New Economics Papers
on Experimental Economics
Issue of 2011‒12‒19
eighteen papers chosen by

  1. Avoiding The Ask: A Field Experiment on Altruism, Empathy, and Charitable Giving By James Andreoni; Justin M. Rao; Hannah Trachtman
  2. Managing self-confidence: theory and experimental evidence By Markus Mobius; Muriel Niederle; Paul Niehaus; Tanya S. Rosenblat
  3. Truth, trust, and sanctions: On institutional selection in sender-receiver games By Ronald Peeters; Marc Vorsatz; Markus Walzl
  4. Economic literacy and inflation expectations: evidence from a laboratory experiment By Mary A. Burke; Michael Manz
  5. Gender Differences in Risk Aversion: Do Single-Sex Environments Affect their Development? By Alison Booth; Lina Cardona Sosa; Patrick Nolen
  6. Costless Discrimination and Unequal Achievements in a Labour Market Experiment By Filippin, Antonio; Guala, Francesco
  7. Are homosexuals discriminated against in the hiring process? By Ahmed, Ali; Andersson, Lina; Hammarstedt, Mats
  8. Comprehension and risk elicitation in the field: Evidence from rural Senegal By Charness, Gary; Viceisza, Angelino
  9. Psychophysical interpretation for utility measures By He, Yuqing
  10. Reference dependent ambiguity aversion: theory and experiment By Qiu, Jianying; Weitzel, Utz
  11. Which Way to Cooperate By Todd R. Kaplan; Bradley J. Ruffle Author-X-Name-Bradley J.
  12. See No Evil: Information Chains and Reciprocity in Teams By Roi Zultan; Eva-Maria Steiger
  13. Timing of Messages and the Aumann Conjecture: A multiple-Selves Approach By Roi Zultan
  14. Stochastic Dominance and Nonparametric Comparative Revealed Risk Aversion By Jan Heufer
  15. Performance of the ambient tax: does the nature of the damage matter? By Nasreddine AMMAR; Ahmed ENNASRI; Marc Willinger
  16. The Effects of Home Computers on Educational Outcomes. Evidence from a Field Experiment with Schoolchildren By Robert Fairlie; Jonathan Robinson

  1. By: James Andreoni; Justin M. Rao; Hannah Trachtman
    Abstract: What triggers giving? We explore this in a randomized natural field experiment during the Salvation Army's annual campaign. Solicitors were at one or both of two main entrances to a supermarket, making the solicitation either easy or difficult to avoid. Additionally, solicitors were either silent, or asked "please give" to passersby. We observed over 17,000 passings over four days, and found dramatic avoidance of the solicitors, but only during a direct ask. Furthermore, asking increased donations 75%. Across all conditions, seeking the solicitor was exceedingly rare. The results do not support static views of altruism, such as inequity aversion, and instead highlight the importance of social cues and psychological features of the giver-receiver interaction. We argue that avoidance could evidence a lack of altruism or self-control strategy to deal with empathic reflexes to give.
    JEL: D03 D64 H41
    Date: 2011–12
  2. By: Markus Mobius; Muriel Niederle; Paul Niehaus; Tanya S. Rosenblat
    Abstract: Evidence from social psychology suggests that agents process information about their own ability in a biased manner. This evidence has motivated exciting research in behavioral economics, but also garnered critics who point out that it is potentially consistent with standard Bayesian updating. We implement a direct experimental test. We study a large sample of 656 undergraduate students, tracking the evolution of their beliefs about their own relative performance on an IQ test as they receive noisy feedback from a known data-generating process. Our design lets us repeatedly measure the complete relevant belief distribution incentive-compatibly. We find that subjects (1) place approximately full weight on their priors, but (2) are asymmetric, over-weighting positive feedback relative to negative, and (3) conservative, updating too little in response to both positive and negative signals. These biases are substantially less pronounced in a placebo experiment where ego is not at stake. We also find that (4) a substantial portion of subjects are averse to receiving information about their ability, and that (5) less confident subjects are more likely to be averse. We unify these phenomena by showing that they all arise naturally in a simple model of optimally biased Bayesian information processing.
