New Economics Papers
on Experimental Economics
Issue of 2013‒06‒16
29 papers chosen by

  1. Good News, Bad News, and Social Image: The Market for Charitable Giving By Luigi Butera; Jeffrey Horn
  2. Institutional Quality, Culture, and Norms of Cooperation: Evidence from a Behavioral Field Experiment By Alessandra Cassar; Giovanna d'Adda; Pauline Grosjean
  3. Taking Punishment into your Own Hands: An Experiment By Julia Müller; Peter Duersch
  4. Long-Term Relationships, Group lending and Peer Sanctioning in Microfinance: New Experimental Evidence By Simon Cornée; David Masclet
  5. How do Non-Monetary Performance Incentives for Physicians Affect the Quality of Medical Care? – A Laboratory Experiment By Nadja Kairies; Miriam Krieger
  6. The Role of Task Meaning on Output in Groups: Experimental Evidence By Agnes Baeker; Mario Mechtel
  7. How to Hire Helpers? Evidence From a Field Experiment By Julian Conrads; Bernd Irlenbusch; Tommaso Reggiani; Rainer Michael Rilke; Dirk Sliwka
  8. Did Fukushima matter? Empirical evidence of the demand for climate protection in Germany By Gallier, Carlo; Löschel, Andreas; Sturm, Bodo
  9. Do Lottery Payments Induce Savings Behavior: Evidence from the Lab By Emel Filiz-Ozbay; Jonathan Guryan; Kyle Hyndman; Melissa Schettini Kearney; Erkut Y. Ozbay
  10. Tangible Temptation in the Social Dilemma: Cash, cooperation, and self-control By Myrseth, Kristian Ove R.; Riener, Gerhard; Wollbrant, Conny
  11. The Decisions of Entrepreneurs and Their Agents: Revealed Levels of Risk Aversion and Betrayal Aversion By Dreber, Anna; Rand, David; Wernerfelt, Nils; Worrell, Peter; Zeckhauser, Richard
  12. Can Inaccurate Beliefs about Incumbents be Changed? And Can Reframing Change Votes? By Rogers, Todd; Nickerson, David W.
  13. Endogenous group formation in experimental contests By Herbst, Luisa; Konrad, Kai A.; Morath, Florian
  14. A theoretical framework for trading experiments By Maxence Soumare; J{\o}rgen Vitting Andersen; Francis Bouchard; Alain Elkaim; Dominique Gu\'egan; Justin Leroux; Michel Miniconi; Lars Stentoft
  16. The incorporation of subjective risks into choice experiments to test scenario adjustment By Cerroni, Simone; Notaro, Sandra; Raffaelli, Roberta; Shaw, Douglass W.
  17. Getting the Most out of Giving: Pursuing Concretely-Framed Prosocial Goals Maximizes Happiness By Rudd, Melanie; Aaker, Jennifer; Norton, Michael I.
