nep-exp New Economics Papers
on Experimental Economics
Issue of 2010‒12‒04
fifteen papers chosen by
Daniel Houser
George Mason University

  1. Free Riding in the Lab and in the Field By Florian Englmaier; Georg Gebhardt
  2. Who should be called to the lab? A comprehensive comparison of students and non-students in classic experimental games By Michèle Belot; Raymond Duch; Luis Miller
  3. Conflicting Tasks and Moral Hazard: Theory and Experimental Evidence By Eva I. Hoppe; David J. Kusterer
  4. Behavioral biases and cognitive reflection By Eva I. Hoppe; David J. Kusterer
  5. When a precedent of donation favors defection in the Prisoner's dilemma By Garapin, A.; Llerena, D.; Hollard, M.
  6. Revisiting Michael McBride’s experiment about “Money, happiness, and aspirations” By Abigail Barr
  7. A fault confessed is half redressed - Confessions and Punishment By Verena Utikal
  8. Are Women More Sensitive to the Decision-Making Context? By Luis Miller; Paloma Ubeda
  9. Taking the initiative. What motivates leaders? By Lisa Bruttel; Urs Fischbacher
  10. The Consistency of Fairness Rules: An Experimental Study By Paloma Ubeda
  11. Joint measurement of risk aversion, prudence and temperance By Sebastian Ebert; Daniel Wiesen
  12. On the path-dependence of tax compliance By Lisa Bruttel; Tim Friehe
  13. Cognitive Racial Discrimination: A Benchmark Experimental Study By Michèle Belot
  14. Competition within firms By Lisa Bruttel; Simeon Schudy
  15. Smarter Task Assignment or Greater Effort: the impact of incentives on team performance. By Propper, Carol; von Hinke Kessler Scholder, Stephanie; Tominey, Emma; Ratto, Marisa; Burgess, Simon

  1. By: Florian Englmaier (University of Munich); Georg Gebhardt (Ulm University)
    Abstract: We run a public good experiment in the field and in the lab with (partly) the same subjects. The field experiment is a true natural field experiment as subjects do not know that they are exposed to an experimental variation. We can show that subjects' behavior in the classic lab public good experiment correlates with their behavior in the structurally comparable public good treatment in the field but not with behavior in any of two control treatments we ran in the field. This effect is also economically significant. We conclude that a) the classic lab public good experiment captures important aspects of structurally equivalent real life situations and b) that behavior in lab and field at least in our setting is driven by the same underlying forces.
    Keywords: Field and Lab Experiments, External Validity, Public Goods, Team Production
    JEL: C91 C93 D01 D64
    Date: 2010–09
  2. By: Michèle Belot; Raymond Duch (Centre for Experimental Social Sciences, Nuffield College, University of Oxford); Luis Miller
    Abstract: This study compares the behavior of students and non-students in a number of classic experimental games. We find that students are more likely to behave as homo-economicus agents than non-students in games involving other-regarding preferences (Dictator Game, Trust Game and Public Good Game). These differences persist even when controlling for demographics, cognitive ability and risk preferences. In games that do not engage other-regarding preferences (Beauty-contest and Second-price Auction) there is limited evidence of differences in behaviour between subject pools. In none of the five games is there evidence of significant differences in comprehension between students and non-students. Within subject analyses indicate that students are highly consistent in their other-regarding preferences while non-student subjects are inconsistent across other-regarding games. Our findings suggest that experiments using students will provide a lower bound estimate of other-regardedness in the general population while exaggerating the stability of other-regarding preferences.
    Keywords: lab experiments, convenience samples, other-regarding preferences, consistency
    JEL: C72 C81 C91
    Date: 2010–10
  3. By: Eva I. Hoppe; David J. Kusterer
    Abstract: We study a multi-task principal-agent problem in which tasks can be in direct conflict with each other. In theory, it is difficult to induce a single agent to exert efforts in two conflicting tasks, because effort in one task decreases the success probability of the other task. We have conducted an experiment in which we find strong support for the relevance of this incentive problem. In the presence of conflict, subjects choose two efforts significantly less often when both tasks are assigned to a single agent than when there are two agents each in charge of one task.
