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on Experimental Economics |
| By: | Steven D. Levitt; John A. List; Susanne Neckermann; Sally Sadoff |
| Abstract: | A long line of research on behavioral economics has established the importance of factors that are typically absent from the standard economic framework: reference dependent preferences, hyperbolic preferences, and the value placed on non-financial rewards. To date, these insights have had little impact on the way the educational system operates. Through a series of field experiments involving thousands of primary and secondary school students, we demonstrate the power of behavioral economics to influence educational performance. Several insights emerge. First, we find that incentives framed as losses have more robust effects than comparable incentives framed as gains. Second, we find that non-financial incentives are considerably more cost-effective than financial incentives for younger students, but were not effective with older students. Finally, and perhaps most importantly, consistent with hyperbolic discounting, all motivating power of the incentives vanishes when rewards are handed out with a delay. Since the rewards to educational investment virtually always come with a delay, our results suggest that the current set of incentives may lead to underinvestment. For policymakers, our findings imply that in the absence of immediate incentives, many students put forth low effort on standardized tests, which may create biases in measures of student ability, teacher value added, school quality, and achievement gaps. |
| JEL: | C9 C93 H75 I20 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18165&r=exp |
| By: | Erik O. Kimbrough (Department of Economics, Simon Fraser University, Canada); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University, USA) |
| Abstract: | We design an experiment to explore the impact of earned entitlements on the frequency and intensity of conflicts in a two-stage bargaining and conflict game with side-payments. In this game, residents (Proposers) make side-payment offers and contestants (Responders) decide whether to accept the offers and whether to engage in a conflict. When subjects earn their roles, conflicts are 44% more likely to be avoided than when roles are assigned randomly. Earned rights impact behavior in three important ways: (1) residents who have earned their position persistently offer larger side-payments; (2) larger offers lead to a lower probability of conflict, but (3) residents whose offers do not lead to conflict resolution respond spitefully and exhibit greater conflict expenditure. Hence, with earned rights, the positive welfare effects of reduced conflict frequency are offset by higher conflict intensity. |
| Keywords: | contests, conflict resolution, side-payments, entitlements, experiments |
| JEL: | C72 C91 D72 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:12-16&r=exp |
| By: | Rustichini, Aldo (University of Minnesota); Villeval, Marie Claire (CNRS, GATE) |
| Abstract: | We show with a laboratory experiment that individuals adjust their moral principles to the situation and to their actions, just as much as they adjust their actions to their principles. We first elicit the individuals’ principles regarding the fairness and unfairness of allocations in three different scenarios (a Dictator game, an Ultimatum game, and a Trust game). One week later, the same individuals are invited to play those same games with monetary compensation. Finally in the same session we elicit again their principles regarding the fairness and unfairness of allocations in the same three scenarios. Our results show that individuals adjust abstract norms to fit the game, their role and the choices they made. First, norms that appear abstract and universal take into account the bargaining power of the two sides. The strong side bends the norm in its favor and the weak side agrees: Stated fairness is a compromise with power. Second, in most situations, individuals adjust the range of fair shares after playing the game for real money compared with their initial statement. Third, the discrepancy between hypothetical and real behavior is larger in games where real choices have no strategic consequence (Dictator game and second mover in Trust game) than in those where they do (Ultimatum game). Finally the adjustment of principles to actions is mainly the fact of individuals who behave more selfishly and who have a stronger bargaining power. The moral hypocrisy displayed (measured by the discrepancy between statements and actions chosen followed by an adjustment of principles to actions) appears produced by the attempt, not necessarily conscious, to strike a balance between self-image and immediate convenience. |
| Keywords: | moral hypocrisy, fairness, social preferences, power, self-deception, self-image |
| JEL: | D03 D63 C91 C7 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6590&r=exp |
| By: | Federica Alberti (Max Planck Institute of Economics, Strategic Interaction Group, Jena); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena) |
| Abstract: | Banning deception in economic experiments does not exclude experiments with participants in the role of experimenters who can gain by deceiving those in the role of participants. We compare treatments with and without possible deception by experimenter-participants to test whether deception aects behaviour of participant-participants in a dictator experiment and whether participants in the role of experimenters engage in deception. We nd no dierence in behaviour of participant-participants between the treatments whereas most participants in the role of experimenters engage in deception. |
| Keywords: | Experimental economic methods, Deception, Experiments |
| JEL: | A12 C90 |
| Date: | 2012–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2012-024&r=exp |
| By: | Loukas Balafoutas; Nikos Nikiforakis |
| Abstract: | Extensive evidence from laboratory experiments indicates that many individuals are willing to use costly punishment to enforce social norms, even in one-shot interactions. However, there appears to be little evidence in the literature of such behavior in the field. We study the propensity to punish norm violators in a natural field experiment conducted in the main subway station in Athens, Greece. The large number of passengers ensures that strategic motives for punishing are minimized. We study violations of two distinct efficiency enhancing social norms. In line with laboratory evidence, we find that individuals punish norm violators. Men are more likely than women to punish violators, while the decision to punish is unaffected by the violator’s height and gender. Interestingly, we find that violations of the better known of the two norms are substantially less likely to trigger punishment. We present additional evidence from two surveys providing insights into the determinants of norm enforcement. |
| Keywords: | norm enforcement, social norms, field experiment, altruistic punishment, cooperation |
| JEL: | C93 D63 H41 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2012-12&r=exp |
| By: | Cerroni, Simone; Notaro, Sandra; Shaw, W. Douglass |