    Keywords: Human behavior ; Bayesian statistical decision theory
    Date: 2011
  3. By: Ronald Peeters; Marc Vorsatz; Markus Walzl
    Abstract: We conduct a laboratory experiment to investigate the impact of institutions and institutional choice on truth-telling and trust in sender-receiver games. We find that in an institution with sanctioning opportunities, receivers sanction predominantly after having trusted lies. Individuals who sanction are responsible for truth-telling beyond standard equilibrium predictions and are more likely to choose the sanctioning institution. Sanctioning and non-sanctioning institutions coexist if their choice is endogenous and the former shows a higher level of truth-telling but lower material payoffs. It is shown that our experimental findings are consistent with the equilibrium analysis of a logit agent quantal response equilibrium with two distinct groups of individuals: one consisting of subjects who perceive non-monetary lying costs as senders and non-monetary costs when being lied to as receivers and one consisting of payoff maximizers.
    Keywords: Experiment, Sender-receiver games, Strategic information transmission, Institutional selection
    JEL: C91 C92
    Date: 2011–12
  4. By: Mary A. Burke; Michael Manz
    Abstract: We present new experimental evidence on heterogeneity in the formation of inflation expectations and relate the variation to economic literacy and demographics. The experimental design allows us to investigate two channels through which expectations-formation may vary across individuals: (1) the choice of information and (2) the use of given information. Subjects who are more economically literate perform better along both dimensions—they choose more-relevant information and make better use of given information. Compared with survey data on inflation expectations, fewer demographic factors are associated with variation in inflation expectations, and economic literacy in most cases accounts for demographic variation in expectations.
    Keywords: Inflation (Finance) ; Financial literacy
    Date: 2011
  5. By: Alison Booth; Lina Cardona Sosa; Patrick Nolen
    Abstract: Single-sex classes within coeducational environments are likely to modify students' risk-taking attitudes in economically important ways. To test this, we designed a controlled experiment using first year college students who made choices over real-stakes lotteries at two distinct dates. Students were randomly assigned to classes of three types: all female, all male, and coeducational. They were not allowed to change group subsequently. We found that women are less likely to make risky choices than men at both dates. However, after eight weeks in a single-sex environment, women were significantly more likely to choose the lottery than their counterparts in coeducational groups. These results are robust to the inclusion of controls for IQ and for personality type, as well as to a number of sensitivity tests. Our findings suggest that observed gender differences in behaviour under uncertainty found in previous studies might partly reflect social learning rather than inherent gender traits.
    Keywords: gender, risk preferences, single-sex groups, cognitive ability
    JEL: C9 C91 C92 J16 D01 D80 J16 J24
    Date: 2011–12
  6. By: Filippin, Antonio (University of Milan); Guala, Francesco (University of Milan)
    Abstract: We investigate the emergence of discrimination in an experiment where individuals affiliated to different groups compete for a monetary prize, submitting independent bids to an auctioneer. The auctioneer receives perfect information about the bids (i.e. there is no statistical discrimination), and she has no monetary incentive to favour the members of her own group (the bidders are symmetric). We observe nonetheless some discrimination by auctioneers, who tend to assign the prize more frequently to a member of their own group when two or more players put forward the highest bid. Out-group bidders react to this bias and reduce significantly their bids, causing an average decay of their earnings throughout the game, with cumulative effects that generate strongly unequal outcomes. Because the initial bias is costless, such mechanism can survive even in competitive market, providing a rationale for a well-known puzzle in the literature, i.e. the long-run persistence of discrimination.
