nep-exp New Economics Papers
on Experimental Economics
Issue of 2013‒11‒09
five papers chosen by
Daniel Houser
George Mason University

  1. Privacy concerns, voluntary disclosure of information, and unraveling: An experiment By Benndorf, Volker; Kübler, Dorothea; Normann, Hans-Theo
  2. Does Inflation Targeting Matter ? An Experimental Investigation By Camille Cornand; Cheick Kader M'Baye
  3. Can Simple Informational Nudges Increase Employee Participation in a 401(k) Plan? By Robert L. Clark; Jennifer A. Maki; Melinda Sandler Morrill
  4. 'Serving Two Masters' and the Chief Audit Executive's Communication: Experimental Evidence About Internal Auditors’ Judgments By Hoos , Florian; Kochetova-Kozloski, Natalia; D'Arcy , Anne
  5. Do Single-Sex Classes Affect Achievement? A Study in a Coeducational University By Alison L. Booth; Lina Cardona-Sosa; Patrick Nolen

  1. By: Benndorf, Volker; Kübler, Dorothea; Normann, Hans-Theo
    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 payout, 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,quantalresponse equilibrium,inequality aversion
    JEL: C72 C90 C91
    Date: 2013
  2. By: Camille Cornand (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure [ENS] - Lyon); Cheick Kader M'Baye (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure [ENS] - Lyon)
    Abstract: We use laboratory experiments with human subjects to test the relevance of di-fferent inflation targeting regimes. In particular and within the standard New Keynesian model, we evaluate to what extent communication of the inflation target is relevant to the success of inflation targeting. We -find that if the central bank only cares about inflation stabilization, announcing the inflation target does not make a difference in terms of macroeconomic performances compared to a standard active monetary policy. However, if the central bank also cares about the stabilization of the economic activity, communicating the target helps to reduce the volatility of inflation, interest rate, and output gap although their average levels are not aff-ected. This finding is consistent with those of the theoretical literature and provides a rationale for the adoption of a flexible inflation targeting regime.
    Keywords: Inflation targeting; inflation expectations; monetary policy; New Keynesian model; laboratory experiments
    Date: 2013–10–28
  3. By: Robert L. Clark; Jennifer A. Maki; Melinda Sandler Morrill
    Abstract: We report results from a field experiment in which a randomized subset of newly hired workers at a large financial institution received a flyer containing information about the employer’s 401(k) plan and the value of contributions compounding over a career. Younger workers who received the flyer were significantly more likely to begin contributing to the plan relative to their peers in the control group. Many workers do not participate in their employers’ supplemental retirement savings programs, even though these programs offer substantial tax advantages and immediate returns due to matching contributions. From a survey of new hires we find that many workers choose not to contribute to the plan because they have other financial priorities. However, some non-participants lack the financial literacy to appreciate the benefit. These findings indicate that simple informational interventions can nudge workers to participate in retirement saving plans and enhance individual well-being and retirement income security.
    JEL: J26 J32
    Date: 2013–10
  4. By: Hoos , Florian; Kochetova-Kozloski, Natalia; D'Arcy , Anne
    Abstract: The position of an internal audit function as a “servant of two masters” (i.e. management and the audit committee) may lead to a conflict of priorities. In this setting, the tone at the top set by the Chief Audit Executive (CAE) plays a critical role in balancing the potentially competing preferences of management and the audit committee. We examine whether the emphasis in the CAE’s communication with internal auditors influences their judgments. We also test whether such influence is more pronounced in an internal audit task where potential for justification created through task complexity and ambiguity is high, as compared to low. We test two hypotheses in a mixed experimental design with the communicated preferences of the CAE to subordinates (cost reduction vs. effectiveness of internal controls) as a between-subjects factor, and levels of opportunity for justification (low, medium, high) manipulated within subjects. Findings suggest that the emphasis in the CAE’s message can bias internal auditors’ judgments, and such influence is more pronounced when the opportunity for justification is high, resulting in the elimination of a significantly greater number of internal controls and the design of less effective processes.
    Keywords: corporate governance; internal audit function; effectiveness; internal controls
    JEL: G34 M42 M48
    Date: 2013–07–28
  5. By: Alison L. Booth; Lina Cardona-Sosa; Patrick Nolen
    Abstract: We examine the effect of single-sex classes on the pass rates, grades, and course choices of students in a coeducational university. We randomly assign students to all-female, all-male, and coed classes and, therefore, get around the selection issues present in other studies on single-sex education. We find that one hour a week of single-sex education benefits females: females are 7.5% more likely to pass their first year courses and score 10% higher in their required second year classes than their peers attending coeducational classes. We find no effect of single-sex education on the subsequent probability that a female will take technical classes and there is no effect of single-sex education for males. Furthermore we are able to examine potential mechanisms and indirect effects of single-sex education. We find that the effects of single-sex education do not appear to be driven by a tracking mechanism and that there are indirect effects on class attendance and completion of optional assignments for females. However, the indirect effects cannot explain much of the effect of single-sex education for females.
    Keywords: Gender, single-sex groups, cognitive ability. Classification JEL:C9, C91, C92, J16, J16, J24
    Date: 2013–10

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