| Abstract: | The validity of risk estimates elicited through the Exchangeability Method (EM) has been theoretically questioned because the use of chained questions may undermine the incentive compatibility of the game even when subjects are rewarded with real monetary incentives. In this paper, we examine the validity of stated risks elicited via the EM by using a laboratory experiment. The risk under study is the presence of pesticide residues in apples. Taking inspiration from the de Finetti’s notion of coherence, we consider risk measures as valid if and only if they obey all axioms and theorems of probability theory. Our experiment consists of four treatments: in the first, subjects are provided with real monetary incentives, but in the second, they are not. Each experimental group is further sub-divided in two groups, in the first, the chained structure of the experimental design made quite clear to the subjects, while, in the second, the chained structure is hidden by resorting the elicitation questions. We found that the beneficial effect of real monetary incentives on the validity of stated risk estimates is completely vanished when people are presented with chained experimental design. |
| Keywords: | Food Consumption/Nutrition/Food Safety, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aieacp:124100&r=exp |
| By: | Klaus Abbink (Department of Economics, Monash University, Clayton, Australia); David Masclet (University of Rennes 1, CREM-CNRS, France); Daniel Mirza (Université François Rabelais de Tours, France) |
| Abstract: | In this paper, we study the determinants of inter-groups conflicts, focusing our attention on the role of inequality aversion. First, we experimentally investigate whether inequality is a driving force of inter-group conflicts. Second, we investigate the factors that make preferences for conflict translate into actions. Inter-group conflicts require both coordination and necessary financial material resources. Our experiment consists of a two-stage game. First, subjects play a proportional rent-seeking game to share a prize. In a second stage players can coordinate with the other members of their group to reduce (“burn”) the other group members’ payoff. Treatments differ in the degree of social inequality set between the two groups by attributing to some subjects (the advantaged group) a larger share of the price than other subjects (the disadvantaged group) for the same amount of effort. We observe frequent conflicts, where, as expected, disadvantaged groups “burn” more money than advantaged groups. Surprisingly, however the frequency of conflicts decreases with the degree of inequality. Our data allow us to identify resignation as the driving force behind this phenomenon. |
| Keywords: | Design of experiments, Experimental economics, Social Inequality, Conflicts |
| JEL: | D72 C91 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cccrwp:2012-07-ccr&r=exp |
| By: | Andreas Hildenbrand (University of Giessen) |
| Abstract: | Industrial organization is mainly concerned with the behavior of large firms. Experimental industrial organization therefore faces a problem: How can firms be brought into the laboratory? The main approach relies on framing: Call individuals “firms”! This experimental approach is not in line with modern industrial organization, according to which a firm’s market behavior is also determined by its organizational structure. In this paper, a Stackelberg experiment is considered in order to answer the question whether framing individual decision making as organizational decision making or implementing an organizational structure is more effective in generating profit-maximizing behavior. Firms are either represented by individuals or by teams. I find that teams’ quantity choices are more in line with the assumption of profit maximization than individuals’ |
| Keywords: | industrial organization, Stackelberg game, individual behavior, team behavior, framing, experimental economics. |
| JEL: | C72 C91 C92 D43 L13 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201229&r=exp |
| By: | Schilizzi, Steven |
| Abstract: | By design, tenders are used when costs are unknown. But if costs are unknown, how can we evaluate the tenders, when their evaluation involves measuring their cost-effectiveness? We identify three approaches: theoretical, empirical and experimental. We first use experimental data to compare the efficiency of each approach, then apply the most efficient one to field data from the Scottish fishing vessel decommissioning program. We estimate the potential errors one would make in using a less efficient approach. In this case, we demonstrate a novel use of controlled lab experiments for interpreting field data and evaluating policy effectiveness. |
| Keywords: | Auctions, conservation, experiments, evaluation, measurement, market-based policy instruments, Resource /Energy Economics and Policy, |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare12:124442&r=exp |
| By: | Franken, Jason R.V.; Pennings, Joost M.E.; Garcia, Philip |
| Abstract: | Researchers employ various measures of risk attitudes to investigate their relation to market behavior with mixed results. We find that a higher-order global risk attitude construct, developed using survey scales and experiments based on expected utility theory, is related to several marketing alternatives, but does not exhibit substantially greater explanatory power than underlying measures. With few exceptions, scales yield greater significance of risk attitudes for these choices, but experimental measures reveal other insights, e.g., differential attitudes in gain and loss domains. Given recent concerns with experimental measures in the literature, we suggest studies include scales as a low cost supplemental measure. |
| Keywords: | risk behavior, risk attitude, futures and options, forward contracts, marketing contracts, Marketing, Risk and Uncertainty, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124471&r=exp |
| By: | Stéphane Robin (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); 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: | We provide experimental evidence of worker's ingratiation by opinion conformity and of managers' discrimination in favor of workers with whom they share similar opinions. In our Baseline, managers can observe both workers' performance at a task and opinions before assigning unequal payoffs. In the Ingratiation treatment, workers can change their opinion after learning that held by manager. In the Random treatment, workers can also change opinion but payoffs are assigned randomly, which gives a measure of non-strategic opinion conformism. We find evidence of high ingratiation indices, as overall, ingratiation is effective. Indeed, managers rewards opinion conformity, and even more so when opinions cannot be manipulated. Additional treatments reveal that ingratiation is cost sensitive and that the introduction of performance pay for managers as well as a less noisy measure of performance increase the role of relative performance in the assignment of payoffs, without eliminating the reward of opinion conformity. |
| Keywords: | Ingration, opinion conformity, favoritism, discrimination, social distance, experiment. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00706791&r=exp |
| By: | Madies, Thierry (University of Fribourg); Villeval, Marie Claire (CNRS, GATE); Wasmer, Malgorzata (University of Fribourg) |
| Abstract: | We study the attitudes of junior and senior employees towards strategic uncertainty and competition, by means of a market entry game inspired by Camerer and Lovallo (1999). Seniors exhibit higher entry rates compared to juniors, especially when earnings depend on relative performance. This difference persists after controlling for attitudes towards non-strategic uncertainty and for beliefs on others' competitiveness and ability. Social image matters, as evidenced by the fact that seniors enter more when they predict others enter more and when they are matched with a majority of juniors. This contradicts the stereotype of risk averse and less competitive older employees. |
