New Economics Papers
on Experimental Economics
Issue of 2013‒01‒07
thirty-two papers chosen by

  1. Six Decades of Top Economics Publishing: Who and How? By Daniel S. Hamermesh
  2. Effect of uncertainty about others’ rationality in experimental asset markets By Eizo Akiyama; Nobuyuki Hanaki;
  3. Separating Will from Grace: An Experiment on Conformity and Awareness in Cheating By Toke Fosgaard; Lars Gaarn Hansen; Marco Piovesan
  4. Peer Effects in Risk Taking By Lahno, Amrei M.; Serra-Garcia, Marta
  5. Learning in Network Games By Romero, José Gabriel; Kovarik, Jaromir; Mengel, Friederike
  6. Temporal stability of risk preference measures By Katerina Straznicka
  7. WP 124: Conditions and motives for voluntary sharing. Results of a solidarity game experiment By Paul Beer; Maarten Berg
  8. The Social Dilemma of Microinsurance: A Framed Field Experiment on Free-Riding and Coordination By Wendy Janssens
  9. Bubbles and Incentives : An Experiment on Asset Markets By Stéphane Robin; Katerina Straznicka; Marie-Claire Villeval
  10. Heartbeat and Economic Decisions: Observing Mental Stress among Proposers and Responders in the Ultimatum Bargaining Game By Uwe Dulleck; Markus Schaffner; Benno Torgler
  11. WP 125: Solidarity in a multicultural neighbourhood. Results of a field experiment By Paul Beer; Maarten Berg
  12. Growing groups, cooperation, and the rate of entry By Eva Ranehill; Frédéric Schneider; Roberto A. Weber
  13. The Economics of Faith: Using an Apocalyptic Prophecy to Elicit Religious Beliefs in the Field By Ned Augenblick; Jesse M. Cunha; Ernesto Dal Bó; Justin M. Rao
  14. Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets By Schmidt, Klaus M.; Spann, Martin; Zeithammer, Robert
  15. Equality-Efficiency Trade-off within French and German Couples – A Comparative Experimental Study By Hélène Couprie; Miriam Beblo; Denis Beninger; François Cochard; Astrid Hopfensitz
  16. Information at a Cost: A Lab Experiment By Pedro Robalo; Rei S. Sayag
  17. Everyone Wants a Chance: Initial Positions and Fairness in Ultimatum Games By Gianluca Grimalda; Anirban Kar; Eugenio Proto
  18. Business Training and Female Enterprise Start-up, Growth, and Dynamics: Experimental evidence from Sri Lanka By de Mel, Suresh; McKenzie, David; Woodruff, Christopher
  19. The RAND Health Insurance Experiment, Three Decades Later By Aviva Aron-Dine; Liran Einav; Amy Finkelstein
  20. The Effects of Information, Social and Economic Incentives on Voluntary Undirected Blood Donations: Evidence from a Randomized Controlled Trial in Argentina By Victor Iajya; Nicola Lacetera; Mario Macis; Robert Slonim
  21. How Much Do Others Matter? Explaining Positional Concerns for Different Goods and Personal Characteristics By Inga Hillesheim; Mario Mechtel
  22. Relative Consumption Concerns or Non-Monotonic Preferences? By Inga Hillesheim; Mario Mechtel
  23. Working or shirking? By Nicholas Bloom; James Liang; John Roberts; Zhichun Jenny Ying
  24. Learning from the experiments that never happened : lessons from trying to conduct randomized evaluations of matching grant programs in Africa By Campos, Francisco; Coville, Aidan; Fernandes, Ana M.; Goldstein, Markus; McKenzie, David
  25. Experimental labor markets and policy considerations: Incomplete contracts and macroeconomic aspects By Casoria Fortuna; Riedl Arno
  26. Predicting health behaviors with economic preferences and perceived control By Lynn Conell-Price; Julian Jamison
  27. Building institutions at the micro-level: Results from a field experiment in property dispute and conflict resolution By Christopher Blattman; Alexandra Hartman; Robert Blair
  28. Are the Smart Kids More Rational ? By Sabrina Bruyneel; Laurens Cherchye; Sam Cosaert; Bram De Rock; Siegfried Dewitte
  29. Difficult Choices: What Influences the Error Variance in a Choice Experiment By Marsh, Dan; Phillips, Yvonne
  30. On the coevolution of social norms in primitive societies By L. Bagnoli; G. Negroni
  31. Beliefs and Public Good Provision with Anonymous Contributors By Wilfredo L. Maldonado; José A. Rodrigues-Neto
  32. A Nudge Isn’t Always Enough By Erin Todd Bronchetti; Thomas S. Dee; David B. Huffman; Ellen Magenheim

  1. By: Daniel S. Hamermesh
    Abstract: Presenting data on all full-length articles published in the three top general economics journals for one year in each of the 1960s through 2010s, I analyze how patterns of co-authorship, age structure and methodology have changed, and what the possible causes of these changes may have been. The entire distribution of number of authors has shifted steadily rightward. In the last two decades the fraction of older authors has almost quadrupled. The top journals are now publishing many fewer papers that represent pure theory, regardless of sub-field, somewhat less empirical work based on publicly available data sets, and many more empirical studies based on data assembled for the study by the author(s) or on laboratory or field experiments.
