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on Experimental Economics |
| By: | Korenok Oleg (Department of Economics, VCU School of Business); Edward L. Millner (Department of Economics, VCU School of Business); Laura Razzolini (Department of Economics, VCU School of Business) |
| Abstract: | We answer the question: Is giving equivalent to not taking? We show that, if giving is equivalent to not taking, impure altruism could account for List's (2007) finding that the payoff to recipients in a dictator game decreases when the dictator has the option to take. We examine behavior in dictator games with different taking options but equivalent final payoffs. We find that the recipients tend to earn more as the amount the dictator must take to achieve a given final payoff increases. We conclude that not taking is not equivalent to giving and agree with List (2007) that the current social preference models fail to rationalize the observed data. |
| Keywords: | Dictator Game; Impure Altruism; Taking |
| JEL: | C91 D01 D64 H30 H41 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:vcu:wpaper:1301&r=exp |
| By: | Bradler, Christiane; Dur, Robert; Neckermann, Susanne; Non, Arjan |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13017&r=exp |
| By: | Uri Gneezy; Alex Imas; Kristóf Madarász |
| Abstract: | We develop a dynamic model where people decide in the presence of moral constraints and test the predictions of the model through two experiments. Norm violations induce a temporal feeling of guilt that depreciates with time. Due to such fluctuations of guilt, people exhibit an endogenous temporal inconsistency in social preferences—a behavior we term conscience accounting. In our experiments people first have to make an ethical decision, and subsequently decide whether to donate to charity. We find that those who chose unethically were more likely to donate than those who did not. As predicted, donation rates were higher when the opportunity to donate came sooner after the unethical choice than later. Combined, our theoretical and empirical findings suggest a mechanism by which prosocial behavior is likely to occur within temporal brackets following an unethical choice. |
| Keywords: | Emotions, Temporal Brackets, Deception, Prosocial Behavior |
| JEL: | D03 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:stitep:/2012/563&r=exp |
| By: | Palhazi Cuervo D.; Goos P.; Sörensen K. |
| Abstract: | We focus on the D-optimal design of screening experiments involving main-eects regression models, especially with large numbers of factors and observations. We propose a new selection strategy for the coordinate-exchange algorithm based on an orthogonality measure of the design. Computational experiments show that this strategy nds better designs within an execution time that is 30% shorter than other strategies. We also provide strong evidence that the use of the prediction variance as a selection strategy does not provide any added value in comparison to simpler selection strategies. Additionally, we propose a new iterated local search algorithm for the construction of D-optimal experimental designs. This new algorithm clearly outperforms the original coordinate-exchange algorithm. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2013006&r=exp |
| By: | Björn Bartling; Ernst Fehr; Holger Herz |
| Abstract: | Philosophers, psychologists, and economists have long argued that certain decision rights carry not only instrumental value but may also be valuable for their own sake. The ideas of autonomy, freedom, and liberty derive their intuitive appeal – at least partly – from an assumed positive intrinsic value of decision rights. Proving the existence of this value and measuring its size, however, is intricate. Here, we develop an experimental method capable of achieving these goals. The data reveal that – across different parameterizations – the large majority of our subjects intrinsically value decision rights beyond their instrumental benefit. The existence of an intrinsic value of decision rights helps understand the allocation of decision rights in practice, and it has implications for their optimal allocation in organizations, economic institutions, and society at large. |
| Keywords: | Decision rights, intrinsic value, authority |
| JEL: | C91 D03 D23 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:120&r=exp |
| By: | Heinrich H. Nax (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Maxwell N. Burton-Chellew (Department of Zoology - University of Oxford (UK)); Stuart A. West (Department of Zoology - University of Oxford (UK)); H. Peyton Young (Department of Economics - University of Oxford (UK)) |
| Abstract: | Many interactive environments can be represented as games, but they are so large and complex that individual players are in the dark about what others are doing and how their own payo s are a ected. This paper analyzes learning behavior in such 'black box' environments, where players' only source of information is their own history of actions taken and payoff s received. Speci fically we study repeated public goods games, where players must decide how much to contribute at each stage, but they do not know how much others have contributed or how others' contributions a effect their own payoff s. We identify two key features of the players' learning dynamics. First, if a player's realized payoff increases he is less inclined to change his strategy, whereas if his realized payo ff decreases he is more inclined to change his strategy. Second, if increasing his own contribution results in higher payoff s he will tend to increase his contribution still further, whereas the reverse holds if an increase in contribution leads to lower payo ffs. These two e ffects are clearly present when players have no information about the game; moreover they are still present even when players have full information. Convergence to Nash equilibrium occurs at about the same rate in both situations. |
| Keywords: | Learning ; Information ; Public goods games |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:hal-00817201&r=exp |
| By: | Glenn W. Harrison; Jimmy MartÃnez-Correa; J. Todd Swarthout; Eric R. Ulm |
| Abstract: | The theoretical literature has a rich characterization of scoring rules for eliciting the subjective beliefs that an individual has for continuous events, but under the restrictive assumption of risk neutrality. It is well known that risk aversion can dramatically affect the incentives to correctly report the true subjective probability of a binary event, even under Subjective Expected Utility. To address this one can "calibrate" inferences about true subjective probabilities from elicited subjective probabilities over binary events, recognizing the incentives that risk averse agents have to distort reports. We characterize the comparable implications of the general case of a risk averse agent when facing a popular scoring rule over continuous events, and find that these concerns do not apply with anything like the same force. For empirically plausible levels of risk aversion, one can reliably elicit most important features of the latent subjective belief distribution without undertaking calibration for risk attitudes providing one is willing to assume Subjective Expected Utility. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2013-05&r=exp |
