New Economics Papers
on Experimental Economics
Issue of 2012‒04‒23
thirty papers chosen by

  1. Information Effects in Multi-Unit Dutch Auctions By Joy A. Buchanan; Steven Gjerstad; David Porter
  2. Following Through on Good Intentions: The Power of Planning Prompts By Katherine L. Milkman; John Beshears; James J. Choi; David Laibson; Brigitte C. Madrian
  3. Defaults and Attention: The Drop Out Effect By Andrew Caplin; Daniel J. Martin
  4. Pro-Social Missions and Worker Motivation: An Experimental Study By Fehrler, Sebastian; Kosfeld, Michael
  5. Effects of exclusion on social preferences By Sven Fischer; Werner Güth
  6. The Role of Salience in Performance Schemes: Evidence from a Field Experiment By Englmaier, Florian; Roider, Andreas; Sunde, Uwe
  7. Explicit versus Implicit Contracts for Dividing the Benefits of Cooperation By Marco Casari; Timothy N. Cason
  8. Harm on an Innocent Outsider as a Lubricant of Cooperation – An Experiment By Christoph Engel; Lilia Zhurakhovska
  9. Assuring Adequate Deterrence in Tort: A Public Good Experiment By Theodore Eisenberg; Christoph Engel
  10. All-Pay Auctions vs. Lotteries as Provisional Fixed-Prize Fundraising Mechanisms By John Duffy
  11. Cultural Integration: Experimental Evidence of Changes in Immigrants' Preferences By Cameron, Lisa A.; Erkal, Nisvan; Gangadharan, Lata; Zhang, Marina
  12. Sharing as Risk Pooling in a Social Dilemma Experiment By Todd Cherry; E. Lance Howe; James J. Murphy
  13. Compulsory and Voluntary Voting Mechanisms: An Experimental Study By Sourav Bhattacharya
  14. Corruption investigated in the lab: a survey of the experimental literature By Bobkova, Nina; Egbert, Henrik
  15. The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment By Delfgaauw, Josse; Dur, Robert; Non, Arjan; Verbeke, Willem
  16. Quitting and Peer Effects at Work By Rosaz, Julie; Slonim, Robert; Villeval, Marie Claire
  17. Do Legal Standards Affect Ethical Concerns of Consumers? An Experiment on Minimum Wages By Danz, David; Engelmann, Dirk; Kübler, Dorothea
  18. Communication With Multiple Senders and Multiple Dimensions: An Experiment By Alistair J. Wilson; Emanuel Vespa
  19. A Portfolio of Dilemmas: Experimental Evidence on Choice Bracketing in a Mini-Trust Game By Jieyao Ding
  20. The Effects of Prediction Market Design and Price Elasticity on Trading Performance of Users: An Experimental Analysis By Ivo Blohm; Christoph Riedl; Johann F\"uller; Orhan K\"oroglu; Jan Marco Leimeister; Helmut Krcmar
  21. Gift Exchange versus Monetary Exchange: Theory and Evidence By John Duffy
  22. Endogenous Leadership: Selection and Influence By Emrah Arbak; Marie-Claire Villeval
  23. Exclusive Dealing and Market Foreclosure: Further Experimental Results By Landeo, Claudia; Spier, Kathryn
  24. Do Community-Managed Schools Facilitate Social Capital Accumulation? Evidence from the COGES Project in Burkina-Faso By Sawada, Yasuyuki; Ishii, Takaharu
  25. Symmetric vs. Asymmetric Punishment Regimes for Bribery By Christoph Engel; Sebastian Goerg; Gaoneng Yu
  26. Designing a sequential choice architecture to reduce choice overload By Besedes, Tibor; Deck, Cary; Sarangi, Sudipta; Shor, Mikhael
  27. The Effect of Teacher Gender on Student Achievement in Primary School: Evidence from a Randomized Experiment By Antecol, Heather; Eren, Ozkan; Ozbeklik, Serkan
  28. The Relationship Between Economic Preferences and Psychological Personality Measures By Becker, Anke; Deckers, Thomas; Dohmen, Thomas; Falk, Armin; Kosse, Fabian
  29. Playing against an Apparent Opponent: Incentives for Care, Litigation, and Damage Caps under Self-Serving Bias By Landeo, Claudia; Nikitin, Maxim; Izmalkov, Sergei
  30. Social Capital as an Instrument for Common Pool Resource By Aida, Takeshi

  1. By: Joy A. Buchanan (Interdisciplinary Center for Economic Science, George Mason University); Steven Gjerstad (Economic Science Institute, Chapman University); David Porter (Economic Science Institute, Chapman University)
    Abstract: This study compares bidding behavior in a multi-unit uniform-price descending price (Dutch) auction under four different information conditions. Bidders are either informed of the number of bidders in the auction, or know that it is one of two possible sizes; they also either know the number of units remaining for sale or are unaware of how many units have been taken by other bidders. We find that revealing group size decreases bids, and therefore revenue, if units remaining are not shown. When group size is unknown the price also falls if the number of units remaining is revealed. The most efficient and largest revenue outcome occurs when bidders are not provided information on either group size or units remaining.