  18. Default options and training participation By Golsteyn B.H.H.; Borghans L.
  19. How Effective are Pay-for-Performance Incentives for Physicians? – A Laboratory Experiment By Jeannette Brosig-Koch; Heike Hennig-Schmidt; Nadja Kairies; Daniel Wiesen
  20. A reproduction and replication of Engel’s meta-study of dictator game experiments. By Le Zhang; Andreas Ortmann
  21. Neighbors, Knowledge, and Nuggets: Two Natural Field Experiments on the Role of Incentives on Energy Conservation By Paul Dolan; Robert Metcalfe
  22. Are Sunspots Learnable? An Experimental Investigation in a Simple General-Equilibrium Model By Jasmina Arifovic; George Evans; Olena Kostyshyna
  23. Structural versus Behavioral Remedies in the Deregulation of Electricity Markets: An Experimental Investigation Guided by Theory and Policy Concerns. By Silvester van Koten; Andreas Ortmann
  24. On the Interpretation of Giving, Taking, and Destruction in Dictator Games and Joy-of-Destruction Games. By Le Zhang; Andreas Ortmann
  25. Strategic Self-Ignorance By Thunström, Linda; Nordström, Jonas; Shogren, Jason F.; Ehmke, Mariah; van 't Veld, Klaas
  26. Information and Student Achievement: Evidence from a Cellular Phone Experiment By Roland G. Fryer, Jr
  27. Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco By Manuela Angelucci; Dean Karlan; Jonathan Zinman
  28. Long-Run Price Elasticities of Demand for Credit: Evidence from a Countrywide Field Experiment in Mexico By Dean Karlan; Jonathan Zinman
  29. Vote Self-Prediction Hardly Predicts Who Will Vote, and Is (Misleadingly) Unbiased By Rogers, Todd; Aida, Masa

  1. By: Luigi Butera (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Jeffrey Horn (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University)
    Abstract: This paper experimentally investigates how donors respond to news about the efficiency of their charities, that is, to real prices of giving greater than 1, and how the response depends on that information being public or not. We find that as long as charity efficiency remains private information, individuals reward better-than-expected charities (good news) by increasing their donations. On the other hand, bad news are largely ignored by donors when giving happens under full anonymity. However, when charity efficiency is revealed to others, some donors decrease their contribution in response to good news, and they increase it when news are bad. This emergent behavior accounts for 34% of subjects that do respond to new information. We show that the latter behavior is driven by image-motivated donors, who treat the size of their gift and the efficiency of their recipients as substitutes in terms of social image payoffs. Length: 36
    Keywords: charity, experiment
    Date: 2013–05
  2. By: Alessandra Cassar (University of San Francisco); Giovanna d'Adda (University opf Birmingham); Pauline Grosjean (School of Economics, the University of New South Wales)
    Abstract: We design an experiment to examine the causal effect of legal institutional quality on informal norms of cooperation, and study the interaction of institutions and culture in sustaining economic exchange. 346 subjects in Italy and Kosovo play a market game under different and randomly allocated institutional treatments, which generate different incentives to behave honestly, preceded and followed by a non-contractible and non-enforceable trust game. Significant increases in individual trust and trustworthiness follow exposure to ‘better’ institutions. A reduction by one percentage point in the probability of facing a dishonest partner in the market game, which is induced by the quality of legal institutions, increases trust by 7 to 11%, and trustworthiness by 13 to 19%. This suggests that moral norms of cooperative behavior can follow improvements in formal institutional quality. Cultural origin, initial trust and trustworthiness influence opportunistic behavior in markets, but only in the absence of strong formal institutions.
    Keywords: legal institutions, culture, trust, trustworthiness, markets, experimental methods
    JEL: K40 O17 Z10
    Date: 2013–10
  3. By: Julia Müller (Erasmus University Rotterdam); Peter Duersch (University of Heidelberg)
    Abstract: In a punishment experiment, we separate the demand for punishment in general from the demand to conduct punishment personally. Subjects experience an unfair split of their earnings from a real effort task and have to decide on the punishment of the person who determines the distribution. First, it is established whether the allocator's payoff is reduced and, afterwards, subjects take part in a second price auction for the right to (physically) carry out the act of payoff reduction themselves. Subjects bid positive amounts and are happier if they get to punish personally.
    Keywords: personal punishment, real effort task, experiment, auction
    JEL: C92 D03
    Date: 2013–05–27
  4. By: Simon Cornée (CREM CNRS UMR 6211, University of Rennes 1 and CERMi); David Masclet (CREM CNRS UMR 6211, University of Rennes 1 and CIRANO (Montreal))
    Abstract: Microfinance is generally associated with high repayment rates. However, it is not clear whether the success of microfinance results only from the use of group lending or is also due to other mechanisms such as peer sanctioning or dynamic incentives induced by long-term relationships that are typically included in microfinance contracts. In this paper, we contribute to the existing literature by investigating the respective effects of each of these components of microfinance. This is done by running a laboratory experiment that allows us to isolate long-term relationships from the two other components (i.e. group lending and peer monitoring). Our experiment indicates that peer-lending dimension of microcredit in absence of peer-sanctioning mechanism is not sufficient to mitigate ex ante and ex post moral hazards. In sharp contrast, we find that individualized long-term credit relationships perform significantly better than group-lending mechanisms with or without peer sanctioning.
