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on Experimental Economics |
| By: | Daniel Houser (Interdsciplinary Center for Economic Science, George Mason University); Rebecca Morton; Thomas Stratmann |
| Abstract: | We present results from laboratory experimental elections in which voter information is endogenously provided by candidates and voting is voluntary. We also compare advertisements that are costless to voters with those that reduce voter payoffs. We fi?nd that informative advertisements increase voter participation and thus informative campaign advertising "turns out" voters. However, the effect of information is less than that found in previous experimental studies where information is exogenously provided by the experimenter. Furthermore, we find that when advertising by winning candidates reduces voter payoffs, informed voters are less likely to participate, thus are "turned off" rather than "turned out."Finally, we discover that candidates tend to overadvertise, and contrary to theoretical predictions, advertise significantly more when voting is voluntary than when it is compulsory. |
| Keywords: | Voting, Campaign Finance, Abstention, Voter Turnout, Experiments |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1004&r=exp |
| By: | Coralio Ballester (Department of Economics, University of Alicante.); Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada.); María Paz Espinosa (Universidad del País Vasco) |
| Abstract: | This paper analyzes the impact of social integration on cooperative behavior. We show that if the social network shows assortative mixing then conditional cooperation is an equilibrium strategy for altruistic subjects with a high degree of social integration.We provide experimental evidence on the relationship between individuals’ position in a social network and their contributions in a public good game. |
| Keywords: | public good game, social networks, conditional cooperation. |
| JEL: | C91 D64 C72 H41 |
| Date: | 2008–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:08/04&r=exp |
| By: | John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst); James J. Murphy (Department of Economics, University of Alaska Anchorage, Anchorage, Alaska); John M. Spraggon (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | This paper uses laboratory experiments to investigate the performance of emission permit markets when compliance is imperfectly enforced. In particular we examine deviations in observed aggregate payoffs and expected penalties from those derived from a model of risk-neutral payoff-maximizing firms. We find that the experimental emissions markets were reasonably efficient at allocating individual emission control choices despite imperfect enforcement and significant noncompliance. However, violations and expected penalties were lower than predicted when these are predicted to be high, but were about the same as predicted values when these values were predicted to be low. Thus, although a standard model of compliance with emissions trading programs tends to predict significantly higher violations than we observe when subjects have strong incentives to violate their emissions permits, individual emissions control responsibilities are distributed among firms as predicted. |
| Keywords: | enforcement, compliance, emissions trading, permit markets, pollution, laboratory experiments |
| JEL: | C91 L51 Q58 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2008-1&r=exp |
| By: | Sabrina Teyssier (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines) |
| Abstract: | This paper reports on the results of an experiment testing whether the agents selfselect between a competitive payment scheme and a revenue-sharing scheme depending on their inequity aversion. Average efficiency should be increased when these payment schemes are endogenously chosen by agents. We show that the choice of the competition is negatively affected by disadvantageous inequity aversion and risk aversion. In the second half of the experiment, the effect of individual preferences is indirect through the effect of past results. The self-selection of agents increases the efficiency of the competitive scheme but not that of the revenue-sharing scheme, due to a heterogeneity of behaviors. |
| Keywords: | performance pay ; incentives ; self-selection ; inequity aversion ; competition ; revenue-sharing scheme |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00303727_v1&r=exp |
| By: | David M. McEvoy (Department of Economics, Appalachian State University, Boone, NC); James J. Murphy (Department of Economics, University of Alaska Anchorage, Anchorage, AK); John M. Spraggon (Department of Resource Economics, University of Massachusetts Amherst); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to not comply with their commitments. A stable coalition is one in which no member wishes to leave and no non-member wishes to join. To counteract the incentive to violate their commitments, coalition members fund a third-party enforcer. This leads to the theoretical conclusion that stable coalitions are larger (and provide more of a public good) when their members must finance enforcement relative to when compliance is ensured without the need for costly enforcement. However, our experiments reveal that giving coalition members the opportunity to violate their commitments while requiring them to finance enforcement to maintain compliance reduces the overall provision of the public good. The decrease in the provision of the public good is attributed to an increase in the participation threshold for a theoretically stable coalition to form and to significant levels of noncompliance. When we abandon the strict stability conditions and require all subjects to join a coalition for it to form, the average provision of the public good increases significantly. |
| Keywords: | stable coalitions, self-enforcing agreements, compliance, enforcement, public goods |
| JEL: | H41 C92 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2008-2&r=exp |
