nep-exp New Economics Papers
on Experimental Economics
Issue of 2012‒03‒08
twelve papers chosen by
Daniel Houser
George Mason University

  1. Toward an Understanding of Why People Discriminate: Evidence from a Series of Natural Field Experiments By Uri Gneezy; John List; Michael K. Price
  2. Bubbles and Experience: An Experiment with a Steady Inflow of New Traders By Huan Xie; Jipeng Zhang
  3. Desert and inequity aversion in teams By David, Gill; Rebecca, Stone
  4. From the lab to the field: envelopes, dictators and manners By Stoop, Jan
  5. A Three-Stage Experimental Test of Revealed Preference By Hammond, Peter; Traub, Stefan
  6. Age differences in the reaction to incentives – do older people avoid competition? By Sproten, Alec N.; Schwieren, Christiane
  7. Do Reported Attitudes towards Immigrants Predict Ethnic Discrimination? By Carlsson, Magnus; Eriksson, Stefan
  8. A growing pain: an experimental approach to discover the most acceptable strategy for lifting fuel subsidy scheme in Indonesia By Pradiptyo, Rimawan; Sahadewo, Gumilang Aryo
  9. You Can Pick Your Friends, But You Need to Watch Them: Loan Screening and Enforcement in a Referrals Field Experiment By Gharad T. Bryan; Dean Karlan; Jonathan Zinman
  10. Self Centred Beliefs: An Empircal Approach By Proto, Eugenio; Sgroi, Daniel
  11. Should Aid Reward Performance? Evidence from a Field Experiment on Health and Education in Indonesia By Benjamin A. Olken; Junko Onishi; Susan Wong
  12. Cognitive hierarchies in adaptive play By Khan Abhimanyu; Peeters Ronald

  1. By: Uri Gneezy; John List; Michael K. Price
    Abstract: Social scientists have presented evidence that suggests discrimination is ubiquitous: women, nonwhites, and the elderly have been found to be the target of discriminatory behavior across several labor and product markets. Scholars have been less successful at pinpointing the underlying motives for such discriminatory patterns. We employ a series of field experiments across several market and agent types to examine the nature and extent of discrimination. Our exploration includes examining discrimination based on gender, age, sexual orientation, race, and disability. Using data from more than 3000 individual transactions, we find evidence of discrimination in each market. Interestingly, we find that when the discriminator believes the object of discrimination is controllable, any observed discrimination is motivated by animus. When the object of discrimination is not due to choice, the evidence suggests that statistical discrimination is the underlying reason for the disparate behavior.
    JEL: C93 J71
    Date: 2012–02
  2. By: Huan Xie (Concordia University); Jipeng Zhang (Nanyang Technological University)
    Abstract: We revisit the effect of traders' experience on price bubbles by introducing either one-third or two-thirds steady inflow of new traders in the repeated experimental asset markets. We find that bubbles are not significantly abated by the third repetition of the market with the inflow of new traders. The relative importance of experience to the formation of bubbles depends on the proportion of new traders in the market. Our findings identify a market environment where increased experience is not sufficient to eliminate price bubbles.
    Keywords: Bubbles; Asset Markets; Experience; Inflow of Traders
    JEL: C91 D83 G12
    Date: 2012–01
  3. By: David, Gill; Rebecca, Stone
    Abstract: Teams are becoming increasingly important in work settings. We develop a framework to study the strategic implications of a meritocratic notion of desert under which team members care about receiving what they feel they deserve. Team members find it painful to receive less than their perceived entitlement, while receiving more may induce pleasure or pain depending on whether preferences exhibit desert elation or desert guilt. Our notion of desert generalizes distributional concern models to situations in which effort choices affect the distribution perceived to be fair; in particular, desert nests inequity aversion over money net of effort costs as a special case. When identical teammates share team output equally, desert guilt generates a continuum of symmetric equilibria. Equilibrium effort can lie above or below the level in the absence of desert, so desert guilt generates behavior consistent with both positive and negative reciprocity and may underpin social norms of cooperation.
