nep-exp New Economics Papers
on Experimental Economics
Issue of 2008‒01‒19
eleven papers chosen by
Daniel Houser
George Mason University

  1. Inter-Group Conflict and Intra-Group Punishment in an Experimental Contest Game By Klaus Abbink; Jordi Brandts; Benedikt Herrmann; Henrik Orzen
  2. Measuring the warm glow: players’ behaviour self declared happiness in trust game experiments By BECCHETTI LEONARDO; DEGLI ANTONI GIACOMO
  3. Humans versus computer algorithms in repeated mixed strategy games By Spiliopoulos, Leonidas
  4. Competition on Common Value Markets with Naive Traders - A Theoretical and Experimental Analysis By Nadine Chlaß; Werner Güth
  5. Planning ahead: eliciting intentions and beliefs in a public goods game By Luis G. Gonzalez; M. Vittoria Levati
  6. Uninformative announcements and asset trading behavior By Brice Corgnet; Praveen Kujal; Dave Porter
  7. Is the ebay feedback system really efficient ? an experimental study By David Masclet Auray (CREM - CNRS - CIRANO); Thierry Pénard (CREM – CNRS - University of Rennes 1)
  8. Beyond Normal Form Invariance : First Mover Advantage in Two-Stage Games with or without Predictable Cheap Talk By Hammond, Peter J.
  9. Procrastination and Impatience By Ernesto Reuben; Paola Sapienza; Luigi Zingales
  10. The Provision Point Mechanism and Scenario Rejection in Contingent Valuation By Peter A. Groothuis; John C. Whitehead
  11. Sensitive Questions in Online Surveys: Experimental Results for the Randomized Response Technique (RRT) and the Unmatched Count Technique (UCT) By Elisabeth Coutts; Ben Jann

  1. By: Klaus Abbink; Jordi Brandts; Benedikt Herrmann; Henrik Orzen
    Abstract: We study how conflict in a contest game is influenced by rival parties being groups and by group members being able to punish each other. Our main motivation stems from the analysis of socio-political conflict. The relevant theoretical prediction in our setting is that conflict expenditures are independent of group size and independent of whether punishment is available or not. We find, first, that our results contradict the independence of group-size prediction: conflict expenditures of groups are substantially larger than those of individuals, and both are substantially above equilibrium. Towards the end of the experiment material losses in groups are 257% of the predicted level. There is, however, substantial heterogeneity in the investment behaviour of individual group members. Second, allowing group members to punish each other after individual contributions to the contest effort are revealed leads to even larger conflict expenditures. Now material losses are 869% of the equilibrium level and there is much less heterogeneity in individual group members? investments. These results contrast strongly with those from public goods experiments where punishment enhances efficiency and leads to higher material payoffs.
    Keywords: Laboratory experiments, Rent-seeking, Conflict, Group competitiveness
    JEL: C90 D72 D74 F51 H41
    Date: 2008–01–15
    Abstract: We perform a standard trust game experiment in which questionnaires are alternatively administered to participants after the experiment and before even knowing the rules of the game. We find that self declared happiness is significantly affected by trustors’ contribution only when survey questions are answered after having played. This result contributes both to the empirical happiness and behavioural experimental literature. With respect to the first, we demonstrate that general questions on self declared life satisfaction evaluated over the entire life period are affected by most recent events. With respect to the second, we interpret our findings as supporting the existence of “warm glow” preferences. We think that our contribution has also important methodological consequences: warm glow preferences cannot just be tested with the standard approach inferring implied preference structures from players’ choices. Only when measuring ex post the effects on happiness of players’ contribution, net of the outcome of the game, we may conclude that their choice to contribute is due to altruistic and not to strategic motivations. Finally our finding is a confirmation of the importance of experience and not just procedural utility. In our experiment trustor happiness is not affected by the outcome of the game but by the specific pattern of chosen actions, irrespective of the final result.
