New Economics Papers
on Experimental Economics
Issue of 2011‒07‒27
twelve papers chosen by

  1. Preferences for Consistency By Falk, Armin; Zimmermann, Florian
  2. Teams or Tournaments? A Field Experiment on Cooperation and Competition among University Students By Bigoni, Maria; Fort, Margherita; Nardotto, Mattia; Reggiani, Tommaso
  3. Framing and Misperceptions in a Public Good Experiment By Toke Fosgaard; Lars Gårn Hansen; Erik Wengström
  4. What drives failure to maximize payoffs in the lab ? A test of the inequality aversion hypothesis. By Nicolas Jacquemet; Adam Zylbersztejn
  5. Social Status and Influence: Evidence from an Artefactual Field Experiment on Local Public Good Provision By d'Adda, Giovanni
  6. Experimental Evidence on the 'Insidious' Illiquidity Risk By Damien Besancenot; Radu Vranceanu
  7. Risk attitude and risk behavior: Comparing Thailand and Vietnam By Gloede, Oliver; Menkhoff, Lukas; Waibel, Hermann
  8. Saving, Microinsurance: Why You Should Do Both or Nothing. A Behavioral Experiment on the Philippines By Landmann, Andreas; Vollan, Björn; Frölich, Markus
  9. The People’s Hired Guns? Experimentally Testing the Inclination of Prosecutors to Abuse the Vague Definition of Crimes By Christoph Engel; Alicja Pluta
  10. Allocating Cash Savings and the Role of Information: Evidence from a Field Experiment in Uganda By Buehren, Niklas
  11. The management of Natura 2000 Network sites: a discrete choice experiment approach. By David Hoyos; Petr Mariel; Eneko Garmendia
  12. Effects of Corporate Support of a Charity on Public Perceptions of the Charity By Mcdonald, Katie; Scaife, Wendy; Wymer, Walter

  1. By: Falk, Armin (University of Bonn); Zimmermann, Florian (University of Bonn)
    Abstract: This paper studies how a preference for consistency can affect economic decision-making. We propose a two-period model where people have a preference for consistency because consistent behavior allows them to signal personal and intellectual strength. We then present three experiments that study main predictions and implications of the model. The first is a simple principal-agent experiment that shows that consistency is valued by others and that this value is anticipated. The second experiment underlines the crucial role of early commitment for consistency preferences. Finally we show how preferences for consistency can be used to manipulate choices.
    Keywords: consistency preferences, experiments, early commitment, charitable giving, social influence
    JEL: C91 D64
    Date: 2011–07
  2. By: Bigoni, Maria (University of Bologna); Fort, Margherita (University of Bologna); Nardotto, Mattia (Telecom - Paris Tech); Reggiani, Tommaso (University of Bologna)
    Abstract: This paper assesses the effect of two stylized and antithetic non-monetary incentive schemes on students’ effort. We collect data from a field experiment where incentives are exogenously imposed, performance is monitored and individual characteristics are observed. Students are randomly assigned to a tournament scheme that fosters competition between coupled students, a cooperative scheme that promotes information sharing and collaboration between students and a control treatment in which students can neither compete, nor cooperate. In line with theoretical predictions, we find that competition induces higher effort with respect to cooperation and cooperation does not increase effort with respect to the baseline. However, this is true only for men, while women do not seem to react to non-monetary incentives.
    Keywords: education, field experiments, incentives, competition, cooperation
    JEL: A22 C93 I20
    Date: 2011–07
  3. By: Toke Fosgaard (Institute of Food and Resource Economics, University of Copenhagen); Lars Gårn Hansen (Institute of Food and Resource Economics, University of Copenhagen); Erik Wengström (Department of Economics, University of Lund; Department of Economics, University of Copenhagen)
    Abstract: Earlier studies have found that a substantial part of the contributions in public good games can be explained by subjects misperceiving the game's incentives. Using a large-scale public good experiment, we show that subtle changes in how the game is framed substantially affect such misperceptions and that this explains major parts of framing effect on subjects' behavior. When controlling for the different levels of misperception between frames, the framing effect on subjects' cooperation preferences disappears. This suggests that merely changing how tax-, fine- or subsidy systems are framed, without reducing complexity, could reduce welfare loss from misperception of incentives.
