nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒04‒18
thirty-one papers chosen by
Daniel Houser
George Mason University

  1. Luck, Choice and Responsibility: An Experimental Study of Fairness Views By Möllerström, Johanna; Reme, Bjørn-Atle; Sørensen, Eric Ø.
  2. Behavioral determinants of home bias - theory and experiment By Dennis Dlugosch; Kristian Horn; Mei Wang
  3. Observing the Strategies Subjects Identify from Choice Data in a Repeated Prisoner's Dilemma By Tobie Cusson; Jim Engle-Warnick
  4. Fear of being left alone drives inefficient exit from partnerships. An experiment By Alexia Gaudeul; Paolo Crosetto; Gerhard Riener
  5. Selection, Tournaments, and Dishonesty By Marco Faravelli; Lana Friesen; Lata Gangadharan
  6. Real tax effects and tax perception effects in decisions on asset allocation By Fochmann, Martin; Hemmerich, Kristina
  7. Rich man and Lazarus – Asymmetric Endowments in Public-Good Experiments By Claudia Keser; Andreas Markstädter; Martin Schmidt; Cornelius Schnitzler
  8. An Experimental Study of a Common Property Renewable Resource Game in Continuous Time By Dina Tasneem; Jim Engle-Warnick; Hassan Benchekroun
  9. Cooperation and Personality By Proto, Eugenio
  10. Negative reciprocity and its relation to anger-like emotions in homogeneous and heterogeneous groups By Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
  11. Motives for Sharing in Developing Countries: Experimental Evidence from Jakarta By Ado, Akifumi; Kurosaki, Takashi
  12. Social Networks and Peer Effects at Work By Julie Beugnot; Bernard Fortin; Guy Lacroix; Marie-Claire Villeval
  13. Overcoming Moral Hazard with Social Networks in the Worksplace: An Experimental Approach By Dhillon, Amrita; Peeters, Ronald; Muge Yukse, Ayse
  14. Human well-being and in-work benefits: A randomized controlled trial By Dorsett, Richard; Oswald, Andrew J.
  15. Motivating Knowledge Agents: Can Incentive Pay Overcome Social Distance By Berg, Erland; Ghatak, Maitreesh; Manjula, R; Rajasekhar, D; Roy, Sanchari
  16. Why Blame? By Gurdal, Mehmet; Miller, Joshua B.; Rustichini, Aldo
  17. How peer-punishment affects cooperativeness in homogeneous and heterogeneous groups: A public goods experiment with social identity By Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
  18. Believing in Oneself: Can Psychological Training Overcome the Effects of Social Exclusion? By Ghoshal, Sayantan; Jana, Smarajit; Mani, Anandi; Mitra, Sandip; Roy, Sanchari
  19. The Effect of Effectiveness: Donor Response to Aid Effectiveness in a Direct Mail Fundraising Experiment By Dean Karlan; Daniel H. Wood
  20. Your Loss Is My Gain: A Recruitment Experiment With Framed Incentives By Jonathan de Quidt
  21. The role of expectations in the provision of public goods under the influence of social identity By Lankau, Matthias; Bicskei, Marianna; Bizer, Kilian
  22. Does the Unemployment Benefit Institution affect the Productivity of Workers? Evidence from a Field Experiment By Blanco, Mariana; Dalton, Patricio S.; Vargas, Juan F.
