nep-exp New Economics Papers
on Experimental Economics
Issue of 2013‒08‒05
nineteen papers chosen by
Daniel Houser
George Mason University

  1. Justice under uncertainty By Riedl A.M.; Cettolin E.
  2. Who knows It is a game? On rule understanding, strategic awareness and cognitive ability By Fehr, Dietmar; Huck, Steffen
  3. Neural Activity Reveals Preferences Without Choices By Alec Smith; B. Douglas Bernheim; Colin Camerer; Antonio Rangel
  4. Do Hypothetical Choices and Non-Choice Ratings Reveal Preferences? By B. Douglas Bernheim; Daniel Bjorkegren; Jeffrey Naecker; Antonio Rangel
  5. Banking and price containment in California\'s greenhouse gas emissions market: an experimental analysis of market design By Charles A. Holt; William M. Shobe
  6. Risk Aversion and Emotions By Nguyen, Y.; Noussair, C.N.
  7. Leadership, Information, and Risk Attitude: A Game Theoretic Approach By John T. Kulas; Mana Komai; Saint Cloud State University; Philip J. Grossman
  8. A robust test of warm glow giving and spiteful pleasure in a “real donation†experiment with and without earned endowments. By Andrew Luccasen; Philip J. Grossman
  9. Trust and reciprocity among Mediterranean countries By Nikolaos Georgantzis; Juan A. Lacomba; Francisco Lagos; Juliette Milgram
  10. Public Good Provision, Punishment and the Endowment Origin: Experimental Evidence By Armenak Antynian; Luca Corazzini; daniel.neururer
  11. Are Happier People Less Judgmental of Other People's Selfish Behaviors? Laboratory Evidence from Trust and Gift Exchange Games By Michalis Drouvelis; Nattavudh Powdthavee
  12. Religion, Minority Status and Trust: Evidence from a Field Experiment By Gautam Gupta; Minhaj Mahmud; Pushkar Maitra; Santanu Mitra; Ananta Neelim
  13. Playing with the social network: Social cohesion in resettled and non-resettled communities in Cambodia By Simone Gobien; Björn Vollan
  14. Dealing with randomisation bias in a social experiment exploiting the randomisation itself: the case of ERA By Barbara Sianesi
  15. Response of Fishermen to Fishing Control Policies in Southern Songkhla Lake, Thailand: A Field Experiment By Kunlayanee Pornpinatepong; Pathomwat Chantarasap; Jumtip Seneerattanaprayul; Wittawat Hemtanon; Papitchaya Saelim
  16. The Role of Probability Interval and Emotional Parameters By Robert M. Feinberg; Mahmud Yesuf
  17. Shotgun Mechanisms for Common-Value Partnerships: The Unassigned-Offeror Problem By Landeo, Claudia; Spier, Kathryn
  18. Effectiveness of Active Learning Approach in Teaching English Language of Standard IX Students By Khevna Trivedi
  19. School Resources, Behavioral Responses and School Quality: Short-Term Experimental Evidence from Niger By Elise Huillery; Elizabeth Beasley

  1. By: Riedl A.M.; Cettolin E. (GSBE)
    Abstract: An important element for the public support of policies is their perceived justice. At the same time most policy choices have uncertain outcomes. We report the results of a first experiment investigating just allocations of resources when some recipients are exposed to uncertainty. Although, under certainty almost all uninvolved participants distribute resources equally, they exhibit remarkable heterogeneity in just allocations under uncertainty. Moreover, uninvolved participants allocate on average less to recipients exposed to higher degrees of uncertainty and allocations are correlated with their own risk preferences. The observed allocations are consistent with four different views of justice under uncertainty.
