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on Experimental Economics |
| By: | Daniel Houser; Daniel Schunk; Joachim Winter; Erte Xiao |
| Abstract: | Temptation and self-control in intertemporal choice environments are receiving increasing attention in the theoretical economics literature. Nevertheless, there remains a scarcity of empirical evidence from controlled environments informing behavior under repeated temptations. This is unfortunate in light of the fact that in many natural environments, the same temptation must be repeatedly resisted. This paper fills that gap by reporting data from a novel laboratory study of economic decisions under repeat temptations. Subjects are repeatedly offered an option with instantaneous benefit that also entails a substantial reduction to overall earnings. We show that this option is “tempting” in the sense that a substantial fraction of our subjects incur pecuniary costs to eliminate the choice, and thus commit to not choosing the tempting alternative. We compare the timing and price-elasticity of these commitment decisions to predictions from existing theoretical models of decision under temptation. Our data are broadly consistent with theory, with the notable exception that commitment often occurs with delay rather than at the first opportunity. Moreover, the timing of commitment is significantly impacted by the cost of the commitment device. The patterns we report have direct implications for economic theory, and are a first step toward designing mechanisms that promote prudent economic decisions under temptation. |
| Keywords: | Self-control, willpower, temptation, commitment, laboratory experiment |
| JEL: | D11 C91 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:488&r=exp |
| By: | Kristian Ove R. Myrseth (ESMT European School of Management and Technology); Peter Martinsson (University of Gothenburg); Conny Wollbrant (University of Gothenburg) |
| Abstract: | We test the proposition that individuals may experience a self-control conflict between short-term temptation to be selfish and better judgment to act pro-socially. Using a dictator game and a public goods game, we manipulated the likelihood that individuals identified self-control conflict, and we measured their trait ability to implement self-control strategies. Consistent with our hypothesis, we find that trait self-control exhibits a positive and significant correlation with pro-social behavior in the treatment that raises likelihood of conflict identification, but not in the treatment that reduces likelihood of conflict identification. |
| Keywords: | self-control, pro-social behavior, altruism, experiment |
| JEL: | D01 D64 D70 |
| Date: | 2010–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:esm:wpaper:esmt-10-003&r=exp |
| By: | M Drouvelis; R Metcalfe; N Powdthavee |
| Abstract: | Research on public goods mainly focuses its attention on the ability of incentives, beliefs and group structure to affect behaviour in social dilemma interactions. This paper investigates the pure effects of a rather subtle mechanism on social preferences in a one-shot linear public good game. Using priming techniques from social psychology, we activate the concept of cooperation and explore the extent to which this intervention brings about changes in people's voluntary contributions to the public good and self-reported emotional responses. Our findings suggest that priming cooperation increases contribution levels, controlling for subjects' gender. Our priming effect is much stronger for females than for males. This difference can be explained by a shift in subjects' beliefs about contributions. We also find a significant impact of priming on mean positive emotional responses. |
| Keywords: | Priming, contributions, beliefs, emotional responses, public goods experiments |
| JEL: | C92 D01 H41 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:10/07&r=exp |
| By: | Santiago Sanchez-Pages; Enrique Turiegano |
| Abstract: | Recent research has analyzed how individual characteristics, like the exposure to different hormones and symmetry, affect decision-making and strategic behaviour. The present article investigates the effect of symmetry, of exposure to testosterone (T) in utero and during puberty and of current T on cooperation in a Prisoners’ Dilemma Game (PDG). T is a hormone with well known effect on males’ behaviour, and that promotes activities that seek to increase reproductive success. Fluctuating Asymmetry (FA) reflects the ability of the organism to maintain a stable development and it is usually employed as a variable reflecting genetic quality (low FA values are thought to signal higher genetic quality). Our results show that subjects with intermediate levels of second to fourth digit ratio (a proxy of exposure to T in utero) and with high FA cooperate more often in the PDG. We also observe that the latter effect is due to the fact that FA has an impact on subjects’ expectations about the behaviour of their counterpart in the game. These results reinforce the described link between markers related to genetic quality and cooperative behaviour. This possible linkage of individual condition and pro-social behaviour in humans clearly merits further attention. |
| Keywords: | Testosterone, Cooperation, Prisoners’ dilemma, Fluctuating asymmetry, Facial masculinity, 2D:4D. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:192&r=exp |
| By: | Duersch, Peter; Müller, Julia |
| Abstract: | In a punishment experiment, we separate the demand for punishment in general from a possible demand to conduct punishment personally. Subjects experience an unfair split of their earnings from a real effort task and have to decide on the punishment of the person who determines the distribution. First, it is established whether the allocator's payoff is reduced and, afterwards, subjects take part in a second price auction for the right to (physically) carry out the act of payoff reduction. This auction only resolves who will punish, not whether punishment takes place, so only subjects with a demand for personal punishment should bid. |
| Keywords: | personal punishment; real effort task; experiment; auction; desire to win |
| JEL: | C92 |
| Date: | 2010–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0501&r=exp |
| By: | Maria Bigoni (Faculty of Economics, University of Bologna); Giancarlo Spagnolo (Faculty of Economics, University of Rome "Tor Vergata"); Paola Valbonesi (Faculty of Statistics, University of Padoa) |
| Abstract: | We study differently framed incentives in dynamic laboratory buyerseller relationships with multi-tasking and endogenous matching. The experimental design tries to mitigate the role of social preferences and intrinsic motivation. Absent explicit incentives, effort is low in both tasks. Their introduction boosts efficiency substantially increasing effort in the contractible task, mildly crowding it out in the non-contractible one, and increasing buyer surplus. Bonuses and penalties are equivalent for efficiency and crowding-out, but different in distributional effects: sellers’ surplus increases with bonuses as buyers’ offers become more generous. Buyers tend to prefer penalties, which may explain why they are dominant in procurement. |
