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on Experimental Economics |
| By: | Tan, Fangfang; Xiao, Erte |
| Abstract: | This paper investigates how punishment promotes cooperation when the punishment enforcer is a third party independent of the implicated parties who propose the punishment. In a prisoner's dilemma experiment, we find an independent third party vetoes not only punishment to the cooperators but punishment to the defectors as well. Compared with the case when the implicated parties are allowed to punish each other, both the cooperation rate and the earnings are lower when the enforcement of punishment requires approval from an independent third party. |
| Keywords: | Social dilemmas; third party; punishment; cooperation; experiment |
| JEL: | D63 C92 C72 |
| Date: | 2011–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:35473&r=exp |
| By: | Serra Garcia, M.; Damme, E.E.C. van; Potters, J.J.M. (Tilburg University, Center for Economic Research) |
| Abstract: | We compare communication about private information to communication about actions in a one- shot 2-person public good game with private information. The informed player, who knows the exact return from contributing and whose contribution is unobserved, can send a message about the return or her contribution. Theoretically, messages can elicit the uninformed player's contribution, and allow the informed player to free-ride. The exact language used is not expected to matter. Experimentally, however, we find that free-riding depends on the language: the informed player free-rides less, and thereby lies less frequently, when she talks about her contribution than when she talks about the return. Further experimental evidence indicates that it is the promise component in messages about the contribution that leads to less free-riding and less lying. |
| Keywords: | Information transmission;lying;communication;experiment. |
| JEL: | C72 D82 D83 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011139&r=exp |
| By: | He, Haoran (School of Economics and Business Administration, Beijing Normal University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Sutter, Matthias (Dept of Public Finance, University of Innsbruck) |
| Abstract: | In an experiment, we study risk-taking of cohabitating student couples, finding that couples’ decisions are closer to risk-neutrality than single partners’ decisions. This finding is similar to earlier experiments with randomly assigned groups, corroborating external validity of earlier results. |
| Keywords: | risk experiment; student couples; group decision making |
| JEL: | C91 C92 |
| Date: | 2011–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0519&r=exp |
| By: | Cabrales, Antonio; Charness, Gary |
| Abstract: | We devise an experiment to explore optimal contracts in a hidden-information context. A principal offers one of three possible contract menus to a team of two agents of unknown skill levels, with both agents’ participation needed for production. We observe numerous rejections of the more lopsided menus, and principals respond by offering more favorable menus. Apart from rejections,wesee almost complete separation in agent choices according to the agent types. Behavior converges towards a consensus in which one of the more equitable menus is proposed and agents accept a contract. The consensus menu differs across two treatments in which we vary the payoffs resulting from a rejection. We find strong evidence of social learning by low-skill agents (but only for low-skilled agents), in that a low-skill agent is more likely to reject a contract menu if her teammate rejected a contract menu in the previous period. In addition, low-skilled agents have a particularly adverse reaction to reduced wage offers. |
| Keywords: | Experiment; Hidden information; Optimal contract; Production team; Wage rigidity; |
| JEL: | A13 B49 C91 C92 D21 J41 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ner:carlos:info:hdl:10016/12809&r=exp |
| By: | Alan S. Gerber; Gregory A. Huber; David Doherty; Conor M. Dowling; Seth J. Hill |
| Abstract: | Although the secret ballot has long been secured as a legal matter in the United States, formal secrecy protections are not equivalent to convincing citizens that they may vote privately and without fear of reprisal. We present survey evidence that those who have not previously voted are particularly likely to voice doubts about the secrecy of the voting process. We then report results from a field experiment where we provided registered voters with information about ballot secrecy protections prior to the 2010 general election. We find that these letters increased turnout for registered citizens without records of previous turnout, but did not appear to influence the behavior of citizens who had previously voted. These results suggest that although the secret ballot is a long-standing institution in the United States, providing basic information about ballot secrecy can affect the decision to participate to an important degree. |