  23. Social environment and forms of governance: Monetary and non-monetary punishment and the role of emotions By Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
  24. Equilibrium Selection in Sequential Games with Imperfect Information By Jon X. Eguia; Aniol Llorente-Saguer; Rebecca Morton; Antonio Nicolò
  25. Information Disclosure through Agents: Evidence from a Field Experiment By Hunt Allcott; Richard Sweeney
  26. Trust and Identity in a Small, Post-Socialist, Post-Crisis Society By Bjornskov, Christian; Bogetic, Zeljko; Hillman, Arye; Popovic, Milenko
  27. Insensitivity to Prices in a Dictator Game By Jim Engle-Warnick; Natalia Mishagina
  28. Experiments for industrial exploration. Testing a car sharing system By Martin Tironi; Brice Laurent
  29. Simultaneous Allocation of Bundled Goods Through Auctions: Assessing the Case for Joint Bidding By Daniel Rondeau; Pascal Courty; Maurice Doyon
  30. Resources for Conflict: Constraint or Wealth? By Kyung Hwan Baik; Subhasish M. Chowdhury; Abhijit Ramalingam
  31. Impact of seasonality-adjusted flexible microcredit on repayment and food consumption : experimental evidence from rural Bangladesh By Shonchoy, Abu S.; Kurosaki, Takashi

  1. By: Möllerström, Johanna (Harvard University); Reme, Bjørn-Atle (Telenor Research, Oslo); Sørensen, Eric Ø. (NHH Norwegian School of Economics, Bergen)
    Abstract: We conduct a laboratory experiment where third-party spectators can redistribute resources between two agents, thereby offsetting the consequences of controllable and uncontrollable luck. Some spectators go to the limits and equalize all or no inequalities, but many follow an interior allocation rule previously unaccounted for by the fairness views in the literature. These interior allocators regard an agent’s choice as more important than the cause of her low income and do not always compensate bad uncontrollable luck. Instead, they condition such compensation on the agent’s decision regarding controllable luck exposure, even though the two types of luck are independent.
    Keywords: Fairness; Responsibility; Option luck; Brute luck; Experiment
    JEL: C91 D63 D81 H23
    Date: 2014–03–21
  2. By: Dennis Dlugosch; Kristian Horn; Mei Wang
    Abstract: We study portfolio diversification in an experimental decision task, where asset returns depend on a draw from an ambiguous urn. Holding other information identical and controlling for the level of ambiguity, we find that labeling assets as being familiar or from the homeland of subjects increases portfolio weights by around 25%, respectively; although the return-generating process remains unaffected. Importantly, we only find these effects when the returns of assets are highly ambiguous. Our ambiguity robust mean-variance model accurately predicts benchmark portfolio weights of the experimental control group, where assets are not labeled: subjects allocate more wealth to assets with low ambiguity. For treatment group portfolios, which show a bias towards assets with a familiar or homeland label, the model does not hold. This misdiversification against the benchmark portfolio can be rationalized via the concept of source dependence of uncertainty attitudes.
    Keywords: Home bias, ambiguity aversion, familiarity, experiment
    JEL: C91 D14 D81 G11
    Date: 2014–04
  3. By: Tobie Cusson; Jim Engle-Warnick
    Abstract: We experimentally test the ability of subjects to identify repeated-game strategies from prisoner's dilemma choice data. In the experiments, subjects use a finite state grammar to build models to fit game histories. The histories are designed to distinguish between strategies with empirical and theoretical validity. We find that subjects successfully identify unconditional, punishment, and counting strategies. When data are observationally equivalent among different strategies, punishment strategies tend to be inferred. When inferred strategies do not fit the data, they tend to be more complex than necessary and to contain positive reciprocity and forgiveness. Our experiment provides an empirical basis for repeated-game strategies and sheds new light on play in repeated games.
    Keywords: Repeated game, prisoner's dilemma, finite automata, strategies,
    JEL: C90 C73 D03
    Date: 2013–08–01
  4. By: Alexia Gaudeul (DFG RTG 1411, Friedrich-Schiller-Universität Jena); Paolo Crosetto (UMR GAEL INRA, Universite Pierre Mendes France, Grenoble); Gerhard Riener (DICE, Heinrich-Heine-Universität Düsseldorf)
    Abstract: We explore in an experiment what leads to the breakdown of partnerships. Subjects are assigned a partner and participate in a repeated public good game with stochastic outcomes. They can choose each period between staying in the public project or working on their own. There is excessive exit as subjects overestimate the likelihood their partner will leave. High barriers to exit thus improve welfare. We observe that exit is driven by failure within the common project but also by pay-off comparisons across options and beliefs about being exploited. Those considerations increasingly matter as we lower exit costs across treatments.