| Keywords: | aging, risk, ambiguity, competitiveness, self-image, confidence, experiment |
| JEL: | C91 D83 J14 J24 M5 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6642&r=exp |
| By: | Benno Torgler (QUT) |
| Abstract: | Field experiments in the area of tax compliance are rare. This field experiment generates a unique data set with respect to individuals’ under-declaration of income and wealth and over-deductions of tax credits by obtaining exclusive full access to the audits. Using this commune level data from Switzerland, the paper explores the influence of moral suasion on tax compliance. Moral suasion was introduced through a treatment in which taxpayers received a letter signed by the commune’s fiscal commissioner containing normative appeals. Interestingly, I observe differences between under-declaration and over-deductions. Moreover, the overall finding is in line with former results that moral suasion has hardly any effect on taxpayers’ compliance. |
| Keywords: | tax compliance, moral suasion, field experiment |
| JEL: | H26 H71 |
| Date: | 2012–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:qut:dpaper:285&r=exp |
| By: | Giacomo Degli Antoni (Department of Law, Universitˆ of Parma); Gianluca Grimalda (University Jaume I of Castell—n - Economics Department) |
| Abstract: | Many scholars have stressed the importance of membership in associations as one of the main determinants of inter-personal trust (e.g. Zucker, 1986; Coleman, 1990; Lahno, 1995). In particular, Olson (1982) and Putnam et al. (1993) provided two different accounts of the role of private voluntary associations in affecting propensity to trust. Olson emphasized the tendency of some groups to pursue private interests and lobby for preferential policies. From this point of view, associations do not contribute to create a social fabric of trust, but instead increase divisions. By contrast, Putnam et al. (1993: 88) stated that voluntary associations Òinstill in their members habits of cooperation, solidarity and public-spiritednessÓ. We carried out an experimental analysis aimed at investigating the propensity to cooperate of voluntary members of different kinds of associations compared with propensity to cooperate of people who have never been voluntary members. Association members came from typically ÒOlsonianÓ association Ð i.e. trade unions Ð and typically ÒPutnamianÓ associations Ð i.e. cultural and social welfare or health associations. Our experimental design is based on a standard Investment Game (Berg et al. 1995). It comprises an in-group treatment, where members interact with other members of their own association, and an out-group treatment, in which members are paired with people from the general population. All interactions are anonymous. To the best of our knowledge, the present study represents the first attempt to investigate the relationship between voluntary participation in different kinds of associations and propensity to cooperate by involving people of different age, education and socio-economic status (previous contributions focused on samples of college students: Glaeser et al. 2000, Anderson et al. 2004). Our preliminary evidence shows that: ¥ Voluntary members of associations contribute significantly more (around 50%) than non- members, both in the in-group and in the out-group treatment; this is a much higher proportion than what found by Ruffle and Sosis (2006) and Hargreaves-Heap and Zizzo (2009), who on the contrary found no significant difference; ¥ The type of associations of which people are members affects the patterns of cooperation. We find in-group favoritism for members of Olson-type associations, i.e. they cooperate significantly more with their fellow members than with people from the general public. No in-group favoritism is found for Putnam-type associations members. Moreover, Putnam- type associates cooperate significantly more than non-members with people from the general public, while members of Olson-type associations contribute as non-members when paired with people from the general public. These results seem to confirm the original intuition of the two authors. |
| Keywords: | Propensity to trust; Voluntary membership; Olson-type and Putnam-type associations; In-group favoritism; Out-group hostility; Natural groups; Field experiment |
| JEL: | C93 L31 A13 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp37&r=exp |
| By: | Tubetov, Dulat; Maart, Syster Christin; Musshoff, Oliver |
| Abstract: | The agricultural sectors of Kazakhstan and Germany are at different development levels. One possible explanation for this might be the different investment behavior of farmers. We experimentally analyze whether the investment behavior of farmers is consistent with the normative benchmarks of the net present value criterion or the real options approach. Furthermore, we experimentally compare the investment behavior of farmers in the two countries in an agricultural and a non-agricultural treatment. In addition, farmers were confronted with the two treatments in a different order. Our results show that both theories cannot exactly predict the investment behavior of farmers. Farmers invest later than the net present value criterion suggests and earlier than the real options approach suggests. However, German farmers invest later than Kazakhstani farmers, which mean that the investment behavior of German farmers is closer to the superior real options approach. Therefore, the different investment behavior might partly be an explanation for different development levels of the agricultural sectors of the two countries. Moreover, results are independent from the framing of an agricultural and a non-agricultural treatment. However, farmers learn from their former investment decisions and consider the value of waiting over time. |
| Keywords: | Experimental Economics, Investment Timing, Real Options, Kazakhstan, Germany, Farm Management, C91, D03, D81, D92, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124650&r=exp |
| By: | Tsusaka, Takuji W.; Kajisa, Kei; Pede, Valerien O.; Aoyagi, Keitaro |
| Keywords: | behavioral games, field experiments, spatial econometrics, dictator game, public goods game, irrigation., Institutional and Behavioral Economics, C59, D01, Q25, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124789&r=exp |
| By: | Ihli, Hanna Julia; Maart, Syster Christin; Musshoff, Oliver |