    Keywords: Experimental Economics, Credit Market, Microfinance, Peer Lending
    JEL: C72 C91 G20 G21
    Date: 2013–05
  5. By: Nadja Kairies; Miriam Krieger
    Abstract: In recent years, several countries have introduced non-monetary performance incentives for health care providers to improve the quality of medical care. Evidence on the effect of non-monetary feedback incentives, predominantly in the form of public quality reporting, on the quality of medical care is, however, ambiguous. This is often because empirical research to date has not succeeded in distinguishing between the effects of monetary and non-monetary incentives, which are usually implemented simultaneously. We use a controlled laboratory experiment to isolate the impact of nonmonetary performance incentives: subjects take on the role of physicians and make treatment decisions for patients, receiving feedback on the quality of their treatment. The subjects’ decisions result in payments to real patients. By giving either private or public feedback we are able to disentangle the motivational eff ects of self-esteem and social reputation. Our results reveal that public feedback incentives have a significant and positive effect on the quality of care that is provided. Private feedback, on the other hand, has no impact on treatment quality. These results hold for medical students and for other students.
    Keywords: Laboratory experiment; quality reporting; feedback; treatment quality; performance incentives
    JEL: I11 C91 L15 I18
    Date: 2013–05
  6. By: Agnes Baeker; Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: This paper analyzes experimentally how the interaction of task meaning and peer presence affects work effort. We build on the experimental designs of Falk and Ichino (2006) and Ariely et al. (2008). Confirming previous results from the literature, we find positive peer effects and negative effects of low task meaning. In addition, we find that peer effects are even stronger if task meaning is low. We conclude that a peer setting is able to overcome the negative effort effect of low task meaning.
    Keywords: task meaning, peer effects, experimental economics
    JEL: J20 J30 M50
    Date: 2013–06
  7. By: Julian Conrads (University of Cologne); Bernd Irlenbusch (University of Cologne); Tommaso Reggiani (University of Cologne); Rainer Michael Rilke (University of Cologne); Dirk Sliwka (University of Cologne)
    Abstract: How to hire voluntary helpers? We shed new light on this question by reporting a field experiment in which we invited 2,859 students to help at the 'ESA Europe 2012' conference. Invitation emails varied non-monetary and monetary incentives to convince subjects to offer help. Students could apply to help at the conference and, if so, also specify the working time they want to offer. Just asking subjects to volunteer or offering them a certificate turned out to be significantly more motivating than mentioning that the regular conference fee would be waived for helpers. Increasing monetary incentives by varying hourly wages of 1, 5, and 10 Euros shows positive effects on the number of applications and on the working time offered. However, when comparing these results with treatments without any monetary compensation, the number of applications could not be increased by offering money and may even be reduced.
    Keywords: Recruitment, Voluntary work, Monetary incentives, Field experiment
    JEL: C93 J33 M52
    Date: 2013–05–29
  8. By: Gallier, Carlo; Löschel, Andreas; Sturm, Bodo
    Abstract: This paper investigates the extent to which the Fukushima Daiichi nuclear disaster of March 2011 has had an impact on the private demand for climate protection in Germany. Data are taken from two framed field experiments (Löschel et al. 2013a, b) conducted before and after the disaster. We find that the demand for climate protection in the experiment after the nuclear disaster is significantly higher than in the experiment before the disaster. --
    Keywords: Experimental economics,demand for climate protection
    JEL: Q51 Q54 C93
    Date: 2013
  9. By: Emel Filiz-Ozbay; Jonathan Guryan; Kyle Hyndman; Melissa Schettini Kearney; Erkut Y. Ozbay
    Abstract: This paper presents the results of a laboratory experiment designed to investigate whether the option of a Prize Linked Savings (PLS) product alters the likelihood that subjects choose to delay payment. By comparing PLS and standard savings products in a controlled way, we find strong evidence that a PLS payment option leads to greater rates of payment deferral than does a straightforward interest payment option of the same expected value. The appeal of the PLS option is strongest among men, self-reported lottery players, and subjects with low bank account balances. We use the results of our experiment to structurally estimate the parameters of the decision problem governing time preference, risk aversion, and probability weighting. We employ the parameter estimates in a series of policy simulations that compare the relative effectiveness of PLS products as compared to standard savings products.