    Keywords: breakup, collaboration, cooperation, exit, imperfect public monitoring, moral hazard, partnerships, punishment, public good, repeated game, social risk, teams
    JEL: C23 C92 H41
    Date: 2014–04–08
  5. By: Marco Faravelli; Lana Friesen; Lata Gangadharan
    Abstract: We conduct a real effort experiment in which performance is not monitored and participants are paid according to their reported performance. Participants are paid according to a piece rate and a winner-take-all tournament and then select between the two schemes before performing the task one more time. Competition increases dishonesty and lowers output when the payment scheme is exogenously determined. Participants with a higher propensity to be dishonest are more likely to select into competition. However after selection, we find no output difference between piece rate and tournament. This is attributable to a handful of honest individuals who select competition.
    Keywords: Dishonesty, Selection, Tournament, Piece rate, Real effort experiment
    JEL: C91 K42
    Date: 2014–04
  6. By: Fochmann, Martin; Hemmerich, Kristina
    Abstract: We test the predictions of the theoretical literature initiated by the study of Domar and Musgrave (1944) with a laboratory experiment in which subjects have to decide on the composition of an asset portfolio. Our simple design enables us to distinguish between Real Tax Effects and Perception Effects when a proportional income tax, with and without a full loss offset provision, is introduced. Observed investment behavior is partially inconsistent with the theoretical predictions if we do not control for the Perception Effects. However, if we consider these effects, we find support for the theory. The isolated Perception Effects can explain the unexpected behavior observed in previous studies and has both scientific and political implications. --
    Keywords: Taxation,Domar-Musgrave Effect,Tax Perception,Risk Taking Behavior,Portfolio Choice,Behavioral Taxation
    JEL: C91 D14 H24
    Date: 2014
  7. By: Claudia Keser; Andreas Markstädter; Martin Schmidt; Cornelius Schnitzler
    Abstract: We compare voluntary contributions to a public good in a symmetric setting to those in a weakly and a strongly asymmetric setting, where the players have different, randomly allocated endowments. We observe that the group-contribution levels are not significantly different between the symmetric and the weakly asymmetric setting. In both situations, participants tend to contribute the same proportion of their respective endowment. In the strongly asymmetric situation, where one of the players has a higher endowment than the three other players together, we observe a significantly lower group contribution than in the other situations. The rich player in this situation does not contribute significantly more than the average contribution of the poor players and thus contributes a significantly lower proportion of the endowment. This player is not as greedy as the rich man in the parable but leaves not more than breadcrumbs to the poor players.
    Keywords: Experimental economics, public goods, asymmetries,
    Date: 2013–09–01
  8. By: Dina Tasneem; Jim Engle-Warnick; Hassan Benchekroun
    Abstract: We experimentally study behavior in a common property renewable resource extraction game with multiple equilibria. In the experiment, pairs of subjects competitively extract and consume a renewable resource in continuous time. We find that play evolves over time into multiple steady states, with heterogeneous extraction strategies that contain components predicted by equilibrium strategies. We find that simple rule-of-thumb strategies result in steady-state resource levels that are similar to the best equilibrium outcome. Sensitivity of aggressive strategies to the starting resource level suggests that improvement in renewable resource extraction can be attained by ensuring a healthy initial resource level. Our experiment thus provides empirical evidence for equilibrium selection in this widely used differential game, as well as evidence for the effectiveness of a resource management strategy.
    Keywords: Renewable resources, dynamic games, differential games, experimental Economics, Markovian Strategies, Common Property Resource,
    JEL: C90 C73 Q2
    Date: 2014–01–01
  9. By: Proto, Eugenio (University of Warwick)
    Abstract: Cooperating and trusting behavior may be explained by preferences over social outcomes (people care about others, are unselfish and help- ful), or attitudes to work and social responsibilities (plans have to be carried out, norms have to be followed). If the first hypothesis is true, Agreeable- ness, reporting stated empathy for others, should matter most; if the second, higher score in traits expressing attitude to work, intrinsic motivation (Con- scientiousness) should be correlated with cooperating behavior and trust. We find experimental support for the second hypothesis when subjects provide real mental effort in two treatments with identical task, differing by whether others' payment is affected.
