New Economics Papers
on Experimental Economics
Issue of 2013‒12‒29
27 papers chosen by

  1. Do markets erode social responsibility? By Björn Bartling; Roberto A. Weber
  2. Partner Selection into Policy Relevant Field Experiments By Michèle Belot (University of Edinburgh) and Jonathan James (University of Bath)
  3. The Spillover Effects of Monitoring: A Field Experiment By Michèle Belot (University of Edinburgh) Marina Schröder (University of Magdeburg)
  4. Changing Eating Habits - A Field Experiment in Primary Schools By Michèle, Belot; Jonathan, James; Patrick, Nolen
  5. How private is private information? The ability to spot deception in an economic game By Michèle Belot (University of Edinburgh) Jeroen van de Ven (Amsterdam Center for Law and Economics, University of Amsterdam, and Tinbergen Institute)
  6. Adaptive vs. Eductive Learning: Theory and Evidence By John Duffy; Te Bao
  7. Discriminatory Taxes are Unpopular - Even when they are Efficient and Distributionally Fair By Rupert Sausgruber; Jean-Robert Tyran
  8. How Do Experienced Traders Respond to Inflows of Inexperienced Traders? An Experimental Analysis By Eizo Akiyama; Nobuyuki Hanaki; Ryuichiro Ishikawa
  9. Reputation and Social (Dis)approval in Feedback Mechanisms: An Experimental study By Marianne Lumeau; David Masclet; Thierry Pénard
  10. Hidden Benefits of Reward: A Field Experiment on Motivation and Monetary Incentives By Kvaløy, Ola; Nieken, Petra; Schöttner, Anja
  11. Risk aversion relates to cognitive ability: Fact or Fiction? By Ola Andersson; Håkan J. Holm; Jean-Robert Tyran; Erik Wengström
  12. Top Contributors as Punishers By Daniela Grieco; Marco Faillo; Luca Zarri
  13. How Does Risk Management Influence Production Decisions? Evidence From a Field Experiment By Xavier Gine; James Vickery; Shawn Cole
  14. Endogenous Stratification in Randomized Experiments By Alberto Abadie; Matthew M. Chingos; Martin R. West
  15. Two Studies on the Interplay between Social Preferences and Individual Biological Features By S., Sanchez Pages; E., Tureigano
  16. Second Thoughts on Free Riding By Ulrik H. Nielsen; Jean-Robert Tyran; Erik Wengström
  17. Group Lending or Individual Lending? Evidence from a Randomized Field Experiment in Rural Mongolia By Attanasio, O.; Augsburg, B.; Haas, R. de; Fitzsimons, E.; Harmgart, H.
  18. Deciding for Others Reduces Loss Aversion By Ola Andersson; Håkan J. Holm; Jean-Robert Tyran; Erik Wengström
  19. Better sexy than flexy? A lab experiment assessing the impact of perceived attractiveness and personality traits on hiring decisions By S. BAERT; L. DECUYPERE
  20. Migrant Remittances and Information Flows: Evidence from a Field Experiment By Batista, Catia; Narciso, Gaia
  21. Promises and Expectations By Florian Ederer; Alexander Stremitzer
  22. Who is the fairest of them all? The independent effect of attractive features and self-perceived attractiveness on cooperation among women By Munoz-Reyes, J. A.; Pita, M.; Arjona, M.; Sanchez-Pages, S.; Turiegano, E.
  23. Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico By Gabriela Calderon; Jesse M. Cunha; Giacomo De Giorgi
  24. Growth and inequality in public good games By Tsakas E.; Gaechter S.; Mengel F.; Vostroknutov A.
  25. Evidential equilibria: Heuristics and biases in static games By Sanjit Dhami; Ali al-Nowaihi
  26. Intrinsic motivation, effort and the call to public service By Banuri, Sheheryar; Keefer, Philip
  27. Longer Interviews May Not Affect Subsequent Survey Participation Propensity By Lynn, Peter

  1. By: Björn Bartling; Roberto A. Weber
    Abstract: This paper studies the stability of socially responsible behavior in markets. We develop a laboratory product market in which low-cost production creates a negative externality for third parties, but where alternative production with higher costs entirely mitigates the externality. Our data reveal a robust and persistent preference for avoiding negative social impact in the market, reflected both in the composition of product types and in a price premium for socially responsible products. Socially responsible behavior in the market is generally robust to varying market characteristics, such as increased seller competition and limited consumer information. Fair behavior in the market is slightly lower than that measured in comparable individual decisions.
