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on Experimental Economics |
| By: | Cardenas, Juan-Camilo |
| Abstract: | Behavior in the local commons is usually embedded in a context of regulations and social norms that the group of users face. Such norms and rules affect how individuals value material and non-material incentives and therefore determine their decision to cooperate or over extract the resources from the common-pool. This paper discusses the importance of social norms in shaping behavior in the commons through the lens of experiments, and in particular experiments conducted in the field with people that usually face these social dilemmas in their daily life. Through a large sample of experimental sessions with around one thousand people between villagers and students, I test some hypothesis about behavior in the commons when regulations and social norms constrain the choices of people. The results suggest that people evaluate several components of the intrinsic and material motivations in their decision to cooperate. While responding in the expected direction to a imperfectly monitored fine on over extraction, the expected cost of the regulation is not a sufficient explanatory factor for the changes in behavior by the participants in the experiments. Even with zero cost of violations, people can respond positively to an external regulator that issues a normative statement about a rule that is aimed at solving the social dilemma. |
| Keywords: | social norms, regulations, cooperation, collective action, common-pool resources, experimental economics, field experiments., Public Economics, D71, Q0, Q2, C9, H3, H4, |
| Date: | 2009–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ulaedd:91168&r=exp |
| By: | Tibor Neugebauer (Luxembourg School of Finance, University of Luxembourg); Sascha Füllbrunn (Luxembourg School of Finance, University of Luxembourg) |
| Abstract: | Safety nets may reduce incentives to mitigate risks, and adversely affect people’s behavior. We model the safety net problem as a social dilemma game involving moral hazard, risk taking and limited liability. Individuals take costly measures to avoid a likely loss which, if incurred, is collectively indemnified. The situation is compared to a situation with full liability and the deterministic benchmark, i.e. the public goods game. We report experimental results. The data show that limited liability leads to higher risk taking in comparison to full liability; however, the difference is much smaller than predicted by theory. In comparison to the deterministic benchmark, individuals take higher loss avoidance levels. We attribute this effect to social responsibility since subjects behave as if they were liable for the losses they impose on the group. With repetition, the experimental data indicate a gradual emergence of the moral hazard problem in safety nets. |
| Keywords: | Experiment, social safety net, moral hazard, linear public goods game, hidden action |
| JEL: | C9 D7 D8 H4 I1 I3 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:crf:wpaper:10-04&r=exp |
| By: | Gerald Eisenkopf; Sabrina Teyssier |
| Abstract: | In tournaments, the large variance in effort provision is incompatible with standard economic theory. In our experiment we test theoretical predictions about the role of envy and loss aversion in tournaments. Our results confirm that envy implies higher effort while loss aversion increases the variance of effort. Moreover, we show that standard theory provides a good explanation for competitive behavior when envy and loss aversion do not play a role in the decision making process. |
| Keywords: | Tournament, Envy, Loss Aversion |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0052&r=exp |
| By: | Alpizar, Francisco; Martinsson, Peter |
| Abstract: | We conducted a field experiment in a protected area to explore the effects of conformity to a social reference versus a comparable, but imposed, suggested donation. As observed before, we see visitors conforming to the changing social reference. On the other hand, the treatment in which we suggested a donation resulted in lower shares of visitors donating, compared to the social reference treatment, and lower conditional donations even compared to the control. We concluded that visitors look at their peers as a reference to conform to, but partially reject being confronted with an imposed suggestion on how to behave. |
| Keywords: | conformity, donation, field experiment |
| JEL: | C93 D10 D60 Q50 |
| Date: | 2010–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-10-16-efd&r=exp |
| By: | Cardenas, Juan-Camilo; Rodriguez, Luz Angela; Johnson, Nancy |
| Abstract: | The dilemma of collective action around water use and management involves solving both the problems of provision and appropriation. Cooperation in the provision can be affected by the rival nature of the appropriation and the asymmetries in the access. We report two field experiments conducted in Colombia and Kenya. The Irrigation Game was used to explore the provision and appropriation decisions under asymmetric or sequential appropriation, complemented with a Voluntary Contribution Mechanism experiment which looks at provision decisions under symmetric appropriation. The overall results were consistent with the patterns of previous studies: the zero contribution hypotheses is rejected whereas the most effective institution to increase cooperation was face-to-face communication, and above external regulations, although we find that communication works much more effectively in Colombia. We also find that the asymmetric appropriation did reduce cooperation, though the magnitude of the social loss and the effectiveness of alternative institutional options varied across sites. |
| Keywords: | Collective Action, Watersheds, Field Experiments, Colombia, Kenya, Community/Rural/Urban Development, Environmental Economics and Policy, Institutional and Behavioral Economics, Q0, Q2, C9, H3, H4, |
| Date: | 2009–11–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ulaedd:91169&r=exp |
| By: | Andreas Nicklisch; Irenaeus Wolff |
| Abstract: | We analyze the interplay between cooperation norms and people's punishment behavior in a social-dilemma game with multiple pun- ishment stages. By combining multiple punishment stages with self- contained episodes of interaction, we are able to disentangle the e ects of retaliation and norm-related punishment. An additional treatment provides information on the norms bystanders use in judging punish- ment actions. Partly con rming previous ndings, punishment behav- ior and bystanders' opinions are guided by an absolute norm. This norm is consistent over decisions and punishment stages and requires full contributions. In the rst punishment stage, our results suggest a higher personal involvement of punishers, leading to a non-linearity de ned by the punishers' contribution. In later punishment stages, the personal-involvement e ect vanishes and retaliation kicks in. By- standers generally apply the same criteria in all stages, also favoring retaliation in response to harsh punishment actions. |