    Keywords: Personality Traits, Cooperation, Effort Provision
    Date: 2013
  10. By: Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
    Abstract: Several studies have shown that social identity fosters the provision of public goods and enhances the willingness to reciprocate cooperative behavior of group members dependent on the social environment. Yet, the question of how social identity affects negative reciprocity in identityhomogeneous and -heterogeneous groups has received only little attention. Consequently, we seek to fill this gap by examining whether social identity affects individuals' willingness to sanction deviating group members in a public good context. Moreover, we devote particular attention to the role of anger-like emotions in negative reciprocity. To test our hypotheses we employ one-shot public good games in strategy method with induced social identity. Our results indicate that members of identity homogeneous groups punish much less often and in smaller amounts than of identity heterogeneous groups when they face contributions smaller than their own. We also find that anger-like emotions influence punishment behavior much stronger when individuals are matched with members of different identities than in identity homogenous groups. These findings contribute to the better understanding of the nature of social identity and its impact on reciprocity, improving economists ability to predict behavior taking emotions also into consideration. --
    Keywords: social identity,emotions,experiment,public goods,negative reciprocity
    Date: 2014
  11. By: Ado, Akifumi; Kurosaki, Takashi
    Abstract: We implemented laboratory experiments in Jakarta, Indonesia, to identify motives for sharing, including baseline altruism, directed altruism, sanction aversion, and reciprocity. The study area is located on the periphery of the Metropolis of Jakarta, many of whose residents are migrants and are closely connected with informal institutions such as Arisan, a rotating savings and credit association in Indonesia. Using data from sample households, the experimental results show that transfers based on baseline altruism accounted for the largest amount.Because the difference in the transferred amounts arising from the revelation of dictators' identities was statistically insignificant, we combined the four motives into two: preference-related motives (baseline and directed altruism) and incentive-related motives (sanction aversion and reciprocity) for the examination of their association with real world behavior regarding sharing. The empirical results suggest the importance of incentive-related motives in explaining variations in the amount of income transfers received from and sent to others.
    Keywords: sharing, altruism, reciprocity, network, experimental economics
    JEL: O17 C92 D03 D64
    Date: 2014–03
  12. By: Julie Beugnot; Bernard Fortin; Guy Lacroix; Marie-Claire Villeval
    Abstract: This paper extends the standard work effort model by allowing workers to interact through networks. We investigate experimentally whether peer performances and peer contextual effects influence individual performances. Two types of network are considered. Participants in Recursive networks are paired with participants who played previously in isolation. In Simultaneous networks, participants interact in real-time along an undirected line. Mean peer effects are identified in both cases. Individual performances increase with peer performances in the recursive network. In the simultaneous network, endogenous peer effects vary according to gender: they are large for men but not statistically different from zero for women.
    Keywords: Peer effects, social networks, work effort, piece rate, experiment.,
    JEL: C91 J16 J24 J31 M52
    Date: 2013–08–01
  13. By: Dhillon, Amrita (Kings College, London); Peeters, Ronald (Maastrict); Muge Yukse, Ayse (Maastrict)
    Abstract: The use of social networks in the workplace has been documented by many authors, although the reasons for their widespread prevalence are less well known. In this paper we present evidence based on a lab experiment that suggests quite strongly that social networks are used by employers to reduce worker moral hazard. We capture moral hazard with a dictator game between the referrer and worker. The worker chooses how much to return under dierent settings of social proximity. Social proximity is captured using Facebook friendship information gleaned anonymously from subjects once they have been recruited. Since employers themselves do not have access to social connections, they delegate the decision to referrers who can select among workers with dierent degrees of social proximity to themselves. We show that employers choose referrals over anonymous hiring relatively more when they know that the referrer has access to friends, and are willing to delegate more often when the social proximity between referrer and worker is potentially higher. In keeping with this expectation, referrers also choose workers with a greater social proximity to themselves and workers who are closer to referrers indeed pay back more to the referrer. The advantage of the lab setting is that we can isolate directed altruism as the only reason for these results.
    Keywords: Eciency wage contracts, Moral hazard, Dictator game, Referrals, Altruism, Reciprocity, Directed altruism, Social proximity, Facebook, Experiment, Social networks, Strength of ties, Spot market.