    Keywords: Social responsibility, markets, externalities, competition, fairness
    JEL: C92 D03 D62
    Date: 2013–11
  2. By: Michèle Belot (University of Edinburgh) and Jonathan James (University of Bath)
    Abstract: This study investigates the issue of self-selection of stakeholders into participation and collaboration in policy-relevant experiments. We document and test the implications of self-selection in the context of randomised policy experiment we conducted in primary schools in the UK. The main questions we ask are (1) is there evidence of selection on key observable characteristics likely to matter for the outcome of interest and (2) does selection matter for the estimates of treatment effects. The experimental work consists in testing the effects of an intervention aimed at encouraging children to make more healthy choices at lunch. We recruited schools through local authorities and randomised schools across two incentive treatments and a control group. We document the selection taking place both at the level of local authorities and at the school level. Overall we find mild evidence of selection on key observables such as obesity levels and socio-economic characteristics. We find evidence of selection along indicators of involvement in healthy lifestyle programmes at the school level, but the magnitude is small. Moreover, we do not find significant differences in the treatment effects of the experiment between variables which, albeit to a mild degree, are correlated with selection into the experiment. To our knowledge, this is the first study providing direct evidence on the magnitude of self-selection in field experiments.
    JEL: C93 I18 J13
    Date: 2013–12–19
  3. By: Michèle Belot (University of Edinburgh) Marina Schröder (University of Magdeburg)
    Abstract: We provide field experimental evidence of the effects of monitoring in a context where productivity is multi-dimensional and only one dimension is monitored and incentivised. We hire students to do a job for us. The job consists of identifying euro coins. We study the effects of monitoring and penalising mistakes on work quality, and evaluate spillovers on non-incentivised dimensions of productivity (punctuality and theft). We find that monitoring improves work quality only if incentives are large, but reduces punctuality substantially irrespectively of the size of incentives. Monitoring does not affect theft, with ten per cent of participants stealing overall. Our setting also allows us to disentangle between possible theoretical mechanisms driving the adverse effects of monitoring. Our findings are supportive of a reciprocity mechanism, whereby workers retaliate for being distrusted.
    Keywords: counterproductive behaviour, monitoring, experiment.
    JEL: C93 J24 J30 M42 M52
    Date: 2013–12–19
  4. By: Michèle, Belot; Jonathan, James; Patrick, Nolen
    Abstract: We conduct a field experiment in 31 primary schools in England to test whether incentives to eat fruit and vegetables help children develop healthier habits. The intervention consists of rewarding children with stickers and little gifts for a period of four weeks for choosing a portion of fruit and vegetables at lunch. We compare the effects of two incentive schemes (competition and piece rate) on choices and consumption over the course of the intervention as well as once the incentives are removed and six months later. We find that the intervention had positive effects, but the effects vary substantially according to age and gender. However, we find little evidence of sustained long term effects, except for the children from poorer socio‐economic backgrounds.
    Keywords: Incentives, Health, Habits, Child nutrition, Field experiment,
    Date: 2013
  5. By: Michèle Belot (University of Edinburgh) Jeroen van de Ven (Amsterdam Center for Law and Economics, University of Amsterdam, and Tinbergen Institute)
    Abstract: We provide experimental evidence on the ability to detect deceit in a buyer-seller game with asymmetric information. Sellers have private information about the buyer’s valuation of a good and sometimes have incentives to mislead buyers. We examine if buyers can spot deception in face-to-face encounters. We vary (1) whether or not the buyer can interrogate the seller, and (2) the contextual richness of the situation. We find that the buyers’ prediction accuracy is above chance levels, and that interrogation and contextual richness are important factors determining the accuracy. These results show that there are circumstances in which part of the information asymmetry is eliminated by people’s ability to spot deception.
