nep-exp New Economics Papers
on Experimental Economics
Issue of 2011‒07‒21
five papers chosen by
Daniel Houser
George Mason University

  1. Focal Points, Gender Norms and Reciprocation in Public Good Games By David Zetland; Marina Della Giusta
  2. Behavioral Responses to Natural Disasters By Marco Castillo; Michael Carter
  3. Ambiguity aversion as a reason to choose tournaments By Christian Kellner; Gerhard Riener
  4. Management Control System Use and Team Commitment By Laura María Gómez-Ruiz; David Naranjo-Gil; Concepción Álvarez-Dardet Espejo
  5. The Present and Future of Game Theory By Martin Shubik

  1. By: David Zetland (Department of Economics, Wageningen University); Marina Della Giusta (Department of Economics, University of Reading)
    Abstract: We examine the impact of information regarding other people’s choices on individual choice in a public good experiment with two separate treatments. In the implicit treatment, subjects do not see the average contribution of others in their group, but they can calculate it from the information available. In the explicit treatment, subjects see the average contribution of others in their group. If subjects are rational calculating agents as suggested in mainstream economic theory there should be no difference in observed behavior across treatments: agents should use all available information to make decisions. What we see instead is quite different and consistent with the presence of social norms: first, players change their behavior in response to the change in displayed information; second, changes in individual behavior produce identical group outcomes, in terms of total payoffs or efficiency across the two treatments. How does this happen? The display of the average contribution of others results in behavior consistent with a focal point (Schelling, 1960), i.e., more subjects behave as reciprocators (conditioning their contributions on the contributions of others), and fewer behave as cooperators or free-riders (unconditionally contributing a lot or a little, respectively). This change in behavior differs by gender: women behave similarly to men when they see the average contribution by others; when they cannot, they behave differently, favoring unconditional strategies of free-riding or cooperation. Men’s behavior, in contrast to women’s adaption, does not adjust to social cues, as suggested by Croson and Gneezy (2009).
    Keywords: public goods, focal points, social norms, gender, experiments
    JEL: D0
    Date: 2011–06–01
  2. By: Marco Castillo (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Michael Carter (Agricultural and Resource Economics, University of California - Davis)
    Abstract: Catastrophic events can dramatically alter existing social and economic relationships. The consequences can be long-lasting and give rise to heterogeneity of behavior across populations. We investigate the impact of a large negative shock on altruism, trust and reciprocity in 30 small Honduran communities diversely affected by Hurricane Mitch in 1998. We conduct a survey of communities and behavioral experiments three and four years after the event. We find that the mean and variance of behavior are nonlinearly related to the severity of the weather shock affecting the community. Also, there is a substitution away from formal local organizations to informal arrangements.
    Keywords: noncooperative games, experimental economics, norms
    JEL: C72 C92 C93
    Date: 2011–06
  3. By: Christian Kellner (University of Bonn); Gerhard Riener (University of Jena and Max-Planck Institute of Economics, Jena)
    Abstract: We test the implications of ambiguity aversion in a principal-agent problem with multiple agents. When output distributions are uncertain, models of ambiguity aversion suggest that tournaments may become more attractive than independent wage contracts, in contrast to the case where output distributions are known. We do so by presenting agents with a choice between tournaments and independent contracts, which are designed in a way that under uncertainty about output distribution (that is, under ambiguity), ambiguity averse agents should typically prefer tournaments, while ambiguity neutral agents prefer independent contracts, independent of their degree of risk aversion. This is the case, because the tournament removes all ambiguity about the equilibrium wages. We compare the share of participants who choose the tournament under ambiguity with the share of participants choosing the tournament in a control treatment, where output distributions are know. As the theory predicts, we find indeed that under ambiguity the share of agents who choose the tournaments is higher than in the case of known output distributions.
    Keywords: Ambiguity aversion, tournaments, Ellsberg urn, contract design
    JEL: D01 D81 M55
    Date: 2011–07–11
  4. By: Laura María Gómez-Ruiz (Department of Business Administration, Universidad Pablo de Olavide); David Naranjo-Gil (Department of Business Administration, Universidad Pablo de Olavide); Concepción Álvarez-Dardet Espejo (Department of Business Administration, Universidad Pablo de Olavide)
    Abstract: Recent Organizations are adopting teams’ structures to react to competition and enhance performance, but they do not fully achieve these objectives. Psychology literature argues that one of the main reasons for that is the lack of team commitment, which could be enhanced partially for the social identity of the team. Accounting literature argues that management control systems can be used as mechanism to motivate individuals in teams, and so enhance commitment. Using an experiment conducted among 120 post-graduate students, we test how team social identity and the interactive and diagnostic uses of the management control systems influence commitment to team’s objectives. Results generally support our hypotheses. Our findings show that an interactive use of management controls in teams is positively related to high level of teams’ commitment. Moreover, our results also support that the effect of social identity on teams´ commitment is moderated by the level of interactive use of management control systems in teams.
    Keywords: Teams, Use of Management Control Systems, Social identity, Commitment, Experiments
    Date: 2011–06
  5. By: Martin Shubik (Cowles Foundation, Yale University)
    Abstract: A broad nontechnical coverage of many of the developments in game theory since the 1950s is given together with some comments on important open problems and where some of the developments may take place. The nearly 90 references given serve only as a minimal guide to the many thousands of books and articles that have been written. The purpose here is to present a broad brush picture of the many areas of study and application that have come into being. The use of deep techniques flourishes best when it stays in touch with application. There is a vital symbiotic relationship between good theory and practice. The breakneck speed of development of game theory calls for an appreciation of both the many realities of conflict, coordination and cooperation and the abstract investigation of all of them.
    Keywords: Game theory, Application and theory, Social sciences, Law, Experimental gaming, conflict, Coordination and cooperation
    JEL: C7 C9
    Date: 2011–07

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