    Date: 2014
  14. By: Dorsett, Richard (National Institute of Economic and Social Research); 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: Well-Being
    Date: 2014
  15. By: Berg, Erland (University of Oxford); Ghatak, Maitreesh (London School of Economics); Manjula, R (ISEC); Rajasekhar, D (ISEC); Roy, Sanchari (University of Warwick)
    Abstract: This paper studies the interaction of incentive pay and social distance in the dissemination of information.We analyse theoretically as well as empirically the effect of incentive pay when agents have pro-social objectives,but also preferences over dealing with one social group relative to another. In a randomised field experiment under taken across 151 villages in South India,local agents were hired to spread information about a public health insurance programme.Relative to flat pay,incentive pay improves knowledge transmission to households that are socially distant from the agent,but not to households similar to the agent.
    Keywords: public services,information constraints,incentive pay, social proximity,knowledge transmission
    Date: 2013
  16. By: Gurdal, Mehmet (Bogazici University); Miller, Joshua B. (Bocconi University); Rustichini, Aldo (University of Minnesota)
    Abstract: We provide experimental evidence that subjects blame others based on events they are not responsible for. In our experiment an agent chooses between a lottery and a safe asset; payment from the chosen option goes to a principal who then decides how much to allocate between the agent and a third party. We observe widespread blame: regardless of their choice, agents are blamed by principals for the outcome of the lottery, an event they are not responsible for. We provide an explanation of this apparently irrational behavior with a delegated-expertise principal-agent model, the subjects’ salient perturbation of the environment.
    Keywords: Experiments; Rationality; Fairness
    Date: 2013
  17. By: Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
    Abstract: This article analyzes how the anticipation of peer-punishment affects cooperativeness in the provision of public goods under social identity. For this purpose we conduct one-shot public good games with induced social identity and implement in-group, out-group and random matching protocols. Our measure of cooperativeness is subjects' conditional contribution elicited via the strategy method, which allows for observing behavior contingent on every possible level of group members' cooperation. We demonstrate, firstly, that the social environment is a determinant of how the threat of peer-punishment influences cooperation. The strongest increase is clearly evident when subjects interact with members of different identities, which is especially the case for individuals who were initially categorized as freeriders. Secondly, anticipation of peer-punishment clearly eliminates the typically existing ingroup bias without punishment and renders out-group members to be as cooperative as ingroups members. Lastly, the results indicate that the institutions of peer-punishment and social identity may be complemented in order to raise subjects' cooperativeness. --
    JEL: C92 D03 D73 H41
    Date: 2014
  18. By: Ghoshal, Sayantan (Glasgow University); Jana, Smarajit (Durbar University); Mani, Anandi (University of Warwick); Mitra, Sandip (ISI Kolkata); Roy, Sanchari (University of Warwick)
    Abstract: This paper examines whether psychological empowerment can mitigate mental constraints that impede efforts to overcome the effects of social exclusion. Using a randomized control trial, we study a training program specifically designed to reduce stigma and build self-efficacy among poor and marginalized sex workers in Kolkata, India. We find positive and significant impacts of the training on self-reported measures of efficacy, happiness and self-esteem in the treatment group, both relative to the control group as well as baseline measures. We also find higher effort towards improving future outcomes as measured by the participants’ savings choices and health-seeking behaviour, relative to the control group. These findings highlight the need to account for psychological factors in the design of antipoverty programmes.
    Keywords: social exclusion, self-efficacy, self-esteem, future-orientation, sex workers
    Date: 2013
  19. By: Dean Karlan; Daniel H. Wood
    Abstract: We test how donors respond to new information about a charity’s effectiveness. Freedom from Hunger implemented a test of its direct marketing solicitations, varying letters by whether they include a discussion of their program’s impact as measured by scientific research. The base script, used for both treatment and control, included a standard qualitative story about an individual beneficiary. Adding scientific impact information has no effect on whether someone donates, or how much, in the full sample. However, we find that amongst recent prior donors (those we posit more likely to open the mail and thus notice the treatment), large prior donors increase the likelihood of giving in response to information on aid effectiveness, whereas small prior donors decrease their giving. We motivate the analysis and experiment with a theoretical model that highlights two predictions. First, larger gift amounts, holding education and income constant, is a proxy for altruism giving (as it is associated with giving more to fewer charities) versus warm glow giving (giving less to more charities). Second, those motivated by altruism will respond positively to appeals based on evidence, whereas those motivated by warm glow may respond negatively to appeals based on evidence as it turns off the emotional trigger for giving, or highlights uncertainty in aid effectiveness.