    Keywords: Deception, lie detection, asymmetric information, face-to-face interaction, experiment.
    JEL: C91 D82 K4
    Date: 2013–12–19
  6. By: John Duffy; Te Bao
    Abstract: Adaptive learning and eductive learning are two widely used ways of modeling learning behavior in macroeconomics. Both approaches yield restrictions on model parameters under which agents are able to learn a rational expectation equilibrium (REE) but these restrictions do not always overlap with one another. In this paper we report on an experiment where we exploit such differences in stability conditions under adaptive and eductive learning to investigate which learning approach provides a better description of the learning behavior of human subjects. Our results suggest that adaptive learning is a better predictor of whether a system converges to REE, while the path by which the system converges appears to be a mixture of both adaptive and eductive learning model predictions.
    Keywords: Rational Expectations, Adaptive Learning, Eductive Learning, Experimental Economics.
    JEL: C91 C92 D83 D84
    Date: 2013–12
  7. By: Rupert Sausgruber (Department of Economics, Vienna University of Economics and Business); Jean-Robert Tyran (Department of Economics, Copenhagen University)
    Abstract: We explore the political acceptance of taxation in commodity markets. Participants in our experiment earn incomes by trading and must collectively choose one of two tax regimes to raise a given tax revenue. A "uniform tax" (UT) imposes the same tax rate on all markets and is fair in that it yields the same – but low – income to participants in all markets. The "discriminatory tax" (DT) imposes a higher burden on markets with inelastic demand and is therefore efficient but it is also unfair in that incomes are unequal across markets. We find that DT are unpopular, as predicted. Surprisingly, however, DT remain unpopular when they are both efficient and produce a fair (equal) distribution. We conclude that non-discrimination (equal treatment) is a salient fairness principle in taxation that shapes voting on commodity taxes above and beyond concerns for efficiency and equal distribution.
    Keywords: taxation, behavioral public economics, voting, efficiency, fairness
    JEL: C92 H21 D72
    Date: 2013–11
  8. 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: We conducted asset market experiments where one experienced subject (EH) interacts with five inexperienced subjects (1EH5H) to investigate how EHs change their price forecasts and trading strategies when faced with strategic uncertainty caused by inflows of inexperienced subjects. Only half the EHs initially forecasted prices deviating more from the fundamental values in 1EH5H than in the final round of the experiment in which they had previously participated. Furthermore, the majority of our EHs did not change their trading behaviour. Many EHs act as price stabilisers when the inflow of inexperienced subjects is not associated with other changes in market conditions.
    Keywords: strategic uncertainty; experience; heterogeneity; experiment; asset markets
    Date: 2013–12
  9. By: Marianne Lumeau (University of Paris 13, CEPN and Labex ICCA, France); David Masclet (CREM UMR CNRS 6211, Université de Rennes 1, France); Thierry Pénard (Université de Rennes 1, CREM UMR CNRS 6211, France)
    Abstract: Several studies have highlighted the role of feedback mechanisms in the success of electronic marketplaces. In this current experiment, we attempt to isolate experimentally the role of reputation and social (dis)approval associated to ratings using a trust game experiment with the opportunity to rate one’s partner (Keser, 2003; Masclet and Penard, 2012). For this purpose we compare two experimental feedback systems that differ in the information that is publically available to participants. In a first feedback system, individuals’ rating profiles are public whereas in the second feedback system this information is private. Our findings indicate that both private and public ratings improve cooperation. However, we observe that private feedbacks are less efficient in enhancing trust and trustworthiness than public systems. This is mainly due to fact that fewer ratings are assigned in the private feedback system than in the public system. Altogether these findings suggest that, even if social (dis)approval matters, publicly observed feedback remains crucial to induce honest behaviors and improve efficiency on markets characterized by imperfect information.
