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on Experimental Economics |
| By: | Jingnan (Cecilia) Chen (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University) |
| Abstract: | Although economic and social relationships can involve deception (Gneezy 2005), such relationships are often governed by informal contracts that require trust (Berg et al. 1995). While important advances have been made concerning deception in economics, the research has focused little on written forms of communication. Are there certain systematic cues that signal written communications as dishonest? Are those signals accurately detected and used by message receivers? We fill this gap by studying messages written in a novel three-person trust game (we call it the “Mistress Gameâ€). We find that: (i) messages that use encompassing terms, or a greater number of words, are significantly more likely to be viewed as promises; and (ii) promises that mention money are significantly more likely to be trusted. Notwithstanding the latter finding, we find senders who mention money within their promises to be significantly less likely to keep their word than those who do not. Length: 36 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1038&r=exp |
| By: | Li Hao (Department of Economics, University of Arkansas, Fayetteville); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University) |
| Abstract: | We report data from a laboratory experiment demonstrating that cheating is significantly deterred when a possible intent to cheat must be revealed before, rather than after, a potentially dishonest act. Further, data from independent evaluators suggests a reason: the same action is more likely to be perceived as dishonest when cheating could have been planned, as compared to cases when it seems simply impulsive. Overall, we find the vast majority of participants prefer to appear honest, but only a minority prefers actually to be honest. Finally, we conduct a type-classification analysis that implies that after establishing an honest appearance people cheat to the greatest extent possible. It follows that the “incomplete cheating†behavior frequently reported in the literature may be due more to a preference for maintaining an honest appearance than an intrinsic aversion to cheating. Length: 43 |
| Keywords: | cheating, honest appearance, partial cheating, experimental design |
| JEL: | C91 D03 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1039&r=exp |
| By: | Jason Shachat; J. Todd Swarthout |
| Abstract: | We conduct an experiment in which we auction the scarce rights to play the Proposer and Responder positions in subsequent ultimatum games. As a control treatment, we randomly allocate these rights and then charge exogenous participation fees according to the auction price sequences observed in the auction treatment. With endogenous selection into ultimatum games via auctions, we find that play converges to a session-specific Nash equilibrium and auction prices emerge which support this equilibrium by the principle of forward induction. With random assignment and exogenous participation fees, we find play also converges to a session-specific Nash equilibrium as predicted by the principle of loss avoidance. The Nash equilibrium observed within a session results in low ultimatum game offers, but the subgame perfect Nash equilibrium is never observed. |
| Keywords: | Ultimatum Bargaining, Auction, Forward Induction |
| JEL: | C92 C78 D44 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2013-01&r=exp |
| By: | Gerald Eisenkopf; Pascal Sulser |
| Abstract: | We present results from a field experiment at Swiss high schools in which we compare the effectiveness of a classroom experiment against conventional economics teaching. We randomly assigned classes into different teaching environments or a control group. Our results suggest that both teaching methods improve economic understanding considerably in contrast to classes without prior training. We do not observe a significant overall effect of the classroom experiment, but more able students benefit from the experiment while others lose out. Furthermore there is no robust impact of economic training on social preferences, measured as both individual behavior in incentivized decisions or political opinions. |
| Keywords: | Education of Economics, Classroom Experiments, Field Experiments, Indoctrination |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0080&r=exp |
| By: | Weng, Qian (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | The effect of session size has largely been ignored in experimental studies, despite the possibility that it may play a role by changing people’s perception of the potential chance of encountering a certain type of people and by affecting the strength of the potential link between people. This paper investigates how the effect of an induced common identity on individual cooperative behavior differs depending on session size in a repeated public goods experiment with constant group size and partner matching. We find that induced identity significantly enhances cooperation only when the session size is small and only in the initial period. In all other periods, the effect of induced identity on cooperation is the same in small and large sessions, suggesting that session size is not a confounding factor of identity in repeated interaction settings. |
| Keywords: | session size; identity building; public goods experiment; China |
| JEL: | C91 D71 H41 |
| Date: | 2013–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0560&r=exp |
| By: | Mohamed Ali Bchir; Marc Willinger |
