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on Experimental Economics |
| By: | Pablo Branas-Garza (Departamento de Teoria Economica, Universidad de Granada); Ana Leon-Mejia (IESA-CSIC); Luis M. Miller (IESA-CSIC and Max Planck Institute of Economics,) |
| Abstract: | This paper studies the response times of experimental subjects playing the Ultimatum game in a laboratory setting using monetary incentives. We find that proposals are not significantly correlated with response time, whereas responders' behavior is positively and significantly correlated. Hence, consistent with Rubisntein (forthcoming) we find that response times may capture relevant cognitive processes. However, the use of monetary incentives causes a reversal of his findings. These results have implications for the information about cognitive mechanisms that can be obtained from response times. |
| Keywords: | Monetary incentives, Ultimatum game, response time |
| JEL: | C72 C91 |
| Date: | 2007–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-070&r=exp |
| By: | Ana Leon-Mejia (IESA-CSIC); Luis M. Miller (IESA-CSIC and Max Planck Institute of Economics) |
| Abstract: | The study of gender differences in social preferences has shown mixed results, preventing economists and other social scientists from drawing definitive conclusions on this topic. Several original investigations and experimental reviews have hypothesized that the main reason of this heterogeneity of results is the myriad of experimental designs used to study gender differences. In this paper we test this hypothesis by making male and female participants to face two different but related experimental games and two different information treatments. Through this 2x2 factorial design, we obtain results in line with some recent papers: women are sensitive to the design and context of the experiment in ways that men are not. In addition, we go further providing a well-grounded account on the importance of the context for female decision-making. |
| Keywords: | Beliefs, economic experiments, empathy, gender differences, social preferences. |
| JEL: | C78 C91 |
| Date: | 2007–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-069&r=exp |
| By: | Randolph Sloof (University of Amsterdam and Tinbergen Institute); C. Mirjam van Praag (University of Amsterdam, Tinbergen Institute and IZA) |
| Abstract: | Theoretical analyses of (optimal) performance measures are typically performed within the realm of the linear agency model. This model implies that, for a given compensation scheme, the agent’s optimal effort is unrelated to the amount of noise in the performance measure. In contrast, expectancy theory as developed by psychologists predicts lower effort levels for noisier performance measures. We conduct a real effort laboratory experiment and find that effort levels are invariant to changes in the distribution of the noise term, i.e. to expectancy. This suggests that enriching the economic (linear agency) model commonly applied within this area by including an expectancy parameter is not needed. |
| Keywords: | performance measurement, expectancy theory, real effort experiments, agency theory, personnel economics |
| JEL: | C91 J33 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3064&r=exp |
| By: | Lisa R. Anderson (Department of Economics, College of William and Mary); Jennifer M. Mellor (Department of Economics, College of William and Mary) |
| Abstract: | We conduct a large-scale economics experiment paired with a survey to examine the association between individual risk preferences and health-related behaviors among adults aged 18 to 87 years. Risk preferences are measured by the Holt and Laury (2002) lottery choice experiment. Controlling for race, sex, and age, we find that risk preference is significantly associated with cigarette smoking, being overweight or obese, seat belt non-use, and driving over the speed limit. In additional specifications, we find that risk preference is significantly associated with heavy episodic drinking, and is a significant predictor of the number of risky behaviors. |
| Keywords: | risk preference, lottery choice experiment, health risk behaviors, smoking |
| JEL: | I12 C91 |
| Date: | 2007–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:cwm:wpaper:59&r=exp |
| By: | Louis Lévy-Garboua (Ecole d'économie de Paris - Paris School of Economics - [Université Panthéon-Sorbonne - Paris I]); Claude Montmarquette (Université de Montréal - Département de Sciences Economique - [Université de Montréal]); Marie-Claire Villeval (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines]) |
| 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 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00174557_v1&r=exp |
| By: | Matthew Rabin (University of California, Berkeley); Georg Weizsäcker (London School of Economics and IZA) |
