nep-exp New Economics Papers
on Experimental Economics
Issue of 2010‒08‒21
nine papers chosen by
Daniel Houser
George Mason University

  1. Hiding an Inconvenient Truth: Lies and Vagueness (Revision of DP 2008-107) By Serra Garcia, M.; Damme, E.E.C. van; Potters, J.J.M.
  2. An Experimental Test of Precautionary Bidding By Kocher, Martin G.; Pahlke, Julius; Trautmann, Stefan T.
  3. Ignorance is not always Bliss: Feedback and Dynamics in Public Good Experiments By Bigoni, M.; Suetens, S.
  4. TRUST, TRUTH, STATUS AND IDENTITY, an experimental inquiry By Jeffrey V. Butler
  5. Social Image in Public Goods Provision with Real Effort By Emel Filiz-Ozbay; Erkut Y. Ozbay
  6. Household Decision Making in Rural China: Using Experiments to Estimate the Influences of Spouses By Fredrik Carlsson; Haoran He; Peter Martinsson; Ping Qin; Matthias Sutter
  7. Teams Make You Smarter: Learning and Knowledge Transfer in Auctions and Markets by Teams and Individuals By Maciejovsky, Boris; Sutter, Matthias; Budescu, David V.; Bernau, Patrick
  8. Consumer Acceptance of Genetically Modified Foods: Traits, Labels and Diverse Information By Huffman, Wallace E.
  9. Hidden Skewness By Ensthaler, Ludwig; Nottmeyer, Olga; Weizsäcker, Georg

