nep-exp New Economics Papers
on Experimental Economics
Issue of 2013‒08‒31
seventeen papers chosen by
Daniel Houser
George Mason University

  1. Status Quo Effects in Fairness Games: Reciprocal Responses to Acts of Commission vs. Acts of Omission By James Cox; Maroš Servátka; Radovan Vadovič
  2. It is Not Just Confusion! Strategic Uncertainty in an Experimental Asset Market By Eizo Akiyama; Nobuyuki Hanaki; Ryuichiro Ishikawa
  3. Does the structure of the fine matters? By Marcelo Caffera; Carlos Chávez; Analia Ardente
  4. Social Networks and Peer Effects at Works By Julie Beugnot; Bernard Fortin; Guy Lacroix; Marie Claire Villeval
  5. Effects of supervision on tax compliance: Evidence from a field experiment in Austria By Katharina Gangl; Benno Torgler; Erich Kirchler; Eva Hofmann
  6. Social Networks and Peer Effects at Work By Julie Beugnot; Bernard Fortin; Guy Lacroix; Marie Claire Villeval
  7. Financial incentives and educational investment: the impact of performance-based scholarships on student time use By Lisa Barrow; Cecilia Elena Rouse
  8. Limited higher order beliefs and the welfare effects of public information By Camille Cornand; Frank Heinemann
  9. What can experiments tell us about how to improve governance? By Gisselquist, Rachel; Niño-Zarazúa, Miguel
  10. Village sanitation and children's human capital : evidence from a randomized experiment by the Maharashtra government By Hammer, Jeffrey; Spears, Dean
  11. The Role of Social Image Concerns in the Design of Legal Regimes By Bruno Deffains; Claude Fluet
  12. Recreating the South Sea Bubble: Lessons from an Experiment in Financial History By Giusti, G.; Noussair, C.N.; Voth, H-J.
  13. The Impact of Information Provision on Agglomeration Bonus Performance: An Experimental Study on Local Networks By Banerjee, Simanti; de, Vries Frans; Hanley, Nicholas; van, Soest Daan
  14. Econometric Mediation Analyses: Identifying the Sources of Treatment Effects from Experimentally Estimated Production Technologies with Unmeasured and Mismeasured Inputs By Heckman, James J.; Pinto, Rodrigo
  15. Who shows solidarity with the irresponsible? By Bolle, Friedel; Costard, Jano
  16. Propensity to Consent to Data Linkage: Experimental Evidence from the Innovation Panel on the Role of Three Survey Design Features By Sala, Emanuela; Knies, Gundi; Burton, Jonathan
  17. Cash Transfers and Child Schooling: Evidence from a Randomized Evaluation of the Role of Conditionality By Richard Akresh; Damien de Walque; Harounan Kazianga

  1. By: James Cox; Maroš Servátka (University of Canterbury); Radovan Vadovič
    Abstract: Both the law and culture make a central distinction between acts of commission that overturn the status quo and acts of omission that uphold it. In everyday life acts of commission often elicit stronger reciprocal responses than do acts of omission. In this paper we compare reciprocal responses to both types of acts and ask whether behavior of subjects in three experiments is consistent with existing theory. The design of the experiments focuses on the axioms of revealed altruism theory (Cox, Friedman, and Sadiraj, 2008) that make it observationally distinct from other theories. We find support for this theory in all three experiments.
    Keywords: Experimental economics, reciprocity, revealed altruism, acts of commission, acts of omission, other-regarding preferences, status quo
    JEL: C70 C91
    Date: 2013–08–09
  2. By: Eizo Akiyama (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba); Nobuyuki Hanaki (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales [EHESS] - Ecole Centrale Marseille (ECM), IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique); Ryuichiro Ishikawa (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba)
    Abstract: To what extent is the observed mis-pricing in experimental asset markets caused by strategic uncertainty (SU) and by individual bounded rationality (IBR)? We address this question by comparing subjects initial price forecasts in two market environments - one with six human traders, and the other with one human and five computer traders. We find that both SU and IBR account equally for the median initial forecasts deviation from the fundamental values. The effect of SU is greater for subjects with a perfect score in the Cognitive Reflection Test, and it is not significant for those with low scores.