| Abstract: | We report the results of an experiment on voluntary contributions to a public good in which we implement a redistribution of the group endowment among group members in a lump sum manner. We study the impact of redistribution on group contribution, on individuals’ contribu- tions according to their endowment and on welfare. Our experimental results show that welfare increases when equality is broken, as predicted by theory (Itaya, De Meza & Myles, 1997), because the larger contribution of the rich subjects overcompensates the lower contribution of the poor subjects. Last but not least, agents’ behavior in situations of inequality of income, depends on initial conditions. In particular, the decisions of those who become poor seem to express a form of protest against the new distribution of incomes compared to those who started out as poor: from a behavioral point of view, being poor is therefore not equivalent to becoming poor. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:13-04&r=exp |
| By: | Centorrino, Samuele; Concina, Laura |
| Abstract: | We show that introducing a competitive preliminary stage in a sequential public good game helps select one of the more cooperative leaders in the group. Using a modified second price auction, we find that bids have a strong positive predictive power on individual contributions. Moreover, evidence is provided that trust can explain voluntary and cooperative leadership. However, followers reaction to voluntary leaders may rise free riding behaviour, with uncertain effect on total public good provision. |
| Keywords: | Public good experiment Leadership Self-selection Cooperation Trust Public good provision. |
| JEL: | A13 C72 C92 H41 Z13 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:26933&r=exp |
| By: | Marie-Laure Cabon-Dhersin (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - Université de Rouen : EA4702); Nathalie Etchart-Vincent (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne) |
| Abstract: | In this short paper, we run an experiment to investigate the influence of a very basic change in the labelling of the strategies on cooperative behaviour in a standard Game of Chicken. Our between-subject experimental design involves two treatments. The only difference between them is that we introduce either a socially-oriented wording ('I cooperate'/'I do not cooperate') or colours (Red/Blue) to designate strategies. Our study replicates the findings obtained in a previous experimental study based on a Game of Chicken framework with incomplete information and a within-subject design: the level of cooperation appears to be higher in the socially-oriented context, due to a change in women behaviour only. |
| Keywords: | social dilemma; Game of Chicken; cooperation; label framing effects; wording effects; gender effects |
| Date: | 2013–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00796708&r=exp |
| By: | Andrew Beath (Office of the Chief Economist for East Asia and the Pacific, World Bank); Fotini Christia (Department of Political Science, Massachusetts Institute of Technology); Ruben Enikolopov (Institute for Advanced Study and New Economic School) |
| Abstract: | Direct democracy is designed to better align policy outcomes with citizen preferences. Using a randomized field experiment in 250 villages across Afghanistan, we compare outcomes of the selection of village-level development projects through secret-ballot referenda and through consultation meetings. We find that elites exert more influence over resource allocation decisions in consultation meetings as compared with referenda. Referenda also improve public satisfaction. The results indicate that the use of direct democracy in public resource allocation mitigates elite capture and results in more legitimate outcomes than those produced by less representative consultative processes. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0192&r=exp |
| By: | Christiane Bradler (ZEW Centre for European Economic Research Mannheim); Robert Dur (Erasmus University Rotterdam); Susanne Neckermann (Erasmus University Rotterdam); Arjan Non (Maastricht University) |
| Abstract: | This paper reports the results from a controlled field experiment designed to investigate the causal effect of public recognition on employee performance. We hired more than 300 employees to work on a three-hour data-entry task. In a random sample of work groups, workers unexpectedly received recognition after two hours of work. We find that recognition increases subsequent performance substantially, and particularly so when recognition is exclusively provided to the best performers. Remarkably, workers who did not receive recognition are mainly responsible for this performance increase. This result is consistent with workers having a preference for conformity. |
| Keywords: | Employee motivation; recognition; reciprocity; conformity; field experiment |
| JEL: | C93 M52 |
| Date: | 2013–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20130038&r=exp |
| By: | Neil J. Buckley; Stuart Mestelman; R. Andrew Muller; Stephan Schott; Jingjing Zhang |
| Abstract: | We study cheap-talk communication in common pool resource environments with and without output-sharing groups. Communication in groups of 12 does not improve efficiency over the non-cooperative Nash outcome without communication. Organizing subjects into output-sharing groups of four players introduces sufficient free-riding incentives to achieve full efficiency. Within-group communication decreases efficiency by countervailing the free-riding incentives induced by output sharing and enhancing between-group competition. The effects are stronger when output-sharing groups have repeated fixed membership. Adding public communication reduces the efficiency-reducing effects of within-group communication. Restricting private communication within social groups that do not share output increases efficiency to almost 100%. |