    Keywords: moral hazard, conflicting tasks, experiment
    JEL: D86 C90 M54
    Date: 2010–08–24
  4. By: Eva I. Hoppe; David J. Kusterer
    Abstract: In a large-scale laboratory experiment, we investigate whether subjects' scores on the cognitive reflection test (CRT) are related to their susceptibility to the base rate fallacy, the conservatism bias, overconfidence, and the endowment effect.
    Keywords: Cognitive reflection test, Base rate fallacy, Conservatism, Overconfidence, Endowment effect
    JEL: C91 D80 J24
    Date: 2010–07–28
  5. By: Garapin, A.; Llerena, D.; Hollard, M.
    Abstract: In this paper we examine the question of wether a collective activity can influence cooperation in a subsequent repeated one shot prisoner's dilemma (PD) game. We conduct two series of experiments. The first consists of control experiments in which 30 periods of a PD game are played, with a random re-matching of the pairs in every period. In a second series of experiments, subjects first play a donation game and then the PD game. In the donation game they collectively discuss the amount of a donation to a given charity, before putting the question to an individual and anonymous vote. Cooperation levels in the PD games preceded by the donation game are signficantly lower than those observed in the control experiment.
    JEL: C72 C91 C92
    Date: 2010
  6. By: Abigail Barr (Queen Elizabeth House, University of Oxford)
    Abstract: In a laboratory experiment designed to test aspiration-based theories of happiness, McBride (2010) found no evidence of the predicted negative effect of own past payments on subjects’ satisfaction with their current round payments. This paper presents further analysis of McBride’s data that reveals such an effect. In the treatment where such an effect is most likely to be observed, subjects’ satisfaction with their payments in a given round is negatively affected by the level of payment they received the last time they faced the same payment probabilities. The overall trajectory of their payments when facing the same payment probabilities is also found to have an effect.
    Keywords: Satisfaction, Happiness, Adaptation, Experiment
    JEL: C91 I31
    Date: 2010–11
  7. By: Verena Utikal
    Abstract: Confessions after failures are socially desirable. However, confessions also bear the risk of punishment. In a laboratory experiment I examine how confessions work. I analyze whether the willingness to punish harmful failures depends on how the harmed party has learned about the outcome. The harmed party can learn about the outcome via random detection or self-report by the performer. I find that confessions are a powerful instrument: Punishment for confessed failures is less likely than for randomly detected failures.
    Keywords: Cheap Talk, Confession, Experiment, Intentions
    Date: 2010
  8. By: Luis Miller (Centre for Experimental Social Sciences, Nuffield College, University of Oxford); Paloma Ubeda (LINEEX, ERI-CESS, University of Valencia)
    Abstract: We conduct an experiment to assess gender differences across different economic contexts. Specifically, we test whether women are more sensitive to the decision-making context in situations in which different fairness principles can be used. We find that women adopt more often than men conditional fairness principles that require information about the context. Furthermore, while most men adopt only one decision principle, most women switch between multiple decision principles. These results complement and reinforce Croson and Gneezy's organizing explanation of greater context sensitivity of women.
    Keywords: Context-sensitivity, Distributive Justice, Gender differences
    JEL: C91 D63
    Date: 2010–11
  9. By: Lisa Bruttel; Urs Fischbacher
    Abstract: Taking the initiative is a crucial element of leadership and an important asset for many jobs. We assess leadership in a game in which it emerges spontaneously since people have a non-obvious possibility to take the initiative. Combining this game with small experimental games and questionnaires, we investigate the motives and personality characteristics that entail leadership. We find efficiency concerns, generosity, and attention seeking as important determinants of leadership. Response time patterns and the results from the cognitive reflection test show that cognitive resources are relevant in the decision to lead.
    Keywords: leading-by-example, social preferences, experiment
    Date: 2010
  10. By: Paloma Ubeda (LINEEX, ERI-CESS, University of Valencia)
    Abstract: In the last two decades, experimental papers on distributive justice have abounded. Two main results have been replicated. Firstly, there is a multiplicity of fairness rules. Secondly, fairness decisions differ depending on the context. This paper studies individual consistency in the use of fairness rules, as well as the structural factors that lead people to be inconsistent. We use a within-subject design, which allows us to compare individual behavior when the context changes. In line with the literature, we find a multiplicity of fairness rules. However, when we control for consistency, the set of fairness rules is considerably smaller. Only selfishness and strict egalitarianism seem to survive the stricter requirement of consistency. We observe that this result is mainly explained by a self-serving bias. Participants select the rule that is individually optimal in each situation.