    Keywords: Design of Experiments: Laboratory, Individual; Equity, Justice, Inequality, and Other Normative Criteria and Measurement;
    JEL: C91 D63
    Date: 2013
  2. By: Fehr, Dietmar; Huck, Steffen
    Abstract: We introduce the notion of strategic awareness in experimental games which captures the idea that subjects realize they are playing a game and thus have to form beliefs about others' actions in order to play well. The concept differs from both, rule understanding and rationality. We then turn to experimental evidence from a beauty contest game where we elicit measures of cognitive ability and beliefs about others' cognitive ability. We show that the effect of cognitive ability is highly non-linear. Subjects' behavior below a certain threshold is indistinguishable from uniform random play and does not correlate with beliefs about others ability. In contrast, choices of subjects who exceed the threshold avoid dominated choices and react very sensitively to beliefs about others cognitive ability. -- In vielen Situationen spielt das Bewusstsein über strategische Komponenten eine wichtige Rolle. In diesem kurzen Artikel führen wir das Konzept von strategic awareness in Experimenten ein. Dieses neue Konzept beschreibt die Fähigkeit von Experimentteilnehmer, strategische Situationen zu erkennen und daher Erwartungen über das Verhalten von anderen zu bilden. Das Konzept unterscheidet sich sowohl von Rationalität als auch vom bloßen Verstehen von den Regeln eines Experiments. Wir demonstrieren das Konzept empirisch mit Hilfe von Daten eines Beauty Contest Games, in dem wir die kognitiven Fähigkeiten der Teilnehmer und ihre Einschätzungen über die kognitiven Fähigkeiten der anderen Teilnehmer erheben. Die Resultate zeigen, dass kognitive Fähigkeiten einen starken nichtlinearen Effekt auf die Entscheidungen in dem Beauty Contest Game haben. Das Verhalten von Experimentteilnehmer, die unter einer bestimmten Schwelle liegen, kann nicht von zufälligen Entscheidungen unterschieden werden und korreliert auch nicht mit deren Einschätzung über die kognitiven Fähigkeiten der anderen Teilnehmer. Im Gegensatz dazu vermeiden Teilnehmer, die über dieser Schwelle liegen, dominierte Entscheidungen und basieren ihre Entscheidungen auf ihrer Einschätzung über die kognitiven Fähigkeiten der anderen Teilnehmer.
    Keywords: strategic awareness,cognitive ability,beauty contest
    JEL: C7 C9 D0
    Date: 2013
  3. By: Alec Smith; B. Douglas Bernheim; Colin Camerer; Antonio Rangel
    Abstract: We investigate the feasibility of inferring the choices people would make (if given the opportunity) based on their neural responses to the pertinent prospects when they are not engaged in actual decision making. The ability to make such inferences is of potential value when choice data are unavailable, or limited in ways that render standard methods of estimating choice mappings problematic. We formulate prediction models relating choices to “non-choice” neural responses and use them to predict out-of-sample choices for new items and for new groups of individuals. The predictions are sufficiently accurate to establish the feasibility of our approach.
    JEL: C91 D12
    Date: 2013–07
  4. By: B. Douglas Bernheim; Daniel Bjorkegren; Jeffrey Naecker; Antonio Rangel
    Abstract: We develop a method for determining likely responses to a change in some economic condition (e.g., a policy) for settings in which either similar changes have not been observed, or it is challenging to identify observable exogenous causes of past changes. The method involves estimating statistical relationships across decision problems between choice frequencies and variables measuring non-choice reactions, and using those relationships along with additional non-choice data to predict choice frequencies under the envisioned conditions. In an experimental setting, we demonstrate that this method yields accurate measures of behavioral responses, while more standard methods are either inapplicable or highly inaccurate.
    JEL: C91 D12 H31 Q51
    Date: 2013–07
  5. By: Charles A. Holt (University of Virginia); William M. Shobe (University of Virginia)
    Abstract: We use a set of economic experiments to test the effects of two key features of California\'s new program for limiting greenhouse gas emissions. The cap & trade scheme included in the program includes two novel features, limits on allowance ownership (or \'holding limits\') and a tiered price containment reserve sale. These program features are linked by their potential to affect liquidity in the market for emission allowances. We examine the effects of these features on liquidity and on measures of market performance including efficiency, price discovery, and price variability. We find that tight holding limits have the effect of substantially lowering the number of banked allowances available for trade, hence lowering liquidity. This impairs the ability of traders to smooth prices over time resulting in lower efficiency, less effective price discovery, and higher variability in price. The price containment reserve, while increasing the supply of allowances available to traders, does not appear to mitigate the effects of tight holding limits on market outcomes. As a result, the imposition of holding limits in the allowance market may have the consequence of increasing the likelihood of the market manipulation that they were intended to prevent.
