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on Experimental Economics |
| By: | Francesco Feri (Department of Public Finance, University of Innsbruck); Bernd Irlenbusch (London School of Economics & Political Science - Department of Management; Institute for the Study of Labor (IZA)); Matthias Sutter (University of Innsbruck - Department of Public Economics; University of Gothenburg - Department of Economics) |
| Abstract: | The need for efficient coordination is ubiquitous in organizations and industries. The literature on the determinants of efficient coordination has focused on individual decision making so far. In reality, however, teams often have to coordinate with other teams. We present a series of coordination experiments with a total of 1,101 participants. We find that teams of three subjects each coordinate much more efficiently than individuals. This finding adds one important cornerstone to the recent literature on the conditions for successful coordination. We explain the differences between individuals and teams using the experience weighted attraction learning model. |
| JEL: | C71 C91 C92 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_14&r=exp |
| By: | Antonio Guarino (University College London); Marco Cipriani (George Washington University) |
| Abstract: | We study herd behavior in a laboratory ?nancial market with ?- nancial market professionals. An important novelty of the experi- mental design is the use of a strategy-like method. This allows us to detect herd behavior directly by observing subjects?decisions for all realizations of their private signal. In the paper, we compare two treatments - one in which the price adjusts to the order ?ow in such a way that herding should never occur, and one in which the presence of event uncertainty makes herding possible. In the ?rst treatment, traders herd seldom, in accordance with both the theory and previous experimental evidence on student subjects. A proportion of traders, however, engage in contrarianism, something not accounted for by the theory. In the second treatment, on the one hand, the proportion of herding decisions increases, but not as much as the theory would sug- gest; on the other hand, contrarianism disappears altogether. In both treatments, in contrast with what theory predicts, subjects sometimes prefer to abstain from trading, which a¤ects the process of price discovery negatively. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:wef:wpaper:0047&r=exp |
| By: | Daniele Nosenzo (University of Nottingham); Martin Sefton (University of Nottingham) |
| Abstract: | In this paper we examine voluntary contributions to a public good when the timing of contributions is endogenously determined by contributors, focusing on the simple quasi-linear setting with two players (Varian, 1994). We show that the move order that is predicted to emerge is sensitive to how commitment opportunities are modeled. We show that a favorable move order is predicted to emerge in Hamilton and Slutsky's (1990) "observable delay" extended game, but a detrimental move order is predicted to emerge in their "action commitment" extended game. We then report a laboratory experiment designed to examine whether the predicted move ordering emerges, and how this impacts overall contributions, in these extended games. The results are similar in both extended games. We find that when the detrimental move order is observed, contributions are indeed lower, as predicted. However, this detrimental move order is seldom observed. Instead of committing to low contributions, players tend to avoid making a commitment. These experimental results on timing decisions suggest that commitment opportunities may be less damaging to public good provision than previously thought. |
| Keywords: | Public Goods, Voluntary Contributions, Sequential Contributions, Endogenous Timing, Action Commitment, Observable Delay, Experiment |
| JEL: | H41 C72 C92 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2009-09&r=exp |
| By: | Andreas Lange; Andrew Stocking |
| Abstract: | Despite the increasing use by charities, significant uncertainty exists about optimal online fundraising mechanisms, especially when large donor pools show substantial heterogeneities. We use an online natural field experiment with over 700,000 subjects to test theory on price discounts and show large differences in donation behavior between donors who have previously given money and/or volunteered. For example, framing the charity's membership price as a discount increases response rates and decreases conditional contributions from former volunteers, but not from past money donors. Our study thereby demonstrates the importance of conditioning fundraising strategies on the specifics of past donation dimensions. |
| JEL: | C93 H41 L30 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14941&r=exp |
| By: | Luo, Jie; Mainville, Denise; You, Wen; Nayga, Rodolfo M. |
