New Economics Papers
on Experimental Economics
Issue of 2013‒06‒09
twenty papers chosen by

  1. Endogenous vs. Exogenous Transmission of Information: An Experiment By Aurora García-Gallego; Penélope Hernández-Rojas; Amalia Rodrigo-González
  2. Competitiveness in dynamic group contests: Evidence from combined field and lab data By Yann Girard; Florian Hett
  3. Social preferences under uncertainty By Alexia Gaudeul
  4. Accepting Zero in the Ultimatum Game: Selfish Nash Response? By Gianandrea Staffiero; Filippos Exadaktylos; Antonio M. Espín
  5. Tangible temptation in the social dilemma: Cash, cooperation, and self-control By Kristian Ove R. Myrseth; Gerhard Riener; Conny Wollbrant
  6. Strike, coordination, and dismissal in uniform wage settings By Karina Gose; Abdolkarim Sadrieh
  7. Motivating Knowledge Agents: Can Incentive Pat Overcome Social Distance? By Erlend Berg; Maitreesh Ghatak; R. Manjula; D. Rajasekhar; Sanchari Roy
  8. Cui Bono, Benefit Corporation? An Experiment Inspired by Social Enterprise Legislation in Germany and the US By Sven Fischer; Sebastian Goerg; Hanjo Hamann
  9. Incomplete Information Models of Guilt Aversion in the Trust Game By Giuseppe Attanasi; Pierpaolo Battigalli; Elena Manzoni
  10. Scaling-up What Works: Experimental Evidence on External Validity in Kenyan Education By Tessa Bold; Mwangi Kimenyi; Germano Mwabu; Alice Ng'ang'a; Justin Sandefur
  11. Social Identity and Punishment By Jeffrey V. Butler; Pierluigi Conzo; Martin A. Leroch
  12. On the Impulse in Impulse Learning By Jieyao Ding; Andreas Nicklisch
  13. Price efficiency and trading behavior in limit order markets with competing insiders By Thomas Stoeckl
  14. Behavioral Law and Economics: Empirical Methods By Christoph Engel
  15. Gender Differences in Cooperation: Experimental Evidence on High School Students By Molina, José Alberto; Gimenez-Nadal, Jose Ignacio; Cuesta, José A.; Garcia-Lazaro, Carlos; Moreno, Yamir; Sanchez, Angel
  16. For Love or Money? Motivating Workers By Saima Naeem; Asad Zaman
  17. Does Social Judgement Diminish Rule Breaking? By Timothy C. Salmon; Danila Serra
  18. Testing for discrimination against lesbians of different marital status: A field experiment By Doris Weichselbaumer
  19. Teaching KAIZEN to Small Business Owners: An Experiment in a Metalworking Cluster in Nairobi By Yukichi Mano; John Akoten; Yutaka Yoshino; Tetsushi Sonobe
  20. Indirect Reciprocity, Golden Opportunities for Defection, and Inclusive Reputation By Hannes Rusch; Max Albert

  1. By: Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Penélope Hernández-Rojas (ERI-CES & Department of Economic Analysis, University of Valencia, Spain); Amalia Rodrigo-González (Department of Business Finance, University of Valencia, Spain)
    Abstract: Based on Gossner, Hernández and Neyman’s (2006) 3-player game (hereafter GHN) we analyze communication efficiency in the lab. In that game, player 1 represents random nature an i.i.d. procedure, player 2 is a fully informed player (wiser), and player 3 is the less informed player (agent). The game is repeated and players 2 and 3 get 1 if both actions match nature’s actions and 0 otherwise. We propose an experiment following this game. We implement two treatments: one without chat (NC) and one with chat (C). In the treatment with chat, players may first send messages to each other through an online chat application, and then play the game. After the chat time, only the wiser player has perfect information on the realized (random) sequence played by nature. The players then play the finitely repeated binary game. In treatment NC, subjects just play the game. In the experiment we observed endogenous communication treatment NC as well as exogenous in treatment C, both of which result in higher payoffs. Furthermore, when explicit communication is possible we observe a chat effect which can be interpreted as a higher level of efficiency in communication. Strategies used by subjects are in line with GHN strategies.