    Keywords: Emission markets; climate change; cap and trade
    JEL: Q54 Q58 H
    Date: 2013–07–30
  6. By: Nguyen, Y.; Noussair, C.N. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: We consider the relationship between emotions and decision-making under risk. Specifically, we examine the emotional correlates of risk-averse decisions. In our experiment, individuals' facial expressions are monitored with facereading software, as they are presented with risky lotteries. We then correlate these facial expressions with subsequent decisions in risky choice tasks. We find that the valence of one’s emotional state is negatively correlated, and the strength of a number of emotions: fear, happiness, anger, and surprise, is positively correlated, with risk-averse decisions.
    Keywords: Risk aversion;emotions;facereading;fear.
    JEL: C9
    Date: 2013
  7. By: John T. Kulas; Mana Komai; Saint Cloud State University; Philip J. Grossman
    Abstract: This paper experimentally investigates how risk attitudes mitigate leadership effectiveness in a collective setting with projects that exhibit both free riding and coordination problems. We take two novel approaches: 1) the introduction of economic game theory to psychological studies of leadership, and 2) the application of the leadership ontology of Drath et al. (2008) as a crossdisciplinary integrative framework. Leadership here is focused on the presence or absence of direction, alignment, and commitment as well as antecedent beliefs and practices that are held within a collective (for us, our experimental participants). Our leadership context is stripped down to very minimal conditions: three group members, an investment decision, and the introduction of information regarding group members' attitudes toward risk. We find that the mere mention of risk attitude (whether risky or risk averse) undermines leadership effectiveness in mitigating free riding for our 420 experimental participants. Our study’s primary implications lie in the application of game theory methodology to the psychological study of leadership, the introduction of relevant individual difference constructs to economic studies of leadership, and the advocation of the Drath et al. (2008) framework as a helpful integrative mechanism for interdisciplinary leadership research.
    Keywords: game theory; risk attitude; interdisciplinary research; group dynamics
    Date: 2013–07
  8. By: Andrew Luccasen; Philip J. Grossman
    Abstract: Behavioral research provides evidence consistent with individuals enjoying kind acts (Crumpler and Grossman, 2008) and with individuals enjoying harmful acts (Abbink and Herrmann, 2011). This paper reports on an experiment designed to test if kind or harmful acts are an artefact of the experimental design. We investigate this question using a “real donation†laboratory experiment (Eckel and Grossman 1996) in which participants make a dictator allocation decision and are paired with an actual charity. We use a 2x3 design to vary the action set (only give to charity, or, give to or take from charity) and the source of the endowment (house money, earned endowment, or earned charity endowment). The experiment is designed so that a pure altruist has no incentive to donate or take. In the context of the “real donation†experiment, we observe very few participants taking money from charity. We find that giving persists when the endowment is earned, and when participants are given the option to take. The results are consistent with a warm glow motivation for giving.
    Keywords: Warm glow; spiteful pleasure; charitable giving; lab experiment.
    Date: 2013–07
  9. By: Nikolaos Georgantzis (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Juan A. Lacomba (Department of Economics & GLOBE, University of Granada, Spain); Francisco Lagos (Department of Economics & GLOBE, University of Granada, Spain); Juliette Milgram (Department of Economics & GLOBE, University of Granada, Spain)
    Abstract: This article examines an intra- and international trust game experiment among Moroccan, French and Spanish subjects. Before making each decision, participants were informed on the nationality of their partner. We find that, overall, subjects from Morocco exhibited a higher level of trust. Furthermore, they were found to trust French subjects more than those from Spain. Regarding reciprocal behavior, subjects from Spain were the least trustworthy. Apart from this, we do not observe any discriminatory patterns from or towards any country.
