nep-exp New Economics Papers
on Experimental Economics
Issue of 2009‒07‒28
fifteen papers chosen by
Daniel Houser
George Mason University

  1. Improvements and Future Challenges for the Research Infrastructure in the Field “Experimental Economics” By Simon Gächter
  2. New Methods in Human Subjects Research: Do We Need a New Ethics? By Karsten Weber
  3. What Do We Expect from Our Friends? By Quoc-Anh Do; Stephen Leider; Markus M. Mobius; Tanya Rosenblat
  4. `Two's Company, Three's a Group' The impact of group identity and group size on in-group favouritism By Donna Harris; Benedikt Herrmann; Andreas Kontoleon
  5. Choosing To Compete: How Different Are Girls and Boys? By Alison L. Booth; Patrick Nolen
  6. Gender Differences in Risk Behaviour: Does Nurture Matter? By Alison L. Booth; Patrick Nolen
  7. Auctions with Endogenous Price Ceiling:Theoretical and Experimental Results By RLobert F. Vesztegy, Serizawa; Kenju Akai; Tatsuyoshi Saijo; Shigehiro Serizawa
  8. Constrained School Choice: An Experimental Study By Guillaume Haeringer; Caterina Calsamiglia; Flip Klijn
  9. Gift Exchange and Workers' Fairness Concerns - When Equality Is Unfair By Johannes Abeler; Stefen Altmann; Sebastian Kube; Matthias Wibral
  10. The Power of Apology By Johannes Abeler; Juljana Calaki; Kai Andree; Christoph Basek
  11. Incorporating Fairness Motives into the Impulse Balance Equilibrium and Quantal Response Equilibrium Concepts: An Application to 2x2 Games By Alessandro Tavoni
  12. Public Transit Capacity and Users Choice: AnExperiment on Downs-Thomson Paradox By Laurent Denant-Boemont; Sabrina Hammiche
  13. Random behavior and the as-if defense of rational choice theory in demand experiments By Ivan Moscati; Paola Tubaro
  14. The Moral Costs of Nastiness By Klaus Abbink; Benedikt Herrmann

  1. By: Simon Gächter
    Abstract: Experimental economics is an established method of generating controlled and replicable empirical knowledge. It is complementary to other empirical methods in the social sciences. The research infrastructure for laboratory experiments is very good in Europe and also in Germany. One useful instrument would be to develop a short socio-economic questionnaire with questions already used in surveys that experimental economists could use to administer to their participants. The analyses of the selectivity of subject pools would then be an easy task. However, among experimental economists no standard exists yet, which limits the comparability of respective data sets. An effort shall be undertaken to “create” such a common questionnaire. The status quo with regard to data reporting is that no standard has emerged yet. There exists one data repository (in the United States) where data of experiments are collected and are freely available. Building up a data archive that integrates (merges) existing data is very laborious and requires substantial scientific inputs of interested researchers.
    Keywords: Experimental economics, data archives, selectivity of subject pools
    JEL: C81 C9
    Date: 2009
  2. By: Karsten Weber
    Abstract: Online surveys and interviews, the observations of chat rooms or online games, data mining, knowledge discovery in databases (KDD), collecting biomarkers, employing biometrics, using RFID technology - even as implants in the human body - and other related processes all seem to be more promising, cheaper, faster, and comprehensive than conventional methods of human subjects research. But at the same time these new means of gathering information may pose powerful threats to privacy, autonomy, and informed consent. Online research, particularly involving children and minors but also other vulnerable groups such as ethnic or religious minorities, is in urgent need of an adequate research ethics that can provide reasonable and morally justified constraints for human subjects research. The paper at hand seeks to provide some clarification of these new means of information gathering and the challenges they present to moral concepts like -privacy, autonomy, informed consent, beneficence, and justice. Some existing codes of conduct and ethical guidelines are examined to determine whether they provide answers to those challenges and/or whether they can be helpful in the development of principles and regulations governing human subjects research. Finally, some conclusions and recommendations are presented that can help in the ask of formulating an adequate research ethics for human subjects research.
