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on Experimental Economics |
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Issue of 2013‒04‒27
fourteen papers chosen by |
| By: | Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Reme, Bjørn-Atle (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | We study whether compensating people who volunteer to be leaders in a public goods game creates a social crowding-out effect of moral motivation among the others in the group. We report from an experiment with four treatments, where the base treatment is a standard public goods game with simultaneous contribution decisions, while the three other treatments allowed participants to volunteer to be an “early contributor” in their group. In the three leader treatments, we manipulate the level of compensation given to the leader. Our main finding is that a moderate compensation to the leader is highly beneficial, it increases the average contribution by almost 80%. A high compensation, however, is detrimental to public good provision. We show that paying a moderate compensation to the leaders strikes the right balance between the need for recruiting leaders and avoiding a large social crowding-out effect. We argue that the main findings of the paper are important in many real life settings where we would like to use economic incentives to encourage people to lead by example. |
| Keywords: | Voluntariness; Group behavior; Public goods; Laoratory. |
| JEL: | C72 C92 H41 |
| Date: | 2013–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2013_010&r=exp |
| By: | Michał Krawczyk (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | I report the results of a large survey of experimental subjects and researchers concerning the use of deception. I conclude that members of these two groups largely agree on the extent to which various specific techniques are deceptive. I identify the main dimensions that determine this judgment. I also find that the attitude towards deception among subjects tends to be more favorable than among researchers, although even the latter do not readily conform with the common view that deception is taboo in experimental economics. |
| Keywords: | experimental methodology, deception |
| JEL: | C90 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2013-11&r=exp |
| By: | Erik O. Kimbrough (Simon Fraser University); Jared Rubin (Chapman University); Roman M. Sheremeta (Chapman University); Timothy Shields (Chapman University) |
| Abstract: | Commitment problems are inherent to non-binding conflict resolution mechanisms, since an unsatisfied party can ignore the resolution and initiate conflict. We provide experimental evidence suggesting that even in the absence of binding contractual agreements individuals often avoid conflict by committing to the outcome of a conflict resolution mechanism. Commitment problems are mitigated to a greater extent for groups who opt-in to the conflict resolution mechanism, but only when opting-in is costly. Although conflict rates are higher when opting-in is costly than when it is free or exogenously imposed, commitment problems are greatly reduced amongst those groups who choose to opt-in. |
| Keywords: | conflict resolution, commitment problem, opting-in, contests, experiments |
| JEL: | C72 C91 D72 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-11&r=exp |
| By: | Marko Pitesa (GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM)); Stefan Thau (LBS - London Business School - London Business School) |
| Abstract: | In this research, we examine when and why organizational environments influence how employees respond to moral issues. Past research proposed that social influences in organizations affect employees' ethical decision making, but did not explain when and why some individuals are affected by the organizational environment and some disregard it. To address this problem, we drew on research on power to propose that power makes people more self-focused, which, in turn, makes them more likely to act upon their preferences and ignore (un)ethical social influences. Using both experimental and field methods, we tested our model across the three main paradigms of social influence: informational influence (Study 1 and 2), normative influence (Study 3), and compliance (Study 4). Results offer converging evidence for our theory. |
| Keywords: | ethical decision making, power, social influences, self-focus |
| Date: | 2013–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:gemptp:hal-00814614&r=exp |
| By: | Kohsaka Youki (Center for Finance Research, Waseda University); Grzegorz Mardyla (Faculty of Economics, Kinki University); Shinji Takenaka (Japan Center for Economic Research); Yoshiro Tsutsui (Graduate School of Economics, Osaka University) |
| Abstract: | We experimentally investigate the existence of the disposition effect and loss aversion as its potential cause. Our approach includes three key characteristics: (i) An environment closely mimicking actual stock markets; (ii) Individual-specific reference prices; (iii) A direct test of loss aversion as a cause of the disposition effect. We find strong support for the existence of the disposition effect as an independent hypothesis. This is an improvement over previous studies, which tested this hypothesis only jointly with others. Our results also strongly point to loss aversion, of the type postulated by prospect theory, being a source of the disposition effect. |
| Keywords: | disposition effect, loss aversion, investor behavior, experimental economics |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1302r&r=exp |
| By: | Emmanuel Malsch (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne - PRES HESAM) |
