New Economics Papers
on Experimental Economics
Issue of 2011‒11‒28
eleven papers chosen by

  1. Rarer Actions: Giving and Taking in Third-Party Punishment Games By Simon Halliday
  2. Individual notions of distributive justice and relative economic status By Abigail Barr; Justine Burns; Luis Miller; Ingrid Shaw
  3. Work for Image and Work for Pay By Dessi, Roberta; Rustichini, Aldo
  4. A note on optimal incentives with state-dependent preferences By Sung-Ha Hwang; Samuel Bowles
  5. Smiling is a Costly Signal of Cooperation Opportunities: Experimental Evidence from a Trust Game By Centorrino, Samuele; Djemaï, Elodie; Hopfensitz, Astrid; Milinski, Manfred; Seabright, Paul
  6. Coordination under threshold uncertainty in a public goods game By Dannenberg, Astrid; Löschel, Andreas; Paolacci, Gabriele; Reif, Christiane; Tavoni, Alessandro
  7. Irrationality rings! - Experimental evidence on mobile tariff choices By Barth, Anne-Kathrin; Graf, Julia
  8. Time Horizon and Cooperation in Continuous Time By M. Bigoni; M. Casari; A. Skrzypacz; G. Spagnolo
  9. Pareto-optimality in linear public goods games By Hokamp, Sascha; Pickhardt, Michael
  10. Anonymous Job Applications of Fresh Ph.D. Economists By Krause, Annabelle; Rinne, Ulf; Zimmermann, Klaus F.
  11. Signaling in deterministic and stochastic settings By Jeitschko, Thomas D.; Normann, Hans-Theo

