New Economics Papers
on Experimental Economics
Issue of 2011‒10‒01
eighteen papers chosen by

  1. Do People Care about Social Context? Framing Effects in Dictator Games By Dreber, Anna; Ellingsen, Tore; Johannesson, Magnus; Rand, David
  2. Do Women Prefer a Co-operative Work Environment? By Kuhn, Peter J.; Villeval, Marie Claire
  3. Work for Image and Work for Pay By Dessi, Roberta; Rustichini, Aldo
  4. Intimidation or Impatience? Jump Bidding in On-line Ascending Automobile Auctions By David Grether; David Porter; Matthew Shum
  5. Nudging with information: a randomized field experiment on reminders and feedback By Calzolari, Giacomo; Nardotto, Mattia
  6. Credible Communication and Cooperation: Experimental Evidence from Multi-stage Games By Andersson, Ola; Wengström, Erik
  7. Credit Market Consequences of Improved Personal Identification: Field Experimental Evidence from Malawi By Xavier Giné; Jessica Goldberg; Dean Yang
  8. The Effects of Training on Own and Co-Worker Productivity: Evidence from a Field Experiment By de Grip, Andries; Sauermann, Jan
  9. Experimental Social Choice: The Impact of Nosy Preferences on Efficiency By Chetan Dave; Stefan Dodds; Sheryl Ball; Rachel Croson
  10. More than Meets the Eye: an Eye-tracking Experiment on the Beauty Contest Game By Müller, Julia; Schwieren, Christiane
  11. Structural versus Behavioral Measures in the Deregulation of Electricity Markets: An Experimental Investigation Guided by Theory and Policy Concerns By Silvester van Koten; Andreas Ortmann
  12. Ultimata bargaining: generosity without social motives By Breitmoser, Yves; Tan, Jonathan H.W.
  13. Sealed Bid Auctions vs. Ascending Bid Auctions: An Experimental Study By Andersson, Christer; Andersson, Ola; Andersson, Tommy
  14. Cognitive effort in the Beauty Contest Game By Pablo Brañas-Garza; Teresa García-Muño; Roberto Hernán
  15. Resolving Conflicts by a Random Device By Erik O. Kimbrough; Roman M. Sheremeta; Timothy Shields
  16. See No Evil: Information Chains and Reciprocity in Teams By Eva-Maria Steiger; Ro'i Zultan
  17. The Explanatory and Predictive Power of Non Two-Stage-Probability Theories of Decision Making Under Ambiguity By Noemi Pace; John D Hey
  18. May I continue or should I stop? the effects of regulatory focus and message framings on video game players’ self-control By Ho, Shu-Hsun; Putthiwanit, Chutinon; Lin, Chia-Yin

  1. By: Dreber, Anna (Dept. of Economics, Stockholm School of Economics); Ellingsen, Tore (Dept. of Economics, Stockholm School of Economics); Johannesson, Magnus (Dept. of Economics, Stockholm School of Economics); Rand, David (Harvard University)
    Abstract: Many previous experiments document that behavior in multi-person settings responds to the name of the game and the labeling of strategies. Usually these studies cannot tell whether frames affect preferences or beliefs. In this Dictator game study, we investigate whether social framing effects are also present when only one of the subjects makes a decision, in which case the frame may only affect preferences. We find that behavior is insensitive to social framing.
    Keywords: beliefs; preferences; framing effects; altruism; cooperation
    JEL: C70 C91 D64
    Date: 2011–09–14
  2. By: Kuhn, Peter J. (University of California, Santa Barbara); Villeval, Marie Claire (CNRS, GATE)
    Abstract: Are women disproportionately attracted to work environments where cooperation rather than competition is rewarded? This paper reports the results of a real-effort experiment in which participants choose between an individual compensation scheme and a team-based payment scheme. We find that women are more likely than men to select team-based compensation in our baseline treatment, but women and men join teams with equal frequency when we add an efficiency advantage to team production. Using a simple structural discrete choice framework to reconcile these facts, we show that three elements can explain the observed patterns in the team-entry gender gap: (1) a gender gap in confidence in others (i.e. women are less pessimistic about their prospective teammates' relative ability), (2) a greater responsiveness among men to instrumental reasons for joining teams, and (3) a greater "pure" preference for working in a team environment among women.
