nep-exp New Economics Papers
on Experimental Economics
Issue of 2008‒10‒13
ten papers chosen by
Daniel Houser
George Mason University

  1. Are women more credit constrained ? experimental evidence on gender and microenterprise returns By de Mel, Suresh; McKenzie, David; Woodruff, Christopher
  2. Managers and Students as Newsvendors - How Out-of-Task Experience Matters By Gary E Bolton; Axel Ockenfels; Ulrich Thonemann
  3. Individual behavior and group membership: Comment By Matthias Sutter
  4. Heterogeneous Treatment and Self-Selection in a Wage Subsidy Experiment By Brouillette, Dany; Lacroix, Guy
  5. Caste Based Discrimination: Evidence and Policy By Siddique, Zahra
  6. Threats and demonstrations of power: experimental results on bilateral bargaining By Noemí Navarro; Róbert Veszteg
  7. Risk Taking and Social Comparison - A Comment on “Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States” By Gary E Bolton; Axel Ockenfels
  8. Herding and Contrarianism in a Financial Trading Experiment with Endogenous Timing By Park, Andreas; Sgroi, Daniel
  9. Three Field Experiments on Procrastination and Willpower By Nicholas Burger; Gary Charness; John Lynham
  10. Genetic Determinants of Financial Risk Taking By Kuhnen, Camelia M.; Chiao, Joan Y.

