nep-exp New Economics Papers
on Experimental Economics
Issue of 2009‒09‒11
twelve papers chosen by
Daniel Houser
George Mason University

  1. Gender, education and reciprocal generosity: Evidence from 1,500 experiment subjects By Pablo Brañas-Garza; Juan C. Cárdenas; Máximo Rossi
  2. The Effect of Motivations on Social Indirect Reciprocity: an Experimental Analysis By Luca Stanca; Luigino Bruni; Marco Mantovani
  3. Judicial Errors and Crime Deterrence: Theory and Experimental Evidence By Matteo Rizzolli; Luca Stanca
  4. Playing with the Good Guys: A Public Good Game with Endogenous Group Formation By Brekke, Kjell Arne; Hauge, Karen Evely; Lind, Jo Thori; Nyborg, Karine
  5. Information and discrimination in the rental housing market: evidence from a field experiment By M. Angeles Carnero Fernández; Lídia Farré Olalla; Mariano Bosch
  6. Eliciting environmental preferences of Ghanaians in the laboratory: An incentive-compatible experiment By Meroz, Yael; Morone, Andrea; Morone, Piergiuseppe
  7. Tournament Incentives in The Field: Gender Differences in The Workplace By Josse Delfgaauw; Robert Dur; Joeri Sol; Willem Verbeke
  8. Teacher Performance Pay: Experimental Evidence from India By Karthik Muralidharan; Venkatesh Sundararaman
  9. Mental Equilibrium and Rational Emotions By Eyal Winter; Ignacio Garcia-Jurado; Jose Mendez-Naya; Luciano Mendez-Naya
  10. First-price auctions with resale: the case of many bidders By Virag, Gabor
  11. Celebrities and Shoes on the Female Brain: The Neural Correlates of Product Evaluation in the Context of Fame By Stallen, M.; Smidts, A.; Rijpkema, M.; Smit, G.; Klucharev, V.; Fernandez, G.
  12. Does Anyone Read the Fine Print? Testing a Law and Economics Approach to Standard Form Contracts By Yannis Bakos; Florencia Marotta-Wurgler; David R. Trossen

  1. By: Pablo Brañas-Garza (Universidad de Granada); Juan C. Cárdenas (Universidad de los Andes); Máximo Rossi (Universidad de la República, Uruguay)
    Abstract: There is not general consensus about if women are more or less generous than men. Although the number of papers supporting more generous females is a bit larger than the opposed it is not possible to establish any definitive and systematic gender bias. This paper provides new evidence on this topic using a unique experimental dataset. We used data from a field experiment conducted under identical conditions (and monetary payoffs) in 6 Latin American cities, Bogotá, Buenos Aires, Caracas, Lima, Montevideo and San José. Our dataset amounted to 3,107 experimental subjects who played the Trust Game. We will analyze the determinants of behavior of second movers, that is, what determines reciprocal generosity. In sharp contrast to previous papers we found that males are more generous than females. In the light of this result, we carried out a systematic analysis of individual features (income, education, age, etc.) for females and males separately. We found differential motivations for women and men. Third, we see that (individual) education enhances pro-social behavior. Lastly, we see that subjects’ expectations are crucial.
    Keywords: Reciprocal altruism, gender, education
    JEL: C93 D64 J16
    Date: 2009
  2. By: Luca Stanca; Luigino Bruni; Marco Mantovani
    Abstract: This paper investigates the effects of motivations on the perceived kindness of an action within the context of strong social indirect reci- procity. We test experimentally the hypothesis that, for a given dis- tributional outcome, an action is perceived by a third party to be less kind if it can be strategically motivated. The results do not support this hypothesis: social indirect reciprocity is indeed found to be signif- icantly stronger when strategic motivations cannot be ruled out. We interpret these findings as an indication of the role played by team reasoning in explaining reciprocal behavior.
    Keywords: Indirect Reciprocity, Motivations, Social Preferences, Laboratory Experiments
    JEL: D63 C78 C91
    Date: 2009–08
  3. By: Matteo Rizzolli; Luca Stanca
    Abstract: The standard economic theory of crime deterrence predicts that the conviction of an innocent (type-I error) is as detrimental to deterrence as the acquittal of a guilty individual (type-II error). In this paper, we qualify this result theoretically, showing that in the presence of risk aversion, loss-aversion, or differential sensitivity to procedural fairness, type-I errors can have a larger effect on deterrence than type-II errors. We test these predictions with an experiment where participants make a decision on whether to steal from other individuals, being subject to different probabilities of judicial errors. The results indicate that both types of judicial errors have a large and significant impact on deterrence, but these effects are not symmetric. An increase in the probability of type-I errors has a larger negative impact on deterrence than an equivalent increase in the probability of type-II errors. This asymmetry is largely explained by risk aversion and, to a lesser extent, type-I error aversion.