    JEL: B20 J24
    Date: 2012–12
  2. By: Eizo Akiyama (Faculty of Engineering, Information and Systems. University of Tsukuba); Nobuyuki Hanaki (Ryuchiro Ishikawa);
    Abstract: We investigate the extent to which price deviations from fundamental values in an experimental asset market are due to the uncertainty of subjects regarding others’ rationality. We do so by comparing the price forecasts submitted by subjects in two market environments: (a) all six traders are human subjects (6H), and (b) one human subject interacts with five profit-maximizing computer traders who assume all the traders are also maximizing profit (1H5C). The subjects are told explicitly about the behavioral assumption of the computer traders (in both 6H and 1H5C) as well as which environment they are in. Results from our experiments show that there is no significant difference between the distributions of the initial deviations of the forecast prices from the fundamental values in the two markets. However, as subjects learn by observing the realized prices, the magnitude of deviations becomes significantly smaller in 1H5C than in 6H markets. We also conduct additional experiments where subjects who have experienced the 1H5C market interact with five inexperienced subjects. The price forecasts initially submitted by the experienced subjects follow the fundamental value despite the fact that the subjects are explicitly told that the five other traders in the market are inexperienced subjects. These findings do not support the hypothesis that uncertainty about others’ rationality plays a major role in causing substantial deviation of forecast prices from the fundamental values in these asset market experiments.
    Keywords: Rationality, Common knowledge, Experiment, Asset Markets, Computer Traders.
    JEL: C90 D84
    Date: 2012–11–19
  3. By: Toke Fosgaard (Institute of Food and Resource Economics, University of Copenhagen); Lars Gaarn Hansen (Institute of Food and Resource Economics, University of Copenhagen); Marco Piovesan (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: In this paper we investigate if people cheat more when they observe their peers cheating because they conform or because they become aware that cheating is something to actively consider. In our experiment subjects toss a coin in private and report the outcome (white or black). We reward only those who report white and leave them the possibility to cheat without being discovered. In our 2x2 experimental design, we manipulated subjects’ report sheet to i) suggest (or not) that cheating is an option; ii) suggest that their peers were honest (or dishonest). We find that increasing awareness of cheating as an option significantly increases the probability that women cheat; whereas men – who are already aware that cheating is an option - are not affected. When we suggest that peers have cheated, men cheat significantly more, whereas women do not.
    Keywords: cheating, norms, conformity, awareness, gender differences
    JEL: D63 K42 D81
    Date: 2012–12
  4. By: Lahno, Amrei M.; Serra-Garcia, Marta
    Abstract: This paper examines the effect of peers on individual risk taking. In the absence of informational motives, we investigate why social utility concerns may drive peer effects. We test for two main channels: utility from payoff differences and from conforming to the peer. We show experimentally that social utility generates substantial peer effects in risk taking. These are mainly explained by utility from payoff differences, in line with outcomebased social preferences. Contrary to standard assumptions, we show that estimated social preference parameters change significantly when peers make active choices, compared to when lotteries are randomly assigned to them.
    Keywords: Peer Effects; Decision Making under risk; Social Comparison; Social Preferences; Laboratory Experiment
    JEL: C91 C92 D03 D83
    Date: 2012–12
  5. By: Romero, José Gabriel; Kovarik, Jaromir; Mengel, Friederike
    Abstract: We report the findings of an experiment designed to study how people learn and make decisions in network games. Network games offer new opportunities to identify learning rules, since on networks (compared to e.g. random matching) more rules differ in terms of their information requirements. Our experimental design enables us to observe both which actions participants choose and which information they consult before making their choices. We use this information to estimate learning types using maximum likelihood methods. There is substantial heterogeneity in learning types. However, the vast majority of our participants' decisions are best characterized by reinforcement learning or (myopic) best-response learning. The distribution of learning types seems fairly stable across contexts. Neither network topology nor the position of a player in the network seem to substantially affect the estimated distribution of learning types.
