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on Experimental Economics |
| By: | Berninghaus, Siegfried; Güth, Werner; Schosser, Stephan |
| Abstract: | In repeated Public Good Games contributions might be influenced by different motives. The variety of motives for deciding between (more or less) free-riding probably explains the seemingly endless tradition of theoretical and experimental studies of repeated Public Good Games. To more clearly distinguish the motives, we try to enrich the choice set by allowing players not only to contribute but also to locate their contribution to one of the player positions. The location choice affects what individual players gain, but not the overall efficiency of contributing, and allows for discrimination, e.g., rewarding and sanctioning co-players differently. Our experimental results show that adding location choice promotes voluntary cooperation, although discrimination itself has no signifficant effect on behavior. -- |
| Keywords: | Public Good Game,Neighborhood,Cooperation,Experimental Analysis |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitwps:11&r=exp |
| By: | Carpenter, Jeffrey P. (Middlebury College); Kariv, Shachar (University of California, Berkeley); Schotter, Andrew (New York University) |
| Abstract: | Recent experiments show that public goods can be provided at high levels when mutual monitoring and costly punishment are allowed. All these experiments, however, study monitoring and punishment in a setting where all agents can monitor and punish each other (i.e., in a complete network). The architecture of social networks becomes important when individuals can only monitor and punish the other individuals to whom they are connected by the network. We study several non-trivial network architectures that give rise to their own distinctive patterns of behavior. Nevertheless, a number of simple, yet fundamental, properties in graph theory allow us to interpret the variation in the patterns of behavior that arise in the laboratory and to explain the impact of network architecture on the efficiency and dynamics of the experimental outcomes. |
| Keywords: | experiment, networks, public good, monitoring, punishment |
| JEL: | D82 D83 C92 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5307&r=exp |
| By: | Marie-Laure Cabon-Dhersin (Centre d'Economie de la Sorbonne - Paris School of Economics & Ecole normale supérieure de Cachan); Nathalie Etchart-Vincent (Centre d'Economie de la Sorbonne - Paris School of Economics & Ecole normale supérieure de Cachan) |
| Abstract: | Wording has been widely shown to affect decision making. In this paper, we investigate experimentally whether and to what extent, cooperative behaviour in a Game of Chicken may be impated by a very basic change in the labelling of the strategies. Our within-subject experimental design involves two treatments. The only difference between them is that we introduce either a socially-oriented wording ("I cooperate"/"I do not cooperate") or colours (red/blue) to designate strategies. The level of cooperation appears to be higher in the socially-oriented context, but only when the uncertainty as regards the type of the partner is manipulated, and especially among females. |
| Keywords: | Social dilemma, Game of Chicken, cooperation, wording effects, gender effects. |
| JEL: | C72 C92 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:10080&r=exp |
| By: | Guillaume Hollard (Centre d'Economie de la Sorbonne); Sébastien Massoni (Centre d'Economie de la Sorbonne); Jean-Christophe Vergnaud (Centre d'Economie de la Sorbonne) |
| Abstract: | Since they have been increasingly used in economics, elicitation rules for subjective beliefs are under scrutiny. In this paper, we propose an experimental design to compare the performance of such rules. Contrary to previous works in which elicited beliefs are compared to an objective benchmark, we consider a pure subjective belief framework (confidence in own performance in a cognitive task and a perceptual task). The performances of elicitation rules are assessed according to the accuracy of stated beliefs in predicting success. For the perceptual task we also compare stated beliefs to Signal Detection Theory predictions. We find consistent evidence in favor of the Lottery Rule which provides more accurate beliefs and is not sensitive to risk aversion. Furthermore the Free Rule, a simple rule with no incentives, elicits relevant beliefs and even outperforms the Quadratic Scoring Rule. Beside this comparison, we propose a belief formation model where we distinguish between two stages in the beliefs : beliefs for decision making and confidence beliefs. Our results give support to this model. |
| Keywords: | Belief elicitation, confidence, signal Detection Theory, methodology, incentives, experimental economics. |
| JEL: | D81 D84 C60 C91 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:10088&r=exp |
| By: | Kroll, Eike B.; Müller, Holger; Vogt, Bodo |
