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on Experimental Economics |
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Issue of 2013‒09‒13
ten papers chosen by |
| By: | John Duffy; Felix Munoz-Garcia |
| Abstract: | This paper investigates behavior in finitely repeated simultaneous and sequential-move prisoner's dilemma games when there is one-sided incomplete information and signaling about players' concerns for fairness, specifically, their preferences regarding "inequity aversion." In this environment, we show that only a pooling equilibrium can be sustained, in which a player type who is unconcerned about fairness initially cooperates in order to disguise himself as a player type who is concerned about fairness. This disguising strategy induces the uninformed player to cooperate in all periods of the repeated game, including the final period, at which point the player type who is unconcerned about fairness takes the opportunity to defect, i.e., he "backstabs" the uninformed player. Despite such last-minute defection, our results show that the introduction of incomplete information can actually result in a Pareto improvement under certain conditions. We connect the predictions of this "backstabbing" equilibrium with the frequently observed decline in cooperative behavior in the final period of finitely-repeated experimental games. |
| Keywords: | Prisoner\'s Dilemma, Social Preferences, Inequity Aversion, Incomplete Information, Siganling, Information Transmission |
| JEL: | C72 C73 D82 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:491&r=exp |
| By: | Ernesto Reuben; Matthew Wiswall; Basit Zafar |
| Abstract: | Standard observed characteristics explain only part of the differences between men and women in education choices and labor market trajectories. Using an experiment to derive students' levels of overconfidence, and preferences for competitiveness and risk, this paper investigates whether these behavioral biases and preferences explain gender differences in college major choices and expected future earnings. In a sample of high-ability undergraduates, we find that competitiveness and overconfidence, but not risk aversion, are systematically related with expectations about future earnings: Individuals who are overconfident and overly competitive have significantly higher earnings expectations. Moreover, gender differences in overconfidence and competitiveness explain about 18 percent of the gender gap in earnings expectations. These experimental measures explain as much of the gender gap in earnings expectations as a rich set of control variables, including test scores and family background, and they are poorly proxied by these same control variables, underscoring that they represent independent variation. While expected earnings are related to college major choices, the experimental measures are not related with college major choice. |
| Keywords: | Career development - Sex differences ; Women - Education ; Universities and colleges ; Risk-taking (Psychology) ; Prediction (Psychology) ; Competition |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:627&r=exp |
| By: | Erik O. Kimbrough (Dept. of Economics, Simon Fraser University); Nikolaus Robalino (Dept. of Economics, Simon Fraser University); Arthur J. Robson (Dept. of Economics, Simon Fraser University) |
| Abstract: | This paper provides an evolutionary foundation for our capacity to attribute preferences to others. This ability is intrinsic to game theory, and is a key component of "Theory of Mind", perhaps the capstone of social cognition. We argue here that this component of theory of mind allows organisms to efficiently modify their behavior in strategic environments with a persistent element of novelty. Such environments are represented here by multistage games of perfect information with randomly chosen outcomes. "Theory of Mind" then yields a sharp, unambiguous advantage over less sophisticated, behavioral approaches to strategic interaction. In related experiments, we show the subscale for social skills in standard tests for autism is a highly significant determinant of the speed of learning in such games. |
| Keywords: | Evolution, Theory of mind |
| JEL: | D01 C7 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1907&r=exp |
| By: | Axel Franzen; Sonja Pointner |
| Abstract: | We study the decision process in a group dictator game in which three subjects can distribute an initial endowment between themselves and a group of recipients. The experiment consists of two stages; first, individuals play a standard dictator game. Second, individuals are randomly matched into groups of three and communicate via instant messaging regarding the decision in the group dictator game. In contrast to former studies our results show that group decisions do not differ from individual decisions in the dictator game. Furthermore, the analysis of the chat history reveals that players make proposals according to their preferences as revealed in the single dictator game and that these proposals in groups drive the final allocation. |
| Keywords: | dictator game, group dictator game, fairness games, small group research |
| JEL: | B3 C79 C91 C92 D03 D7 |
| Date: | 2013–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:bss:wpaper:2&r=exp |
| By: | Radu Vranceanu (Economics Department - ESSEC Business School); Fouad El Ouardighi (Operation management Department - ESSEC Business School); Delphine Dubart (ESSEC Business School - ESSEC Business School) |
| Abstract: | This paper reports the results from a real-effort team production experiment, where best performers can impose either tacit or explicit sanctions on their less-performing partners. The behavior of the best performer in the team differs from one condition to another. When explicit sanctions are not allowed, good performers reduce their effort in response to the advantageous difference in scores; when they can impose sanctions, their change in effort is no longer related to the difference in scores. To some extent, a mechanism of explicit sanctions allows good performers to focus on their own performance. Not sanctioning an opponent who under-performs, what we refer to as forgiveness, prompts the latter to improve his performance, but applying the sanction has a stronger effect. |
| Keywords: | Team work; performance; experimental economics; punishment |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00857364&r=exp |
| By: | Volker Benndorf; Dorothea Kübler; Hans-Theo Normann; |
