nep-exp New Economics Papers
on Experimental Economics
Issue of 2007‒09‒16
sixteen papers chosen by
Daniel Houser
George Mason University

  1. Experimental Economics: Contributions, Recent Developments, and New Challenges By Marie-Claire Villeval
  2. Endogenous Leadership Selection and Influence By Emrah Arbak; Marie-Claire Villeval
  3. Leadership in Groups: A Monetary Policy Experiment By Alan S. Blinder; John Morgan
  4. Do the Reciprocal Trust Less? By Steffen Altmann; Thomas Dohmen; Matthias Wibral
  6. Selfish-biased conditional cooperation: On the decline of contributions in repeated public goods experiments By Tibor Neugebauer; Javier Perote; Ulrich Schmidt; Malte Loos
  7. Three Minimal Market Games: Theory and Experimental Evidence By Juergen Huber; Martin Shubik; Shyam Sunder
  8. The Compromise Game: Two-Sided Adverse Selection in the Laboratory By Juan D Carrillo; Thomas R Palfrey
  9. Individual Responsibility and the Funding of Collective Goods By Louis Levy-Garboua; Claude Montmarquette; Marie-Claire Villeval
  10. Principles of continuous price determination in an experimental environment with flows of random arrivals and departures By Alton, Michael R.; Plott, Charles R.
  11. Social Image and the 50-50 Norm: A Theoretical and Experimental Analysis of Audience Effects By James Andreoni
  12. Preferences, Intentions, and Expectations: A Large-Scale Experiment With a Representative Subject Pool By Bellemare, C.; Kroger, S.; Soest, A.H.O. van
  13. Public versus Private Provision of Daycare: An Experimental Evaluation By Tarja K. Viitanen
  14. Doing good or doing well? Image motivation and monetary incentives in behaving prosocially By Dan Ariely; Anat Bracha; Stephan Meier
  15. Legitimacy of Control By Wendelin Schnedler; Radovan Vadovic
  16. Network Architecture and Traffic Flows: Experiments on the Pigou-Knight-Downs and Braess Paradoxes By John Morgan; Henrik Orzen; Martin Sefton

  1. By: Marie-Claire Villeval (GATE CNRS)
    Abstract: Although economics has long been considered as a non-experimental science, the development of experimental economics and behavioral economics is amazingly rapid and affects most fields of research. This paper first attempts at defining the main contributions of experiments to economics. It also identifies four main trends in the development of experimental research in economics. The third contribution of this paper is to identify the major theoretical and methodological challenges faced by behavioral and experimental economics.
    Keywords: behavioral economy, Experimental economics, field experiment, quantitative methods
    JEL: A12 C90 D0
    Date: 2007–03
  2. By: Emrah Arbak (GATE CNRS); Marie-Claire Villeval (GATE CNRS)
    Abstract: In social dilemmas, leading a team by making heroic efforts may prove costly, especially if the followers are not adequately motivated to make similar sacrifices. Attempting to understand what motivates these seemingly selfless individuals to lead, we report the results of a two-stage public good experiment with endogenous timing. Even though it turns out to be costly on average, a large proportion of our subjects volunteer to lead. Our findings suggest that a fraction of these leaders are socially concerned, while others expect to distill some personal gain, possibly of non-pecuniary nature. The composition of the team also matters, as publicizing certain attributes of a subject’s teammates has an impact on her decision to lead. Lastly, though voluntary leaders improve efficiency in their team, they are not necessarily more influential than randomly imposed leaders.
    Keywords: endogenous switching models, experiment, influence, leadership, voluntary contribution
    JEL: A13 C92 D63 J33 M54
    Date: 2007–03
  3. By: Alan S. Blinder; John Morgan
    Abstract: In an earlier paper (Blinder and Morgan, 2005), we created an experimental apparatus in which Princeton University students acted as ersatz central bankers, making monetary policy decisions both as individuals and in groups. In this study, we manipulate the size and leadership structure of monetary policy decisionmaking. We find no evidence of superior performance by groups that have designated leaders. Groups without such leaders do as well as or better than groups with well-defined leaders. Furthermore, we find rather little difference between the performance of four-person and eight-person groups; the larger groups outperform the smaller groups by a very small margin. Finally, we successfully replicate our Princeton results, at least qualitatively: Groups perform better than individuals, and they do not require more "time" to do so.