| JEL: | H0 H1 Z0 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17673&r=exp |
| By: | Berninghaus, Siegfried K.; Todorova, Lora; Vogt, Bodo |
| Abstract: | This paper presents results from an experiment designed to study the effect of self reporting risk preferences on strategy choices made in a subsequently played 2x2 coordination game. The main finding is that the act of answering a questionnaire about one's own risk preferences significantly alters strategic behavior. Within a best response correspondence framework, this result can be explained by a change in either risk preferences or beliefs. We find that self reporting risk preferences induces an increase in subjects' risk aversion while keeping their beliefs unchanged. Our findings raise some questions about the stability of strategy choices in coordination games. -- |
| Keywords: | coordination game,questionnaire,risk preferences,beliefs,best response correspondence |
| JEL: | D81 C91 C72 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitwps:37&r=exp |
| By: | Urs Fischbacher (Department of Economics, University of Konstanz, Konstanz, Germany; Thurgau Institute of Economics, Kreuzlingen, Switzerland); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); M. Vittoria Levati (Max Planck Institute of Economics, Strategic Interaction Group; Department of Economics, University of Verona) |
| Abstract: | Participants in a public goods experiment receive private or common signals regarding the so-called "point of no return", meaning that if the group's total contribution falls below this point, all payoffs are reduced. An individual faces the usual conflict between private and collective interests above the point of no return, while he incurs the risk of damaging everyone by not surpassing the point. Our data reveal that contributions are higher if the cost of not reaching the threshold is high. In particular if the signal is private, many subjects are not willing to provide the necessary contribution. |
| Keywords: | Public goods, provision point mechanism, experiments, reduction factor, signal |
| JEL: | H41 C92 C72 |
| Date: | 2011–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2011-059&r=exp |
| By: | Katerina Sherstyuk (Department of Economics, University of Hawaii at Manoa); Nori Tarui (Department of Economics, University of Hawaii at Manoa); Tatsuyoshi Saijo (Department of Economics, Osaka University) |
| Abstract: | We consider payment schemes in experiments that model innite-horizon games by using random termination. We compare paying subjects cumulatively for all periods of the game; with paying subjects for the last period only; with paying for one of the periods, chosen randomly. Theoretically, assuming expected utility maximization and risk neutrality, both the Cumulative and the Last period payment schemes induce preferences that are equivalent to maximizing the discounted sum of utilities. The Last-period payment is also robust under dierent attitudes towards risk. In comparison, paying subjects for one of the periods chosen randomly creates a present period bias. We further provide experimental evidence from innitely repeated Prisoners' Dilemma games that supports the above theoretical predictions. |
| Keywords: | economic experiments, infinite-horizon games, random termination |
| JEL: | C90 C73 |
| Date: | 2011–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201118&r=exp |
| By: | Nicola Lacetera (University of Toronto at Mississauga - Department of Management); Mario Macis (Johns Hopkins University); Robert Slonim (University of Sydney) |
| Abstract: | We present evidence from a natural field experiment involving nearly 100,000 individuals on the effects of offering economic incentives for blood donations. Subjects who were offered economic rewards to donate blood were more likely to donate, and more so the higher the value of the rewards. They were also more likely to attract others to donate, spatially alter the location of their donations towards the drives offering rewards, and modify their temporal donation schedule leading to a short-term reduction in donations immediately after the reward offer was removed. Although offering economic incentives, combining all of these effects, positively and significantly increased donations, ignoring individuals who took additional actions beyond donating to get others to donate would have led to an under-estimate of the total effect, whereas ignoring the spatial effect would have led to an over-estimate of the total effect. We also find that individuals who received a reward by surprise were less likely to donate after the intervention than subjects who received no reward, suggesting that for some individuals a surprise reward adversely affected their intrinsic motivations. We discuss the implications of these findings for understanding pro-social behavior. |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2011-010&r=exp |