    Keywords: Desert; Deservingness; Equity; Inequity aversion; Loss aversion; Reference-dependent preferences; Guilt; Reciprocity; Social norms; Team production
    JEL: D63 J33
    Date: 2012–02
  4. By: Stoop, Jan
    Abstract: Results are reported of the first natural field experiment on the dictator game, where subjects are unaware that they participate in an experiment. In contrast to predictions of the standard economic model, dictators show a large degree of pro-social behavior. This paper builds a bridge from the laboratory to the field to explore how predictive findings from the laboratory are for the field. External validity is remarkably high. In all experiments, subjects display an equally high amount of pro-social behavior, whether they are students or not, participate in a laboratory or not, or are aware that they participate in an experiment or not.
    Keywords: altruism; natural field experiment; external validity
    JEL: D63 D64 C70 C93 C91
    Date: 2012–03–02
  5. By: Hammond, Peter (University of Warwick); Traub, Stefan (University of Bremen)
    Abstract: A powerful test of Varian's (1982) generalised axiom of revealed preference (GARP) with two goods requires the consumer's budget line to pass through two demand vectors revealed as chosen given other budget sets. In an experiment using this idea, each of 41 student subjects faced a series of 16 successive grouped portfolio selection problems. Each group of selection problems had up to three stages, where later budget sets depended on that subject's choices at earlier stages in the same group. Only 49% of subjects' choices were observed to satisfy GARP exactly, even by our relatively generous nonparametric test.
    Keywords: Rationality, revealed preference, uncertainty
    Date: 2012
  6. By: Sproten, Alec N.; Schwieren, Christiane
    Abstract: The “aging employee” has recently become a hot topic in many fields of behavioural research. With the aim to determine the effects of different incentive schemes (competition, social or increased monetary incentives) on performance of young and older subjects, we look at behaviour of a group of younger and older adults on a well-established real effort task. We show that older adults differ from younger adults in their performance in all conditions, but not in the improvement between conditions. The age difference in performance is however driven by women. While we replicate the gender difference in competitiveness found in the literature, we do not find a significant age difference in competitiveness. Social incentives have an at least as strong or even stronger effect on performance than increased monetary incentives. This effect is driven by men; women do not show an increase in performance with social incentives.
    Keywords: aging; competition; social production functions; experiment; incentives
    JEL: C72 C91 J10 J33
    Date: 2012–02–17
  7. By: Carlsson, Magnus (School of Business and Economics, Linnaeus University); Eriksson, Stefan (Department of Economics)
    Abstract: Reported attitudes towards immigrants are sometimes used as a proxy for ethnic discrimination. However, there is little empirical evidence of a link between attitudes and discrimination. In this paper, we use survey data on people’s attitudes towards immigrants combined with data on ethnic discrimination from a field experiment in the Swedish housing market to re-examine this issue. We find clear evidence of a link between reported attitudes towards immigrants and the extent of ethnic discrimination at the municipality level. Thus, in contrast to most prior studies, our results suggest that reported attitudes may be a useful proxy for ethnic discrimination.
    Keywords: Attitudes; Ethnic discrimination; Field experiments; Housing market
    JEL: C93 J15 R39
    Date: 2012–02–21
  8. By: Pradiptyo, Rimawan; Sahadewo, Gumilang Aryo
    Abstract: Fuel subsidy has been the biggest quandaries in Indonesian economy, as it has been creating a huge opportunity costs to the economy. The subsidy is implemented to a consumer good (i.e. fuels) as oppose to targeted recipients, creating distortion in the efficient resource allocation. It was estimated about 70% of the subsidy were received by 40% of top income households (World Bank, 2007). Although the budget plan for the subsidy in 2011 was Rp129.7 trillion or 10% of the GoI annual budget, the actual subsidy was Rp160.7 trillion (13.3% of the GoI annual budget). Indeed, no individual prefers to lose the subsidy that has been received for many years, however the Government of Indonesia (GoI) cannot maintain the subsidy policy on fuel price any longer without creating extra budgetary burden. This study use experimental approach to seek the most acceptable exit strategy of eliminating fuel subsidy scheme in Indonesia based on households’ perspective. 335 subjects participated in the experiment, ranging from those who do not own motor vehicle, those who have motor cycle(s) and those who have car(s). During the experiment, subjects were given several pair-wise choices and chose the most acceptable policy from each pair-wise policy choices. The results show that the combination of gradual elimination and earmarked reallocation scheme were the most desirable. Subject with very low and low-income background tend to be more receptive for sudden elimination of the subsidy in comparison to their counterpart from medium and high-income backgrounds.
