nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒04‒29
fourteen papers chosen by
Daniel Houser
George Mason University

  1. Motivational Drivers of the Private Provision of Public Goods: Evidence From a Large Framed Field Experiment By Diederich, Johannees; Goeschl, Timo
  2. Exposure to Risk and Risk Aversion: A Laboratory Experiment By Tai-Sen HE; Fuhai HONG
  3. An externality-robust auction: theory and experimental evidence By Björn Bartling; Nick Netzer
  4. Crime and Self-Control Revisited: Disentangling the Effect of Self-Control on Risk and Social Preferences By Friehe, Tim; Schildberg-Hörisch, Hannah
  5. Experimental Games on Networks: Underpinnings of Behavior and Equilibrium Selection By Charness, Gary; Feri, Francesco; Meléndez-Jiménez, Miguel A.; Sutter, Matthias
  6. A Field Experiment in Motivating Employee Ideas By Gibbs, Michael; Neckermann, Susanne; Siemroth, Christoph
  7. Effects of Experience, Knowledge and Signals on Willingness to Pay for a Public Good By Aanesen, Margrethe; Czajkowski, Mikolaj; Falk-Peterson, Jannike; Hanley, Nicholas; LaRiviere, Jacob; Tinch, Dugald
  8. Effectiveness of regulatory interventions on firm behavior: a randomized field experiement with e-commerce firms By Mulder, Machiel; Huizingh, Eelko
  9. What is the Causal Effect of Information and Learning about a Public Good on Willingness to Pay? By Czajkowski, Mikolaj; Hanley, Nicholas; LaRiviere, Jacob; Simpson, Katherine
  10. Trusting Former Rebels: An Experimental Approach to Understanding Reintegration after Civil War By Michal Bauer; Nathan Fiala; Ian Levely
  11. Playing 'Hard to Get': An Economic Rationale for Crowding Out of Intrinsically Motivated Behavior By Schnedler, Wendelin; Vanberg, Christoph
  12. The Effect of Ambient Noise on Cooperation in Public Good Games By Diederich, Johannes
  13. Conditional Cash Transfers, Civil Conflict and Insurgent Influence: Experimental Evidence from the Philippines By Benjamin Crost; Joseph H. Felter; Patrick B. Johnston
  14. Digit Ratio Measurement Guide By Levent Neyse Homepage; Pablo Brañas-Garza

  1. By: Diederich, Johannees; Goeschl, Timo
    Abstract: Disentangling the motivational drivers of individuals is frequently regarded a key step in reconciling theory and empirical evidence on the voluntary provision of public goods. We present results of a large online field experiments with 12,624 contribution choices by members of the Internet-using German population. Subjects are assigned to six treatments targeted at motivations such as altruism, "warm glow", image motivation, or equity concerns. While evidence on treatment effects is mixed, the data point to signicant effects of framing and the sequence of presenting options. Exploiting variations within the highly heterogeneous sample, the results confirm previous results from a subset of the data on sociodemographics and exogenous environmental conditions as determinants of subjects' choices and add additional evidence that females and older subjects are more inclined to give to the public good.
    Keywords: private provision of public goods; online experiment; field experiment; warm glow; social norms; equity field experiment; online experiment
    Date: 2014–04–16
  2. By: Tai-Sen HE (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.); Fuhai HONG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.)
    Abstract: We examine whether prior exposure to environments with a varying degree of risk affects individuals’ risk-taking behavior. Using a laboratory experiment, we find that subjects exposed to a high risk environment exhibit higher levels of risk aversion than those who were exposed to a moderate or low risk environment. This effect is not driven by subjects’ realized outcomes from the risk. The finding has implications for theoretical models of decision-making under uncertainty, and can speak to a few current policy debates.
    Keywords: Risk; Risk Aversion; Laboratory Experiment
    JEL: D81 C91
    Date: 2014–03
  3. By: Björn Bartling; Nick Netzer
    Abstract: An auction is externality-robust if unilateral deviations from equilibrium leave the other bidders’ payoffs unaffected. The equilibrium and its outcome will then persist if certain types of externalities arise between bidders. One example are externalities due to spiteful preferences, which have been used to explain overbidding in the second-price auction (SPA). Another example are cross-shareholdings between companies that compete in an auction. We derive an auction that coincides with the SPA in terms of efficiency and revenue but, in contrast to the SPA, is externality-robust. The externality-robust auction (ERA) is a first-price auction in which truthful bidding is encouraged by bonus payments. We test the robustness property experimentally by comparing SPA and ERA. We replicate the earlier finding of significant average overbidding in the SPA, but we find that bidders bid on average their value in the ERA. We conduct additional treatments where bidders play against the computer and we use controls for cognitive skills and joy of winning to further pin down the reasons behind the subjects’ bidding behavior.