| Abstract: | An experiment by Tversky and Kahneman (1981) illustrates that people's tendency to evaluate risky decisions separately can lead them to choose combinations of choices that are first-order stochastically dominated by other available combinations. We investigate the generality of this effect both theoretically and experimentally. We show that for any decisionmaker who does not have constant-absolute-risk-averse preferences and who evaluates her decisions one by one, there exists a simple pair of independent binary decisions where the decisionmaker will make a dominated combination of choices. We also characterize, as a function of a person's preferences, the amount of money that she can lose due to a single mistake of this kind. The theory is accompanied by both a real-stakes laboratory experiment and a large-sample survey from the general U.S. population. Replicating Tversky and Kahneman's original experiment where decisionmakers with prototypical prospect-theory preferences will choose a dominated combination, we find that 28% of the participants do so. In the survey we ask the respondents about several hypothetical large-stakes choices, and find higher proportions of dominated choice combinations. A statistical model that estimates preferences from the survey results is best fit by assuming people have utility functions that are close to prospect-theory value functions and that about 83% of people bracket narrowly. None of these results varies strongly with the personal characteristics of participants. We also demonstrate directly that dominated choices are driven by narrow bracketing: when we eliminate the possibility of narrow bracketing by using a combined presentation of the decisions, the dominated choices are eliminated in the laboratory experiment and are greatly reduced in the survey. |
| Keywords: | lottery choice, narrow framing, representative-sample experiments |
| JEL: | B49 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3040&r=exp |
| By: | Yael Meroz (University of Foggia); Andrea Morone (University of Bari); Piergiuseppe Morone (University of Foggia) |
| Abstract: | In this paper we aim - through an 'experimentally-adapted' Contingent Valuation survey - to look into the attributes of Ghanaians' willingness-to-pay for green products. This would help us addressing two main issues: first, from a theoretical point of view, we shall assess whether Ghanaians show a preference towards environmental goods - hence, countering the 'too poor to be green' argument. Secondly, from a methodological point of view, we shall try to see if the incentive compatible CV analysis provides a good measurement of subjects' willingness-to-pay for environmental premium. Our investigation provides an answer to both issues, showing how using an incentive compatible experiment produces, in the case of Ghana, reliable results and that Ghanaians consistently show that they are willing to pay an extra premium for green products. |
| Keywords: | contingent valuation, experiment, incentive-compatible, Ghana, organic products, willingness to pay. |
| JEL: | C9 Q5 |
| Date: | 2007–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-071&r=exp |
| By: | Dahlman, Sandra (Dept. of Economics, Stockholm School of Economics); Ljungqvist, Pontus (Dept. of Economics, Stockholm School of Economics); Johannesson, Magnus (Dept. of Economics, Stockholm School of Economics) |
| Abstract: | Reciprocal behavior, the rewarding of kind acts and the punishment of unkind acts, is relatively well established among adults. We test if reciprocal behavior exists already among children 3-8 years old. Three simple anonymous allocation games are conducted with 242 children. In a first stage, half of the children decide whether to give a bag of raisin to another anonymous child or not. The three games differ in terms of the cost of giving and the relative difference in payoffs. In a second stage the roles are reversed between the two children to test for reciprocal behavior. We find reciprocal behavior in all three games with highly significant effects for two of the three games. Furthermore, the degree of reciprocity tends to increase with age. The effect of reciprocity is not significant among 3-5 year old children, whereas the effect is highly significant in all three games for 6-8 year olds. |
| Keywords: | Reciprocity; prosociality; children; experiments |
| JEL: | C90 D64 J13 |
| Date: | 2007–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0674&r=exp |
| By: | Caitlin Knowles Myers |
| Abstract: | Despite anecdotal and survey evidence suggesting the presence of discrimination against customers in stores, restaurants, and other small –transaction consumer markets, few studies exist that identify or quantify the nature of any unequal treatment. We provide evidence from a ?eld study of wait times in Boston-area coffee shops that suggests that female customers wait an average of 20 seconds longer for their orders than do male customers even when controlling for gender differences in orders. We ?nd that this differential in wait times is inverse to the proportion of employees who are female and directly related to how busy the coffee shop is at the time of the order. This supports the conclusion that the observed differential is driven at least in part by employee animus and/or statistical discrimination rather than unobserved heterogeneity in the purchasing behavior of female customers. |
| Keywords: | economics of gender and minorities, consumer market discrimination JEL Classification: J15, J16 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:0711&r=exp |
| By: | Jordahl, Henrik (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper reviews the literature on economic inequality and trust. Cross-country studies, within-country studies, and experiments all suggest that economic inequality exerts a negative influence on trust. Four mechanisms are proposed to explain the negative relationship: social ties (or networks), inference on social relationships (to see inequality as a signal of untrustworthy behavior), conflicts over resources, and opportunity cost of time. Social ties receive the strongest empirical support, but there is also some evidence in favor of inference on social relationships. Conflicts over resources and opportunity cost of time are contradicted by important pieces of evidence. |
| Keywords: | Trust; Inequality; Social Capital; Social Ties; Networks |
| JEL: | C23 D31 Z13 |
| Date: | 2007–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0715&r=exp |