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on Experimental Economics |
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Issue of 2013‒02‒08
ten papers chosen by |
| By: | Sebastian J. Goerg; Jan Meise; Gari Walkowitz; Eyal Winter |
| Abstract: | We investigate strategic interactions of Israelis and Palestinians within a controlled laboratory experiment. In our first treatment we retrieve cooperation benchmarks prevailing within both subject pools. Then we measure cooperation levels and associated beliefs between Israelis and Palestinians. Treatment three assesses the influence of pre-play face-to-face encounter on cooperative behavior. Our findings are: The degree of expected and actual cooperation within the Palestinian subject pool is significantly higher as compared to the respective levels found in Israel. In line with previous findings, cooperation decreases if subjects are paired with subjects from the other subject pool. Previously detected subject pool differences are not offset. The drop in inter-subject pool cooperation can be outweighed by the introducing of face-to-face communication, which dramatically increases the cooperation rates. The differences in contributions between Palestinians and Israelis are associated with differences in subjects' beliefs. Face-to-face encounter increases and balances beliefs and therefore enhances cooperation. |
| Keywords: | Bargaining, Belief-structure, Israeli-Palestinian Conflict, International Cooperation, Prisoner's Dilemma |
| JEL: | A13 C72 C91 F51 |
| Date: | 2013–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:04-01&r=exp |
| By: | Giovanna Devetag; Sibilla Di Guida; Luca Polonio |
| Abstract: | We analyze subjects’ eye movements while they make decisions in a series of one-shot games. The majority of them perform a partial and selective analysis of the payoff matrix, often ignoring the payoffs of the opponent and/or paying attention only to specific cells. Our results suggest that subjects apply boundedly rational decision heuristics that involve best responding to a simplification of the decision problem, obtained either by ignoring the other players’ motivations or by considering them only for a subset of outcomes. Finally, we find a correlation between types of eye movements observed and choices in the games. |
| Keywords: | one-shot games; eye-tracking; similarity; categorization; focal points; experimental economics; individual behavior; behavioral economics |
| JEL: | C72 C91 D01 D83 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/138438&r=exp |
| By: | David Heres; Steffen Kallbekken; Ibon Galarraga |
| Abstract: | The potential of taxation to correcting environmental externalities has been long recognized among economists. Yet, this welfare-enhancing policy commonly faces strong opposition by citizens. Conversely, externality-correcting subsidies frequently enjoy high levels of public acceptance. We conduct a lab experiment to explore public support for Pigouvian taxes and subsidies. In an experimental market with a negative externality, participants vote on the introduction of Pigouvian taxes and subsidies under full or partial information concerning how the tax revenues will be spent and the subsidy paid for. Theoretically the two instruments should produce identical outcomes. We find substantially greater support for subsidies than taxes. This can partially be explained by the expectation that the subsidy will increase payoffs more than a tax, but not because it could be more effective in changing behavior. Furthermore, we find that under partial information, the preference for subsidies is even stronger. |
| Keywords: | Pigouvian taxes; subsidies; lab experiment; public policy; revenues; effectiveness |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2013-04&r=exp |
| By: | David Danz; Frank Hüber; Dorothea Kübler; Lydia Mechtenberg; Julia Schmid |
| Abstract: | With the help of a simple model, we show that the hindsight bias can lead to ineffcient delegation decisions. This prediction is tested experimentally. In an online experiment that was conducted during the FIFA World Cup 2010 participants were asked to predict a number of outcomes of the ongoing World Cup and had to recall their assessments after the outcomes had been realized. This served as a measure of the hindsight bias for each participant. The participants also had to make choices in a delegation game. Our data confirm that hindsight-biased subjects more frequently fail to delegate optimally than subjects whom we have classified as not hindsight biased. |
| Keywords: | hindsight bias, delegation, experiments |
| JEL: | C72 C91 D84 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2013-009&r=exp |
| By: | Sheremeta, Roman |
