nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒05‒09
24 papers chosen by
Daniel Houser
George Mason University

  1. Learning about Learning in Games through Experimental Control of Strategic Interdependence By Jason Shachat; J. Todd Swarthout
  2. Informational Price Cascades and Non-aggregation of Asymmetric Information in Experimental Asset Markets By Jason Shachat; Anand Srinivasan
  3. An Experimental Investigation of Auctions and Bargaining in Procurement By Jason Shachat; Lijia Tan
  4. Procuring Commodities: First-Price Sealed-Bid or English Auctions? By Jason Shachat; Lijia Wei
  5. Auctioning the Right to Play Ultimatum Games and the Impact on Equilibrium Selection By Jason Shachat; J. Todd Swarthout
  6. Man Versus Nash: An Experiment on the Self-enforcing Nature of Mixed Strategy Equilibrium By Jason Shachat; J. Todd Swarthouty; Lijia Wei
  7. The Hayek Hypothesis and Long Run Competitive Equilibrium: An Experimental Investigation By Jason Shachat; Zhenxuan Zhang
  8. A hidden Markov model for the detection of pure and mixed strategy play in games By Jason Shachat; J. Todd Swarthout; Lijia Wei
  9. Procurement Auctions for Differentiated Goods By Jason Shachat; J.Todd Swarthout
  10. Cooperation and Personality By Proto, Eugenio; Rustichini, Aldo
  11. Conforming to Group Norms: An Experimental Study By Gautam Bose; Lorraine Ivancic; Evgenia Dechter
  12. The effect of straight-line and accelerated depreciation rules on risky investment decisions: An experimental study By Ackermann, Hagen; Fochmann, Martin
  13. Affective reactions influence investment decisions: Evidence from a laboratory experiment with taxation By Schüßler, Katharina; Hewig, Johannes; Kiesewetter, Dirk; Fochmann, Martin
  14. Do Sunspots Matter? Evidence from an Experimental Study of Bank Runs By Jasmina Arifovic; Janet Hua Jiang
  15. Nonrenewable resources, strategic behavior and the hotelling rule: An experiment By van Veldhuizen, Roel; Sonnemans, Joep
  16. Exogenous vs. endogenous governance in innovation communities: Effects on motivation, conflict and justice - An experimental investigation By Störmer, Niclas; Herstatt, Cornelius
  17. Team Reasoning as a Guide to Coordination By Lahno, Amrei Marie; Lahno, Bernd
  18. Information technologies and provision of national identificacion cards by the Bolivian Police: Evidence from two randomized natural field experiments By Alberto Chong; Gustavo Machicado Salas; Monica Yanez-Pagans
  19. Price leadership and unequal market sharing: Collusion in experimental markets By Dijkstra, P.T.
  20. Auction Mechanisms for Allocating Subsidies for Carbon Emissions Reduction: An Experimental Investigation By He, Haoran; Chen, Yefeng; Last Name, First Name
  21. Strategic Sophistication and Attention in Games: an Eye-Tracking Study By Luca Polonio; Sibilla Di Guida; Giorgio Coricelli
  22. Subjective Well-being, Risk Perceptions and Time Discounting: Evidence from a large-scale cash transfer programme By Bruno Martorano; Sudhanshu Handa; Carolyn Halpern; Harsha Thirumurthy; UNICEF Innocenti Research Centre
  23. Sabotage in Handicap Contests By Alasdair Brown; Subhasish M. Chowdhury
  24. Moving Markets: Lessons from New Hampshire's Health Care Price Transparency Experiment. By Ha Tu; Rebecca Gourevitch

  1. By: Jason Shachat; J. Todd Swarthout
    Abstract: We report results from an experiment in which humans repeatedly play one of two games against a computer program that follows either a reinforcement or an experience weighted attraction learning algorithm. Our experiment shows these learning algo- rithms detect exploitable opportunities more sensitively than humans. Also, learning algorithms respond to detected payoff-increasing opportunities systematically; how- ever, the responses are too weak to improve the algorithms’ payoffs. Human play against various decision maker types does not vary significantly. These factors lead to a strong linear relationship between the humans’ and algorithms’ action choice propor- tions that is suggestive of the algorithms’ best response correspondences.