    Keywords: Experimental Economics, Auctions, Institutions
    JEL: C9 D44 D02
    Date: 2012
  2. By: Katherine L. Milkman; John Beshears; James J. Choi; David Laibson; Brigitte C. Madrian
    Abstract: We study whether prompts to form and recall a plan can increase individuals’ responsiveness to reminders to make and attend beneficial appointments. At four companies, all employees due for a colonoscopy were randomly assigned to receive either a control mailing or a treatment mailing. The mailings were identical except that the control mailing included a blank sticky note while the treatment mailing included a sticky note that prompted the recipient to write down the appointment date for a colonoscopy and the name of the doctor who would conduct the procedure. During the seven-month follow-up period, 7.2% of treatment employees received a colonoscopy compared to 6.2% of control employees, a statistically significant difference that is roughly equal to the variation in compliance associated with a 10 percent increase in the fraction of the procedure’s cost covered by insurance. The treatment effect was largest for demographic groups judged to be at the highest risk of failing to receive a colonoscopy due to forgetfulness.
    JEL: D03 D91 I12
    Date: 2012–04
  3. By: Andrew Caplin; Daniel J. Martin
    Abstract: When choice options are complex, policy makers may seek to reduce decision making errors by making a high quality option the default. We show that this positive effect is at risk because such a policy creates incentives for decision makers to "drop out" by paying no attention to the decision and accepting the default sight unseen. Using decision time as a proxy for attention, we confirm the importance of this effect in an experimental setting. A key challenge for policy makers is to measure, and if possible mitigate, such drop out behavior in the field.
    JEL: D01 D03 D04 D82
    Date: 2012–04
  4. By: Fehrler, Sebastian (University of Zurich); Kosfeld, Michael (Goethe University Frankfurt)
    Abstract: Do employees work harder if their job has the right mission? In a laboratory labor market experiment, we test whether subjects provide higher effort if they can choose the mission of their job. We observe that subjects do not provide higher effort than in a control treatment. Surprised by this finding, we run a second experiment in which subjects can choose whether they want to work on a job with their preferred mission or not. A subgroup of agents (roughly one third) is willing to do so even if this option is more costly than choosing the alternative job. Moreover, we find that these subjects provide substantially higher effort. These results suggest that relatively few workers can be motivated by missions and that selection into mission-oriented organizations is important to explain empirical findings of lower wages and high motivation in the latter.
    Keywords: motivation, effort provision, contract choice, sorting, lab experiment
    JEL: C92 J33 M52
    Date: 2012–04
  5. By: Sven Fischer (Max Planck Institute for Research on Collective Goods, Bonn); Werner Güth (Max Planck Institute of Economics, Jena)
    Abstract: In three party ultimatum games the proposer can first decide whether to exclude one responder, what increases the available pie. The experiments control for intentionality of exclusion and veto power of the third party. We do not find evidence for indirect reciprocity of the remaining responder after exclusion of the other. Similarly, not excluding the second responder is only insignificantly reciprocated by him. Overall, we find little evidence that intentional exclusion affects response behavior.
    Keywords: Exclusion, bargaining, ultimatum game, social preferences, experiment
    JEL: C91 J52
    Date: 2011–12
  6. By: Englmaier, Florian (University of Würzburg); Roider, Andreas (University of Heidelberg); Sunde, Uwe (University of St. Gallen)
    Abstract: Incentive schemes affect performance and priorities of agents but, in reality, they can be complicated even for simple tasks. We analyze the effects of the salience of incentives in a team production setting where the principal has an interest in quantity and quality of output. We use data from a controlled field experiment that changed the communication of the incentive system without changing the incentive system. The results indicate that salience of incentives itself is statistically and economically important for performance. We find that higher salience of incentives for quantity increases quantity, reduces quality, and increases in-pocket income of team managers.
