New Economics Papers
on Experimental Economics
Issue of 2013‒08‒16
fifteen papers chosen by

  1. Do institutions affect social preferences? Evidence from divided Korea By Byung-Yeon Kim; Syngjoo Choi; Jungmin Lee; Sokbae 'Simon' Lee; Kyunghui Choi
  2. Voluntary Contributions to Property Rights By David M. Bruner; John R. Boyce
  3. Peer Pressure and Productivity: The Role of Observing and Being Observed By Georganas, Sotiris; Tonin, Mirco; Vlassopoulos, Michael
  4. Cooperation and Personality By Proto, Eugenio
  5. The formation of job referral networks: Experimental evidence from ubran Ethiopia: By Caria, Antonia Stefano; Hassen, Ibrahim Worku
  6. Race and Marriage in the Labor Market: A Discrimination Correspondence Study in a Developing Country By Eva O. Arceo-Gomez; Raymundo M. Campos-Vazquez
  7. Motivating Knowledge Agents: Can Incentive Pay Overcome Social Distance By Berg, Erland; Ghatak, Maitreesh; Manjula, R; Rajasekhar, D; Roy, Sanchari
  8. Social Networks and Peer Effects at Work By Beugnot, Julie; Fortin, Bernard; Lacroix, Guy; Villeval, Marie Claire
  9. The logic of adaptive sequential experimentation in policy design: By Xing, Haipeng; Zhang, Xiaobo
  10. Norms of Punishment in the General Population By S. Bortolotti; M. Casari; F. Pancotto
  11. Data dispersion near the boundaries: can it partially explain the problems of decision and utility theories? By Alexander Harin
  12. Reciprocity as an individual difference By Kurt A. Ackermann; Jürgen Fleiß; Ryan O. Murphy
  13. Demand for weather hedges in India: An empirical exploration of theoretical predictions: By Hill, Ruth Vargas; Robles, Miguel; Ceballos, Francisco
  14. Trust in Cohesive Communities By Felipe Balmaceda; Juan Esconar
  15. Bidding Behavior given Point and Interval Values in a Second-price Auction By Jason F. Shogren; Jason F. Shogren

  1. By: Byung-Yeon Kim; Syngjoo Choi (Institute for Fiscal Studies and University College London); Jungmin Lee (Institute for Fiscal Studies and University of Arkansas); Sokbae 'Simon' Lee (Institute for Fiscal Studies and Seoul National University); Kyunghui Choi
    Abstract: The Cold War division of Korea, regarded as a natural experiment in institutional change, provides a unique opportunity to examine whether institutions affect social preferences. We recruited North Korean refugees and South Korean students to conduct laboratory experiments eliciting social preferences, together with standard surveys measuring subjective attitudes toward political and economic institutions. Our experiments employ widely used dictator and trust games, with four possible group matches between North and South Koreans by informing them of the group identity of their anonymous partners. Experimental behaviour and support for institutions differ substantially between and within groups. North Korean refugees prefer more egalitatian distribution in the dictator games than South Korean students, even after controlling for individual characteristics that could be correlated with social preferences; however, the two groups show little difference in the trust game, once we control for more egalitarian behaviour of North Koreans. North Korean refugees show less support for market economy and democracy than South Korean subjects. Attitudes toward insitutions are more strongly associated with the experimental behaviours among South Korean subjects than among North Korean subjects. An online appendix to accompany this publication is available here
    Keywords: social preferences, experiment, institutions, market economy, democracy
    JEL: C92 C93 D03 P20
    Date: 2013–08
  2. By: David M. Bruner; John R. Boyce
    Abstract: This paper reports the results of an experimental test of the Nash equilibrium prediction of voluntary provision of property rights in a contest under anarchy. Specically, the experiment investigates whether pre-commitment induces positive provision of property rights. As pre- dicted, zero contributions to property rights are observed without pre- commitment. Positive voluntary contributions are observed with pre- commitment, but are less than predicted. Nonetheless, as predicted, stronger property rights with pre-commitment results in less con ict and more production. The experiment also tests predictions for group- size eects. While average contributions to property rights are un- aected by group-size, mean con ict increases and mean production decreases with larger groups. Key Words: Property Rights; Con ict; Public Goods; Experiments
    JEL: C72 C91 F35 O12 O43 P48
    Date: 2013
  3. By: Georganas, Sotiris (Royal Holloway, University of London); Tonin, Mirco (University of Southampton); Vlassopoulos, Michael (University of Southampton)
    Abstract: Peer effects arise in situations where workers observe each other's work activity. In this paper we disentangle the effect of observing a peer from that of being observed by a peer, by setting up a real effort experiment in which we manipulate the observability of performance. In particular, we randomize subjects into three groups: in the first one subjects are observed by another subject, but do not observe anybody; in the second one subjects observe somebody else's performance, but are not observed by anybody; in the last group subjects work in isolation, neither observing, nor being observed. We consider both a piece rate compensation scheme, where pay depends solely on own performance, and a team compensation scheme, where pay also depends on the performance of other team members. Overall, we find some evidence that subjects who are observed increase productivity at least initially when compensation is team based, while we find that subjects observing react to what they see in a non-linear but monotonic way when compensation is based only on own performance.