    Keywords: Judicial errors, criminal procedure, procedural fairness, experimental economics, law and economics, crime, deterrence
    JEL: C91 K14 K41 K42
    Date: 2009–08
  4. By: Brekke, Kjell Arne (Dept. of Economics, University of Oslo); Hauge, Karen Evely (Dept. of Economics, University of Oslo); Lind, Jo Thori (Dept. of Economics, University of Oslo); Nyborg, Karine (Dept. of Economics, University of Oslo)
    Abstract: In public good games, voluntary contributions tend to start o high and decline as the game is repeated. If high contributors are matched, however, contributions tend to stay high. We propose a formalization predicting that high contributors will selfselect into groups committed to charitable giving. Testing this experimentally, we let subjects choose between two group types, where one type donate a xed amount to a charity. Contributions in these groups stayed high, whereas contributions in the other groups showed the well known declining pattern. One implication is that corporate social responsibility may attract more responsible employees.
    Keywords: Altruism; conditional cooperation; self-selection
    JEL: D11 D12 D64 H41
    Date: 2009–04–17
  5. By: M. Angeles Carnero Fernández (Universidad de Alicante); Lídia Farré Olalla (Universidad de Alicante); Mariano Bosch (Universidad de Alicante)
    Abstract: This paper investigates the effect of disclosing information on the discriminatory behaviour against immigrants in the Spanish rental market. We conduct a field experiment where emails are sent showing interest on vacant rental apartments. Fictitious applicants whose names represent different ethnic groups send emails with different amount of information about their ability to pay the rent. Our results show that applicants with a Moroccan sounding name are 15 percentage points less likely to be contacted by the property owner than those with a Spanish name. We also find that revealing positive information about the socioeconomic status of the Moroccan candidate increases the probability of being contacted by 8 percentage points. However, the information revealed does not completely eliminate discriminatory behavior, suggesting the presence of negative attitudes towards immigrants.
    Keywords: Discrimination, migration, rental market, field experiment
    Date: 2009–01
  6. By: Meroz, Yael; Morone, Andrea; Morone, Piergiuseppe
    Abstract: In this paper we aim to look into the attributes of Ghanaians’ willingness-to-pay for green products. This would help us to assess whether Ghanaians show a preference towards environmental goods. The methodology employed to address these issues is an ‘experimentally-adapted’ CV survey which involves laboratory experiment conducted among Ghanaian University students. Notwithstanding the limitations arising from the sample used in our experiment (most notably University students do not represent, economically wise, the entire Ghanaian population), we believe that our investigation provides a first answer to such question as Ghanaians consistently show that they are willing to pay an extra premium for green products.
    Keywords: contingent valuation; experiment; incentive-compatible; Ghana; organic products; willingness to pay.
    JEL: O10 Q56 C91
    Date: 2009–09–04
  7. By: Josse Delfgaauw (Erasmus University Rotterdam); Robert Dur (Erasmus Universiteit Rotterdam); Joeri Sol (Erasmus University Rotterdam); Willem Verbeke (Erasmus University Rotterdam)
    Abstract: We ran a field experiment in a Dutch retail chain consisting of 128 stores. In a random sample of these stores, we introduced short-term sales competitions among subsets of stores. We find that sales competitions have a large effect on sales growth, but only in stores where the store's manager and a large fraction of the employees have the same gender. Remarkably, results are alike for sales competitions with and without monetary rewards, suggesting a high symbolic value of winning a tournament. Lastly, despite the substantial variation in team size, we find no evidence for free-riding.
    Keywords: field experiment; gender differences; competition; sales contests; awards
    JEL: C93 J16 M52
    Date: 2009–08–04
  8. By: Karthik Muralidharan; Venkatesh Sundararaman
    Abstract: Performance pay for teachers is frequently suggested as a way of improving education outcomes in schools, but the theoretical predictions regarding its effectiveness are ambiguous and the empirical evidence to date is limited and mixed. We present results from a randomized evaluation of a teacher incentive program implemented across a large representative sample of government-run rural primary schools in the Indian state of Andhra Pradesh. The program provided bonus payments to teachers based on the average improvement of their students' test scores in independently administered learning assessments (with a mean bonus of 30% of monthly pay). At the end of two years of the program, students in incentive schools performed significantly better than those in control schools by 0.28 and 0.16 standard deviations in math and language tests respectively. They scored significantly higher on "conceptual" as well as "mechanical" components of the tests, suggesting that the gains in test scores represented an actual increase in learning outcomes. Incentive schools also performed better on subjects for which there were no incentives, suggesting positive spillovers. Group and individual incentive schools performed equally well in the first year of the program, but the individual incentive schools outperformed in the second year. Incentive schools performed significantly better than other randomly-chosen schools that received additional schooling inputs of a similar value.