| Abstract: | Experimental Economics methods are used to determine Hispanic consumersâ sensory acceptance of pasture-fed beef and evaluate visual and taste influences on their overall preferences and willingness-to-pay (WTP). Two hundred and thirty-one Hispanic consumers in four experimental sites in Virginia participated in a laboratory experimental procedure where they visually examined and tasted pasture-fed and conventionally produced grain-fed beef, and then participated in a non-hypothetical Multiple Price Lists (MPL) experiment to determine their WTP. Hispanic consumers perceived significant differences between pasture-fed and grain-fed beefâs appearance and taste. Visual and taste acceptances are closely correlated to and significantly influence overall preferences. More than fifty percent of Hispanic consumers prefer pasture-fed beef and the majority of them consistently are willing to pay a price premium. Approximately, half consumers who generally prefer pasture-fed beef consistently consider the appearance and taste of pasture-fed beef more favorable but another half of them indicated discrepant visual and taste acceptances. Nevertheless, this inconsistency doesnât lead to a lower WTP for pasture-fed beef. |
| Keywords: | Pasture-Fed Beef, Experimental Economics, Multiple Price Lists, Preference, Willingness-to-pay, Agribusiness, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Livestock Production/Industries, Marketing, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea09:49457&r=exp |
| By: | Colson, Gregory; Huffman, Wallace E.; Rousu, Matthew |
| Abstract: | Most studies utilizing experimental auction mechanisms to elicit consumersâ willingness to pay are designed to avoid potential substitution or demand-curve effects that may influence bid prices. However, previous research and auction designs have not considered the potential impact on bid prices of commodity inventories held by auction participants that were obtained through transactions outside of the auction. This omission may present a problem for interpreting and analyzing auction data. Using bids from a random nth-price auction of fresh vegetables conducted in a laboratory style setting, we test whether participantsâ outside inventories affect bidding behavior. We find that bidders do in fact consider their inventories, resulting in lower bid prices by individuals with quantity already owned. |
| Keywords: | Consumer/Household Economics, Demand and Price Analysis, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea09:49551&r=exp |
| By: | Gubanova, Tatiana; Adamowicz, W.L.; McMillan, Melville |
| Abstract: | Hypothetical bias arises when values which people say they place on a good or service differ systematically from the values people reveal for the same good or service through actual, binding economic transactions. Studies of hypothetical bias with respect to public goods often use charitable contributions or other relatively unique goods and these studies employ a variety of mechanisms to elicit the stated and revealed values. This study proposes the inclusion of a free-rider barring random dictatorship mechanism in the standard public contribution game to investigate the issue of bias when a public good involves immediate monetary returns to subjects. Steps are taken to make the game have the look and feel of a real-world tradeoff between private investment and public good provision. Data for the experiment were collected using a sample of students from the University of Alberta. A statistically significant negative hypothetical bias is found for the first hypothetical and the first real rounds of the game. The bias decays in subsequent round pairs, oscillating around zero. |
| Keywords: | Resource /Energy Economics and Policy, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea09:49318&r=exp |
| By: | M. Casari; J. Zhang |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:665&r=exp |
| By: | Toth, Sandor F.; Rabotyagov, Sergey S.; Ettl, Gregory J. |
| Abstract: | We attempt to design a market framework (which we call ECOSEL) for private provision of forest ecosystem services. ECOSEL is a non-regulatory framework that uses a voluntary public good provision mechanism (in a form of an auction) in conjunction with a multiobjective optimization algorithm to create a market for forest ecosystem services. It is expected to be attractive to the demand side of the ecosystem service market since only Pareto-efficient bundles of services are offered for auction, and it is expected to be attractive to the supply side as well by creating a source of non-timber income for forest landowners. ECOSEL is capable of flexible response to demand for other relevant dimensions of forestrelated environmental amenities such as biodiversity, viewshed or recreational services. Following Rothâs (2002) advice on behavior of economists as âmarket engineersâ, we use both experimental economics to improve the design of the ecosystem services market. Concurrently, we provide experimental evidence on the efficiency and revenue-generating properties of a multi-good subscription game of incomplete information. |