| Abstract: | This study investigates context effects in general and the compromise effect in particular. It is argued that earlier research in this area lacks realism, a shortcoming that is a major drawback to research conclusions and stated management implications. The importance of this issue is stressed by previous research showing that behavioral anomalies found in hypothetical experimental settings tend to be significantly reduced when real payoff mechanisms are introduced. Therefore, to validate the compromise effect, an enhanced design is presented with participants making binding purchase decisions in the laboratory. We find that the compromise effect holds for real purchase decisions, and therefore is validated, and is not an artificial effect in surveys on hypothetical buying decisions. While conclusions and implications for marketing managers, derived in previous work assume that context effects hold for real market decisions, the results created by this enhanced design close this gap in the literature. -- |
| Keywords: | decision-making,anomalies,irrelevant alternatives,context effects |
| JEL: | D8 C9 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitwps:12&r=exp |
| By: | James Andreoni (University of California - San Diego); William T. Harbaugh (University of Oregon) |
| Abstract: | Experimental work on preferences over risk has typically considered choices over a small number of discrete options, some of which involve no risk. Such experiments often demonstrate contradictions of standard expected utility theory. We reconsider this literature with a new preference elicitation device that allows a continuous choice space over only risky options. Our analysis assumes only that preferences depend on the probability p and prize x; U = u(p; x): We then allow subjects to choose p and x continuously on a linear budget constraint, r1p + r2x = m, so that all prospects with a nonzero expected value are risky. We test five of the most importantly debated questions about risk preferences: rationality, prospect theory asymmetry, the independence axiom, probability weighting, and constant relative risk aversion. Overall, we find that the expected utility model does unexpectedly well. |
| Keywords: | expected utility |
| Date: | 2010–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ore:uoecwp:2010-14&r=exp |
| By: | Farzana Afridi (Department of Economics, Delhi School of Economics, Delhi, India); Sherry Xin Li (School of Economic, Political and Policy Sciences (EPPS) University of Texas at Dallas, GR31); Yufei Ren (School of Economic, Political and Policy Sciences (EPPS) University of Texas at Dallas, GR31) |
| Abstract: | We conduct an experimental study to investigate the causal impact of social identity on individuals? response to economic incentives. We focus on China?s decades old household registration system, or the hukou institution, which categorizes citizens into urban and rural residents, and favors the former over the latter in resource allocation. Our results indicate that making individuals? hukou status salient and public significantly reduces the performance of rural migrant students on an incentivized cognitive task by 10 percent. This leads to a leftward shift of their earnings distribution – the proportion of rural migrants below the 25th earnings percentile increases significantly by almost 19 percentage points. However, among non-migrants the proportion with earnings below the 25th percentile drops by 5 percentage points, and the proportion above the 75th percentile increases by almost 8 percentage points, albeit insignificantly. The results demonstrate the impact of institutionally imposed social identity on individuals? intrinsic response to incentives, and consequently on widening income inequality. |
| Keywords: | social identity, hukou, inequality, field experiment, China |
| JEL: | C93 O15 P36 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:190&r=exp |
| By: | Grossman, Zachary; Owens, David |
| Abstract: | How does overconfidence arise and how does it persist in the face of experience and feedback? In an experimental setting, we examine how individuals’ beliefs about their own performance on a quiz react to noisy, but unbiased feedback. In a control treatment, each participant expresses her beliefs about another participant’s performance, rather than her own. On average, they express accurate posteriors about others’ scores, but they overestimate their own score, believing themselves to have received ‘unlucky’ feedback. However, this driven by overconfident priors, as opposed to biased information processing. We also find that, while feedback improves estimates about the performance on which it is based, this learning does not translate into improved estimates of related performances. This suggests that people use performance feedback to update their beliefs about their ability differently than they do to update their beliefs about their performance, which may contribute to the persistence of overconfidence. |
| Keywords: | overconfidence, overestimation, learning, Bayes rule, biased updating, learning transfer, experiments, quadratic scoring rule |
| Date: | 2010–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsbec:1644421&r=exp |
| By: | Dan Kovenock; Brian Roberson; Roman M. Sheremeta |
