nep-exp New Economics Papers
on Experimental Economics
Issue of 2010‒01‒16
sixteen papers chosen by
Daniel Houser
George Mason University

  1. Gender Differences in Output Quality and Quantity under Competition and Time Constraints: Evidence from a Pilot Study By Olga Shurchkov
  2. The Impact of Distributional Preferences on (Experimental) Markets for Expert Services By Kerschbamer, Rudolf; Sutter, Matthias; Dulleck, Uwe
  3. Do people always pay less than they say? Testbed laboratory experiments with IV and HG values By Nicolas Jacquemet; Robert-Vincent Joule; Stephane Luchini; Jason F. Shogren
  4. Altruism and Social Integration. By Pablo Brañas-Garza; Ramón Cobo-Reyes; María Paz Espinosa; Natalia Jiménez; Jaromír Kovárík; Giovanni Ponti
  5. Happiness and Productivity By Oswald, Andrew J.; Proto, Eugenio; Sgroi, Daniel
  6. A Market Experiment on Trade Promotion Budget and Allocation By Gomez, Miguel I.; Rao, Vithala R.; Yuan, Hong
  7. Attitudes towards Uncertainty and Randomization: An Experimental Study By Dominiak, Adam; Schnedler, Wendelin
  8. How Payment Systems Affect Physicians´ Provision Behaviour – An Experimental Investigation By Heike Henning-Schmidt; Reinhard Selten; Daniel Wiesen
  9. Voting on Thresholds for Public Goods: Experimental Evidence By Julian Rauchdobler; Rupert Sausgruber; Jean-Robert Tyran
  10. When Allais meets Ulysses: Dynamic Consistency and the Certainty Effect By Antoine Nebout; Dimitri Dubois
  11. Do Human Values Explain Economic Behaviour? An Experimental Study By Swee-Hoon Chuah
  12. Exploring the Effects of Unequal and Secretive Pay By Sven Fischer; Eva-Maria Steiger
  13. Leading by Words: A Voluntary Contribution Experiment With One-Way Communication By Anastasios Koukoumelis; M. Vittoria Levati; Johannes Weisser
  14. Real-time search in the laboratory and the market By Meta Brown; Christopher J. Flinn; Andrew Schotter
  15. Technology Adoption in Critical Mass Games: Theory and Experimental Evidence By Claudia Keser; Irina Suleymanova; Christian Wey
  16. Voting with Feet: Community Choice in Social Dilemmas By Gürerk, Özgür; Irlenbusch, Bernd; Rockenbach, Bettina

  1. By: Olga Shurchkov (Wellesley College)
    Abstract: Gender gaps in income and level of position in the workplace are widespread. One explanation for this inequality is that the genders perform differently under competitive conditions, as previous experimental studies have found a significant gender gap in competitive tasks that are perceived to favor men. In this paper, we use a verbal task that is perceived to favor women and find no gender difference under competition per se. We also reject the hypothesis that a .stereotype threat. explains the inability of women to improve performance under competition. We propose an alternative explanation for gender inequality: namely, that women and men respond differently to time pressure. With reduced time pressure, competition in verbal tasks greatly increases the performance of women, such that women significantly outperform men. This effect appears largely due to the fact that extra time in a competition improves the quality of women’s work, leading them to make fewer mistakes. On the other hand, men use this extra time to increase the quantity of work, which results in a greater number of mistakes.
    Keywords: Gender Differences, Competition, Effects of Time Pressure
    JEL: C9 J16 J71
    Date: 2009–11
  2. By: Kerschbamer, Rudolf (University of Innsbruck); Sutter, Matthias (University of Innsbruck); Dulleck, Uwe (Queensland University of Technology)
    Abstract: Credence goods markets suffer from inefficiencies arising from informational asymmetries between expert sellers and customers. While standard theory predicts that inefficiencies disappear if customers can verify the quality received, verifiability fails to yield efficiency in experiments with endogenous prices. We identify heterogeneous distributional preferences as the main cause and design a parsimonious experiment with exogenous prices that allows classifying experts as either selfish, efficiency loving, inequality averse, inequality loving or competitive. Results show that most subjects exhibit non-standard distributional preferences, among which efficiency-loving and inequality aversion are most frequent. We discuss implications for institutional design and agent selection in credence goods markets.