    Keywords: communication, transmission of information, efficiency, experiments
    JEL: D8 C91 C73
    Date: 2013
  2. By: Yann Girard (GSEFM, Goethe University Frankfurt, Germany); Florian Hett (GSEFM, University of Mainz, Germany)
    Abstract: We analyse data from a field setting in which students participate in a dynamic group contest with feedback. We combine this information with a laboratory measure of competitiveness. We ?nd that competitive groups perform worse overall. In addition, we find that participants react to intermediate performance: A better rank in a given period increases the number of points in the subsequent period, even after controlling for group and time fixed effects. The effect is significantly stronger for competitive groups. We show that this difference in the sensitivity to dynamic incentives can explain the overall negative effect of competitiveness on performance.
    Keywords: Dynamic contest, competitiveness, field experiments, lab experiments, rank feedback
    JEL: C91 C93 D03 D74 I21
    Date: 2013–04–01
  3. By: Alexia Gaudeul (Strategic Interaction Group, Max Planck Institute for Economics, Jena)
    Abstract: Willingness to take risk depends on whether the risk affects others as well as oneself and on how the risk affects one's position vis-`a-vis others. Taking a bet can improve one's position relative to others or threaten it. We present an experiment that explores individual attitudes to lotteries that involve both oneself and another subject. Individuals consistently and strongly dislike obtaining safe but unfair social outcomes rather than playing fair but risky social lotteries. This effect is apparent whether the unfair safe social outcome benefits them or the other. Subjects are also more risk averse when facing social lotteries than when facing lotteries that involve only themselves. There is a small but consistent and significant tendency to avoid social lotteries that impose a risk on the other. An attempt to reconcile those findings with standard models of social preferences shows that a high weight given to considerations of ex-ante inequality goes some way towards explaining the decisions of our subjects. It remains difficult however to account for the magnitude of their aversion to safe but unequal social outcomes.
    Keywords: Social preferences, Risk attitudes, Inequality aversion, Altruism, Procedural fairness, Utility measurement
    JEL: C91 D63 D81
    Date: 2013–06–06
  4. By: Gianandrea Staffiero (Universitat Pompeu Fabra); Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies,Istanbul Bilgi University); Antonio M. Espín
    Abstract: The rejection of unfair proposals in ultimatum games is often quoted as evidence of other-regarding preferences. In this paper we focus on those responders who accept any proposals, setting the minimum acceptable offer (MAO) at zero. While this behavior could result from the randomization between the two payoff-maximizing strategies (i.e. setting MAO at zero or at the smallest positive amount), it also implies that the opponent’s payoff is maximized and the “pie†remains intact. We match subjects’ behavior as ultimatum responders with their choices in the dictator game, in two large-scale experiments. We find that those who set MAO at zero are the most generous dictators. Moreover, they differ substantially from responders whose MAO is the smallest positive offer, who are the greediest dictators. Thus, an interpretation of zero MAOs in terms of selfish, payoff-maximizing behavior could be misleading. Our evidence indicates that the restraint from punishing others can be driven by altruism and by the desire to maximize social welfare.
    Keywords: ultimatum game, dictator game, altruism, social welfare, costly punishment, selfishness, social preferences
    JEL: C93 C91 D03 C70
    Date: 2012–01
  5. By: Kristian Ove R. Myrseth (ESMT European School of Management and Technology); Gerhard Riener (DICE, University of Düsseldorf); Conny Wollbrant (University of Gothenburg)
    Abstract: The social dilemma may contain, within the individual, a self-control conflict between urges to act selfishly and better judgment to cooperate. Examining the argument from the perspective of temptation, we pair the public good game with treatments that vary the degree to which money is abstract (merely numbers on-screen) or tangible (tokens or cash). We also include psychometric measures of self-control and impulsivity. Consistent with our hypothesis, we find in the treatments that render money more tangible a stronger positive association between cooperation and self-control—and a stronger negative association between cooperation and impulsivity. Our results shed light on the conditions under which self-control matters for cooperation.