    JEL: D64 H41 L31 O12
    Date: 2014–04
  20. By: Jonathan de Quidt
    Abstract: Empirically, labor contracts that financially penalize failure induce higher effort provision than economically identical contracts presented as paying a bonus for success, an effect attributed to loss aversion. This is puzzling, as penalties are infrequently used in practice. The most obvious explanation is selection: loss averse agents are unwilling to accept such contracts. I formalize this intuition, then run an experiment to test it. Surprisingly, I find that workers were 25 percent more likely to accept penalty contracts, with no evidence of adverse or advantageous selection. Consistent with the existing literature, penalty contracts also increased performance on the job by 0.2 standard deviations. I outline extensions to the basic theory that are consistent with the main results, but argue that more research is needed on the long-term effects of penalty contracts if we want to understand why firms seem unwilling to use them.
    Keywords: loss aversion, reference points, framing, selection, Mechanical Turk
    JEL: D03 J41 D86
    Date: 2014–04
  21. By: Lankau, Matthias; Bicskei, Marianna; Bizer, Kilian
    Abstract: Individuals who share a common identity show persistently elevated contributions to public goods. Yet, so far the factors that actually trigger this welfare enhancement are not precisely understood. We investigate two channels: (1) subjects' expectations on group members' cooperativeness and (2) the degree to which they reciprocate these expectations by own contributions' i.e. their conditional cooperation. To this purpose we induce identity in the lab and implement an in-group, out-group and partner matching protocol in a ten-period public good game. Our results yield that comparatively higher expectations on in-group than on outgroup members' cooperativeness are the main driver for welfare enhancements in identity homogeneous groups. The degree of conditional cooperation is, however, similar in all matching protocols. Merely individuals initially identified as free-riders seem to reciprocate a limited range of expectations by higher own contributions when matched with in-group than with out-group members. Nevertheless, our findings clearly underline the paramount importance of expectations in determining cooperation under social identity. --
    Date: 2014
  22. By: Blanco, Mariana (University of Rosario); Dalton, Patricio S. (Tilburg University); Vargas, Juan F. (University of Rosario)
    Abstract: We investigate whether and how the type of unemployment benefit institution affects productivity. We designed a field experiment to compare workers' productivity under a welfare system, where the unemployed receive an unconditional monetary transfer, with their productivity under a workfare system, where the transfer is received conditional on the unemployed spending some time on ancillary activities. First, we find that having an unemployment benefit institution, regardless of whether it makes transfers conditional or unconditional, increases workers' productivity. Second, we find that productivity is higher under Welfare than under Workfare. Becoming unemployed under Welfare comes at the psychological cost of a drop in self-esteem, presumably due to the shame or stigma associated with receiving an unconditional unemployment benet. We document the empirical relevance of precisely this channel. The differences we observe in productivity suggest that this psychological cost acts as an extra non- monetary incentive for workers under Welfare to put a higher effort in their work.
    Keywords: Unemployment Benefits, Workfare, Productivity, Self-esteem, Shame.