    JEL: C93 I21 M52 O15
    Date: 2009–09
  9. By: Eyal Winter; Ignacio Garcia-Jurado; Jose Mendez-Naya; Luciano Mendez-Naya
    Abstract: We introduce emotions into an equilibrium notion. In a mental equilibrium each player "selects" an emotional state which determines the player's preferences over the outcomes of the game. These preferences typically differ from the players' material preferences. The emotional states interact to play a Nash equilibrium and in addition each player's emotional state must be a best response (with respect to material preferences) to the emotional states of the others. We discuss the concept behind the definition of mental equilibrium and show that this behavioral equilibrium notion organizes quite well the results of some of the most popular experiments in the experimental economics literature. We shall demonstrate the role of mental equilibrium in incentive mechaisms and will discuss the concept of collective emotions, which is based on the idea that players can coordinate their emotional states.
    Date: 2009–09
  10. By: Virag, Gabor
    Abstract: If agents engage in resale, it changes bidding in the initial auction. Resale offers extra incentives for bidders with lower valuations to win the auction. However, if resale markets are not frictionless, then use values affect bidding incentives, and stronger bidders still win the initial auction more often than weaker ones. I consider a first price auction followed by a resale market with frictions, and con…rm the above statements. While intuitive, our results differ from the two bidder case of Hafalir and Krishna (2008): the two bidders win with equal probabilities regardless of their use values. The reason is that they face a common (resale) price at the relevant margin, a property that fails with more than two bidders. Numerical simulations show that asymmetry in winning probabilities increases in the number of bidders, and in large markets resale loses its e¤ect on allocations.
    Keywords: auction; resale
    JEL: D44
    Date: 2009
  11. By: Stallen, M.; Smidts, A.; Rijpkema, M.; Smit, G.; Klucharev, V.; Fernandez, G. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Celebrity endorsement is omnipresent. However, despite its prevalence, it is unclear why celebrities are more persuasive than (equally attractive) non-famous endorsers. The present study investigates which processes underlie the effect of fame on product memory and purchase intention by the use of functional magnetic resonance imaging methods. We find an increase in activity in the medial orbitofrontal cortex (mOFC) underlying the processing of celebrity-product pairings. This finding suggests that the effectiveness of celebrities stems from a transfer of positive affect from celebrity to product. Additional neuroimaging results indicate that this positive affect is elicited by the spontaneous retrieval of explicit memories associated with the celebrity endorser. Also, we demonstrate that neither the activation of implicit memories of earlier exposures nor an increase in attentional processing is essential for a celebrity advertisement to be effective. By explaining the neural mechanism of fame, our results illustrate how neuroscience may contribute to a better understanding of consumer behavior.
    Keywords: celebrity endorsement;persuasion;medial orbital frontal cortex;affect transfer;neuromarketing;neuroeconomics
    Date: 2009–08–26
  12. By: Yannis Bakos (Stern School of Business, New York University); Florencia Marotta-Wurgler (School of Law, New York University); David R. Trossen (Boalt School of Law, University of California at Berkeley)
    Abstract: A cornerstone of the law and economics approach to standard form contracts is the Òinformed minorityÓ hypothesis: in competitive markets, a minority of term-conscious buyers is enough to discipline sellers from offering unfavorable boilerplate terms. The informed minority argument is widely invoked to limit intervention in consumer transactions, but there has been little empirical investigation of its validity. We track the Internet browsing behavior of 45,091 households with respect to 66 online software companies to study the extent to which potential buyers access the standard form contract associated with software purchases, the end user license agreement. We find that only one or two out of every thousand retail software shoppers chooses to access the license agreement, and those that do spend too little time, on average, to have read more than a small portion of the license text. The results cast doubt on the relevance of the informed minority mechanism in a specific market where it has been invoked by both theorists and courts and, to the extent that comparison shopping online is relatively cheap and easy, suggest limits to the mechanism more generally.
    Keywords: online contracts, clickwrap, informed minority, ecommerce law, contracts law, standard form contracts
    JEL: D83 K12 L14
    Date: 2009–08

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