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on Experimental Economics |
| By: | Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Reme, Bjørn-Atle (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | We study how leader compensation affects public goods provision. We report from a lab experiment with four treatments, where the base treatment was a standard public goods game with simultaneous contribution decisions, while the three other treatments allowed participants to volunteer to be the leader in their group and make their contribution before the others. In the three leader treatments, we manipulate the level of compensation given to the leader. Our main finding is that a moderate compensation to the leader is highly beneficial, it increases the average contribution by 63% relative to a situation where the leader is not compensated and by more than 90% relative to a situation without a leader. A further increase in the leader compensation, however, is detrimental to public goods provision; it attracts less morally motivated leaders and creates a social crowding-out effect that makes it harder to lead by example. Finally, we report from a survey showing that the social crowding-out effect is also present in the population at large. We argue that the main findings of the paper are important in many real life settings where we would like to use economic incentives to encourage people to lead by example. |
| Keywords: | Lab experiment; leadership; compensation. |
| JEL: | C91 C92 D63 |
| Date: | 2014–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2014_002&r=exp |
| By: | Gerlinde Fellner; Yoshio Iida; Sabine Kröger; Erika Seki |
| Abstract: | We study voluntary contribution behavior of individuals who vary in their ability to contribute to a joint project under different information scenarios. We investigate a situation with two types who vary only in their external marginal return (low and high). Results of a laboratory experiment suggest that, when group members are not aware of the heterogeneity in their group, both types make the same nominal contributions. When agents are informed about the heterogeneity, contributions increase but differently by type. High types contribute only more with sufficient social exposure, i.e., when information on the type of the contributor is available. Low types, on the other hand, contribute only more when they are aware of the distribution of types, but have no information on the type of the contributor. |
| Keywords: | Public goods, Voluntary contribution mechanism, Heterogeneity, Information, Norms |
| JEL: | C9 H41 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1411&r=exp |
| By: | Leonardo Becchetti (University of Rome Tor Vergata); Vittorio Pelligra (University of Cagliari, CRENoS) |
| Abstract: | We examine by means of an artefactual field experiment on a representative sample of Italian adults, the impact of information and belief elicitation on charitable-giving when donors know (or express their beliefs on) what the organizations received in terms of aggregate donations in the past. We find that both effects are significant in terms of increase in the share of donors to a health related (bone marrow transplant) organization. The observed findings are consistent with expressed health wellbeing preferences of donors and with the gap between the organization position in the ranking of aggregate donations (last) and the far higher expected position of the same organization in donors’ beliefs. The effect is robust also in gender and age sample splits. Inequity aversion and warm glow depending on the expected marginal benefit of increased donations to the specific charity are two observationally equivalent explanations for our findings. Another related consequence of information disclosure is that the share of participants deciding not to donate at all becomes significantly lower when information on aggregate past donations is provided. |
| Keywords: | altruism, warm glow, strategic information, charitable-giving, artefactual field experiment |
| JEL: | C91 D64 H00 |
| Date: | 2014–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:306&r=exp |
| By: | Buechel, Berno; Mechtenberg, Lydia; Petersen, Julia |
| Abstract: | We conducted a multi-wave field experiment to study the interaction of peer effects and self-control among undergraduate students. We use a behavioral measure of self-control based on whether students achieve study related goals they have set for themselves. We find that both self-control and the number of talented friends increase students’ performance. We then set out to test the theoretical prediction of Battaglini, Bénabou and Tirole (2005) that (only) sufficiently self-controlled individuals profit from interactions with peers. We find that peers with high self-control are more likely to connect to others, have a higher overall number of friends and have a higher number of talented friends. Moreover, positive news about self-controlled behavior of their peers increases students’ own perseverance. Hence, our findings are consistent with the model of Battaglini, Bénabou and Tirole. In addition, we find that female students are more likely to have high self-control, but do not outperform male students. One reason for this is that female students have a lower number of talented friends than their male counterparts, thereby profiting less from positive peer effects. |
| Keywords: | Self-control; Peer Influence; Social Networks; Goals; Time preferences; Procrastination; Willpower; School Performance; Experiment |
| JEL: | C93 D85 I21 J24 |
| Date: | 2014–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53658&r=exp |
| By: | Charles Noussair (Tilburg University); Steven Tucker (University of Waikato) |
| Abstract: | Kirchler et al. (2012) make a number of contributions to experimental research on asset markets. One of their findings is that the levels of cash holdings of traders do not affect asset prices when fundamentals follow a constant time trajectory. We report a new experiment in which we replicate their findings for the specific cash levels they use. However, a new treatment is also included, in which cash holdings are at high levels early in the life of the asset. In this treatment, overpricing and market bubbles are observed, indicating that greater cash levels are indeed associated with higher prices, even when fundamental values are constant over time. |