    Date: 2013
  23. By: Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
    Abstract: The question to what extent social environment affects how individuals govern their groups, has received no special academic attention, yet. Within the framework of a ten-period public goods experi&ment we analyse how social identity affects subjects' choice of punishment: They may either sanction group members by monetary and/or by non-monetary sanctions bearing differentconsequences on welfare. What is more, we are also the first to address how emotions influence the effectiveness of punishment in terms of maintaining contributions. Our results show that under the threat of both punishments identity-heterogeneous (out-) groups tend to contribute more to the public good than identity-homogenous (in-) groups. Nevertheless, subjects of out-groups are more likely to govern their group via monetary, in-group members rather via non-monetary punishment. What is more, we demonstrate that emotions of guilt and anger differently affect subsequent contributions dependent on the social environment. --
    Keywords: public goods,social identity,monetary and non-monetary peer-punishment,emotions
    Date: 2014
  24. By: Jon X. Eguia (University of Bristol); Aniol Llorente-Saguer (Queen Mary University of London); Rebecca Morton (New York University); Antonio Nicolò (University of Manchester)
    Abstract: Games with imperfect information often feature multiple equilibria, which depend on beliefs off the equilibrium path. Standard selection criteria such as passive beliefs, symmetric beliefs or wary beliefs rest on ad hoc restrictions on beliefs. We propose a new selection criterion that imposes no restrictions on beliefs: we select the action profile that is supported in equilibrium by the largest set of beliefs. We conduct experiments to test the predictive power of the existing and our novel selection criteria in two applications: a game of vertical multi-lateral contracting, and a game of electoral competition. We find that our selection criterion outperforms the other selection criteria.
    Keywords: Equilibrium selection, Passive beliefs, Symmetric beliefs, Vertical contracting, Multiple equilibria, Imperfect information
    JEL: C72 D86 H41 D72
    Date: 2014–04
  25. By: Hunt Allcott; Richard Sweeney
    Abstract: With a large nationwide retailer, we run a natural field experiment to measure the effects of energy use information disclosure, rebates, and sales agent incentives on demand for energy efficient durable goods. Sales incentives and rebates are complementary, but information and sales incentives alone have statistically and economically insignificant effects. Sales agents comply only partially with the experiment, targeting information at the most interested consumers but not discussing energy efficiency with the disinterested majority. In follow-up surveys, most consumers are aware of the energy efficient model and may even overestimate its benefits, suggesting that imperfect information is not a major barrier to adoption in this context.
    JEL: D04 D12 L15 L51 L68 Q48
    Date: 2014–04
  26. By: Bjornskov, Christian; Bogetic, Zeljko; Hillman, Arye; Popovic, Milenko
    Abstract: The principal focus in the substantial literature on impediments to economic development has been on the inadequacies of policies and governance. However, successful economic development requires effectiveness of markets and incentives for investment, which in turn require trust. This paper reports on trust in a development context. The paper uses trust experiments, a post-experiment survey, and econometric analysis relating trust to identity and other personal attributes in the setting of Montenegro, a small, recently-independent, post-socialist, post-crisis society. External validity was sought by providing sufficient material reward to balance identity-related expressive motives and by having two groups of subjects, one usual university students and another group that, while also students, was somewhat older and had had greater market or ommercial experience. The paper reviews cultural priors that can be expected to affect trust and distinguishes between generalized trust that can be socially beneficial and particularized trust that can be disadvantageous for development. The empirical results suggest that trust among private individuals is not an impediment to development in Montenegro. As a result, policy reform can improve economic and social outcomes. However, the results redirect the focus to issues of governance and political entrenchment as potential explanations for impediments to development. --
    Keywords: particularized trust,Generalized trust,identity,trust game,trust experiment,betrayal aversion,expressive behavior,political entrenchment,Montenegro
    JEL: D03 O12 P16 Z13
    Date: 2014–04–11
  27. By: Jim Engle-Warnick; Natalia Mishagina
    Abstract: We show that violations of demand theory are more numerous than previously reported in experimental two-player dictator games. We then apply a new procedure consisting of income-compensated price adjustments that makes the choice sets rationalizable. We introduce a “weighted price” function that shows that violations of revealed preference can be interpreted as the dictator's insensitivity to the price of the dictator's allocation relative to the responder's allocation. Our paper is the first to rationalize violations of demand theory in dictator games by examining the relationship between violations of GARP and prices. We suggest that weighted prices, and not only preferences, may be a component of decision making in dictator games
    Keywords: Dictator Game, WARP, Revealed Preference,
    Date: 2014–02–01
  28. By: Martin Tironi (School of Design, Pontifical Catholic University of Chile); Brice Laurent (Centre de Sociologie de l'Innovation, Mines ParisTech)
    Abstract: In 2012, considering its development strategy for the electric car market, Renault turned the town of Saint-Quentin-en-Yvelines into a experimentation and demonstration laboratory, with the installation of electric cars as part of a car sharing system without fixed stations, called Twizy Way. In this paper the authors take into account the ontological work this experiment produces, its demonstrative ability and the way it intertwines knowledge, as part of boundary drawing within the framework of the experiment itself. They speak of a form of flexible laboratorisation affected by doubt and constant reorganisation of the elements making up, overflowing and interfering with the experiment.
