New Economics Papers
on Experimental Economics
Issue of 2012‒12‒10
fifteen papers chosen by

  1. Reciprocal Relationships in Tax Compliance Decisions By Cécile Bazart; Aurélie Bonein
  2. Performance of a reciprocity model in predicting a positive reciprocity decision By Bhirombhakdi, Kornpob; Potipiti, Tanapong
  3. Investment behavior in a constrained dictator game By Coenen, Michael; Jovanovic, Dragan
  4. Risk attitudes, development, and growth: Macroeconomic evidence from experiments in 30 countries By Vieider, Ferdinand M.; Chmura, Thorsten; Martinsson, Peter
  5. League-Table Incentives and Price Bubbles in Experimental Asset Market s By Cheung, Stephen L.; Coleman, Andrew
  6. Strategic obfuscation and consumer protection policy in financial markets: Theory and experimental evidence By Gu, Yiquan; Wenzel, Tobias
  7. Exposure to television and individual beliefs: Evidence from a natural experiment By Hennighausen, Tanja
  8. Effects of corporate social responsibility and irresponsibility policies By Armstrong, J. Scott; Green, Kesten C.
  9. Do institutional factors matter for improved solid waste management? By Yalew, Amsalu Woldie
  10. Employment Policies, Hiring Practices and Firm Performance By Blasco, Sylvie; Pertold-Gebicka, Barbara
  11. Causes of Mode Effects: Separating Out Interviewer and Stimulus Effects in Comparisons of Face-to-Face and Telephone Surveys By Roberts, Caroline; Jäckle, Annette
  12. GINI DP 45: The Power of Networks. Individual and Contextual Determinants of Mobilising Social Networks for Help By Natalia Letki; Mierina, I. (Inta)
  13. Immigrants, Ethnic Identities and the Nation-State By Constant, Amelie F.; Zimmermann, Klaus F.
  14. And Now, The Rest of the News: Volatility and Firm Specific News Arrival By Robert F. Engle; Martin Klint Hansen; Asger Lunde
  15. My-World-in-My-Tablet: an Architecture for People with Physical Impairment By Mario Caruso; Febo Cincotti; Francesco Leotta; Massimo Mecella

  1. By: Cécile Bazart (LAMETA, University of Montpellier I, France); Aurélie Bonein (University of Rennes 1 - CREM UMR CNRS 6211, France)
    Abstract: Reciprocity considerations are important to the tax compliance problem as they may explain the global dynamics of tax evasion, beyond individual tax evasion decisions, toward a downward or upward spiral. To provide evidence on reciprocity in tax compliance decisions, we have conducted a laboratory experiment in which we introduced two types of inequities. The first type of inequity is called vertical, because it refers to inequities introduced by the government when it sets different fiscal parameters for identical taxpayers, while the second type of inequity is called horizontal because it refers to the fact that taxpayers may differ in tax compliance decisions. In this setting, taxpayers may react to a disadvantageous or advantageous inequity through negative or positive reciprocal behaviors, respectively. Our results support the existence of negative and positive reciprocity in both vertical and horizontal cases. When both inequities come into play and may induce reciprocal behaviors in opposite directions, the horizontal always dominates the vertical.
    Keywords: Behavioral economics; Experimental economics; Fairness; Tax evasion; Tax compliance
    JEL: H26 C91
    Date: 2012–11
  2. By: Bhirombhakdi, Kornpob; Potipiti, Tanapong
    Abstract: This study experimentally tests the performance in predicting decisions of a reciprocity model that was proposed by Dufwenberg et al. (2004). By applying a new approach, the study directly and individually predicts a subject's future decision from his past decision. The prediction performance is measured by the rate of correct predictions (accuracy) and the gain in the rate of the correct predictions (informativeness). Six scenarios of trust game are used to test the model's performance. Further, we compare the performance of the model with two other prediction methods; one method uses a decision in a dictator game to predict a decision in a trust game; the other uses personal information including IQ-test scores, personal attitudes and socio-economic factors. Seventy-nine undergraduate students participated in this hand-run experimental study. The results show that the reciprocity model has the best performance when compared with other prediction methods.