| By: | Luigi Luini; Annmaria Nese; Patrizia Sbriglia |
| Abstract: | Economists have often analysed the impact that the spread of beliefs and behaviors have on the equilibrium and performance of markets. Recent experimental studies on peer pressure in groups of agents interacting in investment and gift exchange games (Mittone and Ploner, 2011, Gachter et al. 2010) have proved that the imitation of partners’ behaviors can have substantial effects on reciprocity, thus confirming that the effects of information also need to be studied in games where social preferences play a fundamental role. The aim of this paper is to ascertain whether trust is affected by contagion and herding in small groups of trustors who can observe each other’s choices over time. We account for three important factors of trustors’ preferences,namely: risk attitude, generosity and expected trustworthiness. Using our data we test the basic hypothesis that an individual's propensity to trust recipients in the Trust Game can be affected by the observed behavior of other trustors. Our results confirm that trust is affected by contagion effects. Furthermore, we find that specific types of agents (generous or untrusting) more often imitate the same type, when positioned in the same group. Finally, we find that untrusting individuals are less affected by their peers compared to generous individuals, and they imitate less even when positioned in groups of agents who have the same characteristics. |
| Keywords: | trust game, experiments, social influence, imitation |
| JEL: | C72 C91 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:626&r=exp |
| By: | Albrecht, Konstanze (University of Bonn); Von Essen, Emma (Stockholm University); Parys, Juliane (University of Bonn); Szech, Nora (University of Bonn) |
| Abstract: | In a laboratory experiment, we show that subjects incorporate irrelevant group information into their evaluations of individuals. Individuals from on average worse performing groups receive lower evaluations, even if they are known to perform equally well as individuals from better performing groups. Our experiment leaves room neither for statistical nor taste-based discrimination. The discrimination we find is rather due to conservatism in updating beliefs. This conservatism is more pronounced in females. Furthermore, self-confident male evaluators overvalue male performers. Additionally, we use our data to simulate a job promotion ladder: Few rounds of moderate discrimination virtually eliminate females in higher positions. |
| Keywords: | updating, conservatism, gender, discrimination, self-confidence |
| JEL: | J16 C91 D81 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6203&r=exp |
| By: | Bigoni, Maria (University of Bologna); Casari, Marco (University of Bologna); Skrzypacz, Andrzej (Stanford University); Spagnolo, Giancarlo (University of Rome "Tor Vergata" and Stockholm School of Economics) |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:2088&r=exp |
| By: | Olivier Chanel (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Graciela Chichilnisky (Department of Statistics - Columbia University) |
| Abstract: | Global environmental phenomena like climate change, major extinction events or flutype pandemics can have catastrophic consequences. By properly assessing the outcomes involved - especially those concerning human life - economic theory of choice under uncertainty is expected to help people take the best decision. However, the widely used expected utility theory values life in terms of the low probability of death someone would be willing to accept in order to receive extra payment. Common sense and experimental evidence refute this way of valuing life, and here we provide experimental evidence of people's unwillingness to accept a low probability of death, contrary to expected utility predictions. This work uses new axioms of choice, especially an axiom that allows extreme responses to extreme events, and the choice criterion that they imply. The implied decision criteria are a combination of expected utility with extreme responses, and seem more consistent with observations. |
| Keywords: | Decision under risk; Value of Prevented Fatality; Expected Utility; Experiment; Catastrophic risk |
| Date: | 2011–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00651163&r=exp |
| By: | Orazio Attanasio (Institute for Fiscal Studies and University College London); Britta Augsburg (Institute for Fiscal Studies); Ralph de Haas; Emla Fitzsimons (Institute for Fiscal Studies); Heike Harmgart (Institute for Fiscal Studies) |