| Abstract: | The present study would like to show - among other things - in the spirit of Hyndman, Terracol and Vaksmann (2009), that learning and teaching are still observed in an environment where there is no pure strategy Nash equilibrium (but still, as in any finite game, a mixed strategy Nash equilibrium), which is the case in the majority of real-life situations. The main objective in this paper is to test experimentally the following hypotheses: - First, we want to know if players believe that their opponents can be learners and that their actions might influence their opponent's beliefs. - Second, we would like to investigate the idea that players do use this awareness of their opponent's ability to learn to manipulate their opponents' beliefs. - Third, we want to know if there are other explanations we can provide for the way players behave in our game: "cyclic behaviour", "learning of correlated strategies"? - Last, we think that Inequity and Risk aversion might play a role but that doesn't undermine our teaching strategy hypothesis mentioned above. The paper is organized as follows. Section II introduces our game and experimental procedure. Section III gives some preliminary results and descriptive statistics. Section IV-V and VI shows that subjects might be more sophisticated than the standard theories predict. Section VII-VIII-IX explore the possibility of "cyclic playing behaviours", the existence of a learning of "correlated strategy" and examines the effect of "inequity and risk aversion". Section X concludes the paper. |
| Keywords: | théorie des jeux, apprentissage |
| Date: | 2012–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:dumas-00813551&r=exp |
| By: | Jonas Fooken; Markus Schaffner |
| Abstract: | We study the difference in the result of two different risk elicitation methods by linking estimates of risk attitudes to gender, age, personality traits, a decision in a dilemma situation, and physiological states measured by heart rate variability (HRV). Our results indicate that differences between the methods are reflected in a different effect of gender and personality traits. Furthermore, HRV is linked to risk-taking in the experiment for one of the methods, suggesting that emotionally more stressed individuals display more risk aversion. However, we cannot determine if these are significantly related to the difference on the results of the two methods. Finally, we find that risk attitudes are not predictive of the ability to decide in a dilemma, but personality traits are. There is also no apparent relationship between the physiological state during the dilemma situation and the ability to make a decision. |
| Keywords: | s risk preferences |
| JEL: | D81 D87 |
| Date: | 2013–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:qut:qubewp:wp010&r=exp |
| By: | Elaine Liu (University of Houston); JiKun Huang (Center for Chinese Agricultural Policy) |
| Abstract: | Despite insect-resistant Bt cotton has been lauded for its ability to reduce the use of pesticides, studies have shown that Chinese Bt cotton farmers continue to use excessive amounts of pesticides. Using results from a survey and an artefactual field experiment, we find that farmers who are more risk averse use greater quantities of pesticides. We also find that farmers who are more loss averse use lesser quantities of pesticides. This result is consistent with our conceptual framework and suggestive evidence where farmers behave in a loss averse manner in the health domain and place more weight on the importance of health over money in the loss domain. |
| Keywords: | Risk Preferences, Prospect Theory, Pesticide Use |
| JEL: | O13 O14 O33 D03 D81 D83 |
| Date: | 2013–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:hou:wpaper:201310920&r=exp |
| By: | Tessa Bold; Mwangi Kimenyi; Germano Mwabu; Alice Ng'ang'a; Justin Sandefur |
| Abstract: | The recent wave of randomized trials in development economics has provoked criticisms regarding external validity. We investigate two concerns – heterogeneity across beneficiaries and implementers – in a randomized trial of contract teachers in Kenyan schools. The intervention, previously shown to raise test scores in NGO-led trials in Western Kenya and parts of India, was replicated across all Kenyan provinces by an NGO and the government. Strong effects of short-term contracts produced in controlled experimental settings are lost in weak public institutions: NGO implementation produces a positive effect on test scores across diverse contexts, while government implementation yields zero effect. The data suggests that the stark contrast in success between the government and NGO arm can be traced back to implementation constraints and political economy forces put in motion as the program went to scale. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2013-04&r=exp |
| By: | Timothy C. Salmony; Danila Serra |
| Abstract: | We experimentally investigate the extent to which social observability of one’s actions and the possibility of social non-monetary judgment affect the decision to engage in rule breaking behavior. We consider three rule breaking scenarios — theft, bribery and embezzlement — in the absence of any formal enforcement mechanism. By involving a student sample characterized by cultural heterogeneity due to immigration of ancestors to the US, we are able to investigate whether the effectiveness of informal social enforcement mechanisms is conditional on the cultural background of the decision-maker. A total of 52 countries are represented in our sample, ranging from Low Rule of Law countries such as Liberia and Nigeria to High Rule of Law countries such as Sweden and Norway. Our data provide evidence that people with different cultural backgrounds do respond differently to increased social observability of their actions. In particular, while subjects that identify culturally with a High Rule of Law country respond to social obervability and judgment by lowering their propensities to engage in rule breaking, subjects that identify with Low Rule of Law countries do not. Our findings suggest that development policies that rely purely on social judgment to enforce behavior may not work with Low Rule of Law populations. |