    Keywords: distributional preferences, credence goods, verifiability, experiment
    JEL: C72 C91 D82
    Date: 2009–12
  3. By: Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Robert-Vincent Joule (Laboratoire de Psychologie Sociale - Université de Provence); Stephane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Jason F. Shogren (University of Wyoming - Department of Economics and Finance, Umeå University - Department of Economics)
    Abstract: Hypothetical bias is a long-standing issue in stated preference and contingent valuation studies – people generally overstate their preferences when they do not experience the real monetary consequences of their decision. This view, however, has been challenged by recent evidence based on the elicitation of induced values (IV) in the lab and homegrown (HG) demand function from different countries. This paper uses a two experiments design to assess the extent and relevance of hypothetical bias in demand elicitation exercises for both IV and HG values. For testbed purpose, we use a classic second-price auction to elicit preferences. Comparing the demand curve we elicit in both, hypothetical bias unambiguously (i) vanishes in an induced-value, private good context, and (ii) persists in homegrown values elicitation context. This suggests hypothetical bias in preference elicitation appears to be driven by “preference formation” rather than “preference elicitation”. In addition, companion treatments highlight two sources of the discrepancy observed in the HG setting: the hypothetical context leads bidders to underestimate the constraints imposed by their budget limitations, whereas the real context creates pressure leading them to bid “zero” to opt out from the elicitation mechanism. As a result, there is a need for a demand elicitation procedure that helps subjects take the valuation exercise sincerely, but without putting extra pressure on them.
    Keywords: Auctions; Demand revelation; Experimental valuation; Hypothetical bias
    Date: 2010–01–02
  4. By: Pablo Brañas-Garza (Universidad de Granada); Ramón Cobo-Reyes (Universidad de Granada); María Paz Espinosa (Universidad del País Vasco); Natalia Jiménez (Universidad de Granada); Jaromír Kovárík (Universidad del País Vasco); Giovanni Ponti (Universidad de Alicante; Università di Ferrara)
    Abstract: We report on a two-stage experiment in which i) we first elicit the social network within a section of undergraduate students and ii) we then measure their altruistic attitudes by means of a standard Dictator game. We observe that more socially integrated subjects are also more altruistic, as betweenness centrality and reciprocal degree are positively correlated with the level of giving, even after controlling for framing and social distance, which have been shown to signicantly affect giving in previous studies. Our findings suggest that social distance and social integration are complementary determinants of altruistic behavior.
    Keywords: Altruism, centrality, social network experiments
    JEL: C93 D85
    Date: 2009–12–21
  5. By: Oswald, Andrew J. (University of Warwick); Proto, Eugenio (University of Warwick); Sgroi, Daniel (University of Warwick)
    Abstract: The paper provides evidence that happiness raises productivity. In Experiment 1, a randomized trial is designed. Some subjects have their happiness levels increased, while those in a control group do not. Treated subjects have 12% greater productivity in a paid piece-rate Niederle-Vesterlund task. They alter output but not the per-piece quality of their work. To check the robustness and lasting nature of this kind of effect, a complementary Experiment 2 is designed. In this, major real-world unhappiness shocks – bereavement and family illness – are studied. The findings from (real-life) Experiment 2 match those from (random-assignment) Experiment 1.
    Keywords: labor productivity, emotions, well-being, happiness, positive affect, experimental economics
    JEL: J24 C91
    Date: 2009–12
  6. By: Gomez, Miguel I.; Rao, Vithala R.; Yuan, Hong
    Abstract: We design a market experiment to examine how firm size and ability to choose trade promotion types influence trade promotion budget, its allocation and channel profits. Our experimental results show that larger manufacturers offer smaller trade promotion budgets. Manufacturers with ability to influence the allocation decision favor scan-backs while retailers favor off-invoices. Trade promotion decisions affect profit sharing within the channel but not total channel profit. We validate these findings with an econometric analysis of survey data from supermarket executives. Overall, our results suggest that market experiments can shed light on trade promotion outcomes for which industry data are sparse.
