New Economics Papers
on Experimental Economics
Issue of 2014‒05‒04
twenty-one papers chosen by

  1. A Field Study of Chinese Migrant Workers' Attitudes Toward Risks, Strategic Uncertainty, and Competitiveness By Li Hao; Daniel Houser; Lei Mao; Marie Claire Villeval
  2. Deception in Networks: A Laboratory Study By Rong Rong; Daniel Houser
  3. Do people donate more when they perceive a single beneficiary whom they know? A field experimental test of the identifiability effect By Al-Ubaydli, Omar; Yeomans, Mike
  4. Can more be less? An experimental test of the resource curse By Al-Ubaydli, Omar; McCabe, Kevin; Twieg, Peter
  5. Average player traits as predictors of cooperation in a repeated prisoner's dilemma By Al-Ubaydli, Omar; Jones, Garett; Weel, Jaap
  6. Gender and the Labor Market: What Have We Learned from Field and Lab Experiments? By Azmat, Ghazala; Petrongolo, Barbara
  7. Gender Differences in Risk Aversion: Do Single-Sex Environments Affect their Development? By Alison L. Booth; Lina Cardona-Sosa; Patrick Nolen
  8. Gender differences in shirking: monitoring or social preferences? Evidence from a field experiment By Johansson, Per; Karimi, Arizo; Nilsson, Peter
  9. Donations, risk attitudes and time preferences: a study on altruism in primary school children By Angerer, Silvia; Glätzle-Rützler, Daniela; Lergetporer, Philipp Jürgen Huber; Sutter, Matthias
  10. Advice in the Marketplace: A Laboratory Study By Jonathan E. Alevy; Michael K. Price
  11. Trading Participation Rights to the Red Hat Puzzle. Will Markets allocate the rights for performing decision tasks to the more abled players? By Choo, Lawrence C.Y
  12. Obedience to Rules with Mild Sanctions: The Roles of Peer Punishment and Voting By Chen, Josie I
  13. Attitudes to Income Inequality: Experimental and Survey Evidence By Clark, Andrew E.; D'Ambrosio, Conchita
  14. A threshold for biological altruism in public goods games played in groups including kin By Hannes Rusch
  15. Tax Incidence in the Presence of Tax Evasion By Doerrenberg, Philipp; Duncan, Denvil
  16. Do Single?Sex Classes Affect Achievement? A Study in a Coeducational University By Alison L. Booth; Lina Cardona-Sosa; Patrick Nolen
  17. Can Information Reduce Nonpayment for Public Utilities? Experimental Evidence from South Africa By Andrea Szabo; Gergely Ujhelyi
  18. Expectation Formation in an Evolving Game of Uncertainty: Theory and New Experimental Evidence By Gigi Foster; Paul Frijters; Markus Schaffner; Benno Torgler
  19. Problems of utility and prospect theories. A ”certain-uncertain” inconsistency of the random-lottery incentive system By Harin, Alexander
  20. The Importance of Taste for Food Demand and the Experienced Taste Effect of Healthy Labels – An Experiment on Potato Chips and Bread By Thunström, Linda; Nordström, Jonas
  21. Randomised trials for policy: a review of the external validity of treatment effects By Muller, Sean

  1. By: Li Hao (Sam M. Walton College of Business, University of Arkansas, Fayetteville); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Lei Mao (Groupe d’Analyse et de Théorie Economique, UniversiteÌ de Lyon); Marie Claire Villeval (Groupe d’Analyse et de Théorie Economique, UniversiteÌ de Lyon)
    Abstract: Using a field experiment in China, we study whether migration status is correlated with attitudes toward risk, ambiguity, and competitiveness. Our subjects include migrants and non-migrants. We find that, migrants exhibit no differences from non-migrants in risk and ambiguity preferences elicited using pairs of lotteries; however, migrants are significantly more likely to enter competition in the presence of strategic uncertainty when they expect competitive entries from others. Our results suggest that migration may be driven more by a stronger belief in one’s ability to succeed in an uncertain and competitive environment than by risk attitudes under state uncertainty. Length: 46
    Keywords: migration, risk preferences, strategic uncertainty, ambiguity, field experiment
    JEL: C93 D03 D63 J61
    Date: 2014–04
  2. By: Rong Rong (Department of Economics, Weber State University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University)
    Abstract: Communication between departments within a firm may include deception. Theory suggests that telling lies in these environments may be strategically optimal if there exists a small difference in monetary incentives (Crawford and Sobel, 1982; Galeotti et al, 2012). We design a laboratory experiment to investigate whether agents with different monetary incentives in a network environment behave according to theoretical predictions. We found that players’ choices are consistent with the theory. That is, most communication within an incentive group is truthful and deception often occurs between subjects from different groups. These results have important implications for intra-organizational conflict management, demonstrating that in order to minimize deceptive communication between departments the firm may need to reduce incentive differences between these groups. Length: 19
    Keywords: social networks, deception, strategic information transmission, experiments
    JEL: D85 D02 C92
    Date: 2014–04
  3. By: Al-Ubaydli, Omar; Yeomans, Mike
    Abstract: According to the identifiability effect, people will donate more to a single beneficiary rather than to many beneficiaries, holding constant what the donations are actually used for. We test the identifiability effect for two novel subject pools (the suppliers and beneficiaries of volunteer labor). We also test a refinement of the identifiability effect where we vary whether or not the single beneficiary is personally known to the solicitees. While the behavior of volunteers is consistent with the identifiability effect, we find that the identifiability effect is reversed for beneficiaries of volunteer labor. Moreover, we find that making the single beneficiary personally known to the solicitees lowers donations by a statistically insignificant amount, suggesting that it does not enhance donations.
