nep-exp New Economics Papers
on Experimental Economics
Issue of 2013‒03‒23
sixteen papers chosen by
Daniel Houser
George Mason University

  1. Discrimination via Exclusion: An Experiment on Group Identity and Club Goods By Surajeet Chakravarty; Miguel A. Fonseca
  2. Behavioral Approach to Repeated Games with Private Monitoring By Hitoshi Matsushima; Tomomi Tanaka; Tomohisa Toyama
  3. Motives of pro-social behavior in individual versus collective decisions – a comparative experimental study By Ivo Bischoff; Thomas Krauskopf
  4. Love me, love my dog: an experimental study on social connections and indirect reciprocity By Liang, Pinghan; Meng, Juanjuan
  5. Do ambiguity effects survive in experimental asset markets? By Füllbrunn, Sascha; Rau, Holger; Weitzel, Utz
  6. Strategic signaling or emotional sanctioning? An experimental study of ex post communication in a repeated public goods game By Adam Zylbersztejn
  7. The Importance of the Cognitive Environment for Intertemporal Choice By Kuhn, Michael A.; Kuhn, Peter J.; Villeval, Marie Claire
  8. The Impact of Tax Knowledge and Budget Spending Influence on Tax Compliance By Djawadi, Behnud Mir; Fahr, René
  9. Effects of minimum bid increment in internet auctions: Evidence from a field experiment By Janne Tukiainen
  10. An experimental study on the effects of co-payment in public services By Aurora García-Gallego; Nikolaos Georgantzis; Gianandrea Staffiero; Tarek Jaber-López
  11. How and when can economic skills enhance cooperation? By Evelyn Korn; Stephan Meisenzahl; Johannes Ziesecke
  12. Going Online with a Face-to-Face Household Panel: Initial Results from an Experiment on the Understanding Society Innovation Panel By Jäckle, Annette; Lynn, Peter; Burton, Jonathan
  13. Evaluating Case-based Decision Theory: Predicting Empirical Patterns of Human Classification Learning (Extensions) By Pape, Andreas; Kurtz, Kenneth
  14. Incentives when altruism is impure: The case of blood and living organ donations By María Errea; Juan M. Cabasés
  15. The Effects of School Libraries on Language Skills: Evidence from a Randomized Controlled Trial in India By Borkum, Evan; He, Fang; Linden, Leigh L.
  16. The provision point mechanism with reward money By Robertas Zubrickas

  1. By: Surajeet Chakravarty (Department of Economics, University of Exeter); Miguel A. Fonseca (Department of Economics, University of Exeter)
    Abstract: We study using laboratory experiments the impact on cooperation of allowing individuals to invest in group-specific, excludable public goods. We find that allowing different social groups to voluntarily contribute to such goods increases total contributions. However, a significant proportion of that contribution goes towards the group-specific club good, rather than the public good, even when the latter has higher financial returns to cooperation. We find significant evidence of in-group biases, which are manifested by positive in-group reciprocity. That is, club goods allow subjects to display their preferences for interaction with their in-group members, as well as in positive in-group reciprocity.
    Keywords: club goods, social identity, experiment
    JEL: C92 D02 D03 H41
    Date: 2013
  2. By: Hitoshi Matsushima (The University of Tokyo); Tomomi Tanaka (Economic Development & Global Education, LLC); Tomohisa Toyama (Kogakuin University)
    Abstract: We examine repeated prisoners’ dilemma with imperfect private monitoring and random termination where the termination probability is low. We run laboratory experiments and show subjects retaliate more severely when monitoring is more accurate. This experimental result contradicts the prediction of standard game theory. Instead of assuming full rationality and pure self-interest, we introduce naivete and social preferences, i.e., reciprocal concerns, and develop a model that is consistent with, and uniquely predicts, the observed behavior in the experiments. Our behavioral model suggests there is a trade-off between naivete and reciprocity. When people are concerned about reciprocity, they tend to make fewer random choices.