    Keywords: trade promotion, market experiments, Marketing,
    Date: 2009–09–16
  7. By: Dominiak, Adam; Schnedler, Wendelin
    Abstract: Individuals exhibit a randomization preference if they prefer random mixtures of two bets to each of the involved bets. Such preferences provide the foundation of various models of uncertainty aversion. However, it has to our knowledge not been empirically investigated whether uncertainty-averse decision makers indeed exhibit such preferences. Here, we examine the relationship experimentally. We find that uncertainty aversion is not positively associated with randomization preferences. Moreover, we observe choices that are not consistent with the prevailing theories of uncertainty aversion: a non-negligible number of uncertain-averse subjects seem to dislike randomization.
    Keywords: uncertainty aversion; randomization preference; ambiguity; Choquet expected utility model; maxmin expected utility model; experiment
    Date: 2010–01–07
  8. By: Heike Henning-Schmidt; Reinhard Selten; Daniel Wiesen
    Abstract: A central concern in health economics is to understand the influence of commonly used physician payment systems. We introduce a controlled laboratory experiment to analyze the influence of fee-for-service (FFS) and capitation (CAP) payments on physicians' behaviour. Medical students decide as experimental physicians on the quantity of medical services. Real patients gain a monetary benefit from their choices. Our main findings are that patients are overserved in FFS and underserved in CAP. Financial incentives are not the only motivation for physicians' quantity decisions, though. The patient benefit is of considerable importance as well. Patients are affected differently by the two payment systems. Those patients in need of a low level of medical services are better off under CAP, whereas patients with a high need of medical services gain more health benefit when physicians are paid by FFS.
    Keywords: Physician payment system; laboratory experiment; incentives; fee-for-service; capitation
    JEL: C91 I11
    Date: 2009–07
  9. By: Julian Rauchdobler (Department of Public Economics, University of Innsbruck); Rupert Sausgruber (Department of Public Economics, University of Innsbruck); Jean-Robert Tyran (Department of Economics, University of Copenhagen)
    Abstract: Introducing a threshold in the sense of a minimal project size transforms a public goods game with an inefficient equilibrium into a coordination game with a set of Pareto-superior equilibria. Thresholds may therefore improve efficiency in the voluntary provision of public goods. In our one-shot experiment, we find that coordination often fails and exogenously imposed thresholds are ineffective at best and often counter-productive. This holds under a range of threshold levels and refund rates. We test if thresholds perform better if they are endogenously chosen, i.e. if a threshold is approved in a referendum, because voting may facilitate coordination due to signaling and commitment effects. We find that voting does have signaling and commitment effects but they are not strong enough to significantly improve the efficiency of thresholds.
    Keywords: provision of public goods; threshold; voting; experiments
    JEL: H41 D72 C92
    Date: 2009–12
  10. By: Antoine Nebout; Dimitri Dubois
    Abstract: We report experimental findings about subjects’ behavior in dynamic decision problems involving multistage lotteries with different timings of resolution of uncertainty. Our within subject design allows us to study violations of the independence axiom in the light of the dynamic axioms' ones : dynamic consistency, consequentialism and reduction of compound lotteries.
    Date: 2009–12
  11. By: Swee-Hoon Chuah (Nottingham University Business School)
    Abstract: In contrast to current literature which mainly identifies relationships between particular economic behaviours and specific attitudes suggestive of those behaviours, we explore the potential of general human values for explaining economic behaviour. In particular, we investigate whether behaviours observed in binary-choice lotteries, time discounting, public good, ultimatum, dictator and trust game experiments can be explained by Schwartz’s theory of universal human values. We find that the values have explanatory power in relation to strategic, but not parametric, behaviours. We discuss this finding in terms of the sociology of values and suggest that situations involving human interactions provide the most conducive context for the expression of values. We also find that different subsets of the values relate to different strategic behaviours, indicating that there is no redundancy in their explanatory power.