    Keywords: discrimination, tournament, groups, experiment
    JEL: J71 D44 C9
    Date: 2011–12
  7. By: Ahmed, Ali (Linnaeus University); Andersson, Lina (Linnaeus University); Hammarstedt, Mats (Linnaeus University)
    Abstract: This paper presents the first field experiment on sexual orientation discrimination in the hiring process in the Swedish labor market. Job applications were sent to about 4,000 employers in 10 different occupations in Sweden. Gender and sexual orientation were randomly assigned to applications. The results show that sexual orientation discrimi-nation exists in the Swedish labor market. The discrimination against gays and lesbian varies across different occupations and appears only in the private sector. The results also seem to suggest a new dimension of traditional gender roles; the gay applicant was discriminated against in typical male-dominated occupations whereas the lesbian applicant was discriminated against in typical female-dominated occupations. Thus, the results suggest that gays to some extent face the same obstacles on the labor market as heterosexual women.
    Keywords: Labor market discrimination; sexual orientation; field experiment
    JEL: C93 J15 J71
    Date: 2011–11–28
  8. By: Charness, Gary; Viceisza, Angelino
    Abstract: In the past decade, it has become increasingly common to use simple laboratory games and decision tasks as a device for measuring both the preferences and understanding of rural populations in the developing world. This is vitally important for policy implementation in a variety of areas. In this paper, we report the results observed using three distinct risk elicitation mechanisms, using samples drawn from the rural population in Senegal, West Africa. Whatever the intellectual merits of a particular elicitation strategy, there is little value in performing such tests if the respondents do not understand the questions involved. We test the understanding of and the level of meaningful responses to the typical Holt-Laury task, to a simple binary mechanism pioneered by Gneezy and Potters in 1997 and adapted by Charness and Gneezy in 2010, and to a nonincentivized willingness-to-risk scale à la Dohmen et al. We find a disturbingly low level of understanding with the Holt-Laury task and an unlikely-to-be-accurate pattern with the willingness-to-risk question. On the other hand, the simple binary mechanism produces results that closely match the patterns found in previous work, although the levels of risk-taking are lower than in previous studies. Our study is a cautionary note against utilizing either sophisticated risk-elicitation mechanisms at the possible cost of seriously diminished levels of comprehension or nonincentivized questions in the rural developing world.
    Keywords: comprehension, risk elicitation, laboratory experiments in the field, rural,
    Date: 2011
  9. By: He, Yuqing
    Abstract: The paper explores utility measures by combining experiments with mathematical derivations in psychophysics paradigm. The analysis on ultimatum game experiment reveals an evidence for utility threshold and thus supports Bernoulli's utility logarithmic law. Both experimental results and theoretical derivations show that the logarithmic law is suitable for the description of commodity choice and the power law for risk choice. The further mathematical demonstration indicates the logarithmic law for utility scaling to be a Klein-Rubin utility function, a utility function well defined in microeconomics. Based on this, the experimental utility measure is connected with the econometric model Linear Expenditure System, and presents an experimental procedure for testing the utility maximization hypothesis, which will remove a long unsettled perplexity in a fundamental stone of economics since Gossen proposed it in 1854. --
    Keywords: Psychophysics,ultimatum game,utility function,logarithmic law,power law
    JEL: A12 D01
    Date: 2011
  10. By: Qiu, Jianying; Weitzel, Utz
    Abstract: In standard models of ambiguity, the evaluation of an ambiguous asset, as of a risky asset, is considered as an independent process. In this process only information directly pertaining to the ambiguous asset is used. These models face significant challenges from the finding that ambiguity aversion is more pronounced when an ambiguous asset is evaluated alongside a risky asset than in isolation. To explain this phenomenon, we developed a theoretical model based on reference dependence in probabilities. According to this model, individuals (1) form subjective beliefs on the potential winning probability of the ambiguous asset; (2) use the winning probability of the (simultaneously presented) risky asset as a reference point to evaluate the potential winning probabilities of the ambiguous asset; (3) code potential winning probabilities of the ambiguous asset that are greater than the reference point as gains and those that are smaller than the reference point as losses; (4) weight losses in probability heavier than gains in probability. We tested the crucial assumption, reference dependence in probabilities, in an experiment and found supporting evidence.