    Date: 2013–03
  3. By: Ivo Bischoff (University of Kassel); Thomas Krauskopf (University of Kassel)
    Abstract: We investigate the motives of pro-social behavior in collective decisions in an economic experiment. It compares individual behavior in private and collective decisions in a unified experimental setup. Subjects are given an individual endowment and have to decide how much of it to donate to charity. The experiment is combined with two long questionnaires that provide us with background information on subjects and enables us to learn more about the motives driving their behavior. Contrary to theoretical predictions, the distribution of amounts donated individually is remarkably similar to the distribution of amounts proposed for collective donation. In regressions, we find individual donations to be driven by consequentialist motives, social norms and moral convictions. In collective decisions, neither the motiverelated variables nor any of the control variables are found significant. Comparing subjects’ affective state before and after the experiment, we find that individual donations create a feeling of warm glow while collective donations do not. On the other hand, the change in affective state in the collective decision is higher the higher the amount proposed for the collective donation. This pattern is consistent with expressive motives.
    Keywords: voting motives, voluntary contributions, redistribution, charity, economic experiment, warm-glow, Immanuel Kant, affect
    JEL: C90 D72
    Date: 2013
  4. By: Liang, Pinghan; Meng, Juanjuan
    Abstract: This paper conducts a laboratory experiment to investigate the role of social connections in behavioral indirect reciprocity. We provide the evidence of spillovers effects of social ties, e.g., the recipient’s indirect reciprocal act varies with the relations between the donor and a third party. Naturally occurring friendship is employed to study social connections. Thus, a beneficiary might either be a “friend” or a “stranger” of the donor. We demonstrate that knowing social connections significantly increases the recipient’s repayment only if the donor is kind enough in the first place. Overall, recipients’ indirect reciprocity almost doubles when introducing social networks among donors and beneficiaries. It is also shown that this spillovers effect is unlikely the result of recipients’ perception of donors’ expectations. Major theories of social preferences, e.g., fairness, intention-based, guilt-aversion, cannot offer satisfactory explanations of our findings. We propose an explanation based on in-group and out-group differences but with endogenous group status, in which social connections play a crucial role.
    Keywords: indirect reciprocity, social connections, spillovers, social preferences
    JEL: C91 D03 D85
    Date: 2013
  5. By: Füllbrunn, Sascha; Rau, Holger; Weitzel, Utz
    Abstract: Despite ample evidence of ambiguity preferences in individual decision making, experimental studies of ambiguity effects in financial markets are scarce and inconclusive. Although a number of theoretical studies explain empirical puzzles in finance with ambiguity preferences, it is not a given that individual ambiguity effects survive in markets. We therefore combine the predominant design for ambiguous prospects in individual decision making, the two-color Ellsberg urn, with predominant designs in financial trading, the double auction and the call market, and compare trading in risky and in ambiguous assets. Our results suggest that markets are able to wash out ambiguity effects, which we do observe in an individual decision making control. We find no effects on transaction prices or quotes and also no effects on volume, volatility, or portfolios. This applies both to double auctions and call markets, with and without simultaneous trading of risky and ambiguous assets, and even in the absence of arbitrage.
    Keywords: ambiguity, experiment, trading, double auction, call market
    JEL: D03 G12 G14
    Date: 2013–02–28
  6. By: Adam Zylbersztejn (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    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
    Date: 2013–02
  7. By: Kuhn, Michael A. (University of California, San Diego); Kuhn, Peter J. (University of California, Santa Barbara); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We experimentally manipulate two aspects of the cognitive environment, cognitive depletion and recent sugar intake, and estimate their effects on individuals' time preferences in a way that allows us to identify the structural parameters of a simple (α,β,δ) intertemporal utility function for each person. We find that individuals exposed to a prior cognitive load, individuals who consumed a sugared drink, and individuals who consumed a sugar-free drink all defer more income than a control group exposed to none of these conditions. Structural estimates show that all three effects are driven entirely by increases in the intertemporal price elasticity parameter (α). Together, our results suggest that at least for complex economic decisions like intertemporal financial choice, the ‘attention/focusing' effect of both prior cognitively demanding activity and prior assignment of a primary reward can improve decision-making.