    JEL: D03 D14 D81 G11
    Date: 2013–06
  10. By: Myrseth, Kristian Ove R. (ESMT European School of Management and Technology); Riener, Gerhard (DICE, University of Düsseldorf); Wollbrant, Conny (Department of Economics, School of Business, Economics and Law, Göteborg University)
    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: 2013–06–07
  11. By: Dreber, Anna (Stockholm School of Economics); Rand, David (Harvard University and Yale University); Wernerfelt, Nils (MIT); Worrell, Peter (Bigelow Company, Portsmouth, NH); Zeckhauser, Richard (Harvard University)
    Abstract: This paper studies decision making by successful entrepreneurs and their agents. Since entrepreneurs decisions are often influenced by their agents' advice, understanding the behavior of both involved parties is crucial in analyzing observed decisions. To this end, a sample of successful American entrepreneurs and their agents made a high-stakes decision in a real-world context, albeit in an experimental setting offering experimental-scale payoffs. They were asked whether to accept a contract in what was essentially a trust game. A monetary gamble measured economic risk taking; and the difference between the two measured betrayal aversion. All entrepreneurs assumed the professional role as principal. All individuals playing agent were real world agents. We also have some agents play the role of the principal, and thus test whether subjects' roles affect the decisions they make. Consistent with most prior studies, our subjects proved both economically risk-averse and betrayal averse. Little difference in behavior emerged between entrepreneurs and agents in their respective professional capacities, or with agents acting as principals. These results imply that, under our realistically framed business scenario with aligned incentives, agents could be relied upon to be "faithful," to act according to their principals' proclivities. Importantly, however, they do not advise against what many expert observers believe to be principals' excess aversion to risks. That is, they fail to act as "correcting agents".
    Date: 2013–05
  12. By: Rogers, Todd (Harvard University); Nickerson, David W. (University of Notre Dame)
    Abstract: Can independent groups change voters' beliefs about an incumbent's positions? And, does reframing how candidates' are perceived by changing beliefs about their positions influence actual vote choices? Past laboratory and observational research suggests that candidate reframing is difficult and of little consequence because the messages must be believed despite competing messages, counter-framing and misinformation. We report the results of a field experiment conducted during a highly competitive 2008 US Senate election showing that independent organizations can meaningfully reframe candidates, and that reframing can affect vote choice. Two pro-choice organizations administered an inexpensive mail and phone intervention correcting a prevalent false belief that the incumbent was pro-choice. This modest reframing intervention enduringly corrected the beliefs of one-third of misinformed participants, and induced a sizable proportion to align their vote choices with their policy priorities.
    Date: 2013–05
  13. By: Herbst, Luisa; Konrad, Kai A.; Morath, Florian
    Abstract: We study endogenous group formation in tournaments employing experimental threeplayer contests. We find that players in endogenously formed alliances cope better with the moral hazard problem in groups than players who are forced into an alliance. Also, players who are committed to expending effort above average choose to stand alone. If these players are forced to play in an alliance, they invest even more, whereas their co-players choose lower effort. Anticipation of this exploitation may explain their preference to stand alone. -- Wir untersuchen die endogene Bildung von Gruppen in Wettkämpfen in experimentellen Drei-Spieler-Wettbewerben. Es zeigt sich, dass Spieler in endogen gebildeten Allianzen besser mit dem Moral Hazard-Problem in Gruppen zurechtkommen als Spieler, die in eine Allianz gezwungen werden. Außerdem entscheiden sich Spieler, die bereit sind, überdurchschnittlichen Einsatz zu leisten, allein zu agieren. Sind diese Spieler gezwungen in einer Allianz zu spielen, investieren sie sogar mehr, wogegen ihre Mitspieler ihren Einsatz reduzieren. Die Erwartung dieser Ausbeutung ist eine mögliche Erklärung für ihre Präferenz allein zu agieren.
