nep-exp New Economics Papers
on Experimental Economics
Issue of 2007‒07‒27
eight papers chosen by
Daniel Houser
George Mason University

  1. Are Experimental Economists Prone to Framing Effects? A Natural Field Experiment By Simon Gaechter; Henrik Orzen; Elke Renner; Chris Starmer
  2. Inequity Aversion and Individual Behavior in Public Good Games: An Experimental Investigation By Dannenberg, Astrid; Riechmann, Thomas; Sturm, Bodo; Vogt, Carsten
  3. Do People Plan? By John Bone; John D Hey; John Suckling
  4. Counterintuitive Number Effects in Experimental Oligopolies By Henrik Orzen
  5. Unique bid auctions: Equilibrium solutions and experimental evidence By Rapoport, Amnon; Otsubo, Hironori; Kim, Bora; Stein, William E.
  6. Institutions and Behavior: Experimental Evidence on the Effects of Democracy By Pedro Dal Bo; Andrew Foster; Louis Putterman
  7. The Evolution of Coorporation in Infinitely Repeated Games: Experimental Evidence By Pedro Dal Bo; Guillaume R. Frechette
  8. Monitoring In Teams: A Model and Experiment on the Central Monitor Hypothesis By Stefan Grosse; Louis Putterman; Bettina Rockenbach

  1. By: Simon Gaechter (Centre for Decision Research and Experimental Economics, University of Nottingham); Henrik Orzen (Centre for Decision Research and Experimental Economics, University of Nottingham); Elke Renner (Centre for Decision Research and Experimental Economics, University of Nottingham); Chris Starmer (Centre for Decision Research and Experimental Economics, University of Nottingham)
    Abstract: An extensive literature demonstrates the existence of framing effects in the laboratory and in questionnaire studies. This paper reports new evidence from a natural field experiment using a subject pool one may consider as particularly resistant to such effects: experimental economists. We find that while the behaviour of junior experimental economists is affected by the description of the decision task they face, this is not the case for the more senior members of our subject pool.
    Keywords: Framing; field experiments
    JEL: C93 D01
    Date: 2007–04
  2. By: Dannenberg, Astrid; Riechmann, Thomas; Sturm, Bodo; Vogt, Carsten
    Abstract: We present a simple two-steps procedure for a within-subject test of the inequity aversion model of Fehr and Schmidt (1999). In the first step, subjects played modified ultimatum and dictator games and were classified according to their preferences. In the second step, subjects with specific preferences according to the Fehr and Schmidt model were matched into pairs and interacted with each other in a standard public good game and a public good game with punishment possibility. Our results show that the specific composition of groups significantly influences the subjects’ performance in the public good games. We identify the aversion against advantageous inequity and the information about the coplayer’s type as the main influencing factors for the behavior of subjects.
    Keywords: individual preferences, inequity aversion, experimental economics, public goods
    JEL: C91 C92 H41
    Date: 2007
  3. By: John Bone; John D Hey; John Suckling
    Abstract: We report the results of an experimental investigation of a key axiom of economic theories of dynamic decision making – namely, that agents plan. Inferences from previous investigations have been confounded with issues concerning the preference functionals of the agents. Here, we present an innovative experimental design which is driven purely by dominance: if preferences satisfy dominance, we can infer whether subjects are planning ahead. We implement two sets of experiments: the first (the Individual Treatment) in which the same player takes decisions both in the present and the future; and the second the Pairs Treatment) in which different players take decisions at different times. In both contexts, according to economic theory, the players in the present should anticipate the decision of the player in the future. We find that over half the participants in both experimental treatments do not appear to be planning ahead; moreover, their ability to plan ahead does not improve with experience. These findings identify an important lacuna in economic theories, both for individual behaviour and for behaviour in games.
    Date: 2006–11
  4. By: Henrik Orzen (University of Nottingham)
    Abstract: Recent theoretical research on oligopolistic competition suggests that under certain conditions prices increase with the number of competing firms. However, this counterintuitive result is based on comparative-static analyses which neglect the importance of dynamic strategies in naturally-occurring markets. When firms compete repeatedly, supra-competitive prices can become sustainable but this is arguably more difficult when more firms operate in the market. This paper reports the results of laboratory experiments investigating pricing behavior in a setting in which (static) theory predicts the counterintuitive number effect. Under a random matching protocol, which retains much of the one-shot nature of the model, the data corroborates the gametheoretic prediction. Under fixed matching duopolists post substantially higher prices, whereas prices in quadropolies remain very similar. As a result, the predicted effect is no longer observed, and towards the end the reverse effect is observed.
    Keywords: Market Concentration; Experiments; Tacit Collusion
    JEL: C72 C92 D43
    Date: 2006–12
  5. By: Rapoport, Amnon; Otsubo, Hironori; Kim, Bora; Stein, William E.
    Abstract: Two types of auction were introduced on the Internet a few years ago and have rapidly been gaining widespread popularity. In both auctions, players compete for an exogenously determined prize by independently choosing an integer in some finite and common strategy space specified by the auctioneer. In the unique lowest (highest) bid auction, the winner of the prize is the player who submits the lowest (highest) bid, provided that it is unique. We construct the symmetric mixed-strategy equilibrium solutions to the two auctions, and then test them in a sequence of experiments that vary the number of bidders and size of the strategy space. Our results show that the aggregate bids, but only a minority of the individual bidders, are accounted for quite accurately by the equilibrium solutions.
    Keywords: unique bid auctions; equilibrium analysis; experiment
    JEL: C92 C72
    Date: 2007–07–16
  6. By: Pedro Dal Bo; Andrew Foster; Louis Putterman
    Date: 2007
  7. By: Pedro Dal Bo; Guillaume R. Frechette
  8. By: Stefan Grosse; Louis Putterman; Bettina Rockenbach
    Date: 2007

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.
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