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on Experimental Economics |
| By: | Ned Augenblick; Muriel Niederle; Charles Sprenger |
| Abstract: | Experimental tests of dynamically inconsistent time preferences have largely relied on choices over time-dated monetary rewards. Several recent studies have failed to find the standard patterns of time inconsistency. However, such monetary studies contain often discussed confounds. In this paper, we sidestep these confounds and investigate choices over consumption (real effort) in a longitudinal experiment. We pair those effort choices with a companion monetary discounting study. We confirm very limited time inconsistency in monetary choices. However, subjects show considerably more present bias in effort. Furthermore, present bias in the allocation of work has predictive power for demand of a meaningfully binding commitment device. Therefore our findings validate a key implication of models of dynamic inconsistency, with corresponding policy implications. |
| JEL: | C9 D12 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18734&r=exp |
| By: | Donna Harris; Benedikt Herrmann |
| Abstract: | Using a laboratory experiment with minimal groups, we examined the extent to which the threats of costly punishments affect in-group favouritism behaviour. We studied three types of punishment separately: in-group, out-group, and third-party punishments. In line with previous studies, the majority of the allocators favoured their own group by allocating more money to each of the in-group members at the expense of the out-group in the baseline without punishment. In the in-group punishment treatment, we observed a slight increase in in-group favouritism behaviour. On the contrary, when only the out-group could punish the allocators, there was a significant drop in in-group favouritism behaviour as well as an increase in the equal division option. Finally, when faced with an independent third-party punisher the allocators continued to favour their own group. The threat of third-party punishment appeared to have no effect on their decisions. Our paper contributes to the literature on in-group favouritism and the nature of social norms by showing that the decision whether to favour one’s own group is affected by the threats of in-group and out-group punishments and whether it leads to an increase or decrease in this behaviour depends on who has the punishment power. Parochial or in-group biased norm was enforced by the in-group members, whilst ‘egalitarian sharing norm’ (across groups) was enforced by the out-group members. We conclude firstly that people apply different ‘self-serving’ social norms depending on their own group identity. Secondly, unlike selfish or opportunistic behaviours, independent third-parties, who only observed this behaviour but were not directly affected by it, were not willing to punish this behaviour. |
| Keywords: | In-group favouritism, Group behaviour, Social identity, Social norm, In-group punishment, Out-group punishment, Third-party punishment, Favour game |
| JEL: | D70 D73 C92 |
| Date: | 2012–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:628&r=exp |
| By: | John D. Hey; Daniela Di Cagno |
| Abstract: | Inspired by the conjecture that the necessity of trading through money in monetarised economies might hinder convergence to competitive equilibrium, and hence, for example, cause unemployment, we experimentally investigate behaviour in sequential markets. In order to evaluate the properties of these markets, we compare their behaviour to behaviour in simultaneous markets, where money does not intervene. As the trading mechanism might be a compounding factor, we investigate two kinds of mechanism: the double auction, where bids, asks and trades take place in continuous time throughout a trading period; and the clearing house, where bids and asks are placed once in a trading period, and which are then cleared by an aggregating device. We thus have four treatments, the pairwise combinations of simultaneous/sequential with double auction/clearing house. We find that: convergence is faster under simultaneous trading, implying that the necessity of using money to facilitate trade hinders convergence; that sequential trading is noisier than simultaneous trading; and that the volume of trade and realised surpluses are higher with the double auction than the clearing house. We suspect that the double auction, although on the surface more complicated for subjects to understand, enables them better to realise their desired trades. We also confirm the conjecture that inspired these experiments: that the necessity to use money in trading hinders convergence to competitive equilibrium, lowers realised trades and surpluses, and hence may cause unemployment. |
| Keywords: | clearing house mechanism, double auction mechanism, experimental markets, money, sequential trade, simultaneous trade |
| JEL: | C92 D40 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:13/03&r=exp |
| By: | Ansink, Erik; Bouma, Jetske |
| Abstract: | We study label framing effects in linear public goods games. By accounting for heterogeneous frame connotation, we can identify individual framing effects. We test for such effects in a field experiment on irrigation management in India. Using membership of the water users association as a proxy for frame connotation, we find a differential impact on contributions in the game. Members contribute relatively more under the irrigation frame than non-members as compared to an alternative, neutral, frame. We conclude that experimental behaviour is sensitive to framing at the individual level but that such individual effects may cancel out on average, which explains previous studies that find mixed or only weak effects of framing. |
| Keywords: | Framing effects; field experiment; public goods game; frame connotation; irrigation management |
| JEL: | H41 Q15 C93 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43975&r=exp |
| By: | Casoria, Fortuna (Maastricht University); Riedl, Arno (Maastricht University) |
| Abstract: | This survey focuses on experimental labor markets investigating two aspects that deem us important for a better understanding of labor market relations and the consequences for labor market policies. The first part of the survey is dedicated to papers that assess the prevalence of reciprocal considerations in incomplete labor contracts. The second part summarizes the relatively small but growing experimental literature exploring labor issues in a macroeconomics and public finance setting and studying the interaction between taxation and labor market outcomes. |