| Keywords: | experimental asset markets; bubbles |
| JEL: | C90 D03 G02 G12 |
| Date: | 2014–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:14/03&r=exp |
| By: | Güth, Werner; Pull, Kerstin; Stadler, Manfred; Zaby, Alexandra |
| Abstract: | Based on the acquiring-a-company game of Samuelson and Bazerman (1985), we theoretically and experimentally analyze the acquisition of a firm. Thereby we compare cases of symmetrically and asymmetrically informed buyers and sellers. This setting allows us to predict and test the effects of information disclosure as prescribed by two recently implemented directives of the European Union, the Transparency and the Takeover-Bid Directive. Our theoretical and experimental results suggest a welfare-enhancing effect of compulsory information disclosure. Hence, the EU Transparency and the EU Takeover-Bid Directive should both be welfare enhancing. -- |
| Keywords: | acquisition of firms,disclosure of private information,experimental economics |
| JEL: | C91 D61 D82 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:69&r=exp |
| By: | Zhixin Dai (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I); Robin M. Hogarth (Universitat Pompeu Fabra - Universitat Pompeu Fabra); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I) |
| Abstract: | We investigate the impact of various audit schemes on the future provision of public goods, when contributing less than the average of the group is sanctioned exogenously and the probability of an audit is unknown. We study how individuals update their beliefs about the probability of being audited, both before and after audits are definitely withdrawn. We find that when individuals have initially experienced systematic audits, they decrease both their beliefs and their contributions almost immediately after audits are withdrawn. In contrast, when audits were initially less frequent and more irregular, they maintain high beliefs about the probability of being audited and continue cooperating long after audits have been withdrawn. Inconsistency in experiencing audits across time clearly increases the difficulty of learning the true audit probabilities. Thus, conducting less frequent and irregular audits with higher fines can increase efficiency dramatically. |
| Keywords: | Ambiguity; audits; sanctions; beliefs, cooperation; public goods; experiment |
| Date: | 2014–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00944500&r=exp |
| By: | Schlicht, Ekkehart |
| Abstract: | Abstract This note offers two comments on the article “Social Influences towards Conformism in Economic Experiments” by Hargreaves Heap that is to appear in the Economics e-Journal. One relates to the concept of conformism, the other lines out some phenomena where an explicit recognition of group processes, such as conformism, may be analytically helpful. |
| Keywords: | Conformism; relative income hypothesis; reference group behavior; social multiplier; social preferences; self-classification; group polarization |
| JEL: | C91 C92 D43 H41 J41 D1 |
| Date: | 2014–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:18376&r=exp |
| By: | Dorsett, Richard (National Institute of Economic and Social Research (NIESR)); Oswald, Andrew J. (University of Warwick) |
| Abstract: | Many politicians believe they can intervene in the economy to improve people's lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy. |
| Keywords: | randomized controlled trials, government policy, in-work benefits, wage subsidies, well-being, happiness |
| JEL: | I31 D03 D60 H11 J38 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7943&r=exp |
| By: | Almås, Ingvild (Dept. of Economics, Norwegian School of Economics and Business Administration); Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Salvanes, Kjell G. (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | This paper studies the role of family background in explaining differences in the willingness to compete. By combining data from a lab experiment conducted with a representative sample of adolescents in Norway and high quality register data on family background, we show that family background is fundamental in two important ways. First, boys from low socioeconomic status families are less willing to compete than boys from better off families, even when controlling for confidence, performance, risk preferences, time preferences, social preferences, and psychological traits. Second, family background is crucial for understanding the large gender difference in the willingness to compete. Girls are much less willing to compete than boys among children from better off families, whereas we do not find any gender difference in willingness to compete among children from low socioeconomic status families. Our data suggest that the main mechanism explaining the role of family background is that the father’s socioeconomic status has a large effect on the boys’ willingness to compete, but no effect on the girls. We do not find any effect on the willingness to compete for boys or girls of the mother’s socioeconomic status or other family characteristic that may potentially shape competition preferences, including parental equality and sibling rivalry. |
| Keywords: | Family background; socioeconomic status; lab experiment. |
| JEL: | C91 C92 D63 |
| Date: | 2014–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2014_003&r=exp |
| By: | Hopfensitz, Astrid; Miquel-Florensa, Pepita |
| Abstract: | Due to its long-lasting internal armed conflict, Colombia has witnessed a rupture in social networks. The network composition was altered for municipalities with high in- or out-flows of displaced individuals, in addition to the individual impact on the displaced. We use a controlled laboratory experiment and questionnaires to measure the impact of displacement on public good contributions at the Colombian ‘Eje Cafetero’. Abstract public good contributions are related to actual community involvement and observed to be significantly higher in regions with a history of high pressure or intensity of displacement. Contributions are particularly high by vulnerable individuals in high out-flow areas (e.g. women). A local control institution can further increase contributions, independent of the individuals’ personal preference for such control. |