    Keywords: incentives, attention, salience, communication, field experiments
    JEL: M52 J30 D03 D80
    Date: 2012–03
  7. By: Marco Casari; Timothy N. Cason
    Abstract: Experimental evidence has accumulated highlighting the limitations of formal and explicit contracts in certain situations, and has identified environments in which informal and implicit contracts are more efficient. This paper documents the superior performance of explicit over implicit contracts in a new partnership environment in which both contracting parties must incur effort to generate a joint surplus, and one (“strong”) agent controls the surplus division. In the treatment in which the strong agent makes a non-binding, cheap talk “bonus” offer to the weak agent, this unenforceable promise doubles the rate of joint high effort compared to a baseline with no promise. The strong agents most frequently offered to split the gains of the high effort equally, but actually delivered this amount only about onequarter of the time. An explicit and enforceable contract offer performs substantially better, increasing the frequency of the most efficient outcome by over 200 percent relative to the baseline.
    Keywords: Experiments; laboratory; social preferences; inequity aversion; reciprocity; trust.
    JEL: C70 D03
    Date: 2012–04
  8. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Lilia Zhurakhovska (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: If two players of a simultaneous symmetric one-shot prisoner’s dilemma hold standard preferences, the fact that choosing the cooperative move imposes harm on a passive outsider is immaterial. Yet if participants hold social preferences, one might think that they are reticent to impose harm on the outsider. This is not what we find, however severe the externality. A within-subjects measure of reticence to impose harm does not explain cooperation. But the externality makes participants more pessimistic. However conditional on their beliefs participants are more, not less cooperative if cooperation entails harm on an outsider, again however severe the externality.
    Keywords: externality, prisoner’s dilemma, Modified Dictator Game, Beliefs
    JEL: C72 C91 D03 H23
    Date: 2012–01
  9. By: Theodore Eisenberg (Cornell University, Cornell Law School); Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: To explore damage rules’ deterrent effect, we use a public good experiment to tailor allowable punishment to rules used in actual civil litigation. The experimental treatments are analogous to: (1) damages limited to harm to an individual litigant, (2) damages limited to harm to a group available in aggregate litigation, such as class actions, and (3) damages allowed beyond actual harm to victims, such as punitive damages. The treatment with damages limited to harm to an individual does not prevent the deterioration in cooperation over time commonly found in public good experiments without punishment or with too low punishment. In the class action damages treatment, cooperation is stable over time. In the damages-beyond-harm treatment, cooperation approaches the optimal level, but concerns of socially unjust punishment arise. In all treatments, a money maximising agent would be expected to completely freeride and make no contribution to the public good. Our results can thus not be explained by an incentive effect. Rather we find that social preferences interact with the severity of sanctions, even if imposing the sanction is not altruistic, but instead financially benefits the sanctioning authority. The results persist in a variation of the three treatments in which the player imposing damages has the option to not retain them for herself but to have them forfeited with no benefit to her. We can therefore rule out that the beneficial effect of sanctions hinges on the participants knowing that the player imposing sanctions cannot intend to enrich herself. The methodology we develop could be used to assess the social welfare benefit of many damages rules, such as treble damages in antitrust cases and caps on damages common in medical malpractice cases and punitive damages cases.
    Keywords: Deterrence, Public Good Experiment, Class actions, Tort, Damages, Punitive damages
    JEL: K13 K4 C73 K0
    Date: 2012–04
  10. By: John Duffy
    Abstract: We study two provisional fixed-prize mechanisms for funding public goods: an all-pay auction and a lottery. In our setting, the public good is provided only if the participants' contributions are greater than the fixed-prize value; otherwise contributions are refunded. We prove that in this provisional fixed prize setting, lotteries can outperform all-pay auctions in terms of expected public good provision. Specifically, we state conditions under which the provisional fixed prize all-pay auction mechanism generates zero public good provision, while the provisional fixed prize lottery mechanism generates positive public good provision. We test these predictions in a laboratory experiment where we vary the number of participants, the marginal per capita return (mpcr) on the public good and the mechanism for awarding the prize, either a lottery or an all-pay auction. Consistent with the theory, we find that the mpcr matters for contribution amounts under the lottery mechanism. However, inconsistent with the theory bids are always significantly higher than predicted and there is no significant difference in public good contributions under either mechanism. We suggest how a non-expected utility approach involving probability weighting can help to explain over-bidding in our experiment.