    JEL: E52 E58
    Date: 2007–09
  4. By: Steffen Altmann (University of Bonn and IZA); Thomas Dohmen (IZA); Matthias Wibral (University of Bonn and IZA)
    Abstract: We study the intrapersonal relationship between trust and reciprocity in a laboratory experiment. Reciprocal subjects trust significantly more than selfish ones. This finding raises questions about theories of social preferences which predict that "fairer" players should trust less.
    Keywords: trust, reciprocity, social preferences, fairness, laboratory experiment
    JEL: C91 D63
    Date: 2007–08
  5. By: Simon Gaechter (University of Nottingham); Eric Johnson (Columbia University); Andreas Herrmann (University of St Gallen)
    Abstract: Loss aversion can occur in riskless and risky choices. Yet, there is no evidence whether people who are loss averse in riskless choices are also loss averse in risky choices. We measure individual-level loss aversion in riskless choices in an endowment effect experiment by eliciting both WTA and WTP from each of our 360 subjects (randomly selected customers of a car manufacturer). All subjects also participate in a simple lottery choice task which arguably measures loss aversion in risky choices. We find substantial heterogeneity in both measures of loss aversion. Loss aversion in the riskless choice task and loss aversion in the risky choice task are highly significantly and strongly positively correlated. We find that in both choice tasks loss aversion increases in age, income, and wealth, and decreases in education.
    Keywords: Loss aversion, endowment effect, field experiments
    JEL: C91 C93 D81
    Date: 2007–07
  6. By: Tibor Neugebauer; Javier Perote; Ulrich Schmidt; Malte Loos
    Abstract: In the recent literature, several hypotheses have been put forward in order to explain the decline of contributions in repeated public good games. We present results of an experiment which allows to evaluate these hypotheses. The main characteristics of our experimental design are a variation of information feedback and an elicitation of individual beliefs about others’ contributions. Altogether, our data support the hypothesis of conditional cooperation with a selfish bias.
    Keywords: experimental economics, information feedback, public goods, voluntary contributions, conditional cooperation
    JEL: C72 C92 H41
    Date: 2007–09
  7. By: Juergen Huber; Martin Shubik; Shyam Sunder
    Date: 2007–09–03
  8. By: Juan D Carrillo; Thomas R Palfrey
    Date: 2007–09–03
  9. By: Louis Levy-Garboua (CES-TEAM and Paris School of Economics); Claude Montmarquette (CIRANO and Université de Montréal); Marie-Claire Villeval (GATE CNRS, Institute for the Study of Labor (IZA))
    Abstract: When a deficit occurs in the funding of collective goods, it is usually covered by raising the amount of taxes or by rationing the supply of the goods. This article compares the efficiency of these institutions. We report the results of a 2x2 experiment based on a game in the first stage of which subjects can voluntarily contribute to the funding of a collective good that is being used to compensate the victims of a disaster. In the second stage of the game, in case of a deficit, we introduce either taxation or rationing. Each treatment is subjected to two conditions: the burden of the deficit is either uniform for all the subjects, or individualized according to the first-stage contribution. We show that the individualized treatments favor the provision of the collective good through voluntary cooperation whereas the uniform treatments encourage free-riding. Individualized taxation brings the voluntary contributions closer to the optimum while uniform rationing appears to be the worst system since free-riding restrains the provision of the good.