    Keywords: Human Subjects Research, Online Research, Biomarkers, Biometrics, Autonomy, Privacy, Informed Consent, Research Ethics
    Date: 2009
  3. By: Quoc-Anh Do (School of Economics, Singapore Management University); Stephen Leider (Harvard University); Markus M. Mobius (Harvard University); Tanya Rosenblat (Iowa State University)
    Abstract: We conduct a field experiment in a large real-world social network to examine how subjects expect to be treated by their friends and by strangers who make allocation decisions in modified dictator games. While recipients’ beliefs accurately account for the extent to which friends will choose more generous allocations than strangers (i.e. directed altruism), recipients are not able to anticipate individual differences in the baseline altruism of allocators (measured by giving to an unnamed recipient, which is predictive of generosity towards named recipients). Recipients who are direct friends with the allocator, or even recipients with many common friends, are no more accurate in recognizing intrinsically altruistic allocators. Recipient beliefs are significantly less accurate than the predictions of an econometrician who knows the allocator’s demographic characteristics and social distance, suggesting recipients do not have information on unobservable characteristics of the allocator.
    Keywords: dictator games, beliefs, baseline altruism, directed altruism, social networks
    JEL: C73 C91 D64
    Date: 2009–06
  4. By: Donna Harris (Department of Land Economy, University of Cambridge); Benedikt Herrmann (CeDEx, School of Economics, University of Nottingham); Andreas Kontoleon (Department of Land Economy, University of Cambridge)
    Abstract: In this study, we use an allocation experiment to study the effects of group identity and group size on in-group favouritism when the person's own payoff is not affected by her decision. In a triadic setting when subjects are asked to allocate a fixed amount of resource between two other anonymous individuals, the majority of the subjects choose to allocate equal amounts to both the in-group and the out-group members. Telling the subjects that they belong to the same `group' does not increase the amount al- located to the in-group member relative to the out-group member in a triadic setting. However, once the sizes of the in-group and the out-group are increased from one recipient to three (which we refer to as `the favour game'), we observe a sharp increase in in-group favouritism. Our results suggest that no special treatment is needed in a one-shot experiment to induce the distinction between the in-group and the out-group when groups consist of more than two group members.
    Keywords: Favouritism, Group Identity, Group Behaviour, Group Size, Design of Laboratory Experiment
    JEL: D73 C92
    Date: 2009–07
  5. By: Alison L. Booth; Patrick Nolen
    Abstract: Using a controlled experiment, we examine the role of nurture in explaining the stylized fact that women shy away from competition. Our subjects (students just under 15 years of age) attend publicly-funded single-sex and coeducational schools. We found robust differences between the competitive choices of girls from single-sex and coed schools. Moreover, girls from single-sex schools behave more like boys even when randomly assigned to mixed-sex experimental groups. Thus it is untrue that the average female avoids competitive behaviour more than the average male. This suggests that observed gender differences might reflect social learning rather than inherent gender traits.
    Date: 2009–07–21
  6. By: Alison L. Booth; Patrick Nolen
    Abstract: Women and men may differ in their propensity to choose a risky outcome because of innate preferences or because pressure to conform to gender-stereotypes encourages girls and boys to modify their innate preferences. Single-sex environments are likely to modify students' risk-taking preferences in economically important ways. To test this, we designed a controlled experiment in which subjects were given an opportunity to choose a risky outcome - a real-stakes gamble with a higher expected monetary value than the alternative outcome with a certain payoff - and in which the sensitivity of observed risk choices to environmental factors could be explored. The results of our real-stakes gamble show that gender differences in preferences for risk-taking are indeed sensitive to whether the girl attends a single-sex or coed school. Girls from single-sex schools are as likely to choose the real-stakes gamble as boys from either coed or single sex schools, and more likely than coed girls. Moreover, we found that gender differences in preferences for risk-taking are sensitive to the gender mix of the experimental group, with girls being more likely to choose risky outcomes when assigned to all-girl groups. This suggests that observed gender differences in behaviour under uncertainty found in previous studies might reflect social learning rather than inherent gender traits.