  1. By: Simon Halliday (SALDRU, School of Economics, University of Cape Town)
    Abstract: In attempting to understand cooperation, economists have used the methods of experimental economics to focus on spheres of human behavior in which humans display altruism, reciprocity, or other social preferences through giving and through punishment. Recent work has begun to examine whether allowing allocations in the negative domain, that is, allowing subjects to take (or steal) other subjects' endowments, might affect participants' behavior. If participants' behavior is a affected, then our understanding of experimental results generally, and social preferences specifically, should be affected too (List 2007, Bardsley 2008). In this paper we propose an experimental variation on the Dictator Game with third-party punishment (Fehr & Fischbacher 2004b). We examine, first, a basic Dictator Game with third-party punishment, after which we introduce a treatment allowing the dictator to take from the receiver, in the knowledge that the third party could punish them. The results conict. Many dictators choose the most self-interested option, while, when taking is introduced as an option for the dictator, third parties punish the most self-interested option more than in the baseline.
    Keywords: Experimental Economics, Social Norms, Punishment, Strong Reciprocity, Social Preferences, Third Party.
    JEL: C91 D63
    Date: 2011–06
  2. By: Abigail Barr (University of Nottingham); Justine Burns (SALDRU, School of Economics, University of Cape Town); Luis Miller (University of the Basque Country); Ingrid Shaw
    Abstract: We present two experiments designed to investigate whether individuals’ notions of distributive justice are associated with their relative (within-society) economic status. Each participant played a specially designed four-person dictator game under one of two treatments, under one initial endowments were earned, under the other they were randomly assigned. The first experiment was conducted in Oxford, United Kingdom, the second in Cape Town, South Africa. In both locations we found that relatively well-off individuals make allocations to others that reflect those others’ initial endowments more when those endowments were earned rather than random; among relatively poor individuals this was not the case.
    Keywords: Distributive Justice, Inequality, Laboratory Experiments.
    JEL: D63 C91 C93
    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 payment. 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 offer the best overall explanation for our results. We also find that high-powered monetary incentives do not "crowd out" intrinsic motivation, but may elicit "too much" effort when intrinsic motivation is very high.
    Date: 2011–09–10
  4. By: Sung-Ha Hwang (Department of Economics, Sogang University, Seoul); Samuel Bowles (Santa Fe Institute, U.S.A. and Dipartimento di Economia Politica, Univerity of Siena, Italy)
    Abstract: In both experimental and natural settings incentives sometimes under-perform, generating smaller eects on the targeted behaviors than would be predicted for entirely self-regarding agents. A parsimonious explanation is that incentives that appeal to payo maximizing mo- tives may crowd out non-economic motives such as altruism, reciprocity, intrinsic motivation and other social preferences, leading to disappointing and sometimes even counter-productive incentive eects. Evidence from behavioral experiments indicates that crowding may take two forms: categorical (the eect on preferences depends only on the presence or absence of the incentive) or marginal (the eect depends on the extent of the incentive). We extend an earlier contribution to this journal (Bowles and Hwang, 2008) providing a more general framework for the study of optimal incentives when crowding out results from framing and information eects including (with evidence for ) categorical crowding, and as a result, an expanded range of situations for which the sophisticated planner will make greater use of incentives when incentives crowd out social preferences than when motivational crowding is absent.
    Keywords: Social preferences, public goods, motivational crowding out, explicit incentives, framing, endogenuous preferences
    JEL: D64 H41 D78
    Date: 2011
  5. By: Centorrino, Samuele; Djemaï, Elodie; Hopfensitz, Astrid; Milinski, Manfred; Seabright, Paul
    Abstract: We test the hypothesis that "genuine" or "convincing" smiling is a costly signal that has evolved to induce cooperation in situations requiring mutual trust. Potential trustees in a trust game made video clips for viewing by potential trusters before the latter decided whether to send them money. Ratings of the genuineness of smiles vary across clips; it is difficult to make convincing smiles to order. We argue that smiling convincingly is costly, because smiles from trustees playing for higher stakes are rated as significantly more convincing, so that rewards appear to induce effort. We show that it induces cooperation: smiles rated as more convincing strongly predict judgments about the trustworthiness of trustees, and willingness to send them money. Finally, we show that it is a honest signal: those smiling convincingly return more money on average to senders. Convincing smiles are to some extent a signal of the intrinsic character of trustees: less honest individuals find smiling convincingly more difficult. They are also informative about the greater amounts that trustees playing for higher stakes have available to share: it is harder to smile convincingly if you have less to offer.
    Date: 2011–04
  6. By: Dannenberg, Astrid; Löschel, Andreas; Paolacci, Gabriele; Reif, Christiane; Tavoni, Alessandro
    Abstract: We explored experimentally how threshold uncertainty affects coordination success in a threshold public goods game. Whereas all groups succeeded in providing the public good when the exact value of the threshold was known, uncertainty was generally detrimental for the public good provision. The negative effect of threshold uncertainty was particularly severe when it took the form of ambiguity, i.e. when players were not only unaware of the value of the threshold but also of its probability distribution. Early signaling of willingness to contribute and share the burden equitably helped groups in coping with threshold uncertainty. --
    Keywords: Public good,threshold uncertainty,ambiguity,experiment
    JEL: C72 C92 H41 Q54
    Date: 2011
  7. By: Barth, Anne-Kathrin; Graf, Julia
    Abstract: This paper investigates why consumers choose calling plans that are not always cost-minimizing. Our approach is twofold: we account for general difficulties facing a tariff choice, as well as for biased preferences. We provide evidence from an experiment among German university students and staff, finding that participants are often not aware of their actual consumption. In line with the findings on at-rate biases, respondents systematically overestimate their consumption. On the other hand, they are generally able and willing to detect optimal tariffs. Furthermore, with increasing usage level, consumers' performance improves. However, some participants hold strong preferences for certain tariff forms, seducing them to choose cost-dominated offers. In our setup, we find that respondents prefer tariffs involving subsidies or hire-purchase options for handsets over contracts with buy now options. --
    Keywords: Behavioral Economics,Mobile phone tariffs,Handset subsidy,Hire-purchase of device
    Date: 2011
  8. By: M. Bigoni; M. Casari; A. Skrzypacz; G. Spagnolo
    Abstract: When subjects interact in continuous time, their ability to cooperate may dramatically increase. In an experiment, we study the impact of different time horizons on cooperation in (quasi) continuous time prisoner's dilemmas. We find that cooperation levels are similar or higher when the horizon is deterministic rather than stochastic. Moreover, a deterministic duration generates different aggregate patterns and individual strategies than a stochastic one. For instance, under a deterministic horizon subjects show high initial cooperation and a strong end-of-period reversal to defection. Moreover, they do not learn to apply backward induction but to postpone defection closer to the end.
    JEL: C72 C73 C91 C92 D74
    Date: 2011–11
  9. By: Hokamp, Sascha; Pickhardt, Michael
    Abstract: We derive a generalized method for calculating the total number of Paretooptimal allocations (NOPA) in typical linear public goods games. Among other things, the method allows researchers to develop new experimental designs for testing the relevance of Pareto-optimality in experimental settings, for investigating alternative causes of the decline of voluntary contributions, or for analyzing the contribution behavior of the rich and poor in heterogeneous income settings. Further findings include that the NOPA is related to the marginal per capita return (MPCR) of a contribution to the public good and that the maximum number of free-riders tolerated by the Paretooptimality concept is independent from the group size and income distribution. Finally, we apply our findings to a number of published linear public goods games, suggest an agenda for future research and provide a MATLAB code. --
    Keywords: linear public goods games,Pareto-optimality,public goods experiments,behavioral economics,free-rider,heterogeneous incomes,heterogeneous MPCRs
    JEL: C70 C90 H41
    Date: 2011
  10. By: Krause, Annabelle (IZA); Rinne, Ulf (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: Discrimination in recruitment decisions is well documented. Anonymous job applications may reduce discriminatory behavior in hiring. This paper analyzes the potential of this approach in a randomized experiment with fresh Ph.D. economists on the academic job market using data from a European-based economic research institution. If included in the treatment group, characteristics such as name, gender, age, contact details and nationality were removed. Results show that anonymous job applications are in general not associated with a higher or lower probability to receive an invitation for a job interview. However, we find that while female applicants have a higher probability to receive an interview invitation than male applicants with standard applications, this difference disappears with anonymous job applications. We furthermore present evidence that certain professional signals are weighted differently with and without anonymization.
    Keywords: Ph.D. economists, annual job market, discrimination, anonymous job applications, randomized experiment
    JEL: J44 J79 J20
    Date: 2011–11
  11. By: Jeitschko, Thomas D.; Normann, Hans-Theo
    Abstract: We contrast a standard deterministic signaling game with one where the signal-generating mechanism is stochastic. With stochastic signals a unique equilibrium emerges that involves separation and has intuitive comparative-static properties as the degree of signaling depends on the prior type distribution. With deterministic signals both pooling and separating configurations occur. Laboratory data support the theory: In the stochastic variant, there is more signaling behavior than with deterministic signals, and less frequent types distort their signals relatively more. Moreover, the degree of congruence between equilibrium and subject behavior is greater in stochastic settings compared to deterministic treatments. --
    Keywords: experiments,learning,noise,signaling,stochastic environments
    JEL: C7 C9 D8
    Date: 2011

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