| Abstract: | In agriculture, long-term decisions are usually made in an environment which is almost completely dynamic. For example, uncertainty arises from weather and climatic conditions. (Dis)investment in irrigation technology on farms has become more prominent over the past decade. The use of irrigation has become crucial in many parts of the world as an adaptation strategy to climate change. The purpose of this study is to test whether the Real Options Approach can help to explain why farmers often choose to postpone (dis)investments that appear to be immediately profitable. We combine investment and disinvestment decisions in one experiment using a “within-subject” design and carrying out a comparative analysis between the Net Present Value approach and the Real Options Approach in order to ascertain which of the methods provides a better prediction of the investment and disinvestment behavior of farmers. In our study, we consider a simple optimal stopping (dis)investment problem in which farmers can invest in as well as abandon irrigation technology. Our results show that both theories do not explain the observed (dis)investment behavior exactly. However, some evidence was found that the Real Options Approach provides a better prediction of the (dis)investment behavior of farmers than the Net Present Value approach. Moreover, we find that farmers learn from repeated investment decision-making and consider the value of waiting over time, whereas in disinvestment situations, farmers exaggerate the option to delay. We also find that farmers demonstrate different (dis)investment behavior depending on the order in which they were faced with the investment and disinvestment treatments. |
| Keywords: | Experimental Economics, Investment, Disinvestment, Inertia, Real Options, Agribusiness, Farm Management, Risk and Uncertainty, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124532&r=exp |
| By: | Shakun D. Mago (Department of Economics, Robins School of Business, University of Richmond, USA); Anya C. Savikhin (Becker Friedman Institute for Economic Research, The University of Chicago, USA); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University, USA) |
| Abstract: | We experimentally investigate the effect of social identification and information feedback on individual behavior in contests. Identifying subjects through photo display decreases efforts. Providing information feedback about others’ effort does not affect the aggregate effort levels but it does change the dynamics of individual behavior. We develop a behavioral model based on relative payoff maximization, and use it to estimate the degree of pro-social/status-seeking behavior. We find that decrease in ‘social distance’ between group members through photo display promotes pro-social behavior. Information feedback reduces the within-group volatility in effort level and facilitates greater adherence to the ‘group norm.’ Finally, in contrast to standard theoretical predictions, we find significant over-expenditure of efforts in all treatments. This overdissipation can be explained by a combination of non-monetary utility of winning and relative payoff maximization. |
| Keywords: | contest, information, identification, over-dissipation, experiments |
| JEL: | C72 C91 D72 D74 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:12-15&r=exp |
| By: | Mercedes Esteban Bravo; Agata Leszkiewicz; José M. Vidal-Sanz |
| Abstract: | The quality of Conjoint Analysis estimations heavily depends on the alternatives presented in the experiment. An efficient selection of the experiment design matrix allows more information to be elicited about consumer preferences from a small number of questions, thus reducing experimental cost and respondent's fatigue. The statistical literature considers approximate optimal design (see Kiefer, 1959), and typically selects the same combination of stimuli more than once. However in the context of conjoint analysis, replications do not make sense for individual respondents. In this paper we present a general approach to compute optimal designs for conjoint experiments in a variety of scenarios and methodologies: continuous, discrete and mixed attributes types, customer panels with random effects, and quantile regression models. We do not compute good designs, but the best ones according to the size (determinant or trace) of the information matrix of the associated estimators without repeating profiles as in Kiefer's methodology. We handle efficient optimization algorithms to achieve our goal, avoiding the use of widespread ad-hoc intuitive rules |
| Keywords: | Conjoint Analysis, Optimal experimental designs, Optimization |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb121405&r=exp |
| By: | Agnes Bäker (University of Tübingen, Faculty of Economics and Social Sciences, Germany); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Groupm Jena); Kerstin Pull (University of Tübingen, Faculty of Economics and Social Sciences, Germany); Manfred Stadler (University of Tübingen, Faculty of Economics and Social Sciences, Germany) |
| Abstract: | We consider three-person envy games with a proposer, a responder, and a dummy player. In this class of games, the proposer, rather than allocating a constant pie, chooses the pie size which the responder can then accept or reject while the dummy player can only refuse his own share. While the agreement payoffs for the responder and the dummy are exogenously given, the proposer acts as the residual claimant who - in case of responder acceptance - receives whatever is left after the two exogenously given agreement payoffs have been deducted from the pie. Consistent with earlier findings from three-person generosity games, we find inequality aversion to be strongly context-dependent and affected by the (in)equality of exogenously given agreement payoffs. Motivated by these findings, we present a stylized model on context-dependent inequality aversion that accounts for the observed effects. |
| Keywords: | Experimental economics, envy game |
| JEL: | C72 C91 D63 |
| Date: | 2012–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2012-023&r=exp |
| By: | Salas, Paula Cordero |
| Keywords: | Financial Economics, Public Economics, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124503&r=exp |
| By: | Boxall, Peter C.; Perger, Orsolya; Packman, Katherine |
| Keywords: | Resource /Energy Economics and Policy, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare12:124247&r=exp |
| By: | Lionel Page (QUT); David Savage (QUT); Benno Torgler (QUT) |
| Abstract: | This study explores people's risk attitudes after having suffered large real-world losses following a natural disaster. Using the margins of the 2011 Australian floods (Brisbane) as a natural experimental setting, we find that homeowners who were victims of the floods and face large losses in property values are 50% more likely to opt for a risky gamble - a scratch card giving a small chance of a large gain ($500,000) - than for a sure amount of comparable value ($10). This finding is consistent with prospect theory predictions of the adoption of a risk-seeking attitude after a loss. |
| Keywords: | Decision under risk, large losses, natural experiment |
| JEL: | D03 D81 C93 |
| Date: | 2012–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:qut:auncer:2012_6&r=exp |
| By: | Perkis, David F.; Cason, Timothy N.; Tyner, Wallace E. |
| Abstract: | Tradable emissions permits have been implemented to control pollution levels in various markets around the world and represent a major component of legislative efforts to control greenhouse gas (GHG) emissions in the United States. Because permits are supplied for a fixed level of pollution, allowing the market for permits to determine the price, there is a desire for price control mechanisms which would protect firms otherwise susceptible to price spikes caused by fluctuations in the demand for pollution abatement. We test permit markets in an experimental laboratory setting to determine the effectiveness of several price control mechanisms. Evidence suggests that both permit supply adjustments and traditional price ceilings (hard ceilings) effectively limit elevated prices in this setting. In contrast, reserve auctions (associated with soft ceiling designs) do not consistently control prices, especially when a minimum reserve permit price is applied. Furthermore, the grandfathering of permits allows permit sellers to realize significant welfare gains at the expense of buyers under a soft ceiling policy. Of the two ceiling options, our results point towards a hard ceiling as the preferred mechanism for controlling short term price increases. |
