nep-exp New Economics Papers
on Experimental Economics
Issue of 2010‒12‒23
eleven papers chosen by
Daniel Houser
George Mason University

  1. Impatience, Anticipatory Feelings and Uncertainty: A Dynamic Experiment on Time Preferences By Marco Casari; Davide Dragone
  2. Context and Interpretation in Laboratory Experiments: The Case of Reciprocity By Maria Vittoria Levati; Topi Miettinen; Birendra K. Rai
  3. Doing good with other people's money: A charitable giving experiment with students in environmental sciences and economics By Frederik Carlsson; Mitesh Kataria; Elina Lampi; M. Vittoria Levati
  4. Does Entitlement Crowd Out Efficiency or Equality Seeking? - Selling the Roles in Generosity Game Experiments - By Agnes Bäker; Werner Güth; Kerstin Pull; M. Stadler
  5. Generosity in bargaining: Fair or fear? By Breitmoser, Yves; Tan, Jonathan H.W.
  6. Trust, Positive Reciprocity, and Negative Reciprocity: Do These Traits Impact Entrepreneurial Dynamics? By Marco Caliendo; Frank Fossen; Alexander Kritikos
  7. Do Environmental Benefits Matter? A Choice Experiment Among House Owners in Germany By Achtnicht, Martin
  8. Same Work, Lower Grade? Student Ethnicity and Teachers’ Subjective Assessments By Reyn van Ewijk
  9. Are boys discriminated in Swedish high schools? By Tyrefors Hinnerich, Björn; Höglin, Erik; Johannesson, Magnus
  10. Directed Generosity and Network Formation: Network Dimension Matters By D'Exelle, Ben; Riedl, Arno
  11. Bounded Rationality In Finite Automata By Ioannou, Christos A; Nompelis, Ioannis

  1. By: Marco Casari (University of Bologna); Davide Dragone (University of Bologna)
    Abstract: We study time preferences in a real-effort experiment with a one-month horizon. We report that two thirds of choices suggest negative time preferences. Moreover, choice reversal over time is common even if temptation plays no role. We propose and measure three distinct concepts of choice reversal over time to study time consistency. This evidence calls for an important role for anticipatory feelings and uncertainty in intertemporal behavior.
    Keywords: negative time preferences, choice reversal, risk, time inconsistency, real-effort experiment
    JEL: C91 D01 D80 D90
    Date: 2010–12–13
  2. By: Maria Vittoria Levati (Max Planck Institute of Economics, Jena); Topi Miettinen (Aalto School of Economics, Alto); Birendra K. Rai (Monash Univeristy, Clayton)
    Abstract: The existing literature acknowledges that a mismatch between the experimenter's and the subjects' models of an experimental task can adversely affect the interpretation of data from laboratory experiments. We discuss why the two common experimental designs (between-subjects and within-subjects) used to conduct experiments may fail to sufficiently account for this concern. An alternative design for laboratory experiments is proposed which may alleviate this concern especially in studies of social preferences. The proposed design is used to answer some questions that have attracted continued attention in the literature on social preferences in general and reciprocity in particular.
    Keywords: Experimental design, Context, Trust game
    JEL: C70 C90 D63 D64
    Date: 2010–12–14
  3. By: Frederik Carlsson (Department of Economics, University of Gothenburg); Mitesh Kataria (Max Planck Institute of Economics, Strategic Interaction Group, Jena); Elina Lampi (Department of Economics, University of Gothenburg); M. Vittoria Levati (Max Planck Institute of Economics, Strategic Interaction Group, Jena)
    Abstract: We augment a standard dictator game to investigate how preferences for an environmental project relate to willingness to limit others' choices. We explore this issue by distinguishing three student groups: economists, environmental economists, and environmental social scientists. We find that people are generally disposed to grant freedom of choice, but only within certain limits. In addition, our results are in line with the widely held belief that economists are more selfish than other people. Yet, against the notion of consumer sovereignty, economists are not less likely to restrict others' choices and impose restrictions closer to their own preferences than the other student groups.
