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on Experimental Economics |
| By: | Huan Xie; Jipeng Zhang |
| 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 experience is not sufficient to eliminate price bubbles. <P> |
| Keywords: | Price bubbles, experience, inflow of new traders, experiments, |
| Date: | 2012–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2012s-01&r=exp |
| By: | Nejat Anbarci; Nick Feltovich |
| Abstract: | Previous research has shown that individuals do not respond to changes in their bargaining position to the extent predicted by standard bargaining theories. Most of these results come from experiments with bargaining power allocated exogenously, so that individuals may perceive it as having been “unearned” and thus be reluctant to exploit it. Typically these experiments also allowed equal splits of the “cake” (the amount bargained over) as equilibrium outcomes, leading to a powerful tendency toward 50-50 splits. We conduct a bargaining experiment in which subjects earn their bargaining power through a real–effort task. Treatments are based on the Nash demand game (NDG) and an unstructured bargaining game (UBG). Subjects bargain over a fixed amount of money, with disagreement payments determined entirely by the number of units of the real–effort task successfully completed. Task parameters are set to allow disagreement payoffs above half the cake size, in which case 50–50 splits are not individually rational, and thus not consistent with equilibrium. We find that subjects are least responsive to changes in own and opponent disagreement payoffs in the NDG with both disagreement payments below half the cake size. Responsiveness is higher in the UBG, and in the NDG when one disagreement payment is more than half the cake size, but in both cases it is still less than predicted. It is only in the UBG when a disagreement payment is more than half the cake size that responsiveness to disagreement payoffs reaches the predicted level. Our results imply that even when real–life bargaining position is determined by past behaviour rather than luck, the extent to which actual bargaining corresponds to theoretical predictions will depend on (1) the institutions within which bargaining takes place, and (2) the distribution of bargaining power; in particular, whether the 50–50 norm is a viable outcome. |
| Keywords: | Nash demand game, unstructured bargaining, real effort, disagreement, experiment |
| JEL: | C78 C72 D81 |
| Date: | 2012–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:dkn:econwp:eco_2012_2&r=exp |
| By: | Giovanna d’Adda |
| Abstract: | This paper studies the effect of leadership on the level and evolution of pro-social behavior using an artefactual field experiment on local public good provision. Participants decide how much to contribute to an actual conservation project. They can then revise their donations after being randomly matched in pairs on the basis of their authority and having observed each other’s contributions. Authority is measured through a social ranking exercise identifying formal and moral leaders within the community. I find that giving by a pair is higher and shows a lower tendency to decrease over time when a leader is part of a pair. This is because higher-ranked pair members in general, and leaders in particular, donate more and are less likely to revise contributions downwards after giving more than their counterparts. Leadership effects are stronger when moral authority is made salient within the experiment, in line with the ethical nature of the decision under study. These findings highlight the importance of identifying different forms of leadership and targeting the relevant leaders in projects aimed at local public good provision. |
| Keywords: | Leadership, local public goods, experimental, Colombia |
| JEL: | D7 H4 O1 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:059&r=exp |
| By: | Fabian Kosse; Friedhelm Pfeiffer |
| Abstract: | Using experimental data of children and their mothers, this paper explores the intergenerational relationship of impatience. The child's impatience stems from a delay of gratification experiment. Mother's impatience has been assessed by a choice task where the mothers faced trade-offs between a smaller-sooner and a larger-later monetary reward with a delay of six or twelve months. The findings demonstrate an intergenerational relationship in short-run decision making. Controlling for mother's and child's characteristics the child's impatience at preschool age is significantly correlated with the six month maternal reservation interest rate. |
| Keywords: | time preferences; impatience; intergenerational transmission, field experiments |
| JEL: | C93 D03 D90 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp431&r=exp |
| By: | Attanasi, Giuseppe; Garcia-Gallego, Aurora; Georgantzis, Nikolaos; Montesano, Aldo |
| Abstract: | We apply an alternating proposals protocol with a confirmation stage as a way of solving a Prisoner’s Dilemma game. We interpret players’ proposals and (no) confirmation of outcomes of the game as a tacit communication device. The protocol leads to unprecedented high levels of cooperation in the laboratory. Assigning the power of confirmation to one of the two players alone, rather than alternating the role of a leader significantly increases the probability of signing a cooperative agreement in the first bargaining period. We interpret pre-agreement strategies as tacit messages on players’ willingness to cooperate and on their beliefs about the others’ type. |
| Keywords: | Prisoner’s Dilemma; Bargaining; Confirmed Proposals; Confirmed Agreement; Tacit Communication. |
| JEL: | C72 C91 C92 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25463&r=exp |
| By: | Proto, Eugenio (University of Warwick); Sgroi, Daniel (University of Warwick and CAGE) |
| 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. Key words: subjective beliefs ; attitudes ; observable characteristics ; self-centered bias JEL classification: D03 ; C83 ; D84 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:978&r=exp |
| By: | Maasland, E. (Tilburg University) |
| Abstract: | Auction theory is a branch of game theory that considers human behavior in auction markets and the ensuing market outcomes. It is also successfully used as a tool to design real-life auctions. This thesis contains five essays addressing a variety of topics within the realm of auction theory. The first essay gives an easily accessible overview of the most important insights of auction theory. The second essay, motivated by the UMTS-auctions that took place in Europe, studies auctions in which, in contrast to standard auction theory, losing bidders benefit from a high price paid by the winner(s). Under this assumption, the first-price sealed-bid auction and the second-price sealed-bid auction are no longer revenue equivalent. The third essay analyzes how well different kinds of auctions are able to raise money for charity. It turns out that standard winner-pay auctions are inept fund-raising mechanisms because of the positive externality bidders forgo if they top another’s high bid. As this problem does not occur in all-pay auctions, where bidders pay irrespective of whether they win or lose, all-pay auctions are more effective in raising money. The fourth essay studies a particular auction type, a so-called simultaneous pooled auction with multiple bids and preference lists, that has been used for example in the Netherlands and Ireland to auction available spectrum. The results in this essay show that this type of auction does not satisfy elementary desirable properties such as the existence of an efficient equilibrium. The fifth essay argues that inefficient auction outcomes due to strong negative (informational) externalities (created by post-auction interactions) can be avoided by asking bidders prior to the auction to submit any publicly observable payment they would like to make. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ner:tilbur:urn:nbn:nl:ui:12-5242208&r=exp |