    Keywords: gender, cooperation, self-selection, confidence, experiment
    JEL: C91 J16 J24 J31 M5
    Date: 2011–09
  3. By: Dessi, Roberta (Toulouse School of Economics (IDEI and GREMAQ), and CEPR); Rustichini, Aldo (University of Minnesota)
    Abstract: Standard economic models with complete information predict a positive, monotonic relationship between pay and performance. This prediction does not always hold in experimental tests: offering a small payment may result in lower performance than not offering any pay- ment. We test experimentally two main explanations that have been put forward for this result: the "incomplete contract" hypothesis views the payment rule as a signal given to subjects on purpose of the activity. The "informed principal" hypothesis views it as a signal concerning the characteristics of the agent or of the task. The incomplete contract view appears to oer the best overall explanation for our results. We also nd that high-powered monetary incentives do not "crowd out" intrinsic motivation, but may elicit "too much" eort when intrinsic motivation is very high.
    Date: 2011–09–10
  4. By: David Grether (Division of Humanities and Social Sciences, California Institute of Technology); David Porter (Economic Science Institute, Chapman University); Matthew Shum (Division of Humanities and Social Sciences, California Institute of Technology)
    Abstract: We run a large field experiment with an online company specializing in selling used automobiles via ascending auctions. We manipulate experimentally the maximum amount which bidders can bid above the current standing price, thus affecting the ease with which bidders can engage in jump bidding. We test between the intimidation vs. costly bidding hypotheses of jump bidding by looking at the effect of these jump-bidding restrictions on average seller revenue. We find evidence consistent with costly bidding in one market (Texas), but intimidation in the other market (New York). This difference in findings between the two markets appears partly attributable to the more prominent presence of sellers who are car dealers in the Texas market.
    Date: 2011
  5. By: Calzolari, Giacomo; Nardotto, Mattia
    Abstract: Can people be helped to stick to their plans with a little help from information? We provide a theoretical and empirical analysis of the effects of reminders and feedback on investment activities involving up-front costs and delayed benefits, such as education and healthy behavior. By means of a randomized field experiment, we show that simple weekly reminders induce users of a gym to substantially increase their levels of physical exercise. We show that limited attention helps explain our results, and we find evidence of mental accounting in users' response to the stimulus of reminders. These results show that virtuous behavior, such as following a healthy life style, can be promoted without the need for monetary incentives: providing incentives through information is both effective and cheap.
    Keywords: feedback; inattention; limited memory; mental accounting; randomized field experiment; reminders; sunk cost
    JEL: C93 D11
    Date: 2011–09
  6. By: Andersson, Ola (Research Institute of Industrial Economics (IFN)); Wengström, Erik (Lund University)
    Abstract: It is well known that communication often serves as a facilitator for cooperation in static games. Yet, communication can serve entirely different purposes in dynamic settings as communication during the game may work as a means for renegotiation, potentially undermining the credibility of cooperative strategies. To explore this issue, this paper experimentally investigates cooperation and non-binding communication in a two-stage game. More specifically, two treatments are considered: one with only pre-play communication and one where subjects can also communicate intra-play between the stages of the game. The results highlight a nontrivial difference concerning the effects of pre-play communication between the two treatments. Pre-play communication only has a significant impact on cooperation when no intra-play communication is possible. The results suggest that the credibility of pre-play messages may depend crucially on future communication opportunities.
    Keywords: Communication; Cooperation; Renegotiation; Experiments
    JEL: C72 C92
    Date: 2011–09–19
  7. By: Xavier Giné; Jessica Goldberg; Dean Yang
    Abstract: We report the results of a randomized field experiment that examines the credit market impacts of improvements in a lender's ability to determine borrowers’ identities. Improved personal identification enhances the credibility of a lender’s dynamic repayment incentives by allowing it to withhold future loans from past defaulters and expand credit for good borrowers. The experimental context, rural Malawi, is characterized by an imperfect identification system. Consistent with a simple model of borrower heterogeneity and information asymmetries, fingerprinting led to substantially higher repayment rates for borrowers with the highest ex ante default risk, but had no effect for the rest of the borrowers. The change in repayment rates is driven by reductions in adverse selection (smaller loan sizes) and lower moral hazard (for example, less diversion of loan-financed fertilizer from its intended use on the cash crop).
    JEL: O12 O16
    Date: 2011–09
  8. By: de Grip, Andries (ROA, Maastricht University); Sauermann, Jan (ROA, Maastricht University)
    Abstract: This paper analyses the effects of work-related training on worker productivity. To identify the causal effects from training, we combine a field experiment that randomly assigns workers to treatment and control groups with panel data on individual worker performance before and after training. We find that participation in the training programme leads to a 10 percent increase in performance. Moreover, we provide experimental evidence for externalities from treated workers on their untreated teammates: An increase of 10 percentage points in the share of treated peers leads to a performance increase of 0.51 percent. We provide evidence that the estimated effects are causal and not the result of employee selection into and out of training. Furthermore, we find that the performance increase is not due to lower quality provided by the worker.