    Keywords: bounded rationality; strategic uncertainty; experiment; asset markets; computer traders; cognitive reflection test
    Date: 2013–08
  3. By: Marcelo Caffera; Carlos Chávez; Analia Ardente
    Abstract: We study individual compliance behavior with respect to a legal norm in an experimental setting under two different regulatory instruments: emission standards and tradable pollution permits. Compliance to the same set of standards and expected permit holdings was induced with different structures of the fine schedule, namely: a linear and a strictly convex penalty function. Even though our design induces perfect compliance, we find that there are violations in both emissions standards and tradable permits systems, regardless of the penalty structure. Nevertheless, the extent of violations is affected by the penalty parameters under emissions standards, but not under a tradable pollution permits. Notwithstanding, we find that the penalty design has an effect on the average price of permits traded, its dispersion and the number of trades.
    Keywords: Environmental policy, enforcement, penalty structure, emissions standards, emissions trading, laboratory experiments
    JEL: C91 L51 Q58 K42
    Date: 2013
  4. By: Julie Beugnot (Department of economics, Université Laval, CIRPÉE); Bernard Fortin (Department of economics, Université Laval, CIRPÉE and CIRANO); Guy Lacroix (Department of economics, Université Laval, CIRPÉE and CIRANO); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    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
  5. By: Katharina Gangl; Benno Torgler; Erich Kirchler; Eva Hofmann
    Abstract: The tax compliance literature has mainly focused on individual tax evasion rather than firm tax evasion. In general, there is a lack of field experiments on the topic, and measuring tax compliance is challenging. To address this shortcoming in the literature, we conduct a field experiment on firm tax compliance looking at newly founded firms. As a novelty we explore how firms react to closer supervision by the tax administration, looking at timely paying which has no measurement biases. Interestingly, we observe a crowding-out effect of supervision on timely paying of taxes. On the other hand, for those who were non-compliant, supervision reduced the tax amount that was due.
    Keywords: tax compliance; tax evasion; field experiment; deterrence; tax enforcement; supervision
    JEL: H26 C93 K42
    Date: 2013–08
  6. By: Julie Beugnot; Bernard Fortin; Guy Lacroix; Marie Claire Villeval
    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
  7. By: Lisa Barrow; Cecilia Elena Rouse
    Abstract: Using survey data from a field experiment in the U.S., we test whether and how financial incentives change student behavior. We find that providing post-secondary scholarships with incentives to meet performance, enrollment, and/or attendance benchmarks induced students to devote more time to educational activities and to increase the quality of effort toward, and engagement with, their studies; students also allocated less time to other activities such as work and leisure. While the incentives did not generate impacts after eligibility had ended, they also did not decrease students’ inherent interest or enjoyment in learning. Finally, we present evidence suggesting that students were motivated more by the incentives provided than simply the effect of giving additional money, and that students who were arguably less time-constrained were more responsive to the incentives as were those who were plausibly more myopic. Overall these results indicate that well-designed incentives can induce post-secondary students to increase investments in educational attainment.
    Keywords: Education, Higher - Economic aspects
    Date: 2013
  8. By: Camille Cornand (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Frank Heinemann (Fachgebiet Makroökonomik - Technische Universität Berlin)
    Abstract: In games with strategic complementarities, public information about the state of the world has a larger impact on equilibrium actions than private information of the same precision, because the former is more informative about the likely behavior of others. This may lead to welfare-reducing 'overreactions' to public signals as shown by Morris and Shin (2002). Recent experiments on games with strategic complementarities show that subjects attach a lower weight to public signals than theoretically predicted. Aggregate behavior can be better explained by a cognitive hierarchy model where subjects employ limited levels of reasoning. This paper analyzes the welfare effects of public information under such limited levels of reasoning and argues that for strategies according with experimental evidence, public information that is more precise than private information cannot reduce welfare, unless the policy maker has instruments that are perfect substitutes to private actions.
    Keywords: coordination games; strategic uncertainty; private information; public information; higherorder beliefs; levels of reasoning
    Date: 2013–08–28
  9. By: Gisselquist, Rachel; Niño-Zarazúa, Miguel
    Abstract: In recent years, randomized controlled trials have become increasingly popular in the social sciences. In development economics in particular, their use has attracted considerable debate in relation to the identification of ‘what works’ in development policy. This paper focuses on a core topic in development policy: governance. It aims to address two key questions: (1) what have the main contributions of randomized controlled trials been to the study of governance? and (2) what could be the contributions, and relatedly the limits of such methods? To address these questions, a systematic review of experimental and quasi-experimental methods to study government performance was conducted. It identified 139 relevant papers grouped into three major types of policy interventions that aim to: (1) improve supply-side capabilities of governments; (2) change individual behaviour through various devices, notably incentives, and (3) improve informational asymmetries. We find that randomized controlled trials can be useful in studying the effects of some policy interventions in the governance area, but they are limited in significant ways: they are ill-equipped to study broader governance issues associated with macro-structural shifts, national level variation in institutions and political culture, and leadership. Randomized controlled trials are best for studying targeted interventions, particularly in areas of public goods provision, voting behaviour, and specific measures to address corruption and improve accountability; however, they can provide little traction on whether the intervention is transferable and ‘could work’ (and why) in other contexts, and in the longer run.
