New Economics Papers
on Experimental Economics
Issue of 2013‒09‒06
nine papers chosen by

  1. Do Institutions Affect Social Preferences? Evidence from Divided Korea By Kim, Byung-Yeon; Choi, Syngjoo; Lee, Jungmin; Lee, Sokbae; Choi, Kyunghui
  2. Too many charities? Insight from an experiment with multiple public goods and contribution thresholds By Luca Corazzini; Christopher Cotton; Paola Valbonesi
  3. The curse of uninformed voting: An experimental study By Jens Großer; Michael Seebauer
  4. A Classroom Financal Market Experiment By Jonathan E. Alevy; Paul Johnson
  5. A political theory of Russian orthodoxy: Evidence from public goods experiments By Grigoriadis, Theocharis
  6. Physiological Responses to Stressful Work Situations in Low-Immersive Virtual Environments By Valeria Faralla; Alessandro Innocenti; Stefano Taddei; Eva Venturini
  7. Searching for a job is a beauty contest By Busetta, Giovanni; Fiorillo, Fabio; Visalli, Emanuela
  8. On the Number of Bidders and Auction Performance: when More Means Less By Bruno Larue; Mohamed Jeddy; Sébastien Pouliot
  9. Correlated Equilibria and Communication Equilibria in All-pay Auctions By Gregory Pavlov