| By: | Maria Claudia Lopez (Workshop in Political Theory and Policy Analysis, Indiana University, Bloomington, IN); James J. Murphy (Department of Economics, University of Alaska Anchorage, Anchorage, AK); John M Spraggon (Department of Resource Economics, University of Massachusetts Amherst); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | In this paper we describe a field experiment conducted among mollusk harvesters in a community on the Pacific Coast of Columbia. The experiment is based on a standard linear public good and consists of two stages. In the first stage we compare the ability of monetary and nonmonetary sanctions among community members to increase contributions to the public good. In the second stage we add a government regulation with either a high or low sanction for noncompliance to community enforcement efforts. The results for the first stage are consistent with other comparisons of monetary and nonmonetary sanctions within groups; both led to higher contributions. The results from the second stage reveal that government regulations always complemented community enforcement efforts. While the subjects tended to reduce their sanctioning efforts under the government regulations, contributions and earnings were significantly higher than without government interventions. In fact, the combination of community and government enforcement efforts generated near-perfect contributions to the public good. However, more research into the combined roles of government intervention and community enforcement efforts is needed because the complementarity we find may be situation-specific. |
| Keywords: | Field experiments, public goods, government regulation, community enforcement |
| JEL: | C93 H41 Q2 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2008-4&r=exp |
| By: | Viceisza, Angelino |
| Abstract: | "This study reports theory-testing laboratory experiments on the effect of yardstick competition on corruption. The results reveal that on the incumbent's side, yardstick competition acts as a corruption-taming mechanism only if the incumbent politician is female. On the voter's side, voters focus on the difference between the tax rate in their own jurisdiction versus that in another jurisdiction. If the voters' tax rate is deemed unfair compared to that in the other jurisdiction, voters are less likely to re-elect. These findings support the claim by Besley and Case (1995) that incumbent behavior and tax setting are tied together through the nexus of yardstick competition, suggesting that our laboratory experiments have some external validity." from Author's Abstract |
| Keywords: | Corruption, Yardstick competition, Political agency, Asymmetric and private information, Experiments, Social protection, Institutions, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:774&r=exp |
| By: | Burks, Stephen V. (University of Minnesota, Morris); Carpenter, Jeffrey P. (Middlebury College); Goette, Lorenz (Federal Reserve Bank of Boston); Rustichini, Aldo (University of Minnesota) |
| Abstract: | Economic analysis has said little about how an individual’s cognitive skills (CS's) are related to the individual’s preferences in different choice domains, such as risk-taking or saving, and how preferences in different domains are related to each other. Using a sample of 1,000 trainee truckers we report three findings. First, we show a strong and significant relationship between an individual’s cognitive skills and preferences, and between the preferences in different choice domains. The latter relationship may be counterintuitive: a patient individual, more inclined to save, is also more willing to take calculated risks. A second finding is that measures of cognitive skill predict social awareness and choices in a sequential Prisoner's Dilemma game. Subjects with higher CS's more accurately forecast others' behavior, and differentiate their behavior depending on the first mover’s choice, returning higher amount for a higher transfer, and lower for a lower one. After controlling for investment motives, subjects with higher CS’s also cooperate more as first movers. A third finding concerns on-the-job choices. Our subjects incur a significant financial debt for their training that is forgiven only after twelve months of service. Yet over half leave within the first year, and cognitive skills are also strong predictors of who exits too early, stronger than any other social, economic and personality measure in our data. These results suggest that cognitive skills affect the economic lives of individuals, by systematically changing preferences and choices in a way that favors the economic success of individuals with higher cognitive skills. |
| Keywords: | field experiment, risk aversion, ambiguity aversion, loss aversion, time preference, Prisoners Dilemma, social dilemma, IQ, MPQ, numeracy, U.S. trucking industry, for-hire carriage, truckload (TL), driver turnover, employment duration, survival model |
| JEL: | C81 C93 L92 J63 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3609&r=exp |
| By: | Rosholm, Michael (Aarhus School of Business) |
| Abstract: | This paper uses a social experiment in labour market policy – providing early and intensive monitoring and programme participation in unemployment spells – to assess the nature of labour market policy effectiveness. The experiment was conducted in two counties in Denmark during the winter of 2005-6. The treatment consisted of a dramatic intensification of labour market policies. The results show that the intensification of labour market policies is highly effective, leading to increases in the exit rate from unemployment ranging from 20 to 40%. When introducing time-varying indicators for the various specific treatments actually prescribed to the unemployed workers, none of those treatments have a positive effect on the exit rate from unemployment, neither during the week in which the activity takes place, nor after the activity is completed. However, when the estimated risk of participating in an activity is included as an explanatory variable, it removes the difference in job-finding rates between treatment and control groups completely in one of the counties, and reduces it dramatically and renders it insignificant in the other county. The interpretation we attach to these results is the following; since individual treatments do not appear to be effective per se, but the risk of treatment is, it must be that the intensification of the policy regime increases the job-finding rate of unemployed workers. |