    Keywords: Learning, �Repeated games, �Experiments, �Simulation
    JEL: C72 C92 C81
    Date: 2013–10–14
  2. By: Jason Shachat; Anand Srinivasan
    Abstract: We report on experimental markets for a contingent claim asset that eight subjects traded for nine periods before the state was revealed. There is an informative binary signal that arrives after each of the first eight trading rounds. In our baseline treatment the realization of the signal is public information, and in another treatment, market participants are randomly sequenced and receive the signal as private information. In the latter case, we observe zero information aggregation and prices lock in on home grown norms, which we call informational price cascades. We test the fragility of the price cascades in two further treatments. First, we break the monopoly on each signal by revealing it to two subjects, and then we increase that number to four. It is only when we inform four participants, or one-half of the market, that cascades fail to form and information starts to aggregate in the market.
    Keywords: Information cascade; information aggregation; experiment; asset market
    JEL: C92 D82 G12
    Date: 2013–10–14
  3. By: Jason Shachat; Lijia Tan
    Abstract: In reverse auctions, buyers often retain the right to bargain further concessions from the winner. The optimal form of such procurement is an English auction followed by an auctioneer's option to engage in ultimatum bargaining with the winner. We study behavior and performance in this procurement format using a laboratory experiment. Sellers closely follow the equilibrium strategy of exiting the auction at their costs and then accepting strictly profitable offers. Buyers generally exercise their option to bargain according to their equilibrium strategy, but their take-it-or-leave-it o ers vary positively with auction prices when they should be invariant. We explain this deviation by modeling buyers' subjective posteriors regarding the winners' costs as distortions, calculated using a formulation of probability weighting, of the Bayesian posteriors. We show alternative models based upon risk aversion and anticipated regret can't explain these price dependencies.
    Keywords: Auction, Bargaining, Experiment, Subjective Posterior
    JEL: C34 C92 D03 D44
    Date: 2013–10–14
  4. By: Jason Shachat; Lijia Wei
    Abstract: We use laboratory experiments to examine the relative performance of the English auction (EA) and the first-price sealed-bid auction (FPA) when procuring a commodity. The mean and variance of prices are lower in the FPA than in the EA. Bids and prices in the EA agree with game-theoretic predictions, but they do not agree in the FPA. To resolve these deviations found in the FPA, we introduce a mixture model with three bidding rules: constant absolute markup, constant percentage markup, and strategic best response. A dynamic specification in which bidders can switch strategies as they gain experience is estimated as a hidden Markov model. Initially, about three quarters of the subjects are strategic bidders, but over time, the number of strategic bidders falls to below 65%. There is a corresponding growth in those who use the constant absolute markup rule.
    Keywords: procurement auction; experiment; hidden Markov model; decision rules of thumb
    Date: 2013–10–14
  5. By: Jason Shachat; J. Todd Swarthout
    Abstract: We conduct an experiment in which we auction the scarce rights to play the Proposer and Responder positions in subsequent ultimatum games. As a control treatment, we randomly allocate these rights and then charge exogenous participation fees according to the auction price sequences observed in the auction treatment. With endogenous selection into ultimatum games via auctions, we find that play converges to a session-specific Nash equilibrium and auction prices emerge which support this equilibrium by the principle of forward induction. With random assignment and exogenous participation fees, we find play also converges to a session-specific Nash equilibrium as predicted by the principle of loss avoidance. The Nash equilibrium observed within a session results in low ultimatum game offers, but the subgame perfect Nash equilibrium is never observed.
    Keywords: Ultimatum Bargaining; Auction; Forward Induction
    JEL: C92 C78 D44
    Date: 2013–10–14
  6. By: Jason Shachat; J. Todd Swarthouty; Lijia Wei
    Abstract: We examine experimentally how humans behave when they play against a computer which implements its part of a mixed strategy Nash equilibrium. We consider two games, one zero-sum and another unprofitable with a pure minimax strategy. A minority of subjects' play was consistent with their Nash equilibrium strategy, while a larger percentage of subjects' play was more consistent with different models of play: equiprobable play for the zero-sum game, and the minimax strategy in the unprofitable game. We estimate the heterogeneity and dynamics of the subjects' latent mixed strategy sequences via a hidden Markov model. This provides clear results on the identification of the use of pure and mixed strategies and the limiting distribution over strategies. The mixed strategy Nash equilibrium is not self-enforcing except when it coincides with the equal probability mixed strategy, and there is surprising amounts of pure strategy play and clear cycling between the pure strategy states.