    Keywords: endogenous group formation,contest,conflict,alliance,experiment,moral hazard problem,free-riding,in-group favoritis
    JEL: D72 D74
    Date: 2013
  14. By: Maxence Soumare; J{\o}rgen Vitting Andersen; Francis Bouchard; Alain Elkaim; Dominique Gu\'egan; Justin Leroux; Michel Miniconi; Lars Stentoft
    Abstract: A general framework is suggested to describe human decision making in a certain class of experiments performed in a trading laboratory. We are in particular interested in discerning between two different moods, or states of the investors, corresponding to investors using fundamental investment strategies, technical analysis investment strategies respectively. Our framework accounts for two opposite situations already encountered in experimental setups: i) the rational expectations case, and ii) the case of pure speculation. We consider new experimental conditions which allow both elements to be present in the decision making process of the traders, thereby creating a dilemma in terms of investment strategy. Our theoretical framework allows us to predict the outcome of this type of trading experiments, depending on such variables as the number of people trading, the liquidity of the market, the amount of information used in technical analysis strategies, as well as the dividends attributed to an asset. We find that it is possible to give a qualitative prediction of trading behavior depending on a ratio that quantifies the fluctuations in the model.
    Date: 2013–06
  15. By: Bradley J. Ruffle (BGU); Yossef Tobol (School of Industrial Management Jerusalem College of Technology Jerusalem Israel and IZA, Bonn)
    Abstract: We show that temporally distancing the decision task from the payment of the reward increases honest behavior. Each of 427 Israeli soldiers fulfilling their mandatory military service rolled a six-sided die in private and reported the outcome to the unit's cadet coordinator. For every point reported, the soldier received an additional half-hour early release from the army base on Thursday afternoon. Soldiers who participated on Sunday (the first work day of the week) are significantly more honest than those who participated later in the week. We derive practical implications for eliciting honesty.
    Keywords: experimental economics, honesty, temporal distance, soldiers.
    JEL: C93 D63
    Date: 2013
  16. By: Cerroni, Simone; Notaro, Sandra; Raffaelli, Roberta; Shaw, Douglass W.
    Abstract: In choice experiment (CE) applications, subjects are typically assumed to fully accept information given in the status quo (SQ) alternative, however, subjects might adjust such information on the basis of their subjective beliefs. This phenomenon is known as scenario adjustment. By using a CE field survey, we investigate whether subjects adjust risks portrayed in the SQ using their subjective estimates via a two-stage approach. In the first stage, subjective risks are elicited using the exchangeability method. In the second stage, two treatment groups are designed. In the first group, each subject is presented with a SQ which incorporates her/his own subjective risk estimate, and, hence, no adjustment is required. In the second group, each subject faces a SQ where the presented risk is not consistent with her/his own estimate, and, hence, a mental adjustment to the scenario might take place. Our modeling results suggest that subjects who are provided with a SQ in which the risk is lower than their own subjective estimates have a higher maximum willingness to pay (WTP) for a risk reduction than subjects provided with a SQ where the risk is consistent with their perceptions. Hence, in this case the scenario adjustment takes place. In contrast, subjects who are presented with a SQ where the risk is higher than their subjective estimates, overreact to the risk information, and have a higher WTP for the risk reduction than subjects who face a SQ where the presented risk is consistent with their perceived risks. Hence, in this case they appear to go along with the information in the SQ and abandon their subjective estimate
    Keywords: subjective risks, risk information, scenario adjustment, choice experiment, best-worst pivot design, Consumer/Household Economics, Demand and Price Analysis, C83, C93, D81, Q18,
    Date: 2013–06
  17. By: Rudd, Melanie (Stanford University); Aaker, Jennifer (Stanford University); Norton, Michael I. (Harvard University)
    Abstract: Across six field and laboratory experiments, participants given a concretely-framed prosocial goal (e.g., making someone smile, increasing recycling) felt happier after performing a goal-directed act of kindness than did those who were assigned a functionally similar, but more abstractly-framed, prosocial goal (e.g., making someone happy, saving the environment). This effect was driven by differences in the size of the gap between participants' expectations and reality: Compared to those assigned to pursue an abstractly-framed prosocial goal, those assigned to pursue a concretely-framed goal perceived that the actual outcome of their goal-directed efforts more accurately matched their expectations, causing them to experience a greater boost in personal happiness. Further, participants were unable to predict this effect, believing that pursuing abstractly-framed prosocial goals would have either an equal or greater positive impact on their own happiness.