    Keywords: trust, reciprocity, trust game, cross-country, experiment
    JEL: C91
    Date: 2013
  10. By: Armenak Antynian (University of Venice); Luca Corazzini (University of Padova); daniel.neururer (University of Innsbruck)
    Abstract: We study the interplay between contributions and costly punishment in a linear public good game in which subjects differ in the origin of their endowment: for half of the group members, obtaining the endowment is conditional on succeeding in a real effort task, while for the remaining half, it is exogenously granted. Compared to a benchmark treatment with no real effort task, we find no differences in contributions. However, we detect significant differences in punishment between treatments, with subjects in the benchmark being more inclined to punish non-cooperative behaviors. Moreover, in the treatment with heterogeneity of endowment sources, we find that subjects exerting real effort to earn their endowments assign fewer punishing points than those receiving a windfall endowments.
    Keywords: Endowment Origin, Linear Public Good Game, Punishment. JEL: D63, H41, C91, C92.
    Date: 2013–07
  11. By: Michalis Drouvelis; Nattavudh Powdthavee
    Abstract: What determines people's moral judgments of selfish behaviors? Here we study whether people's normative views in trust and gift exchange games, which underlie many situations of economic and social significance, are themselves functions of positive emotions. We used experimental survey methods to investigate people's moral judgments empirically, and explored whether we could influence subsequent judgments by deliberately making some individuals happier. We found that moral judgments of selfish behaviors in the economic context depend strongly on other people's behaviors, but their relationships are significantly moderated by an increase in happiness for the person making the judgment.
    Keywords: Happiness, moral judgments, trust games, gift exchange games
    JEL: C91
    Date: 2013–07
  12. By: Gautam Gupta; Minhaj Mahmud; Pushkar Maitra; Santanu Mitra; Ananta Neelim
    Abstract: It is now well accepted that trust is crucial for economic and social development. There is also evidence that religion strongly affects how individuals act when interacting with others. The same is true of status. Using a field experiment conducted in Bangladesh and West Bengal, India, two regions, which are similar in terms of socioeconomic characteristics, ethnicity and language but have different religious composition, this paper examines whether religion or minority status affect trusts among different segments of the population. Our results show that it is minority status rather than religion that drives behavior. In both countries individuals belonging to the minority group (Muslims in West Bengal and Hindus in Bangladesh) exhibit positive in-group bias in trust behavior, while individuals belonging to the majority group in both countries (Hindus in West Bengla and Muslims in Bangladesh) show positive out-group bias in trustworthiness. The driver of this bias is however different across the two countries. Finally we find that the extent of in-group bias is systematically higher for religious individuals than non-religious individuals.
    Keywords: Trust, Religion, Status, In-group and Out-group, Field Experiment, South Asia.
    JEL: C93 N3 C21 D03
    Date: 2013–07
  13. By: Simone Gobien (University of Marburg); Björn Vollan (University of Innsbruck)
    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 sociodemographic 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-inthe- field” experiment, Cambodia
    JEL: C93 O15 O22 R23
    Date: 2013
  14. By: Barbara Sianesi (Institute for Fiscal Studies and IFS)
    Abstract: We highlight the importance of randomisation bias, a situation where the process of participation in a social experiment has been affected by randomisation per se. We illustrate how this has happened in the case of the UK Employment Retention and Advancement (ERA) experiment, in which over one quarter of the eligible population was not represented. Our objective is to quantify the impact that the ERA eligible population would have experienced under ERA, and to assess how this impact relates to the experimental impact estimated on the potentially selected subgroup of study participants. We show that the typical matching assumption required to identify the average treatment effect of interest is made up of two parts. One part remains testable under the experiment even in the presence of randomisation bias, and offers a way to correct the non-experimental estimates should they fail to pass the test. The other part rests on what we argue is a very weak assumption, at least in the case of ERA. We implement these ideas to the ERA program and show the power of this strategy. Further exploiting the experiment we assess the validity in our application of the claim often made in the literature that knowledge of long and detailed labour market histories can control for most selection bias in the evaluation of labour market interventions. Finally, for the case of survey-based outcomes, we develop a reweighting estimator which takes account of both non-participation and non-response.