  1. By: Kim, Byung-Yeon (Seoul National University); Choi, Syngjoo (University College London); Lee, Jungmin (Sogang University); Lee, Sokbae (Seoul National University); Choi, Kyunghui (University of Tokyo)
    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 behavior and support for institutions differ substantially between and within groups. North Korean refugees prefer more egalitarian distribution in the dictator games than South Korean students, even after controlling for individual characteristics that could be correlated with social preferences; however, two groups show little difference in the trust game, once we control for more egalitarian behavior of North Koreans. North Korean refugees show less support for market economy and democracy than South Korean subjects. Attitudes toward institutions are more strongly associated with the experimental behaviors among South Korean subjects than among North Korean subjects.
    Keywords: social preferences, experiment, institutions, market economy, democracy
    JEL: C92 C93 D03 P20
    Date: 2013–08
  2. By: Luca Corazzini (University of Padova); Christopher Cotton (University of Miami); Paola Valbonesi (University of Padova)
    Abstract: We present results from an experiment with multiple public goods, where each good produces benefits only if total contributions to it reach a minimum threshold. The experiment allows us to compare contributions in a benchmark treatment with a single public good and in treatments with more public goods than can be funded. The presence of multiple public goods makes coordination among participants more diffcult, discouraging contributions, and decreasing the likelihood of any public good being effectively funded. Multiplicity decreases funding unless one public good stands out as being the most efficient alternative. Applied to the case of philanthropy, the results show how overall donations and the number of effectively funded charities may both decrease as the total number of charities increase. This is true even if the new charities offer higher potential benefits than previous options.
    Keywords: Threshold public goods, multiple public goods, laboratory experiment, fundraising. JEL: C91, C92, H40, H41.
    Date: 2013–08
  3. By: Jens Großer; Michael Seebauer
    Abstract: We study majority voting over two alternatives in small groups. Individuals have identical preferences but are uncertain about which alternative can better achieve their common interest. Before voting, each individual can get informed, to wit, buy a valuable but imperfect signal about the better alternative. Voting is either voluntary or compulsory. In the compulsory mode, each individual can vote for either of the two alternatives, while in the voluntary mode they can also abstain. An uninformed random vote generates negative externalities, as it may override informative group decisions in pivotal events. In our experiment, participants in groups of three or seven get informed more often with compulsory than voluntary voting, and in this way partly counteract the curse of uninformed voting when they cannot avoid it by abstaining. Surprisingly, uninformed voting is a common phenomenon even in the voluntary mode! A consequence of substantial uninformed voting is poor group efficiency in all treatments, indicating the need to reconsider current practices of jury and committee voting.
    Date: 2013–08–27
  4. By: Jonathan E. Alevy (Department of Economics, University of Alaska Anchorage); Paul Johnson (Department of Economics, University of Alaska Anchorage)
    Abstract: This computerized web experiment immerses students in an environment where they are in the role of bank managers, complementing existing experiments in which they act as depositors. The experiment is programmed to run on a variety of devices, including student’s phones and is suitable for use in intermediate macroeconomics or money and banking courses. Students learn the basic elements of bank balance sheets, the tradeoffs a bank makes when it hedges against liquidity risk, and the macroeconomic implications of the network aspects of the banking system. Key parameters are chosen by the instructor, and all results are saved as a spreadsheet data file. Early trials show that a team's performance is positively correlated with its success in managing interbank deposits.
    Keywords: asset pricing, laboratory experiments, advice
    JEL: A22 C92 E32 E44 G21
    Date: 2013–08
  5. By: Grigoriadis, Theocharis
    Abstract: In this paper, I test the effects of religious norms on the provision of public goods. My evidence is drawn from public goods experiments that I ran with regional bureaucrats in Tomsk and Novosibirsk, Russia. I introduce three treatments, which I define as degrees of Eastern Orthodox collectivist enforcement: 1. Solidarity, 2. Obedience, and 3. Universal discipline. I argue for the existence of an Eastern Orthodox hierarchy in the Russian bureaucracy that facilitates the delivery of public goods under conditions of universal discipline and the principal´s overfulfillment. Eastern Orthodox hierarchy is enforced through universal disciplinary monitoring, which induces collective punishment when the public good is not delivered. Contrary to conventional wisdom about freeriding in administrative institutions, higher ranks in Russian bureaucracies are associated with less freeriding. --
    Keywords: public goods experiments,bureaucracy,enforcement,Russia,religion,incomplete information,hierarchy
    JEL: C91 C92 D72 D73 P21 P26 P32 P51 Z12
    Date: 2013
  6. By: Valeria Faralla; Alessandro Innocenti; Stefano Taddei; Eva Venturini
    Abstract: The paper analyzes physiological responses to different visual representations of stressful work activities. A between-subject experiment was conducted to analyze differences in heart rate (HR) and electromyography (EMG) between subjects watching videos featuring real actors and virtual videos with avatars representing the same situation. Findings show that exposure to real videos is associated with greater physiological activations than exposure to virtual videos. This evidence may suggest that, by inducing less emotional involvement, low-immersive virtual environments activate different cognitive mechanisms of stress perception.
    Keywords: work stress, physiological activations, perception, virtual reality.
    JEL: C91 D01 D81
    Date: 2013–07
  7. By: Busetta, Giovanni; Fiorillo, Fabio; Visalli, Emanuela
    Abstract: The paper deals with the impact of beauty on employability of people, stressing the first stage of the hiring process. In particular, we studied if there exists a preference for attractive candidates and if it does whether it depends on sex, physical features and racial characteristics. We monitored all relevant agencies offering jobs in Italy from August 2011 to September 2012 sending 11008 CVs to 1542 advertised job openings. To do so, we construct fake CVs and we sent the same CV 8 times, changing only name and surname, address, and the photo included. In particular, we sent 4 CVs with photo of an attractive and unattractive man and women, and 4 CVs without photo of an Italian and a foreign men and women to each job opening. Callbacks rates are statistically significant higher for attractive women and men than unattractive ones. Racial discrimination appears to be statistically relevant, but less than discrimination based on the physical features, especially for women.
    Keywords: beauty premium, racial discrimination, experimental economics.
    JEL: C93 J71
    Date: 2013–08–30
  8. By: Bruno Larue; Mohamed Jeddy; Sébastien Pouliot
    Abstract: We first show in the context of sequential multi-unit auctions under complete information that a seller’s revenue may increase or decrease as the number of buyers increases, even when the additional bidders win an object. We use data from the Quebec daily hog auction to empirically analyze the effect of invitations extended to bidders from Ontario. Our estimation accounts for the endogenous timing of these rare invitations, but we nevertheless uncover a negative “invitation” effect. We attribute this anti-competitive effect to the fact that the addition of bidders increases competition in late rounds, but not necessarily in early ones.
    Keywords: Auctions, Livestock, Competition, Price
    JEL: D44 C23
    Date: 2013
  9. By: Gregory Pavlov (University of Western Ontario)
    Abstract: We study cheap-talk pre-play communication in the static all-pay auctions. For the case of two bidders, all correlated and communication equilibria are payoff equivalent to the Nash equilibrium if there is no reserve price, or if it is commonly known that one bidder has a strictly higher value. Hence, in such environments the Nash equilibrium predictions are robust to preplay communication between the bidders. If there are three or more symmetric bidders, or two symmetric bidders and a positive reserve price, then there may exist correlated and communication equilibria such that the bidders’ payoffs are higher than in the Nash equilibrium. In these cases, pre-play cheap talk may affect the outcomes of the game, since the bidders have an incentive to coordinate on such equilibria.
    Keywords: Communication; Collusion; All-pay auctions
    JEL: C72 D44 D82 D83 L41
    Date: 2013

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