    Keywords: solicitation; donation; field experiment
    JEL: D64 L31
    Date: 2014–04–15
  4. By: Al-Ubaydli, Omar; McCabe, Kevin; Twieg, Peter
    Abstract: Several scholars have argued that abundant natural resources can be harmful to economic performance under bad institutions and helpful when institutions are good. These arguments have either been theoretical or based on naturally-occurring variation in natural resource wealth. We test this theory using a laboratory experiment to reap the benefits of randomized control. We conduct this experiment in a virtual world (Second LifeTM) to make institutions more visceral. We find support for the theory.
    Keywords: resource curse; institutions; economic development
    JEL: D72 D74 O13 Q34
    Date: 2014–03–31
  5. By: Al-Ubaydli, Omar; Jones, Garett; Weel, Jaap
    Abstract: Many studies have looked at how individual player traits influence individual choice in the repeated prisoner’s dilemma, but few studies have looked at how the average traits of pairs of players influence the average choices of pairs. We consider cognitive ability, patience, risk tolerance, and the Big Five personality measures as predictors of individual and average group choices in a ten-round repeated prisoner’s dilemma. We find that a pair’s average cognitive ability measured by the Raven’s IQ test predicts average cooperation rates robustly and average earnings more modestly. Higher individual cognitive ability also predicts a greater probability of sustaining cooperation in the second round, suggesting that positive reciprocity is more likely among players with higher Raven’s scores. Openness is the only control variable that predicts first-round cooperative behavior.
    Keywords: cooperation; IQ; personality; discount rate; patience; risk-aversion; prisoner's dilemma
    JEL: D02 D23 O12 O43
    Date: 2014–02–05
  6. By: Azmat, Ghazala (Queen Mary, University of London); Petrongolo, Barbara (Queen Mary, University of London)
    Abstract: We discuss the contribution of the experimental literature to the understanding of both traditional and previously unexplored dimensions of gender differences and discuss their bearings on labor market outcomes. Experiments have offered new findings on gender discrimination, and while they have identified a bias against hiring women in some labor market segments, the discrimination detected in field experiments is less pervasive than that implied by the regression approach. Experiments have also offered new insights into gender differences in preferences: women appear to gain less from negotiation, have lower preferences than men for risk and competition, and may be more sensitive to social cues. These gender differences in preferences also have implications in group settings, whereby the gender composition of a group affects team decisions and performance. Most of the evidence on gender traits comes from the lab, and key open questions remain as to the source of gender preferences – nature versus nurture, or their interaction – and their role, if any, in the workplace.
    Keywords: gender, field experiments, lab experiments, discrimination, gender preferences
    JEL: J16 J24 J71 C91 C92 C93
    Date: 2014–04
  7. By: Alison L. Booth; Lina Cardona-Sosa; Patrick Nolen
    Abstract: Single-sex classes within coeducational environments are likely to modify students' risktaking attitudes in economically important ways. To test this, we designed a controlled experiment using first year college students who made choices over real-stakes lotteries at two distinct dates. Students were randomly assigned to weekly classes of three types: all female, all male, and coeducational. They were not allowed to change group subsequently. We found that women are less likely to make risky choices than men at both dates. However, after eight weeks in a single-sex class environment, women were significantly more likely to choose the lottery than their counterparts in coeducational groups. These results are robust to the inclusion of controls for IQ and for personality type, as well as to a number of sensitivity tests. Our findings suggest that observed gender differences in behaviour under uncertainty found in previous studies might partly reflect social learning rather than inherent gender traits.