| Keywords: | Experiment, public-good, punishment, social norms, volun- tary cooperation |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0054&r=exp |
| By: | Urs Fischbacher; Verena Utikal |
| Abstract: | An apology is a strong and cheap device to restore social or economic relationships that have been disturbed. In a laboratory experiment we find that harmdoers use apologies in particular if they fear punishment and when their intentions cannot be easily inferred. After offenses with ambiguous intentionality apologizers are punished less often than nonapologizers. Victims expect an apology and punish if they do not receive one. If an apology is possible, harmdoers who apologize are punished with lower probability. An apology only affects the event of punishment but not the level of punishment. An apology does not help at all after clearly intentionally committed offenses. On the contrary, after such offenses harmdoers do better not to apologize since sending an apology in this situation strongly increases punishment compared to remaining silent. |
| Keywords: | Apology, Intentions, Experiment |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0053&r=exp |
| By: | John Duffy; Sean Crockett |
| Abstract: | We report results from a laboratory experiment that implements a consumption-based dynamic general equilibrium model of asset pricing. This work-horse model of the macrofinance literature posits that agents buy and sell assets for the purpose of intertemporally smoothing consumption, and that asset prices are determined by individual risk and time preferences as well as the distribution of income and dividends. The experimental findings are largely supportive of the model’s theoretical predictions. Notably we observe that asset price bubbles, defined as sustained departures of prices from those implied by fundamentals, are infrequent and short-lived. This finding is a stark departure from many recent multi-period asset pricing experiments that lack a consumption-smoothing objective. Indeed, we find that when subjects are induced to adjust shareholdings to smooth consumption, assets typically trade at a discount relative to their expected value and market participation is broad; when the consumption smoothing motivation to trade assets is removed in an otherwise identical economy, assets frequently trade at a premium relative to fundamentals and shareholdings become highly concentrated. |
| JEL: | C90 D51 D91 G12 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:398&r=exp |
| By: | Duffy, Sean; Smith, John |
| Abstract: | Prior studies have found that subjects prefer an improving sequence of income over a constant sequence, even if the constant sequence offers a larger present discounted value. However, little is known about how these preferences vary with the size of the wage payments. In each of our three studies, we find a relationship between the preference for increasing payments and the size of the payments. Further, our measure of the shape of the utility curve is not significantly related to this behavior. Our results roughly confirm an earlier theoretical prediction that the preference for increasing wage payments will be largest for payments which are neither very likely nor very unlikely to cover the cost of effort. Finally, consistent with the literature, we find mixed evidence regarding the applicability of these time preferences in domains other than money. |
| Keywords: | time preference; experimental economics; intertemporal choice |
| JEL: | D90 C91 |
| Date: | 2010–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23559&r=exp |
| By: | Maldonado, Jorge Hignio; Moreno-Sanchez, Rocio del Pilar |
| Abstract: | Economic Experimental Games (EEGs), focused to analyze dilemmas associated with the use of common pool resources, have shown that individuals make extraction decisions that deviate from the suboptimal Nash equilibrium. However, few studies have analyzed whether these deviations towards the social optimum are affected as the stock of resource changes. Performing EEG with local fishermen, we test the hypothesis that the behavior of participants differs under a situation of abundance versus one of scarcity. Our findings show that under a situation of scarcity, players over-extract a given resource, and thus make decisions above the Nash equilibrium; in doing so, they obtain less profit, mine the others-regarding interest, and exacerbate the tragedy of the commons. This result challenges previous findings from the EEG literature. When individuals face abundance of a given resource, however, they deviate downward from the prediction of individualistic behavior. The phenomenon of private, inefficient overexploitation is corrected when management strategies are introduced into the game, something that underlines the importance of institutions. |
| Keywords: | tragedy of the commons intensified, economic experimental games, resource abundance, resource scarcity, dynamic effects, Community/Rural/Urban Development, Environmental Economics and Policy, Institutional and Behavioral Economics, Land Economics/Use, Public Economics, D01, D02, D03, O13, O54, Q01, Q22, C93, C72, C73, C23, |
| Date: | 2009–10–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ulaedd:91170&r=exp |
| By: | Robin Hogarth; Emre Soyer |
| Abstract: | Whereas much literature has documented difficulties in making probabilistic inferences, it has also emphasized the importance of task characteristics in determining judgmental accuracy. Noting that people exhibit remarkable efficiency in encoding frequency information sequentially, we construct tasks that exploit this ability by requiring people to experience the outcomes of sequentially simulated data. We report two experiments. The first involved seven well-known probabilistic inference tasks. Participants differed in statistical sophistication and answered with and without experience obtained through sequentially simulated outcomes in a design that permitted both between- and within-subject analyses. The second experiment involved interpreting the outcomes of a regression analysis when making inferences for investment decisions. In both experiments, even the statistically naïve make accurate probabilistic inferences after experiencing sequentially simulated outcomes and many prefer this presentation format. We conclude by discussing theoretical and practical implications. |
| Keywords: | probabilistic reasoning; natural frequencies; experiential sampling; simulation. |
| JEL: | C00 C11 C15 C91 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1224&r=exp |