    Keywords: Randomised control trials; governance; development
    JEL: C93 D72 D73 H41
    Date: 2013–08–01
  10. By: Hammer, Jeffrey; Spears, Dean
    Abstract: Open defecation is exceptionally widespread in India, a county with puzzlingly high rates of child stunting. This paper reports a randomized controlled trial of a village-level sanitation program, implemented in one district by the government of Maharashtra. The program caused a large but plausible average increase in child height (95 percent confidence interval [0.04 to 0.61] standard deviations), which is an important marker of human capital. The results demonstrate sanitation externalities: an effect even on children in households that did not adopt latrines. Unusually, surveyors also collected data in districts where the government planned but ultimately did not conduct an experiment, permitting analysis of the importance of the set eligible for randomization.
    Keywords: Health Monitoring&Evaluation,Disease Control&Prevention,Population Policies,Hygiene Promotion and Social Marketing,Early Child and Children's Health
    Date: 2013–08–01
  11. By: Bruno Deffains; Claude Fluet
    Abstract: We consider situations where legal liability yields insufficient incentives for socially efficient behavior, e.g., individuals who cause harm are not always sued or are unable to pay fully for harm done. Some individuals nevertheless behave efficiently because of intrinsic prosocial concerns. Others have no such concerns but would like people to believe that they do. We show that fault-based liability is generally more effective than strict liability in harnessing social image concerns. This extends to the case where courts can make mistakes. The rules of proof then affect the inferences drawn from court decisions and therefore the stigma attached to an adverse judgment. If fault is a rare event, plaintiffs or prosecutors should bear the burden of proving the defendant’s fault; otherwise there are cases where defendants should prove compliance with the legal standard of behavior. Under either assignment of the burden of proof, incentives to comply are maximized by a standard of proof stronger than a mere preponderance of evidence.
    Keywords: Normative motivations, prosocial behavior, fault, negligence, strict liability, tort law, public enforcement of law, burden of proof, standard of proof
    JEL: D8 K4 Z13
    Date: 2013
  12. By: Giusti, G.; Noussair, C.N.; Voth, H-J. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: Major bubble episodes are rare events. In this paper, we examine what factors might cause some asset price bubbles to become very large. We recreate, in a laboratory setting, some of the specific institutional features investors in the South Sea Company faced in 1720. Several factors have been proposed as potentially contributing to one of the greatest periods of asset overvaluation in history: an intricate debt-for-equity swap, deferred payment for these shares, and the possibility of default on the deferred payments. We consider which aspect might have had the most impact in creating the South Sea bubble. The results of the experiment suggest that the company’s attempt to exchange its shares for government debt was the single biggest contributor to the stock price explosion, because of the manner in which the swap affected fundamental value. Issuing new shares with only partial payments required, in conjunction with the debtequity swap, also had a significant effect on the size of the bubble. Limited contract enforcement, on the other hand, does not appear to have contributed significantly.
    Keywords: Financial bubbles;experiments;South Sea bubble;risk-shifting;government debt;equity issuance1.
    JEL: G01 G12 G14 N23 C92
    Date: 2013
  13. By: Banerjee, Simanti; de, Vries Frans; Hanley, Nicholas; van, Soest Daan
    Abstract: The Agglomeration Bonus (AB) is a mechanism to induce adjacent landowners to spatially coordinate their land use for the delivery of ecosystem services from farmland. This paper uses laboratory experiments to explore the performance of the AB in achieving the socially optimal land management configuration in a local network environment where the information available to subjects varies. The AB poses a coordination problem between two Nash equilibria: a Pareto dominant and a risk dominant equilibrium. The experiments indicate that if subjects are informed about both their direct and indirect neighbors' actions, they are more likely to coordinate on the Pareto dominant equilibrium relative to the case where subjects have information about their direct neighbors' action only. However, the extra information can only delay - and not prevent - the transition to the socially inferior risk dominant Nash equilibrium. In the long run, the AB mechanism may only be partially effective in enhancing delivery of ecosystem services on farming landscapes featuring local networks.