    Keywords: Reciprocity; Kindness; Performance; Trust Game
    JEL: C71 C91
    Date: 2012–10–29
  3. By: Coenen, Michael; Jovanovic, Dragan
    Abstract: We analyze a constrained dictator game in which the dictator splits a pie which will be subsequently created through simultaneous investments by herself and the recipient. We consider two treatments by varying the maximum attainable size of the pie leading to either high or low investment incentives. We find that constrained dictators and recipients invest less than a model with self-interested players would predict. While the splitting decisions of constrained dictators correspond to the theoretical predictions when investment incentives are high, they are more selfish when investment incentives are low. Overall, team productivity is negatively affected by lower investment incentives. --
    Keywords: Bargaining Game,Dictator Game,Investment Incentives,Team Production
    JEL: C72 C91 D01
    Date: 2012
  4. By: Vieider, Ferdinand M.; Chmura, Thorsten; Martinsson, Peter
    Abstract: We measure risk attitudes in 30 different countries in a controlled, incentivized experiment (N = 3025). At the macroeconomic level, we find a strong and highly significant negative correlation between the risk tolerance of a country and income per capita. This gives rise to a paradox, seen that risk tolerance has been found to be positively associated with personal income within countries. We show that this paradox can be explained by unified growth theory. These results are consistent with the prediction that risk attitudes act as a transmission mechanism for growth by encouraging entrepreneurship. Furthermore, our study shows that risk attitudes vary considerably between countries and that for typical experimental stakes, risk seeking or neutrality is just as frequent as risk aversion. --
    Keywords: risk attitudes,cultural comparison,economic growth,comparative development
    JEL: D01 D03 D81 E02 O10 O11 O12
    Date: 2012
  5. By: Cheung, Stephen L.; Coleman, Andrew
    Abstract: We study experimental markets in which participants face incentives modeled upon those prevailing in markets for managed funds. Each participant's portfolio is periodically evaluated at market value and ranked in a league table according to short-term paper returns. Those who rank highly attract a larger share of new fund inflows. In an environment in which prices are typically close to intrinsic value, the effect of incentives is mild. However in an environment in which markets are prone to bubble, mispricing is greatly exacerbated by incentives and even become more pronounced with experience.
    Keywords: asset market experiments; tournament incentives; managed funds markets; price bubbles; league table
    Date: 2012–11
  6. By: Gu, Yiquan; Wenzel, Tobias
    Abstract: This paper studies obfuscation decisions by firms in retail financial markets theoretically and experimentally. We show that more prominent firms are more likely to obfuscate. While prominent firms always choose maximum obfuscation, the obfuscation by less prominent firms depends on the degree of asymmetry in prominence and consumer protection policy. We evaluate the impact of a consumer protection policy that limits the scope of obfuscation. We show that such a policy may not be effective as less prominent firms may increase their obfuscation practice. --
    Keywords: Obfuscation,Financial markets,Consumer protection,Experiment
    JEL: G20 D14 D18 C92
    Date: 2012
  7. By: Hennighausen, Tanja
    Abstract: Does the information provided by mass media have the power to persistently affect individual beliefs about the drivers of success in life? To answer this question empirically, this contribution exploits a natural experiment on the reception of West German television in the former German Democratic Republic. After identifying the impact of Western television on individual beliefs and attitudes in the late 1980s, longitudinal data from the German Socio-Economic Panel is used to test the persistence of the television effect on individual beliefs during the 1990s. The empirical findings indicate that Western television exposure has made East Germans more inclined to believe that effort rather than luck determines success in life. Furthermore, this effect still persists several years after the German reunification. --