| By: | He, Xue-Zhong; Treich, Nicolas |
| Keywords: | Prediction market, heterogeneous beliefs, risk aversion, favorite-longshot bias, complete markets, and asset prices. |
| Date: | 2012–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:27154&r=exp |
| By: | Chowdhury , Subhasish; Lee , Dongryul; Sheremeta , Roman |
| Abstract: | We analyze a group contest in which n groups compete to win a group-specific public good prize. Group sizes can be different and any player may value the prize differently within and across groups. Players exert costly efforts simultaneously and independently. Only the highest effort (the best-shot) within each group represents the group effort that determines the winning group. We fully characterize the set of equilibria and show that in any equilibrium at most one player in each group exerts strictly positive effort. There always exists an equilibrium in which only the highest value player in each active group exerts strictly positive effort. However, perverse equilibria may exist in which the highest value players completely free-ride on others by exerting no effort. We provide conditions under which the set of equilibria can be restricted and discuss contest design implications. |
| Keywords: | best-shot technology; group contest; group-specific public goods; free-riding |
| JEL: | C72 D70 D72 H41 |
| Date: | 2013–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46654&r=exp |
| By: | Gaurab Aryal; Dong-Hyuk Kim |
| Abstract: | We study the identification and estimation of first-price auction models with independent private values where bidders are risk averse and there is ambiguity about the valuation distribution. When bidders' preferences are represented by the maxmin expected utility of [Gilboa and Schmeidler, 1989], we provide sufficient conditions for nonparametric identification of the valuation distribution and bidders' attitude toward ambiguity, separately from the risk aversion (CRRA, CARA). We propose a semi-parametric method and apply it to two datasets, one from experimental auctions and the other from USFS timber auctions. We find, for both cases, that bidders are not only risk averse but also ambiguity averse. In addition, we consider the multiplier preferences of [Hansen and Sargent, 2001] and identify the valuation distribution using the same conditions, and show that normalizing, additionally, (any) one quantile of the value, e.g. upper bound of the support, is sufficient to identify the ambiguity parameter separately from the nonparametric utility. |
| Keywords: | first-price auction, identification, Bayesian econometrics, ambiguity aversion |
| JEL: | C11 C44 D44 E61 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2013-607&r=exp |
| By: | Chad Kendall; Tommaso Nannicini; Francesco Trebbi |
| 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. |
| JEL: | H1 H7 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18986&r=exp |
| By: | Kilduff, Gavin J.; Anderson, Cameron; Willer, Robb |
| Abstract: | Recent research on status and group productivity has highlighted that status hierarchies encourage contributions to group efforts by rewarding contributors with enhanced status. However, that and other work has typically assumed that status hierarchies are widely agreed-upon among group members. Here we challenge this assumption, proposing that groups vary in their level of hierarchical consensus and that when groups fail to achieve high agreement, the status rewards motivating contributions are attenuated, undermining group performance. Results of two studies of task groups support our claims. We observed that status disagreements were quite common, particularly those in which two group members both viewed themselves as higher in status than the other, and that more dominant individuals were most likely to engage in these types of disagreements. Further, we found that such status disagreements led to diminished group performance and that this effect was driven by reduced contributions from the group members involved. These findings suggest that status consensus can vary substantially across groups, and that groups that are able to successfully coalesce around agreed-upon status hierarchies benefit from increased contributions and performance. |
| Keywords: | Business Administration, Management and Operations, Human Resources Management and Services, Shared Status Hierarchies, Group Dynamics |
| Date: | 2013–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:qt77q7n684&r=exp |
| By: | Amalia Di Girolamo; Glenn W. Harrison; Morten I. Lau; J. Todd Swarthout |
| Abstract: | We characterize the literacy of an individual in a domain by their elicited subjective belief distribution over the possible responses to a question posed in that domain. We consider literacy across several financial, economic and statistical domains. We find considerable demographic heterogeneity in the degree of literacy. We also characterize the degree of consistency within a sample about their knowledge, even when that knowledge is imperfect. We show how uncertainty aversion might be a normatively attractive behavior for individuals who have imperfect literacy. Finally, we discuss extensions of our approach to characterize financial capability, the consequences of non-literacy, social literacy, and the information content of hypothetical survey measures of literacy. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2013-04&r=exp |
| By: | Thomas M. Eisenbach; Martin C. Schmalz |
| Abstract: | Motivated by individuals' emotional response to risk at different time horizons, we model an 'anxious' agent--one who is more risk averse with respect to imminent risks than distant risks. Such preferences describe well-documented features of 1) individual behavior, 2) equilibrium prices, and 3) institutions. In particular, we derive implications for financial markets, such as overtrading and price anomalies around announcement dates, as well as a downward-sloping term structure of risk premia, which are found empirically. Since such preferences can lead to dynamic inconsistencies with respect to risk trade-offs, we show that costly delegation of investment decisions is a strategy used to cope with 'anxiety.' |
| Keywords: | Risk management ; Risk-taking (Psychology) ; Human behavior ; Investments ; Rate of return |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:610&r=exp |