    Keywords: experiments, game theory, heterogeneity, learning, maximum likelihood method, networks
    JEL: C72 C90 C91 D85
    Date: 2012–11–23
  6. By: Katerina Straznicka (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: We examine the temporal stability of risk preference measures obtained by different elicitation methods in a controlled laboratory experiment at two distinct times. Our results indicate remarkable temporal stability of risk measures at the aggregated level and temporal instability at the individual level. We control for the impact of, first, personality traits, and second, performance realized in a market game. When better market performers demonstrate more stable risk preferences, the impact of personality traits is marginal.
    Keywords: Time stability; Risk Preferences; Personality Theory; Experimental economics
    Date: 2012–12–21
  7. By: Paul Beer (AIAS, Universiteit van Amsterdam); Maarten Berg (AIAS, Universiteit van Amsterdam)
    Abstract: This paper studies experimentally the conditions and motives for voluntary solidarity, following a game theoretical approach. The ‘solidarity game’ that is used in this study consists of groups of four players and is based on the solidarity game of Selten and Ockenfels (1998). In each group, two winners, which are either randomly selected or on the basis of their performance on a quiz, distribute 20 credits each (reflecting real money). We tested four hypotheses regarding the effect of various conditions on voluntary sharing, related to the motives for solidary behaviour, viz. self-interest, fairness, neediness and meritocracy. For most of our hypotheses the experiments provided support, although there are a few exceptions. Players share more with others in the first round of the four shots game than in the one shot game, but their gifts decrease quickly as the game progresses, which confirms that they act largely out of self-interest. Players give more to a player from whom they have received money in the previous rounds (fairness, resulting in direct reciprocity). However, players do not give more to co-players who have been generous to others in the previous round, which would have been proof of indirect reciprocity. Players do not give more to a loser than to a winner in the current round, and, consequently, do not equalize the differences in revenue. However, they give more to players who have received relatively little in previous rounds, which suggests that neediness of the potential beneficiary is also a motive. Finally, winners give more in the random based conditions, when they do not really ‘deserve’ to be a winner, than in the performance based conditions, which offers support for the meritocracy hypothesis. The motives that the subjects expressed themselves for their sharing behaviour in answering some post-hoc questions, mirrors their actual behaviour pretty well. Additionally, we also analyse the effect of some personal characteristics, and the party preferences and media use of the players.
    Date: 2012–12
  8. By: Wendy Janssens (VU University Amsterdam)
    Abstract: This paper analyzes free-riding and coordination problems in microinsurance. Our proposition is that the demand for insurance suffers from a social dilemma when formal insurance is introduced in existing risk-sharing networks. Less risk averse individuals offered welfare-improving insurance are tempted to free-ride on the enrollment of their network members while the more risk averse may fail to coordinate. This results in suboptimal demand. Group insurance binds both types to the social optimum. A framed laboratory experiment in Tanzania elicits demand for group versus individual insurance among microcredit clients who typically share risk through joint liability. The experiment demonstrates substantial free-riding but only limited coordination failures. These findings extend the literature on strategic decisions in the presence of a public good and provide a potential explanation for the low take-up of microinsurance.
    Keywords: Framed field experiment; micro health insurance; microfinance; risk-sharing; public good game
    JEL: D71 G21
    Date: 2012–12–18
  9. By: Stéphane Robin (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Katerina Straznicka (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); 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 explore the effects of competitive incentives and of their time horizon on the evolution of both asset prices and trading activity in experimental asset markets. We compare i) a no-bonus treatment based on Smith, Suchanek and Williams (1988) ; ii) a short-term bonus treatment in which bonuses are assigned to the best performers at the end of each trading period ; iii) a long-term bonus treatment in which bonuses are assigned to the best performers at the end of the 15 periods of the market. We find that the existence of bonus contracts does not increase the likelihood of bubbles but it affects their severity, depending on the time horizon of bonuses. Markets with long-term bonus contracts experience lower price deviations and a lower turnover of assets than markets with either no bonuses or long-term bonus contracts. Short-term bonus contracts increase price deviations but only when markets include a higher share of male traders. At the individual level, the introduction of bonus contracts increases the trading activity of males, probably due to their higher competitiveness. Finally, both mispricing and asset turnover are lower when the pool of traders is more risk-averse.
