New Economics Papers
on Experimental Economics
Issue of 2011‒08‒22
nine papers chosen by

  1. Would People Behave Differently If They Better Understood Social Security? Evidence From a Field Experiment By Jeffrey B. Liebman; Erzo F.P. Luttmer
  2. Field Experiments on Anchoring of Economic Valuations By Jonathana E. Alevy; Craig E. Landry; John A. List
  3. Hidden Information, Bargaining Power, And Efficiency: An Experiment By Antonio Cabrales; Gary Charness; Marie-Claire Villeval
  4. Biological correlates of the Allais paradox - updated By Da Silva, Sergio; Baldo, Dinora; Matsushita, Raul
  5. How Competitive are Female Professionals? A Tale of Identity Conflict By Bram Cadsby; Maroš Servátka; Fei Song
  6. Risk Aversion: Experimental Evidence from South African Fishing Communities By Kerri Brick; Martine Visser; Justine Burns
  7. Spectators versus stakeholders with or without veil of ignorance: The difference it makes for justice and chosen distribution criteria By Leonardo Becchetti; Giacomo Degli Antoni; Stefania Ottone; Nazaria Solferino
  8. Performance Pay and Information: Reducing Child Malnutrition in Urban Slums By Singh, Prakarsh
  9. Alcohol Availability and Crime: Lessons from Liberalized Weekend Sales Restrictions By Grönqvist, Hans; Niknami, Susan