| Abstract: | We study the voluntary revelation of private, personal information in a labor-market experiment with a lemons structure where workers can reveal their productivity at a cost. While rational revelation improves a worker's payoff, it imposes a negative externality on others and may trigger further unraveling. Our data suggest that subjects reveal their productivity less frequently than predicted in equilibrium. A loaded frame emphasizing personal information about workers' health leads to even less revelation. We show that three canonical behavioral models all predict too little rather than too much revelation: level-k reasoning, quantal-response equilibrium,and to a lesser extent inequality aversion. |
| Keywords: | information revelation, privacy, lemons market, level-k reasoning, quantal response equilibrium, inequality aversion |
| JEL: | C72 C90 C91 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2013-040&r=exp |
| By: | Giorgia Barboni; Tania Treibich |
| Abstract: | The widespread evidence of multiple bank lending relationships in credit markets suggests that firms are interested in setting up a diversity of banking links. However, it is hard to know from the empirical data whether a firm's observed number of lenders is symptomatic of financial constraints or rather a well-designed strategy. We design an experimental credit market to analyze the determinants of multiple bank lending relationships, both from the demand and the supply side. Our results show that borrowers prefer multiple lending when they are credit rationed and unable to stabilize their lending source, whatever their risk level. Moreover, rationed borrowers are less likely to repay and display a higher tendency to switch between lenders. At the same time, we observe that the determinants of lending change according to the type of information available on the loan applicants. Overall, our findings support the view that the number of banking relationships is mainly determined by the supply side. |
| Keywords: | Repeated games, experiment, information asymmetries, multiple lending, relationship lending |
| JEL: | C72 C73 C92 G21 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2013-28&r=exp |
| By: | David McKenzie (Development Research Group, The World Bank); Emily Beam (Department of Economics, National University of Singapore); Dean Yang (Economics Department, University of Michigan) |
| Abstract: | Significant income gains from migrating from poorer to richer countries have motivated unilateral (source-country) policies facilitating labor emigration. However, their effectiveness is unknown. We conducted a large-scale randomized experiment in the Philippines testing the impact of unilaterally facilitating international labor migration. Our most intensive treatment doubled the rate of job offers but had no identifiable effect on international labor migration. Even the highest overseas job-search rate we induced (22%) falls far short of the share initially expressing interest in migrating (34%). We conclude that unilateral migration facilitation will at most induce a trickle, not a flood, of additional emigration. |
| Keywords: | International migration, passport costs, barriers to migration, unilateral migration policy, imperfect information, job-matching, field experiment, Philippines |
| JEL: | O15 F22 O15 C93 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1319&r=exp |
| By: | Marko Pitesa (GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM)); Stefan Thau (INSEAD - INSEAD); Madan M. Pillutla (LBS - London Business School - London Business School) |
| Abstract: | Individuals' willingness to act in socially desirable ways, such as sharing resources with others and abiding by norms of ethical conduct, is a necessary condition of social life. The current research reconciles two seemingly contradicting sets of findings on the role of cognitive control in socially desirable behaviors. One set of findings suggests that people are tempted by self-serving impulses and have to rely on cognitive control overriding such impulses to act in socially desirable ways. Another set of findings suggests people are guided by other-regarding impulses and cognitive control is not necessary to motivate socially desirable behaviors. We provide a theoretical and empirical integration of these findings by identifying a key situational variable--the salience of interpersonal impact--that determines whether the dominant impulse is to behave in a self-serving or a socially desirable manner. We suggest that the dominant impulse is to behave in a socially desirable manner when the interpersonal impact of an action is salient, and that the dominant impulse is to behave in a self-serving manner when the interpersonal impact of an action is not salient. Consistent with this prediction, Studies 1-3 found that impairing participants' cognitive control led to less socially desirable behavior when interpersonal impact was not salient, but more socially desirable behavior when interpersonal impact was salient. Study 4 extended these findings by demonstrating that behaving in a socially desirable manner causes cognitive control impairment when interpersonal impact is not salient. But, when interpersonal impact is salient, behaving in a self-serving manner impairs cognitive control. We discuss the implications of our findings for understanding and managing socially desirable behaviors. |
| Keywords: | socially desirable behavior; cognitive control; impulses; cheating; resource distributions |
| Date: | 2013–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:gemwpa:hal-00853900&r=exp |
| By: | Sandner, Malte |
| Abstract: | This paper presents results from a randomized evaluation of a home visiting program for disadvantaged first-time mothers and their families implemented in three German federal states. I analysis the impact of the intervention on maternal employment, school attendance, child care use, fertility, life-satisfaction and well-being. Biannual telephone interviews with the participating mothers until the third birthday of the child give a rich data source to evaluate these outcomes. I find that the intervention increases fertility and maternal life-satisfaction and well-being, whereas the treatment does not affect maternal employment, school attendance and child care use. These results are in contrast to previous studies from the US where home visiting programs decreased fertility. |
| Keywords: | Early Childhood Intervention, Randomized Experiment, Fertility |
| JEL: | J13 J12 I21 H52 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-516&r=exp |