| Keywords: | Tradable Emissions Permit Market, Price Controls, Hard Ceiling, Soft Ceiling, Experimental Economics, Environmental Economics and Policy, Institutional and Behavioral Economics, Resource /Energy Economics and Policy, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124096&r=exp |
| By: | Caputo, Vincenzina; Canavari, Maurizio; Nayga Jr., Rodolfo M. |
| Keywords: | Crop Production/Industries, |
| Date: | 2012–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124926&r=exp |
| By: | Richards, Timothy J.; Green, Gareth |
| Keywords: | Demand and Price Analysis, Environmental Economics and Policy, Financial Economics, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124764&r=exp |
| By: | Palma, Marco A.; Zhang, Yu Yvette |
| Abstract: | Auctions are commonly used when a seller is unsure about the values that potential buyers attach to the object being sold. Bidders’ willingness to pay can be elicited in the form of bids. Many auctions are designed to be truth revealing such that bidders’ optimal strategy is to bid their true value. However, people sometimes do not bid sincerely; in particular off-margin bidders, whose values are far below or above the market-clearing price, are often observed not to bid sincerely (Shorgen et al. 2001). Low-value bidders might believe they will never win, while high-value bidders might believe they will never lose. Therefore, off-margin bidders often do not reveal their true values (Miller and Plott, 1985; Franciosi et al. 1993). For example, Knetsch et al. (2001) found that a second-price auction might not engage low-value bidders, whereas a ninth-price auction might not engage high value bidders. This paper presents a combined choice ranking and 11th-price sealed-bid auction mechanism which reveals the values of both on- and off- margin consumers for seven fruit products. Unlike experimental auctions that use lab-induced values to generate on- and off-margin bidders, the choice rankings reveal bidders’ preference and signal their relative positions on the value distributions. We found that low-value bidders tend not to bid attentively while high-value bidders place bids strongly agreeing with their rankings of the products. Our approach provides an effective mechanism to discriminate sincere bidders from casual bidders and improves the reliability of the elicitation of consumer valuations. |
| Keywords: | Experiments, 11th-price sealed-bid auction, choice rankings, consumer valuations, fruit products, novel products., Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, Research Methods/ Statistical Methods, C91, D03, D44, |
| Date: | 2012–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124602&r=exp |
| By: | Maack, Moritz; Maart, Syster Christin; Musshoff, Oliver |
| Abstract: | In order to stimulate investments, agricultural policies frequently use price floors, which guarantee a price above a certain limit. In some cases, however, a price floor does not have the desired effects. In this study, we experimentally analyse differences in the investment be-haviour with respect to the presence of a price floor and compare the actual investment be-haviour to normative benchmarks of the net present value and the real options approach. Furthermore, we look at treatment order and learning effects. The results show that the price floor has no significant impact on the decision behaviour of participants, whereas the effects of treatment order were statistically significant. Regarding the analysis of policy impacts, the latter result shows that the investment reluctance arising from an abolishment of a price floor is stronger than the investment stimulation arising from the introduction of a price floor. Consequently, neither the net present value nor the real options approach is appropriate to predict the investment behaviour in general. Nevertheless, we found out that the predictions of the real options approach enable an approximation of the participants’ investment behav-iour if the individuals have an adequate chance to learn from personal experience. |
| Keywords: | Price floors, investment decisions, real options, experimental economics., Demand and Price Analysis, C91, D81, E61., |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare12:124328&r=exp |
| By: | Simeon Schudy; Verena Utikal |
| Abstract: | We investigate the consequences of imperfect data privacy on information acquisition about personal health status. In a simplified game of persuasion players decide on whether or not to acquire information about their health status before searching for a matching partner (e.g. an insurance company). We contrast three institutional settings: automatic dissemination of certified test results, perfect data privacy and imperfect data privacy about certified test results (i.e. potentially involuntary dissemination). Assuming that the ex-ante expected payoff of a match with an unknown type is positive, we find that equilibria with complete information acquisition and complete information revelation exist only under perfect and imperfect data privacy whereas equilibria without any information acquisition exist under all institutional settings. We test our predictions in a laboratory experiment. Indeed, both imperfect and perfect data privacy yield almost perfect information acquisition. Automatic dissemination leads to incomplete information acquisition. |
| Keywords: | data privacy, endogenous information acquisition, health, experiment |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0076&r=exp |
| By: | Saenger, Christoph; Torero, Maximo; Qaim, Matin |
| Abstract: | Asymmetry of information is a fundamental problem in agricultural markets. Production contracts remain incomplete if product quality attributes measured by the buying company remain unobservable for the selling farmer. Opportunistic buyers would report lower than actual output quality, negatively affecting farmers’ compensation given it is directly linked to quality. When farmers factor in the buyer’s opportunistic behavior, underinvestment may occur, negatively affecting farm productivity. Using the example of the Vietnamese dairy industry, a field experiment is conducted in which randomly selected dairy farmers are entitled to independently verify milk testing results. Farm-level output data are complemented with household information from two rounds of comprehensive surveys conducted before and at the end of the intervention. We find a 10 percent higher use of inputs for treatment farmers, also resulting in significantly higher dairy output; welfare levels increase for a specific subgroup of farmers. As the buying company had not underreported output quality despite the existing information asymmetry, third-party enforcement enabled the company to credibly signal its fair type to farmers, leading to a Pareto improvement in the supply chain. While producers benefit directly from higher farm productivity, buying companies are better off due to lower per-unit transaction costs when procuring the farm output. |
| Keywords: | contract farming, dairy, Vietnam, field experiment, RCT, information asymmetry, developing country, smallholder, Agribusiness, Institutional and Behavioral Economics, International Development, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124628&r=exp |
