nep-exp New Economics Papers
on Experimental Economics
Issue of 2008‒09‒05
eight papers chosen by
Daniel Houser
George Mason University

  1. Face Value By Catherine C. Eckel; Ragan Petrie
  2. Are Risk Preferences Stable? Comparing an Experimental Measure with a Validated Survey-Based Measure By Lisa R. Anderson; Jennifer M. Mellor
  3. Varying the Intensity of Competition in a Multiple Prize Rent Seeking Experiment By Lisa R. Anderson; Beth A. Freeborn
  4. Cooperativeness and Impatience in the Tragedy of the Commons By Ernst Fehr; Andreas Leibbrandt
  5. On reputation: A microfoundation of contract enforcement and price rigidity By Ernst Fehr; Martin Brown; Christian Zehnder
  6. Shifting the Blame: On Delegation and Responsibility By Björn Bartling; Urs Fischbacher
  7. Focal prices and price cycles in an alternating price duopoly experiment By Leufkens Kasper; Peeters Ronald
  8. Rationalization and Cognitive Dissonance: Do Choices Affect or Reflect Preferences? By M. Keith Chen

  1. By: Catherine C. Eckel; Ragan Petrie
    Abstract: There is growing evidence of systematic heterogeneity in behavior by observable characteristics, such as what one would see in a face. We ask, is there informational value in knowing these characteristics in a strategic interaction? Subjects are given the opportunity to purchase a photograph of their partner in the play of a trust game. Not everyone purchases the photo, even at prices as low as $0.20. Senders (first movers in the game) have a more inelastic demand for pictures than responders (second movers). White senders have a substantially higher demand than nonwhite senders or responders. For responders, there is no difference in demand for pictures across ethnicity or sex. White senders who pay to see the picture of their partner use the information to discriminate, sending significantly less to black responders than to white responders. Overall, responders return a higher percentage of the amount received as offers go up, but they do differentiate that percentage when they see the picture of the sender, returning more to a member of the same ethnicity. A face, it appears, has strategic value, especially for those who will use the information to differentiate their decisions.
    Date: 2008–09
    URL: http://d.repec.org/n?u=RePEc:exc:wpaper:2008-11&r=exp
  2. 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 examine the stability of risk preference within subjects by comparing measures obtained from two elicitation methods, an economics experiment with real monetary rewards and a survey with questions on hypothetical gambles. The survey questions have been validated by numerous empirical studies of investment, insurance demand, smoking and alcohol use, and recent studies have shown the experimental measure is associated with several real-world risky behaviors. For the majority of subjects, we find that risk preferences are not stable across elicitation methods. In interval regression models, subjects’ risk preference classifications from survey questions on job-based gambles are not associated with risk preference estimates from the experiment. However, we find that risk classifications from inheritance-based gambles are significantly associated with the experimental measure. We identify some subjects for whom risk preference estimates are more strongly correlated across elicitation methods, suggesting that unobserved subject traits like comprehension or effort influence risk preference stability.
    Keywords: Risk Preferences, Laboratory Experiment, Survey
    JEL: C9 D8
    Date: 2008–08–12
    URL: http://d.repec.org/n?u=RePEc:cwm:wpaper:74&r=exp
  3. By: Lisa R. Anderson (Department of Economics, College of William and Mary); Beth A. Freeborn (Department of Economics, College of William and Mary)
    Abstract: We experimentally test a rent seeking model under five levels of competition. At one extreme, a subject’s probability of winning a prize is equal to her share of the total expenditures. At lower levels of competition, a subject’s probability of winning is affected more by her own expenditures than by the expenditures of others. Predicted expenditure levels are positively associated with higher levels of competition. Consistent with previous rent seeking experiments, we find that subjects spend significantly more than the Nash equilibrium prediction at all levels of competition. However, expenditure patterns generally follow the Nash prediction; expenditures decrease as the level of competition decreases. Our experimental design also includes a lottery choice experiment to control for subjects’ risk preference. We find that subjects who are more risk averse spend significantly less in the contest and this effect is particularly strong for female subjects
