nep-exp New Economics Papers
on Experimental Economics
Issue of 2009‒01‒10
ten papers chosen by
Daniel Houser
George Mason University

  1. Reciprocity, culture, and human cooperation: Previous insights and a new cross-cultural experiment By Simon Gaechter; Benedikt Herrmann
  2. Experimental Economics: Some Methodological Notes By Fiore, Annamaria
  3. Bargaining and Trust: The Effects of 36hr Total Sleep Deprivation on Socially Interactive Decisions By Clare Anderson; David L. Dickinson
  4. Testing Leniency Programs Experimentally: The Impact of “Natural” Framing By Jana Krajcova; Andreas Ortmann
  5. Explaining Focal Points: Cognitive Hierarchy Theory versus Team Reasoning By Nicholas Bardsley; Judith Mehta; Chris Starmer; Robert Sugden
  6. Ex Ante Efficiency in School Choice Mechanisms: An Experimental Investigation By Clayton Featherstone; Muriel Niederle
  7. Testing Leniency Programs Experimentally: The Impact of Change in Parameterization By Jana Krajcova
  8. Lost in the Mail: A Field Experiment on Crime By Marco Castillo; Ragan Petrie; Maximo Torero; Angelino Viceisza
  9. On the Empirical Relevance of St.Petersburg Lotteries By James C. Cox; Vjollca Sadiraj; Bodo Vogt
  10. Finding Missing Markets (and a disturbing epilogue): Evidence from an Export Crop Adoption and Marketing Intervention in Kenya By Nava Ashraf; Xavier Giné; Dean Karlan