| By: | Markussen, Thomas (University of Copenhagen); Reuben, Ernesto (Columbia University); Tyran, Jean-Robert (University of Copenhagen) |
| Abstract: | The ability of groups to implement efficiency-enhancing institutions is emerging as a central theme of research in economics. This paper explores voting on a scheme of intergroup competition, which facilitates cooperation in a social dilemma situation. Experimental results show that the competitive scheme fosters cooperation. Competition is popular, but the electoral outcome depends strongly on specific voting rules of institutional choice. If the majority decides, competition is almost always adopted. If likely losers from competition have veto power, it is often not, and substantial gains in efficiency are foregone. |
| Keywords: | tournament, competition, public goods, cooperation, voting |
| JEL: | D72 J33 H41 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6620&r=exp |
| By: | Sergio Currarini (Department of Economics, University of Bristol and Dipartimento di Economia, Universita' Ca' Foscari di Venezia); Friederike Menge (School of Economics, University of Nottingham, University Park Campus and Department of Economics (AE1), Maastricht University) |
| Abstract: | School of Economics, University of Nottingham, University Park Campus and Department of Economics (AE1), Maastricht University |
| Keywords: | In-Group Bias, Homophily, Endogenous Matching, Experiments, Game Theory |
| JEL: | D03 D01 C91 C92 C7 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2012.37&r=exp |
| By: | Ke, Changxia; Konrad, Kai A.; Morath, Florian |
| Abstract: | Victorious alliances often fight about the spoils of war. We consider experimentally when members of victorious alliances accept a peaceful division of the spoils, and when they fight against each other, and how the inability to commit to a peaceful division affects their effort contributions in their fight against a common enemy. First, we find that an asymmetric split of the prize induces a higher likelihood of internal fight and, in turn, reduces the effort contributions in the fight against a joint enemy. Second, non-binding declarations on how to divide the spoils in case of victory do not help to mitigate the holdup problem. -- |
| Keywords: | conflict,contest,alliance,hold-up problem,experiment |
| JEL: | D72 D74 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbfff:spii2012104&r=exp |
| By: | Iskandar, Deden Dinar; Wuenscher, Tobias |
| Abstract: | The degradation of environmental quality has been one of the main concerns in Indonesia. The government has mentioned the environmental tax as the instrument of environmental management; however, the primary potential problem will be the issue of compliance. Inspired by the situation in Indonesia, this study is expected to contribute on environmental regulation and tax compliance literatures by examining and comparing the impact of bribery, financial reward, and religious attitude on compliance in a developing country where the bribery prevails. The study employs laboratory experiment approach. The results indicate that bribery has the strongest impact; the presence of bribery significantly worsens the compliance. Financial reward enhances the compliance only if the bribery is curbed, while religious attitude has no significant impact. |
| Keywords: | Environmental tax, compliance, laboratory experiment, Environmental Economics and Policy, Public Economics, |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare12:124316&r=exp |
| By: | Kellner, Christian; Riener, Gerhard |
| Abstract: | We test the implications of ambiguity aversion in a principal-agent problem with multiple agents. Models of ambiguity aversion suggest that, under ambiguity, comparative compensation schemes may become more attractive than independent wage contracts. We test this by presenting agents with a choice between comparative reward schemes and independent contracts, which are designed such that under uncertainty about output distributions (that is, under ambiguity), ambiguity averse agents (and only those) should typically prefer comparative reward schemes, independent of their degree of risk aversion. We indeed find that the share of agents who choose the comparative scheme is higher under ambiguity than in the case of known output distributions. -- |
| Keywords: | ambiguity aversion,comparative compensation schemes,Ellsberg urn,contract design |
| JEL: | D01 D03 D81 M55 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:55&r=exp |
| By: | Debopam Bhattacharya |
| Abstract: | In real-life, individuals are often assigned to binary treatments according to existing treatment protocols. Such protocols, when designed with “taste-based” motives, would be productively inefficient in that the expected returns to treatment for the marginal treatment recipient would vary across covariates and be larger for discriminated groups. This cannot be directly tested if assignment is based on more covariates than the researcher observes, because then the marginal treatment recipient is not identified. We present (i) a partial identification approach to detecting such inefficiency which is robust to selection on unobservables and (ii) a novel way of point-identifying the necessary counterfactual distributions by combining observational datasets with experimental estimates. These methods can also be used to (partially) infer risk-preferences which may rationalize the observed treatment allocations. Specifically, existing healthcare datasets can be analzyed with the proposed tools to test the allocational efficiency of medical treatments. Using our methodology on data from the Coronary Artery Surgery Study in the US, which combined experimental and observational components, we find that after controlling for age, smokers in the observational dataset had to overcome a higher threshold of expected survival relative to non-smokers in order to qualify for surgery. Our methods are applicable when individuals cannot alter their potential treatment outcomes in response to the treatment regime, unlike in the case of law enforcement. |
| Keywords: | Efficient resource allocation, Taste-based discrimination, Healthcare, Treatment assignment, Data combination, Partial identification |
| JEL: | C31 J15 I12 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:609&r=exp |
| By: | Valle, Haydn; Capon, Tim; Harris, Michael; Reeson, Andrew |
| Abstract: | Designing a conservation auction where bidders know the ecological value of their land poses challenges for policy makers because bidders will tend to increase their asking price. This is known as strategic behaviour, and it is particularly prevalent in sequential auction settings. The tender process ceases to be competitive when strategic behaviour occurs, eroding the efficiency advantages of an auction. To overcome this problem, contract options can be designed such that early winners are restricted in their efforts to strategically manipulate auction outcomes. Simply offering multi-period contracts could achieve this goal if participants need to wait for their contracts to expire before they can change their asking price. This idea was tested in a laboratory setting using computer software to simulate a simplistic multi-period auction for conservation. The results indicate that auctions offering multi-period contracts might be better equipped to constrain strategic behaviour compared to single period contracts. The treatment leads to a more efficient outcome, which supports the conclusion that given certain design intricacies, competition in an auction for conservation can be preserved with the provision of a system that works to ‘lock-in’ winners. |
