nep-exp New Economics Papers
on Experimental Economics
Issue of 2009‒04‒18
ten papers chosen by
Daniel Houser
George Mason University

  1. Social norms, third-party observation and third-party reward By Matthias Sutter; Peter Lindner; Daniela Platsch
  2. Revisiting Strategic versus Non-Strategic Cooperation By Reuben, Ernesto; Suetens, Sigrid
  3. Homo Aequalis: A Cross-Society Experimental Analysis of Three Bargaining Games By Abigail Barr; Chris Wallace; Jean Ensminger; Joseph Henrich; Clark Barrett; Alexander Bolyanatz; Juan Camilo Cardenas; Michael Gurven; Edwins Gwako; Carolyn Lesorogol; Frank Marlowe; Richard McElreath; David Tracer; John Ziker
  4. Equilibrium Discovery and Preopening Mechanisms in an Experimental Market By BIAIS, Bruno; BISIÈRE, Christophe; POUGET, Sébastien
  5. Insurance Demand for Disaster-type Risks and the Separation of Attitudes toward Risk and Ambiguity: an Experimental Study By Marielle Brunette; Laure Cabantous; Stéphane Couture; Anne Stenger
  6. Leading with(out) Sacrifice? A Public-Goods Experiment with a Super-Additive Player By Andreas Glöckner; Bernd Irlenbusch; Sebastian Kube; Andreas Nicklisch; Hans-Theo Normann
  7. Experimental Economics: Applications to Environmental Policy By Andrew Reeson; Karel Nolles
  8. Everyone is a Winner: Promoting Cooperation through All-Can-Win Intergroup Competition By Reuben, Ernesto; Tyran, Jean-Robert
  9. Do Women Supply more Public Goods than Men? By Andersen, Steffen; Bulte, Erwin; Gneezy, Uri; List, John A.
  10. Better LATE Than Nothing: Some Comments on Deaton (2009) and Heckman and Urzua (2009) By Guido W. Imbens