    Keywords: Fuel subsidy; experimental economics; analytical hierarchy process (AHP); preference relation; reallocation of resources
    JEL: D03 D12 Q48 C91
    Date: 2012–03–03
  9. By: Gharad T. Bryan; Dean Karlan; Jonathan Zinman
    Abstract: We examine a randomized trial that allows separate identification of peer screening and enforcement of credit contracts. A South African microlender offered half its clients a bonus for referring a friend who repaid a loan. For the remaining clients, the bonus was conditional on loan approval. After approval, the repayment incentive was removed from half the referrers in the first group and added for half those in the second. We find large enforcement effects, a $12 (100 Rand) incentive reduced default by 10 percentage points from a base of 20%. In contrast, we find no evidence of screening.
    JEL: C93 D12 D14 D82 O12 O16
    Date: 2012–03
  10. By: Proto, Eugenio (University of Warwick); Sgroi, Daniel (University of Warwick)
    Abstract: We perform an experiment designed to assess the accuracy of beliefs about distributions. The beliefs relate to behavior (mobile phone purchasing decisions, hypothetical restaurant choices), attitudes (happiness, politics) and observable characteristics (height, weight) and are typically formed through real world experiences. We nd a powerful and ubiquitous bias in perceptions that is \self-centered" in the sense that an individual's beliefs about the population distribution changes with their own position in the distribution. In particular, those at extremes tend to perceive themselves as closer to the middle of the distribution than is the case. We discuss possible explanations for this bias
    Keywords: subjective beliefs, attitudes, observable characteristics, self-centered bias
    Date: 2012
  11. By: Benjamin A. Olken; Junko Onishi; Susan Wong
    Abstract: This paper reports an experiment in over 3,000 Indonesian villages designed to test the role of performance incentives in improving the efficacy of aid programs. Villages in a randomly-chosen one-third of subdistricts received a block grant to improve 12 maternal and child health and education indicators, with the size of the subsequent year’s block grant depending on performance relative to other villages in the subdistrict. Villages in remaining subdistricts were randomly assigned to either an otherwise identical block grant program with no financial link to performance, or to a pure control group. We find that the incentivized villages performed better on health than the non-incentivized villages, particularly in less developed areas, but found no impact of incentives on education. We find no evidence of negative spillovers from the incentives to untargeted outcomes, and no evidence that villagers manipulated scores. The relative performance design was crucial in ensuring that incentives did not result in a net transfer of funds toward richer areas. Incentives led to what appear to be more efficient spending of block grants, and led to an increase in labor from health providers, who are partially paid fee-for-service, but not teachers. On net, between 50-75% of the total impact of the block grant program on health indicators can be attributed to the performance incentives.
    JEL: I15 I25 O38
    Date: 2012–03
  12. By: Khan Abhimanyu; Peeters Ronald (METEOR)
    Abstract: Inspired by the behavior in repeated guessing game experiments, we study adaptive play bypopulations containing individuals that reason with different levels of cognition. Individualsplay a higher order best response to samples from the empirical data on the history of play, wherethe order of best response is determined by their exogenously given level of cognition. As inYoung''s model of adaptive play, (unperturbed) play still converges to a minimal curb set. However,with the random perturbations of this (higher order) best response dynamic, the stochasticallystable states obtained may now be different, but in a deterministic manner. Perhapscounter-intuitively, higher cognition may actually be bad for both the individual with highercognition and his parent population.
    Keywords: microeconomics ;
    Date: 2012

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