| Keywords: | Common pool resources, communication, competition, group behavior, partners and strangers, experiments |
| JEL: | Q20 C92 C72 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2013-06&r=exp |
| By: | Wolfgang J. Luhan; Johann Scharler |
| Abstract: | We develop a simple experimental setting to evaluate the role of the Taylor principle, which holds that the nominal interest rate has to respond more than one-for-one to fluctuations in the inflation rate. In our setting, the average inflation rate fluctuates around the inflation target if the computerized central bank obeys the Taylor principle. If the Taylor principle is violated, then the average inflation rate persistently deviates from the target. We find that these deviations from the target are less pronounced, if inflation rates cannot be as readily observed as nominal interest rates. This result is consistent with the interpretation that subjects underestimate the influence of inflation on the real return to savings if the inflation rate is only observed ex post. |
| Keywords: | Taylor principle; interest rate rule; inflation illusion; laboratory experiment |
| JEL: | E30 E52 C90 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0402&r=exp |
| By: | Borghans, Lex (Department of Economics and Research Centre for Education and the Labour Market, Maastricht University); Meijers, Huub (UNU-MERIT/MGSoG and Department of Economics, Maastricht University); Weel, Bas ter (CPB Netherlands Bureau for Economic Policy Research and Department of Economics, 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 are 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 motivations turn out to be complements. |
| Keywords: | incentives, cognitive test scores |
| JEL: | J20 J24 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2013006&r=exp |
| By: | Adam Zylbersztejn (Centre d'Economie de la Sorbonne - Paris School of Economics) |
| Abstract: | Several experimental studies show that ex post communication promotes generosity in situations where individual incentives contradict with common interest, like the provision of public goods. The root underlying the effect of this institution, especially in a repeated interaction, is nonetheless still obscure. This study provides a novel empirical testbed for two mechanisms by which ex post communication may affect behavior in repeated interactions : one is related to strategic signaling, the other involves emotions induces by others' opinions. The main findings are as follows. First, the presence of ex post communication (conducted through the attribution of costless disapproval points) fosters pro-social behavior and reduces free-riding. Second, I find systematic evidence that subjects tend to use ex post communication as a signaling device, whilst no evidence in favor of the emotion-based hypothesis. A possible interpretation of this phenomenon is that ex post messages are used to announce future sanctions for free-riding. |
| Keywords: | Public goods game, voluntary contribution mechanism, ex post communication. |
| JEL: | C72 D83 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13011&r=exp |
| By: | Andrew Beath (Office of the Chief Economist for East Asia and the Pacific, World Bank); Fotini Christia (Department of Political Science, Massachusetts Institute of Technology); Ruben Enikolopov (Institute for Advanced Study and New Economic School) |
| Abstract: | In societies with widespread gender discrimination, development programs with gender quotas are considered a way to improve women’s economic, political, and social status. Using a randomized field experiment across 500 Afghan villages, we examine the effects of a development program that mandates women’s community participation. We find that even in a highly conservative context like Afghanistan, such initiatives improve female participation in some economic, social, and political activities, including increased mobility and income generation. They, however, produce no change in more entrenched female roles linked to family decision-making or in attitudes towards the general role of women in society. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0191&r=exp |
| By: | Nicholas Bloom; James Liang; John Roberts; Zhichun Jenny Ying |
| Abstract: | About 10% of US employees now regularly work from home (WFH), but there are concerns this can lead to “shirking from home.” We report the results of a WFH experiment at CTrip, a 16,000- employee, NASDAQ-listed Chinese travel agency. Call center employees who volunteered to WFH were randomly assigned to work from home or in the office for 9 months. Home working led to a 13% performance increase, of which about 9% was from working more minutes per shift (fewer breaks and sick-days) and 4% from more calls per minute (attributed to a quieter working environment). Home workers also reported improved work satisfaction and experienced less turnover, but their promotion rate conditional on performance fell. Due to the success of the experiment, CTrip rolled-out the option to WFH to the whole firm and allowed the experimental employees to re-select between the home or office. Interestingly, over half of them switched, which led to the gains from WFH almost doubling to 22%. This highlights the benefits of learning and selection effects when adopting modern management practices like WFH. |
| JEL: | M1 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18871&r=exp |
| By: | Jeanette Brosid-Koch; Timo Heinrich; Christoph Helbach |
