nep-exp New Economics Papers
on Experimental Economics
Issue of 2013‒05‒11
eighteen papers chosen by
Daniel Houser
George Mason University

  1. Ancillary experiments: Opportunities and challenges By Baldwin, Kate; Bhavnani, Rikhil R.
  2. Experimental Departures from Self-Interest when Competing Partnerships Share Output By Cherry, Josh; Salant, Stephen; Uler, Neslihan
  3. Simultaneous Decision-Making in Competitive and Cooperative Environments By Savikhin , Anya; Sheremeta , Roman
  4. Gender and other determinants of trust and reciprocity in an experimental labour market amongst Chinese students By Uwe Dulleck; Jonas Fooken; Yumei He
  5. Visibility of Contributors and Cost of Information: An Experiment on Public Goods By Samak , Anya; Sheremeta , Roman
  6. Fairness norms can explain the emergence of specific cooperation norms in the Battle of the Prisoners Dilemma By Fabian Winter
  7. Sorting via Screening versus Signaling: A Theoretic and Experimental Comparison By Werner Güth; Fabian Winter
  8. Intra-household efficiency: An experimental study from Ethiopia By Kebede, Bereket; Tarazona, Marcela; Munro, Alistair; Verschoor, Arjan
  9. Does Monitoring Work? A Field Experiment with Multiple Forms of Counterproductive Behaviour By Michèle Belot; Marina Schröder
  10. Side-Payments and the Costs of Conflict By Kimbrough , Erik; Sheremeta , Roman
  11. Cooperation and Climate Change: Can Communication Facilitate the Provision of Public Goods in Heterogeneous Settings? By Brick, Kerri; Van der Hoven, Zoe; Visser, Martine
  12. A helping hand or the long arm of the law ? experimental evidence on what governments can do to formalize firms By de Andrade, Gustavo Henrique; Bruhn, Miriam; McKenzie, David
  13. Linking Appropriation of Common Resources and Provision of Public Goods Decreases Rate of Destruction of the Commons By Anabela Botelho; Ariel Dinar; Lígia M.Costa Pinto; Amnon Rapoport
  14. The porous dialectic: Experimental and non-experimental methods in development economics By Dehejia, Rajeev
  15. Measuring government performance in public opinion surveys in Africa: Towards experiments? By Bratton, Michael
  16. Thanks but No Thanks: A New Policy to Avoid Land Conflict By Dufwenberg, Martin; Köhlin, Gunnar; Martinsson, Peter; Medhin, Haileselassie
  17. Preventing Youth Violence and Dropout: A Randomized Field Experiment By Sara Heller; Harold A. Pollack; Roseanna Ander; Jens Ludwig
  18. On Loss Aversion, Level-1 Reasoning, and Betting By Ido Erev; Sharon Gilat-Yihyie; Davide Marchiori; Doron Sonsino

  1. By: Baldwin, Kate; Bhavnani, Rikhil R.
    Abstract: .Ancillary experiments. are a new technique whereby researchers use a completed experiment conducted by others to recover causal estimates of a randomized intervention on new outcomes. The method requires pairing new outcome data with randomized treatment
    Keywords: experimental methods, government performance, ancillary experiments, downstream experiments, causal inference, research design
    Date: 2013
  2. By: Cherry, Josh; Salant, Stephen; Uler, Neslihan
    Abstract: When every individual's effort imposes negative externalities, self-interested behavior leads to socially excessive effort. To curb these excesses when effort cannot be monitored, competing output-sharing partnerships can form. With the right-sized groups, aggregate effort falls to the socially optimal level. We investigate this theory experimentally and find it makes correct qualitative predictions but there are systematic quantitative deviations, always in the direction of the socially optimal investment. By using data on subjects' conjectures of each other's behavior we show that deviations are consistent with both altruism and conformity (but not extremeness aversion).
    Keywords: output-sharing, partnership solution, laboratory experiment, altruism, conformity
    JEL: L23 Q20 Q22 O13
    Date: 2013–03–14
  3. By: Savikhin , Anya; Sheremeta , Roman
    Abstract: We experimentally investigate simultaneous decision-making in two contrasting environments: one that encourages competition (lottery contest) and one that encourages cooperation (public good game). We find that simultaneous participation in the public good game affects behavior in the contest, decreasing sub-optimal overbidding. Contributions to the public good are not affected by participation in the contest. The direction of behavioral spillover is explained by differences in strategic uncertainty and path-dependence across games. Our design allows us to compare preferences for cooperation and competition. We find that in early periods, there is a negative correlation between decisions in competitive and in cooperative environments.