    Keywords: training, field experiment, peer effects, productivity
    JEL: J24 M53 C93
    Date: 2011–09
  9. By: Chetan Dave; Stefan Dodds; Sheryl Ball; Rachel Croson
    Abstract: A foundational paradox in social choice theory is that liberalism (freedom of action) and Pareto efficiency, the standard in evaluating economic outcomes, can conflict with each other (Sen 1970). We capture this tension in a series of sequential Battle of the Sexes game experiments. We find that most individuals are willing to waive rights to achieve efficient outcomes. In addition efficiency is higher when participants may claim new rights than when they may relinquish them or when only one player possesses them. This evidence may help resolve the tensions between efficiency and liberty that lie at the heart of social choice and political philosophy.
    Keywords: Pareto Optimality, Sen’s Paradox, Social Choice, Minimal Liberalism, preferences, rights, Battle of the Sexes game  
    Date: 2011
  10. By: Müller, Julia; Schwieren, Christiane
    Abstract: The beauty contest game has been used to analyze how many steps of reasoning subjects are able to perform. A common finding is that a majority seem to have low levels of reasoning. We use eye-tracking to investigate not only the number chosen in the game, but also the strategies in use and the numbers contemplated. We can show that not all cases that are seemingly level-1 or level-2 thinking indeed are {they might be highly sophisticated adaptations to beliefs about other people's limited reasoning abilities.
    Keywords: beauty contest game; levels of reasoning; level-k model; strategic reason ing; cognitive hierarchy
    Date: 2011–09–22
  11. By: Silvester van Koten; Andreas Ortmann
    Abstract: We try to better understand the comparative advantages of structural and behavioral measures of deregulation in electricity markets, an eminent policy issue for which the experimental evidence is scant and problematic. In the present paper we investigate theoretically and experimentally the effects of the introduction of a forward market on competition in electricity markets. We compare this scenario with the best alternative, reducing concentration by adding one more competitor by divestiture. Our work contributes to the literature by introducing more realistic cost configurations, teasing apart number and asset effect, and studying numbers of competitors that reflect better the market concentration in the European electricity industries. Our experimental data suggest that introducing a forward market has a positive effect on the aggregate supply in markets with two or three major competitors, configurations typical for both the newly accessed and the old European Union member states. Introducing a forward market also increases efficiency. Our data furthermore suggest, in contrast to previous findings, that the effects of introducing a forward market is stronger than adding one more competitor both in markets with two, and particularly three, producers. Our data thus suggest that the behavioral measure of introducing a forward market is more effective than the structural measure of adding one more competitor by divestiture. Thus competition authorities should, in line with EU law, focus on the behavioral measure of introducing, or at least facilitating the emergence of, forward markets rather than on the structural measure of lowering market concentration by divestiture.
    Keywords: economics experiments; market power; competition; forward markets; EU electricity market
    Date: 2011–02–24
  12. By: Breitmoser, Yves; Tan, Jonathan H.W.
    Abstract: We show and explain how generosity beyond that explainable by social preferences can manifest in bargaining. We analyze an ultimata game with two parties vying to coalesce with a randomly chosen proposer. They simultaneously demand shares of the surplus. The proposer must then make an offer that meets at least one demand, or else the game either continues with a new round or breaks down with all earning zero. Self-interest, altruism, and inequity aversion univocally predict miniscule demands due to inter-party competition; proposers thus obtain the lion's share. We experimentally observe that proposers coalesce with the less demanding party by strategically matching demands, like ultimatum bargaining, but also give non-strategically to the other party, like dictator giving. The observations are incompatible with concave utilities, as implied by social preferences, but are compatible with reference dependent preferences.
    Keywords: demand commitment; ultimata bargaining; non-cooperative; laboratory experiment; social preferences; reference dependence
    JEL: C78 D72 C72 C91
    Date: 2011–09–22
  13. By: Andersson, Christer (Lund University); Andersson, Ola (Research Institute of Industrial Economics (IFN)); Andersson, Tommy (Lund University)
    Abstract: This paper considers the sealed bid and ascending auction, which both identifies the minimum Walrasian equilibrium prices and where truthful preference revelation constitutes an equilibrium. Even though these auction formats share many theortical properties, there are behavioral aspects that are not easily captured. To explore this issue in more detail, this paper experimentally investigates what role the design of the auction format has for its outcome. The results suggest that the sealed bid mechanism performs weakly better in all of investigated measures (consistent reporting, efficiency etc.). In addition, we find that the performance of the ascending auction is increasing over time, whereas the sealed bid auction shows no such tendency.