  1. By: Serra Garcia, M.; Damme, E.E.C. van; Potters, J.J.M. (Tilburg University, Center for Economic Research)
    Abstract: When truth conflicts with efficiency, can verbal communication destroy efficiency? Or are lies or vagueness used to hide inconvenient truths? We consider a sequential 2-player public good game in which the leader has private information about the value of the public good. This value can be low, high, or intermediate, with the latter case giving rise to a prisoners’ dilemma. Without verbal communication, efficiency is achieved, with contributions for high or intermediate values. When verbal com- munication is added, the leader has an incentive to hide the precise truth when the value is intermediate. We show experimentally that, when communication about the value must be precise, the leader frequently lies, preserving efficiency by exaggerating. When communication can be vague, the leader turns to vague messages when the value is intermediate, but not when it is high. Thus, she implicitly reveals all values. Inter- estingly, efficiency is still preserved, since the follower ignores messages altogether and does not seem to realize that vague messages hide inconvenient truths.
    Keywords: Communication;Efficiency;Lying;Public Goods.
    JEL: C72 C92 D83 H41
    Date: 2010
  2. By: Kocher, Martin G.; Pahlke, Julius; Trautmann, Stefan T.
    Abstract: Auctions often involve goods exhibiting a common knowledge ex-post risk that is independent of buyers’ private values or their signals regarding common value components. Esö and White (2004) showed theoretically that ex-post risk leads to precautionary bidding for DARA bidders: Agents reduce their bids by more than their appropriate risk premium. Testing precautionary bidding with data from the field seems almost impossible. We conduct experimental first-price auctions that allow us to directly identify the precautionary premium and find clear evidence for precautionary bidding. Bidders are significantly better off when a risky object rather than an equally valued sure object is auctioned. Our results are robust if we control for potentially confounding decision biases.
    Keywords: precautionary bidding; prudence; auction; experiment
    JEL: C91 D44 D81
    Date: 2010–08
  3. By: Bigoni, M.; Suetens, S. (Tilburg University, Center for Economic Research)
    Abstract: In this paper we study the effects of providing additional feedback about individual contributions and earnings on the dynamics of contributions in a repeated public good game. We include treatments where subjects can freely choose whether to obtain additional information about individual contributions or individual earnings. We find that, in the aggregate, contributions decline less fast when additional information about contributions and earnings is provided on top of aggregate information. We also find that there exist substantial but intuitively appealing differences in the way individuals react to feedback. Particularly, individuals with a high propensity to contribute tend to imitate the highest contributor more often and are more inclined to obtain feedback about individual contributions than about individual earnings than individuals with a lower propensity to contribute.
    Keywords: voluntary contributions;experiment;repeated interaction;feedback;imitation
    JEL: C91 D74
    Date: 2010
  4. By: Jeffrey V. Butler (EIEF)
    Abstract: In an experiment involving a standard trust game and a costless signalling game, it is demonstrated that economically relevant norm-based behaviors (trust, reciprocity and truth-telling) vary with social identity. The experimental procedure induced two trivial social identities. In one version, a status difference was induced. The results permitted a succinct description of identity effects: subjects held own-group members to a higher standard; and high status subjects held everyone, including themselves, to a higher standard. To illustrate the “high status/high standards” phenomenon, subjects’ “standards” were estimated from a simple identity model for a subset of the data.
    Date: 2010
  5. By: Emel Filiz-Ozbay (University of Maryland); Erkut Y. Ozbay (University of Maryland)
    Abstract: We study public goods game where the contribution efforts are observable. When the players are observed, they contribute more and free-riding diminishes significantly. On the other hand, presence of an audience does not affect the performance of players if there is no strategic aspect of the game, i.e. when they play private goods game. The findings are in line with the predictions of the social image theory where a player’s contribution is also a signal to an audience regarding how much she cares about contributing to the public goods.
    Keywords: Conditional CAPM
    Date: 2010–08
  6. By: Fredrik Carlsson; Haoran He; Peter Martinsson; Ping Qin; Matthias Sutter
    Abstract: Many economic decisions are made jointly within households. This raises the question about spouses’ relative influence on joint decisions and the determinants of relative influence. Using a controlled experiment (on inter-temporal choice), we let each spouse first make individual decisions and then make joint decisions with the other spouse. We use a random parameter probit model to measure the relative influence of spouses on joint decisions. In general, husbands have a stronger influence than wives. However, in richer households and when the wife is older than the husband, we find a significantly stronger influence of the wife on joint decisions.
    Keywords: household decision making, spouses, relative influence, random parameter model, field experiment, time preferences
    JEL: C91 C92 C93 D10
    Date: 2010–07
  7. By: Maciejovsky, Boris (Imperial College London); Sutter, Matthias (University of Innsbruck); Budescu, David V. (Fordham University); Bernau, Patrick (University of Cologne)
    Abstract: We study the impact of team decision making on market behavior and its consequences for subsequent individual performance in the Wason selection task, the single-most studied reasoning task. We reformulated the task in terms of "assets" in a market context. Teams of traders learn the task’s solution faster than individuals and achieve this with weaker, less specific, performance feedback. Some teams even perform better than the best individuals. The experience of team decision-making in the market also creates positive knowledge spillovers for post-market individual performance in solving new Wason tasks, implying that team experiences enhance individual problem-solving skills.
    Keywords: team decisions, markets, auctions, Wason selection task, rationality
    JEL: C91 C92
    Date: 2010–08
  8. By: Huffman, Wallace E.
    Abstract: New experimental economic methods are described and used to assess consumers' willingness to pay for food products that might be made from new transgenic and intragenic genetically modified (GM) traits. Participants in auctions are randomly chosen adult consumers in major US metropolitan areas and not college students. Food labels are kept simple and focus on key attributes of experimental goods. Diverse private information from the agricultural biotech industry (largely Monsanto and Syngenta), environmental groups (largely Greenpeace and Friends of the Earth) and independent third-party information is used to construct the information treatments. Food labels and information treatments are randomized, which is a deviation from traditional lab methods. Auctions are best described as sealed bid random n-th price and not the standard Vickery 2nd price auctions. I show that participants in these experiments respond to both food labels and information treatments, but no single type of information is dominant 
    Date: 2010–08–10
  9. By: Ensthaler, Ludwig (DIW Berlin); Nottmeyer, Olga (DIW Berlin); Weizsäcker, Georg (University College London)
    Abstract: We provide laboratory evidence that people neglect skewness resulting from compound shocks.
    Keywords: skewness, belief biases, binomial tree
    JEL: C91
    Date: 2010–08

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