    Keywords: Ambiguity Aversion, Reference Point, Comparison, Experiment
    JEL: G1 C9
    Date: 2011–11–01
  11. By: Todd R. Kaplan (Department of Economics, University of Haifa, Israel.); Bradley J. Ruffle Author-X-Name-Bradley J. (Department of Economics, Ben-Gurion University, Beer Sheva, Israel.)
    Abstract: We introduce a two-player, binary-choice game in which both players have a privately known incentive to enter, yet the combined surplus is highest if only one enters. Repetition of this game admits two distinct ways to cooperate: turn taking and cutoffs, which rely on the player’s private value to entry. A series of experiments highlights the role of private information in determining which mode players adopt. If an individual’s entry values vary little (e.g., mundane tasks), taking turns is likely; if these potential values are diverse (e.g., difficult tasks that differentiate individuals by skill or preferences), cutoff cooperation emerges.
    JEL: C90 Z13
    Date: 2011
  12. By: Roi Zultan (Department of Economics, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel); Eva-Maria Steiger
    Abstract: Transparency in teams can facilitate 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 in early movers when compared to a non-transparent protocol and in late movers when compared to a fully-transparent protocol. 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
  13. By: Roi Zultan (Department of Economics, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel)
    Abstract: The Aumann (1990) conjecture states that cheap-talk messages do not necessarily help to coordinate on efficient Nash equilibria. In an experimental test of Aumann’s conjecture, Charness (2000) found that cheap-talk messages facilitate coordination when they precede the action, but not when they follow the action. Standard game-theoretical modeling abstracts from this timing effect, and therefore cannot account for it. To allow for a formal analysis of the timing effect, I study the sequential equilibria of the signaling game in which the sender is modeled as comprising two selves: an acting self and a signaling self. I interpret Aumann’s argument in this context to imply that all of the equilibria in this game are ‘babbling’ equilibria, in which the message conveys no information and does not affect the behavior of the receiver. Using this framework, I show that a fully communicative equilibrium exists—only if the message precedes the action but not when the message follows the action. In the latter case, no information is transmitted in any equilibrium. This result provides a game-theoretical explanation for the puzzling experimental results obtained by Charness (2000). I discuss other explanations for this timing-of-message effect and their relationship to the current analysis.
    Keywords: pre-play communication, Nash equilibrium, coordination games, multiple selves
    JEL: A13 C72 C91 D82 D84
    Date: 2011
  14. By: Jan Heufer
    Abstract: It is shown how to test revealed preference data on choices under uncertainty for consistency with first and second order stochastic dominance (FSD or SSD). The axiom derived for SSD is a necessary and sufficient condition for risk aversion. If an investor is risk averse, stochastic dominance relations can be combined with revealed preference relations to recover a larger part of an investor‘s preference. Interpersonal comparison between investors can be based on intersections of revealed preferred and worse sets. Using a variant of Yaari‘s (1969) defi nition of “more risk averse than”, it is shown that it is sufficient to compare only the revealed preference relations of two investors. This makes the approach operational given a fi nite set of observations. The central rationalisability theorem provides strong support for this approach to comparative risk aversion. The entire analysis is kept completely nonparametric and can be used as an alternative or complement to parametric approaches and as a robustness check. The approach is illustrated with an application to experimental data of by Choi et al. (2007). Most subjects come close to SSD-rationality, and most subjects are comparable with each other. The distribution of risk attitudes in the population can be described by comparing subjects‘ choices with any given preference, which is also illustrated.