    Keywords: social experiments, sample selection, treatment effects, matching methods, reweighting estimators
    JEL: C21 J18 J38
    Date: 2013–07
  15. By: Kunlayanee Pornpinatepong (Department of Economics, Prince of Songkla University, Hat Yai, Songkhla); Pathomwat Chantarasap (Department of Economics, Prince of Songkla University, Hat Yai, Songkhla); Jumtip Seneerattanaprayul (Department of Economics, Prince of Songkla University, Hat Yai, Songkhla); Wittawat Hemtanon (Department of Economics, Prince of Songkla University, Hat Yai, Songkhla); Papitchaya Saelim (Department of Economics, Prince of Songkla University, Hat Yai, Songkhla)
    Abstract: Game theory was used to analyze the extraction behavior of fishermen around the Southern Sonkhla Lake in Southern Thailand. The field experiments were designed based on the concept of non-cooperative game theory for investigating fishermen’s behavior in response to four management policy options: external regulations with individual transferable quotas (ITQs) and with individual quotas (IQ), and co-management with ITQs and with IQ. The analysis examined fishermen’s responses under high and low fish stocks that arose due to seasonal salinity in the Lake. Higher fish stocks encouraged fishermen to increase their extraction. A co-management policy led to better results than imposed external regulation in terms of reducing extraction and ensuring resource sustainability. There were no significant differences between ‘with ITQ’ and ‘without ITQ’ in terms of reduction of extraction and sustainability of resource use. However, there were significantly less violation behaviors when ITQs were used rather than with IQ. The ITQs provided more flexibility for fishermen who wanted to increase their extraction while still following conservation guidelines. Therefore, implementation of ITQ is recommended but with appropriate penalties.
    Keywords: game theory, Thailand
    Date: 2013–02
  16. By: Robert M. Feinberg; Mahmud Yesuf
    Abstract: We study risk and ambiguity aversion among experimental subjects, focusing on understanding the role of the degree of ambiguity (as measured by the probability interval) and selected emotional parameters on attitudes towards ambiguity. In contrast to the general findings in the literature that people usually tend to take gambles with known probability over equivalent gambles with ambiguous probability, we find that student subjects are ambiguity neutral when faced with a relatively narrow probability interval but ambiguity averse in relatively wider intervals. We also find that less trusting and more pessimistic individuals tend to avoid ambiguity, while a measure of subject happiness has no impact on ambiguity aversion. JEL classification:
    Date: 2013–07
  17. By: Landeo, Claudia (University of Alberta, Department of Economics); Spier, Kathryn (Harvard Law School)
    Abstract: Shotguns clauses are commonly included in the business agreements of partnerships and limited liability companies (LLCs), but the role of offeror typically remains unassigned. In a common-value, one-sided asymmetric information setting, unfair and ineffcient outcomes occur with an unassigned offeror. Experimental results are aligned with our theory.
    Keywords: Business Deadlock; Shotgun Mechanisms; Asymmetric Information; Experiments
    JEL: C72 C90 D82 K40
    Date: 2013–07–01
  18. By: Khevna Trivedi
    Abstract: The present study aims to compare Active Learning Approach and tradition method of teaching. 200 students of English medium school were the sample of the study. Two equivalent group pre test post test experimental design was used. It was found that Active Learning Approach had been more effective than Conventional Approach. Key words: Active Learning Approach, Standard IX students, English subject
    Date: 2013–06
  19. By: Elise Huillery (Département d'économie); Elizabeth Beasley
    Abstract: Increasing school resources has often shown disappointing effects on school quality in developing countries, a lack of impact which may be due to student, parent or teacher behavioral responses. We test the short-term impact of an increase in school resources under parental control using an experimental school grant program in Niger.
    JEL: H52 O15 I21 I28
    Date: 2013–04

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