| Keywords: | Conservation, Biodiversity, Auctions, Strategic Behaviour, Landscape Design, Coordination, Institutional and Behavioral Economics, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare12:124466&r=exp |
| By: | Kuhnen, Camelia M. |
| Abstract: | The goal of this study is to ask whether investors learn differently from gains (positive news) versus losses (negative news), whether learning performance is better or worse when people are actively investing in a security or passively observing the security’s payoffs, and whether there are personal characteristics that correlate with learning performance. The experimental evidence documented here indicates that the ability to learn from financial information is on average worse in the loss domain, in particular if the investor has personally experienced the prior outcomes of the financial asset considered. Within individual, learning from gains versus losses, or during active versus passive involvement, are not perfectly correlated, indicating that there exists heterogeneity across people with respect to the type of financial information or context to which they are the most sensitive. Learning performance is determined by acquired financial expertise as well as by genetic factors related to memory and cognitive control. |
| Keywords: | financial decision making; learning; gains; losses; genes; COMT; neuroeconomics |
| JEL: | G11 D83 C91 |
| Date: | 2012–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39412&r=exp |
| By: | Heller, Yuval |
| Abstract: | Experimental evidence suggest that people only use 1-3 iterations of strategic reasoning, and that some people systematically use less iterations than others. In this paper, we present a novel evolutionary foundation for these stylized facts. In our model, agents interact in finitely repeated Prisoner's Dilemma, and each agent is characterized by the number of steps he thinks ahead. When two agents interact, each of them has an independent probability to observe the opponent's type. We show that if this probability is not too close to 0 or 1, then the evolutionary process admits a unique stable outcome, in which the population includes a mixture of “naive” agents who think 1 step ahead, and “sophisticated” agents who think 2-3 steps ahead. |
| Keywords: | Indirect evolution; cognitive hierarchy; bounded forward-looking; Prisoner's Dilemma; Cooperation |
| JEL: | D03 C73 |
| Date: | 2012–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39429&r=exp |
| By: | Hubbs, Todd; Kuethe, Todd H.; Ebel, Robert M.; Morehart, Mitch |
| Keywords: | Farm Management, Research Methods/ Statistical Methods, Risk and Uncertainty, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124822&r=exp |
| By: | Frenkel, Sivan; Heller, Yuval; Teper, Roee |
| Abstract: | Experimental evidence and field data suggest that agents hold two seemingly unrelated biases: failure to account for the fact that the behavior of others reflects their private information (“winner's curse”), and a tendency to value a good more once it is owned (“endowment effect”). In this paper we propose that these two phenomena are closely related: the biases fully compensate for each other in various economic interactions, and induce an “as-if rational” behavior. We pay specific attention to barter trade, of the kind that was common in prehistoric societies, and suggest that the endowment effect and the winner's curse could have jointly survived natural selection together. |
| Keywords: | Bounded Rationality; Endowment Effect; Winner's Curse; Cursed Equilibrium; Evolution |
| JEL: | D82 C73 |
| Date: | 2012–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39430&r=exp |
| By: | Liaukonyte, Jura; Richards, Timothy J.; Rickard, Bradley J.; Kaiser, Harry M. |
| Keywords: | Public Economics, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124682&r=exp |
| By: | de Magistris, Tiziana; Pascucci, Stefano |
| Keywords: | Food Consumption/Nutrition/Food Safety, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124834&r=exp |
| By: | Reise, Christian; Liebe, Ulf; Musshoff, Oliver |
| Abstract: | For a sustainable development of energy production in biogas plants, the continuous supply with substrates is essential. To the authors’ knowledge, there have not been carried out any quantitative investigations of farmers’ choices with regard to supply contracts for biogas plants. Thus, it has been only possible to a limited extent to make predictions for a targeted design of supply contracts. We therefore investigated different factors, which might be relevant for the conclusion of substrate supply contracts, by conducting a survey with 178 German farmers. The survey included a choice experiment, in which participants were confronted with different contract attributes (features). These attributes were varied systematically and thus revealed the influence of each individual feature on the probability of contract conclusion. It becomes clear that the farmers interviewed prefer to conclude contracts with other farmers or with a bioenergy village to non-agricultural investors. The probability of contract conclusion decreases with an increasing lifetime of the contract. However, a contract with a higher sales price is more attractive for the farmers. The investigation of the characteristics of respondents shows that the amount of the premium for one additional year of contractual lifetime depends on the individual valuation of the entrepreneurial freedom of the respective farm manager. It cannot be established that risk-averse farmers tend to prefer contracts with fixed prices over contracts with price adjustment clauses. In addition, there are no great differences in the choice behaviour of farmers who have signed a substrate supply contract and farmers without this experience. Regarding the expansion of renewable energies, these findings are meaningful for a target-aimed design of supply contracts. |
| Keywords: | Renewable energy, bioenergy, substrate supply contract, contract design, (labeled) choice experiment, Resource /Energy Economics and Policy, |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare12:124428&r=exp |
| By: | Shi, Lijia; House, Lisa A.; Gao, Zhifeng |
| Abstract: | In this study, we conduct a series of BDM auctions at multiple marketing outlets to elicit consumers’ willingness-to-pay (WTP) for organic and local blueberries. We find that consumers’ attitudes and their reported valuation of organic and local production of blueberries vary across different types of marketing outlets. Participants’ purchase intentions are controlled in the auction process to see how participants’ purchase intentions for the auctioned product affect their partial bids (WTP for an additional attribute) as well as full bids (WTP for the auctioned product). The results suggest that purchase intention affects full bids, but not partial bids. |
| Keywords: | BDM auction, Multi-store auction, Purchase intention, Willingness-to-pay, Food Consumption/Nutrition/Food Safety, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124998&r=exp |
| By: | Bechtolda, Kai-Brit; Abdulai, Awudu |