    Keywords: Comparative risk aversion; experimental economics; induced budget experiments; interpersonal comparison; nonparametric analysis; portfolio choice; revealed preference; risk preference
    JEL: C14 C91 D11 D12
    Date: 2011–11
  15. By: Nasreddine AMMAR; Ahmed ENNASRI; Marc Willinger
    Abstract: The ambient tax is often considered as an effcient instrument to achieve a …rst best outcome of ambient pollution when the regulator is less informed than the polluters. Since the ambient tax was never imple- mented in the …eld, empirical evidence is missing. Available experimental …ndings provide mixed evidence: effciency is higher under external dam- age, i.e. if ambient pollution affects non-polluters (Spraggon, 2002, 2003) than under internal damage, i.e. if ambient pollution a¤ects polluters themselves (Cochard et al., 2005). Since these two types of experiments relied on very different designs, it is worthwhile to compare them under a common experimental design. Our main …nding is that the ambient tax is equally effcient under external damage than under internal damage.
    Date: 2011–12
  16. By: Robert Fairlie (Department of Economics, University of California, Santa Cruz); Jonathan Robinson (Department of Economics, University of California, Santa Cruz)
    Abstract: Are home computers are an important input in the educational production function? To address this question, we conduct a field experiment involving the provision of free computers to schoolchildren for home use. Low-income children attending middle and high schools in 15 schools in California were randomly selected to receive free computers and followed over the school year. The results indicate that the experiment substantially increased computer ownership and total computer use among the schoolchildren with no substitution away from use at school or other locations outside the home. We find no evidence that the home computers improved educational outcomes for the treatment group. From detailed administrative data provided by the schools and a follow-up survey, we find no evidence of positive effects on a comprehensive set of outcomes such as grades, test scores, credits, attendance, school enrollment, computer skills, and college aspirations. The estimates also do not indicate that the effects of home computers on educational outcomes are instead negative. Our estimates are precise enough to rule out even modestly-sized positive or negative impacts. The lack of a positive net effect on educational outcomes may be due to displacement from non-educational uses such as for games, social networking, and entertainment. We find evidence that total hours of computer use for games and social networking increases substantially with having a home computer, and increases more than total hours of computer use for schoolwork.
    Keywords: Computers, education, technology, experiment
    JEL: I24
    Date: 2011–09
  17. By: Marcucci E. (DIPES, University of Roma Tre, Italy); Stathopoulos A. (DISES University of Trieste, Italy); Gatta V. (Sapienza, University of Rome, Italy); Valeri E. (DISES, University of Trieste, Italy)
    Abstract: City logistics policies require an understanding of several issues (e.g. freight distribution context, preferences and relationship among agents) seldom accounted for in current research. Policies run the risk of producing unsatisfactory results because behavioural and contextual aspects are not considered. The acquisition of relevant data is crucial to test hypothesis and forecast agents’ reactions to policy changes. Despite recent methodological advances in modelling interactive behaviour the development of apt survey instruments is still lacking to test innovative policies acceptability. This paper expands and innovate the methodological literature by describing a stated ranking experiment to study freight agent interactive behaviour and discusses the experimental design implemented to incorporate agent-specific priors when efficient design techniques are employed.
    Keywords: urban freight distribution, group decision making, agent-specific interaction, stated preference, stated ranking experiments
    Date: 2011
  18. By: Roi Zultan (Department of Economics, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel)
    Abstract: Pre-play face-to-face communication is known to facilitate cooperation. Various explanations exist for this effect, varying in their dependence on the strategic content of the communication. Previous studies have found similar communication effects regardless of whether strategic communication is available. These results were so far taken to support a social-preferences based explanation of the communication effects. The current experiment provides a replication and extension of previous results to show that different processes come into play, depending on the communication protocol. Specically, pre-play communication in an ultimatum game was either restricted to nongame- related content or unrestricted. The results show that strategic, but not social, communication affects responders' strategies. Thus, the existing results are cast in a new light. I conclude that pre-play communication effects may be mediated by qualitatively dierent processes, depending on the social context.
    JEL: C90 Z13
    Date: 2011

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