  1. By: Matthias Sutter; Peter Lindner; Daniela Platsch
    Abstract: This paper examines the influence of third-party observation and third-party reward on behavior in an experimental prisoner’s dilemma (PD) game. Whereas the existing literature on third-party intervention as a means to sustain social norms has dealt almost exclusively with third-party punishment, we show that both third-party observation and third-party reward have positive effects on cooperation rates, compared to a treatment where no third party is involved. Third-party reward is more effective in increasing cooperation than third-party observation. However, rewards are given too late to prevent a steady downward trend of cooperation rates.
    Keywords: Social norms, third-party reward, third-party observation, prisoner’s dilemma experiment
    JEL: C72 C91
    Date: 2009–04
  2. By: Reuben, Ernesto (Northwestern University); Suetens, Sigrid (Tilburg University)
    Abstract: We use a novel experimental design to disentangle strategically- and non-strategically-motivated cooperation. By using contingent responses in a repeated sequential prisoners' dilemma with a known probabilistic end, we differentiate end-game behavior from continuation behavior within individuals while controlling for expectations. This design allows us to determine the extent to which strategically-cooperating individuals are responsible for the so-called end-game effect. Experiments with two different subject pools indicate that the most common motive for cooperation in repeated games is strategic and that the extent to which end-game effects are driven by strategically-cooperating individuals depends on the profitability of cooperation.
    Keywords: reputation building, strong reciprocity, conditional cooperation, strategic cooperation
    JEL: C91 D01 D74
    Date: 2009–04
  3. By: Abigail Barr; Chris Wallace; Jean Ensminger; Joseph Henrich; Clark Barrett; Alexander Bolyanatz; Juan Camilo Cardenas; Michael Gurven; Edwins Gwako; Carolyn Lesorogol; Frank Marlowe; Richard McElreath; David Tracer; John Ziker
    Abstract: Data from three bargaining games - the Dictator Game, the Ultimatum Game, and the Third-Party Punishment Game - played in 15 societies are presented. The societies range from US undergraduates to Amazonian, Arctic, and African hunter-gatherers. Behaviour within the games varies markedly across societies. The paper investigates whether this behavioural diversity can be explained solely by variations in inequality aversion. Combining a single parameter utility function with the notion of subgame perfection generates a number of testable predictions. While most of these are supported, there are some telling divergencies between theory and data: uncertainty and preferences relating to acts of vengeance may have influenced play in the Ultimatum and Third-Party Punishment Games; and a few subjects used the games as an opportunity to engage in costly signalling.
    Keywords: Bargaining games, Cross-cultural experiments, Inequality aversion
    JEL: C72 C9 Z13
    Date: 2009
  4. By: BIAIS, Bruno; BISIÈRE, Christophe; POUGET, Sébastien
    Date: 2009–01
  5. By: Marielle Brunette; Laure Cabantous (Nottingham University Business School); Stéphane Couture (Laboratoire d'Economie Forestière, INRA - AgroParisTech); Anne Stenger (Laboratoire d'Economie Forestière, INRA - AgroParisTech)
    Abstract: This article presents the results of an experiment designed to test theoretical predictions about the impact of public compensation schemes and ambiguity on insurance and self-insurance decisions. Consistent with theory, we find that government assistance significantly reduces willingness to pay (WTP) for insurance and self-insurance (compared with a free insurance market). As expected, we also find significant differences between WTPs for insurance under different types of government compensation programs. For example, results from our experiment confirm the prediction that the WTP for insurance is smaller under a “Fixed Help” program than under a “Contingent Fixed Help” program where the government assistance is conditioned to the purchase of an insurance policy. Thirdly, we find that ambiguity, i.e., uncertainty about probability, significantly increases WTPs for insurance. This result, which indicates that decision-makers are ambiguity averse, is in line with previous results on the impact of ambiguity on insurance demand for low probability risks. Lastly, our experiment provides a clear support for the hypothesis that attitude to risk and attitude to ambiguity are two independent phenomena. In fact in this experiment, decision-makers are both risk-seekers (i.e., the mean WTP for insurance is on average smaller than the expected value of the loss) and ambiguity averse (i.e., the mean WTP for insurance is on average higher for an ambiguous risk than for a ’risky’ risk).
    Keywords: Experimental Economics, Insurance, Self-Insurance, Public Policy, Forest, Ambiguity, Risk
    JEL: C91 D81 Q23
    Date: 2008–10
  6. By: Andreas Glöckner (Max Planck Institute for Research on Collective Goods); Bernd Irlenbusch (Max Planck Institute for Research on Collective Goods); Sebastian Kube (Max Planck Institute for Research on Collective Goods); Andreas Nicklisch (Max Planck Institute for Research on Collective Goods); Hans-Theo Normann (Max Planck Institute for Research on Collective Goods)
    Abstract: We analyse two team settings in which one member in a team has stronger incentives to contribute than the others. If contributions constitute a sacrifice for the strong player, the other team members are more inclined to cooperate than if contributions are strictly dominant for the strong player.
    Keywords: Experiments, Leadership, Reciprocity, Voluntary Contribution Mechanism
    JEL: C91 C92 H40 H41
    Date: 2009–03
  7. By: Andrew Reeson; Karel Nolles (CSIRO Sustainable Ecosystems, Australia)
    Abstract: Incentives, regulations and other policy interventions intended to promote sustainability work through influencing human behaviour. There is therefore much to be gained from a thorough understanding of exactly how various policy interventions relate to the decision-making process. Experimental economics, and the closely related fields of behavioural economics and behavioural finance, apply an empirical approach to study how people act when faced with a range of economic and social scenarios. The experimental approach was pioneered by Vernon Smith and Daniel Kahneman and others, building on early studies by Chamberlin (1948). In recognition of this work, Kahneman and Smith were awarded the 2002 Nobel Prize in Economic Sciences. This paper briefly reviews the applications and methods of experimental economics, relates some key research findings and describes some examples of its use in informing environmental policy.
    Keywords: Experimental economics; Behavioral economics; Environmental economics; Environmental markets; Market-based instruments; MBIs
    JEL: C90 Q50 Q58
    Date: 2009–01
  8. By: Reuben, Ernesto (Northwestern University); Tyran, Jean-Robert (University of Copenhagen)
    Abstract: We test if cooperation is promoted by rank-order competition between groups in which all groups can be ranked first, i.e. when everyone can be a winner. This type of rank-order competition has the advantage that it can eliminate the negative externality a group's performance imposes on other groups. However, it has the disadvantage that incentives to outperform others are absent if groups perform at the same level and it therefore does not eliminate low-cooperation equilibria. We find that all-can-win competition produces a universal increase in cooperation and benefits a majority of individuals if incentives to compete are strong.
    Keywords: intergroup competition, cooperation, public goods, experiment
    JEL: H41 M52 C92
    Date: 2009–04
  9. By: Andersen, Steffen (Department of Economics, Copenhagen Business School); Bulte, Erwin (Department of Economics, Copenhagen Business School); Gneezy, Uri (Department of Economics, Copenhagen Business School); List, John A. (Department of Economics, Copenhagen Business School)
    Abstract: na
    Keywords: na
    JEL: G10
    Date: 2009–04–06
  10. By: Guido W. Imbens
    Abstract: Two recent papers, Deaton (2009), and Heckman and Urzua (2009), argue against what they see as an excessive and inappropriate use of experimental and quasi-experimental methods in empirical work in economics in the last decade. They specifically question the increased use of instrumental variables and natural experiments in labor economics, and of randomized experiments in development economics. In these comments I will make the case that this move towards shoring up the internal validity of estimates, and towards clarifying the description of the population these estimates are relevant for, has been important and beneficial in increasing the credibility of empirical work in economics. I also address some other concerns raised by the Deaton and Heckman-Urzua papers.
    JEL: C10 C50 C90
    Date: 2009–04

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