    Keywords: Mixed Strategy, Nash Equilibrium, Experiment, Hidden Markov Model
    JEL: C92 C72 C10
    Date: 2013–10–14
  7. By: Jason Shachat; Zhenxuan Zhang
    Abstract: We report on an experiment investigating whether the Hayak Hypothesis (Smith, 1982)extends to the long run setting. We consider two environments; one with a common pro-duction technology having a U-shaped long run average cost curve and a single competitive equilibrium, and another with a common constant returns to scale technology having a constant long run average cost curve and multiple competitive equilibria. While there is convergence in both environments to the long run equilibrium, it takes longer and is less robust than usually observed in the short run setting. We show that price formation is adaptive and quickly converges to realized short run equilibrium, but long run investment decisions exhibit very limited rationality. We present and estimate an investment choice model that shows that only minimal rationality, coupled with repeated decisions, is enough to achieve high long run allocative eciency when markets use continuous double auctions.
    Keywords: Experiment; Double Auction; Hayek Hypothesis; Long Run Equilibrium; Bounded Rationality
    JEL: C92 D02
    Date: 2013–10–14
  8. By: Jason Shachat; J. Todd Swarthout; Lijia Wei
    Abstract: We propose a statistical model to assess whether individuals strategically use mixed strategies in repeated games. We formulate a hidden Markov model in which the latent state space contains both pure and mixed strategies, and allows switching between these states. We apply the model to data from an experiment in which human subjects repeatedly play a normal form game against a computer that always follows its part of the unique mixed strategy Nash equilibrium profile. Estimated results show significant mixed strategy play and non-stationary dynamics. We also explore the ability of the model to forecast action choice.
    Keywords: Mixed Strategy; Nash Equilibrium; Experiment; Hidden Markov Model
    JEL: C92 C72 C10
    Date: 2013–10–14
  9. By: Jason Shachat; J.Todd Swarthout
    Abstract: We consider two mechanisms to procure differentiated goods:a sealed-bid buyer-determined auction and a dynamic-bid price-based auction with bidding credits. The sealed-bid buyer-determined auction is analogous to the ââ¬Årequest for quoteâ⬠procedure commonly used by procurement agencies, and has each seller submit a price and the inherent quality of his good. Then the buyer selects the seller who offers the greatest difference in quality and price. In the dynamic-bid price-based auction with bidding credits, the buyer assigns a bidding credit to each seller conditional upon the quality of the sellerââ¬â¢s good. Then the sellers compete in an English auction, with the winner receiving the auction price and his bidding credit. Game-theoretic models predict the sealed-bid buyer-determined auction is socially efficient but the dynamic-bid price-based auction with bidding credits is not. The optimal bidding credit assignment undercompensates for quality advantages, creating a market distortion in which the buyer captures surplus at the expense of the sellerââ¬â¢s profit and social efficiency. In our experiment, the sealed-bid buyer-determined auction is less efficient than the dynamic-bid price-based auction with bidding credits. Moreover, both the buyer and seller receive more surplus in the dynamic-bid price-based auction with bidding credits.