| Keywords: | laboratory experiment, labor markets, incomplete contracts, gift-exchange, labor market policy |
| JEL: | C90 C92 C93 D01 D51 E24 E62 F41 J01 J08 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7102&r=exp |
| By: | Laurent Bouton (Boston University); Micael Castanheira (Université Libre de Bruxelles); Aniol Llorente-Saguer (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | This paper both theoretically and experimentally studies the properties of plurality and approval voting when the majority is divided as a result of information imperfections. The minority backs a third alternative, which the majority views as strictly inferior. The majority thus faces two problems: aggregating information and coordinating to defeat the minority candidate. Two types of equilibria coexist under plurality: either voters aggregate information, but this requires splitting their votes, or they coordinate but cannot aggregate information. With approval voting, expected welfare is strictly higher, because some voters multiple vote to achieve both goals at once. In the laboratory, we observe both types of equilibrium under plurality. Which one is selected depends on the size of the minority. Approval voting vastly outperforms plurality. Finally, subject behavior suggests the need to study asymmetric equilibria. |
| Keywords: | Experiments, Multicandidate Elections, Plurality, Approval Voting |
| JEL: | C92 C72 D70 P16 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2012_20&r=exp |
| By: | van der Heijden, Eline (Tilburg University); Klein, Tobias J. (Tilburg University); Müller, Wieland (University of Vienna); Potters, Jan (Tilburg University) |
| Abstract: | We confront a representative sample of one 1,102 Dutch individuals with a series of incentivized investment decisions and also elicit their time preferences. There are two treatments that differ in the frequency at which individuals decide about the invested amount. The low frequency treatment stimulates decision makers to frame a sequence of risky decisions broadly rather than narrowly. We find that the framing effect is significantly larger for impatient than for patient individuals. This result is robust to controlling for various economic and demographic variables and for cognitive ability. |
| Keywords: | framing, choice under risk, time preference, experiment |
| JEL: | C93 D03 D81 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7085&r=exp |
| By: | Astrid Matthey (Max-Planck-Insititute of Economics, Strategic Interaction Group); Tim Kasser (Knox College, Department of Psychology) |
| Abstract: | We study the relation between people's personal values and environmentally friendly consumption behavior. We first assessed subjects' personal values using the Aspiration Index. Then subjects participated in a laboratory supermarket offering organic and conventional food products and different kinds of bags. The results suggest that subjects' personal values are poor predictors of their ecologically-relevant consumption behavior. However, we find that subjects who spontaneously reflected upon power values made less ecologically sustainable consumption decisions than did those who reflected on universalism values. We discuss methodological differences as possible reasons for variations between our results and those of earlier studies. |
| Keywords: | Consumer Behavior, Values, Conservation (Ecological Behavior) |
| JEL: | D12 Q31 Q56 |
| Date: | 2013–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2013-007&r=exp |
| By: | Qiu, Jianying; Weitzel, Utz |
| Abstract: | Abstract Popular models for decision making under ambiguity assume that people use not one but multiple priors. This paper is a first attempt to experimentally elicit multiple priors. In an ambiguous scenario with two underlying states we measure a subject’s single prior, her other potential priors (multiple priors), her confidence in these priors valuation of an ambiguous asset with the same underlying states. We also investigate subjects' updating of (multiple) priors after receiving signals about the true states. We find that single priors are best understood as a confidence-weighted average of multiple priors. Single priors also predict the valuation of ambiguous assets best, while both the minimum and maximum of subjects' multiple priors add explanatory power. This provides some but no exclusive support for the maxmin (Gilboa and Schmeidler, 1989) and the alpha maxmin model (Ghirardato et al., 2004). With regard to updating of priors, we do not observe strong deviations from Bayesian learning, although subjects overadjust/underadjust their priors and their confidence in multiple priors after a contradictory/confirming signal. Subjects also react to neutral information with more confidence in their priors. This holds under ambiguity, but not in a comparison treatment under risk. |
| Keywords: | ambiguity; uncertainty; risk; multiple priors; Bayesian updating; first-order beliefs; second-order beliefs |
| JEL: | D46 D83 C91 |
| Date: | 2013–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43974&r=exp |
| By: | Baert, Stijn (Ghent University); Cockx, Bart (Ghent University); Gheyle, Niels (Ghent University); Vandamme, Cora (Ghent University) |
| Abstract: | We empirically test the relationship between hiring discrimination and labour market tightness at the level of the occupation. To this end, we conduct a correspondence test in the youth labour market. In line with theoretical expectations, we find that, compared to natives, candidates with a foreign sounding name are equally often invited to a job interview if they apply for occupations for which vacancies are difficult to fill, but they have to send twice as many applications for occupations for which labour market tightness is low. Our findings are robust against various sensitivity checks. |
| Keywords: | hiring discrimination, ethnic discrimination, labour market tightness, field experiments |
| JEL: | C93 J15 J21 J24 J42 J71 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7145&r=exp |
| By: | Fehrler, Sebastian (University of Zurich); Przepiorka, Wojtek (Nuffield College, Oxford) |