    Keywords: dictator game, charitable giving, social preferences, paternalism
    JEL: C92 D64
    Date: 2010–12–15
  4. By: Agnes Bäker (Eberhard Karls Universität Tübingen); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Kerstin Pull (Eberhard Karls Universität Tübingen); M. Stadler (Eberhard Karls Universität Tübingen)
    Abstract: In generosity games, one agreement payoff is exogenously given, whereas the other is endogenously determined by the proposer's choice of the "pie" size. This has been shown to induce pie choices which are either efficiency or equality seeking. In our experiment, before playing the generosity game, participants are asked to buy their role via a random price mechanism. This should entitle them to exploit the chances which their role provides and at the same time avoid the selection bias of competitive auctions. We find that entitlement crowds out equality seeking and strengthens efficiency seeking. Interpreting participants' willingness to pay as an aspiration level of how much they want to earn, our design further allows us to test for satisficing behavior. Indeed, we find evidence for satisficing behavior in the data.
    Keywords: Entitlement, Generosity Game, Efficiency Seeking, Inequity Aversion, Satisficing
    JEL: C7 C91
    Date: 2010–12–14
  5. By: Breitmoser, Yves; Tan, Jonathan H.W.
    Abstract: Are "generous" bargaining offers made out of fairness or in fear of rejection? We disentangle risk and social references by analyzing experimental behavior in three majority bargaining games: (1) a random-proposer game with infinite time horizon; 2) a one round proposer game with disagreement payoffs equal to the infinite horizon continuation payoffs; and, (3) a demand commitment game. Inequity aversion predicts very differently across these games, but risk aversion does not. Observed strategies violate neither stationarity nor truncation consistency. This allows us to use structural models of bargaining behavior to estimate the latent type shares of subjects with CES, inequity averse, and Prospect theoretic preferences. The Prospect theoretic, i.e. reference-dependent, model of utility explains the observations far better than any mixture of alternative models.
    Keywords: coalitional bargaining; non-cooperative modeling; random utility model; quantal response equilibrium; laboratory experiment
    JEL: C78 D78 C72
    Date: 2010–12–14
  6. By: Marco Caliendo; Frank Fossen; Alexander Kritikos
    Abstract: Experimental evidence reveals that there is a strong willingness to trust and to act in both positively and negatively reciprocal ways. So far it is rarely analyzed whether these variables of social cognition influence everyday decision making behavior. We focus on entrepreneurs who are permanently facing exchange processes in the interplay with investors, sellers, and buyers, as well as needing to trust others and reciprocate with their network. We base our analysis on the German Socio-Economic Panel and recently introduced questions about trust, positive reciprocity, and negative reciprocity to examine the extent that these variables influence the entrepreneurial decision processes. More specifically, we analyze whether i) the willingness to trust other people influences the probability of starting a business; ii) trust, positive reciprocity, and negative reciprocity influence the exit probability of entrepreneurs; and iii) willingness to trust and to act reciprocally influences the probability of being an entrepreneur versus an employee or a manager. Our findings reveal that, in particular, trust impacts entrepreneurial development. Interestingly, entrepreneurs are more trustful than employees, but much less trustful than managers.
    Keywords: Entrepreneurship, trust, reciprocity
    JEL: D81 J23 M13 L26
    Date: 2010
  7. By: Achtnicht, Martin (Centre for European Economic Research (ZEW))
    Abstract: Residential buildings strongly contribute to global CO2 emissions due to the high energy demand for electricity and heating, particularly in industrialised countries. Within the EU, decentralised heat generation is of particular relevance for future climate policy, as its emissions are not covered by the EU ETS. We conducted a choice experiment concerning energy retrofits for existing houses in Germany. In the experiment, the approximately 400 sampled house owners could either choose a modern heating system or an improved thermal insulation for their home. We used standard and mixed logit specifications to analyse the choice data. We found environmental benefits to have a significant impact on choices of heating systems. However, they played no role in terms of insulation choices. Based on the estimated mixed logit model, we further obtained WTP measures for CO2 savings.
    Keywords: Choice experiment; CO2 emissions; Energy efficiency; Energy saving; Mixed logit; Residential buildings; Willingness to pay.