| Abstract: | This study employs stated preference data from a choice experiment to address two issues related to consumer demand for functional dairy products: (1) Consumers’ preferences for functional dairy product attributes in Germany, and (2) are willingness-to-pay estimates obtained in the choice experiment affected by starting point bias? Based on a random parameter logit model, our results indicate that dairy products enriched with omega-3 fatty acids and bearing a health claim that is aimed at healthy blood vessels and healthy metabolism are highly valued. Furthermore, results reveal that willingness-to-pay is indeed susceptible to starting point bias. In a two-split sample approach, we find that varying the price levels displayed in the first choice set significantly affects respondents’ willingness-to-pay for functional dairy products. |
| Keywords: | Functional food attributes, choice experiments, preference heterogeneity, willingness-to-pay, starting point bias, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, C25, D12, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124776&r=exp |
| By: | Bonnefon, Jean-François (Centre national de la recherche scientifique); De Neys, Wim (Centre national de la recherche scientifique); Hopfensitz, Astrid (TSE) |
| Abstract: | The capacity to trust wisely is a critical facilitator of success and prosperity, and it has been conjectured that people of higher intelligence were better able to detect signs of untrustworthiness from potential partners. In contrast, this article reports five Trust Game studies suggesting that reading trustworthiness on the faces of strangers is a modular process. Trustworthiness detection from faces is independent of general intelligence (Study 1) and effortless (Study 2). Pictures that include non-facial features such as hair and clothing impair trustworthiness detection (Study 3) by increasing reliance on conscious judgments (Study 4), but people largely prefer to make decisions from this sort of pictures (Study 5). In sum, trustworthiness detection in an economic interaction is a genuine and effortless ability, possessed in equal amount by people of all cognitive capacities, but whose impenetrability leads to inaccurate conscious judgments and inappropriate informational preferences. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25848&r=exp |
| By: | Costanigro, Marco; Deselnicu, Oana; Kroll, Stephan |
| Abstract: | Using a best-worst ranking exercise we compare the inferences made by consumers regarding the nutritional value and healthiness of fluid milk and soymilk beverages under several combinations of three labeling regimes: front label, back label ( including the nutritional information panel), and an index measure of nutrition value, the Ratio of Recommended to Restricted nutrients (RRR score). We find that, when only front label (process) information is available, consumers tend to overstate the relevance of certain product attributes (e.g. organic) and underestimate the effect of others (soy vs. cow milk). Indeed, product rankings significantly change when the information treatment includes the nutritional panel and/or RRR scores (outcome labels). Interestingly, nutritional panel and RRR scores are found to induce similar product rankings. A similar experiment is conducted to measure consumers’ ability to assess the (relative) environmental impact of alternative milk and soymilk products. We find that rankings and judging criteria are much more heterogeneous for this task, suggesting that environmental impact information contained in existing labels is minimal or subjectively interpreted. |
| Keywords: | Food and Agricultural Marketing, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Marketing, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124615&r=exp |
| By: | Donja Darai; Silvia Grätz |
| Abstract: | Physical attractiveness is associated with goodness in the literature. In particular, people think of attractive ones as being more socially skillful, trustworthy, or likeable. This "beauty-is-good" stereotype can induce a beauty premium in various economic interactions. Cooperative behavior might be one more such attribute that is elicited by physical attractiveness. In this paper we analyze this potential relationship. We combine data from 211 episodes of a television game show, in which contestants play a face-to-face prisoner's dilemma game, with data from independent facial appearance ratings of these contestants. The main finding is that attractiveness is an important factor for cooperative behavior even in an environment of very high stakes, communication, and past behavior. Although there is no difference between facially attractive and unattractive contestants regarding the decision to cooperate, facing a facially attractive opponent increases cooperation significantly. Especially, in mixed-gender interactions males and females are more likely to cooperate with a facially attractive counterpart. The marginal beauty premium for a one standard deviation increase in facial attractiveness amounts to an increase of a contestant's expected earnings of £2 153. Moreover, the probability to obtain positive earnings increases by 5.9 percentage points for facially attractive contestants. |
| Keywords: | Beauty premium, stereotypes, cooperation, prisoner's dilemma |
| JEL: | C71 D83 Z13 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:082&r=exp |
| By: | Antoni Bosch-Domènech; Joaquim Silvestre |
| Abstract: | Various experimental procedures aimed at measuring individual risk aversion involve a list of pairs of alternative prospects. We first study the widely used method by Holt and Laury (2002), for which we find that the removal of some items from the lists yields a systematic decrease in risk aversion. This bias is quite distinct from other confounds that have been previously observed in the use of the Holt and Laury method. It may be related to empirical phenomena and theoretical developments where better prospects increase risk aversion. Nevertheless, we have also found that the more recent elicitation method due to Abdellaoui et al. (2011), also based on lists, does not display any statistically significant bias when the corresponding items of the list are removed. Our results suggest that methods other than the popular Holt and Laury one may be preferable for the measurement of risk aversion. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1318&r=exp |
| By: | Bigoni, Maria; Fridolfsson, Sven-Olof; Le Coq, Chloé; Spagnolo, Giancarlo |
| Abstract: | This paper presents results from a laboratory experiment on the channels through which different law enforcement strategies deter cartel formation. With leniency policies offering immunity to the first reporting party a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears then mainly driven by 'distrust', the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter the most, and low fines are exploited to punish defections. The results appear relevant to several other crimes sharing cartels' strategic features, including corruption and financial fraud. |
| Keywords: | Antitrust; Betrayal; Cartels; Collusion; Distrust; Fines; Leniency; Whistleblowers |
| JEL: | C92 D03 K21 K42 L41 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9002&r=exp |
| By: | Vassalos, Michael; Hu, Wuyang; Woods, Timothy; Schieffer, Jack; Dillon, Carl R. |
| Keywords: | Crop Production/Industries, Demand and Price Analysis, Marketing, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124773&r=exp |
| By: | Weicksel, Scott; Lupi, Frank; Kaplowitz, Michael; Chen, Min |
| Keywords: | Research Methods/ Statistical Methods, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124772&r=exp |