    Date: 2009–07–20
  7. By: RLobert F. Vesztegy, Serizawa; Kenju Akai; Tatsuyoshi Saijo; Shigehiro Serizawa
    Abstract: This paper analyzes an auction mechanism that excludes overoptimistic bidders inspired by the rules of the procurement auctions adopted by several Japanese local governments. Our theoretical and experimental results suggest that the endogenous exclusion rule reduces the probability of suffering a monetary loss induced by winning the auction, and also mitigates the problem of the winnerfs curse in the laboratory. However, this protection comes at the price of a lower revenue for the seller.
    Date: 2009–06
  8. By: Guillaume Haeringer (Universitat Autònoma de Barcelona); Caterina Calsamiglia (Universitat Autònoma de Barcelona); Flip Klijn (Institute for Economic Analysis (CSIC))
    Abstract: The literature on school choice assumes that families can submit a preference list over all the schools they want to be assigned to. However, in many real-life instances families are only allowed to submit a list containing a limited number of schools. Subjects' incentives are drastically affected, as more individuals manipulate their preferentes. Including a safety school in the constrained list explains most manipulations. Competitiveness across schools plays an important role. Constraining choices increases segregation and affects the stability and efficiency of the final allocation. Remarkably, the constraint reduces significantly the proportion of subjects playing a dominated strategy.
    Keywords: School Choice, Matching, Experiment, Gale-Shapley, Top Trading Cycles, Boston Mechanism, Efficiency, Stability, Truncation, Truthtelling, Safety School
    JEL: C72 C78 D78 I20
    Date: 2009–05
  9. By: Johannes Abeler (University of Bonn); Stefen Altmann (IZA Bonn); Sebastian Kube (Max Planck Institute for Research on Collective Goods); Matthias Wibral (University of Bonn)
    Abstract: We study how different payment modes inuence the effectiveness of gift exchange as a contract enforcement device. In particular, we analyze how horizontal fairness concerns affect performance and efficiency in an environment characterized by contractual incompleteness. In our experiment, one principal is matched with two agents. The principal pays equal wages in one treatment and can set individual wages in the other. We find that the use of equal wages elicits substantially lower efforts. This is not caused by monetary incentives per se since under both wage schemes it is profit-maximizing for agents to exert high efforts. The treatment difference instead seems to be driven by the fact that the norm of equity is violated far more frequently in the equal wage treatment. After having suffered from violations of the equity principle, agents withdraw effort. These findings hold even after controlling for the role of intentions, as we show in a third treatment. Our results suggest that adherence to the norm of equity is a necessary prerequisite for successful establishment of gift-exchange relations.
    Keywords: wage setting, wage equality, equity, gift exchange, reciprocity, incomplete contracts
    JEL: J33 D63 M52 C92 J41
    Date: 2009–06
  10. By: Johannes Abeler (University of Nottingham); Juljana Calaki (University of Bonn); Kai Andree (University of Potsdam); Christoph Basek (University of Bonn)
    Abstract: After an unsatisfactory purchase, many firms are quick to apologize to customers. It is, however, not clear why they should do that. As the apology is costless, it should be regarded as cheap talk and thus ignored by the customer. In this paper, we test in a controlled field experiment whether apologizing inuences customers' subsequent behavior. We find that apologizing yields much better outcomes for the firm than offering a monetary compensation.