    Keywords: Reputation, (dis)approval, Experiment, Trust Game
    Date: 2013–12
  10. By: Kvaløy, Ola; Nieken, Petra; Schöttner, Anja
    Abstract: We conducted a field experiment in a controlled work environment to investigate the effect of motivational talk and its interaction with monetary incentives. We find that motivational talk significantly improves performance only when accompanied by performance pay. Moreover, performance pay slightly reduces performance unless it is accompanied by motivational talk. These effects also carry over to the quality of work. Performance pay alone leads to more mistakes. Adding motivational talk makes the difference. In treatments with performance pay, motivational talk increases output by about 20 percent and reduces the ratio of mistakes by more than 40 percent.
    Keywords: Verbal Motivation; Performance Pay; Field Experiment
    JEL: C93 M52 J33
    Date: 2013–12
  11. By: Ola Andersson (Research Institute of Industrial Economics (IFN)); Håkan J. Holm (Lund University - Department of Economics); Jean-Robert Tyran (Centre for Economic Policy Research (CEPR), University of Vienna, Department of Economics, Copenhagen University); Erik Wengström (Department of Economics, Copenhagen University)
    Abstract: Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation might be spurious. We recruit a large subject pool drawn from the general Danish population for our experiment. By presenting subjects with choice tasks that vary the bias induced by random choices, we are able to generate both negative and positive correlations between risk aversion and cognitive ability. Structural estimation allowing for heterogeneity of noise yields no significant relation between risk aversion and cognitive ability. Our results suggest that cognitive ability is related to random decision making rather than to risk preferences.
    Keywords: risk preference, cognitive ability, experiment, noise
    JEL: C81 C91 D12 D81
    Date: 2013–09–04
  12. By: Daniela Grieco (Department of Economics (University of Verona)); Marco Faillo (Department of Economics, University of Trento); Luca Zarri (Department of Economics (University of Verona))
    Abstract: We experimentally investigate cooperation within a finitely repeated public goods game framework where peer punishment is possible but, unlike previous work, in each round access to sanctioning power is exclusively awarded to the group’s top contributor. We compare this mechanism with a treatment where the right to punish is assigned to one randomly selected subject (O’Gorman et al., 2009), as well as with classic discretionary punishment (Fehr and Gächter, 2000) and with ‘legitimate punishment’ (Faillo et al., 2013). We show that the “Top Contributors as Punishers” mechanism is extremely effective in both raising cooperation and welfare, compared to the randomly selected punisher treatment and to discretionary punishment. This interestingly occurs despite the fact that the (first and second-order) free riding problem may lead subjects to perceive the new institution as an excessively demanding one: in fact, the lure of the top contributor role induces many subjects to significantly contribute and many top contributors to incur relevant costs to sanction others.
    Keywords: Public Goods Games; Cooperation; Legitimacy; Solitary Punishment; Behavioral Mechanism Design.
    JEL: C73 C91 D02 D63
    Date: 2013–12
  13. By: Xavier Gine (World Bank); James Vickery (Federal Reserve Bank of New York); Shawn Cole (Harvard Business School)
    Abstract: Rainfall variation and other weather shocks are a key source of risk for many firms and households, particularly in the developing world. We study how the availability of risk management instruments designed to hedge rainfall risk affects investment and production decisions of small- and medium-scale Indian farmers. We use a field experiment approach, involving randomized provision of rainfall insurance to farmers. While we find little effect on total expenditures, increased insurance induces farmers to substitute production activities towards high-return but higher-risk cash crops, consistent with theoretical predictions. Our results support the view that financial innovation may help ameliorate costs associated with weather variability and other types of risk.
    Date: 2013
  14. By: Alberto Abadie; Matthew M. Chingos; Martin R. West
    Abstract: Researchers and policy makers are often interested in estimating how treatments or policy interventions affect the outcomes of those most in need of help. This concern has motivated the increasingly common practice of disaggregating experimental data by groups constructed on the basis of an index of baseline characteristics that predicts the values that individual outcomes would take on in the absence of the treatment. This article shows that substantial biases may arise in practice if the index is estimated, as is often the case, by regressing the outcome variable on baseline characteristics for the full sample of experimental controls. We analyze the behavior of leave-one-out and repeated split sample estimators and show that in realistic scenarios they have substantially lower biases than the full sample estimator. We use data from the National JTPA Study and the Tennessee STAR experiment to demonstrate the performance of alternative estimators and the magnitude of their biases.