| Keywords: | Colombia, conflict, displacement, public good games |
| Date: | 2014–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:27881&r=exp |
| By: | Avdeenko, Alexandra; Gilligan, Michael J. |
| Abstract: | Over the past decade the international community, especially the World Bank, has conducted programs to increase local public service delivery in developing countries by improving local governing institutions and creating social capital. This paper evaluates one such program in Sudan to answer the question: Can the international community change the grassroots civic culture of developing countries to increase social capital? The paper oers three contributions. First, it uses lab-in-the-eld measures to focus on the eects of the program on pro-social preferences without the confounding in uence of any program- induced changes on local governing institutions. Second, it tests whether the program led to denser social networks in recipient communities. Based on these two measures, the eect of the program was a precisely estimated zero. However, in a retrospective survey, respondents from program communities characterized their behavior as being more pro-social and their communities more socially cohesive. This leads to a third contribution of the paper: it provides evidence for the hypothesis, stated by several scholars in the literature, that retrospective survey measures of social capital oer biased evidence of a positive eect of these programs. Regardless of one's faith in retrospective self-reported survey measures, the results clearly point to zero impact of the program on pro-social preferences and social network density. Therefore, if the increase in self-reported behaviors is accurate, it must be because of social sanctions that enforce compliance with pro-social norms through mechanisms other than the social networks that were measured. |
| Keywords: | Social Capital,Community Development and Empowerment,Housing&Human Habitats,Social Cohesion,Governance Indicators |
| Date: | 2014–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6772&r=exp |
| By: | Arbel, Yuval (School of Business, Carmel Academic Center); Bar-El, Ronen (Open University of Israel); Siniver, Erez (College of Management, Rishon Lezion Campus); Tobol, Yossi (Jerusalem College of Technology (JTC)) |
| Abstract: | We examine the effect of adherence to behavioral codes, as measured by the degree of religiosity, on the level of honesty by conducting under-the-cup die experiments. The findings suggest that behavioral codes, which prohibit lying, offset the monetary incentive to lie. The highest level of honesty is found among young religious females while the lowest is found among secular females. Moreover, when the monetary incentive to lie is removed, the tendency of secular subjects to lie disappears. Given the strict separation between the secular and religious education systems the research findings confirm the importance of education in instilling ethical values. |
| Keywords: | honesty, religion, behavioral codes, ethical values |
| JEL: | C91 D63 Z12 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7946&r=exp |
| By: | Michael Woodford |
| Abstract: | A model is proposed in which stochastic choice results from noise in cognitive processing rather than random variation in preferences. The mental process used to make a choice is nonetheless optimal, subject to a constraint on available information-processing capacity that is partially motivated by neurophysiological evidence. The optimal information-constrained model is found to offer a better fit to experimental data on choice frequencies and reaction times than either a purely mechanical process model of choice (the drift-diffusion model) or an optimizing model with fewer constraints on feasible choice processes (the rational inattention model). |
| JEL: | C25 C91 D87 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19897&r=exp |
| By: | Maruta, Toshimasa; Okada, Akira |
| Abstract: | Abstract: We consider the formation and long-run stability of cooperative groups in a social dilemma situation where the pursuit of individual interests conflicts with the maximization of social welfare. The adaptive play model of Young (1993) is applied to a game of group formation where voluntary participants negotiate for an institution to enforce them to cooperate. For a class of group formation games with two types, the stochastically stable equilibrium can be characterized in terms of the Nash products of the associated hawk-dove games, which summarize the strategic interaction among the individuals in the game. |
| Keywords: | Adaptive play, cooperation, evolution, group formation, hawk-dove game, social dilemma, stochastic stability, voluntary participation |
| JEL: | C70 C72 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:econdp:2014-03&r=exp |
| By: | Emla Fitzsimons (Institute for Fiscal Studies and Institute of Education, University of London); Bansi Malde (Institute for Fiscal Studies); Alice Mesnard (Institute for Fiscal Studies); Marcos Vera-Hernandez (Institute for Fiscal Studies and University College London) |
| Abstract: | Incorrect knowledge of the health production function may lead to inefficient household choices, and thereby to the production of suboptimal levels of health. This paper studies the effects of a randomised intervention in rural Malawi which, over a six-month period, provided mothers of young infants with information on child nutrition without supplying any monetary or in-kind resources. A simple model first investigates theoretically how nutrition and other household choices including labour supply may change in response to the improved nutrition knowledge observed in the intervention areas. We then show empirically that, in line with this model, the intervention improved child nutrition, household consumption and consequently health. These increases are funded by an increase in male labor supply. We consider and rule out alternative explanations behind these findings. This paper is the first to establish that non-health choices, particularly parental labor supply, are affected by parents’ knowledge of the child health production function. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:14/02&r=exp |