    JEL: C72 D44 H41
    Date: 2011–11
  11. By: Cameron, Lisa A. (Monash University); Erkal, Nisvan (University of Melbourne); Gangadharan, Lata (Monash University); Zhang, Marina (University of Melbourne)
    Abstract: Cultural traits play a significant role in the determination of economic outcomes and institutions. This paper presents evidence from laboratory experiments on the cultural integration of individuals of Chinese ethnicity in Australia, focusing on social preferences, preferences for competition, and risk attitudes. We show that the greater the share of education an individual receives in the West, the more they behave like Western subjects and the less they behave according to the norms of their Eastern heritage. Increased exposure to Western education has a strong negative impact on altruism, trust, and trustworthiness. For risk and competitive preferences, our results are gender-specific. These results have important implications for policy making and institution building in multi-cultural societies.
    Keywords: cultural integration, cultural transmission, cultural diversity, cultural assimilation, acculturation, immigration, social preferences, preferences for competition, risk aversion
    JEL: C91 J15 D64 D03
    Date: 2012–04
  12. By: Todd Cherry (Department of Economics, Appalachian State University); E. Lance Howe (Department of Economics, University of Alaska Anchorage); James J. Murphy (Department of Economics, University of Alaska Anchorage)
    JEL: C92 D81 O13 Q20
    Date: 2012
  13. By: Sourav Bhattacharya
    Abstract: We report on an experiment comparing compulsory and voluntary voting mechanisms. Theory predicts that these different mechanisms have different implications both for the sincerity of the voting decisions and for the participation decisions of voters, and we find strong support for these theoretical predictions in our experimental data. Voters are able to adapt the sincerity of their votes or their participation decisions to the different voting mechanisms in such a way as to make the welfare differences between these mechanisms negligible. We argue that this finding may account for the co-existence of these two voting mechanisms in nature.
    Date: 2011–12
  14. By: Bobkova, Nina; Egbert, Henrik
    Abstract: The article provides a survey of the growing experimental literature on the investigation of corruption and extends previous surveys. We discuss three aspects which deserve more attention in further research. These are, first, a more careful consideration of individual norms, second, a broader perspective on the influence of norms within groups on corrupt behaviour, and, third, embedding corruption experiments in more extended social science research on corruption.
    Keywords: bribery; corruption experiments; economic experiments
    JEL: D73 Z1 C92 C91
    Date: 2012–04–17
  15. By: Delfgaauw, Josse (Erasmus University Rotterdam); Dur, Robert (Erasmus University Rotterdam); Non, Arjan (ROA, Maastricht University); Verbeke, Willem (Erasmus University Rotterdam)
    Abstract: We conduct a natural field experiment in a large retail chain to test basic predictions of tournament theory regarding prize spread and noise. A random subset of the 208 stores participates in two-stage elimination tournaments. Tournaments differ in the distribution of prize money across winners of the first and second round of the tournament. As predicted by theory, we find that a more convex prize spread increases performance in the second round at the expense of first-round performance, although the magnitude of these effects is small. Moreover, the treatment effect is significantly larger for stores that historically have relatively stable performance as compared to stores with more noisy performance.
    Keywords: elimination tournaments, incentives, prize spread, performance measurement, field experiment
    JEL: C93 M51 M52
    Date: 2012–04
  16. By: Rosaz, Julie (University of Montpellier 1); Slonim, Robert (University of Sydney); Villeval, Marie Claire (CNRS, GATE)
    Abstract: While peer effects have been shown to affect worker's productivity when workers are paid a fixed wage, there is little evidence on their influence on quitting decisions. This paper presents results from an experiment in which participants receive a piece-rate wage to perform a real-effort task. After completing a compulsory work period, the participants have the option at any time to continue working or quit. To study peer effects, we randomly assign participants to work alone or have one other worker in the room with them. When a peer is present, we manipulate the environment by giving either vague or precise feedback on the co-worker's output, and also vary whether the two workers can communicate. We find that allowing individuals to work with a co-worker present does not increase worker's productivity. However, the presence of a peer in all working conditions causes workers to quit at more similar times. When, and only when, communication is allowed, workers are significantly more likely to (1) stay longer if their partner is still working, and (2) work longer the more productive they are. We conclude that when workers receive a piece-rate wage, critical peer effects occur only when workers can communicate with each other.