    Keywords: Second-price auction, spitefulness, mechanism design, experimental auctions
    JEL: C91 D03 D44 D82
    Date: 2014–04
  4. By: Friehe, Tim (University of Bonn); Schildberg-Hörisch, Hannah (University of Bonn)
    Abstract: In economic models, risk and social preferences are major determinants of criminal behavior. In criminology, low self-control is considered a fundamental cause of crime. Relating the arguments from both disciplines, this paper studies the relationship between self-control and both risk and social preferences. To exogenously vary the level of self-control, we use a well-established experimental manipulation. We find that low self-control causes less risk-averse behavior. The effect of self-control on social preferences is not significant. In sum, our findings support the proposition that low self-control is a facilitator of crime. While our study is motivated by the literature on the determinants of criminal behavior, it has important implications for dual-system models and documents endogeneity of economic preferences.
    Keywords: criminal behavior, risk preferences, social preferences, ego-depletion, dual-system models, experiment, endogeneity of economic preferences
    JEL: K42 H23 C91
    Date: 2014–04
  5. By: Charness, Gary (University of California, Santa Barbara); Feri, Francesco (University of Innsbruck); Meléndez-Jiménez, Miguel A. (University of Malaga); Sutter, Matthias (European University Institute)
    Abstract: In this paper, we describe a series of laboratory experiments that implement specific examples of a more general network structure and we examine equilibrium selection. Specifically, actions are either strategic substitutes or strategic complements, and participants have either complete or incomplete information about the structure of a random network. Since economic environments typically have a considerable degree of complementarity or substitutability, this framework applies to a wide variety of settings. The degree of equilibrium play is striking, in particular with incomplete information. Behavior closely resembles the theoretical equilibrium whenever this is unique; when there are multiple equilibria, general features of networks, such as connectivity, clustering, and the degree of the players, help to predict informed behavior in the lab. People appear to be strongly attracted to maximizing aggregate payoffs (social efficiency), but there are forces that moderate this attraction: 1) people seem content with (in the aggregate) capturing only the lion's share of the efficient profits in exchange for reduced exposure to loss, and 2) uncertainty about the network structure makes it considerably more difficult to coordinate on a demanding, but efficient, equilibrium that is typically implemented with complete information.
    Keywords: random networks, incomplete information, connectivity, clustering, strategic substitutes, strategic complements, experiment
    JEL: C71 C91 D03 D85
    Date: 2014–04
  6. By: Gibbs, Michael (University of Chicago); Neckermann, Susanne (Erasmus University Rotterdam); Siemroth, Christoph (University of Mannheim)
    Abstract: We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas.
    Keywords: innovation, creativity, intrinsic motivation, incentives
    JEL: C93 J24 M52 O32
    Date: 2014–04
  7. By: Aanesen, Margrethe; Czajkowski, Mikolaj; Falk-Peterson, Jannike; Hanley, Nicholas; LaRiviere, Jacob; Tinch, Dugald
    Abstract: This paper compares how increases in experience versus increases in knowledge about a public good affect willingness to pay (WTP) for its provision. This is challenging because while consumers are often certain about their previous experiences with a good, they may be uncertain about the accuracy of their knowledge. We therefore design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their WTP for it. Using data for two different public goods, we show qualitative equivalence of the effect of knowledge and experience on valuation for a public good. Surprisingly, though, we find that the causal effect of objective signals about the accuracy of a subject's knowledge for a public good can dramatically affect their valuation for it: treatment causes an increase of $150-$200 in WTP for well-informed individuals. We find no such effect for less informed subjects. Our results imply that WTP estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states.
    Keywords: Choice Experiment; Uncertainty; Valuation; Field Experiment; Beliefs; Information
    Date: 2014–04
  8. By: Mulder, Machiel; Huizingh, Eelko (Groningen University)
    Abstract: Economic regulators use a number of instruments to change the behavior of economic agents, but only limited evidence exists on the effectiveness of such regulatory interventions. We conduct a randomized field experiment to determine the effects of two interventions aimed at e-commerce firms by a regulatory authority in order to let these firms meet legal obligations regarding information disclosure to protect consumer interests. We measure the compliance behavior of e-commerce firms in both a treatment group and a control group before and after two interventions. The first regulatory intervention concerns sending personalized letters to firms (firm-specific guidance), whereas the second intervention includes a number of dedicated publications and presentations by the regulatory authority (industry guidance). We find that both of these interventions have hardly any effect, neither in the short term nor in the long term. We conclude that regulatory interventions in the form of providing only guidance on the legal rules to firms are not effective strategies to influence their behavior.
