nep-exp New Economics Papers
on Experimental Economics
Issue of 2007‒09‒09
seven papers chosen by
Daniel Houser
George Mason University

  1. Cheap Talk and Secret Intentions in a Public Goods Experiments By Werner Güth; M. Vittoria Levati; Torsten Weiland
  2. What Norms Trigger Punishment By Jeffrey Carpenter; Peter Hans Matthews
  3. Three Minimal Market Institutions: Theory and Experimental Evidence By Juergen Huber; Martin Shubik; Shyam Sunder
  4. Choice over Time By Paola Manzini; Marco Mariotti
  5. TOURNAMENTS AND OFFICE POLITICS: Evidence from a real effort experiment By Jeffrey Carpenter; Peter Hans Matthews; John Schirm
  6. The information method - theory and application By Engström, Per; Hesselius, Patrik
  7. Endogenous Participation in Charity Auctions By Jeffrey Carpenter; Jessica Holmes; Peter Hans Matthews

  1. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); M. Vittoria Levati (Max Planck Institute of Economics, Strategic Interaction Group); Torsten Weiland (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: In a public goods experiment, subjects can vary over a period of stochastic length two contribution levels: one is publicly observable (their cheap talk stated intention), while the other is not seen by the others (their secret intention). When the period suddenly stops, participants are restricted to choose as actual contribution either current alternative. Based on the two types of choice data for a partners and a perfect strangers condition, we confirm that final outcomes strongly depend on the matching protocol. As to choice dynamics, we distinguish different types of adaptations.
    Keywords: Public goods game, Cheap talk communication, Real-time protocol
    JEL: C72 H41 D82 D83
    Date: 2007–08–20
  2. By: Jeffrey Carpenter; Peter Hans Matthews
    Abstract: Many experiments have demonstrated the power of norm enforcement-peer monitoring and punishment-to maintain, or even increase, contributions in social dilemma settings, but little is known about the underlying norms that monitors use to make punishment decisions. Using a large sample of experimental data, we empirically recover the set of norms used most often by monitors and show ?rst that the decision to punish should be modeled separately from the decision of how much to punish. Second, we show that absolute norms often ?t the data better than the group average norm often assumed in related work. Third, we ?nd that di?erent norms seem to in?uence the decisions about punishing violators inside and outside one’s own group.
    Keywords: public good, experiment, punishment, social norm, norm enforcement.
    JEL: C72 C92 H41
    Date: 2007–08
  3. By: Juergen Huber (University of Innsbruck); Martin Shubik (Cowles Foundation, Yale University); Shyam Sunder (Yale University)
    Abstract: In this experiment we examine the performance of three minimal strategic market games relative to theoretical predictions. These models of a closed exchange economy with monetary and financial structures have limited amounts of cash to facilitate transactions. Subsequent experiments will deal with credit limitations, banking and credit, the role of clearinghouses and the possibility for the universal issue of credit by individuals. In theory, with enough money the non-cooperative equilibria should converge to the respective competitive equilibria as the number of players increases. Since general equilibrium theory abstracts away from the market mechanism, it makes no predictions about how the paths of convergence to the CE may differ across market mechanisms. GE allows no role for money or credit. In contrast to most market experiments conducted in open or partial equilibrium settings, we report on closed settings that include feedbacks. Laboratory examination of the three market mechanisms reveals convergence to CE with increasing number of players. It also reveals significant differences in the convergence paths across the mechanisms, suggesting that to the extent deviations from CE are of interest (either because the number of players in the environment of substantive interest is small, or because disequilibrium behavior itself is of substantive interest), theoretical abstraction from the market mechanisms has been taken too far. For example, the oligopoly effect of feedback from buying a good that the player is endowed with is missed. Inclusion of mechanism differences into theory would help us understand markets better.
    Keywords: Strategic market games, Laboratory experiments, General equilibrium
    JEL: C92 D43 D51 D58 L13
    Date: 2007–08
  4. By: Paola Manzini (Queen Mary, University of London); Marco Mariotti (Queen Mary, University of London)
    Abstract: In the last twenty years a growing body of experimental evidence has posed a challenge to the standard Exponential Discounting Model of choice over time. Attention has focused on some specific 'anomalies', notably preference reversal and declining discount rates, leading to the formulation of the model of hyperbolic discounting which is finding increasing favour in the literature. In this paper we provide a survey of both the theoretical modelling and the experimental evidence relating to choice over time. As we will show, a careful analysis of the mapping between theoretical models and experimental investigations raises questions as to whether some of the most focused upon anomalies should be indeed classified as such, or whether they are really the most challenging ones for conventional theory. New developments are emerging both at the theoretical and empirical level, opening up new exciting avenues for investigation.
    Keywords: Time preference, Choice over time, Theory, Experiments
    JEL: C91 D9
    Date: 2007–09
  5. By: Jeffrey Carpenter; Peter Hans Matthews; John Schirm
    Abstract: In many environments, tournaments can elicit more e?ort from workers, except perhaps when workers can sabotage each other. Because it is hard to separate effort, ability and output in many real workplace settings, the empirical evidence on the incentive effect of tournaments is thin. There is even less evidence on the impact of sabotage because real world acts of sabotage are often subtle manifestations of subjective peer evaluation or “o?ce politics.” We discuss a real e?ort experiment in which e?ort, quality adjusted output and o?ce politics are compared under piece rates and tournaments. Our results suggest that tournaments increase e?ort only in the absence of o?ce politics. Competitors are more likely to sabotage each other in tournaments and, as a result, workers actually provide less e?ort simply because they expect to be the victims of sabotage. Adjusting output for quality with the rating of an independent auditor shrinks the incentive e?ect of the tournament even further since output tends to become more slipshod. "The person who says ‘I’m not political’ is in great danger... Only the ?ttest will survive, and the ?ttest will be the ones who understand their offce’s politics." Jean Hollands, quoted in Playing Offce Politics, Newsweek, 16 September 1985
    Date: 2007–09
  6. By: Engström, Per (IFAU - Institute for Labour Market Policy Evaluation); Hesselius, Patrik (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: When estimating the extent of e.g. excess use of public benefits one traditionally uses direct monitoring. Such direct estimates are afflicted with an intrinsic negative bias since you only count what you find. This paper presents and assesses an alternative intuitive, yet relatively unexplored, approach that may reduce the bias by making use of the individual's own response to information of increased monitoring. Through an extensive randomized social experiment we apply the method to one particular Swedish public benefit: Parental Benefit for Temporary Childcare. In our view the application was successful: the results are interpretable and we are able to surface more hidden excess use through the information method. As a rough estimate we find that the information based estimate of excess use is 40 percent higher than the corresponding estimate based on ordinary random monitoring (22.5 percent compared to 16 percent). The method is potentially applicable to a large number of related fields, such as e.g. tax evasion and insurance fraud.
    Keywords: Monitoring; Social insurance; Randomized experiments
    JEL: C51 C93 H55
    Date: 2007–08–20
  7. By: Jeffrey Carpenter; Jessica Holmes; Peter Hans Matthews
    Abstract: Data from a recent ?eld experiment suggests that differences in participation rates are responsible for much of the variations in revenues across formats in charity auctions. We provide a theoretical framework for the analysis of this, and other related, results. The model illustrates the limits of previous "?xed" results and introduces some new considerations to the choice of auction mechanism. It also implies, however, that the data cannot be explained in terms of participation costs alone: there must exist mechanism-speci?c obstacles to participation.
    Date: 2007–07

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