    Keywords: quits, peer effects, communication, feedback, experiment
    JEL: C91 D83 J63 J28 J81
    Date: 2012–04
  17. By: Danz, David; Engelmann, Dirk; Kübler, Dorothea
    Abstract: To address the impact of regulation on ethical concerns of consumers, we study the example of minimum wages. In our experimental market, consumers have monopsony power, firms set prices and wages, and workers are passive recipients of a wage payment. We find that the consumers exhibit considerable fairness towards the workers by buying from the firm with the higher price and the higher wage. We also find that consumers have a tendency to split their demand equally between firms, which is a simple strategy to provide both workers with a minimal payoff. Introducing a minimum wage in a mature market raises average wages despite its significant crowding-out effects on consumers' fairness concerns. Abolishing a minimum wage crowds in consumers' fairness concerns, but crowding in is not sufficient to avoid overall negative effects on the workers' wages.
    Keywords: Fairness , crowding out , consumer behavior , minimum wage , experimental economics
    JEL: C91 J88 K31
    Date: 2012
  18. By: Alistair J. Wilson; Emanuel Vespa
    Abstract: We implement the Battaglini (2002) model of multi-sender-multi-dimension cheap talk in the laboratory, analyzing the effects of sender competition on information transmission. Our results indicate that competing senders provide enough information for close to full revelation, but receiver`s ability to use this information crucially depends on senders` biases. Receivers are close to full extraction when biases identify an ex-ante trustworthy sender. When there is no ex-ante trustworthy source, fully exploiting sent messages requires information to be inferred across dimensions. However, receivers seem to treat dimensions as separate choices, and are much closer to best-responding within each separate dimension.
    Keywords: Multiple Senders, Strategic Information Transmission, Experiment, Recommendations
    JEL: C72 C92 D83 D84
    Date: 2012–04
  19. By: Jieyao Ding (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Bracketing is a mental procedure about how people deal with multiple tasks. If a decision maker handles all the tasks at the same time, it is called broad bracketing. If she handles the tasks separately, e.g., one or a few tasks each time, it is called narrow bracketing. This paper experimentally investigates the effect of broad versus narrow bracketing in the context of a mini-trust game. The result shows that, in the narrow bracketing treatment, the investor (first mover) is more likely to place trust on others, but the receiver (second mover) is less likely to fulfill the trust under the same condition. The effect is partly conditional on beliefs in others' behavior.
    Keywords: meta-study, self-control, general theory of crime
    JEL: K42 D03 K14 C13
    Date: 2012–03
  20. By: Ivo Blohm; Christoph Riedl; Johann F\"uller; Orhan K\"oroglu; Jan Marco Leimeister; Helmut Krcmar
    Abstract: We employ a 2x3 factorial experiment to study two central factors in the design of prediction markets (PMs) for idea evaluation: the overall design of the PM, and the elasticity of market prices set by a market maker. The results show that 'multi-market designs' on which each contract is traded on a separate PM lead to significantly higher trading performance than 'single-markets' that handle all contracts one on PM. Price elasticity has no direct effect on trading performance, but a significant interaction effect with market design implies that the performance difference between the market designs is highest in settings of moderate price elasticity. We contribute to the emerging research stream of PM design through an unprecedented experiment which compares current market designs.
    Date: 2012–04
  21. By: John Duffy
    Abstract: This paper reports findings from an experiment that implements the Lagos-Wright (2005) model of monetary exchange. We find that subjects generally avoid the autarkic equilibrium of that model and make trading decisions consistent with the model`s monetary equilibrium. Aliprantis, Camera and Puzzello (ACP, 2007) show that providing periodic access to centralized markets as in the Lagos and Wright framework may facilitate the sustainability of social norms of gift exchange, thus rendering money inessential in decentralized exchange. We also explore this hypothesis by replacing the centralized market of the Lagos-Wright model with a version of the centralized market of ACP`s model. We find that the essentiality of money is not threatened by the presence of centralized meetings. Indeed, the efficiency of allocations is significantly higher in the environment with money than without money, suggesting that money plays a role as an efficiency enhancing coordination device.