    Date: 2014
  9. By: Czajkowski, Mikolaj; Hanley, Nicholas; LaRiviere, Jacob; Simpson, Katherine
    Abstract: In this study we elicit agents' prior information set regarding a public good, exogenously give information treatments to survey respondents and subsequently elicit willingness to pay for the good and posterior information sets. The design of this field experiment allows us to perform theoretically motivated hypothesis testing between different updating rules: non-informative updating, Bayesian updating, and incomplete updating. We find causal evidence that agents imperfectly update their information sets. We also field causal evidence that the amount of additional information provided to subjects relative to their pre-existing information levels can affect stated WTP in ways consistent overload from too much learning. This result raises important (though familiar) issues for the use of stated preference methods in policy analysis.
    Keywords: Stated Preference; Behavioral Economics; Public Goods; Bayesian
    Date: 2014–04
  10. By: Michal Bauer; Nathan Fiala; Ian Levely
    Abstract: The stability of many post-conflict societies rests on the successful reintegration of former soldiers. We use an experimental approach to study reintegration in Northern Uganda and examine behavior of former soldiers together with the behavior of receiving communities towards this group. We focus on trust-based interactions and find that individual trustworthiness increases with the length of time a person was with the Lord's Resistance Army, a rebel group which forcibly recruited a large fraction of young people in the area. The effect is strongest among former soldiers who were abducted during childhood and is mute among those who soldiered during adulthood. These results are consistent with predictions of recent theories that highlight the importance of cooperation during war. Furthermore, members of receiving communities with an abductee son, who thus have better knowledge of former soldiers are aware of the behavioral difference. They believe former soldiers are more trustworthy than their peers and trust them more. Last, we find no evidence of preference-based discrimination, suggesting that anger is attenuated when communities do not attribute responsibility for committed violence to returning soldiers.
    Keywords: trust; cooperation; civil war; endogenous preferences; soldiers; reintegration;
    JEL: C93 D03 D74 O12
    Date: 2014–03
  11. By: Schnedler, Wendelin (University of Paderborn); Vanberg, Christoph (Alfred-Weber-Institut für Wirtschaftswissenschaften, Universität Heidelberg)
    Abstract: Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people's willingness to engage in those activities voluntarily. We propose a simple rationale for this 'crowding out' phenomenon, using standard economic arguments. The central idea is that the potential to earn rewards in return for an activity may create incentives to play 'hard to get' in an effort to increase those rewards. We discuss two specific contexts in which such incentives arise. In the first, refraining from the activity causes others to attach higher value to it because it becomes scarce. In the second, restraint serves to conceal the actor's intrinsic motivation. In both cases, not engaging in the activity causes others to offer larger rewards. Our theory yields the testable prediction that such effects are likely to occur when a motivated actor enjoys a sufficient degree of 'market power.'
    Keywords: intrinsic motivation, crowding out, behavioral economics, market power, hidden information
    JEL: D1 M5 D8 D4 C9
    Date: 2014–04
  12. By: Diederich, Johannes
    Abstract: Environmental stressors such as noise, pollution, extreme temperatures, or crowding can pose relevant externalities in the economy if certain conditions are met. This paper presents experimental evidence that exposure to acute ambient noise decreases cooperative behavior in a standard linear public good game.
    Keywords: private provision of public goods; environmental stress; noise
    Date: 2014–04–16
  13. By: Benjamin Crost (University of Colorado Denver); Joseph H. Felter (Stanford University); Patrick B. Johnston (RAND Corporation)
    Abstract: Conditional cash transfer (CCT) programs are an increasingly popular tool for reducing poverty in conflict-affected areas. Despite their growing popularity, there is limited evidence on how CCT programs affect conflict and theoretical predictions are ambiguous. We estimate the effect of conditional cash transfers on civil conflict in the Philippines by exploiting an experiment that randomly assigned eligibility for a CCT program at the village level. We find that cash transfers caused a substantial decrease in conflict-related incidents in treatment villages relative to control villages. Using unique data on local insurgent influence, we also find that the program significantly reduced insurgent influence in treated villages.
    Date: 2014–04
  14. By: Levent Neyse Homepage; Pablo Brañas-Garza
    Abstract: Literature on Digit Ratio is rapidly growing in Economics. Quite surprisingly we observe that there is no consensus about how to make an accurate measurement in such a delicate task. Along this brief document we offer some concise guidance of how to scan the hands using digital scanners and provide a comprehensive guideline to make a reliable measurement of the 2D:4D. Furthermore, we point out the most common imaging and measurement errors. We also provide a number of hints aimed to avoid these errors that in some cases may cause systematic inaccuracies
    Keywords: 2D:4D; Digit Ratio; Measurement; Guide
    JEL: C42 C8 C90
    Date: 2014–03

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