    Keywords: Asset market; bubbles; incentives; bonuses; risk attitudes; experiment
    Date: 2012–12–21
  10. By: Uwe Dulleck; Markus Schaffner; Benno Torgler
    Abstract: In line with experimental economics' goal of better understanding human economic decision making, early research on the ultimatum bargaining game (see Güth Schmittberger, and Schwarze 1982) demonstrated that motives other than pure monetary reward play a role. More recently, the development of of neuroeconomic research techniques has allowed physiological reactions to be recorded as signals of emotional response. In this study, we apply heart rate variability (HRV) to explore the behaviour and physiological reactions during the ultimatum bargaining game of not only responders but also proposers. Because this technology is small and non-intrusive, we are able to run our experiment using a standard experimental economic setup. We find that low offers by a proposer cause signs of mental stress in both the proposer and the responder; that is, both exhibit high ratios of low to high frequency activity in the HRV spectrum.
    Date: 2012–12
  11. By: Paul Beer (AIAS, Universiteit van Amsterdam); Maarten Berg (AIAS, Universiteit van Amsterdam)
    Abstract: This paper investigates the effect of differences in sex, age, ethnicity and residency on the willingness of individuals to share money with others in a solidarity game. The solidarity game that was used in this study consists of groups of four players and has similarities with the well-known ‘dictator game’. The dictator role was either randomly assigned (random conditions) or earned by performing well on a quiz (performance conditions). In each group, two ‘dictators’ could distribute 20 credits (reflecting real money). Contrary to most experimental games, this experiment was carried out both with university students in a laboratory at the University of Amsterdam and with ‘ordinary’ people who visited the Dapper market in a multicultural Amsterdam neighbourhood as subjects. This working paper reports on the latter case. Since the players were informed about the age, the sex, the cultural background and the number of years of residency in the Dapper area of their co-players, we can examine the effect of a difference between two players and of heterogeneity of the group. Thus we test the thesis of Robert Putnam (2007) that ethnic diversity of a group harms both out-group and in-group solidarity. A difference in cultural background between two players appears to have a significantly negative impact on the gift they bestow each other. Natives discriminate against co-players with a Turkish, Moroccan or European background, but not against Surinamese co-players. Surinamese players and players with an ‘other’ cultural background also demonstrated a bias in favour of players of their own or each other’s group compared to natives, Turks, Moroccan and European players. We also found an effect of the ethnic composition of groups on giving, but there is no straightforward relationship between ethnic diversity and the size of gifts. In general, gifts are largest in groups with either three natives or three non-natives, due to intra-ethnic favouritism within these groups. In case of an equal number of natives and non-natives within a group, however, there is little evidence for intra-ethnic favouritism or discrimination against the other ethnic group. Remarkably, we found a similar effect with respect to the diversity of residency within the group, i.e. the number of players who live in the Dapper neighbourhood. Regarding age, both the age of the players and the age difference between the players matters. Up till the age of 50, the size of gifts rises with the age of the player, and gifts are the largest when the players differ about 18.5 years in age, irrespective of who is older and who is younger. Consequently, solidarity seems to be stimulated by a substantial but not too large age difference. Finally, we also examine the relationship between media use and political party preferences on the one hand and gift giving on the other.
    Date: 2012–12
  12. By: Eva Ranehill; Frédéric Schneider; Roberto A. Weber
    Abstract: We study the stability of voluntary cooperation to entry by individuals coming from groups with low cooperation rates. We investigate the effect of varying entry rates on sustained cooperation. In a finitely-repeated public good game with economies of scale, we initially allot participants to small, “High-cooperation” groups and large, “Low-cooperation” groups. We then study movement from the “Low” groups into the “High” groups under two main treatment conditions that vary the rate of movement. We find that fast growth disrupts efficient public good provision; but when moved in slowly, members of “failed” groups adapt to contribution levels in cooperative groups. This behavior is generally consistent with a belief-driven explanation similar to Fischbacher and Gächter (2010). In a third condition, in which participants in the “High” group decide on the rate of entry by voting, growth generally occurs slowly but stops short of the efficient group size. Interestingly, newcomers, not incumbents, veto further entry. We conclude that the right rate of entry can greatly facilitate cooperation, but that overly cautious expansion may limit the realization of potential gains from growth.
