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on Experimental Economics |
| By: | Johannes Abeler (School of Economics, University of Oxford); Daniele Nosenzo (School of Economics, University of Nottingham) |
| Abstract: | Laboratory experiments have become a wide-spread tool in economic research. Yet, there is still doubt about how well the results from lab experiments generalize to other settings. In this paper, we investigate the self-selection process of potential subjects into the subject pool. We alter the recruitment email sent to first-year students, either mentioning the monetary reward associated with participation in experiments; or appealing to the importance of helping research; or both. We find that the sign-up rate drops by two-thirds if we do not mention monetary rewards. Appealing to subjects’ willingness to help research has no effect on signup. We then invite the so-recruited subjects to the laboratory to measure a range of preferences in incentivized experiments. We do not find any differences between the three groups. Our results show that student subjects participate in experiments foremost to earn money, and that it is therefore unlikely that this selection leads to an over-estimation of social preferences in the student population. |
| Keywords: | Methodology; Selection bias; Laboratory experiment; Field experiment; Otherregarding behavior; Social preferences; Social Approval; Experimenter Demand. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2013-03&r=exp |
| By: | Lilley, Andrew (University of Sydney); Slonim, Robert (University of Sydney) |
| Abstract: | This paper presents a model and experimental evidence to explain the "volunteering puzzle" where agents prefer volunteering time to donating money when monetary donations are, ceteris paribus, more efficient for providing resources to charity. In the model agents receive heterogeneous utility from pure and impure altruism (Andreoni 1989) that permits warm glow to vary between monetary donations and volunteering, thus allowing preferences for impure altruism to rationalize inefficient allocation decisions. We define a measure of the price of impure altruism as the additional proportion of income sacrificed by a donor to give in the dimension that maximizes her utility, holding the overall charitable contribution constant. To test the predictions of the model we ran an experiment in which we varied within-subjects the costs and benefits of monetary and volunteer donations. We also primed between-subjects the emphasis on the donation value to the charity (pure altruism) or the sacrifice to the donor (impure warm-glow altruism). Consistent with the model's predictions, the experiment shows that priming pure altruism increases the efficiency of donation choices, substitutability of donations between money and time and crowding out. Nonetheless, while greater impurity results in a more inefficient allocation of resources, empirically we find it increases overall charitable donations. We discuss the implications of our experimental results for both theory and policy. |
| Keywords: | altruism, warm glow, volunteering, monetary donations, laboratory experiments |
| JEL: | D64 D78 H41 C91 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7445&r=exp |
| By: | Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Susanne Warning (University of Augsburg) |
| Abstract: | It has recently been claimed that women’s social preferences are easier to manipulate than men’s. We tested for gender differences in responsiveness to a homo economicus prime in a gift-exchange experiment with 113 participants. We observed gender differences in the direction of prime-to-behavior effects. For men, we found that primed participants behaved more selfishly than non-primed men as expected. However and surprisingly, for women we observed that participants primed toward selfishness behaved less selfishly than non-primed women. To explain this counterintuitive result, we suggest that prime-to-behavior effects are sensitive to individuals’ associations with the prime. We surveyed 452 students to test whether the homo economicus prime activated systematically different associations among men and women. We found strong evidence that women have significantly less positive associations with the homo economicus concept than men, pointing to a likely reason for the observed contrast effect among women. |
| Keywords: | priming, gender difference, gift exchange, experiment |
| JEL: | C91 D03 D63 M52 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:dpaper:201309&r=exp |
| By: | Björn Vollan; Yexin Zhou; Andreas Landmann; Biliang Hu; Carsten Herrmann-Pillath |
| Abstract: | There is ample evidence for a “democracy premium”. Laws that have been implemented via election lead to a more cooperative behavior compared to a top-down approach. This has been observed using field data and laboratory experiments. We present evidence from Chinese students and workers who participated in public goods experiments and a value survey. We find a premium for top-down rule implementation stemming from people with stronger individual values for obeying authorities. When participants have values for obeying authorities, they even conform to non-preferred rule. Our findings provide strong evidence that the efficiency of political institutions depends on societal norms. |
| Keywords: | Deterrent effect of legal sanctions, expressive law, authoritarian norms, public goods, democratic voting, China |
| JEL: | A13 C92 D02 D72 H41 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-14&r=exp |
| By: | Mueller-Langer, Frank; Andreoli-Versbach, Patrick |