    Keywords: Gender, risk preferences, single-sex groups, cognitive ability
    JEL: C9 C91 C92 J16 D01 D80 J16 J24
    Date: 2013–10–28
  8. By: Johansson, Per (IFAU - Institute for Evaluation of Labour Market and Education Policy); Karimi, Arizo (IFAU - Institute for Evaluation of Labour Market and Education Policy); Nilsson, Peter (Institute for International Economic Studies (IIES), Stockholm University)
    Abstract: This paper studies gender differences in the extent to which social preferences affect workers' shirking decisions. Using exogenous variation in work absence induced by a randomized field experiment that increased treated workers' absence, we find that also non-treated workers increased their absence as a response. Furthermore, we find that male workers react more strongly to decreased monitoring, but no significant gender difference in the extent to which workers are influenced by peers. However, our results suggest significant heterogeneity in the degree of influence that male and female workers exert on each other: conditional on the potential exposure to same-sex co-workers, men are only affected by their male peers, and women are only affected by their female peers.
    Keywords: Peer effects; employer-employee data; work absence; randomized field experiment
    JEL: C23 C93 J24
    Date: 2014–04–15
  9. By: Angerer, Silvia; Glätzle-Rützler, Daniela; Lergetporer, Philipp Jürgen Huber; Sutter, Matthias
    Abstract: We study with a sample of 1,070 primary school children, aged seven to eleven years, how altruism in a donation experiment is related to children’s risk attitudes and intertemporal choices. Examining such a relationship is motivated by theories of reciprocal altruism that provide a cornerstone to understand human social behavior. We find that higher risk tolerance and patience in intertemporal choice increase, in general, the level of donations, albeit the effects are non-linear. We confirm earlier results that altruism increases with age during childhood and that girls are more altruistic than boys. Having older brothers makes subjects less altruistic.
    Keywords: Altruism, donations, risk attitudes, intertemporal choices, experiment, children
    JEL: C91 D03 D63 D64
    Date: 2014
  10. By: Jonathan E. Alevy; Michael K. Price
    Abstract: There is substantial evidence that the decisions of experienced and inexperienced agents differ in ways that impact both individual earnings and aggregate market outcomes. Typically, such evidence is gathered by studying experience as it accumulates within subjects. We examine a new question; whether behaviors associated with experience can be transferred directly to new market participants. Specifically, we study the intergenerational transmission of information, including direct advice, in experimental asset markets. Empirical results suggest that advice is a good substitute for experience; prices in sessions with advised traders shift towards fundamentals. Further, convergence towards fundamentals holds in mixed-markets where only a subset of traders are advised. Such data patterns are consistent with recent neurological evidence on fictive learning.
    Keywords: asset markets; laboratory experiments; advice, fictive learning
    JEL: C92 G12 D83
    Date: 2014–04
  11. By: Choo, Lawrence C.Y
    Abstract: This paper investigates the conventional wisdom that markets would naturally allocate the rights for performing decisional task to those players who might be best suited to perform the task. We embedded the decisional tasks in a stylised setting of a game, motivated by Littlewood(1953) Red Hat Puzzle, when the optimal choices in the game require players to employ logical and epistemological reasoning. We present a treatment where players are permitted to trade their participation rights to the game. The payoffs are furthermore calibrated such that the players who know the optimal choice in the game should value the rights strictly more than those who do not. However, aggregated performances in this treatment were found to be significantly lower than the control treatments where players were not permitted to trade their participation rights, providing little support for the conventional wisdom. We show that this finding could be attributed to price bubbles in the markets for participations rights.
    Keywords: Game Theory, Experimental Economics, Trading Markets
    JEL: C72 C92 G34
    Date: 2014–04–27
  12. By: Chen, Josie I
    Abstract: Governments sometimes promote rules backed by sanctions too weak to make obedience privately optimal. Factors that may help make such rules effective include the presence of informal sanctions by peers, and implementation through voting. I study the impact of non-deterrent formal sanctions on voluntary contributions to a public good in a laboratory experiment. The effect is studied both in the presence and absence of informal sanctions, under fully exogenous implementation and after both implemented and randomly overridden voting. I find that informal sanctions strengthen the effect of formal ones in most conditions. However, voted implementation has no clear effect on non-deterrent formal sanction in my data, which suggests a reason for caution when studying exogenous implementation by a random vote override procedure.