    Keywords: Auctions; Non-manipulability; Efficiency; Experiments
    JEL: C91 D44
    Date: 2011–09–19
  14. By: Pablo Brañas-Garza (Universidad de Granada, Spain); Teresa García-Muño (Universidad de Granada, Spain); Roberto Hernán (Economic Science Institute, Chapman University, USA)
    Abstract: This paper analyzes cognitive effort in 6 different one-shot p-beauty games. We use both Raven and Cognitive Reflection tests to identify subjects' abilities. We find that the Raven test does not provide any insight on beauty contest game playing but CRT does: subjects with higher scores on this test are more prone to play dominant strategies.
    Keywords: Beauty Contest Game, Raven, Cognitive Reflection Test
    Date: 2011
  15. By: Erik O. Kimbrough (Department of Economics (AE1), School of Business and Economics, Maastricht University, The Netherlands); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University, USA); Timothy Shields (Argyros School of Business and Economics, Chapman University, USA)
    Abstract: We examine conflict resolution via a random device. We model conflict as a two-agent rent-seeking contest for a fixed prize. Before conflict arises, both agents may agree to allocate the prize by coin flip to avoid the costs of conflict. In equilibrium, risk-neutral agents with relatively symmetric conflict capabilities agree to resolve the conflict by randomization. However, with sufficiently asymmetric capabilities, conflicts are unavoidable because the stronger agent prefers to fight. Laboratory experiments confirm that the availability of the random device partially eliminates conflicts when agents are relatively symmetric; however, the device also reduces conflict between substantially asymmetric agents.
    Keywords: Beauty contest, conflict resolution, experiments
    JEL: C72 C91 D72
    Date: 2011
  16. By: Eva-Maria Steiger (Max Planck Institute of Economics, Jena); Ro'i Zultan
    Abstract: Transparency in teams can induce cooperation. We study contribution decisions by agents when previous decisions can be observed. We find that an information chain, in which each agent directly observes only the decision of her immediate predecessor, is at least as effective as a fully-transparent protocol in inducing cooperation under increasing returns to scale. In a comparable social dilemma, the information chain leads to high cooperation both when compared to a non-transparent protocol for early movers, and when compared to a fully-transparent protocol for late movers. we conclude that information chains facilitate cooperation by balancing positive and negative reciprocity.
    Keywords: team production, public goods, incentives, externality, information, transparency, conditional cooperation
    JEL: C72 C92 D21 J31 M52
    Date: 2011–09–23
  17. By: Noemi Pace (Department of Economics, University Of Venice Cà Foscari); John D Hey (Department of Economics, University of York)
    Abstract: Representing ambiguity in the laboratory using a Bingo Blower (which is transparent and not manipulable) and asking the subjects a series of allocation questions (which are more efficient than pairwise choice questions), we obtain data from which we can estimate by maximum likelihood methods (with explicit assumptions about the errors made by the subjects) a significant subset of the empirically relevant models of behaviour under ambiguity, and compare their relative explanatory and predictive abilities. Our results suggest that not all recent models of behaviour represent a major improvement in explanatory and predictive power, particularly the more theoretically sophisticated ones.
    Keywords: Alpha Model, Ambiguity, Bingo Blower, Choquet Expected Utility, Contraction Model, Rank Dependent Expected Utility, Subjective Expected Utility,Vector Expected Utility.
    JEL: D81 C9
    Date: 2011
  18. By: Ho, Shu-Hsun; Putthiwanit, Chutinon; Lin, Chia-Yin
    Abstract: Two types of motivations exist in terms of regulatory focus: a promotion orientation concerned with advancement and achievement and a prevention orientation concerned with safety and security. The central premise of this research is that promotion-focused and prevention-focused players differ in their sensitivity to message frames and therefore respond with different levels of self-control. This study adopted a 2 (message frames: positive vs. negative) × 2 (regulatory focus: promotion vs. prevention) between-subjects design; the results confirmed the hypotheses that, for promotion-focused players, negative messages are significantly effective in preventing them from becoming addicted to the games; meanwhile, for prevention-focused players, positive messages significantly influenced players, leading them to become addicted. Hence, video games’ negative and addiction-related messages should be enhanced whereas positive messages should be cautiously released.
    Keywords: Regulatory focus; regulatory fit; message frames; self-control; video game
    JEL: M31
    Date: 2011–06–22

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