| Abstract: | This paper experimentally examines behavior in a two-player game of attack and defense of a weakest-link network of targets, in which the attacker’s objective is to successfully attack at least one target and the defender’s objective is diametrically opposed .We apply two benchmark contest success functions (CSFs): the auction CSF and the lottery CSF. Consistent with the theoretical prediction, under the auction CSF, attackers utilize a stochastic “guerilla warfare” strategy - in which a single random target is attacked - more than 80% of the time. Under the lottery CSF, attackers utilize the stochastic guerilla warfare strategy almost 45% of the time, contrary to the theoretical prediction of an equal allocation of forces across the targets. |
| Keywords: | Colonel Blotto, conflict resolution, weakest-link, best-shot, multi-dimensional resource allocation, experiments |
| JEL: | C72 C91 D72 D74 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1256&r=exp |
| By: | Reuben, Ernesto (Columbia University); Rey-Biel, Pedro (Universitat Autònoma de Barcelona); Sapienza, Paola (Northwestern University); Zingales, Luigi (University of Chicago) |
| Abstract: | We present evidence from an experiment in which groups select a leader to compete against the leaders of other groups in a real-effort task that they have all performed in the past. We find that women are selected much less often as leaders than is suggested by their individual past performance. We study three potential explanations for the underrepresentation of women, namely, gender differences in overconfidence concerning past performance, in the willingness to exaggerate past performance to the group, and in the reaction to monetary incentives. We find that men’s overconfidence is the driving force behind the observed prevalence of male representation. |
| Keywords: | discrimination, gender gap, glass ceiling, overconfidence, leadership |
| JEL: | J71 C92 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5300&r=exp |
| By: | Fruteau, C. (Tilburg University) |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ner:tilbur:urn:nbn:nl:ui:12-4378357&r=exp |
| By: | David Rietzke; Brian Roberson |
| Abstract: | This paper examines the robustness of alliance formation in a three-player, two-stage game in which each of two players compete against a third player in disjoint sets of contests. Although the players with the common opponent share no common interests, we find that under the lottery contest success function (CSF) there exists a range of parameter configurations in which the players with the common opponent have incentive to form an alliance involving a pre-conflict transfer of resources. Models that utilize the lottery CSF typically yield qualitatively different results from those arising in models with the auction CSF (Fang 2002). However, under the lottery and the auction CSFs, the parameter configurations within which players with a common opponent form an alliance are closely related. Our results, thus, provide a partial robustness result for ‘enemy-of-my-enemy-is-my-friend’ alliances. |
| Keywords: | Alliance Formation, Contests, Economics of Alliances, Conflict |
| JEL: | C72 D74 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1258&r=exp |
| By: | Lacetera, Nicola; Macis, Mario; Slonim, Robert |
| Abstract: | We present evidence from observational data on nearly 14,000 American Red Cross blood drives and from a randomized natural field experiment showing that economic incentives have a positive effect on blood donations without increasing the fraction of donors who come to a drive but are ineligible to donate. We also show that the effect of incentives on donations increases with the incentive's economic value. However, we further show that a substantial proportion of the increase in donations due to incentives may be explained by donors leaving neighboring drives without incentives to attend the drive with incentives, and the likelihood of this substitution is higher the higher the monetary value of the incentive offered. We conclude that extrinsic incentives stimulate pro-social behavior, but, unless substitution effects are also considered, the effect of incentives may be overesti mated. |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2123/6958&r=exp |
| By: | Cleave, Blair L.; Nikiforakis, Nikos; Slonim, Robert |
| Abstract: | Do the social and risk preferences of participants in laboratory experiments represent the preferences of the population from which they are recruited? To answer this question, we conducted a classroom experiment with a population of 1,173 students using a trust game and a lottery choice task to measure individual preferences. Separately, all 1,173 students were invited to participate in a laboratory experiment. To determine whether selection bias exists, we compare the preferences of the individuals who eventually participated in a laboratory experiment to those in the population. We find that the social and risk preferences of the students participating in the laboratory experiment are not significantly different from the preferences of the population from which they were recruited. We further show that participation decisions across most subgroups (e.g., men vs. women) do not differ significantly. We therefore fail to find selection bias based on social and risk preferences. |
| Keywords: | risk preferences; social preferences; external validity; laboratory experiments; selection bias |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2123/6957&r=exp |