| Abstract: | We provide an overview of experimental literature on contests and point out the two main phenomena observed in most contest experiments: (i) overbidding relative to the standard Nash equilibrium prediction and (ii) heterogeneous behavior of ex-ante symmetric contestants. Based on the sample of contest experiments that we review, the median overbidding rate is 72%. We provide different explanations for the overbidding phenomenon, including bounded rationality, utility of winning, other-regarding preferences, probability distortion, and the shape of the payoff function. We also provide explanations for heterogeneous behavior of contestants based on differences in preferences towards winning, inequality, risk and losses, and demographic differences. Furthermore, we suggest mechanisms that can reduce overbidding and induce more homogeneous behavior. Finally, we discuss directions for future research. |
| Keywords: | experiments; contests; overbidding; heterogeneous behavior |
| JEL: | C92 D74 D72 C91 C72 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44124&r=exp |
| By: | Stefano DellaVigna; John A. List; Ulrike Malmendier; Gautam Rao |
| Abstract: | Do men and women have different social preferences? Previous findings are contradictory. We provide a potential explanation using evidence from a field experiment. In a door-to-door solicitation, men and women are equally generous, but women become less generous when it becomes easy to avoid the solicitor. Our structural estimates of the social preference parameters suggest an explanation: women are more likely to be on the margin of giving, partly because of a less dispersed distribution of altruism. We find similar results for the willingness to complete an unpaid survey: women are more likely to be on the margin of participation. |
| JEL: | C93 D64 H4 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18748&r=exp |
| By: | Jeffrey V. Butler (EIEF); Luigi Guiso (EIEF); Tullio Jappelli (University of Naples "Federico II" and CSEF) |
| Abstract: | Prior research suggests that those who rely on intuition rather than effortful reasoning when making decisions are less averse to risk and ambiguity. The evidence is largely correlational, however, leaving open the question of the direction of causality. In this paper, we present experimental evidence of causation running from reliance on intuition to risk and ambiguity preferences. We directly manipulate participants’ predilection to rely on intuition and find that enhancing reliance on intuition lowers the probability of being ambiguity averse by 30 percentage points and increases risk tolerance by about 30 percent in the experimental subpopulation where we would a priori expect the manipulation to be successful (males). |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1301&r=exp |
| By: | Bruno Crépon (CREST); Esther Duflo (MIT); Marc Gurgand (PSE & CREST); Roland Rathelot (CREST); Philippe Zamora (CREST) |
| Abstract: | This paper reports the results from a randomized experiment designed to evaluate the direct and indirect (displacement) impacts of job placement assistance on the labor market outcomes of young, educated job seekers in France. We use a two-step design. In the first step, the proportions of job seekers to be assigned to treatment (0%, 25%, 50%, 75% or 100%) were randomly drawn for each of the 235 labor markets (e.g. cities) participating in the experiment. Then, in each labor market, eligible job seekers were randomly assigned to the treatment, following this proportion. After eight months, eligible, unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not. But these gains are transitory, and they appear to have come partly at the expense of eligible workers who did not benefit from the program, particularly in labor markets where they compete mainly with other educated workers, and in weak labor markets. Overall, the program seems to have had very little net benefits. |
| Keywords: | job placement, counseling, displacement effects, randomized experiment |
| JEL: | J68 J64 C93 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2012-28&r=exp |
| By: | Bas ter Weel; Lex Borghans (Maastricht University)............ Huub Meijers (Maastricht University) |
| Abstract: | This research provides an economic model of the way people behave during an IQ test. We distinguish a technology that describes how time investment improves performance from preferences that determine how much time people invest in each question. We disentangle these two elements empirically using data from a laboratory experiment. The main findings is that both intrinsic (questions that people like to work on) and extrinsic motivation (incentive payments) increase time investments and as a result performance. The presence of incentive payments seems to be more important than the size of the reward. Intrinsic and extrinsic motivation turn out to be complements. |
| JEL: | J20 J24 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:231&r=exp |
| By: | Sylvie Blasco (CREST); Barbara Pertold-Gebicka (Aarhus Université) |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2012-27&r=exp |