    Keywords: Voluntary cooperation, experiment, public good game
    JEL: C92 C72
    Date: 2012–12
  13. By: Ned Augenblick; Jesse M. Cunha; Ernesto Dal Bó; Justin M. Rao
    Abstract: We model religious faith as a "demand for beliefs," following the logic of the Pascalian wager. We then demonstrate how an experimental intervention can exploit standard elicitation techniques to measure religious belief by varying prizes associated with making choices contrary to one's belief in a, crucially, falsifiable religious proposition. We implemented this approach with a group that expected the "End of the World" to happen on May 21, 2011 by offering prizes payable before and after May 21st. The results suggest the existence of a demand for extreme, sincere beliefs that was unresponsive to experimental manipulations in price.
    JEL: D8 D91 Z1 Z12
    Date: 2012–12
  14. By: Schmidt, Klaus M.; Spann, Martin; Zeithammer, Robert
    Abstract: Pay What You Want (PWYW) can be an attractive marketing strategy to price discriminate between fair-minded and selfish customers, to fully penetrate a market without giving away the product for free, and to undercut competitors that use posted prices. We report on laboratory experiments that identify causal factors determining the willingness of buyers to pay voluntarily under PWYW. Furthermore, to see how competition affects the viability of PWYW, we implement markets in which a PWYW seller competes with a traditional seller. Finally, we endogenize the market structure and let sellers choose their pricing strategy. The experimental results show that outcome-based social preferences and strategic considerations to keep the seller in the market can explain why and how much buyers pay voluntarily to a PWYW seller. We find that PWYW can be viable in isolation, but it is less successful as a competitive strategy because it does not drive traditional posted-price sellers out of the market. Instead, the existence of a posted-price competitor reduces buyers’ payments and prevents the PWYW seller from fully penetrating the market. If given the choice, the majority of sellers opt for setting a posted price rather than a PWYW pricing. We discuss the implications of these results for the use of PWYW as a marketing strategy.
    Keywords: customer-driven pricing mechanisms; pay what you want; revenue management; price discrimination; social preferences
    Date: 2012–12
  15. By: Hélène Couprie; Miriam Beblo; Denis Beninger; François Cochard; Astrid Hopfensitz (THEMA, Universite de Cergy-Pontoise and THEMA; Universität Hamburg; Universität Hamburg and University of Strasbourg; Université de Franche-Comté (CRESE); Toulouse School of Economics)
    Abstract: We present the results of an experiment measuring social preferences within couples in a context where intra-household pay-off inequality can be reduced at the cost of diminishing household income. We measure social norms regarding this efficiency-equality trade-off and implement a cross-country comparison between France and Germany. In particular, we show that German households are more inequality averse and are thus less efficient than French households. A decomposition of this difference reveals that approximately 40% is driven by diverging sample compositions in the two countries, while 60% of the initial French/German difference remains unexplained. Beliefs differ significantly from observed behavior in both countries. Efficient choices are overestimated in the German sample and underestimated in the French.
    Keywords: Intra-household allocation, Inequality aversion, Pareto efficiency, social norms
    JEL: C71 C91 C92 D13
    Date: 2012
  16. By: Pedro Robalo (University of Amsterdam); Rei S. Sayag (Erasmus University Rotterdam)
    Abstract: The supposed irrelevance of historical costs for rational decision making has been the subject of much interest in the economic literature. In this paper we explore whether individual decision making under risk is affected by the cost of the supplied information. Outside of the lab, it is difficult to disentangle the effect of the cost of information itself from the effect of self-selection by individuals who tend to gain the most from this information. We thus create an environment in the lab where subjects are offered additional, useful and identical information on the state of the world across treatments. By varying the cost of information we can distinguish between selection and sunk cost effects. We find a systematic effect of sunk costs on the manner in which subjects update their beliefs on the state of the world. Subjects over-weigh costly information relatively to free information, which results in a 'push' of beliefs towards the extremes. This shift does not necessarily lead to behavior more attuned with Bayesian updating.
    Keywords: sunk cost; information; Bayesian updating; decision under risk; heuristics and biases; lab experiment
    JEL: C91 D81 D83
    Date: 2012–12–14
  17. By: Gianluca Grimalda (LEE & Economics Department, Universitat Jaume I, Castellón, Spain); Anirban Kar (Delhi School of Economics, University of Delhi, India); Eugenio Proto (Department of Economics, University of Warwick, UK)
    Abstract: We investigate experimentally the modification of initial chances to acquire advantaged positions in bargaining problems. In the baseline case players have equal opportunities to acquire the advantaged position. Chances become increasingly unequal across three treatments. We find: (1) The more unequal initial chances, the lower acceptance rates of a given split; consequently inequality decreases. (2) Players react significantly to being assigned a purely symbolic 1% chance of occupying the advantaged position compared to having no chance; (3) Players respond to the way opportunities are distributed across periods of time. These results confirm and extend cross-national survey evidence concerning the relevance of procedural fairness for redistributive preferences.