    JEL: C25 D12 Q40 Q51
    Date: 2010–12
  8. By: Reyn van Ewijk (VU University Amsterdam, and Netspar)
    Abstract: Previous research shows that ethnic minority students perform poorer in school when they are taught by ethnic majority teachers. Why this is the case was unclear. This paper focuses on one important potential explanation: I examine whether ethnic majority teachers grade minority and majority students differently for the same work. Using an experiment, I rule out the existence of such a direct grading bias. I do find indirect evidence for alternative explanations: teachers report lower expectations and unfavorable attitudes that both likely affect their behavior towards minority students, potentially inducing them to perform below their ability level. Effects of having majority teachers on minority students' grades hence seem more likely to be indirect than direct.
    Keywords: Ethnicity; Discrimination; Grading; Experiment
    JEL: I2 J15
    Date: 2010–12–13
  9. By: Tyrefors Hinnerich, Björn (Department of Economics, Stockholm University); Höglin, Erik (Swedish Fiscal Policy Council); Johannesson, Magnus (Department of Economics, Stockholm School of Economics)
    Abstract: Girls typically have higher grades than boys in school and recent research suggests that part of this gender difference may be due to discrimination of boys. We rigorously test this in a field experiment where a random sample of the same tests in the Swedish language is subject to blind and non-blind grading. The non-blind test score is on average 15 % lower for boys than for girls. Blind grading lowers the average grades with 13 %, indicating that personal ties and/or grade inflation are important in non-blind grading. But we find no evidence of discrimination against boys. The point estimate of the discrimination effect is close to zero with a 95 % confidence interval of ±4.5 % of the average non-blind grade.
    Keywords: Discrimination; Field experiments; Grading; Education; Gender
    JEL: C93 I20 J16
    Date: 2010–11–22
  10. By: D'Exelle, Ben (University of East Anglia); Riedl, Arno (Maastricht University)
    Abstract: We explore network effects on generosity for different network dimensions. To this end we elicit multiple network dimensions (friendship, social support, economic exchange, etc.) in a rural village in the Southern hemisphere and measure generosity with a sequence of dictator games conducted in the field. We find that networks of different dimensions differ substantially in density, clustering, and centrality. When relating generosity to networks we observe that social distance only matters for friendship ties but that structural network variables are important in all network dimensions. Importantly, these effects are not invariant across different network dimensions. We also find that individual characteristics are unrelated with generosity per se but that they have strong explanatory power for network formation.
    Keywords: networks, generosity, network formation, experiments
    JEL: C72 C90 D64 L14 Z13
    Date: 2010–12
  11. By: Ioannou, Christos A; Nompelis, Ioannis
    Abstract: A model of adaptive learning and innovation is used to simulate the evolution of finite automata in the repeated Prisoner's Dilemma stage-game. The automata are prone to two types of errors: (a) implementation errors and (b) perception errors. The computational experiments incorporate different levels of errors in an effort to assess whether and how the distribution of outcomes and structures in the population changes. Under the proposed framework, the incorporation of implementation and perception errors is sufficient to reduce cooperative outcomes. In addition, the study identifies a threshold error-level. At and above the threshold error-level, the prevailing structures converge to the open-loop (history-independent) automaton Always-Defect. On the other hand, below the threshold, the prevailing structures are closed-loop (history-dependent) and diverse. The diversity thus impedes our inferential projections on the superiority of a particular automaton. Yet, the analysis still identifies some broad characteristics of the automata that work "reasonably well" in such environments. In particular, the complexity of the automata is decreasing in the probability of errors. Furthermore, the prevailing structures tend to exhibit low reciprocal cooperation and low tolerance to defections. These results show that the evolution of cooperative automata is considerably weaker than expected; and the change in the model is ecologically plausible: errors are common in strategic situations. <br><br> Keywords; Automata, Repeated Games, PrisonerÂ’s Dilemma, Bounded Rationality, Algorithms. <br><br> JEL Classification: C72, C80, C90
    Date: 2010–12–01

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