    Keywords: cooperation, competition, public goods, contests, experiments, behavioral spillover
    JEL: C72 C91
    Date: 2012–03–05
  4. By: Uwe Dulleck; Jonas Fooken; Yumei He
    Abstract: Due to economic and demographic changes highly educated women play an important role on the Chinese labour market. Gender has been shown to be an important characteristic that influences behaviour in economic experiments, as have, to a lesser degree, academic major, age and income. We provide a study looking at trust and reciprocity and their determinants in a labour market laboratory experiment. Our experimental data is based on two games, the Gift Exchange Game (GEG) and a variant of this game (the Wage Promising Game, WPG) where the employer's wage offer is non-binding and the employer can choose the wage freely after observing the workers effort. We find that women are less trusting and reciprocal than men in the GEG while this cannot be found in the WPG. Letting participants play the GEG and the WPG, allows us to disentangle reciprocal and risk attitudes. While in the employer role, it seems to be that risk attitude is the main factor, this is not confirmed analysing decisions in the worker role.
    Date: 2013–05–01
  5. By: Samak , Anya; Sheremeta , Roman
    Abstract: We experimentally investigate the impact of visibility of contributors and cost of information on public good contributions. First, we vary recognizing all, highest or lowest contributors. Second, we investigate the effect of imposing a cost on viewing contributors. Recognizing all contributors significantly increases contributions relative to the baseline, even when viewing contributors’ information is costly. This effect holds even though the identities of contributors are viewed less than ten percent of the time. Recognizing only highest contributors does not increase contributions compared to not recognizing contributors, but recognizing only lowest contributors is as effective as recognizing all contributors. These findings support our conjecture that aversion from shame is a more powerful motivator for giving than anticipation of prestige.
    Keywords: public-goods, information, experiments
    JEL: C72 C90 H41
    Date: 2013–05–06
  6. By: Fabian Winter (Max Planck Institute of Economics, Jena)
    Abstract: Cooperation norms often emerge in situations, where the long term collective benefits help to overcome short run individual interests, for instance in repeated Prisoner's Dilemma (PD) situations. Often, however, there are different paths to cooperation, benefiting different kinds of actors to different degrees. This leads to payoff asymmetries even in the state of cooperation, and consequently can give rise to normative conflicts about which norms should be in place. This norm-coordination problem will be modeled as a Battle of the Sexes game (BoS) with different degrees of asymmetry in payoffs. We combine the PD and the BoS to the 3×3 Battle of the Prisoners Dilemma (BOPD) with several asymmetric cooperative and one non-cooperative equilibria. Bame theoretical and "behavioral" predictions are derived about the kind of norms that are likely to emerge under different shadows of the future and degrees of asymmetry and tested in a lab-experiment. Our experimental data show that game theory fairly well predicts the basic main effects of our experimental manipulations, but "behavioral" predictions perform better in describing the equilibrium selection process of emerging norms.
    Keywords: Social norms, normative conflict, Prisoner's Dilemma, coordination, experiment
    JEL: Z13 C92 C72 D31
    Date: 2013–04–24
  7. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Fabian Winter (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: Similar to Kübler et al. (2008, GEB 64, p. 219-236), we compare sorting in games with asymmetric incomplete information theoretically and experimentally. Rather than distinguishing two very different sequential games, we use the same game format and capture the structural difference of screening and signaling only via their payoff specification. The experiment thus relies on the same verbal instructions. Although the equilibrium outcomes coincide, greater efficiency losses off the equilibrium play due to sorting under signaling, compared to screening, is predicted and confirmed experimentally.
    Keywords: sorting, screening, signaling, wage bargaining, off-equilibrium play
    JEL: C9 D82 J24 J40
    Date: 2013–04–24
  8. By: Kebede, Bereket; Tarazona, Marcela; Munro, Alistair; Verschoor, Arjan
    Abstract: An experimental design using treatments of a voluntary contribution mechanism is used to test household efficiency. Efficiency is decisively rejected in all treatments contrary to the assumption of most household models. Information on initial endowments
    Keywords: household efficiency, intra-household models, experimental games, Ethiopia
    Date: 2013
  9. By: Michèle Belot (School of Management, University Edinburgh); Marina Schröder (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: This paper provides .eld experimental evidence on the effects of monitoring in a context where workers can engage in various forms of counterproductive behaviour and only one of them is monitored and incentivised. We hire students to do a job for us (identifying euro coins) for which they are paid a .at fee. There are various ways they can behave counterproductively: they can perform sloppily, not complete the task within the requested time or even steal some of the coins. We study how monitoring one productivity dimension (sloppiness) spills over to others (tardiness and theft). We find that introducing lax monitoring does not improve performance, but increases tardiness substantially. Strict monitoring increases tardiness to the same extent, but also leads to substantial improvements in performance. Theft, on the other hand, occurs more rarely and its prevalence is not affected by the monitoring scheme. We conclude that monitoring does have a discipling effect on workers, but at the same time, workers retaliate for being monitored and do so in the least costly manner for themselves (both in monetary and non-monetary terms).