| Abstract: | <p>Although microfinance institutions across the world are moving from group lending towards individual lending, this strategic shift is not substantiated by sufficient empirical evidence on the impact of both types of lending on borrowers. We present such evidence from a randomised field experiment in rural Mongolia. We find a positive impact of access to group loans on food consumption and entrepreneurship. Among households that were offered group loans the likelihood of owning an enterprise increases by ten per cent more than in control villages. Enterprise profits increase over time as well, particularly for the less-educated. For individual lending on the other hand, we detect no significant increase in consumption or enterprise ownership. These results are in line with theories that stress the disciplining effect of group lending: joint liability may deter borrowers from using loans for non-investment purposes. Our results on informal transfers are consistent with this hypothesis. Borrowers in group-lending villages are less likely to make informal transfers to families and friends while borrowers in individual-lending villages are more likely to do so. We find no significant difference in repayment rates between the two lending programs, neither of which entailed weekly repayment meetings.</p> |
| Keywords: | Microcredit; group lending; poverty; access to finance; randomised field experiment |
| JEL: | G21 D21 I32 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:11/20&r=exp |
| By: | Muller, L.; Ruffieux, B. |
| Abstract: | In a laboratory experiment, we study consumer responses to 7 Nutrition ‘Front of Pack’ Logos. In addition to the Guideline Daily Amounts (GDA) logo, the six other logos vary according to three criteria: (i) Granularity (What object do we rate? Product vs. Nutrient), (ii) Reference Set (How do we distinguish between products? All Products vs. Product Family), and (iii) Policy Range (Do we include bad ratings? Green vs. Green and Red). 364 subjects, all parents accustomed to shopping, were asked to fill their shopping cart for their family for the next couple of days in an e-shopping environment. To do so, they could choose among 273 products grouped into 35 product families. They were then given the opportunity to revise their shopping cart after one of the seven logos had been exhaustively applied to all 273 products. The nutritional quality of a cart was assessed according to its salt, free sugar and saturated fatty acids content. We found that all of the seven logos significantly improved the nutritional quality of the shopping carts. On average, rating the product rather than the nutrient was more efficient. Informing on both healthy and unhealthy products was also more efficient on average but had significant toxic effects. The GDA logo lies at the median of our logo chart list. Unlike free sugar and saturated fatty acids, salt appears to be a particular case, as our logos proved to be insufficient for reducing its consumption. |
| Keywords: | FOOD RATING SYSTEMS;LABEL;NUTRITION POLICY;CONSUMER BEHAVIOR;FRANCE |
| JEL: | C93 D12 I18 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:gbl:wpaper:201105&r=exp |
| By: | Jeroen Hinloopen; Wieland Müller; Hans-Theo Normann |
| Abstract: | We analyze the impact of product bundling in experimental markets. A firm has monopoly power in one market but faces competition by a second firm in another market. We compare treatments where the monopolist can bundle its two products to treatments where it cannot, and we contrast simultaneous and sequential order of moves. Our data indicate support for the theory of product bundling, even though substantial payoff differences between players exist. With bundling and simultaneous moves, the monopolist offers the predicted number of units. When the monopolist is the Stackelberg leader, the predicted equilibrium is better attained with bundling although in theory bundling should not make a difference here. In sum: bundling works as a commitment device that enables the transfer of market power from one market to another. |
| JEL: | C92 D43 L11 L12 L41 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:1112&r=exp |
| By: | Philipp Poppitz (University of Hamburg) |
| Abstract: | In the aftermath of the financial crisis, attention concerning inequality as a risk factor has risen. Nevertheless studies, focusing on the implications of inequality as a collective risk, remain seldom. Therefore the following paper will discuss why inequality is indeed a collective risk, leading to a social dilemma as known from game theory. The first section examines the collective risks that emerge of disproportionate income distribution and social immobility - as two dimensions of inequality. The second section investigates how these inequalities and their resulting collective risks can remain persistent. Climate change as a risk factor, shares several features with the dynamics of inequality. This will be demonstrated, by applying the results of an experimental study on climate change on the afore mentioned discussion and analysing the implications of additional aspects as unequal initial endowments and strong reciprocity. The paper concludes that the contribution of individuals to lower inequality is highly dependent on the expected probability of risk. If the risk probability is not close to one, contributions are low and cannot reduce inequality substantially while risks remain persistent. |