| Abstract: | This study tests experimentally whether teams can create synergies in strategic interactions. For our comparison between team and individual behavior we employ the race game. This game has the advantage that the optimal strategy does neither depend on beliefs about other players nor on distributional or efficiency concerns. Our results reveal that teams do not only outperform individuals but that they can also beat the “truth-wins” benchmark. In particular, varying the length of the race game we find that the team advantage increases with the complexity of the game. The latter finding supports the conjectures made by Charness et al. (2010) and Cooper and Kagel (2005), who suggest a relation between task complexity and the size of synergies created by teams. |
| Keywords: | Race game; strategic sophistication; team decision making |
| JEL: | C72 C91 C92 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0396&r=exp |
| By: | Fairlie, Robert W. (University of California, Santa Cruz); Robinson, Jonathan (University of California, Santa Cruz) |
| Abstract: | Computers are an important part of modern education, yet large segments of the population – especially low-income and minority children – lack access to a computer at home. Does this impede educational achievement? We test this hypothesis by conducting the largest-ever field experiment involving the random provision of free computers for home use to students. 1,123 schoolchildren grades 6-10 in 15 California schools participated in the experiment. Although the program significantly increased computer ownership and use, we find no effects on any educational outcomes, including grades, standardized test scores, credits earned, attendance and disciplinary actions. Our estimates are precise enough to rule out even modestly-sized positive or negative impacts. The estimated null effect is consistent with survey evidence showing no change in homework time or other "intermediate" inputs in education for treatment students. |
| Keywords: | computers, education, experiment |
| JEL: | I24 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7211&r=exp |
| By: | Francesco Fallucchi (School of Economics, University of Nottingham); Elke Renner (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham) |
| Abstract: | We investigate the effects of information feedback in rent-seeking games with two different contest structures. In the deterministic contest a contestant receives a share of the rent equal to her share of rent-seeking expenditures, while in the stochastic contest a contestant wins the entire rent with probability equal to her share of rent-seeking expenditures. In deterministic contests average expenditures converge to equilibrium levels when subjects only get feedback about own earnings, and additional feedback about rivals’ choices and earnings raises average expenditures. In stochastic contests information feedback has an opposite, and even stronger, effect: when subjects only get feedback on own earnings we observe high levels of rent dissipation, usually exceeding the value of the rent, and additional feedback about rivals’ choices and earnings has a significant moderating influence on expenditures. In a follow-up treatment we endogenize information feedback by allowing contestants in a stochastic contest to make “public” or “private” expenditures. Subjects make the vast majority of expenditures privately and overall excess expenditures are similar to the stochastic contest with own feedback. |
| Keywords: | contests, rent-seeking, information feedback, learning, experiments |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2013-02&r=exp |
| By: | HASAN, HAMID; EJAZ, NAUMAN |
| Abstract: | The paper attempts to test the following hypotheses: (i) Are people generally self interested, (ii) If people tend to be generous, what is the motive, i.e., either they fear rejection or do they have a preference for fairness, and (iii) Is there any behavioral difference in bargaining between males and females. In this respect, we conduct an ultimatum bargaining experiment in a “same gender pairings” setting in International Islamic University Islamabad, Pakistan. In order to test the first hypothesis we look at the overall offers made by the proposers and the rejection rates of the responders. In order to test the second hypothesis we compare the offers that proposers anticipate will be accepted by the responders and the offers they actually make. If actual offer exceeds the minimum acceptable offer anticipated by the proposer, we conclude that he is fair minded. Otherwise, he is being generous due to fear of rejection. In order to test the third hypothesis, we compare the offers and responses made by males and females in this game. At the start of this study, we were of the view that the people of an Islamic society, in general, and students of International Islamic University, Islamabad, in particular, would show a greater concern for fairness rather than fear of rejection. As is evident, the results of this study prove these views wrong. Further, this fear of rejection was very realistic, particularly, in case of males where the rejection rates for unfair offers were very high. |
| Keywords: | Ultimatum games, fairness, self-interest, gender |
| JEL: | C9 C91 C92 D0 D03 |
| Date: | 2013–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44923&r=exp |
| By: | Booth, Alison L. (Australian National University); Cardona Sosa, Lina (University of Essex); Nolen, Patrick J. (University of Essex) |
| Abstract: | We examine the effect of single-sex classes on the pass rates, grades, and course choices of students in a coeducational university. We randomly assign students to all-female, all-male, and coed classes and, therefore, get around the selection issues present in other studies on single-sex education. We find that one hour a week of single-sex education benefits females: females are 7% more likely to pass their first year courses and score 10% higher in their required second year classes than their peers attending coeducational classes. We find no effect of single-sex education on the probability that a female will take technical classes and there is no effect of single-sex education for males. Furthermore we are able to examine potential mechanisms driving the single-sex effect for females. We find that the results are consistent with a reduction in stereotype threat for females and are not due to a potential tracking effect. |