| Keywords: | bonuses, business-to-business, contract choice, experiment, framing, explicit incentives, incomplete contracts, loss aversion, motivation, penalties, procurement, multi-tasking, relational contracts, rewards |
| JEL: | H57 C92 L14 M52 |
| Date: | 2010–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:157&r=exp |
| By: | Sharma, Tridib; Vadovic, Radovan |
| Abstract: | The Axiom of Monotonicity (AM) is a necessary condition for a number of expected utility representations, including those obtained by de Finetti (1930), von Neumann and Morgenstern (1944) and Savage (1954). The paper reports on experiments that directly test AM by eliminating strategic uncertainty, context, and peer effects. In this sterile and simple environment we do not observe AM violations under uncertainty but we do observe violations under ambiguity. |
| Keywords: | monotonicity; dominance; disjunction effect; sure thing principle |
| JEL: | D81 C91 C72 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22863&r=exp |
| By: | Horton, John J. (Harvard University); Rand, David G. (Harvard University); Zeckhauser, Richard (Harvard University) |
| Abstract: | Online labor markets have great potential as platforms for conducting experiments, as they provide immediate access to a large and diverse subject pool and allow researchers to conduct randomized controlled trials. We argue that online experiments can be just as valid--both internally and externally--as laboratory and field experiments, while requiring far less money and time to design and to conduct. In this paper, we first describe the benefits of conducting experiments in online labor markets; we then use one such market to replicate three classic experiments and confirm their results. We confirm that subjects (1) reverse decisions in response to how a decision-problem is framed, (2) have pro-social preferences (value payoffs to others positively), and (3) respond to priming by altering their choices. We also conduct a labor supply field experiment in which we confirm that workers have upward sloping labor supply curves. In addition to reporting these results, we discuss the unique threats to validity in an online setting and propose methods for coping with these threats. We also discuss the external validity of results from online domains and explain why online results can have external validity equal to or even better than that of traditional methods, depending on the research question. We conclude with our views on the potential role that online experiments can play within the social sciences, and then recommend software development priorities and best practices. |
| JEL: | C70 C91 C92 C93 J20 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp10-017&r=exp |
| By: | Dreber, Anna (Harvard U); Rand, David G. (Harvard U); Garcia, Justin R. (Binghamton U, SUNY); Wernerfelt, Nils (Harvard U); Lum, J. Koji (Binghamton U, SUNY); Zeckhauser, Richard (Harvard U) |
| Abstract: | Individuals differ significantly in their willingness to take risks. Such differences may stem, at least in part, from individual biological (genetic) differences. We explore how risk-taking behavior varies with different versions of the dopamine receptor D4 gene (DRD4), which has been implicated in previous studies of risk taking. We investigate risk taking in three contexts: economic risk taking as proxied by a financial gamble, self-reported general risk taking, and self-reported behavior in risk-related activities. Our participants are serious tournament bridge players with substantial experience in risk taking. Presumably, this sample is much less varied in its environment than a random sample of the population, making genetic-related differences easier to detect. A prior study (Dreber et al. 2010) looked at risk taking by these individuals in their bridge decisions. We examine their risk decisions in other contexts. We find evidence that individuals with a 7-repeat allele (7R+) of the DRD4 genetic polymorphism take significantly more economic risk in an investment game than individuals without this allele (7R-). Interestingly, this positive relationship is driven by the men in our study, while the women show a negative but non-significant result. Even though the number of 7R+ women in our sample is low, our results may indicate a gender difference in how the 7R+ genotype affects behavior, a possibility that merits further study. Considering other risk measures, we find no difference between 7R+ and 7R- individuals in general risk taking or any of the risk-related activities. Overall, our results indicate that the dopamine system plays an important role in explaining individual differences in economic risk taking in men, but not necessarily in other activities involving risk. |
| JEL: | C91 C93 D81 D87 G00 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp10-012&r=exp |
| By: | Ostrovsky, Michael (Stanford University); Schwarz, Michael (Yahoo! Labs) |
| Abstract: | We present the results of a large field experiment on setting reserve prices in auctions for online advertisements, guided by the theory of optimal auction design suitably adapted to the sponsored search setting. Consistent with the theory, following the introduction of new reserve prices revenues in these auctions have increased substantially. |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:2054&r=exp |
| By: | Jacob Ladenburg (Danish Institute of Governmental Research); Søren Bøye Olsen (Institute of Food and Resource Economics, University of Copenhagen) |
| Abstract: | In this paper, we develop a North-South endogenous growth model to examine thrThe potential for a number of common but severe biases in stated preference method surveys being gender dependent has been largely overlooked in the literature. In this paper we summarize results from three Choice Experiment studies that find evidence in favor of gender differences in vulnerability to biases. Specifically, the results indicate that women are more susceptible to starting point bias than men, while men are more susceptible to hypothetical bias than women. This seems to be interrelated with women inherently being more uncertain than men when choosing from a choice set. Furthermore, we set up a novel theoretical model, which provides an explanation for gender specific susceptibility to biases. We conclude that biases can indeed be gender dependent. Hence, researchers should not simply disregard potential gender differences, but rather take them into account and examine the extent of them when performing surveys. Finally, we give suggestions for future research in this area. |
| Keywords: | Choice Experiment, Gender, Hypothetical bias, Preference Uncertainty, Starting point bias |
| JEL: | J16 D80 Q51 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2010_01&r=exp |