    Keywords: time preferences, self-control, depletion, sucrose, experiment
    JEL: C91 D90
    Date: 2013–03
  8. By: Djawadi, Behnud Mir (University of Paderborn); Fahr, René (University of Paderborn)
    Abstract: We investigate the impact of trust in authorities on tax compliance within a controlled laboratory setting. Embedded in two hypothetical tax systems with high and low power of authorities respectively, we gradually increase trust in authorities in form of tax knowledge about public expenditures and by allowing taxpayers to decide on what public goods they want their tax dollars to be spend for. To clearly disentangle any effects from factors that are known to influence tax compliance from previous studies, we control for tax commitment, risk attitude, income and effort exerted to earn the income which the taxpayers report truthfully or underreport to the tax authority. Non-parametric statistical analyses as well as multivariate regressions provide clear evidence that tax compliance is higher in tax systems with low power of authorities when providing complete transparency on public expenditures and when taxpayers are given the possibility to decide on the use of their taxes. With a powerful tax authority in place which is reflected in high audit rates, compliance does not change when increasing trust in authorities. Our results have important policy implications as the mere hypothetical possibility to express preferences on budget spending influences tax compliance.
    Keywords: tax evasion, tax compliance, tax knowledge, budget spending, real effort, experimental economics
    JEL: H26 C91
    Date: 2013–02
  9. By: Janne Tukiainen
    Abstract: I study the role of minimum bid increments (MBI) in internet auctions using field experiment data. I sell identical gift cards while varying the MBI. Internet auctions have typically been viewed as second-price, implying truthful bidding. However, due to the presence of the MBI, equilibrium bidding behavior involves bid-shading. I test between truthful bidding and equilibrium bidding. Truthful bidding is rejected. Bidders conduct bid-shading in a pattern consistent with equilibrium bidding. I also report that the revenue maximizing level for the MBI is higher than zero and the eBay level is close to optimal. Moreover, a high MBI inefficiently limits entry.
    Keywords: Field experiment, internet auctions, minimum bid increment, revenue, strategic bidding
    JEL: D44 C93 C72 C52 L81
    Date: 2013–02–15
  10. By: Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzis (GLOBE & Economics Department, University of Granada, Spain; LEE & Economics Department, Universitat Jaume I, Castellón-Spain); Gianandrea Staffiero (Center for Research in Economics and Health (CRES)); Tarek Jaber-López (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: We analyze the effect of imposing a charge for the individual appropriation of common resources. In our design, withdrawing the maximum amount is the dominant strategy for every player, but the resulting equilibrium is socially inefficient. We find that the presence of a price, small enough to leave intact the trade-off between individual incentives and collective welfare, is not effective in reducing appropriation among players who have previously played without it. On one hand, the upward trend in the average extraction of common funds continues after the introduction of a price. On the other hand, the presence of a price does decrease withdrawals, in comparison with a baseline treatment without any charge, as long as it is imposed from the outset. Our design sheds light on the conditions for the effectiveness of co-payment in curbing the over-consumption of public resources, most notably in the realm of healthcare.
    Keywords: Common-Pool Resources, Co-Payment, Public Goods, Consumer Choice
    JEL: C91 C92 H41 I11 I18
    Date: 2013
  11. By: Evelyn Korn (University of Marburg); Stephan Meisenzahl (University of Marburg); Johannes Ziesecke (University of Marburg)
    Abstract: Conventional wisdom has it that economic training and education tends to produce less cooperative people – where cooperation means following group-oriented goals. This issue has attracted particular attention in discussions of the current economic crisis where it was asked if increasing marketization of societies has created an environment encouraging amoral selfish behavior of financial intermediaries and other economic agents. We provide some evidence against this claim with the help of an experiment, using an investment game with a public-goods character. Modest guidance of strategic abilities increases the degree of cooperation if the institutional setting permits reputation building. We thus conclude that economic practice can enhance cooperation in a socially stable environment.