    Keywords: peer effects, piece rate, team incentives, real-effort experiment
    JEL: D03 J24 M52 M59
    Date: 2013–07
  4. By: Proto, Eugenio (University of Warwick)
    Abstract: Cooperating and trusting behavior may be explained by preferences over social outcomes (people care about others, are unselfish and help- ful), or attitudes to work and social responsibilities (plans have to be carried out, norms have to be followed). If the first hypothesis is true, Agreeable- ness, reporting stated empathy for others, should matter most; if the second, higher score in traits expressing attitude to work, intrinsic motivation (Con- scientiousness) should be correlated with cooperating behavior and trust. We find experimental support for the second hypothesis when subjects provide real mental effort in two treatments with identical task, differing by whether others' payment is affected.
    Keywords: Personality Traits, Cooperation, Effort Provision
    Date: 2013
  5. By: Caria, Antonia Stefano; Hassen, Ibrahim Worku
    Abstract: In this study we focus on exclusion from job contact networks, which constitutes a major disadvantage for labor market participants in settings where referral hiring is common and information about jobs hard to obtain. In a mid-size town in northern Ethiopia, where these mechanisms are at work, we observe that many individuals do not access local job contact networks. Models of strategic network formation and behavioral decision theory suggest that given the right incentives, job contact networks should be more inclusive. On these grounds we hypothesize that workers would link to peripheral peers when this maximizes their chances of referral and when self-regarding concerns are absent due to social preferences.
    Keywords: social network, Labor market, field experiment,
    Date: 2013
  6. By: Eva O. Arceo-Gomez (CIDE); Raymundo M. Campos-Vazquez (El Colegio de Mexico)
    Abstract: In Mexico, as in most Latin American countries with indigenous populations, it is commonly believed that European phenotypes are preferred to mestizo or indigenous phenotypes. However, it is hard to test for such racial biases in the labor market using official statistics since race can only be inferred from native language. Moreover, employers may think that married females have lower productivity, and hence they may be more reluctant to hire them. We are interested in testing both hypotheses through a field experiment in the labor market. The experiment consisted on sending fictitious curriculums (CVs) responding to job advertisements with randomized information of the applicants. The CVs included photographs representing three distinct phenotypes: Caucasian, mestizo and indigenous. We also randomly vary marital status across gender and phenotype. Hence, our test consists on finding whether there are significant differences in the callback rates. We find that females have 40 percent more callbacks than males. We also find that indigenous looking females are discriminated against, but the effect is not present for males. Interestingly, married females are penalized in the labor market and this penalty is higher for indigenous-looking women. We did not find an effect of marital status on males.
    Keywords: Discrimination; Gender; Race; Labor market; Mexico; Hiring; Correspondence study
    JEL: I24 J10 J16 J70 O54
    Date: 2013–06
  7. By: Berg, Erland (University of Oxford); Ghatak, Maitreesh (London School of Economics); Manjula, R (ISEC); Rajasekhar, D (ISEC); Roy, Sanchari (University of Warwick)
    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 under taken 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
  8. By: Beugnot, Julie (Université Laval); Fortin, Bernard (Université Laval); Lacroix, Guy (Université Laval); Villeval, Marie Claire (CNRS, GATE)
    Abstract: This paper extends the standard work effort model by allowing workers to interact through networks. We investigate experimentally whether peer performances and peer contextual effects influence individual performances. Two types of network are considered. Participants in Recursive networks are paired with participants who played previously in isolation. In Simultaneous networks, participants interact in real-time along an undirected line. Mean peer effects are identified in both cases. Individual performances increase with peer performances in the recursive network. In the simultaneous network, endogenous peer effects vary according to gender: they are large for men but not statistically different from zero for women.