    Keywords: Distributive Justice, Fairness, Laboratory Experiments, Self-serving bias, Consistency
    JEL: C91 D63
    Date: 2010–11
  11. By: Sebastian Ebert; Daniel Wiesen
    Abstract: We propose a method to measure the intensity of risk aversion, prudence (downside risk aversion) and temperance (outer risk aversion) in experiments. Higher-order risk compensations are defined within the proper risk apportionment model of Eeckhoudt and Schlesinger [American Economic Review, 96 (2006) 280] that are elicited using a multiple price list format. This approach is not based on expected utility theory. In our experiment we find evidence for risk aversion, prudence and temperance. Women demand higher risk compensations for all orders. The highest compensation is demanded for taking downside risk, not for being (second order) risk-loving. This highlights the importance of prudence when considering economic decisions under risk.
    Keywords: Decision making under risk, laboratory experiment, prudence, risk aversion, temperance, gender differences
    JEL: C91 D81
    Date: 2010–11
  12. By: Lisa Bruttel; Tim Friehe
    Abstract: This paper presents experimental evidence that tax compliance is path dependent. We show that individuals faced with the same current tax enforcement parameters, will nevertheless choose different compliance if they have faced different tax enforcement parameters in the past. This finding has important policy implications. For instance, legal harmonization in the EU cannot be expected to reliably yield similar behavior in countries with different legal histories.
    Keywords: Tax compliance, Path dependence, Experiment
    Date: 2010
  13. By: Michèle Belot (Centre for Experimental Social Sciences, Nuffield College, University of Oxford)
    Abstract: This study investigates the following questions: Is it harder to distinguish and remember people if they are of another race? And do memory limitations have discriminatory implications? To answer these questions, I conduct an experiment in a laboratory environment. Participants are presented with a set of potential candidates of different races - East Asian and Caucasian White - and each candidate is associated with a monetary value. Incentives are provided to recall candidates with higher values. I find that people are much better able to recall candidates with higher values if they are of the same race. Candidates of the other race are more likely to be confused with each other. This leads to positive and negative discrimination at the same time: those at bottom of the value distribution benefit while those at the top lose out. These results suggest that cognitive biases could play a role in the nature of cross-racial relations, in particular for phenomena relying on repeated interactions and individual recognition, such as the formation and maintenance of social ties or the establishment of trust relationships.
    Keywords: Own-Race-Bias, Discrimination, Bounded Memory
    JEL: J71 C91 D83
    Date: 2010–10
  14. By: Lisa Bruttel; Simeon Schudy
    Abstract: We investigate the role of incentives set by a parent firm for competition among its subsidiaries. In a Cournot experiment four subsidiaries of the same parent operate in the same market. Parents earn a speciffic share of the joint profit and can choose how to distribute the remaining surplus (or loss). Results show that parents allocating profits equally among their subsidiaries reach outcomes close to collusion. However, almost half of the parent firms employ a proportional sharing rule instead. These groups end up with profits around the Cournot level.
    Keywords: Cournot Competition, Subsidiary, Subcompany, Experiment
    Date: 2010
  15. By: Propper, Carol; von Hinke Kessler Scholder, Stephanie; Tominey, Emma; Ratto, Marisa; Burgess, Simon
    Abstract: We use an experiment to study the impact of team-based incentives, exploiting rich data from personnel records and management information systems. Using a triple difference design, we show that the incentive scheme had an impact on team performance, even with quite large teams. We examine whether this effect was due to increased effort from workers or strategic task reallocation. We find that the provision of financial incentives did raise individual performance but that managers also disproportionately reallocated efficient workers to the incentivised tasks. We show that this reallocation was the more important contributor to the overall outcome.
    Keywords: Public Sector; Incentives; Performance; Teams;
    JEL: J33 J38
    Date: 2010

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