| Keywords: | treatment effect, labour market policy regime, social experiment, threat effect, duration model |
| JEL: | J64 J65 J68 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3620&r=exp |
| By: | Jürgen Eichberger (University of Heidelberg, Department of Economics); Dmitri Vinogradov (University of Essex, Essex Business School,) |
| Abstract: | Least-Unmatched Price Auctions have become a popular format of TV and radio shows. Increasingly, they are also applied in internet trading. In these auctions the lowest single (unique) bid wins. We analyze the game-theoretic solution of least unmatched price auctions when prize, bidding cost and the number of participants are known. We use a large data-set of such auctions in order to contrast actual behavior of players with game-theoretic predictions. In the aggregate, bidding behaviour seems to conform with a Nash equilibrium in mixed strategies. |
| Keywords: | games, experiments |
| JEL: | C71 C93 D01 D81 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0471&r=exp |
| By: | Cathleen Johnson; David Masclet; Claude Montmarquette |
| Abstract: | Noncompliance is a quantitatively important phenomenon that affects significantly revenue source for state governments. This phenomenon raises challenging questions about the determinants of tax reporting and also about the appropriate design of a tax system: how many resources should be devoted to auditing? This paper provides specific empirical insights using an experimental approach to measure the effects of systematic sales tax monitoring and the determinants of sales tax compliance. The results indicate that if perfect monitoring is instituted without other complementary policies, an increase in tax revenues is not the likely outcome. A successful policy aiming at reducing fiscal fraud might be a difficult task, once people have decided their equilibrium level of tax compliance. The reference-dependent effect observed in the data suggests that individuals will try to recover their losses following any policy changes even if it means taking more risks. <P>Les revenus de plusieurs niveaux de gouvernements sont significativement altérés par la fraude fiscale. Découvrir les déterminants de la fraude fiscale est un défi important alors que ce phénomène pose en même temps la question du design du système de taxation. Combien de ressources devons-nous, par exemple, consacrer à l’audit? Cette recherche mobilisant l’économie expérimentale offre une analyse empirique sur les effets d’assurer systématiquement le contrôle de la taxe de vente et d’étudier les déterminants de s’acquitter du paiement de ce type de taxes. Les résultats indiquent que le contrôle parfait de la taxe de vente sans politiques complémentaires n’augmentent pas nécessairement les rentrées fiscales. Une politique efficace pour réduire la fraude fiscale s’avère une tâche difficile si les agents impliqués ont décidé d’un niveau d’équilibre de conformité dans le paiement de leurs taxes. Les données montrent que les participants tendent à recouvrer leurs pertes suite à un changement de politique fiscale même s’ils doivent prendre plus de risques pour y arriver. |
| Keywords: | sales tax, perfect monitoring, experimental economics, reference-dependent effect., taxe de vente, fraude fiscale, économie expérimentale, politiques d’audit. |
| Date: | 2008–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2008s-17&r=exp |
| By: | Paul Collier (University of Oxford); Pedro C. Vicente (University of Oxford) |
| Abstract: | Following the wave of democratization during the 1990s, elections are now common in low-income societies. However, these elections are frequently flawed. We investigate the Nigerian general election of 2007, which is to date the largest election held in Africa and one seriously marred by violence. We designed and conducted a nationwide field experiment based on randomized anti-violence grassroots campaigning. We find direct effects on violence outcomes from exploring both subject-surveying and independent data sources. Crucially, we establish that voter intimidation is effective in reducing voter turnout, and that the violence was systematically dissociated from incumbents. We suggest that incumbents have a comparative advantage in alternative strategies, vote buying and ballot fraud. Voter intimidation may be a strategy of the weak analogous to terrorism. |
| Keywords: | Violence, Conflict, Electoral Politics, Political Economy, Randomized Experiment, Field Experiment, Nigeria, West Africa |
| JEL: | D72 D74 O55 P16 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:hic:wpaper:50&r=exp |
| By: | Anat Bracha; Donald Brown |
| Date: | 2008–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:122247000000002291&r=exp |
| By: | Weizsäcker, Georg (London School of Economics) |
| Abstract: | The paper presents a new meta data set covering 13 experiments on the social learning games by Bikhchandani, Hirshleifer, and Welch (1992). The large amount of data makes it possible to estimate the empirically optimal action for a large variety of decision situations and ask about the economic significance of suboptimal play. For example, one can ask how much of the possible payoffs the players earn in situations where it is empirically optimal that they follow others and contradict their own information. The answer is 53% on average across all experiments – only slightly more than what they would earn by choosing at random. The players’ own information carries much more weight in the choices than the information conveyed by other players’ choices: the average player contradicts her own signal only if the empirical odds ratio of the own signal being wrong, conditional on all available information, is larger than 2:1, rather than 1:1 as would be implied by rational expectations. A regression analysis formulates a straightforward test of rational expectations, which rejects, and confirms that the reluctance to follow others generates a large part of the observed variance in payoffs, adding to the variance that is due to situational differences. |
| Keywords: | failure of rational expectations, information cascades, social learning, meta analysis |
| JEL: | C72 C92 D82 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3616&r=exp |