    Keywords: peer effects, social networks, work effort, piece rate, experiment
    JEL: C91 J16 J24 J31 M52
    Date: 2013–07
  9. By: Xing, Haipeng; Zhang, Xiaobo
    Abstract: In this paper, we argue that economists can learn a great deal from the design principles implemented in medical research. We develop a theoretical model to show the logic of adaptive sequential experiment design in the presence of uncertainty over negative effects and discuss how to choose samples in a population to minimize the experiment cost. We also point out the applications of our proposed framework in the economic domain, such as economic reforms and new product design.
    Keywords: Economic development, Economy, Experiments, randomized experiment, Social Sciences, methodologies,
    Date: 2013
  10. By: S. Bortolotti; M. Casari; F. Pancotto
    Abstract: Norms of cooperation and punishment differ across societies, but also within a single society. In an experiment with two subject pools sharing the same geographical and cultural origins, we show that opportunities for peer punishment increase cooperation among students but not in the general population. In previous studies, punishment magnified the differences across societies in peoples ability to cooperate. Here, punishment reversed the order: with punishment, students cooperate more than the general population while they cooperate less without it. Our results obtained with students cannot be readily generalized to the society at large.
    JEL: C72 C90 Z13
    Date: 2013–08
  11. By: Alexander Harin (MUH - Modern University for the Humanities - Modern University for the Humanities)
    Abstract: An existence theorem for a bias of the mean in the presence of data dispersion is proved. The ultimate aims are to use this theorem to explain the well-known problems of utility and decision theories, such as risk aversion, the underweighting of high and the overweighting of low probabilities, the Allais paradox, etc. The results may be used to estimate preferences, choices, decisions, (ir)rational behavior at data uncertainty, noises and experimental errors in experiments interpretation, probability theory, statistics, management, finance, investment, insurance, etc.
    Keywords: data; behavior; rational; risk; noise; decision; utility;
    Date: 2013–08–11
  12. By: Kurt A. Ackermann (Chair of Decision Theory and Behavioral Game Theory, ETH Zurich); Jürgen Fleiß (Institute of Statistics and Operations Research, Karl-Franzens-University Graz); Ryan O. Murphy (Chair of Decision Theory and Behavioral Game Theory, ETH Zurich)
    Abstract: There is accumulating evidence that decision makers are sensitive to the distribution of resources among themselves and others, beyond what is expected from the predictions of narrow self-interest. These social preferences are typically conceptualized as being static and existing independently of information about the other people influenced by a DM’s allocation choices. In this paper we consider the reactivity of a decision makers’s social preferences in response to information about the intentions or past behavior of the person to be affected by the decision maker’s allocation choices (i.e., how do social preferences change in relation to the other’s type). This paper offers a conceptual framework for characterizing the link between distributive preferences and reciprocity, and reports on experiments in which these two constructs are disentangled and the relation between the two is characterized.
    Date: 2013–08–06
  13. By: Hill, Ruth Vargas; Robles, Miguel; Ceballos, Francisco
    Abstract: This paper analyzes the demand for rainfall-based weather hedges among farmers in rural India. We explore the predictions of a standard expected utility theory framework on the nature of demand for such products, in particular testing whether demand behaves as predicted with respect to price, the basis of the hedge, and risk aversion using data from a randomized control trial in which price and basis risk was varied for a series of hedging products offered to farmers. We find that demand behaves as predicted, with demand falling with price and basis risk, and appearing hump-shaped in risk aversion. Second, we analyze understanding of and demand for hedging products over time, examining the impact of increased investments in training on hedging products as well as evidence for learning by doing among farmers. We find evidence that suggests that learning by doing is more effective at increasing both understanding and demand.
    Keywords: index insurance, Economic theory, expected utility, weather index insurance, Risk, randomized experiment,
    Date: 2013
  14. By: Felipe Balmaceda; Juan Esconar
    Abstract: This paper studies which social networks maximize trust and cooperation when agreements are implicitly enforced. We study a repeated trust game in which trading opportunities arise exogenously and the social network determines the information transmission technology. We show that cohesive communities, modeled as social networks of complete components, emerge as the optimal community design. Cohesive communities generate some degree of common knowledge of transpired play that allows players to coordinate their punishments and, as a result, yield relatively high equilibrium payoffs. Our results provide an economic rationale for the commonly argued optimality of cohesive social networks.
    Date: 2013
  15. By: Jason F. Shogren; Jason F. Shogren
    Date: 2013

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