| Abstract: | Two 'order effects' may emerge in dynamic tournaments with information feedback. First, participants adjust effort across stages, which could advantage the leading participant who faces a larger 'effective prize' after an initial victory (leading-effect). Second, participants lagging behind may increase risk at the final stage as they have 'nothing to lose' (risk-taking). We use a randomized natural experiment in professional two-game soccer tournaments where the treatment (order of a stage-specific advantage) and team characteristics, e.g. ability, are independent. We develop an identification strategy to test for leading-effects controlling for risk-taking. We find no evidence of leading-effects and negligible risk-taking effects. |
| Keywords: | Tournaments; order effects; leading-effect; risk-taking; randomized natural experiments |
| JEL: | C93 C21 D01 L83 |
| Date: | 2013–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:15452&r=exp |
| By: | Björn Vollan; Sebastian Prediger; Markus Frölich |
| Abstract: | We examine the effectiveness of three democratically chosen rules that alleviate the coordination and cooperation problems inherent in collectively managed common-pool resources. In particular we investigate how rule effectiveness and rule compliance depends on the prevailing local norms and ecological values held by resource users. For this purpose, we employ a framed field experiment that is based on a rangeland model for semi-arid regions and carried out with communal farmers in Namibia and South Africa. Participants could vote for three ‘best practice’ management rules found in many places around the world that are discussed for implementation in the study area: (temporary) private property rights, rotational grazing or limitation of livestock numbers. All rules were designed in a way that facilitated cooperation or coordination of actions. The focus of this study lies on the interactions between these rules and prevalent ecological norms exhibited in the rounds prior to rule implementation. In contrast to previous lab experimental studies, we find that democratic voting of rules is not sufficient for high rule compliance and an overall enhancement in cooperation. Rules turned out to be inefficient if they were in conflict with the prevalent ecological norm. |
| Keywords: | field laboratory experiment, rule compliance, ecological norms, common-pool resource, adaptive co-management, Southern Africa |
| JEL: | C71 C92 Q24 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-15&r=exp |
| By: | Eckel, Catherine; Johnson, Cathleen; Montmarquette, Claude |
| Abstract: | The purpose of the study is to better understand human capital investment decisions of the working poor, and to collect information that can be used to design a policy to induce the poor to invest in human capital. We use laboratory experimental methodology to elicit the preferences and observe the choices of the target population of a proposed government policy. We recruited 256 subjects in Montreal, Canada; 72 percent had income below 120 percent of the Canadian poverty level. The combination of survey measures and actual decisions allows us to better understand individual heterogeneity in responses to different subsidy levels. In particular, participants chose between various cash alternatives and educational subsidies, for themselves and for a family member, allowing for the construction of two measures of willingness to invest in education. Two behavioral characteristics, patience and attitude towards risk, are key to understanding the determinants of educational investment for the low-income individuals in this experiment. The decision to save for a family member’s education is somewhat different from that of investing in one’s own education. Patient participants were more likely to save for a family member’s education, but in contrast to investing in one’s own education, a subject’s attitude towards risk played no role. |
| Keywords: | Intertemporal choice, field experiments, risk attitudes, working poor. |
| JEL: | C93 D81 D91 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47782&r=exp |
| By: | Falk, Armin (University of Bonn); Szech, Nora (University of Bamberg) |
| Abstract: | This paper studies how organizational design affects moral outcomes. Subjects face the decision to either kill mice for money or to save mice. We compare a Baseline treatment where subjects are fully pivotal to a Diffused-Pivotality treatment where subjects simultaneously choose in groups of eight. In the latter condition eight mice are killed if at least one subject opts for killing. The fraction of subjects deciding to kill is higher when pivotality is diffused. The likelihood of killing is monotone in subjective perceptions of pivotality. On an aggregate level many more mice are killed in Diffused-Pivotality than Baseline. |
| Keywords: | morality, pivotality, experiment, organization, responsibility |
| JEL: | C91 D01 D03 D23 D63 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7442&r=exp |
| By: | Simone Gobien; Björn Vollan |
| Abstract: | Mutual aid among villagers in developing countries is often the only means of insuring against economic shocks. We use “lab-in-the-field experiments” in Cambodian villages to study social cohesion in established and newly resettled communities. Both communities are part of a land distribution project. The project participants all signed up voluntarily, and their socio-demographic attributes and pre-existing network ties are similar. We use a version of the “solidarity game” to identify the effect of voluntary resettlement on willingness to help fellow villagers after an income shock. We find a sizeable reduction in willingness to help others. Resettled players transfer on average between 47% and 74% less money than non-resettled players. The effect remains large and significant after controlling for personal network and when controlling for differences in transfer expectations. The costs of voluntary resettlement, not only monetary but also social, seem significantly higher than is commonly assumed by development planners. |