    Keywords: Procedural fairness, Initial opportunities, Symbolic opportunity, Ultimatum Game
    JEL: C99 C78 D63
    Date: 2012
  18. By: de Mel, Suresh (University of Peradeniya); McKenzie, David (World Bank); Woodruff, Christopher (University of Warwick)
    Abstract: We conduct a randomized experiment among women in urban Sri Lanka to measure the impact of the most commonly used business training course in developing countries, the Start-andImprove Your Business (SIYB) program. We work with two representative groups of women: a random sample of women operating subsistence enterprises and a random sample of women who are out of the labor force but interested in starting a business. We track impacts of two treatments – training only and training plus a cash grant – over two years with four follow-up surveys and find that the short- and medium-term impacts differ. For women already in business, training alone leads to some changes in business practices but has no impact on business profits, sales or capital stock. In contrast the combination of training and a grant leads to large and significant improvements in business profitability in the first eight months, but this impact dissipates in the second year. For women interested in starting enterprises, we find that business training speeds up entry but leads to no increase in net business ownership by our final survey round. Both profitability and business practices of the new entrants are increased by training, suggesting training may be more effective for new owners than for existing businesses. We also find that the two treatments have selection effects, leading to entrants being less analytically skilled and poorer.
    Keywords: Business training; female self-employment; randomized experiment; business startup; trajectory of treatment effects
    Date: 2012
  19. By: Aviva Aron-Dine; Liran Einav; Amy Finkelstein
    Abstract: We re-present and re-examine the analysis from the famous RAND Health Insurance Experiment from the 1970s on the impact of consumer cost sharing in health insurance on medical spending. We begin by summarizing the experiment and its core findings in a manner that would be standard in the current age. We then examine potential threats to the validity of a causal interpretation of the experimental treatment effects stemming from different study participation and differential reporting of outcomes across treatment arms. Finally, we re-consider the famous RAND estimate that the elasticity of medical spending with respect to its out-of-pocket price is -0.2, emphasizing the challenges associated with summarizing the experimental treatment effects from non-linear health insurance contracts using a single price elasticity.
    Date: 2012–12
  20. By: Victor Iajya; Nicola Lacetera; Mario Macis; Robert Slonim
    Abstract: In many low- and middle-income countries blood donations per capita are substantially lower than in advanced economies. In these countries blood supply is mostly collected through donations by relatives and friends of individuals needing transfusions or to replace blood used in emergencies. The World Health Organization considers this method of blood supply inefficient compared to undirected voluntary donations. To examine methods to motivate undirected voluntary donations, we ran a large-scale, natural field experiment in Argentina testing the effectiveness of information, social and economic incentives. We find that only higher-valued economic incentives generated more donations, increasing in the value of the incentive. These incentives did not create adverse selection in the safety and usability of the donated blood. We discuss the implications of our findings for researchers interested in understanding motivations for pro-social behavior and for health agencies and policymakers concerned with the current and growing shortages in blood supply in low- and middle-income countries.
    JEL: C93 D03 H41 I15
    Date: 2012–12
  21. By: Inga Hillesheim; Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: We test concerns for relative standing with respect to private consumption, income, leisure, savings, and personal characteristics, using data from a classroom survey. Our results show highest degrees of positionality for personal characteristics and income. In order to explain positionality, we employ survey participants’ ratings of items with respect to (i) observability and (ii) non-psychological negative externalities on others. Based on these ratings, our results show that non-psychological externalities play an important role for an item’s degree of positionality. In contrast to previous research, we find that there is no statistically significant effect of an item’s observability on its degree of positionality.
    Keywords: behavioral economics, relative consumption, other-regarding preferences, relative standing
    JEL: C91 D63 D10
    Date: 2012–11
  22. By: Inga Hillesheim; Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: We conduct a classroom survey to investigate the willingness to sacrifice consumption in absolute terms in order to ascend above others in terms of consumption levels. In contrast to other studies using survey methodologies, participants are divided into a treatment and a control group. This allows us to distinguish whether choosing less in absolute terms is really induced by relative consumption concerns, or else by nonmonotonic preferences. We find that relative consumption concerns provide a good explanation for choosing less in the case of some goods, while this is not the case for a number of other goods.