    Keywords: Self-control, pro-social behavior, public good experiment, temptation
    JEL: D01 D03 D64 D70
    Date: 2013–05–24
  6. By: Karina Gose (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Abdolkarim Sadrieh (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: In our laboratory experiment, the employer in a gift exchange game with 12 workers can incur a loss, if the employees fail to provide enough effort. When the employer can offer individually differentiated wages, we observe high wage and effort choices. When restricted to uniform wages, however, trust and reciprocity drop dramatically due to widespread free-riding by employees on the workforce's reputation. Introducing two collective action mechanisms, strike and effort coordination, does not mitigate the free-riding problem. Introducing employment risk, however, reduces free-riding substantially and reinstalls employees´ reciprocity at the price of a small, but sustained unemployment.
    Keywords: fair wage-effort hypothesis, efficiency wages, wage compression, labor unions, contract design
    JEL: C92 D23 J33 M52
    Date: 2013–03
  7. 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
    Date: 2013–03–29
  8. By: Sven Fischer (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Hanjo Hamann (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: How do barely incentivized norms impact incentive-rich environments? We take social enterprise legislation as a case in point. It establishes rules on behalf of constituencies that have no institutionalized means of enforcing them. By relying primarily on managers' other-regarding concerns whilst leaving corporate incentive structures unaltered, how effective can such legislation be? This question is vital for the ongoing debate about social enterprise forms, as recently introduced in several US states and in British Columbia, Canada. We ran a laboratory experiment with a framing likened to German corporate law which traditionally includes social standards. Our results show that a stakeholder provision, as found in both Germany and the US, cannot overcome material incentives. However, even absent incentives the stakeholder norm does not foster other regarding behavior but slightly inhibits it instead. Our experiment thus illustrates the paramount importance of taking into account both incentives and framing effects when designing institutions. We tentatively discuss potential policy implications for social enterprise legislation and the stakeholder debate.
    Keywords: experiment, stakeholder value, social enterprise, benefit corporation, corporate law
    JEL: D01 A12 M52 D03 L21 M14
    Date: 2013–02
  9. By: Giuseppe Attanasi; Pierpaolo Battigalli; Elena Manzoni
    Abstract: In the theory of psychological games it is assumed that players' preferences on material consequences depend on endogenous beliefs. Most of the applications of this theoretical framework assume that the psychological utility functions representing such preferences are common knowledge. But this is often unrealistic. In particular, it cannot be true in experimental games where players are subjects drawn at random from a population. Therefore an incomplete-information methodology is called for. We take a first step in this direction, focusing on models of guilt aversion in the Trust Game. We consider two alternative modeling assumptions: (i) guilt aversion depends on the role played in the game, because only the trustee can feel guilt for letting the co-player down, (ii) guilt aversion is independent of the role played in the game. We show how the set of Bayesian equilibria changes as the upper bound on guilt sensitivity varies, and we compare this with the complete-information case. Our analysis illustrates the incomplete-information approach to psychological games and can help organize experimental results in the Trust Game.
    Keywords: Psychological games, Trust Game, guilt, incomplete information
    JEL: C72 C91 D03
    Date: 2013–06
  10. 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: 2013–03–12
  11. By: Jeffrey V. Butler (EIEF); Pierluigi Conzo (University of Turin); Martin A. Leroch (University of Mainz)
    Abstract: Third party punishment is crucial for sustaining cooperative behavior. Still, little is known about its determinants. In this paper we use laboratory experiments to investigate a long-conjectured interaction between group identification and bystanders' punishment preferences using a novel measure of these preferences. We induce minimal groups and give a bystander the opportunity to punish the perpetrator of an unfair act against a defenseless victim. We elicit the bystander's valuation for punishment in four cases - when the perpetrator, the victim, both or neither are members of the bystander's group. We generate testable predictions about the rank order of punishment valuations from a simple framework incorporating group-contingent preferences for justice which are largely confirmed. Finally, we conduct control sessions where groups are not induced. Comparing punishment across treatment and control suggests that third-party punishers tend to treat others as in-group members unless otherwise divided.
