Maréchal; Christian Thöni
    Abstract: A substantive amount of lab experimental evidence suggests that the norm of reciprocity has important economic consequences. However, it is unclear whether the norm of reciprocity survives in a natural and competitive environment with experienced agents. For this purpose we analyze data from a natural field experiment conducted with sales representatives who were instructed to randomly distribute product samples as gifts to their business partners. We find that distributing gifts to store managers boosts sales revenue substantially, which is consistent with the notion of reciprocity. However, the results underline that the nature of the relationship between market participants crucially affects the prevalence of reciprocal behavior.
    Keywords: reciprocity, gift exchange, field experiment
    JEL: D63 C93
    Date: 2007–04
  2. By: Belot, Michèle; Bhaskar, Venkataraman; Van de Ven, Jeroen
    Abstract: This paper analyzes behaviour on a TV game show where players' monetary payoffs depend upon an array of factors, including ability in answering questions, perceived cooperativeness and the willingness of other players to choose them. We find a substantial beauty premium and are able to disentangle contributing factors. Attractive players perform no differently from less attractive ones, on every dimension. They also exhibit and engender the same degree of cooperativeness. Nevertheless, attractive players are substantially less likely to be eliminated by their peers. Our results suggest a consumption value basis for the beauty premium, and it appears that this is a form of insidious discrimination.
    Keywords: beauty premium; discrimination
    JEL: C93 D63 J15 J16
    Date: 2007–04
  3. By: Jesse A. Schwartz (Department of Economics, Kennesaw State University); Quan Wen (Department of Economics, Vanderbilt University)
    Abstract: We introduce a subsidized Vickrey auction for cost sharing problems. Although the average, marginal, and serial cost sharing mechanisms are budget-balanced, they are not allocatively efficient and they do not induce players to truthfully reveal their values as a dominant strategy. The conventional Vickrey auction, on the other hand, is allocatively efficient and does induce truthful bidding as a dominant strategy, but also generates an overpayment. This paper modifies the conventional Vickrey auction so that some of the overpayment is used to subsidize additional production without upsetting the players' incentives to bid truthfully. Although this subsidized Vickrey auction is not allocatively efficient, it always Pareto dominates the conventional Vickrey auction and sometimes dominates other existing cost sharing mechanisms.
    Keywords: Cost sharing, dominant strategy implementation, Vickrey auction, subsidized Vickrey auction
    JEL: C72 D44 H42
    Date: 2007–04

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