| Keywords: | Voluntary resettlement, Social cohesion, Risk-sharing networks, Monetary transfers, “Lab-in-the-field” experiment, Cambodia |
| JEL: | C93 O15 O22 R23 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-16&r=exp |
| By: | Holden, Stein (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | This study revisits the issue whether poverty and shocks are associated with high discount rates by using an incentive compatible Multiple Price List approach in a poor rural population in Africa where a substantial share of the population had been affected by drought in the recent rainy season. Randomized treatments included tests for present bias, magnitude effects and time horizon effects. While the study revealed significant present bias, magnitude and time horizon effects, average rates of time preference remained high after correcting for risk aversion. Exposure to drought increased the average rates of time preference by 42-47%. |
| Keywords: | Time preferences; poverty; climatic shocks; risk aversion; artifactual field experiment; Multiple Price List approach; Malawi |
| JEL: | C93 D91 Q54 |
| Date: | 2013–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsclt:2013_008&r=exp |
| By: | Karina Gose (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | When an employee in a gift exchange game earns significantly less than the employer, the source of employer income does not affect effort choices. However, to induce one unit of effort, the employer has to pay higher wages than in a game without payoff inequality. |
| Keywords: | Gift exchange, fair wage-effort hypothesis, reciprocity, inequity aversion, tit for tat |
| JEL: | C91 D31 M52 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:130009&r=exp |
| By: | Angelucci, Manuela (University of Michigan); Karlan, Dean (Yale University); Zinman, Jonathan (Dartmouth College) |
| 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. |
| Keywords: | microcredit, microcredit impact, microentrepreneurship, Compartamos Banco |
| JEL: | D12 D22 G21 O12 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7439&r=exp |
| By: | Luc Behaghel (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, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Bruno Crépon (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Marc Gurgand (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, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique) |
| Abstract: | In this paper we discuss how the " encouragement design "used in randomized controlled trials can be extended to a setting with two treatments and one control group. Conditions to interpret the Two-Stage Least Squares (TSLS) estimates causally are stronger than in the case with only one treatment and one control group. A rst case where a causal interpretation holds is when only those assigned to one of the two treatments can e ectively enter the corresponding program. A second case is when there are always takers. In that second case, entry rates into a given program should be the same among those assigned to the control group and those assigned to the other program; this restriction can be tested from the data. In cases where the restriction is rejected, we derive bounds to the Local Average Treatment E ect (LATE) based on weaker monotonicity conditions. We illustrate the results using data from a large randomized experiment where job seekers at risk of long term unemployment can receive a reinforced counseling scheme o ered either by the public or the private sector, or remain on a standard track. |
| Keywords: | Randomized evaluation; Local Average Treatment E ffect; Bounds |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00834169&r=exp |
| By: | Armantier, Olivier; Treich, Nicolas |
| JEL: | C91 D81 D84 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ner:toulou:http://neeo.univ-tlse1.fr/3494/&r=exp |
| By: | Kristensen, Soren Rud (Centre of Health Economics); Bech, Mickael (COHERE, Department of Budiness and Economics); Lauridsen, Jørgen T (COHERE, Department of Business and Economics) |
| Abstract: | When implementing a pay for performance (P4P) scheme, designers must decide to whom the nancial incentive for performance should be directed. This paper compares department level hospital reported performance on the Danish Case Management Scheme at hospitals that did and did not redistribute performance payments to the department level. Across a range of models we nd that hospital reported performance at departments that operate under a direct nancial incentive is about 5 percentage points higher than performance at departments at hospital where performance payments are not directly redistributed to the department level. This result is in line with the theoretical expectations but due to the non-experimental design of the study, our results only have a causal interpretation under certain assumptions discussed in the paper |
| Keywords: | Pay for performance; P4P; Hospital incentives; Incentive design; Team production |
| JEL: | L23 M52 O18 |
| Date: | 2013–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sduhec:2013_005&r=exp |