  1. By: de Mel, Suresh; McKenzie, David; Woodruff, Christopher
    Abstract: This paper analyzes data from a randomized experiment on mean returns to capital in Sri Lankan micro-enterprises. The findings show greater returns among men than among women; indeed, returns were not different from zero for women. The authors explore different explanations for the lower returns among female owners, and find no evidence that the gender gap is explained by differences in ability, risk aversion, or entrepreneurial attitudes. Differential access to unpaid family labor and social constraints limiting sales to local areas are not important. However, there is evidence that women invested grants differently from men. A smaller share of the smaller grants remained in the female-owned enterprises, and men were more likely to spend the grant on working capital and women on equipment. The gender gap is largest when male-dominated sectors are compared with female-dominated sectors, although female returns are lower than male returns even for females working in the same industries as men. The authors examine the heterogeneity of returns to determine whether any group of businesses owned by women benefit from easing capital constraints. The results suggest there is a large group of high-return male owners and a smaller group of poor, high-ability, female owners who might benefit from more access to capital.
    Keywords: Access to Finance,Debt Markets,Gender and Health,,Economic Theory&Research
    Date: 2008–10–01
  2. By: Gary E Bolton; Axel Ockenfels; Ulrich Thonemann
    Abstract: We compare how freshmen business students, graduate business students and experienced procurement managers perform on a simple inventory ordering task. We find that, qualitatively, managers exhibit ordering behavior similar to students, including biased ordering towards average demand. Experience, however, affects subjects’ utilization of information. The managers’ work experience seems most valuable when there is only historical demand data to guide decision making, while students better utilize analytical information and task training. As a result, when information necessary to solve the problem to optimality is added to historical information, students catch up to the managers, and students with classroom experience in operations management outperform managers.
    Date: 2008–08–25
  3. By: Matthias Sutter (Department of Public Finance, University of Innsbruck, and Department of Economics, University of Gothenburg.)
    Abstract: Charness et al. (2007) have shown that group membership has a strong effect on individual decisions in strategic games when group membership is salient through payoff commonality. In this comment I show that their findings also apply to non-strategic decisions, even when no outgroup exists, and I relate the effects of group membership on individual decisions to joint decision making in teams. I find in an investment experiment that individual decisions with salient group membership are largely the same as team decisions. This finding bridges the literature on team decision making and on group membership effects.
    Keywords: Individual behavior, group membership, team decision-making, experiment
    JEL: C91 C92 D71
    Date: 2008–10–07
  4. By: Brouillette, Dany (Université Laval); Lacroix, Guy (Université Laval)
    Abstract: The Self-Sufficiency Project (SSP) is a research and demonstration project that offered a generous time-limited income supplement to randomly selected welfare applicants under two conditions. The first, the eligibility condition, required that they remain on welfare for at least twelve months. The second, the qualification condition, required that they find a full-time job within twelve months after establishing eligibility. In this paper we focus on a neglected and important feature of the program, namely that the financial reward for becoming qualified is inversely related to the expected wage rate. Under very simple assumptions we show that those who have a low expected wage rate have a clear incentive to establish eligibility. Empirical non-parametric evidence strongly suggests that individuals self-select into eligibility. We jointly estimate a participation equation and a wage equation that are correlated through individual random effects. Our results show that the omission of self-selectivity into qualification translates into slightly overestimated treatment effects.
    Keywords: SSP Applicant Study, heterogeneous treatment, self-selection
    JEL: I38 J31 J64
    Date: 2008–09
  5. By: Siddique, Zahra (IZA)
    Abstract: Caste-based quotas in hiring have existed in the public sector in India for decades. Recently there has been debate about introducing similar quotas in private sector jobs. This paper uses an audit study to determine the extent of caste-based discrimination in the Indian private sector. On average low-caste applicants need to send 20 percent more resumes than high-caste applicants to get the same callback. Differences in callback which favor high-caste applicants are particularly large when hiring is done by male recruiters or by Hindu recruiters. This finding suggests that the differences in callback between high and low-caste applicants are not entirely due to statistical discrimination. High-caste applicants are also differentially favored by firms with a smaller scale of operations, while low-caste applicants are favored by firms with a larger scale of operations. This finding is consistent with taste-based theories of discrimination and with commitments made by large firms to hire actively from among low-caste groups.
    Keywords: field experiments, discrimination, public policy, human resources
    JEL: C93 J71 J78 O15
    Date: 2008–09
  6. By: Noemí Navarro (Department of Economic Theory, Universidad de Málaga); Róbert Veszteg (Institute of Social and Economic Research, Osaka University)
    Abstract: We test the empirical effectiveness of threats in equilibrating bargaining power in simple bilateral bargaining games. Our experimental design is based on the two-player versions of the multibidding game (Pérez-Castrillo and Wettstein, 2001) and the bid-and-propose game (Navarro and Perea, 2005) that build on the ultimatum game and balance parties' bargaining power by auctioning the role of the proposer in the first stage. We show that, while both mechanisms implement the fair split in their subgame-perfect Nash-equilibrium, they induce different results in the laboratory. Subjects do not react to threats that lie off the the equilibrium path in the expected way, even if these threats are theoretically credible as they belong to the subgame-perfect Nash equilibrium. In particular, it seems that subjects feel the need to show their bargaining power as if punishment that never happens could not constitute a credible threat.
    Keywords: bargaining, experiments, fairness, Myerson value, ultimatum game
    JEL: C72 C91 D63
    Date: 2008–10
  7. By: Gary E Bolton; Axel Ockenfels
    Date: 2008–09–30
  8. By: Park, Andreas (University of Toronto); Sgroi, Daniel (University of Warwick)
    Abstract: We undertook the first market trading experiments that allowed heterogeneously informed subjects to trade in endogenous time, collecting over 2000 observed trades. Subjects’ decisions were generally in line with the predictions of exogenous-time financial herding theory when that theory is adjusted to allow rational informational herding and contrarianism. While herding and contrarianism did not arise as frequently as predicted by theory, such behavior occurs in a significantly more pronounced manner than in comparable studies with exogenous timing. Types with extreme information traded earliest. Of those with more moderate information, those with signals conducive to contrarianism traded earlier than those with information conducive to herding.
    Keywords: Herding ; Contrarianism ; Endogenous-time ; Informational Efficiency, Experiments
    JEL: C91 D82 G14
    Date: 2008
  9. By: Nicholas Burger; Gary Charness; John Lynham
    Date: 2008–10–05
  10. By: Kuhnen, Camelia M.; Chiao, Joan Y.
    Abstract: Individuals vary in their willingness to take financial risks. Here we show that variants of two genes that regulate dopamine and serotonin neurotransmission and have been previously linked to emotional behavior, anxiety and addiction (5-HTTLPR and DRD4) are significant determinants of risk taking in investment decisions. These findings provide novel evidence of a genetic basis for financial choices.
    Keywords: genes; risk preferences; financial decisions; neuroeconomics; dopamine; serotonin; emotion; addiction
    JEL: D81 G11 D87 C91
    Date: 2008–09

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