    Date: 2011–11
  22. By: Emrah Arbak (CEPS - Centre for European Policy Studies - Centre for European Policy Studies); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: In social dilemmas, leading a team by making heroic efforts may prove costly, especially when the followers are not adequately motivated to make similar sacrifices. Attempting to shed light on what drives people to lead, we devise a two-stage public good experiment with endogenous timing. We show that leading by making generous contributions is widespread and relatively persistent. At least three motives explain this behavior. Some use leadership strategically to distill personal gains, with the expectation that others will respond by being at least as generous. Others are more altruistic, volunteering to lead even though this may come at a personal cost. Yet for another fraction of volunteers, a concern for maintaining a positive social image appears to be responsible. We also find that voluntary leaders are not necessarily more influential than randomly-chosen leaders.
    Keywords: leadership, endogenous selection, influence, voluntary contribution, experiment
    Date: 2012–04–10
  23. By: Landeo, Claudia (University of Alberta, Department of Economics); Spier, Kathryn (Harvard Law School)
    Abstract: This paper reports further experimental results on exclusive dealing contracts. We extend Landeo and Spier’s [2009] work by studying Naked Exclusion in a strategic environment that involves a four-player, two-stage game. In addition to the roles of seller and buyers, our experimental environment includes the role of a potential entrant (a fourth passive player). Our findings are as follows. First, payoff endogeneity increases the likelihood of exclusion. Second, communication between the potential entrant and the buyers increases buyers’ coordination on their preferred equilibrium (equilibrium with entry) and hence, reduces the likelihood of exclusion. Entrant-buyers communication also induces more generous offers.
    Keywords: exclusive dealing; market foreclosure
    JEL: C72 C91 D62 D86 K12
    Date: 2012–04–01
  24. By: Sawada, Yasuyuki; Ishii, Takaharu
    Abstract: In this paper, we investigate the role of a School Management Committee (COGES) in facili- tating social capital among community members and teachers. We employ unique data from Burkina Faso, where the COGES project was recently introduced. To determine the individual level of social capital of each community member and teacher, we conduct public goods games, one of the standard artefactual field experiments, with monetary rewards. Using in- strumental variable and propensity score matching methods, we obtain several findings. First, we find that the COGES project increases the level of social capital significantly. This finding is robust across different econometric specifications and methodologies. According to our point estimates, the amount of voluntary contribution to public goods increases by 16% to 27%. Second, the social capital facilitation effect of COGES varies based on the characteristics of the participant: while those who are more educated tended to have a lower level of social capital, Muslims have a higher level of social capital with COGES. Third, our qualitative re- sults are maintained if we use the subjective assessment data of social capital based on the General Social Survey (GSS) questions.
    Keywords: School Management Committee (COGES) , community participation , social capital , Burkina Faso , field experiments public goods game
    Date: 2012–03–28
  25. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Gaoneng Yu (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: In major legal orders such as UK, the U.S., Germany, and France, bribers and recipients face equally severe criminal sanctions. In contrast, countries like China, Russia, and Japan treat the briber more mildly. Given these differences between symmetric and asymmetric punishment regimes for bribery, one may wonder which punishment strategy is more effective in curbing corruption. For this purpose, we designed and ran a lab experiment in Bonn (Germany) and Shanghai (China) with exactly the same design. The results show that, in both countries, with symmetric punishment recipients are less likely to grant the socially undesirable favor, while bribers are more likely to report to the authorities with asymmetric punishment. In addition, when punishment was asymmetric, corrupt offers were significantly more likely in Shanghai, but not in Bonn. Our results suggest a tradeoff between deterrence and law enforcement. In a forward-looking perspective, lawmakers must decide which aim carries more weight.
    Keywords: Bribery, Punishment, Effectiveness, Asymmetry, Legislation
    JEL: C91 D02 D03 D73 K14 K42
    Date: 2012–01
  26. By: Besedes, Tibor; Deck, Cary; Sarangi, Sudipta; Shor, Mikhael
    Abstract: Previous studies have demonstrated that a multitude of options can lead to choice overload, reducing decision quality. Through controlled experiments, we examine sequential choice architectures that enable the choice set to remain large while potentially reducing the effect of choice overload. A specific tournament-style architecture achieves this goal. An alternate architecture in which subjects compare each subset of options to the most preferred option encountered thus far fails to improve performance due to the status quo bias. Subject preferences over different choice architectures are negatively correlated with performance, suggesting that providing choice over architectures might reduce the quality of decisions.