| Abstract: | It has been shown that psychological predispositions to benefit others can motivate human cooperation and the evolution of such social preferences can be explained with kin or multi-level selection models. It has also been shown that cooperation can evolve as a costly signal of an unobservable quality that makes a person more attractive with regard to other types of social interactions. Here we show that if a proportion of individuals with social preferences is maintained in the population through kin or multi-level selection, cooperative acts that are truly altruistic can be a costly signal of social preferences and make altruistic individuals more trustworthy interaction partners in social exchange. In a computerized laboratory experiment, we test whether altruistic behavior in the form of charitable giving is indeed correlated with trustworthiness and whether a charitable donation increases the observing agents' trust in the donor. Our results support these hypotheses and show that, apart from trust, responses to altruistic acts can have a rewarding or outcome-equalizing purpose. Our findings corroborate that the signaling benefits of altruistic acts that accrue in social exchange can ease the conditions for the evolution of social preferences. |
| Keywords: | altruism, evolution of cooperation, costly signaling, social preferences, trust, trustworthiness |
| JEL: | C72 C92 H41 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7148&r=exp |
| By: | Jere H. Behrman (Department of Economics, University of Pennsylvania); Susan W. Parker (Center for Research and Teaching in Economics(CIDE) Mexico); Petra E. Todd (Department of Economics, University of Pennsylvania); Kenneth I. Wolpin (Department of Economics, University of Pennsylvania) |
| Abstract: | This paper evaluates the impact of three different performance incentives schemes using data from a social experiment that randomized 88 Mexican high schools with over 40,000 students into three treatment groups and a control group. Treatment one provides individual incentives for performance on curriculum-based mathematics tests to students only, treatment two to teachers only and treatment three gives both individual and group incentives to students, teachers and school administrators. Program impact estimates reveal the largest average effects for treatment three, smaller impacts for treatment one and no impact for treatment two. |
| Keywords: | student, teacher, and group incentives, randomized social experiment, Mexican high schools |
| JEL: | O1 |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:13-004&r=exp |
| By: | Nicolas Jacquemet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II); Frédéric Koessler (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA)) |
| Abstract: | This paper studies the value of private information in strictly competitive interactions in which there is a trade-off between (i) the short-run gain of using information, and (ii) the long-run gain of concealing it. We implement simple examples from the class of zero-sum repeated games with incomplete information. While the empirical value of information does not always coincide with the theoretical prediction, the qualitative properties of the value of information are satisfied in the laboratory: (i) it is never negative, (ii) it decreases with the number of repetitions, (iii) it is bounded below by the value of the infinitely repeated game, and (iv) it is bounded above by the value of the one-shot game. In line with the theory, the empirical use of private information is almost complete when it should be, and decreases in longer interactions. |
| Keywords: | Concealment of information; Laboratory experiments; Value of information; Zero-sum repeated games |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00773412&r=exp |
| By: | Penczynski, Stefan |
| Abstract: | This paper proposes a behavioral model of social learning that unies various forms of inferential reasoning in one hierarchy of types. Iterated best responses that are based on uninformative level-0 play lead to the following of the private information (level-1), to the following of the majority (level-2), to a differentiated view on predecessors (level-3), etc. I present evidence from three sources that these are the prevalent types of reasoning in social learning: a review of social learning studies, existing data from Celen and Kariv (2004) as well as new experimental data that includes written accounts of reasoning from incentivized intra-team communication. |
| Keywords: | Social learning , levels of reasoning |
| JEL: | C91 D82 D83 D84 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:mnh:wpaper:32667&r=exp |
| By: | Hanna Daoudy; Michel Verstraeten |
| Abstract: | The present study analyses the impacts of verbal interactions as well as the team’s international diversity on team performance and on team members’ satisfaction during a game called the Marshmallow Challenge. Ninety-one students from a business school participated in the game, forming twenty-three teams. The purpose was to construct the highest freestanding structure with 20 sticks of spaghettis and a marshmallow on top. Participants only had eighteen minutes to achieve this goal. The variables were measured through observations and through individual questionnaires. Results show that verbal interactions played a critical role on both performance and satisfaction. Teams where some of the members spoke more than others were more likely to achieve higher performance. Members in these teams were also more satisfied regarding the team outcome. Furthermore, open discussions in teams decreased the members’ communication process satisfaction. Finally interesting results appeared in international teams. For instance, the average level of anger and frustration was highest in these teams. This in turn had an impact on personal satisfaction. More specifically, the team’s international diversity affected negatively the members’ communication process satisfaction. Taken together, these findings show that communication strongly affected performance and satisfaction and it significantly influenced members’ willingness to remain in the same team. Despite these observations, the current study presents some limitations that will be discussed and that should be taken into account for further research. |
| Keywords: | team performance; team members’ satisfaction; verbal interactions |
| Date: | 2013–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/138387&r=exp |