    JEL: C01 C21 C9
    Date: 2013–12
  15. By: S., Sanchez Pages; E., Tureigano
    Abstract: Biological features and social preferences have been studied separately as factors influencing human strategic behaviour. We run two studies in order to explore the interplay between these two sets of factors. In the first study, we investigate to what extent social preferences may have some biological underpinnings. We use simple one-shot distribution experiments to attribute subjects one out of four types of social preferences: Self-interested (SI), Competitive (C), Inequality averse (IA) and Efficiency-seeking (ES). We then investigate whether these four groups display differences in their levels of facial Fluctuating Asymmetry (FA) and in proxies for exposure to testosterone during phoetal development and puberty. We observe that development-related biological features and social preferences are relatively independent. In the second study, we compare the relative weight of these two set of factors by studying how they affect subjects’ behaviour in the Ultimatum Game (UG). We find differences in offers made and rejection rates across the four social preference groups. The effect of social preferences is stronger than the effect of biological features even though the latter is significant. We also report a novel link between facial masculinity (a proxy for exposure to testosterone during puberty) and rejection rates in the UG. Our results suggest that biological features influence behaviour both directly and through their relation with the type of social preferences that individuals hold.
    Keywords: Testosterone, Ultimatum Game, Fluctuating Asymmetry, Facial masculinity, 2D:4D, Social preferences,
    Date: 2013
  16. By: Ulrik H. Nielsen (Department of Economics, Copenhagen University); Jean-Robert Tyran (Centre for Economic Policy Research (CEPR), University of Vienna, Department of Economics, Copenhagen University); Erik Wengström (Department of Economics, Copenhagen University)
    Abstract: We use the strategy method to classify subjects into cooperator types in a large-scale online Public Goods Game and find that free riders spend more time on making their decisions than conditional cooperators and other cooperator types. This result is robust to reversing the framing of the game and is not driven by free riders lacking cognitive ability, confusion, or natural swiftness in responding. Our results suggest that conditional cooperation serves as a norm and that free riders need time to resolve a moral dilemma.
    Keywords: Response Time, Free Riding, Public Goods, Experiment
    JEL: C70 C90 D03
    Date: 2013–09–04
  17. By: Attanasio, O.; Augsburg, B.; Haas, R. de; Fitzsimons, E.; Harmgart, H. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: We present evidence from a randomized field experiment in rural Mongolia on the comparative poverty impact of group versus individual microcredit. We find a positive impact of group loans but not of individual loans on entrepreneurship and food consumption. Moreover, group borrowers are less likely to make informal transfers to families and friends while the opposite holds true for individual borrowers. This suggests that joint liability may deter borrowers from using loans for non-investment purposes with stronger impacts as a result. We find no difference in repayment rates between both types of microcredit.
    Keywords: Microcredit;poverty;randomized field experiment
    JEL: G21 D21 I32
    Date: 2013
  18. By: Ola Andersson (Research Institute of Industrial Economics (IFN)); Håkan J. Holm (Lund University - Department of Economics); Jean-Robert Tyran (Centre for Economic Policy Research (CEPR), University of Vienna, Department of Economics, Copenhagen University); Erik Wengström (Department of Economics, Copenhagen University)
    Abstract: We study risk taking on behalf of others,both with and without potential losses. A large-scale incentivized experiment is conducted with subjects randomly drawn from the Danish population. On average, decision makers take the same risks for other people as for themselves when losses are excluded. In contrast, when losses are possible, decisions on behalf of others are more risky. Using structural estimation, we show that this increase in risk stems from a decrease in loss aversion when others are affected by their choices.