    Date: 2013
  12. By: Jieyao Ding (Max Planck Institute for Research on Collective Goods, Bonn); Andreas Nicklisch (University of Hamburg, School of Business, Economics and Social Science)
    Abstract: This paper experimentally investigates the nature of impulses in impulse learning. Particularly, we analyze whether positive feedback (i.e., yielding a superior payo in a game) or negative feedback (i.e., yielding an inferior payo in a game) leads to a systematic change in the individual choices. The results reveal that subjects predominantly learn from negative feedback.
    Keywords: learning, Aspiration level, Impulse, Reinforcement, Stimulus
    JEL: C91 D83 D03
    Date: 2013–02
  13. By: Thomas Stoeckl
    Abstract: We study price efficiency and trading behavior in laboratory limit order markets with asymmetrically informed traders. Markets differ in the number of insiders present and in the subset of traders who receive information about the number of insiders present. We observe that price efficiency (i) is the higher the higher the number of insiders in the market but (ii) is unaffected by changes in the subset of traders who know about the number of insiders present. (iii) Independent of the number ofinsiders, price efficiency increases gradually over time. (iv) The insiders' information is reflected in prices via limit (market) orders if the asset's value is inside (outside) the bid-ask spread. (v) In situations where limit and market orders yield positive profits, insiders clearly prefer market orders, indicating a strong desire for immediate transactions.
    Keywords: insider, competition, asset market, price efficiency, trading behavior, experimental economics
    JEL: C92 D82 G12 G14
    Date: 2013–05
  14. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Originally, behavioral law and economics was an exercise in exploring the implications of key findings from behavioral economics (and psychology) for the analysis and reform of legal institutions. Yet as the new discipline matures, it increasingly replaces foreign evidence by fresh evidence, directly targeted to the legal research question. This chapter surveys the key methods: field evidence, survey data, vignette and lab experiment, discusses their pros and cons, illustrates them with key publications, and concludes with methodological paths for fu-ture development. It quantifies statements with descriptive statistics about the 77 behavioral papers that have been published in the Journal of Empirical Legal Studies since its foundation until the end of 2012.
    Keywords: behavioral law and economics, law and psychology, criminology, field data, survey data, vignette, lab experiment
    JEL: K00 D02 C91 D03 C01 C83
    Date: 2013–01
  15. By: Molina, José Alberto (University of Zaragoza); Gimenez-Nadal, Jose Ignacio (University of Zaragoza); Cuesta, José A. (University of Zaragoza); Garcia-Lazaro, Carlos (University of Zaragoza); Moreno, Yamir (University of Zaragoza); Sanchez, Angel (University of Zaragoza)
    Abstract: Charles Darwin (1874) stated that "women are less selfish but men are more competitive". Very recent papers (Eckel & Grossman, 1998, 2001 or Andreoni and Vesterlund 2001, among others) have shown the relevance of gender in altruism in both ultimatum and dictator games. In this paper we analyze the role of gender in repeated Prisoners' Dilemma played by Spanish high-school students in both a square lattice and a heterogeneous network. We find that female students have a higher probability of cooperation than male students.
    Keywords: high school students, cooperation, gender differences, prisoners' dilemma
    JEL: C72 C73 C93 D03 J16
    Date: 2013–05
  16. By: Saima Naeem (Pakistan Institute of Development Economics, Islamabad); Asad Zaman (Pakistan Institute of Development Economics, Islamabad)
    Abstract: We conducted a field experiment and tested how employers can use socioemotional resources, such as appreciation and recognition, in order to signal intentions and create positive reciprocal relationships with employees. Results showed that these resources led to a significant gain in productivity. The study was extended to account for relative wage concerns both with and without appreciation treatment. Efficiency gains with appreciation appeared to be robust even after including information regarding relatively disadvantageous wage discrimination. However, workers’ without socioemotional resources exhibited strong resentment toward relatively lower wages by showing a significant systematic decrease in their labour supply. Our results suggest that workers not only compare their wages, as pointed out in previous literature, but also compare the socioemotional resources provided by their employer. This provides important evidence against one-dimensional comparisons of relative wages relevant to worker productivity.