    Keywords: procurement; auction; product differentiation; experiment
    Date: 2013–10–14
  10. By: Proto, Eugenio (Department of Economics, University of Warwick); Rustichini, Aldo (Department of Economics, University of Minnesota)
    Abstract: Cooperating behavior may be fostered by personality traits reflecting either favorable inclination to others or willingness to comply with norms and rules. We test the relative importance of these two factors in an experiment where subjects provide real mental effort in two treatments with identical task, differing only by whether others' payment is affected. If the first hypothesis is true, subjects reporting high Agreeableness score should put more effort; if the second is true, reporting higher Conscientiousness should predict more effort. We find experimental support for the second hypothesis but not for the first, as subjects reporting high Altruism do not behave consistently with this statement. Key words: Personality Traits ; Cooperation ; Effort Provision JEL classification: C90 ; D03 ; D82
    Date: 2014
  11. By: Gautam Bose (School of Economics, Australian School of Business, the University of New South Wales); Lorraine Ivancic (School of Economics, Australian School of Business, the University of New South Wales); Evgenia Dechter (School of Economics, Australian School of Business, the University of New South Wales)
    Abstract: There is substantial experimental and empirical evidence to suggest that individual behaviour in bilateral or small-group interactions is affected by social norms. Further, social norms vary according to context. Previous research largely focuses on norms of fairness, not norms per se. We design an experiment to decouple norm-adherence from fairness. We find that (a) a group norm evolves and individuals cluster more tightly around it as they learn the average behaviour of the group, (b) actions further from this norm in a self-serving direction are less acceptable by others, and (c) when an agent is moved to a group with a different norm, s/he conforms quickly to the new norm.
    Keywords: group behaviour, norms, conformism, fairness, ultimatum game
    JEL: C72 C78 C92 Z13
    Date: 2014–04
  12. By: Ackermann, Hagen; Fochmann, Martin
    Abstract: The aim of this study is to analyze how depreciation rules influence the decision behavior of investors. For this purpose, we conduct a laboratory experiment in which participants decide on the composition of an asset portfolio in different choice situations. Using an experimental environment with different payment periods, we show that accelerated compared to straight-line depreciation can increase the willingness to invest as hypothesized by theory. Additionally, we are able to replicate the unexpected finding of Ackermann et al. (2013) - that introducing a subsidy leads to a lower willingness to take risk although the net returns are kept constant - with our setting which is different to their experimental environment. --
    Keywords: Taxation,Straight-line Depreciation,Accelerated Depreciation,Tax Perception,Risk Taking Behavior,Portfolio Choice,Behavioral Taxation
    JEL: C91 D14 H24
    Date: 2014
  13. By: Schüßler, Katharina; Hewig, Johannes; Kiesewetter, Dirk; Fochmann, Martin
    Abstract: We investigate the effect of taxation on gains and losses on the investment behavior of investors. Based on the insights of both economic research on the influence of taxation on investment behavior and psychological concepts dealing with the descriptive decision behavior of investors we expect investors to react to taxation of investment alternatives they face with behavioral and affective changes. By conducting a laboratory experiment with a total of 72 participants based on the experimental design of Fochmann, Kiesewetter, and Sadrieh (2012) that allows to quantify the reactions of investors to taxation on gains and loss deduction independent of their individual risk preferences and additionally measuring the affective reactions of our participants, we explore the role of affect in the relation of taxation and decision making. Hence, we are able to show that affective reactions to the taxation situations, in particular the perceived valence of these situations, influence the change in behavior of investors when confronted with taxation on gains and limited loss deduction. --
    Keywords: decision making,risk taking behavior,behavioral taxation,distorting taxation,affect,valence
    JEL: C91 D14 H24
    Date: 2014
  14. By: Jasmina Arifovic; Janet Hua Jiang
    Abstract: A "sunspot" is a variable that has no direct impact on the economy’s fundamental condition, such as preferences, endowments or technologies, but may nonetheless affect economic outcomes through the expectations channel as a coordination device. This paper investigates how people react to sunspots in the context of a bank-run game in a controlled laboratory environment. The sunspot variable is a series of random public announcements predicting withdrawal outcomes. The treatment variable is the coordination parameter, defined as the minimum fraction of depositors required to wait so that waiting entails a higher payoff than withdrawing. We conduct treatments with a high, low and intermediate value of the coordination parameter. Although theory predicts that sunspot equilibria exist in all treatments, strong responses to sunspots only occur in the treatment featuring the intermediate value of the coordination parameter where strategic uncertainty is high. The policy implication is that people tend to respond strongly to public announcements during times of uncertainty. In those situations, communication to the public must be treated with extra care.