    Keywords: risk taking, loss aversion, experiment
    JEL: C91 D03 D81 G02
    Date: 2013–09–04
    Abstract: In this letter we present a laboratory experiment to assess the relative and independent effect of perceived attractiveness and personality traits on hiring decisions. Our results indicate that attractiveness and conscientiousness, followed by emotional stability, are important drivers of recruiters’ decisions.
    Date: 2013–12
  20. By: Batista, Catia (Universidade Nova de Lisboa); Narciso, Gaia (Trinity College Dublin)
    Abstract: Do information flows matter for remittance behavior? We design and implement a randomized control trial to quantitatively assess the role of communication between migrants and their contacts abroad on the extent and value of remittance flows. In the experiment, a random sample of 1,500 migrants residing in Ireland was offered the possibility of contacting their networks outside the host country for free over a varying number of months. We find a sizable, positive impact of our intervention on the value of migrant remittances sent. Our results exclude that the remittance effect we identify is a simple substitution effect. Instead, our analysis points to this effect being a likely result of improved information via factors such as better migrant control over remittance use, enhanced trust in remittance channels due to experience sharing, or increased remittance recipients' social pressure on migrants.
    Keywords: information flows, international migration, migrant networks, remittances, randomized control trial
    JEL: F22 J61 O15
    Date: 2013–12
  21. By: Florian Ederer (School of Management, Yale University); Alexander Stremitzer (UCLA School of Law)
    Abstract: We investigate why people keep their promises in the absence of external enforcement mechanisms and reputational effects. In a controlled economic laboratory experiment we show that exogenous variation of second-order expectations (promisors' expectations about promisees' expectations that the promise will be kept) leads to a significant change in promisor behavior. We document for the first time that a promisor's aversion to disappoint the promisee's expectation leads her to keep her promise. We propose a simple theory of lexicographic promise keeping that is supported by our results and nests the findings of previous contributions as special cases.
    Keywords: A13, C91, D03, C72, D64, K12
    Date: 2013–12
  22. By: Munoz-Reyes, J. A.; Pita, M.; Arjona, M.; Sanchez-Pages, S.; Turiegano, E.
    Abstract: The present paper analyzes the extent to which attractiveness-related variables affect cooperative behavior in women. Cooperativeness is evaluated through a Prisoner's Dilemma Game (PDG). We consider several morphometric variables related to attractiveness: Fluctuating Asymmetry (FA), Waist-Hip Ratio (WHR, Body Mass Index (BMI) and Facial Femininity (FF). These variables have been shown to predict human behavior. We also include as a control variable a score for Self-Perceived Attractiveness (SPA). We test differences in these variables according to behavior in the PDG. Our results reveal that low FA women cooperate less frequently in the PDG. We also find that women with lower WHR are more cooperative. This result contradicts the expected relation between WHR and behavior in the PDG. We show that this effect of WHR on cooperation operates through its influence on the expectation that participants hold on the cooperative intent of their counterpart. In addition, we show that the effect of attractive features on cooperation occurs independently of the participants' perception of their own appeal. Finally, we discuss our results in the context of the evolution of cooperative behavior and under the hypothesis that attractiveness is a reliable indicator of phenotypic quality.
    Keywords: Cooperation, Attractiveness, Fluctuating asymmetry, Waist-hip ratio, Body 46 Mass Index, Facial Femininity,
    Date: 2013
  23. By: Gabriela Calderon; Jesse M. Cunha; Giacomo De Giorgi
    Abstract: A large share of the poor in developing countries run small enterprises, often earning low incomes. This paper explores whether the poor performance of businesses can be explained by a lack of basic business skills. We randomized the offer of a free, 48-hour business skills course to female entrepreneurs in rural Mexico. We find that those assigned to treatment earn higher profits, have larger revenues, serve a greater number of clients, are more likely to use formal accounting techniques, and more likely to be registered with the government. Indirect treatment effects on those entrepreneurs randomized out of the program, yet living in treatment villages, are economically meaningful, yet imprecisely measured. We present a simple model of experience and learning that helps interpret our results, and consistent with the theoretical predictions, we find that "low-quality" entrepreneurs are the most likely to quit their business post-treatment, and that the positive impacts of the treatment are increasing in entrepreneurial quality.