    Keywords: status consumption, social status, behavioral economics, other-regarding preferences
    JEL: C91 D63 D10
    Date: 2012–09
  23. By: Nicholas Bloom; James Liang; John Roberts; Zhichun Jenny Ying
    Abstract: Over 10% of US employees now regularly work from home (WFH), but there is widespread skepticism over its impact highlighted by phrases like "shirking from home". We report the results of a WFH experiment at Ctrip, a 13,000 employee NASDAQ listed Chinese multinational. Call center employees who volunteered to WFH were randomly assigned to work from home or in the office for 9 months. Work from home led to a 13% performance increase, of which about 9.5% is from working more minutes per shift (fewer breaks and sick-days) and 3.5% from more calls per minute (attributed to a quieter working environment). Home workers also reported improved work satisfaction and their job attrition rate fell by 50%. After the experiment, the firm rolled the program out to all employees, letting them choose home or office working. Interestingly, only half of the volunteer group decided to work at home, with the other half changing their minds in favor of office working. After employees were allowed to choose where to work, the performance impact of WFH more than doubled, highlighting the benefits of choice alongside modern management practices like home working.
    Keywords: working from home, organization, productivity, field experiment, and China
    Date: 2012–12
  24. By: Campos, Francisco; Coville, Aidan; Fernandes, Ana M.; Goldstein, Markus; McKenzie, David
    Abstract: Matching grants are one of the most common policy instruments used by developing country governments to try to foster technological upgrading, innovation, exports, use of business development services and other activities leading to firm growth. However, since they involve subsidizing firms, the risk is that they could crowd out private investment, subsidizing activities that firms were planning to undertake anyway, or lead to pure private gains, rather than generating the public gains that justify government intervention. As a result, rigorous evaluation of the effects of such programs is important. The authors attempted to implement randomized experiments to evaluate the impact of seven matching grant programs offered in six African countries, but in each case were unable to complete an experimental evaluation. One critique of randomized experiments is publication bias, whereby only those experiments with"interesting"results get published. The hope is to mitigate this bias by learning from the experiments that never happened. This paper describes the three main proximate reasons for lack of implementation: continued project delays, politicians not willing to allow random assignment, and low program take-up; and then delves into the underlying causes of these occurring. Political economy, overly stringent eligibility criteria that do not take account of where value-added may be highest, a lack of attention to detail in"last mile"issues, incentives facing project implementation staff, and the way impact evaluations are funded, and all help explain the failure of randomization. Lessons are drawn from these experiences for both the implementation and the possible evaluation of future projects.
    Keywords: Microfinance,Banks&Banking Reform,Access to Finance,ICT Policy and Strategies,E-Business
    Date: 2012–12–01
  25. By: Casoria Fortuna; Riedl Arno (METEOR)
    Abstract: This survey focuses on experimental labor markets investigating two aspects that deem us importantfor a better understanding of labor market relations and the consequences for labor marketpolicies. The first part of the survey is dedicated to papers that assess the prevalence ofreciprocal considerations in incomplete labor contracts. The second part summarizes the relativelysmall but growing experimental literature exploring labor issues in a macroeconomics and publicfinance setting and studying the interaction between taxation and labor market outcomes.
    Keywords: public economics ;
    Date: 2012
  26. By: Lynn Conell-Price; Julian Jamison
    Abstract: We present new evidence on the relationship between health behaviors and experimental measures of risk and time preferences and introduce evidence that perceived control — a measure incorporated from the health psychology literature — is a stronger and more consistent predictor of health behaviors than economic preferences.
    Keywords: Health ; Human behavior
    Date: 2012
  27. By: Christopher Blattman (Columbia University, Department of Politics & SIPA); Alexandra Hartman (Yale University, Department of Political Science); Robert Blair (Yale University, Department of Political Science)
    Abstract: How to promote local order and property rights under weak rule of law? States commonly use education campaigns to influence citizen behavior and, ultimately, change generalized practices and norms (or informal institutions). But can education alone influence behavior, let alone “institutions”? In Liberia, property disputes are endemic, but access to formal legal institutions is scant. An intervention trained residents of 68 towns in mediation and advocated informal resolution practices and forums. We compare them to 179 randomized control towns a year later. We see little short-term impact on dispute levels or ferocity, but observe dramatically higher land dispute resolution and satisfaction. Spillovers within towns indicate generalized change - perhaps an early indication of institutionalization. Qualitative work suggests the intervention imparted superior mediation skills, enhanced the legitimacy of informal practices, and deterred defection to competing forums. We argue education can shift practices and norms by helping citizens coordinate on procedures and institutions.