    Date: 2007–12
  3. By: Spiliopoulos, Leonidas
    Abstract: This paper is concerned with the modeling of strategic change in humans’ behavior when facing different types of opponents. In order to implement this efficiently a mixed experimental setup was used where subjects played a game with a unique mixed strategy Nash equilibrium for 100 rounds against 3 preprogrammed computer algorithms (CAs) designed to exploit different modes of play. In this context, substituting human opponents with computer algorithms designed to exploit commonly occurring human behavior increases the experimental control of the researcher allowing for more powerful statistical tests. The results indicate that subjects significantly change their behavior conditional on the type of CA opponent, exhibiting within-sub jects heterogeneity, but that there exists comparatively little between-subjects heterogeneity since players seemed to follow very similar strategies against each algorithm. Simple heuristics, such as win-stay/lose-shift, were found to model subjects and make out of sample predictions as well as, if not better than, more complicated models such as individually estimated EWA learning models which suffered from overfitting. Subjects modified their strategies in the direction of better response as calculated from CA simulations of various learning models, albeit not perfectly. Examples include the observation that subjects randomized more effectively as the pattern recognition depth of the CAs increased, and the drastic reduction in the use of the win-stay/lose-shift heuristic when facing a CA designed to exploit this behavior.
    Keywords: Behavioral game theory; Learning; Experimental economics; Simulations; Experience weighted attraction learning; Simulations; Repeated games; Mixed Strategy Nash equilibria; Economics and psychology
    JEL: C9 C63 C70 C73 C72 C91
    Date: 2008–01–09
  4. By: Nadine Chlaß (Max Planck Institute of Economics, Jena, Germany); Werner Güth (Max Planck Institute of Economics, Jena, Germany.)
    Abstract: Theoretically and experimentally, we generalize the analysis of acquiring a company (Samuelson and Bazerman 1985) by allowing for competition of both, buyers and sellers. Naivety of both is related to the idea that higher prices exclude worse qualities. While competition of naive buyers increases prices, competition of naive sellers promotes effciency enhancing trade. Our predictions are tested experimentally.
    Keywords: incomplete information, common value auction, experiment
    JEL: D01 D42 D43 D44 D61 D82 L13 L15
    Date: 2007–12–20
  5. By: Luis G. Gonzalez (Max Planck Institute of Economics, Jena, Germany); M. Vittoria Levati (Max Planck Institute of Economics, Jena, Germany)
    Abstract: In a two-person ï¬nitely repeated public goods experiment, we use intentions data to interpret individual behavior. Based on a random-utility model speciï¬cation, we develop a relationship between a player's beliefs about others' behavior and his contributions' plans, and use this relationship to identify the player's most likely preference "type". Our estimation analysis indicates that players are heterogeneous in their preferences also at the intentional level. Moreover, our data show that deviations from intended actions are positively related to changes in beliefs, thereby suggesting that people are able to plan.
    Keywords: Public goods games, Experiments, Latent-class logit, Conditional cooperation
    JEL: C70 C72 C92 H41
    Date: 2007–12–20
  6. By: Brice Corgnet; Praveen Kujal; Dave Porter
    Abstract: Financial markets are overwhelmed by daily announcements. We use experimental asset markets to assess the impact of uninformative communications on asset prices and trading volumes. We deliver uninformative messages in standard experimental asset markets and find that trading volumes and prices are impacted by these messages. In particular, the release of a pre-announced preset message to traders “The price is too high” in predetermined trading periods decreases the amplitude and duration of bubbles. Also, the release of the messages “The price is too high” or “The price is too low” reduces trading volume with inexperienced subjects.