    Keywords: collective goods, experiment, interior Pareto optimum, rationing, responsibility, taxation
    JEL: C91 H21 H30 H41 H50
    Date: 2007–09
  10. By: Alton, Michael R.; Plott, Charles R.
    Date: 2007–09
  11. By: James Andreoni
    Date: 2007–09–03
  12. By: Bellemare, C.; Kroger, S.; Soest, A.H.O. van (Tilburg University, Center for Economic Research)
    Abstract: We specify and estimate an econometric model which separately identifies distributional preferences and the effects of perceived intentions on responder behavior in the ultimatum game. We allow the effects of perceived intentions to depend, among other things, on the subjective probabilities responders attach to the possible offers. We estimate the model on a large representative sample from the Dutch population. We find that the relative importance of distributional preferences and perceived intentions depends significantly on the socioeconomic characteristics of responders. Strong inequity aversion to the other player?s disadvantage is found for lower educated and older respondents. Responders tend to punish unfavorable offers more if they expect that fair proposals will occur with higher probability.
    Keywords: Inequity aversion;intentions;subjective expectations.
    JEL: C93 D63 D84
    Date: 2007
  13. By: Tarja K. Viitanen (University of Sheffield and IZA)
    Abstract: This paper provides experimental estimates of the impact of a voucher for private care within the Nordic system of universal provision of public care. The private daycare voucher acted as a significant boost for new daycare entrepreneurs to enter the market thus increasing the overall daycare provision in the municipalities participating in the experiment. In a market that was providing high-quality, low-cost public daycare, a voucher is nevertheless found to have a significant, positive effect for the use of private daycare with zero to negligible effects on the use of public care and labor force participation.
    Keywords: social experimentation, vouchers, daycare use, labor force participation
    JEL: H42 J2 J13
    Date: 2007–08
  14. By: Dan Ariely; Anat Bracha; Stephan Meier
    Abstract: This paper examines image motivation—the desire to be liked and well-regarded by others— as a driver in prosocial behavior (doing good), and asks whether extrinsic monetary incentives (doing well) have a detrimental effect on prosocial behavior due to crowding out of image motivation. ; By definition, image depends on one’s behavior being visible to other people. Using this unique property we show that image is indeed an important part of the motivation to behave prosocially. Moreover, we show that extrinsic incentives interact with image motivation and are therefore less effective in public than in private. Together, these results imply that image motivation is crowded out by monetary incentives; this means that monetary incentives are more likely to be counterproductive for public prosocial activities than for private ones.
    Date: 2007
  15. By: Wendelin Schnedler (University of Heidelberg, Department of Economics); Radovan Vadovic (ITAM Mexico City, Department of Economics)
    Abstract: What is the motivational effect of imposing a minimum effort require- ment? Agents may no longer exert voluntary effort but merely meet the requirement. Here, we examine how such hidden costs of control change when control is considered legitimate. We study a principal- agent model where control signals the expectations of the principal and the agent meets these expectations because he is guilt-averse. We conjecture that control is more likely to be considered legitimate (i) if it is not exclusively aimed at a specifc agent or (ii) if it protects the endowment of the principal. Given the conjecture, the model predicts that hidden costs are lower when one of the two conditions is met. We experimentally test these predictions and find them confirmed.
    Keywords: moral-hazard, intrinsic motivation, guilt-aversion
    JEL: C7 C9 M5
    Date: 2007–08
  16. By: John Morgan (University of California, Berkeley); Henrik Orzen (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham)
    Abstract: This paper presents theory and experiments to investigate how network architecture influences route-choice behavior. We consider changes to networks that, theoretically, exhibit the Pigou- Knight-Downs and Braess Paradoxes. We show that these paradoxes are specific examples of more general classes of network change properties that we term the “least congestible route” and “size” principles, respectively. We find that technical improvements to networks induce adjustments in traffic flows. In the case of network changes based on the Pigou-Knight-Downs Paradox, these adjustments undermine short-term payoff improvements. In the case of network changes based on the Braess Paradox, these adjustments reinforce the counter-intuitive, but theoretically predicted, effect of reducing payoffs to network users. Although aggregate traffic flows are close to equilibrium levels, we see some systematic deviations from equilibrium. We show that the qualitative features of these discrepancies can be accounted for by a simple reinforcement learning model.
    Date: 2007–08

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