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on Experimental Economics |
| By: | Andreas Ortmann; Sasha Prokosheva; Ondrej Rydval; Ralph Hertwig |
| Abstract: | Gneezy, List and Wu [Q. J. Econ. 121 (2006) 1283-1309] document that lotteries are often valued less than the lotteries’ worst outcomes. We show how to undo this result. |
| Keywords: | Risky choice, framing, experiments, task ambiguity, subject confusion. |
| JEL: | C81 C91 C93 D83 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp334&r=exp |
| By: | Michalis Drouvelis (School of Economics, University of Nottingham); Maria Montero (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham) |
| Abstract: | Power indices suggest that adding new members to a voting body may affect the balance of power between the original members even if their number of votes and the decision rule remain constant. Some of the original members may actually gain, a phenomenon known as the paradox of new members. We show that the paradox can occur as an equilibrium of a noncooperative bargaining game based on the Baron-Ferejohn (1989) model of legislative bargaining. We implement this game in the laboratory and find empirical support for the paradox. |
| Keywords: | voting, non-cooperative bargaining, power indices, experiments, paradox of new members |
| JEL: | C70 C92 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2007-06&r=exp |
| By: | Jonathan Guryan; Kory Kroft; Matt Notowidigdo |
| Abstract: | This paper uses the random assignment of playing partners in professional golf tournaments to test for peer effects in the workplace. We find no evidence that the ability of playing partners affects the performance of professional golfers, contrary to recent evidence on peer effects in the workplace from laboratory experiments, grocery scanners, and soft-fruit pickers. In our preferred specification, we can rule out peer effects larger than 0.045 strokes for a one stroke increase in playing partners' ability, and the point estimates are small and actually negative. We offer several explanations for our contrasting findings: that workers seek to avoid responding to social incentives when financial incentives are strong; that there is heterogeneity in how susceptible individuals are to social effects and that those who are able to avoid them are more likely to advance to elite professional labor markets; and that workers learn with professional experience not to be affected by social forces. We view our results as complementary to the existing studies of peer effects in the workplace and as a first step towards explaining how these social effects vary across labor markets, across individuals and with changes in the form of incentives faced. In addition to the empirical results on peer effects in the workplace, we also point out that many typical peer effects regressions are biased because individuals cannot be their own peers, and suggest a simple correction. |
| JEL: | J01 J24 J3 J44 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13422&r=exp |
| By: | Roider, Andreas; Schmitz, Patrick W. |
| Abstract: | The experimental literature has documented that there is overbidding in second-price auctions, regardless of bidders' valuations. In contrast, in first-price auctions there tends to be overbidding for large valuations, but underbidding for small valuations. We show that the experimental evidence can be explained by a simple extension of the standard auction model, where bidders anticipate positive or negative emotions caused by the mere fact of winning or losing. Even if the "emotional" (dis-)utility is very small, the seller's optimal reserve price r* may be significantly different from the standard model. Moreover, r* is decreasing in the number of bidders. |
| Keywords: | auction theory; emotions; reserve prices |
| JEL: | D44 D81 D82 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6476&r=exp |
| By: | Sapienza, Paola; Toldra Simats, Anna; Zingales, Luigi |
| Abstract: | Several papers study the effect of trust by using the answer to the World Values Survey (WVS) question “Generally speaking, would you say that most people can be trusted or that you can’t be too careful in dealing with people?” to measure the level of trust. Glaeser et al. (2000) question the validity of this measure by showing that it is not correlated with senders’ behaviour in the standard trust game, but only with his trustworthiness. By using a large sample of German households, Fehr et al. (2003) find the opposite result: WVS-like measures of trust are correlated with the sender’s behaviour, but not with its trustworthiness. In this paper we resolve this puzzle by recognizing that trust has two components: a belief-based one and a preference based one. While the sender behaviour’s reflects both, we show that WVS-like measures capture mostly the belief-based component, while questions on past trusting behaviour are better at capturing the preference component of trust. |
| Keywords: | Trust; trust game; trustworthiness |
| JEL: | G10 G30 Z10 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6462&r=exp |