| Keywords: | Theft;Corruption; Social Enforcement; Culture; Experiments |
| JEL: | C90 D73 K42 Z10 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2013-05&r=exp |
| By: | Erlend Berg; Maitreesh Ghatak; R Manjula; D Rajasekhar; Sanchari Roy |
| Abstract: | This paper studies the interaction of incentive pay and social distance in the dissemination of information. We analyse theoretically as well as empirically the effect of incentive pay when agents have pro-social objectives, but also preferences over dealing with one social group relative to another. In a randomised field experiment undertaken across 151 villages in South India, local agents were hired to spread information about a public health insurance programme. Relative to flat pay, incentive pay improves knowledge transmission to households that are socially distant from the agent, but not to households similar to the agent. |
| Keywords: | public services, information constraints, incentive pay, social proximity, knowledge transmission |
| JEL: | C93 D83 I38 M52 O15 Z13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2013-06&r=exp |
| 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); Ainhoa Jaramillo-Gutiérrez (EriCes & Dpt. of Applied Economics, University of Valencia, Spain); Pedro Pereira (Autoridade da Concorrência and CEFAGE-UE, U. of Evora, Portugal); J. Carlos Pernías-Cerrillo (Economics Department, Universitat Jaume I, Castellón, Spain) |
| Abstract: | We study the evolution of prices in markets assisted by price-comparison engines. We use laboratory data obtained under two industry sizes and two conditions concerning the sample (complete, incomplete) of prices available to informed consumers. Distributions are typically bimodal. One of the two modes, corresponding to monopoly prices, tends to increasingly attract prices over time. The second one, corresponding to interior prices, presents a decreasing trend. Monopoly pricing can be used as an insurance against more competitive (but riskier) behavior. In fact, subjects earning low profits due to interior pricing in the past are more likely to choose monopoly pricing. |
| Keywords: | Internet Economics, price-comparison search engines, mixed strategy equilibria, experimental economics |
| JEL: | D0 D2 L1 L4 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2013/05&r=exp |
| By: | Marko Pitesa (GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM)); Stefan Thau (LBS - London Business School - London Business School) |
| Abstract: | This paper provides an answer to the question of why agents make self-serving decisions under moral hazard and how their self-serving decisions can be kept in check through institutional arrangements. Our theoretical model predicts that the agents' power and the manner in which they are held accountable jointly determine their propensity to make self-serving decisions. We test our theory in the context of financial investment decisions made under moral hazard using others' funds. Across three studies, using different decision-making tasks, different manipulations of power and accountability, and different samples, we show that agents' power makes them more likely to behave in a self-serving manner under moral hazard, but only when the appropriate accountability mechanisms are not in place. Specifically, we distinguish between outcome and procedural accountability and show that holding agents accountable for their decision-making procedure reduces the level of self-serving decisions under moral hazard and also curbs the negative consequences of power. Implications for decisions under moral hazard, the psychology of power, and the accountability literature are discussed. |
| Keywords: | moral hazard; accountability; power; investment decisions; unethical behavior |
| Date: | 2013–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:gemptp:hal-00814565&r=exp |
| By: | Kendall, Chad (University of British Columbia, Vancouver); Nannicini, Tommaso (Bocconi University); Trebbi, Francesco (University of British Columbia, Vancouver) |
| Abstract: | Rational voters update their subjective beliefs about candidates' attributes with the arrival of information, and subsequently base their votes on these beliefs. Information accrual is, however, endogenous to voters' types and difficult to identify in observational studies. In a large scale randomized trial conducted during an actual mayoral campaign in Italy, we expose different areas of the polity to controlled informational treatments about the valence and ideology of the incumbent through verifiable informative messages sent by the incumbent reelection campaign. Our treatments affect both actual vote shares at the precinct level and vote declarations at the individual level. We explicitly investigate the process of belief updating by comparing the elicited priors and posteriors of voters, finding heterogeneous responses to information. Based on the elicited beliefs, we are able to structurally assess the relative weights voters place upon a candidate's valence and ideology. We find that both valence and ideological messages affect the first and second moments of the belief distribution, but only campaigning on valence brings more votes to the incumbent. With respect to ideology, cross-learning occurs, as voters who receive information about the incumbent also update their beliefs about the opponent. Finally, we illustrate how to perform counterfactual campaigns based upon the structural model. |
| Keywords: | voting, information, beliefs elicitation, randomized controlled trial |
| JEL: | D72 D83 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7340&r=exp |