    Keywords: counterproductive behaviour, monitoring, experiment
    JEL: C93 J24 J30 M42 M52
    Date: 2013–04
  10. By: Kimbrough , Erik; Sheremeta , Roman
    Abstract: Conflict and competition often impose costs on both winners and losers, and conflicting parties may prefer to resolve the dispute before it occurs. The equilibrium of a conflict game with side-payments predicts that with binding offers, proposers make and responders accept side-payments, generating settlements that strongly favor proposers. When side-payments are non-binding, proposers offer nothing and conflicts always arise. Laboratory experiments confirm that binding side-payments reduce conflicts. However, 30% of responders reject binding offers, and offers are more egalitarian than predicted. Surprisingly, non-binding side-payments also improve efficiency, although less than binding. With binding side-payments, 87% of efficiency gains come from avoided conflicts. However, with non-binding side-payments, only 39% of gains come from avoided conflicts and 61% from reduced conflict expenditures.
    Keywords: contests, conflict resolution, side-payments, experiments
    JEL: C72 C91 D72
    Date: 2013–02–03
  11. By: Brick, Kerri; Van der Hoven, Zoe; Visser, Martine
    Abstract: International and domestic efforts to reduce greenhouse gas emissions require a coordinated effort from heterogeneous actors. This experiment uses a public good game with a climate change framing to consider whether cooperation is possible in just such a climate change context. Specifically, we examine whether groups of heterogeneous individuals can meet a collective emissions reduction target through individual contributions. Participants represent two different sectors of society with differing marginal costs of abatement. Thus, the equity considerations that make climate change such a contentious issue are implicit in the experiment framing. Subjects are able to communicate with one another in order to coordinate contribution strategies. The results indicate that participatory processes and stakeholder engagement play an important role in promoting cooperation—even when heterogeneity is present. However, heterogeneity makes it more difficult for groups to reach consensus on how to distribute an abatement burden. Further, the non-binding nature of the agreement results in significant levels of free-riding. In addition, heterogeneity appears to provide disadvantaged player-types with a justification for free-riding. Ultimately, the results indicate that participatory processes alone are not sufficient to induce widespread compliance with a mitigation obligation.
    Keywords: public good, framing, communication, heterogeneity, emissions reduction target
    JEL: H41 Q54 Q58
    Date: 2012–11–16
  12. By: de Andrade, Gustavo Henrique; Bruhn, Miriam; McKenzie, David
    Abstract: Many governments have spent much of the past decade trying to extend a helping hand to informal businesses by making it easier and cheaper for them to formalize. Much less effort has been devoted to raising the costs of remaining informal, through increasing enforcement of existing regulations. This paper reports on a field experiment conducted in Belo Horizonte, Brazil, in order to test which government actions work in getting informal firms to register. Firms were randomized to a control group or one of four treatment groups: the first received information about how to formalize; the second received this information and free registration costs along with the use of an accountant for a year; the third group was assigned to receive an enforcement visit from a municipal inspector; while the fourth group was assigned to have a neighboring firm receive an enforcement visit to see if enforcement has spillovers. The analysis finds zero or negative impacts of information and free cost treatments, and a significant but small increase in formalization from inspections. Estimates of the impact of actually receiving an inspection give a 21 to 27 percentage point increase in the likelihood of formalizing. The results show most informal firms will not formalize unless forced to do so, suggesting formality offers little private benefit to them. But the tax revenue benefits to the government of bringing firms of this size into the formal system more than offset the costs of inspections.
    Keywords: Microfinance,E-Business,Small Scale Enterprise,Knowledge for Development,Information Security&Privacy
    Date: 2013–05–01
  13. By: Anabela Botelho (NIMA, Universidade do Minho); Ariel Dinar (Water Science and Policy Center, Department of Environmental Sciences, University of California, Riverside); Lígia M.Costa Pinto (NIMA, Universidade do Minho); Amnon Rapoport (A. Gary Anderson School of Business Administration, University of California, Riverside)
    Abstract: Experimental studies of common pool resource (CPR) dilemmas are frequently terminated with collapse of the resource; however, there is considerable evidence in real-world settings that challenge this finding. To reconcile this difference, we propose a two-stage model that links appropriation of the CPR and provision of public goods in an attempt to explain the emergence of cooperation in the management of CPRs under environmental uncertainty. Benchmark predictions are derived from the model, and subsequently tested experimentally under different marginal cost-benefit structures concerning the voluntary contribution to the provision of the good. Our results suggest that the severity of the appropriation problem is significantly mitigated by the presence of an option for voluntarily contributing a fraction of the income surplus from the appropriation phase to the provision of the public good.