| Keywords: | Inequality, Social Mobility, Collective Risk, Snow Drift Game. |
| JEL: | C71 D81 H41 Z13 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:hep:macppr:201106&r=exp |
| By: | Godager, Geir (Department of Health Management and Health Economics); Wiesen, Daniel (BonnEconLab, Laboratory for Experimental Economics, University of Bonn and Chair of Quantitative) |
| Abstract: | This paper investigates physician altruism toward patients’ health benefit using behavioral data from the fully incentivized laboratory experiment of Hennig-Schmidt et al. (2011). This setup identifies both physicians’ profits and patients’ health benefit resulting from medical treatment decisions. <p> <p> We estimate a random utility model applying multinomial logit regression, finding that physicians attach a positive weight on patients’ health benefit. Furthermore, physicians vary substantially in their degree of altruism. Finally, we provide some implications for the design of physician payment schemes. <p> <p> |
| Keywords: | Payment incentives; Physician altruism; Health Care Quantity |
| JEL: | C91 I11 |
| Date: | 2011–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oslohe:2011_007&r=exp |
| By: | Darmon, N.; Lacroix, A.; Muller, L.; Ruffieux, B. |
| Abstract: | The aime of this paper is to compare the impact of food price policies on the nutritional quality of food baskets chosen by low-income and medium-income women. Experimental economics was used to simulate a fruit and vegetable price subsidy (FV policy) and a mixed policy subsidizing healthy products and taxing unhealthy ones(NP policy)Low-income (n=95) and medium–income (n=33) women selected a daily food basket at current prices and then at policy prices. Energy density (ED) and the mean adequacy ratio (MAR) were used as nutritional quality indicators. At baseline, low-income women selected less healthy baskets than medium–income ones (less fruit and vegetables, more unhealthy products,higher ED, lower MAR). Both policies improved nutritional quality (fruit and vegetable quantities increased, ED decreased,the MAR increased), but the magnitude of the improvement was often lower among low income women. For instance, their ED decreased by 5.3% with the FV policy and by 7.3% with the NP policy, whereas decreases of 13.2% and 12.6% respectively were recorded for the medium–income group. |
| Keywords: | FOOD PRICE;NUTRITION POLICY;PUBLIC POLICY;NUTRITION;NUTRITIONAL QUALITY;CONSUMER BEHAVIOR; SOCIOECONOMIC INEQUALITY |
| JEL: | C93 D12 I18 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:gbl:wpaper:201104&r=exp |
| By: | Jose Luis Pinto Prades (Department of Economics, Universidad Pablo de Olavide); José M. Abellán-Perpiñán (Department of Applied Economics, Universidad de Murcia); Ildefonso Méndez-Martínez (Department of Applied Economics, Universidad de Murcia); Silvia Díaz-Cerezo (Pfizer, S.L.U.); Verónica Sanz de Burgoa (Pfizer, S.L.U.) |
| Abstract: | Smoking is one of the main preventable causes of death in the world. There are several first-line pharmacological treatments available for smoking cessation. However, they are not very popular amongst smokers. There is evidence that smokers may not value these therapies in accordance with the scientific evidence. This paper provides evidence about the impact of subjective perceptions on the decision to use pharmacological treatments for smoking cessation and on the value that people place on these treatments. We conducted telephone interviews with 2011 members of the Spanish population (785 smokers, 590 ex-smokers and 636 never-smokers). We found that a large proportion of subjects (70% smokers, 67% ex-smokers and 59% never-smokers) did not show a positive willingness to pay for these therapies. The basic reason for refusing to pay anything at all was that they did not believe the therapies were effective. Mean willingness to pay (for those with a positive willingness to pay) was very similar for the three groups (€223/month for smokers, €225/month for ex-smokers and €213/month for never-smokers). We discuss whether social policy can be based on distorted preferences. We argue that Libertarian Paternalism can be used to guide social policy in the area of tobacco addiction. |
| Keywords: | willingness to pay, smoking cessation therapies, biases, libertarian paternalism |
| JEL: | D12 D78 I18 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:11.13&r=exp |