    Date: 2013–04
  18. By: Golsteyn B.H.H.; Borghans L. (GSBE)
    Abstract: This paper analyzes whether defaults affect the choice for courses followed at work. In addition, we analyze whether the size of the default effect varies with employees' personality and skill- deficiencies. We perform an experiment in which workers are hypothetically offered three courses which they can accept or exchange for other courses. Randomizing the default package of courses, we identify the default effect. Default courses are chosen approximately three times more often than other courses. They are chosen more often if people have skill-deficiencies in these courses, suggesting that people consider the default to be an advice. Women choose default courses more often than men. Women with less self-confidence and men with lower cognitive skills choose the default courses more often.
    Keywords: Human Capital; Skills; Occupational Choice; Labor Productivity; Wage Level and Structure; Wage Differentials;
    JEL: J24 J31 I2
    Date: 2013
  19. By: Jeannette Brosig-Koch; Heike Hennig-Schmidt; Nadja Kairies; Daniel Wiesen
    Abstract: Recent reforms in health care have introduced a variety of pay-for-performance programs using financial incentives for physicians to improve the quality of care. Their effectiveness is, however, ambiguous as it is often difficult to disentangle the effect of financial incentives from the ones of various other simultaneous changes in the system. In this study we investigate the effects of introducing financial pay-for-performance incentives with the help of controlled laboratory experiments. In particular, we use fee-for-service and capitation as baseline payment schemes and test how additional pay-for-performance incentives affect the medical treatment of different patient types. Our results reveal that, on average, patients significantly benefit from introducing pay-forperformance, independently of whether it is combined with capitation or fee-for-service incentives. The magnitude of this effect is significantly infl uenced by the patient type, though. These results hold for medical and non-medical students. A cost-benefit analysis further demonstrates that, overall, the increase in patient benefits cannot overcompensate the additional costs associated with pay-for-performance. Moreover, our analysis of individual data reveals different types of responses to pay-for-performance incentives. We find some indication that pay-forperformance might crowd out the intrinsic motivation to care for patients. These insights help to understand the effects caused by introducing pay-for-performance schemes.
    Keywords: Physician incentive schemes; pay-for-performance; fee-for-service; capitation; laboratory experiment
    JEL: C91 I11
    Date: 2013–05
  20. By: Le Zhang (University of New South Wales); Andreas Ortmann (University of New South Wales)
    Abstract: In this paper, we reproduce Engel’s (2011) meta-study of dictator game experiments using his data, and then replicate it using our own data. We find that Engel’s (2011) meta-study of dictator game experiments is quite robust. We show that meta-analyses of dictator game experiments depend to an extent on the definition of independent variables and consistent coding of studies. This insight pertains in particular to the take-option, which has produced important questions (Bardsley 2008; List 2007; Guala and Mittone 2010) about the epistemological inferences one can draw from dictator game experiments.