    Keywords: Appreciation, Recognition, Symbolic Gift Exchange, Wage Comparisons
    JEL: C93 M5 J31 J32 J53
    Date: 2013
  17. By: Timothy C. Salmon; Danila Serra
    Abstract: We experimentally investigate the extent to which social obervability 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 bfeaking scenarios - theft, bribery and embezzlement - in the absence of any formal enforcement mechanism.  By involving a student sample characterized by cultural heterogeneity due to immigraiton 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 dientify 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 enforement, culture, experiemnts
    JEL: C90 D73 K42 Z10
    Date: 2013–03–15
  18. By: Doris Weichselbaumer
    Abstract: In this paper, a correspondence testing experiment is conducted to examine sexual orientation discrimination against lesbians in Germany. Applications for four fictional female characters are sent out in response to job advertisements: a heterosexual single, a married heterosexual, a single lesbian and a lesbian who is in a ‘same-sex registered partnership’. Different results are obtained for the two cities investigated, Munich and Berlin. While single lesbians and lesbians in a registered partnership are equally discriminated in comparison to the heterosexual women in the city of Munich, no discrimination based on sexual orientation has been found in Berlin. Furthermore, for a subset of our data we can compare the effects of a randomized versus a paired testing approach, which suggests that under certain conditions, due to increased conspicuity, the paired testing approach may lead to biased results.
    JEL: C93 J15 J71
    Date: 2013–05
  19. By: Yukichi Mano (Hitotsubashi University, Tokyo); John Akoten (Anti-Courterfeit Agency, Nairobi); Yutaka Yoshino (World Bank, Washington D.C.); Tetsushi Sonobe (National Graduate Institute for Policy Studies)
    Abstract: In recent years, managerial capital has received attention as one of the major determinants of enterprise productivity, growth, and longevity. This paper attempts to assess the impacts of a management training program on the business performance of small enterprises in a metalworking cluster in Nairobi, Kenya. A previous study of this cluster observed that while several enterprises had successfully expanded operation, the majority had been experiencing declining profits due to increasing competition with imported products and with new entrants in the cluster. Based on the observed differences in management between successful and less successful enterprises, we designed a management training program featuring the basics of KAIZEN, an inexpensive, commonsense approach to management emphasizing the reduction of wasted work and materials, for the less successful enterprises. Although our initial intention was to use this training program as a randomized experiment, we had to abandon randomization and allow every business owner interested in the program to participate in it, due to circumstances beyond our control. This paper finds that business owners operating smaller enterprises tended to be self-selected into training participation. The training effects combined with the self-selection effect, which we estimate with panel data, were statistically significant and particularly stronger on profits than on sales revenues, while other training programs that did not teach KAIZEN had positive effects on sales revenues, not profits. As a result, the participants caught up with and overtook the non-participants in terms of average sales revenues and average profits, respectively.
    Date: 2013–05
  20. By: Hannes Rusch (University of Giessen); Max Albert (University of Munich)
    Abstract: In evolutionary models of indirect reciprocity, reputation mechanisms can stabilize cooperation even in severe cooperation problems like the prisoner’s dilemma. Under certain circumstances, conditionally cooperative strategies, which cooperate iff their partner has a good reputation, cannot be invaded by any other strategy that conditions behavior only on own and partner reputation. The first point of this paper is to show that an evolutionary version of backward induction can lead to a breakdown of this kind of indirectly reciprocal cooperation. Backward induction, however, requires trategies that count and then cease to cooperate in the last, last but one, last but two, game they play. These strategies are unlikely to exist in natural settings. We then present two new findings. (1) Surprisingly, the same kind of breakdown is also possible without counting. Strategies using rare golden opportunities for defection can invade conditional cooperators. This can create further golden opportunities, inviting the next wave of opportunists, and so on, until cooperation breaks down completely. (2) Cooperation can be stabilized against these opportunists, by letting an individual’s initial reputation be inherited from that individual’s parent. This ‘inclusive reputation’ mechanism can cope with any observably opportunistic strategy. Offspring of opportunists who successfully exploited a conditional cooperator cannot repeat their parents’ success because they inherit a bad reputation, which forewarns conditional cooperators in later generations.
    Keywords: evolutionary game theory; repeated prisoner’s dilemma; backward induction; conditional cooperation; opportunism;
    JEL: C73
    Date: 2013

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