    Keywords: Public goods, Cooperation, Misperception, Game form recognition, Framing effects, Internet experiment
    JEL: C90 H41
    Date: 2011–07
  4. By: Nicolas Jacquemet (Centre d'Economie de la Sorbonne - Paris School of Economics); Adam Zylbersztejn (Centre d'Economie de la Sorbonne)
    Abstract: In experiments based on the Beard and Beil (1994) game, second movers very often fail to select the decision that maximizes both players payoff. This note reports on a new experimental treatment, in which we neutralize the potential effect of inequality aversion on the likelihood of this behavior. We show this behavior is robust to this change, even after allowing for repetition-based learning.
    Keywords: Coordination failure, laboratory experiments, aversion to inequality.
    JEL: C72 D83
    Date: 2011–06
  5. By: d'Adda, Giovanni
    Abstract: I look at the effect of social status on transmission of pro-social behavior. In an artefactual field experiment conducted in northern Colombia I observe contribution to local biodiversity conservation. The design varies whether choice is observable or not and social status of observing/observed individuals. Status is derived from a social ranking exercise identifying formal and moral leaders within the community. I find that leaders have higher valuation of the common good and that their giving is less volatile in the face of exposure to participants contributing lower amounts. Social information on others giving is particularly effective when low status participants are able to observe leaders' choices. I interpret the results as evidence in favor of preference-based altruism and upward social comparison theories. The findings confirm those of laboratory experiments on status in a field setting and with naturally occurring leaders. The study has relevant policy implications in terms of targeting of development programs and questions the commonly held negative view of elites in developing countries. --
    Date: 2011
  6. By: Damien Besancenot (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris-Nord - Paris XIII - CNRS : UMR7234); Radu Vranceanu (Economics Department - ESSEC Business School)
    Abstract: This paper brings experimental evidence on investors' behavior subject to an "illiquidity" constraint, where the success of a risky project depends on the participation of a minimum number of investors. The experiment is set up as a frameless coordination game that replicates the investment context. Results confirm the insidious nature of the illiquidity risk: as long as a first illiquidity default does not occur, investors do not seem able to fully internalize it. After several defaults, agents manage to coordinate on a default probability above which they refuse to participate to the project. This default probability is lower than the default probability of the first illiquidity default.
    Keywords: Coordination game ; Illiquidity risk ; Threshold strategy ; Experimental economics
    Date: 2011–06–01
  7. By: Gloede, Oliver; Menkhoff, Lukas; Waibel, Hermann
    Abstract: Are responses to a simple survey item sufficiently reliable in eliciting risk attitudes? Our angle in examining reliability is to conduct comparative research across Thailand and Vietnam. We find, first, that the survey item is informative about individual risk attitude because it is plausibly related to socio-demographic characteristics (including vulnerability), it is experimentally validated and has some predictive power. Second, however, we find major differences between both countries: whereas explained variances of regressions are tentatively higher in Vietnam, the predictive value of the survey item is much lower than in Thailand. Therefore, the survey item cannot be implemented across countries in an unreflected way. --
    Keywords: risk attitude,socio-economic survey,household behavior,field experiment
    JEL: O1 R2 C93 D81
    Date: 2011
  8. By: Landmann, Andreas; Vollan, Björn; Frölich, Markus
    Abstract: This paper analyzes data from a novel field experiment designed to test the impact of two different insurance products and a secret saving device on solidarity in risk-sharing groups among rural villagers in the Philippines. Risk is simulated by a lottery, risk-sharing is possible in solidarity groups of three and insurance is introduced via less risky lotteries. Our main hypothesis is that formal market-based products lead to lower transfers among network members. We also test for the persistence of this crowding-out of solidarity. We find evidence for a reduction of solidarity by insurance if shocks are observable. Depending on insurance design, there is also evidence for persistence of this effect even if insurance is removed. Simulations using our regression results show that the benefits of insurance are completely offset by the reduction in transfers. However, if secret saving is possible solidarity is very low in general and there is no crowding out effect of insurance. This suggests that introducing formal insurance is not as effective as it is hoped for when the monetary situation can be closely monitored, but that it might be a very important complement when savings inhibit observing financial resources. --