    Date: 2007–12
  7. By: David Masclet Auray (CREM - CNRS - CIRANO); Thierry Pénard (CREM – CNRS - University of Rennes 1)
    Abstract: The eBay Feedback Forum is claimed to be a crucial component of the success of eBay. Many empirical studies have found that this feedback system exerts a deterrent effect on the opportunistic behavior the Internet's anonymity may incite buyers and sellers to adopt. The feedback system in place on eBay is however far from being perfect and may be especially vulnerable to strategic ratings (or nonratings) that might reduce the informational content of feedback profiles. This article aims to examine the efficiency of the eBay feedback system, through a set of experiments based on the trust game. Our experimental design consists of four different treatments. The baseline treatment corresponds to a finite repeated simultaneous trust game. The second treatment, called “eBay rating” is identical to the baseline treatment except that we added a second stage in which the players have the opportunity of rating their partner. In this treatment, each participant is given the choice to either evaluate immediately or wait, knowing that only one rating will be accepted. The third treatment, called "Sequential rating" is identical to the “eBay rating” treatment, except that the order in which players evaluate one another is randomly determined by the computer. Finally in the fourth treatment, called “Simultaneous rating”, both players are required to make their rating decisions simultaneously. Our experimental results indicate that the eBay feedback system could be improved by either constraining partners to leave ratings simultaneously or by predetermining the rating sequence.
    JEL: C92 C72 L14 L86
    Date: 2008
  8. By: Hammond, Peter J. (Department of Economics, University of Warwick)
    Abstract: Von Neumann (1928) not only introduced a fairly general version of the extensive form game concept. He also hypothesized that only the normal form was relevant to rational play. Yet even in Battle of the Sexes, this hypothesis seems contradicted by players' actual behaviour in experiments. Here a refined Nash equilibrium is proposed for games where one player moves first, and the only other player moves second without knowing the first move. The refinement relies on a tacit understanding of the only credible and straightforward perfect Bayesian equilibrium in a corresponding game allowing a predictable direct form of cheap talk.
    Date: 2008
  9. By: Ernesto Reuben; Paola Sapienza; Luigi Zingales
    Abstract: There is a large body of literature documenting both a preference for immediacy and a tendency to procrastinate. O'Donoghue and Rabin (1999a,b, 2001) and Choi et al. (2005) model these behaviors as the two faces of the same phenomenon. In this paper, we use a combination of lab, field, and survey evidence to study whether these two types of behavior are indeed linked. To measure immediacy we had subjects choose between a series of smaller-sooner and larger-later rewards. Both rewards were paid with a check in order to control for transaction costs. To measure procrastination we use the subjects' actual behavior in cashing the check and completing tasks on time. Our results lend support to the hypothesis that subjects who have a preference for immediacy are indeed more likely to procrastinate.
    JEL: D0 G0
    Date: 2007–12
  10. By: Peter A. Groothuis; John C. Whitehead
    Abstract: The provision point mechanism mitigates free riding behavior in economic experiments. In two contingent valuation method surveys, we implement the provision point design. We ask respondents about their perceptions about the success of the provision point mechanism. One of the determinants that identifies who is likely to feel the provision point will be met is the bid itself. We find that respondents who believe that the provision point would not be met are more likely to say no to a contingent valuation dichotomous choice question. The scenario rejection that arises may result in biased willingness to pay estimates. Key Words: Provision Point Mechanism, Contingent Valuation, Willingness to Pay, Public Goods
    JEL: Q51
    Date: 2008
  11. By: Elisabeth Coutts; Ben Jann
    Abstract: Gaining valid answers to so-called sensitive questions is an age-old problem in survey research. Various techniques have been developed to guarantee anonymity and minimize the respondent's feelings of jeopardy. Two such techniques are the randomized response technique (RRT) and the unmatched count technique (UCT). In this study we evaluate the effectiveness of different implementations of the RRT (using a forced-response design) in a computer-assisted setting and also compare the use of the RRT to that of the UCT. The techniques are evaluated according to various quality criteria, such as the prevalence estimates they provide, the ease of their use, and respondent trust in the techniques. Our results indicate that the RRTs are problematic with respect to several domains, such as the limited trust they inspire and non-response, and that the RRT estimates are unreliable due to a strong false "no" bias, especially for the more sensitive questions. The UCT, however, performed well compared to the RRTs on all the evaluated measures. The UCT estimates also had more face validity than the RRT estimates. We conclude that the UCT is a promising alternative to RRT in self-administered surveys and that future research should be directed towards evaluating and improving the technique.
    Keywords: sensitive questions, online survey, randomized response technique, unmatched count technique, item count technique, methodological experiment
    JEL: C42 C81
    Date: 2008–01

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