    Keywords: choice architecture; choice overload; status quo bias; self-sorting; decision making; experiments
    JEL: D03 C91
    Date: 2012–04–13
  27. By: Antecol, Heather (Claremont McKenna College); Eren, Ozkan (University of Nevada, Las Vegas); Ozbeklik, Serkan (Claremont McKenna College)
    Abstract: This paper attempts to reconcile the contradictory results found in the economics literature and the educational psychology literature with respect to the academic impact of gender dynamics in the classroom. Specifically, using data from a randomized experiment, we look at the effects of having a female teacher on the math test scores of students in primary school. We find that female students who were assigned to a female teacher without a strong math background suffered from lower math test scores at the end of the academic year. This negative effect however not only seems to disappear but it becomes (marginally) positive for female students who were assigned to a female teacher with a strong math background. Finally, we do not find any effect of having a female teacher on male students' test scores (math or reading) or female students' reading test scores. Taken together, our results tentatively suggest that the findings in these two streams of the literature are in fact consistent if one takes into account a teacher's academic background in math.
    Keywords: teacher gender, student achievement, random assignment
    JEL: I21 J24
    Date: 2012–03
  28. By: Becker, Anke (University of Bonn); Deckers, Thomas (University of Bonn); Dohmen, Thomas (ROA, Maastricht University); Falk, Armin (University of Bonn); Kosse, Fabian (University of Bonn)
    Abstract: Although both economists and psychologists seek to identify determinants of heterogeneity in behavior, they use different concepts to capture them. In this review we first analyze the extent to which economic preferences and psychological concepts of personality – such as the Big Five and locus of control – are related. We analyze data from incentivized laboratory experiments and representative samples and find only low degrees of association between economic preferences and personality. We then regress life outcomes – such as labor market success, health status and life satisfaction – simultaneously on preference and personality measures. The analysis reveals that the two concepts are rather complementary when it comes to explaining heterogeneity in important life outcomes and behavior.
    Keywords: risk preference, time preference, social preferences, locus of control, Big Five
    JEL: C91 D01 D80 D90 I00 J30 J62
    Date: 2012–04
  29. By: Landeo, Claudia (University of Alberta, Department of Economics); Nikitin, Maxim (International College of Economics and Finance); Izmalkov, Sergei (New Economics School)
    Abstract: This paper presents a strategic model of incentives for care and litigation under asymmetric information and self-serving bias, and studies the effects of damage caps. We contribute to the behavioral economics literature by generalizing the perfect Bayesian equilibrium concept to environments with biased litigants. Our main findings are as follows. First, our results suggest that self-serving bias might be welfare-reducing. The negative impact of this cognitive bias on social welfare is explained by the reduction in the level of care, and the increase in the likelihood of disputes. We also find that self-serving bias helps litigants commit to tough negotiation positions. However, it is economically self-defeating for the informed plaintiff. Second, our findings indicate that caps on non-economic damages might reduce the level of care. Importantly, we find that the positive effect of damage caps on lowering the likelihood of disputes, commonly attributed to caps, does not necessarily hold in environments with biased litigants: Caps might induce higher likelihood of disputes. Our findings are aligned with empirical and experimental evidence.
    Keywords: settlement; litigation; incentives for care; caps on non-economic damages; self-serving bias; asymmetric information; apparent opponents; perfect Bayesian equilibrium; motivated reasoning; divergent beliefs; universal divinity refinement; motivated anchoring; non-cooperative games; disputes; pretrial bargaining
    JEL: C72 D82 J52 J58 K13 K41
    Date: 2012–04–12
  30. By: Aida, Takeshi
    Abstract: This paper investigates the effect of social capital between irrigation canal head-enders and tail-enders on their water allocation problem. Although social capital is considered to be an instrument for common pool resource management, a consensus has not been reached on its effect among heterogeneous players. In irrigation management, the water allocation problem between head-enders and tail-enders is one of these serious problems. Using unique natural and artefactual field experiment data as well as general household survey data collected by JICA, this study finds that social capital, especially trust toward their tail-enders, has a significantly positive effect on satisfaction with water usage among head-enders. Considering the fact that the incentive structure of irrigation water allocation for head-enders closely resembles that in the dictator and trust games, this finding also supports the validity of experimentally measured social capital. In addition, this study deals with the simultaneity bias between satisfaction level and experimentally measured social capital, and finds that OLS estimators are downward biased, which is consistent with the hypothesis that scarcity of resources enhances the level of social capital.
    Keywords: social capital , irrigation , field experiment , head-enders and tail-enders
    Date: 2011–08–09

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