    Keywords: Apology, Credulity, Natural Field Experiment
    JEL: C93 D82 L81
    Date: 2009–06
  11. By: Alessandro Tavoni (Advanced School of Economics in Venice)
    Abstract: Substantial evidence has accumulated in recent empirical works on the limited ability of the Nash equilibrium to rationalize observed behavior in many classes of games played by experimental subjects. This realization has led to several attempts aimed at finding tractable equilibrium concepts which perform better empirically; one such example is the impulse balance equilibrium (Selten, Chmura, 2008), which introduces a psychological reference point to which players compare the available payoff allocations. This paper is concerned with advancing two new, empirically sound, concepts: equity-driven impulse balance equilibrium (EIBE) and equity-driven quantal response equilibrium (EQRE): both introduce a distributive reference point to the corresponding established stationary concepts known as impulse balance equilibrium (IBE) and quantal response equilibrium (QRE). The explanatory power of the considered models leads to the following ranking, starting with the most successful in terms of fit to the experimental data: EQRE, IBE, EIBE, QRE and Nash equilibrium.
    Keywords: Fairness, Inequity aversion, Aspiration level, Impulse balance, Quantal Response, Behavioral economics, Experimental economics
    JEL: C72 C91 D01 D63
    Date: 2009–05
  12. By: Laurent Denant-Boemont (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen); Sabrina Hammiche (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen)
    Abstract: We study the Downs-Thomson paradox, a situation where an additional road capacitycan cause an overall increase in transport generalized cost and therefore a decrease in welfarefor transport users. To this end, we build an experiment based on a double market-entrygame (DMEG) where users have to choose between road and public transit after that the op-erator has choosen public transit capacity. The optimal strategy for operator is to minimizecapacity, and the equilibrium for users depend on the endogeneous public transit capacitycompared to exogeneous road capacity. The most important result is that we observe theDowns-Thomson paradox empirically in the laboratory: An increase in road capacity causesshift from road to rail and, at the end, increases total travel costs. But the contrary isnot true: A decrease in road capacity does not cause lower total travel costs, which is incontradiction with our theoretical model. Results also show that the capacity chosen byoperator di¤ers from Nash prediction, levels being signi…cantly higher than those predictedby our model. Moreover, users coordinate remarkably well on Nash equilibrium entry ratewhile capacity has been chosen by operator.
    Keywords: traffic equilibrium, public transit, congestion, experimental economics, market entry game
    Date: 2009–06–10
  13. By: Ivan Moscati; Paola Tubaro
    Abstract: Rational choice theory (RCT) models decision makers as utility maximizers and is often defended via an as-if argument. According to this argument, although real individuals do not consciously maximize their utility function, their choices can be explained as if they were generated by utility maximization. An alternative model is random-choice, which assumes that decision makers pick up an element from a given set according to a uniform distribution on the set. In this paper we examine a series of experiments that compare RCT and the random-choice model as alternative explanations of consumer demand, and investigate how these experiments contribute to clarifying the actual scope of RCT and the shortcomings of the standard as-if defense of it.
    Date: 2009
  14. By: Klaus Abbink (CREED, University of Amsterdam); Benedikt Herrmann (School of Economics, The University of Nottingham)
    Abstract: We introduce two variants of the one-shot joy-of-destruction minigame (mini-JOD). Two players are endowed with the same amount of money. They simultaneously decide whether or not to reduce the payoff of the other player at an own cost. In one treatment there was a probability that Nature would destroy the opponent’s money anyway. We test whether this feature reduces the moral costs of being nasty, and find that destruction rates rise significantly, despite the absence of strategic reasons.
    Date: 2009–06
    Abstract: In two experiments we demonstrate that men display an enhanced interest in status enhancing consumption upon exposure to mating cues. Men indicate a higher interest in high-status products (study 1) and more readily noticed high-status products (study 2) after exposure to sexily, rather than plainly, dressed women. The effects are restricted to single men, suggesting that the acquisition or consumption of a luxurious product functions as a mate attraction mechanism.
    Date: 2009–03

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