  1. By: Jeffrey B. Liebman; Erzo F.P. Luttmer
    Abstract: This paper presents the results of a field experiment in which a sample of older workers was randomized between a treatment group that was given information about key Social Security provisions and a control group that was not. The experiment was designed to examine whether it is possible to affect individual behavior using a relatively inexpensive informational intervention about the provisions of a public program and to explore the mechanisms underlying the behavior change. We find that our relatively mild intervention (sending an informational brochure and an invitation to a web-tutorial) increased labor force participation one year later by 4 percentage points relative to the control group mean of 74 percent and that this effect is driven by a 7.2 percentage point increase among female subjects. The information intervention increased the perceived returns to working longer, especially among female respondents, which suggests that the behavioral response can be attributed at least in part to updated information about Social Security.
    JEL: C93 D83 H55 J26
    Date: 2011–08
  2. By: Jonathana E. Alevy (Department of Economics, University of Alaska Anchorage); Craig E. Landry (Department of Economics, East Carolina University); John A. List (Department of Economics, University of Chicago)
    Abstract: A pillar of behavioral research is the view that preferences are constructed during the value elicitation process, but it is unclear whether, and to what extent, such biases influence real market equilibria. This paper examines the “anchoring” phenomenon in the field. The first experiment produces evidence that inexperienced consumers can be anchored in the value elicitation process, yet there is little evidence that experienced agents are influenced by anchors. The second experiment finds that anchors have only transient effects on prices and quantities traded: aggregate market outcomes converge to the intersection of supply and demand after a few market periods.
    Keywords: field experiment, anchoring, valuation, experience
    JEL: C92 M11
    Date: 2011
  3. By: Antonio Cabrales (Departamento de Economía - Universidad Carlos III de Madrid); Gary Charness (Department of Economics, University of California - University of California, Santa Barbara); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)
    Abstract: We devise an experiment to explore the effect of different degrees of bargaining power on the design and the selection of contracts in a hidden-information context. In our benchmark case, each principal is matched with one agent of unknown type. In our second treatment, a principal can select one of three agents, while in a third treatment an agent may choose between the contract menus offered by two principals. We first show theoretically how different ratios of principals and agents affect outcomes and efficiency. Informational asymmetries generate inefficiency. In an environment where principals compete against each other to hire agents, these inefficiencies may disappear, but they are insensitive to the number of principals. In contrast, when agents compete to be hired, efficiency improves dramatically, and it increases in the relative number of agents because competition reduces the agents' informational monopoly power. However, this environment also generates a high inequality level and is characterized by multiple equilibria. In general, there is a fairly high degree of correspondence between the theoretical predictions and the contract menus actually chosen in each treatment. There is, however, a tendency to choose more 'generous' (and more efficient) contract menus over time. We find that competition leads to a substantially higher probability of trade, and that, overall, competition between agents generates the most efficient outcomes.
    Keywords: experiment; hidden information; bargaining power; competition; efficiency
    Date: 2011
  4. By: Da Silva, Sergio; Baldo, Dinora; Matsushita, Raul
    Abstract: We conducted a questionnaire study with student subjects to look for explicit correlations between selected biological characteristics of the subjects and manifestation of the Allais paradox in the pattern of their choices between sets of two pairs of risky prospects. We found that particular characteristics, such as gender, menstrual cycle, mother’s age at delivery, parenthood, second- to fourth-digit ratio, perceived negative life events, and emotional state, can be related to the paradox. Women,particularly when not menstruating, are less susceptible to the paradox. Those born to not-too-young mothers are also less prone to the paradox. The same holds true for men who have fathered children and had been exposed to high levels of prenatal testosterone, people who had experienced many negative life events, and those who were anxious, excited, aroused, happy, active, or fresh at the time of the experiment. Further, left-handers and atheists may be less inclined to display the paradox.
    Keywords: Allais paradox; choice under risk; biological characteristics; experimental economics
    JEL: D81 C91
    Date: 2011
  5. By: Bram Cadsby; Maroš Servátka (University of Canterbury); Fei Song
    Abstract: We develop and test experimentally the argument that gender/family and/or professional identities, activated through psychological priming, may influence preference for competition. We focus on female professionals for whom these identities may conflict and male professionals for whom they may be reinforcing. We primed MBA-student participants by administering questionnaires that concerned either gender/family or professional issues. Subsequently, participants undertook a real-effort task and chose between piece-rate and competitive-tournament compensation. Identity priming, moderated by gender, significantly affected preference for competitive pay. This relationship was partially mediated by beliefs about one‟s performance ranking. The implications of our results are profound. The decision to avoid competition made by many female professionals may be driven not by lack of ability, but rather by the increased salience of gender/family identity, influenced by marriage and motherhood over time. Indeed, activation of internalized identities might not only drive the experimental results, but also have strong implications for career choices and job performance of women, thus contributing to the observed gender and motherhood wage gaps.
    Date: 2011–08–02
  6. By: Kerri Brick; Martine Visser; Justine Burns
    Abstract: We estimate the risk attitudes of a large sample of small-scale fishers from various fishing communities along the west coast of South Africa, using subjects’ choices over lotteries with real monetary prizes. We find that participants are moderately risk averse and that risk attitudes vary with certain socio-demographic variables. In particular, females are found to be more risk averse than their male counterparts, while quota holders are more risk loving. Logistic regression analysis indicates that risk attitudes have implications for non-compliance with fisheries regulation. Specifically, greater risk aversion translates into a reduction in the odds of catching illegally. Furthermore, in the case of gender, female fishers and female fishers with fishing rights are more likely to comply with fisheries regulation. These findings have important implications for the characterisation of risk attitudes in fisheries policy applications and for the management of marine resources.
    Keywords: risk attitudes risk aversion experiments fishing rights compliance and South Africa
    JEL: D81 Q22
    Date: 2011
  7. By: Leonardo Becchetti (University of Roma Tor Vergata); Giacomo Degli Antoni (University of Milano – Bicocca); Stefania Ottone (University of Milano – Bicocca); Nazaria Solferino (University of Calabria-Unical)
    Abstract: We document with a randomized experiment that being spectators and, to a lesser extent, stakeholders with veil of ignorance on relative payoffs, induces subjects who can choose distribution criteria to prefer rewarding talent (vis-à-vis effort, chance or strict egalitarianism) after guaranteeing a minimal egalitarian base. The removal of the veil of ignorance reduces dramatically such choice since most players opt or revise their decision in favour of the criterion which maximizes their own payoff (and, by doing so, end up being farther from the maximin choice). Large part (but not all) of the stakeholders’ choices before the removal of the veil of ignorance are driven by their performance beliefs since two thirds of them choose under the veil the criterion in which they assume to perform relatively better.
    Keywords: Distributive Justice; Perceived Fairness; Talent, Chance and Effort; Veil of Ignorance.
    JEL: C91 D63
    Date: 2011
  8. By: Singh, Prakarsh
    Abstract: This paper provides evidence for the effectiveness of performance pay to government workers and how performance pay interacts with demand-side information. In an experiment covering 145 child day-care centres, I implement three separate treatments. First, I engineer an exogenous change in compensation for childcare workers from fixed wages to performance pay. Second, I only provide mothers with information without incentivizing the workers. Third, I combine the first two treatments. This helps us identify if performance pay and public information are complements or substitutes in reducing child malnutrition. I find that combining incentives to workers and information to mothers reduces weight-for-age malnutrition by 4.2% in 3 months, although individually the effects are negligible. This complementarity is shown to be driven by better mother-worker communication and the mother feeding more calorific food at home. There is also a sustained long-run positive impact of the combined treatment after the experiment concluded.
    Keywords: Performance pay; Child malnutrition; Public health; Information; Complementarity; Nutrition; Public sector; Urban slums
    JEL: J13 I12 H41 M52 L38 D12 H75 I18 I38 D61 J33
    Date: 2011–07
  9. By: Grönqvist, Hans (Swedish Institute for Social Research, Stockholm University); Niknami, Susan (Swedish Institute for Social Research, Stockholm University)
    Abstract: In February 2000, the Swedish state monopoly alcohol retail company launched a large scale experiment in which all stores in selected counties were allowed to keep open on Saturdays. We assess the effects on crime of this expansion in access to alcohol. To isolate the impact of the experiment from other factors, we compare conviction rates in age cohorts above and below the national drinking age restriction in counties where the experiment had been implemented, and contrast these differences to those in counties that still prohibited weekend alcohol commerce. Our analysis relies on extensive individual conviction data that have been merged to population registers. After demonstrating that Saturday opening of alcohol shops significantly raised alcohol sales, we show that it also increased crime. The increase is confined to crimes committed on Saturdays and is driven by illegal activity among individuals with low ability and among persons with fathers that have completed at least some secondary education. Although the increases in crime and alcohol sales were slightly higher during the initial phase of the experiment, our evidence suggests that both effects persist over time. Our analysis reveals that the social costs linked to the experiment exceed the monetary benefits.
    Keywords: Delinquency; Alcohol laws; Substance use
    JEL: K42
    Date: 2011–08–02

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