nep-exp New Economics Papers
on Experimental Economics
Issue of 2012‒02‒08
six papers chosen by
Daniel Houser
George Mason University

  1. Learning, Teaching, and Turn Taking in the Repeated Assignment Game By Timothy N. Cason; Sau-Him Paul Lau; Vai-Lam Mui
  2. Legislative bargaining and the dynamics of public investment By Battaglini, Marco; Nunnari, Salvatore; Palfrey, Thomas
  3. The Provision of Relative Performance Feedback Information: An Experimental Analysis of Performance and Happiness By Ghazala Azmat; Nagore Iriberri
  4. Team Incentives: Evidence from a Firm Level Experiment By Bandiera, Oriana; Barankay, Iwan; Rasul, Imran
  5. Peer Effects and Social Preferences in Voluntary Cooperation By Thöni, Christian; Gächter, Simon
  6. Coping with Conflict:A Dynamic Decision Making Perspective By Kuperman, Ranan

  1. By: Timothy N. Cason; Sau-Him Paul Lau; Vai-Lam Mui
    Abstract: History-dependent strategies are often used to support cooperation in repeated game models. Using the indefinitely repeated common-pool resource assignment game and a perfect stranger experimental design, this paper reports novel evidence that players who have successfully used an efficiency-enhancing turn-taking strategy will teach other players in subsequent supergames to adopt this strategy. We find that subjects engage in turn taking frequently in both the Low Conflict and the High Conflict treatments. Prior experience with turn taking significantly increases turn taking in both treatments. Moreover, successful turn taking often involves fast learning, and individuals with turn taking experience are more likely to be teachers than inexperienced individuals. The comparative statics results show that teaching in such an environment also responds to incentives, since teaching is empirically more frequent in the Low Conflict treatment with higher benefits and lower costs.
    Keywords: Learning, Teaching, Assignment Game, Laboratory Experiment, Repeated Games, Turn Taking, Common-Pool Resources
    JEL: C73 C91
    Date: 2011–12
    URL: http://d.repec.org/n?u=RePEc:pur:prukra:1267&r=exp
  2. By: Battaglini, Marco; Nunnari, Salvatore; Palfrey, Thomas
    Abstract: We present a legislative bargaining model of the provision of a durable public good over an infinite horizion. In each period, there is a societal endowment which can either be invested in the public good or consumed. We characterize the optimal public policy, defined by the time path of investment and consumption. In each period, a legislature with presentatives of each of n districts bargain over the current period's endowment for investment in the public good and transfers to each district. We analyze the Markov perfect equilibrium under different voting q-rules where q is the number of yes votes required for passage. We show that the efficiency of the public policy is increasing in q because higher q leads to higher investment in the public good and less pork. We examine the theoretical equilibrium predictions by conducting a laboratory experiment with fiveperson committees that compares three alternative voting rules: unanimity (q=5); majority (q=3); and dictatorship (q=1). --
    Keywords: dynamic political economy,voting,public goods,bargaining,experiments
    JEL: D71 D72 C78 C92 H41 H54
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2011205&r=exp
  3. By: Ghazala Azmat; Nagore Iriberri
    Abstract: This paper studies the effect of providing relative performance feedback information on individuals' performance and affective response, under both piece-rate and flat-rate incentives. In a laboratory setup, agents perform a real effort task and when receiving feedback, they are asked to rate their happiness, arousal and feeling of dominance. Control subjects learn only their absolute performance, while the treated subjects additionally learn the average performance in the session. Under piece-rate, performance is 17 percent higher when relative performance feedback is provided. Furthermore, although feedback increases the performance independent of the content (i.e., performing above or below the average), the content is determinant for the affective response. When subjects are treated, the inequality in the happiness and the feeling of dominance between those subjects performing above and below the average increases by 8 and 6 percentage points, respectively. Under flat-rate, we do not find any effect on either of the outcome variables.
    Keywords: Relative performance, feedback, piece-rate, flat-rate, happiness
    JEL: C91 M52 D03
    Date: 2012–01
    URL: http://d.repec.org/n?u=RePEc:cep:cepdps:dp1116&r=exp
  4. By: Bandiera, Oriana (London School of Economics); Barankay, Iwan (University of Pennsylvania); Rasul, Imran (University College London)
    Abstract: Many organizations rely on teamwork, and yet field evidence on the impacts of team-based incentives remains scarce. Compared to individual incentives, team incentives can affect productivity by changing both workers' effort and team composition. We present evidence from a field experiment designed to evaluate the impact of rank incentives and tournaments on the productivity and composition of teams. Strengthening incentives, either through rankings or tournaments, makes workers more likely to form teams with others of similar ability instead of with their friends. Introducing rank incentives however reduces average productivity by 14%, whereas introducing a tournament increases it by 24%. Both effects are heterogeneous: rank incentives only reduce the productivity of teams at the bottom of the productivity distribution, and monetary prize tournaments only increase the productivity of teams at the top. We interpret these results through a theoretical framework that makes precise when the provision of team-based incentives crowds out the productivity enhancing effect of social connections under team production.
    Keywords: rank incentives, team-based incentives, teams, tournaments
    JEL: D23 J33 M52
    Date: 2012–01
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp6279&r=exp
  5. By: Thöni, Christian (University of St. Gallen); Gächter, Simon (University of Nottingham)
    Abstract: Substantial evidence suggests the behavioral relevance of social preferences and also the importance of social influence effects ("peer effects"). Yet, little is known about how peer effects and social preferences are related. In a three-person gift-exchange experiment we find causal evidence for peer effects in voluntary cooperation: agents' efforts are positively related despite the absence of material payoff interdependencies. We confront this result with major theories of social preferences which predict that efforts are unrelated, or negatively related. Some theories allow for positively-related efforts but cannot explain most observations. Conformism, norm following and considerations of social esteem are candidate explanations.
    Keywords: social preferences, voluntary cooperation, peer effects, reflection problem, gift exchange, conformism, social norms, social esteem
    JEL: C92 D03
    Date: 2012–01
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp6277&r=exp
  6. By: Kuperman, Ranan (University of Haifa)
    Abstract: This research investigates how students of political science playing the role of a state leader cope with structural and dynamic complexities of international conflict. This was studied with the aid of an interactive microworld simulator of a fishing dispute, which was designed according to principles of system dynamics. The research question was what type of decision-making patterns characterized subjects who adapted successfully to the challenges posed by the opponent in comparison to subjects who pursued policies that produced suboptimal payoffs. The results of this research suggest two reasons for poor adaptation. First, rather than exploring the consequences of all possible policy options, most subjects had very strong pre-existing policy preferences and were reluctant to abandon them in favor of alternative policies. Second, many subjects did not adequately analyze the statistical data that were required in order to estimate the payoffs. A third possibility that was explored but not sufficiently supported is that decisions were based on satisficing rather than comparing utilities associated with alternative policies.
    Keywords: policy preferences; decision making; international conflicts
    JEL: D74
    Date: 2011–12–01
    URL: http://d.repec.org/n?u=RePEc:ris:nepswp:2011_003&r=exp

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