    Date: 2012–10
  28. By: Sabrina Bruyneel; Laurens Cherchye; Sam Cosaert; Bram De Rock; Siegfried Dewitte
    Abstract: We conducted an experiment to collect data on consumption decisions made by children of different age categories. In particular, our experiment involves unsophisticated discrete consumption choices,and we present a rationality test that is specially designed for the resulting choice data. Our firstconclusion is that, in general, the observed children's consumption behavior is largely irrational. Next, we also investigate the relationship between the degree of rationality and the children's characteristics.Specically, we use teacher based assessments on several personal characteristics to investigate whether and to what extent smart children tend to behave more rational. Here, our main conclusion is that it is important to recognize the multidimensional nature of intelligence to obtain a balanced insight into the effect of intelligence on rationality.
    Keywords: rationality; children; revealed-preference; intelligence
    JEL: C14 C91 D12
    Date: 2012–12
  29. By: Marsh, Dan; Phillips, Yvonne
    Abstract: This is an updated version posted 12/12/12. In the previous version attribute labels in Table 5 were incorrect for tribs and jobs.
    Keywords: Choice experiment, scale factor, error variance, water quality, New Zealand., Demand and Price Analysis, Environmental Economics and Policy, Land Economics/Use, Research Methods/ Statistical Methods,
    Date: 2012
  30. By: L. Bagnoli; G. Negroni
    Abstract: Two parties bargaining over a pie, the size of which is determined by their previous investment decisions. The bargaining rule is sensitive to investment behavior. Two games are considered. In both, bargaining proceeds according to the Nash Demand Game when a symmetric investments pro?le is observed. When, on the other hand, an asymmetric investments pro?le is observed, we assume that bargaining proceeds according to the Ultimatum Game in one case and according to a Dictator Game in the other. We hereby show that in both games when a unique stochastically stable outcome exists it supports an homogeneous behavior in the whole population both at the investment stage and at the distribution stage. A norm of investment and a norm of division must therefore coevolve in the two games, supporting both the efficient investment pro?le and the egalitarian distribution of the surplus, respectively. The two games differ depending on the conditions needed for the two norms to coevolve. The games are proposed to explain the social norms used in modern hunter-gatherer societies.
    JEL: C78 D83 L14 Z13
    Date: 2012–12
  31. By: Wilfredo L. Maldonado; José A. Rodrigues-Neto
    Abstract: We analyze a static game of public good contributions where finitely many anonymous players have heterogeneous preferences about the public good and heterogeneous beliefs about the distribution of preferences. In the unique symmetric equilibrium, the only individuals who make positive contributions are those who most value the public good and who are also the most pessimistic; that is, according to their beliefs, the proportion of players who value the most the public good is smaller than it would be according to any other possible belief. We predict whether the aggregate contribution is larger or smaller than it would be in an analogous game with complete information (and heterogeneous preferences), by comparing the beliefs of contributors with the true distribution of preferences. A tradeoff between preferences and beliefs arises if there is no individual who simultaneously has the highest preference type and the most pessimistic belief. In this case, there is a symmetric equilibrium, and multiple symmetric equilibria occur only if there are more than two preference types.
    JEL: C72 H41
    Date: 2012–12
  32. By: Erin Todd Bronchetti; Thomas S. Dee; David B. Huffman; Ellen Magenheim
    Abstract: Over the past decade, researchers have focused attention on a new approach for encouraging Americans to adopt beneficial behaviors. This approach relies on making the desired behavior occur automatically unless an individual chooses to opt out. A prominent example is automatic enrollment in 401(k plans, in which employees are signed up for the plan at a default contribution rate if they do not take any action. This policy has proven to be a potent way to boost participation rates. While such default design strategies can improve some saving decisions, researchers have begun exploring their potential limitations. For example, one recent study found that setting a very high default contribution rate for a workplace saving plan caused many workers to choose a different rate. This brief is based on a new study that also tests the limits to default design through an experiment to encourage low-income individuals to save about 10 percent of their tax refund. The discussion is organized as follows. The first section describes the behavioral theory behind default design. The second section explains how defaults were used to nudge some low-income tax-filers to buy U.S. Savings Bonds with a portion of their tax refund. The third section discusses the results: the tax filers who were “nudged” to invest in the bonds were no more likely than other low-income filers to participate, apparently because they already had plans to spend their refunds. The final section concludes that policies that rely on default design may not work when they clash sharply with individuals’ intentions.
    Date: 2012–12

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.