    JEL: C93 O12 Z13
    Date: 2011
  9. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Alicja Pluta
    Abstract: Legal realists expect prosecutors to be selfish. If they get the defendant convicted, this helps them advance their careers. If the odds of winning on the main charge are low, prosecutors have a second option. They can exploit the ambiguity of legal doctrine and charge the defendant for vaguely defined crimes, like “conspiracy”. We model the situation as a signalling game and test it experimentally. If we have participants play the naked game, at least a minority plays the game theoretic equilibrium and use the vague rule if a signal indicates that the defendant is guilty. This becomes even slightly more frequent if a misbehaving defendant imposes harm on a third participant. By contrast if we frame the situation as a court case, almost all prosecutors take the signal at face value and knowingly run the risk of loosing in court if the signal was false. Our experimental prosecutors behave like textbook legal idealists, and follow the urge of duty.
    Keywords: Risk aversion, prosecution, doctrinal ambiguity, vaguely defined crimes, duty, DOSPERT
    JEL: D63 C72 K42 C91 K14
    Date: 2011–07
  10. By: Buehren, Niklas
    Abstract: Microfinance in general and microcredit programs in particular have attracted much attention among interest groups concerned with poverty eradication and are seen by many as highly promising means in order to alleviate poverty. More recently, the spotlight has turned increasingly on the development and promotion of microsaving devices and mechanisms suitable to the unbanked poor. Along these lines, the Saving Mobilization program implemented by BRAC in Uganda is an attempt to encourage a saving culture as well as overcoming barriers to make use of saving services at more formal financial institutions. Building on a randomized control trial, the aim of this study is to investigate the impact of this program on the saving behavior of participants. The intervention is successful in increasing the usage of semi-formal financial institutions on the extensive margin as well as to boost the amount held at these institutions. The total amount of savings, however, remains unaffected. Impact heterogeneity is important and the analysis shows that illiterate individuals as well as individuals having experienced theft in the recent past are more likely to respond to the program. --
    Keywords: Microfinance,saving promotion,theft,literacy,Uganda
    JEL: D14 G21 O16
    Date: 2011
  11. By: David Hoyos (Universidad del País Vasco (UPV/EHU)); Petr Mariel (Universidad del País Vasco (UPV/EHU)); Eneko Garmendia (Universidad del País Vasco (UPV/EHU))
    Abstract: One of the main problems that public institutions face in the management of protected areas, such as the European Natura 2000 network, is how to design and implement sustainable management plans accounting both for the social cost and benefits of conserving these sites. This paper provides with an empirical application of a discrete choice experiment undertaken in a Natura 2000 site in the Basque Country (Spain) aimed at evaluating the social preferences for different land-use options. This information is then used to evaluate the social desirability of some future management plans.
    Keywords: discrete choice experiments; choice modelling; environmental valuation; Natura 2000
    JEL: Q51
    Date: 2011–07–14
  12. By: Mcdonald, Katie; Scaife, Wendy; Wymer, Walter
    Abstract: A quasi-experimental design (N=517) was used to investigate the effect of corporate support of a charity in an ad on audience response to the supported charity. The results indicate that corporate support of a charity appears not to influence audience attitudes and donation intentions for the charity. A small portion of the audience may be motivated to donate when learning of a large corporate donation to the charity. The level of individuals' favorability for the charity was the strongest predictor of their attitudes and intentions. Gender was also a predictor of more positive charity attitudes, with females having more positive attitudes than males for three of four charities. Managerial implications and areas for future research are discussed.
    Keywords: reputationevolution; ad; corporate support; branding; Charity attitude s
    Date: 2011

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