    Date: 2013–04
  14. By: Dehejia, Rajeev
    Abstract: This paper provides a survey of six widely used non-experimental methods for estimating the impact of programmes in the context of developing economies (instrumental variables, regression discontinuity, direct matching, propensity score matching, linear r
    Keywords: randomized controlled trials, observational studies, programme evaluation, external validity
    Date: 2013
  15. By: Bratton, Michael
    Abstract: In examining the study of government performance, this paper asks whether field experiments can improve the explanatory precision of results generated by public opinion surveys. Survey research on basic health and education services sub-Saharan Africa sho
    Keywords: government performance, surveys, experiments, health, education, Africa
    Date: 2013
  16. By: Dufwenberg, Martin; Köhlin, Gunnar; Martinsson, Peter; Medhin, Haileselassie
    Abstract: Land conflicts can be detrimental. An important goal of development policy is to help define and instill respect for borders. This is often implemented through mandatory and expensive interventions that rely on the expansion of government land administration institutions. We bring to the table a new policy that, in theory, promotes neighborly relations and equitable divisions at low cost. The salient features of this policy would be the existence of a regulatory institution and the option to bypass regulation in favor of a cooperative solution. Such a policy is particularly relevant when the government formally owns the land but tenure rights are about to be individualized. The key idea combines the logic of forward induction with the insight that social preferences transform social dilemmas into coordination problems. As a first and low-cost pass at empirical evaluation, we conduct a framed field experiment among farmers in the Ethiopian highlands, a region exhibiting features typical of many countries where borders are often disputed.
    Keywords: conflict, land grabbing game, social preferences, forward induction, Ethiopia, experiment, land reform, development aid
    JEL: C78 C93 D63 Q15
    Date: 2013–01–18
  17. By: Sara Heller; Harold A. Pollack; Roseanna Ander; Jens Ludwig
    Abstract: Improving the long-term life outcomes of disadvantaged youth remains a top policy priority in the United States, although identifying successful interventions for adolescents – particularly males – has proven challenging. This paper reports results from a large randomized controlled trial of an intervention for disadvantaged male youth grades 7-10 from high-crime Chicago neighborhoods. The intervention was delivered by two local non-profits and included regular interactions with a pro-social adult, after-school programming, and – perhaps the most novel ingredient – in-school programming designed to reduce common judgment and decision-making problems related to automatic behavior and biased beliefs, or what psychologists call cognitive behavioral therapy (CBT). We randomly assigned 2,740 youth to programming or to a control group; about half those offered programming participated, with the average participant attending 13 sessions. Program participation reduced violent-crime arrests during the program year by 8.1 per 100 youth (a 44 percent reduction). It also generated sustained gains in schooling outcomes equal to 0.14 standard deviations during the program year and 0.19 standard deviations during the follow-up year, which we estimate could lead to higher graduation rates of 3-10 percentage points (7-22 percent). Depending on how one monetizes the social costs of crime, the benefit-cost ratio may be as high as 30:1 from reductions in criminal activity alone.
    JEL: I24 I3 K42
    Date: 2013–05
  18. By: Ido Erev (Faculty of Industrial Engineering and Management, Technion); Sharon Gilat-Yihyie (Department of Psychology, Western Galilee College); Davide Marchiori (Department of Management, Università Ca' Foscari Venezia); Doron Sonsino (The School of Business Administration, The College of Management)
    Abstract: Previous research suggests that human reaction to risky opportunities reflects two contradicting biases: Òloss aversion", and Òlimited level of reasoning" that leads to overconfidence. Rejection of attractive gambles is explained by loss aversion, while counterproductive risk seeking is attributed to limited level of reasoning. The current research highlights a shortcoming of this popular (but often implicit) "contradicting biases" assertion. Studies of "negative-sum betting games" reveal high rate of counterproductive betting even when limited level of reasoning and loss aversion imply no betting. The results reflect two reasons for the high betting rate: initial tendency to participate and slow learning. Under certain conditions, the observed betting rate was higher than the rate predicted under random choice even after 250 trials with immediate feedback. These results can be captured with a model that assumes a tendency to select strategies that have led to good outcomes in a small set of similar past experiences, and allows for an initial framing effect.
    Keywords: Loss aversion, Level-1 reasoning, SamuelsonÕs Colleague, acquiring a company problem, market for lemons
    JEL: C63 C73 D03 D82 D83
    Date: 2013–04

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