    Keywords: dictator game experiments, meta-analysis, meta-regression, reproduction, replication
    JEL: C24 C91 D03
    Date: 2012–11
  21. By: Paul Dolan; Robert Metcalfe
    Abstract: There is increasing research on the exogenous impact of descriptive social norms on economic behavior. The research to date has a number of limitations: 1) it has not de-coupled the impact of the norm and the knowledge required to understand how to change behavior based upon it; 2) it has exclusively used offline but not online (i.e. emails) methods; and 3) it has not understood the impact of financial incentives in conjunction with norms. We address these three limitations using two natural field experiments. We find, firstly, that norms change energy behavior over a 15 month treatment period irrespective of whether information is provided or not. We find that social norms reduce consumption by around 6% (0.2 standard deviations). Norms have has their largest impact on the day that information on the social norm is received, and then decreases over time. Secondly, we do not find that social norms work online (even with experienced consumers who are used to online billing) - social norms de- livered online may have very little beneficial effects on reducing energy use. Thirdly, we find that large financial rewards work very well online in reducing consumption, with a 0.35 change in energy consumption over a four month period. Perhaps most interestingly, we find that the large effect of financial incentives is completely removed when information on social norms is added online.
    Keywords: social norms, financial incentives, natural field experiments, energy consumption
    JEL: D01 D03 D83 Q41
    Date: 2013–06
  22. By: Jasmina Arifovic; George Evans; Olena Kostyshyna
    Abstract: We conduct experiments with human subjects in a model with a positive production externality in which productivity is a non-decreasing function of the average level of employment of other firms. The model has three steady states: the low and high steady states are expectationally stable (E-stable), and thus locally stable under learning, while the middle steady state is not E-stable. There also exists a locally E-stable sunspot equilibrium that fluctuates between the high and low steady states. Steady states are payoff ranked: low values give lower profits than higher values. We investigate whether subjects in our experimental economies can learn a sunspot equilibrium. Our experimental design has two treatments: one in which payoff is based on the firm’s profits, and the other in which payoff is based on the forecast squared error. We observe coordination on the extrinsic announcements in both treatments. In the treatments with forecast squared error, the average employment and average forecasts of subjects are closer to the equilibrium corresponding to the announcement. Cases of apparent convergence to the low and high steady states are also observed.
    Keywords: Economic models
    JEL: D83 G20
    Date: 2013
  23. By: Silvester van Koten (European University Institute); Andreas Ortmann (The University of New South Wales)
    Abstract: We try to better understand the comparative advantages of structural and behavioral remedies of deregulation in electricity markets, an eminent policy issue for which the experimental evidence is scant and problematic. Specifically, we investigate theoretically and experimentally the effects on competition of introducing a forward market which the European Commission classifies as a behavioral remedy. We compare this scenario with its best alternative, the structural remedy of adding one more competitor by divestiture. Our study contributes to the literature by introducing more realistic cost configurations, by teasing apart competition effect and asset effect, and by investigating competitor numbers that reflect the market concentration in the European electricity industries. Our experimental data suggest that introducing a forward market has a positive effect on the aggregate supply in markets with two or three major competitors, configurations typical for the newly accessed and the old European Union member states, respectively. Introducing a forward market also increases efficiency.
    Keywords: experimental economics
    Date: 2012–09
  24. By: Le Zhang (University of New South Wales); Andreas Ortmann (University of New South Wales)
    Abstract: The literature on dictator [D] games seems to demonstrate that some people are quite altruistic (nice), whereas the literature on joy-of-destruction [JoD] games shows that some people may be quite nasty. We study to what extent these behaviors are context dependent: If people are nice or nasty, are they consistently so? Or are niceness and nastiness dependent on circumstances? What are some of these circumstances? And what role does efficiency play in this context? We study these issues in a counter-balanced within-subject design of one-shot D and JoD games across three treatments (between-subjects). We find that people’s niceness, and nastiness, are indeed choice set, and context, dependent. When take-options and add-options (mirror images of give-options in standard D games and destruction options in standard JoD games) were added, we find considerable heterogeneity in types but relatively little behavior that can be considered clearly inconsistent, i.e., both nice and nasty. Consistent with previous evidence, we also find that subjects pay considerable attention to efficiency considerations. Mach-IV scores and other demographic characteristics have larger – but not large – effects on niceness (giving decision) than nastiness (destruction decision) where they, in our setting, essentially make no difference. Importantly, the order of decision elicitation implicit in our counter-balanced within-subject design, and, intriguingly, the definition of the relevant reference point (especially for giving decisions), matter for the interpretation of the results.