    Keywords: rent seeking, experiment, rent dissipation, political competition
    JEL: C9 D72
    Date: 2008–08–15
    URL: http://d.repec.org/n?u=RePEc:cwm:wpaper:75&r=exp
  4. By: Ernst Fehr; Andreas Leibbrandt
    Abstract: This paper examines the role of other-regarding and time preferences for cooperation in the field. We study the preferences of fishermen whose main, and often only, source of income stems from using a common pool resource (CPR). The exploitation of a CPR involves a negative interpersonal and inter-temporal externality because individuals who exploit the CPR reduce the current and the future yield for both others and themselves. Accordingly, economic theory predicts that more cooperative and more patient individuals should be less likely to exploit the CPR. Our data supports this prediction because fishermen who exhibit a higher propensity for cooperation in a laboratory public goods experiment, and those who show more patience in a laboratory time preference experiment, exploit the fishing grounds less in their daily lives. Moreover, because the laboratory public goods game exhibits no inter-temporal spillovers, measured time preferences should not predict cooperative behavior in the laboratory. This prediction is also borne out by our data. Thus, laboratory preference measures are useful to capture important dimensions of field behavior.
    Keywords: Cooperation, common pool resource, experiments, generalizability, methodology
    JEL: B4 C9 D8 O1
    Date: 2008–07
    URL: http://d.repec.org/n?u=RePEc:zur:iewwpx:378&r=exp
  5. By: Ernst Fehr; Martin Brown; Christian Zehnder
    Abstract: We study the impact of reputational incentives in markets characterized by moral hazard problems. Social preferences have been shown to enhance contract enforcement in these markets, while at the same time generating considerable wage and price rigidity. Reputation powerfully amplifies the positive effects of social preferences on contract enforcement by increasing contract efficiency substantially. This effect is, however, associated with a considerable bilateralisation of market interactions, suggesting that it may aggravate price rigidities. Surprisingly, reputation in fact weakens the wage and price rigidities arising from social preferences. Thus, in markets characterized by moral hazard, reputational incentives unambiguously increase mutually beneficial exchanges, reduce rents, and render markets more responsive to supply and demand shocks.
    Keywords: Reputation, Reciprocity, Relational Contracts, Price Rigidity, Wage Rigidity
    JEL: D82 J3 J41 E24 C9
    Date: 2008–07
    URL: http://d.repec.org/n?u=RePEc:zur:iewwpx:384&r=exp
  6. By: Björn Bartling; Urs Fischbacher
    Abstract: To fully understand the motives for delegating a decision right, it is important to study responsibility attributions for outcomes of delegated decisions. We conducted an experiment in which subjects were able to delegate the choice between a fair or unfair allocation, and used a punishment option to elicit responsibility attributions. Our results show that, first, responsibility attribution can be effectively shifted and, second, this constitutes a powerful motive for the delegation of a decision right. Furthermore, we propose a formal measure of responsibility and show that this measure outperforms measures based on outcome or intention in predicting punishment behavior.
    Keywords: Delegation, decision rights, moral responsibility, blame shifting
    JEL: C91 D63
    Date: 2008–07
    URL: http://d.repec.org/n?u=RePEc:zur:iewwpx:380&r=exp
  7. By: Leufkens Kasper; Peeters Ronald (METEOR)
    Abstract: In the infinite horizon alternating price setting duopoly of Maskin and Tirole (1988), a focal price equilibrium and an equilibrium consisting of Edgeworth cycles coexist. In this study we investigate which of these two equilibria is more likely to emerge by means of a laboratory experiment. In 20 out of 27 observations the focal price equilibrium emerges, while price cycles are observed in only one observation. Furthermore, we study the duopoly in case of a long but finite horizon. Although the corresponding unique subgame-perfect equilibrium consists of Edgeworth cycles, experimentally we still observe a focal price in the majority of the observations. Nevertheless, price cycles are observed far more often than for the infinite horizon setting.
    Keywords: microeconomics ;
    Date: 2008
    URL: http://d.repec.org/n?u=RePEc:dgr:umamet:2008021&r=exp
  8. By: M. Keith Chen
    Date: 2008–08–29
    URL: http://d.repec.org/n?u=RePEc:cla:levrem:122247000000002336&r=exp

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