    Keywords: media,beliefs,East Germany,GSOEP
    JEL: D78 D83 H89 P39
    Date: 2012
  8. By: Armstrong, J. Scott; Green, Kesten C.
    Abstract: This article reviews experimental evidence on the effects of policies intended to promote behavior by firms that is more socially responsible and less socially irresponsible. Corporate social responsibility (CSR) can provide firms with opportunities for profit, but changes are likely to increase total welfare only if firms adopt them freely and without taxpayer subsidies. Mandated CSR circumvents people’s own plans and preferences, distorts the allocation of resources, and increases the likelihood of irresponsible decisions. Evidence that government policies will increase welfare and a compelling argument that proven benefits justify reductions in freedom are necessary in order to justify CSR mandates. To date, this has apparently not been achieved. Corporate social irresponsibility (CSI) is concerned with whether firms undertake harmful actions that managers would be unwilling to undertake acting for themselves, or that a reasonable person would expect to cause substantive net harm when all parties are considered. Markets in which stakeholders are free to make decisions in their own interests provide some protection against CSI. Tort and contract law provide additional protection. Nevertheless, managers sometimes act irresponsibly. Codes of ethics that require fair treatment of stakeholders while pursuing long-term profit reduce the risk of irresponsible decisions. Management support and stakeholder accounting are important for successful implementation. Firms may wish to consider these measures; many already have.
    Keywords: accountability; affirmative action; decision making; ethics; externalities; free markets; minimum wage; paternalism; principal-agent problem; regulation; seer-sucker theory; stakeholder accounting; stakeholder theory; sustainability
    JEL: L51 L21 H23
    Date: 2012–12–01
  9. By: Yalew, Amsalu Woldie
    Abstract: There is non-changing behavior of residents in cooperating and contributing for improved solid waste management in spite of increasing provision of solid waste management services in many urban areas. This paper starts from a hypothesis that institutional factors (interventions) are missing. We considered the case of issuing laws and creating awareness about the health and economic burdens due to improper waste management. We applied a paired-t test to test our hypothesis. We find that institutional factors, creating awareness and introducing rules, significantly increase household’s willingness to pay for improved solid waste management services. We find also increasing awareness is more influential than issuing laws. The findings do have important policy implications in reducing not only solid waste management problems but also many other environmental problems in developing countries.
    Keywords: Solid waste management; Rules; Awareness; experimental research; t-test
    JEL: Q53
    Date: 2012–11–20
  10. By: Blasco, Sylvie (GAINS, Université du Maine); Pertold-Gebicka, Barbara (Aarhus University)
    Abstract: In this paper we investigate how active labour market policy programmes affect firms' hiring strategies and, eventually, firms' performance. We focus on counseling and monitoring which may reduce search costs for employers, but which may have ambiguous effect on the employer-employee matching quality and thus on firms' performance. Using a large scale experiment which was conducted in Denmark in 2005-2006 and induced a greater provision of activation, we find that small firms hiring in the districts where the social experiment was conducted changed their hiring practices in favor of unemployed workers and experienced greater turnover than the other firms. Treated firms also experienced no change or a marginal reduction in value added and total factor productivity during the first years after the experiment. These results are consistent with the idea that monitoring creates compulsion effects which counteract the possible improvement in the matching process expected from job search assistance.
    Keywords: active labour market programmes, counseling and monitoring, hiring decisions, firms performance
    JEL: C21 J63 J68
    Date: 2012–11
  11. By: Roberts, Caroline; Jäckle, Annette
    Abstract: We attempt to isolate the causes of mode effects on measurement in a comparison of face-to-face and telephone interviewing, distinguishing between effects caused by differences in the type of question stimulus used in each mode (audio vs. visual) and effects caused by other differences between the modes, notably, the presence or absence of the interviewer. We use data from an experiment conducted in the context of the European Social Survey. Differences in the stimulus did not lead to differential measurement error, but the presence or absence of the interviewer did. Telephone respondents were far more likely to give socially desirable responses than face-to-face respondents.