    Keywords: Dictator game, Joy-of-Destruction game, Money burning, Altruism, Nastiness, Efficiency considerations, Mach-IV test
    JEL: A13 C79 D03 D64
    Date: 2012–12
  25. By: Thunström, Linda (Department of Economics and Finance, University of Wyoming); Nordström, Jonas (Department of Economics, Lund University); Shogren, Jason F. (Department of Economics and Finance, University of Wyoming); Ehmke, Mariah (Department of Agricultural and Applied Economics, University of Wyoming); van 't Veld, Klaas (Department of Economics and Finance, University of Wyoming)
    Abstract: We examine strategic self-ignorance—the use of ignorance as an excuse to over-indulge in pleasurable activities that may be harmful to one’s future self. Our model shows that guilt aversion provides a behavioral rationale for present-biased agents to avoid information about negative future impacts of such activities. We then confront our model with data from an experiment using prepared, restaurant-style meals—a good that is transparent in immediate pleasure (taste) but non-transparent in future harm (calories). Our results support the notion that strategic self-ignorance matters: nearly three of five subjects (58 percent) chose to ignore free information on calorie content, leading at-risk subjects to consume significantly more calories. We also find evidence consistent with our model on the determinants of strategic self-ignorance.
    Keywords: Experiment; Information; Ignorance
    JEL: D03 D81 D83
    Date: 2013–05–28
  26. By: Roland G. Fryer, Jr
    Abstract: This paper describes a field experiment in Oklahoma City Public Schools in which students were provided with free cellular phones and daily information about the link between human capital and future outcomes via text message. Students’ reported beliefs about the relationship between education and outcomes were influenced by treatment, and treatment students also report being more focused and working harder in school. However, there were no measureable changes in attendance, behavioral incidents, or test scores. The patterns in the data appear most consistent with a model in which students cannot translate effort into measureable output, though other explanations are possible.
    JEL: I20 J01
    Date: 2013–06
  27. By: Manuela Angelucci; Dean Karlan; Jonathan Zinman
    Abstract: Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico. Average effects on a rich set of outcomes measured 18-34 months post-expansion suggest some good and little harm. Other estimators identify heterogeneous treatment effects and effects on outcome distributions, but again yield little support for the hypothesis that microcredit causes harm.
    JEL: D12 D22 G21 O17
    Date: 2013–06
  28. By: Dean Karlan; Jonathan Zinman
    Abstract: The long-run price elasticity of demand for credit is a key parameter for intertemporal modeling, policy levers, and lending practice. We use randomized interest rates, offered across 80 regions by Mexico’s largest microlender, to identify a 29-month dollars-borrowed elasticity of -1.9. This elasticity increases from -1.1 in year one to -2.9 in year three. The number of borrowers is also elastic. Credit bureau data does not show evidence of crowd-out. Competitors do not respond by reducing rates, perhaps because Compartamos’ profits are unchanged. The results are consistent with multiple equilibria in loan pricing.
    JEL: E43 G21 O11 O12
    Date: 2013–06
  29. By: Rogers, Todd (Harvard University and Analyst Institute, Washington, DC); Aida, Masa (Greenberg Quinlan Rosner Research)
    Abstract: Public opinion researchers, campaigns, and political scientists often rely on self-predicted vote to measure political engagement, allocate resources, and forecast turnout. Despite its importance, little research has examined the accuracy of self-predicted vote responses. Seven pre-election surveys with post-election vote validation from three elections (N = 29,403) reveal several patterns. First, many self-predicted voters do not actually vote (flake-out). Second, many self-predicted nonvoters do actually vote (flake-in). This is the first robust measurement of flake-in. Third, actual voting is more accurately predicted by past voting (from voter file or recalled) than by self-predicted voting. Finally, self-predicted voters differ from actual voters demographically. Actual voters are more likely to be white (and not black), older, and partisan than actual nonvoters (i.e., participatory bias), but self-predicted voters and self-predicted nonvoters do not differ much. Vote self-prediction is "biased" in that it misleadingly suggests that there is no participatory bias.
    Date: 2013–04

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.