    Keywords: Agglomeration bonus, agri-environment schemes, biodiversity conservation, ecosystem services, information spillovers, Payments for Ecosystem Services, spatial coordination
    Date: 2013–08
  14. By: Heckman, James J. (University of Chicago); Pinto, Rodrigo (University of Chicago)
    Abstract: This paper presents an econometric mediation analysis. It considers identification of production functions and the sources of output effects (treatment effects) from experimental interventions when some inputs are mismeasured and others are entirely omitted.
    Keywords: production function, mediation analysis, measurement error, missing inputs
    JEL: C21 C38 C43 D24
    Date: 2013–08
  15. By: Bolle, Friedel; Costard, Jano
    Abstract: In the Solidarity game lucky winners of a lottery can transfer part of their income to unlucky losers. Will losers get smaller transfers if they can be assumed to be responsible for their zero income because they have chosen riskier lotteries? Or will risk-lovers and riskaverters favor those who made the same risk-choice, leading to larger transfers within rather than between the risk-groups? While there is support for both motives in the literature, in an experiment we find that the effect of holding people responsible for their actions is overcome by behavior guided by in-group favoritism based on different levels of risk-taking. This behavior is successfully described by a variant of the social utility function suggested by Cappelen et al. (2013). -- Im Solidaritätsspiel können die glücklichen Gewinner einer Lotterie einen Teil ihres Gewinns den unglücklichen Verlierern überlassen. Erhalten die Verlierer eine geringere Kompensation, wenn sie dafür verantwortlich gemacht werden können, dass sie leer ausgingen, weil sie sich für eine riskantere Lotterie entschieden hatten? Oder bevorzugen risikofreudige und risikoscheue Spieler diejenigen, die sich für das jeweils gleiche Risikoniveau entschieden hatten? Während es in der Literatur Argumente für beide Motive gibt, zeigt sich im Experiment, dass Verlierer mehr Solidarität erfahren, wenn sie die gleiche Risikoentscheidung getroffen haben wie der Gewinner und dass damit das Motiv Spieler für ihre Entscheidung verantwortlich zu machen in den Hintergrund treten kann. Dieses Verhalten kann erfolgreich durch eine Variante der social utility function, wie sie von Cappelen et al. (2013) vorgeschlagen wurde, erklärt werden.
    Keywords: Risky Behaviour,Solidarity,Responsibility,In-Group Favoritism
    JEL: D3 D8
    Date: 2013
  16. By: Sala, Emanuela; Knies, Gundi; Burton, Jonathan
    Abstract: When performing data linkage, survey respondents need to provide their informed consent. Since not all respondents agree to this request, the linked dataset will have fewer observations than the survey dataset alone and bias may be introduced. By focusing on the role that survey design features play in gaining respondents consent, this paper provides an innovative contribution to the studies in this field. Analysing experimental data collected in a nationally representative household panel survey of the British population, we find that interview features such as question format (dependent/independent questions) and placement of the consent question within the questionnaire have an impact on consent rates.
    Date: 2013–08–29
  17. By: Richard Akresh (University of Illinois at Urbana-Champaign); Damien de Walque (The World Bank, Washington DC); Harounan Kazianga (Oklahoma State University)
    Abstract: We conduct a randomized experiment in rural Burkina Faso to estimate the impact of alternative cash transfer delivery mechanisms on education. The two-year pilot program randomly distributed cash transfers that were either conditional (CCT) or unconditional (UCT). Families under the CCT schemes were required to have their children ages 7-15 enrolled in school and attend classes regularly. There were no such requirements under the unconditional programs. Results indicate that UCTs and CCTs have a similar impact increasing the enrollment of children who are traditionally favored by parents for school participation, including boys, older children, and higher ability children. However, CCTs are significantly more effective than UCTs in improving the enrollment of "marginal children" who are initially less likely to go to school, such as girls, younger children, and lower ability children. Thus, conditionality plays a critical role in benefiting children who are less likely to receive investments from their parents.
    Keywords: Cash transfers; Conditionality; Education; Africa
    JEL: I21 I25 I38 J13 O15 C93
    Date: 2013–01

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