nep-exp New Economics Papers
on Experimental Economics
Issue of 2007‒06‒18
three papers chosen by
Daniel Houser
George Mason University

  1. Making Sense of the Experimental Evidence on Endogenous Timing in Duopoly Markets By Pinto, Luis Santos
  2. Money, Happiness, and Aspirations: An Experimental Study By Michael McBride
  3. Experienced and Novice Investors: Does Environmental Information Influence on Investment Allocation Decisions? By Holm, Claus; Rikhardsson, Pall

  1. By: Pinto, Luis Santos
    Abstract: The prediction of asymmetric equilibria with Stackelberg outcomes is clearly the most frequent result in the endogenous timing literature. Several experiments have tried to validate this prediction empirically, but failed to find support for it. By contrast, the experiments find that simultaneous-move outcomes are modal and that behavior in endogenous timing games is quite heterogeneous. This paper generalizes Saloner’s (1987) and Hamilton and Slutsky’s (1990) endogenous timing games by assuming that players are averse to inequality in payoffs. We explore the theoretical implications of inequity aversion and compare them to the empirical evidence. We find that this explanation is able to organize most of the experimental evidence on endogenous timing games. However, inequity aversion is not able to explain delay in Hamilton and Slutsky’s endogenous timing games.
    Date: 2007
  2. By: Michael McBride (Department of Economics, University of California-Irvine)
    Abstract: The past decade has witnessed an explosion of interest in the scientific study of happiness. Economists, in particular, find that happiness increases in income but decreases in income aspirations, and this work prompts examination of how aspirations form and adapt over time. This paper presents results from the first experimental study of how multiple factors -- past payments, social comparisons, and expectations -- influence aspiration formation and reported satisfaction. I find that expectations and social comparisons significantly affect reported satisfaction, and that subjects care relatively more about social comparisons once they have achieved a satisfactory outcome. These findings support an aspirations-based theory of happiness.
    Keywords: Satisfaction; Happiness; Adaptation; Experiment
    JEL: C91 I31
    Date: 2007–03
  3. By: Holm, Claus (Department of Management Science and Logistics, Aarhus School of Business); Rikhardsson, Pall (Department of Management Science and Logistics, Aarhus School of Business)
    Abstract: This paper examines the effect of environmental information on the investment <p> decisions of investors. The motivation for the experimental design <p> applied in this study is that unless actual decision making is observed, <p> the potential usefulness of environmental information (or lack <p> thereof) cannot be taken for granted. The study is based on an experiment <p> where groups of investors (varied by experience) were asked to <p> make investment allocation decisions based on financial information and <p> on supplementary environmental information (varied between cases). As <p> an investment allocation decision (varied by investment horizons) the <p> groups were asked to allocate funds to two companies based on the available <p> information. The findings suggest that environmental information has <p> the potential to influence investment allocation decisions. The findings <p> also suggest that the influence of environmental information on investment <p> allocation decisions is mitigated by the variables considered explicitly <p> in this study, i.e., the investment horizon (varied as short and long) <p> and investor experience (varied as novice and experienced investor). It is <p> concluded that because allocation decisions are multifaceted problems, <p> mixed results related to the influence of environmental information should <p> be expected
    Keywords: Environmental reporting; Environmental disclosures; Allocation; Decision making; Investment horizon; Investors; Experiment;
    Date: 2006–06–14

This nep-exp issue is ©2007 by Daniel Houser. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.