| Keywords: | Environmental Economics and Policy, Marketing, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea09:49565&r=exp |
| By: | Chern, Wen S.; Chang, Chun-Yu |
| Abstract: | This research is aimed at investigating the consumerâs preference for food produced in Taiwan and the economic benefits for the country of origin labeling. The study uses both experimental auction and contingent valuation method (CVM) to investigate factors that affect the consumerâs willingness to pay (WTP) for products under country-of-origin labeling (COOL). Experimental auctions of Taiwan and China preserved olives as well as Taiwan, China and Vietnam oolong teas were conducted using the Vickreyâs second price sealed bid auction. For CVM, the study used the double-bounded dichotomous choice method in which we started assuming the same base price for all products in the first question and then varied the prices in the second CV question. The products not chosen in the first question were offered with a discount in a range from 10% to 50% in the following question. Based on auction data, the Tobit model shows that the estimated premiums are 58.1%, 78.15% and 98.13% for Taiwan products over their alternatives of China olives, China oolong tea, and Vietnam oolong tea, respectively. Based on the CVM, the estimated premiums for Taiwan over China olives from a Logit model is 67%, and the premiums for Taiwan produced oolong tea should lie between 50% to an unknown upper bound over China and Vietnam alternatives as the Multinomial Logit model cannot be successfully estimated due to too few choice switches with discounted prices. The study thus demonstrates the superiority of the experimental auction over the CVM in eliciting the WTP for foods produced in Taiwan. The study concludes that enacting a COOL law would increase economic benefits to consumers in Taiwan, and at the same time, placing the imported products in the level playing field. |
| Keywords: | country-of-origin labeling, experimental auction, Tobit model, contingent valuation method, logit model, multinomial logit model, willingness to pay, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Q13, D12., |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea09:49215&r=exp |
| By: | Yue, Chengyan; Hurley, Terry; Anderson, Neil |
| Abstract: | The ultimate objective of commercial horticultural activities is to satisfy the needs of the final consumer. Consumer demand for novel plants drives the ornamental plant industry. Therefore, dispersal of native and invasive horticultural plants can be understood by considering the decisions/choices of consumers who decide which plants to purchase from retailers. In contrast to previous studies on invasive and native plants, this study uses an experimental auction to elicit consumersâ willingness to pay (WTP) for labeled native and invasive attributes. Results from a censored random effect model show that consumersâ WTP for plants decreases when the plants are labeled as invasive and increases when plants are labeled as native. The study finds that consumers discount an invasive attribute more for native than for non-native plants. Consumersâ sociodemographics and attitudesâage, income, gender, concern about environment, interest in plant quality, ease of care and sensitivity to priceâsignificantly alter consumerâs WTP for native and invasive attributes. The implications of this study are notable given the consumersâ increasing concern about the environment and recent debate over sustainable labeling of plants by the horticulture industry. |
| Keywords: | native plants, invasive plants, willingness to pay, labeling, auction, marketing, Consumer/Household Economics, Demand and Price Analysis, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea09:49212&r=exp |
| By: | Ifft, Jennifer; Roland-Holst, David; Zilberman, David |
| Abstract: | The valuation of traceable or safety-branded food by consumers in developing countries affected by diseases such as avian influenza, or with food safety issues in general, is very difficult to identify. Products that have safety-branding are not common, and food is usually purchased by bargaining at informal markets. However, valuation of traceability has important implications for livestock disease policies as well as agricultural sector development. Through developing a short-term certified supply chain for free range chicken in Hanoi, we were able to conduct a combined field experiment and detailed household survey to measure the valuation of this type of poultry. We find that consumers in urban Hanoi on average have a welfare gain of about $1 per whole chicken purchase for safety-branding and traceability, which translates into a potential annual consumer welfare gain of $66 million for such characteristics. |
| Keywords: | field experiments, avian influenza, Vietnam, food safety, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, C93, D12, Q13, Q18, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea09:49444&r=exp |