| Keywords: | single-sex, education, gender, experiment |
| JEL: | C91 C92 J16 J33 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7207&r=exp |
| By: | Michailova, Julija; Katter, Joana K. Q. |
| Abstract: | This article illustrates the difficulties of quantifying overconfidence in economic experiments and suggests a procedure for the development of the reliable overconfidence measurement instrument (test). Following the suggested two-stage procedure a sample measure of overconfidence is developed. First a pilot test is conducted to divide the initial fifty items into three difficulty levels: hard, moderate and easy questions. A final test was compiled of six questions of each difficulty levels. In the second phase a replicability check was run with the final instrument. |
| Keywords: | overconfidence quantification, instrument development, economic experiment. |
| JEL: | C49 C80 C90 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44399&r=exp |
| By: | Borghans, Lex (Maastricht University); Golsteyn, Bart H.H. (Maastricht University) |
| Abstract: | This paper analyzes whether defaults affect the choice for courses followed at work. In addition, we analyze whether the size of the default effect varies with employees' personality and skill-deficiencies. We perform an experiment in which workers are hypothetically offered three courses which they can accept or exchange for other courses. Randomizing the default package of courses, we identify the default effect. Default courses are chosen approximately three times more often than other courses. They are chosen more often if people have skill-deficiencies in these courses, suggesting that people consider the default to be an advice. Women choose default courses more often than men. Women with less self-confidence and men with lower cognitive skills choose the default courses more often. |
| Keywords: | training, human capital investment, default |
| JEL: | J24 J31 I2 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7214&r=exp |
| By: | Andreas Drichoutis; Phoebe Koundouri; Mavra Stithou |
| Abstract: | Environmental health hazards in Asopos River Basin (RB) rise concerns on health risk not only for the residents of the catchment but also for the consumers of the area s products across the country. As a result, the focus of this chapter is on the estimation of theses health risks. In order to assess the social cost from consuming products produced in an area where water resources are not in good condition a lab experimental auction has been conducted. According to the details of the experiment presented at the beginning of the chapter all participants were asked to bid to exchange a product from region A (the polluted one) with a similar product from a region in a good ecological status (in the terminology of the European Water Framework Directive (WFD)), region B. After the presentation of the employed methodology econometric analysis was conducted. The output of this analysis is an average Willingness-to-Pay (WTP) for the specific sample of consumers. WTP represents the maximum amount of money a person would be willing to pay in order to receive a good or avoid an undesired impact. The chapter concludes with policy recommendations and suggests that unless an epidemiology study confirms the health hazards from consuming agricultural products cultivated in the area of Asopos (area similar to the characteristics of region A), the estimated amount is a net cost suffered by the local farmers and compensation measures have to be adopted. |
| Date: | 2013–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:aue:wpaper:1316&r=exp |
| By: | Ilyana Kuziemko; Michael I. Norton; Emmanuel Saez; Stefanie Stantcheva |
| Abstract: | This paper analyzes the effects of information about inequality and taxes on preferences for redistribution using randomized online surveys on Amazon Mechanical Turk (mTurk). About 5,000 respondents were randomized into treatments providing interactive information on U.S. income inequality, the link between top income tax rates and economic growth, and the estate tax. We find that the informational treatment has very large effects on whether respondents view inequality as an important problem. By contrast, we find quantitatively small effects of the treatment on views about policy and redistribution: support for taxing the rich increases slightly, support for transfers to the poor does not, especially among those with lower incomes and education. An exception is the estate tax — we find that informing respondents that it affects only the very richest families has an extremely large positive effect on estate tax support, even increasing respondents' willingness to write to their U.S. senator about the issue. We also find that the treatment substantially decreases trust in government, potentially mitigating respondents' willingness to translate concerns about inequality into government action. Methodologically, we explore different strategies to lower attrition in online survey platforms and show our main results are robust across methods. A small follow-up survey one month later reveals that our results persist over time. Finally, we compare mTurk with other survey vendors and provide suggestions to future researchers considering this platform. |
| JEL: | D63 D72 H2 I3 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18865&r=exp |