    Keywords: Values, behaviour, survey, experiments
    JEL: C72 C91 D81
    Date: 2010–01–04
  12. By: Sven Fischer (Max Planck Institute for Research on Collective Goods); Eva-Maria Steiger (Stratigic Interaction Group, Max Planck Institute of Economics, Jena)
    Abstract: We experimentally test whether intentional and observable discriminatory pay of symmetric agents in the Winter (2004) game causes low paid agents to reduce effiort. We control for intentionality of wages by either allowing a principal to determine wages or by implementing a random process. Our main observations are that discrimination has no negative effiect on effiorts and principals do not shy away from using discriminatory pay if it is observable. Rather, with experience discrimination enhances efficiency as it facilitates coordination among agents. The only evidence for reciprocity is that subjects receiving a low payment from a principal (discriminatory or not) exert signiï¬cantly less effort.
    Keywords: wage discrimination, experimental study, envy, reciprocity, pay secrecy
    JEL: C72 C91 D21 J31
    Date: 2009–12–21
  13. By: Anastasios Koukoumelis (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); M. Vittoria Levati (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Johannes Weisser (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)
    Abstract: In this paper, we study a voluntary contribution mechanism with one-way communication. The relevance of one person's words is assessed by assigning exogenously the role of the "communicator" to one group member. Contrary to the view that the mutual exchange of promises is necessary for the cooperation-enhancing effect of communication, we ï¬nd that, compared to a standard voluntary contribution mechanism with no communication, one-way communication signiï¬cantly increases contributions and renders them stable over time. Moreover, the positive effects of one-way communication persist even when communication is one-shot.
    Keywords: Public goods experiment, Computer-mediated communication, Cheap-talk, Cooperation
    JEL: C72 C92 H41
    Date: 2009–12–21
  14. By: Meta Brown; Christopher J. Flinn; Andrew Schotter
    Abstract: While widely accepted models of labor market search imply a constant reservation wage policy, the empirical evidence strongly suggests that reservation wages decline in the duration of search. This paper reports the results of the first real-time-search laboratory experiment. The controlled environment that subjects face is stationary, and the payoff-maximizing reservation wage is constant. Nevertheless, subjects' reservation wages decline sharply over time. We investigate two hypotheses to explain this decline: 1) searchers respond to the stock of accruing search costs, and 2) searchers experience nonstationary subjective costs of time spent searching. Our data support the latter hypothesis, and we substantiate this conclusion both experimentally and econometrically.
    Keywords: Labor market ; Job hunting ; Wages ; Employment
    Date: 2009
  15. By: Claudia Keser; Irina Suleymanova; Christian Wey
    Abstract: We analyze the choices between two technologies A and B that both exhibit network effects. We introduce a critical mass game in which coordination on either one of the standards constitutes a Nash equilibrium outcome while coordination on standard B is assumed to be payoff-dominant. We present a heuristic definition of a critical mass and show that the critical mass is inversely related to the mixed strategy equilibrium. We show that the critical mass is closely related to the risk dominance criterion, the global game theory, and the maximin criterion. We present experimental evidence that both the relative degree of payoff dominance and risk dominance explain players' choices. We finally show that users' adoption behavior induces firms to select a relatively unrisky technology which minimizes the problem of coordination failure to the benefit of consumers.
    JEL: C72 C91 D91 D84
    Date: 2009
  16. By: Gürerk, Özgür (University of Erfurt); Irlenbusch, Bernd (London School of Economics); Rockenbach, Bettina (University of Erfurt)
    Abstract: Economic and social interactions often take place in open communities but the dynamics of the community choice process and its impact on cooperation of its members are yet not well understood. We experimentally investigate community choice in social dilemmas. Participants repeatedly choose between a community with and an alternative without punishment opportunities. Within each community a social dilemma game is played. While the community with punishment grows over time and fully cooperates, the alternative becomes depopulated. We analyze the success of this "voting with feet" mechanism and find that endogenous self-selection is key while slow growth is less decisive.
    Keywords: cooperation, social dilemmas, community choice, punishment, voting with feet
    JEL: C72 C92 H41
    Date: 2009–12

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