    Keywords: experiment, voluntary contribution, public goods, formal sanctions, informal sanctions, voting, democracy effect
    JEL: C72 C91 C92 D72 H41
    Date: 2014–04–15
  13. By: Clark, Andrew E. (Paris School of Economics); D'Ambrosio, Conchita (University of Luxembourg)
    Abstract: We review the survey and experimental findings in the literature on attitudes to income inequality. We interpret the latter as any disparity in incomes between individuals. We classify these findings into two broad types of individual attitudes towards the income distribution in a society: the normative and the comparative view. The first can be thought of as the individual's disinterested evaluation of income inequality; on the contrary, the second view reflects self-interest, as individual's inequality attitudes depend not only on how much income they receive but also on how much they receive compared to others. We conclude with a number of extensions, outstanding issues and suggestions for future research.
    Keywords: attitudes, distribution, experiments, income inequality, life satisfaction, reference groups
    JEL: C91 D31 D63 I31
    Date: 2014–04
  14. By: Hannes Rusch (University of Giessen)
    Abstract: Phenomena like meat sharing in hunter-gatherers, altruistic self-sacrifice in intergroup conflicts, and contribution to the production of public goods in laboratory experiments have led to the development of numerous theories trying to explain human prosocial preferences and behavior. Many of these focus on direct and indirect reciprocity, assortment, or (cultural) group selection. Here, I investigate analytically how genetic relatedness changes the incentive structure of that paradigmatic game which is conventionally used to model and experimentally investigate collective action problems: the public goods game. Using data on contemporary hunter-gatherer societies I then estimate a threshold value determining when biological altruism turns into maximizing inclusive fitness in this game. I find that, on average, contributing no less than about 40% of individual fitness to public goods production still is an optimal strategy from an inclusive fitness perspective under plausible socio-ecological conditions.
    JEL: B15 C72 D64 H41
    Date: 2014
  15. By: Doerrenberg, Philipp (University of Cologne); Duncan, Denvil (Indiana University)
    Abstract: This paper studies the effect of tax evasion on the economic incidence of sales taxes. We design a laboratory experiment in which buyers and sellers trade a fictitious good in double auction markets. A per-unit tax is imposed on sellers, and sellers in the treatment group are provided the opportunity to evade the tax whereas sellers in the control group are not. We find that the market equilibrium price in the treatment group is economically and statistically lower than in the control group. This result is consistent with a theoretical model in which access to evasion opportunities reduces the effective tax rate and therefore dampens real behavioral responses. Our findings suggest that the benefits of tax evasion are not limited to the side of the market with access to evasion but are partly shifted to the non-evading side of the market. We discuss the implications of our findings for the distributional and welfare effects of taxes.
    Keywords: tax evasion, tax incidence, double auction
    JEL: H21 H22 H26 H3 D44
    Date: 2014–04
  16. By: Alison L. Booth; Lina Cardona-Sosa; Patrick Nolen
    Abstract: We examine the effect of single?sex classes on the pass rates, grades, and course choices of students in a coeducational university. We randomly assign students to all?female, all?male, and coed classes and, therefore, get around the selection issues present in other studies on single?sex education. We find that one hour a week of single?sex education benefits females: females are 7.5% more likely to pass their first year courses and score 10% higher in their required second year classes than their peers attending coeducational classes. We find no effect of single?sex education on the subsequent probability that a female will take technical classes and there is no effect of single?sex education for males. Furthermore we are able to examine potential mechanisms and indirect effects of single?sex education. We find that the effects of single?sex education do not appear to be driven by a tracking mechanism and that there are indirect effects on class attendance and completion of optional assignments for females. However, the indirect effects cannot explain much of the effect of single-sex education for females.
    Keywords: Gender, single?sex groups, cognitive ability
    JEL: C9 C91 C92 J16 J16 J24
    Date: 2013–10–30
  17. By: Andrea Szabo (University of Houston); Gergely Ujhelyi (University of Houston)
    Abstract: Nonpayment for public utilities is an important constraint to expanding service access in developing countries. As a potential policy response, this study implements and evaluates a randomized water education campaign in a low income peri-urban area in South Africa. We estimate substantial treatment effects: on the order of a 30% increase in payments over a three-month period. Surprisingly, these effects are not driven by an increase in households’ knowledge. We consider various possible explanations, and argue that the intervention likely had "nudging" effects on households. Our findings have important implications for understanding energy conservation and other public information campaigns.