    JEL: C93 I25 O12 O14
    Date: 2013–12
  24. By: Tsakas E.; Gaechter S.; Mengel F.; Vostroknutov A. (GSBE)
    Abstract: In a novel experimental design we study dynamic public good games in which wealth is allowed to accumulate. More precisely each agents income at the end of a period serves as her endowment in the following period. In this setting growth and inequality arise endogenously allowing us to address new questions regarding their interplay and effect on cooperation levels. We find that average cooperation levels in this setting are high between 20-60 of endowments and that amounts contributed do not decline over time. Introducing the possibility of punishment leads to lower group income, but less inequality within groups. In both treatments with and w/o punishment inequality and group income are positively correlated for poor groups with below median income, but negatively correlated for rich groups with above median income. There is very strong path dependence inequality in early periods is strongly negatively correlated with group income in later periods. These results give new insights into why people cooperate and should make us rethink previous results from the literature on repeated public good games regarding the decay of cooperation in the absence of punishment.
    Date: 2013
  25. By: Sanjit Dhami; Ali al-Nowaihi
    Abstract: Standard equilibrium concepts in game theory find it difficult to explain the empirical evidence in a large number of static games such as prisoners’ dilemma, voting, public goods, oligopoly, etc. Under uncertainty about what others will do in one-shot games of complete and incomplete information, evidence suggests that people often use evidential reasoning (ER), i.e., they assign diagnostic significance to their own actions in forming beliefs about the actions of other like- minded players. This is best viewed as a heuristic or bias relative to the standard approach. We provide a formal theoretical framework that incorporates ER into static games by proposing evidential games and the relevant solution concept- evidential equilibrium (EE). We derive the relation between a Nash equilibrium and an EE. We also apply EE to several common games including the prisoners’ dilemma and oligopoly games.
    Keywords: Evidential reasoning; causal reasoning; evidential games; social projec- tion functions; ingroups and outgroups; evidential equilibria and consistent eviden- tial equilibria; Nash equilibria; the prisoners.dilemma and oligopoly games; common knowledge and epistemic foundations.
    Date: 2013–11
  26. By: Banuri, Sheheryar; Keefer, Philip
    Abstract: Pay schemes in the public sector aim to attract motivated, high-ability applicants. A nascent literature has found positive effects of higher pay on ability and no or slightly positive effects on motivation. This paper revisits this issue with a novel subject pool, students destined for the private and public sectors in Indonesia. The analysis uses dictator games and real effort tasks to examine wage effects on a measure of motivation that exactly matches the mission of the public sector task. The model and experimental design allow for precisely measuring (1) the distribution of ability over the effort task; (2) the distribution of motivational preferences for public sector missions; and (3) outside options when choosing to work for public sector missions. Three novel conclusions emerge. First, more pro-social workers do, in fact, exert higher effort in a pro-social task. Second, in contrast to previous research, motivated individuals are more likely to join the public sector when public sector pay is low than when it is high. Third, real public sector workers exhibit greater pro-sociality than private sector workers, even for entrants into the Indonesian Ministry of Finance.
    Keywords: Public Sector Economics,Public Sector Management and Reform,Educational Sciences,Intergovernmental Fiscal Relations and Local Finance Management,Economic Stabilization
    Date: 2013–12–01
  27. By: Lynn, Peter
    Abstract: Researchers often assume that respondent burden influences survey participation propensity and that interview length is a good indicator of burden. However, there is little evidence of the effect of interview length on subsequent participation propensity, particularly for face-to-face surveys. In a randomised experiment, respondents experienced interviews of different lengths at wave 1 of a panel survey. Subsequently, they were asked to complete a self-completion questionnaire and to take part in further waves of the survey. Response rates to these subsequent tasks are compared between those administered the shorter and longer versions of the wave 1 interview. No evidence is found that wave 1 interview length affects subsequent participation propensity.
    Date: 2013–12–16

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