nep-exp New Economics Papers
on Experimental Economics
Issue of 2007‒12‒01
six papers chosen by
Daniel Houser
George Mason University

  1. An Agent-Based Model of Behavior in “Beauty Contest” Games By Mark W. Nichols; Michael J. Radzicki
  2. Network Structure in a Link-formation Game: An Experimental Study By Alexander Elbittar; Rodrigo Harrison; Roberto Muñoz
  3. What's in a name? A field experiment test for the existence of ethnic discrimination in the hiring process By Bursell, Moa
  4. An experimental study of trading volume and divergence of expectations in relation to earnings announcement By Thanh Huong Dinh; Jean-François Gajewski
  5. Economics for marketing revisited By Ana Isabel Costa; Cesaltina Pires
  6. Information, School Choice, and Academic Achievement: Evidence from Two Experiments By Justine S. Hastings; Jeffrey M. Weinstein

  1. By: Mark W. Nichols (Department of Economics, University of Nevada, Reno); Michael J. Radzicki (Department of Social Science and Policy Studies, Worcester Polytechnic Institute)
    Abstract: Recently, computer simulation, particularly agent-based modeling, has grown in popularity as a method to uncover macro patterns and developments that emerge from simple micro behavior. The present paper combines both techniques by using protocol analysis to uncover player strategies in an experiment and encoding those strategies in an agent-based computer simulation. In particular, Keynes’ (1936) beauty contest analogy is simulated in a number-guessing context. Several researchers have conducted experiments asking subjects to play “p-beauty contest games” in order to compare the experimental results with those predicted by the game-theoretic, deductive reasoning concept of iterated dominance. Our results are compared with those found experimentally in order to demonstrate the usefulness of a combining agent-based modeling with protocol analysis.
    Keywords: Agent-Based modeling; Beauty contest games
    JEL: C15 E12
    Date: 2007–11
  2. By: Alexander Elbittar; Rodrigo Harrison; Roberto Muñoz
    Date: 2007–11–19
  3. By: Bursell, Moa (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: This paper provides evidence of extensive ethnic discrimination in the Swedish labour market. A field experiment (correspondence test) that tests employer discrimination has been performed. Pairs of equally merited applications has been sent to job openings, one with a Swedish sounding name and one with a foreign sounding name. Discrimination is measured by documenting the existence of an ethnic difference in call-backs. The results indicate that there is discrimination in all of the occupations that were tested in the experiment, but that the extent of the ethnic discrimination differs between the occupations. An attempt is also made to explain the results applying the theories of statistical discrimination and social distance.
    Keywords: ethnic discrimination in the labour market; statistical discrimination; social distance; field experiment; correspondence test
    JEL: J15 J71
    Date: 2007–11–27
  4. By: Thanh Huong Dinh; Jean-François Gajewski
    Abstract: The objective is to study from an experimental point of view investors’ reactions to the announcement of annual earnings in terms of trading volume. Annual net income is seen by shareholders as the most important figure, since it is, for individual accounts, the basis for determining profit by the shareholders’ general meeting. In the experiment, this is announced at the end of eight rounds of exchange. Every two periods, a fraction of the annual income is revealed to all the participants. Thus they periodically revise their expectations as to the annual results. The experiment shows that the divergence of expectations does not decrease when investors have more information about the final results. This is the main explanation for transactions in our experimental asset markets. However, too large a divergence prevents investors from trading. As expected, price changes in absolute value influence trading volume. But this effect is smaller than the impact of heterogeneity of expectations. <P>L’objectif de cette étude est d’observer, d’un point de vue expérimental, la réaction des investisseurs lors de la diffusion des bénéfices annuels d’une entreprise en termes de volume de transactions. Le revenu net annuel est perçu par les actionnaires comme l’indice le plus important, étant responsable de la détermination des gains individuels à l’assemblée des actionnaires. Au cours de l’expérience, cet indice est annoncé après huit rondes d’échanges. Une fraction du revenu annuel est annoncé à tous les participants une période sur deux. Ainsi, les participants révisent périodiquement leurs attentes face aux résultats annuels. L’expérience démontre que la divergence des attentes ne diminue pas lorsque les investisseurs possèdent plus d’information sur les résultats finaux. C’est ce qui explique principalement les transactions obtenues dans notre marché d’actifs expérimental. Cependant, une divergence trop importante empêche les investisseurs d’effectuer des transactions. Comme prévu, les changements de prix en valeur absolue influencent le volume de transactions. Cette conséquence est toutefois moins importante que l’impact de l’hétérogénéité des attentes.
    Keywords: trading volume, heterogeneity of expectations, earnings announcement and experimental asset markets, volume de transactions, hétérogénéité des attentes, annonce des bénéfices, marchés d’actifs expérimentaux
    JEL: C91 D84
    Date: 2007–11–01
  5. By: Ana Isabel Costa (Universidade de Évora – Departamento de Gestão e Aarhus School of Business – Department of Marketing and Statistics); Cesaltina Pires (Universidade de Évora – Departamento de Gestão)
    Abstract: This paper aims to provide evidence supporting the following: that recent theoretical, empirical and methodological advances in microeconomics are decisive to the progress of marketing science. That such a notion is not yet mainstream and uncontroversial, we contend, is more due to insufficient knowledge dissemination and outdated perceptions about irreconcilable differences between economists and psychologists than to lack of intrinsic value or cognitive appeal. Evidence is provided by describing these advances in a concise manner, showing how they can contribute to tackle complex marketing issues and providing examples from published matter in which this contribution already takes place.
    Keywords: Marketing Science, Economic Psychology, Behavioral Economics, Experimental Economics
    JEL: M31 A11
    Date: 2007
  6. By: Justine S. Hastings; Jeffrey M. Weinstein
    Abstract: There is growing empirical evidence that low-income parents place lower weights on academics when choosing schools, implying that school choice plans may have the smallest impact on the choices of the families they are targeting. This paper uses a natural experiment generated by the 2004 implementation of the No Child Left Behind Act in the Charlotte-Mecklenburg Public School District (CMS) and a field experiment we designed and implemented as part of the district's 2006 school choice plan to examine how transparent information on school-level academic performance affects the test scores of the schools parents choose and the subsequent impact on their children's academic outcomes. We find in both cases that providing parents with transparent information on the academic achievement at schools with their school choice forms results in significantly more parents choosing substantially higher-performing schools. We then use instrumental variables approaches, exploiting random variation generated by each experiment in the test score of the school attended to estimate the impact of attending a higher-scoring school on student academic outcomes. We find that attending higher-performing schools results in significant increases in their children's standardized test scores at the end of the first year. If the results we find represent permanent increases in student-level test scores, they suggest a small policy change that lowers information or decision making costs for these parents had a substantial monetary impact on their children's lifetime earnings, adding to growing evidence that small changes in information can greatly affect choices, program participation, and outcomes.
    JEL: D83 H0 I2 I28
    Date: 2007–11

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