    Date: 2012–11–23
  12. By: Natalia Letki (PGPE Project, Institute of Sociology, University of Warsaw); Mierina, I. (Inta)
    Abstract: In this paper we treat social networks as a resource of individuals, that is used in conjunction with other types of capital, and similarly to other types of capital, its use is context-specific. We propose a conditional mechanism for how context determines networks use: not only does context affect network mobilisation, but that it affects behaviour of different groups differently. We test this proposition on the example of social and economic polarisation influencing probability of turning to networks for help by different income groups. Our findings show that although the poor have the greatest need to turn to networks to compensate for the shortage of other forms of capital, when context becomes adverse, in comparison with other groups they are always disadvantaged in terms of networks mobilisation.
    Keywords: social capital, networks, inequality, income, post-communist, Central Eastern Europe
    Date: 2012–06
  13. By: Constant, Amelie F. (George Washington University, Temple University); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: In the Western world, multiculturalism has become the way to view and form "nationhood," igniting the interest to understand and model identity. The complexity of identity formation, however, has been firm and ethnic and national identities have been deviating more and more. In this paper, we seek to investigate the nature, role and relationships between ethnic and national identities by using migrants as the natural innovators. The arrival of immigrants can amplify social challenges and both natives and immigrants can see their identities altering and evolving. Individuals in a country can be patriotic, nationalistic, indifferent, apathetic, or subvert and undermining. The openness of the people in the host country, their embracing of new cultures and their respect towards newcomers can play a major role in how immigrants react and how close they remain with the country of origin. The laws of the host country together with the ideals, the self-understanding and the foundation of the sovereign nation can also affect the identities of immigrants and natives at the individual level and at the nation-building level. We present empirical results concerning ethnic and national identities and we discuss the ramifications of the divergence between them. We review surveys and experimental contributions to the study of identity formation and its consequences for economic behavior. Before we conclude we debate the endogeneity issue of identity.
    Keywords: international migration, economic nationalism, colonialism, economics of minorities, ethnic identity, national identity, cultural economics
    JEL: F22 F52 F54 F59 J15 J16 Z10
    Date: 2012–11
  14. By: Robert F. Engle (Stern School of Business, New York University); Martin Klint Hansen (Aarhus University and CREATES); Asger Lunde (Aarhus University and CREATES)
    Abstract: Starting with the advent of the event study methodology, the puzzle of how public information relates to changes in asset prices has unraveled gradually. Using a sample of 28 large US companies, we investigate how more than 3 million firm specific news items are related to firm specific stock return volatility. We specify a return generating process in conformance with the mixture of distributions hypothesis, where stock return volatility has a public and a private information processing component. Following public information arrival, prices incorporate public information contemporaneously while private processing of public information generates private information that is incorporated sequentially. We refer to this model as the information processing hypothesis of return volatility and test it using time series regression. Our results are evidence that public information arrival is related to increases in volatility and volatility clustering. Even so, clustering in public information does not fully explain volatility clustering. Instead, the presence of significant lagged public information effects suggest private information, generated following the arrival of public information, plays an important role. Including indicators of public information arrival explains an incremental 5 to 20 percent of variation in the changes of firm specific return volatility. Contrary to prior financial information research, our investigation favors the view that return volatility is related to public information arrival.
    Keywords: Firm Specific News, Realized Volatility, Public Information Arrival.
    JEL: G14
    Date: 2012–12–04
  15. By: Mario Caruso (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Febo Cincotti (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Francesco Leotta (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Massimo Mecella (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza")
    Abstract: Mobile computing, coupled with advanced types of input interfaces, such as Brain Computer Interfaces (BCIs), can improve the quality of life of persons with dierent disabilities. In this paper we describe the architecture and the prototype of an assistive system, which allows users to express themselves and partially preserve their independence in controlling electrical devices at home. Even in absence of muscular functions, the proposed system would still allows the user some communication and control capabilities, by relaying on non-invasive BCIs. Experiments show how the fully-software realization of the system guarantees effective use with BCIs.
    Keywords: Design, Human Factors
    Date: 2012–02

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