    Date: 2013
  12. By: Jäckle, Annette; Lynn, Peter; Burton, Jonathan
    Abstract: To date, face-to-face interviewing has been the primary mode of data collection for Understanding Society. There may be advantages in instead collecting data online where possible. Primarily, this should bring a reduction in data collection costs. There are, however, concerns that response rates could fall if the request to participate is no longer made in person and that measurement could differ between modes. Wave 5 of the Innovation Panel incorporated an experimental design comparing a mixed mode design (web plus face-to-face follow-up) with a standard face-to-face design. This paper presents initial findings from the experiment, primarily with regard to participation rates.
    Date: 2013–03–15
  13. By: Pape, Andreas; Kurtz, Kenneth
    Abstract: We introduce a computer program which calculates an agent’s optimal behavior according to Case-based Decision Theory (Gilboa and Schmeidler, 1995) and use it to test CBDT against a benchmark set of problems from the psychological literature on human classification learning (Shepard et al., 1961). This allows us to evaluate the efficacy of CBDT as an account of human decision-making on this set of problems. We find: (1) The choice behavior of this program (and therefore Case-based Decision Theory) correctly predicts the empirically observed relative difficulty of problems and speed of learning in human data. (2) ‘Similarity’ (how CBDT decision makers extrapolate from memory) is decreasing in vector distance, consistent with evidence in psychology (Shepard, 1987). (3) The best-fitting parameters suggest humans aspire to an 80 − 85% success rate, and humans may increase their aspiration level during the experiment. (4) Average similarity is rejected in favor of additive similarity.
    Keywords: Case-based Decision Theory, Human Cognition, Learning, Agent-based Computational Economics, Psychology, Cognitive Science
    JEL: C63 C88 D83
    Date: 2013–03–18
  14. By: María Errea (Departamento de Economía-UPNA); Juan M. Cabasés (Departamento de Economía-UPNA)
    Abstract: The decision to donate blood and living organs is considered voluntary and altruistic. However, the shortage of donors has opened an interesting debate in recent years, considering offering economic incentives to donors. This paper analyzes theoretically and empirically, the effects of incentives over individuals when facing the decision of becoming donors. Results show that crowding-in of blood donors would be more likely by offering "Information concerning blood donations" or "Blood Tests". In both, blood and living organ donations, "Money" would be very likely to crowd-out individuals from donating. Concerning living organs, we do not find good evidence for crowding-in. We conclude donation policies, properly designed, could help to increase the number of donors, and more specifically suggest implementing non-monetary incentives.
    Keywords: social preferences, incentives, altruism, blood and living organ donations
    Date: 2013
  15. By: Borkum, Evan (Mathematica Policy Research); He, Fang (US Government Accountability Office); Linden, Leigh L. (University of Texas at Austin)
    Abstract: We conduct a randomized controlled trial of an Indian school library program. Overall, the program had no impact on students' scores on a language skills test administered after 16 months. The estimates are sufficiently precise to rule out effects larger than 0.053 and 0.037 standard deviations, based on the 95 and 90 percent confidence intervals. This finding is robust across individual competencies and subsets of the sample. The method of treatment, however, does seem to matter – physical libraries have no effect, while visiting librarians actually reduce test scores. We find no impact on test scores in other subjects or attendance rates.
    Keywords: library, randomized controlled trial, education, development
    JEL: I21 I28 O15
    Date: 2013–03
  16. By: Robertas Zubrickas
    Abstract: We introduce reward money into the provision point mechanism with refunds. Reward money is distributed among the contributors in proportion to their con- tributions only when the provision point is not reached. In environments without aggregate uncertainty, the provision point is always reached in equilibrium as competition for reward money and preference for the public good induce sufficient contributions. Importantly, the mechanism not only ensures allocative efficiency but also distributional. At a specific level of reward money, we obtain a unique equilibrium, where all consumers contribute the same proportion of their private valuations. The advantages of the mechanism are also demonstrated for collective action problems.
    Keywords: Public goods, private provision, provision point mechanism, distributional efficiency, collective action problem
    JEL: D82 H41
    Date: 2013–02

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