nep-exp New Economics Papers
on Experimental Economics
Issue of 2008‒05‒24
seven papers chosen by
Daniel Houser
George Mason University

  1. Cognitive Forward Induction and Coordination without Common Knowledge: An Experimental Study By Andreas Blume; Andreas Blume; Uri Gneezy
  2. Your Place in Space: Classroom Experiment on Spatial Location Theory By Margo Bergman; G. Dirk Mateer; Michael Reksulak; Jonathan C. Rork; Rick K. Wilson; David Zirkle
  3. Measuring People's Trust By John F. Ermisch; Diego Gambetta; Heather Laurie; Thomas Siedler; S.C. Noah Uhrig
  4. On Feelings as a Heuristic for Making Offers in Ultimatum Negotiations By Stephen, Andrew T.; Pham, Michel Tuan
  5. The Behaviour of Corporate Actors. A Survey of the Empirical Literature By Christoph Engel
  6. The social science of economics By Brian Loasby
  7. Imposing Monotonicity Nonparametrically in First-Price Auctions By Henderson, Daniel J.; List, John A.; Millimet, Daniel L.; Parmeter, Christopher F.; Price, Michael K.

  1. By: Andreas Blume; Andreas Blume; Uri Gneezy
    Abstract: . . .
    Date: 2008–05
  2. By: Margo Bergman; G. Dirk Mateer; Michael Reksulak; Jonathan C. Rork; Rick K. Wilson; David Zirkle
    Abstract: The authors detail an urban economics experiment that is easily run in the classroom. The experiment has a flexible design that allows the instructor to explore how congestion, zoning, public transportation, and taxation levels determine the bid-rent function. Heterogeneous agents in the experiment compete for land use utilizing a simple auction mechanism. Using the data that is collected, a bid-rent function is derived, and the experimental treatment is altered over the course of three sessions to uncover core concepts in urban economics. Moreover, this provides a tangible experience that can be used to help undergraduates relate to urban issues such as the steep rent gradient found around many larger colleges and universities.
    JEL: A22 R1 C9
    Date: 2008–05
  3. By: John F. Ermisch (Institute for Social and Economic Research); Diego Gambetta (Nuffield College, Oxfod); Heather Laurie (Institute for Social and Economic Research); Thomas Siedler (DIW Berlin); S.C. Noah Uhrig (Institute for Social and Economic Research)
    Abstract: We measure trust and trustworthiness in British society with an experiment using real monetary rewards and a sample of the British population. The study also asks the most typical survey question that aims to measure trust, showing that it does not predict ‘trust’ as measured in the experiment. Overall, about 40% of people were willing to trust a stranger in our experiment, and their trust was rewarded one-half of the time. Analysis of variation in the trust behaviour in our survey suggests that trust is more likely if people are older, their financial situation is ‘comfortable’, they are a homeowner, or they are divorced or separated. Trustworthiness is less likely if a person’s financial situation is perceived by them as ‘just getting by’ or difficult.
    Keywords: social trust
    Date: 2008–01
  4. By: Stephen, Andrew T.; Pham, Michel Tuan
    Abstract: This research examines how the reliance on emotional feelings as a heuristic influences the proposal of offers in negotiations. Results from three experiments based on the classic ultimatum game show that, compared to proposers who do not rely on their feelings, proposers who rely on their feelings make less generous offers in the standard ultimatum game, more generous offers in a variant of the game allowing responders to make counteroffers, and less generous offers in the dictator game where no responses are allowed. Reliance on feelings triggers a more literal form of play, whereby proposers focus more on how they feel toward the offers themselves than on how they feel toward the possible outcomes of these offers, as if their offers were the final outcomes. Proposers relying on their feelings also tend to focus on gist-based, simpler construals of negotiations that capture only the essential aspects of the situation.
    Keywords: affect; emotions; heuristics; bargaining; ultimatum game; affect as information; affect heuristic; trust in feelings
    JEL: D81 D11 D71 A13 A12 C70 D83
    Date: 2008–05–08
  5. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Much of behavioural research, both in economics and in psychology, is limited in one respect: it tests isolated individuals. In many practically relevant situations, there are discernible actors, but these actors are not individuals. Rather firms, regulatory bodies, associations, countries or international organisations become active. The social problem at hand is best understood if one attributes judgement and decision making to higher level aggregates of individuals. Which elements from the rich body of behavioural evidence transfer to these corporate actors? Are there other deviations from the predictions of the rational choice model, not present or studied in individuals? This paper surveys the empirical literature from experimental economics, psychology, sociology and law. While some building blocks, like the behaviour of managers and of ad hoc groups, are relatively well understood, our knowledge about the effects of more elaborate internal structure on the dealings of corporate actors with the outer world is still relatively limited.
    Keywords: Behaviour, Firms, Organizations, Associations, Groups
    JEL: C92 D21 D23 K22 L20
    Date: 2008–05
  6. By: Brian Loasby (SCEME, University of Stirling)
    Abstract: The argument of this paper is that much modern economics is drastically undersocialised because it lacks an understanding of the distinctive characteristics of the evolved human mind, despite the significant insights provided by three of our most famous economists, Adam Smith, Alfred Marshall and Friedrich Hayek. This deficiency results from a failure to apply what may be considered the defining principle of economics, that of analysing the implications of scarcity. These implications challenge the adequacy of a theoretical structure based on the confrontation of preference functions and opportunity sets, even when extended to include formal interdependence, as in game theory; they require both a more modest view of human cognitive abilities and a more extensive view of human motivation and potential.
    Keywords: Adam Smith, Alfred Marshall, Hayek
    JEL: B41 Z1
    Date: 2007–11
  7. By: Henderson, Daniel J.; List, John A.; Millimet, Daniel L.; Parmeter, Christopher F.; Price, Michael K.
    Abstract: Monotonicity of the equilibrium bidding strategy is a key property of structural auction models. Traditional nonparametric estimators provide a flexible means of uncovering salient features of auction data, but do not formally impose the monotonicity assumption that is inherent in the models during estimation. Here, we develop a nonparametric estimator which imposes the monotonicity assumption. We accomplish this by employing the constraint weighted bootstrapping theory developed in the statistics literature. The finite sample performance of our estimator is examined using simulated data, experimental data, as well as a naturally occurring data set composed of thousands of bids from Canadian timber auctions.
    Keywords: Constrained Weighted Bootstrap; Bandwidth; Equilibrium Bidding Strategy
    JEL: C14 C12 D44
    Date: 2008–04–14

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