  1. By: Simon Gaechter (Centre of Decision Research and Experimental Economics, School of Economics, University of Nottingham); Benedikt Herrmann (Centre of Decision Research and Experimental Economics, School of Economics, University of Nottingham)
    Abstract: Understanding the proximate and ultimate sources of human cooperation is a fundamental issue in all behavioural sciences. In this article we review the experimental evidence on how people solve cooperation problems. Existing studies show without doubt that direct and indirect reciprocity are important determinants of successful cooperation. We also discuss the insights from a large literature on the role of peer punishment in sustaining cooperation. The experiments demonstrate that many people are “strong reciprocators” who are willing to cooperate and punish others even if there are no gains from future cooperation or any other reputational gains. We document this in new one-shot experiments which we conducted in four cities in Russia and Switzerland. Our crosscultural approach allows us furthermore to investigate how the cultural background influences strong reciprocity. Our results show that culture has a strong influence on positive and in especially negative strong reciprocity. In particular, we find large crosscultural differences in “antisocial punishment” of pro-social co-operators. Further crosscultural research and experiments involving different socio-demographic groups document that antisocial punishment is much more widespread than previously assumed. Understanding antisocial punishment is an important task for future research because antisocial punishment is a strong inhibitor of cooperation.
    Keywords: human cooperation; strong reciprocity; public goods experiments; culture; antisocial punishment
    Date: 2008–12
  2. By: Fiore, Annamaria
    Abstract: The aim of this work is presenting in a self-contained paper some methodological aspects as they are received in the current experimental literature. The purpose has been to make a critical review of some very influential papers dealing with methodological issues. In other words, the idea is to have a single paper where people first approaching experimental economics can find summarised (some) of the most important methodological issues. In particular, the focus is on some methodological practises still debated in experimental literature, such as attainment of control in experimental settings, subject pool, incentive mechanisms, repeated trials and learning. The hope is that increasing awareness on some sharing methodologies will improve the robustness of results in this research field.
    Keywords: Experimental Economics; Methodology; Control; Incentives; Learning; Deception.
    JEL: B40 C90
    Date: 2009–01
  3. By: Clare Anderson; David L. Dickinson
    Abstract: Though it is well known that sleep loss results in poor judgment and decisions, little is known about the influence of social context in these processes. Sixteen healthy young adults underwent three games involving bargaining (‘Ultimatum’ and ‘Dictator’) and trust, following total sleep deprivation (TSD) and during rested wakefulness (RW), in a repeated measures, counterbalanced design. To control for repeatability, a second group (n=16) was tested twice under RW conditions. Paired anonymously with another individual, participants made their simple social interaction decisions facing real monetary incentives. For bargaining, following TSD participants were more likely to reject unequal-split offers made by their partner, despite the rejection resulting in a zero monetary payoff for both participants. For the trust game, participants were less likely to place full trust in their anonymous partner, again affecting final payoff. Overall, we provide novel evidence that following TSD, the conflict between personal financial gain and payoff equality is focused on unfavourable inequality. This results in the rejection of unfair offers, at personal monetary cost, and the lack of full trust, which would expose one to being exploited in the interaction. As such, we suggest that within a social domain a rational decision may not prevail over more emotional options following TSD, which has fundamental consequence for real-world decision making involving social exchange. Key Words: Sleep loss, trust, bargaining, social preference, interaction
    Date: 2009
  4. By: Jana Krajcova; Andreas Ortmann
    Abstract: We study the effects of loaded instructions in a bribery experiment. We find a strong gender effect: men and women react differently to real-world framing. The treatment effect becomes significant once we allow for genderspecific coefficients. Our paper contributes to the (small) literature on experimental tests of (anti-)corruption measures and adds evidence to the (mixed) results on gender effects and the on-going discussion on the need for sociodemographic controls.
    Keywords: Corruption, anti-corruption mechanisms, optimal contract, monitoring
    JEL: C91 D02 D73 K42
    Date: 2008–11
  5. By: Nicholas Bardsley (National Centre for Research Methods, University of Southampton); Judith Mehta (School of Economics, University of East Anglia); Chris Starmer (CeDEx, University of Nottingham); Robert Sugden (School of Economics, University of East Anglia)
    Abstract: This paper reports experimental tests of two alternative explanations of how players use focal points to select equilibria in one-shot coordination games. Cognitive hierarchy theory explains coordination as the result of common beliefs about players’ pre-reflective inclinations towards the relevant strategies; the theory of team reasoning explains it as the result of the players’ using a non-standard form of reasoning. We report two experiments. One finds strong support for team reasoning; the other supports cognitive hierarchy theory. In the light of additional questionnaire evidence, we conclude that players’ reasoning is sensitive to the decision context.
    Keywords: salience, focal point, cognitive hierarchy, team reasoning
    JEL: C72 C92
    Date: 2008–12
  6. By: Clayton Featherstone; Muriel Niederle
    Abstract: Criteria for evaluating school choice mechanisms are first, whether truth-telling is sometimes punished and second, how efficient the match is. With common knowledge preferences, Deferred Acceptance (DA) dominates the Boston mechanism by the first criterion and is ambiguously ranked by the second. Our laboratory experiments confirm this. A new ex ante perspective, where preferences are private information, introduces new efficiency costs borne by strategy-proof mechanisms, like DA. In a symmetric environment, truth-telling can be an equilibrium under Boston, and Boston can first-order stochastically dominate DA in terms of efficiency, both in theory and in the laboratory.
    JEL: C78 C9 I2
    Date: 2008–12
  7. By: Jana Krajcova
    Abstract: I analyze subjects’ sensitivity to parametric change that does not affect the theoretical prediction. I find that increasing the value of an illegal transaction to a briber and reducing the penalties to both culprits leads to more bribes being paid but does not affect the cooperation of the bribee. My data also suggest that trust and preferences towards others might play a role. My paper provides a testbed for experimental testing of anti-corruption measures and adds evidence to the on-going discussion on the need for sociodemographic controls.
    Keywords: Corruption, anti-corruption mechanisms, optimal contract, monitoring.
    JEL: C91 D02 D73 K42
    Date: 2008–10
  8. By: Marco Castillo; Ragan Petrie; Maximo Torero; Angelino Viceisza
    Abstract: Crime in the mail sector can hamper the development of electronic markets. We use a field experiment to detect crime and measure its differential impacts. We subtly, and realistically, manipulate the content and information available in mail sent to households and detect high levels of shirking and stealing. Eighteen percent of the mail never arrived at its destination, and even more was lost if there was even a slight hint of something additional inside the envelope. Our study demonstrates that privatization has been unable to extricate moral hazard and that crime is strategic and not equally distributed across the population.
    Date: 2009–01
  9. By: James C. Cox; Vjollca Sadiraj; Bodo Vogt
    Abstract: Expected value theory has been known for centuries to be subject to critique by St. Petersburg paradox arguments. And there is a traditional rebuttal of the critique that denies the empirical relevance of the paradox because of its apparent dependence on existence of credible offers to pay unbounded sums of money. Neither critique nor rebuttal focus on the question with empirical relevance: Do people make choices in bounded St. Petersburg games that are consistent with expected value theory? This paper reports an experiment that addresses that question.
    Keywords: St. Petersburg paradox, expected value theory, experiment
    Date: 2008–12
  10. By: Nava Ashraf (Harvard Business School and Jameel Poverty Action Lab); Xavier Giné (The World Bank); Dean Karlan (Economic Growth Center, Yale University)
    Abstract: In much of the developing world, many farmers grow crops for local or personal consumption despite export options which appear to be more profitable. Thus many conjecture that one or several markets are missing. We report here on a randomized controlled trial conducted by DrumNet in Kenya that attempts to help farmers adopt and market export crops. DrumNet provides smallholder farmers with information about how to switch to export crops, makes in-kind loans for the purchase of the agricultural inputs, and provides marketing services by facilitating the transaction with exporters. The experimental evaluation design randomly assigns pre-existing farmer self-help groups to one of three groups: (1) a treatment group that receives all DrumNet services, (2) a treatment group that receives all DrumNet services except credit, or (3) a control group. After one year, DrumNet services led to an increase in production of export oriented crops and lower marketing costs; this translated into household income gains for new adopters. However, one year after the study ended, the exporter refused to continue buying the cash crops from the farmers because the conditions of the farms did not satisfy European export requirements. DrumNet collapsed in this region as farmers were forced to sell to middlemen and defaulted on their loans. The risk of such events may explain, at least partly, why many seemingly more profitable export crops are not adopted.
    Keywords: Field Experiment, Export Crop, Food Safety Standards
    JEL: O12 Q17 F13
    Date: 2008–12

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