    Keywords: care; maintenance; material ecology; material vulnerability; ordering Devices
    JEL: I18 Z18
    Date: 2014–04
  29. By: Daniel Rondeau; Pascal Courty; Maurice Doyon
    Abstract: We use the experimental method to study the costs and benefits of allowing joint bidding in simultaneous multi-unit first price sealed bid auctions for bundled goods. The research has immediate applications to the sale of public forest stands that arbor a mixture of species. Joint bidding and communication raise the prospect of higher allocative efficiency, but also of collusive bidding through a reduction in the number of bidders and a greater scope for the formation of bidding rings. However, we find that allowing joint bidding has a significant positive impact on efficiency and reduces collusion significantly. We also explore the robustness of the results to characteristics of the auction environment that are relevant to timber auctions.
    Keywords: Timber auctions; forest industry; joint bidding; bidding rings; collusion; simultaneous auction; starting price; two bidder rule,
    JEL: Q23 Q28 D44
    Date: 2013–09–01
  30. By: Kyung Hwan Baik (Sungkyunkwan University); Subhasish M. Chowdhury (University of East Anglia); Abhijit Ramalingam (University of East Anglia)
    Abstract: We investigate the effects of the availability of resources that can be expended in conflict on conflict intensity. We run a between-subjects Tullock contest in which we vary the contest budget from Low to Medium to High, while keeping the Nash equilibrium bid the same. We find an `inverted U-shaped' relationship between resource availability and conflict intensity. While standard error correction models can explain the first part of the relationship by attributing resources as constraint, they do not apply in the latter part. We further run a Wealth treatment in which the budget remains Medium, but a fixed payment independent of the contest outcome is provided. The level of conflict in the Wealth and the High treatment are not different, implying a wealth effect through available resources. We conclude that the resources for conflict can have both a constraint as well as a wealth effect. When initial resources are scarce, they act as a constraint. As more resources become available the constraint loosens up and conflict intensity increases. However, when resources are abundant, they are viewed as wealth and conflict intensity decreases. Hence, the availability of additional resources reduces the marginal benefit from winning as well as conflict intensity.
    Date: 2014–04
  31. By: Shonchoy, Abu S.; Kurosaki, Takashi
    Abstract: The mismatch between credit repayments and income seasonality poses a challenge for microfinance institutions (MFIs) working in developing countries. For instance, in northern Bangladesh, income and consumption downfalls during the lean season after the transplanting of major paddy crops are a serious threat to a household's economy. Poor landless agricultural wage laborers suffer the most owing to this seasonality as they face difficulties in smoothing their consumption. However, in designing microcredit products, MFIs do not usually provide flexibility or seasonal adjustment during the lean season. This is mainly because MFIs are afraid that such flexibility might break the repayment discipline of borrowers, resulting in higher default rates. We thus conducted a randomized controlled trial in 2011-12 in northern Bangladesh to empirically test whether seasonality-adjusted flexible microcredit leads to an increase in repayment problems for MFIs as well as whether it can increase and stabilize consumption of borrower households. Our results suggest no statistically discernible difference among the treatment arms in case of default, overdue amount, or repayment frequency. On the other hand, we find no positive impact of repayment flexibility on immediate food consumption during the period of seasonality, except for in-kind full moratorium treatment group. After a year of initial intervention, however, we see positive changes in food intake during the lean season. Thus, our preliminary results are in favor of seasonality-adjusted flexible microcredit.
    Keywords: Bangladesh, Microfinance, Rural credit, Consumption, Microcredit, Default, Seasonality, Consumption Smoothing
    JEL: D12 G21 O16
    Date: 2014–03

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