    Keywords: nonpayment, information, water conservation
    JEL: Q25 Q28 H27 L95
    Date: 2014–04–21
  18. By: Gigi Foster; Paul Frijters; Markus Schaffner; Benno Torgler
    Abstract: We examine the nature of stated subjective probabilities in a complex, evolving context in which true event probabilities are not within subjects' explicit information set. Specifically, we collect information on subjective expectations in a car race wherein participants must bet on a particular car but cannot influence the odds of winning once the race begins. In our setup, the actual probability of the good outcome (a win) can be determined based on computer simulations from any point in the process. We compare this actual probability to the subjective probability participants provide at three different points in each of 6 races. We find that the S-shaped curve relating subjective to actual probabilities found in prior research when participants have direct access to actual probabilities also emerges in our much more complex situation, and that there is only a limited degree of learning through repeated play. We show that the model in the S-shaped function family that provides the best fit to our data is Prelec's (1998) conditional invariant model.
    Keywords: behavioural economics; expected utility theory; experiments; expectations; probabilities
    JEL: D40 L10
    Date: 2013–11
  19. By: Harin, Alexander
    Abstract: Three main groups of results have been obtained: 1) The question is emphasized whether the probability weighting function W(p) is continuous. If W(p) reveals a discontinuity at p=1, then this is a topological feature. This can qualitatively change (at least) the mathematical aspects of the utility and prospect theories. This is supported by a number of the evidences of the qualitative difference between subjects’ treatments of the probabilities of probable and certain outcomes. 2) Purely mathematical theorems prove (under several conditions) that if the dispersion of data (the noise) is non-zero, then the non-zero discontinuity take place at the probability p=1. 3) In the prevailing random-lottery incentive system of the experiments of the utility and prospect theories, the choices of certain outcomes are stimulated by uncertain lotteries. Because of this evident “certain-uncertain” inconsistency, the deductions from the random-lottery incentive experiments, those include the certain outcomes, cannot be unquestionably correct. The experiment of Starmer and Sugden (1991) evidently supports this consideration.
    Keywords: utility; prospect theory; experiment; incentive; random-lottery incentive system; Prelec; probability weighting function;
    JEL: C1 C9 C91 D8 D81
    Date: 2014–05–03
  20. By: Thunström, Linda (Department of Economics and Finance, University of Wyoming); Nordström, Jonas (Department of Economics, Lund University)
    Abstract: This paper quantitatively analyzes the importance of taste versus health in food demand, as well as the effect on consumers’ experienced taste of the non-intrinsic value of healthy labels. Our analysis is based on taste experiments and Vickrey second price auctions on potato chips and bread. Our findings imply a large positive effect on demand for potato chips from higher taste scores: when consumers’ experienced taste from potato chips improves by one unit, the average willingness-to-pay (WTP) for a 150 gram bag of chips increases by 25 euro cents. The estimated effect from taste on bread demand is smaller, but may be sizeable for subgroups of consumers. Our evidence suggests that demand for chips and bread is unaffected by nutrition – the effect of the healthy label on WTP is not statistically significant. Finally, we find that consumers’ experienced taste of a food is unaffected by the food carrying a healthy label.
    Keywords: willingness-to-pay for food; revealed preferences; taste; non-intrinsic value; healthy label
    JEL: D12 D83 Q18
    Date: 2014–04–23
  21. By: Muller, Sean (SALDRU, School of Economics, University of Cape Town)
    Abstract: The paper provides a first survey of the literature on external validity. The starting point for this are debates regarding the use of randomised evaluations to inform policy. Besides synthesising contributions to the programme evaluation literature we consider definitions of external validity from other subdisciplines within economics, such as experimental economics and the time-series forecasting literature, as well as the disciplines of philosophy and medicine. We suggest - following Cook and Campbell (1979) - that the fundamental challenge arises from interactive functional forms. This somewhat neglected point provides a framework in which to understand how and why extrapolation may fail. In particular it suggests that replication cannot resolve the external validity problem unless informed by some prior theoretical understanding of the causal relationship of interest. Finally, we argue that the assumptions required for simple external validity are conceptually equivalent to those required for obtaining unbiased estimates of treatment effects using non-experimental methods, undermining the idea that internal validity needs be rigorously assessed whereas external validity can be ascertained subjectively. Theory may play a role in aiding extrapolation, but the extent to which this will be possible in practice remains an open question.
    Keywords: external validity; treatment effects; randomised trials
    Date: 2014

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