    Keywords: Financial markets, Financial stability
    JEL: C91 C92 D80 E58 G20
    Date: 2014
  15. By: van Veldhuizen, Roel; Sonnemans, Joep
    Abstract: This study uses the methods of experimental economics to investigate possible reasons for the lack of empirical support for the Hotelling rule for nonrenewable resources. We argue that as long as resource stocks are large enough, producers may choose to (partially) ignore the dynamic component of their production decision, shifting production to the present and focusing more on strategic behavior. We experimentally vary stock size in a nonrenewable resource duopoly setting and find that producers with large stocks indeed pay significantly less attention to variables related to dynamic optimization, and overproduce relative to the Hotelling rule. --
    Keywords: laboratory experiment,nonrenewable resources,Hotelling rule,dynamic oligopoly
    JEL: C90 Q30 L13
    Date: 2014
  16. By: Störmer, Niclas; Herstatt, Cornelius
    Abstract: In this study we examine the effects of exogenous vs. endogenous governance rules on a virtual community handling an innovative task. Specifically we investigate the relationship between the two modes (exogenous vs. endogenous) and factors such as motivation, conflict and justice. We conducted an experiment with 70 students, divided into teams of five. We manipulated procedural legitimacy by allowing one group to choose a set of rules and giving the other group the same rules exogenously. Our study indicates, that letting a team choose its own governance rules leads to increasing level of conflict negatively impacting motivation. --
    Keywords: Governance,Collaborative Innovation Communities
    Date: 2014
  17. By: Lahno, Amrei Marie; Lahno, Bernd
    Abstract: A particular problem of traditional Rational Choice Theory is that it cannot explain equilibrium selection in simple coordination games. In this paper we analyze and discuss the solution concept for common coordination problems as incorporated in the theory of Team Reasoning (TR). Special consideration is given to TR’s concept of opportunistic choice and to the resulting restrictions in using private information. We report results from a laboratory experiment in which teams were given a chance to coordinate on a particular pattern of behavior in a sequence of HiLo games. A modification of the stage game offered opportunities to improve on the team goal through changing this accustomed pattern of behavior. Our observations throw considerable doubt on the idea of opportunistic team reasoning as a guide to coordination. Contrary to what TR would predict, individuals tend to stick to accustomed behavioral patterns. Moreover, we find that individual decisions are at least partly determined by private information not accessible to all members of a team. Alternative theories of choice, in particular cognitive hierarchy theory may be more suitable to explain the observed pattern of behavior.
    Keywords: team reasoning, collective agency, coordination, opportunistic choice, laboratory experiment.
    JEL: C91 C92 D03 D70
    Date: 2014–04–01
  18. By: Alberto Chong (Elliott School of International Aairs, George Washington University); Gustavo Machicado Salas (Institute for Advanced Development Studies (INESAD)); Monica Yanez-Pagans (Poverty Reduction and Economic Management Network, The World Bank)
    Abstract: This paper investigates the potential of information technologies to improve public service delivery and empower citizens in the context of two unusual randomized natural experiments occurring within one particular bureaucratic process: the renewal of a national identification card by the Bolivian Police. The first experiment arises from the random assignment of both police officers and applicants to a manual or digital renewal process, which is identical in all aspects except that the digital renewal process makes use of information technologies as part of the renewal process. The second experiment arises by the existence of technical failures within the digital renewal process, which allows police officers to change from the digital to the manual renewal process randomly across renewal day. The efficiency of public service delivery is measured in terms of both renewal success rates (which average to a strikingly low rate of 72 percent in our sample) and time-it-takes to renew an identification card. The causal effect of information technologies on public service delivery is estimated using two different identification strategies. In the first one, applicant-police oficer pairs randomly assigned to each one of these two renewal processes are compared after controlling for renewal day fixed effects. In the second one, applicant-police officer pairs randomly assigned to the digital process are compared to those randomly assigned to this same process but who experienced a technical failure within the process, which allows to directly control for unobserved heterogeneity at the police officer level. We find that information technologies significantly improve the quality of public service delivery. Applicants randomly assigned to the digital renewal process are on average 12 percentage points more likely to complete the renewal process as compared to those randomly assigned to the manual one. Further, successful applicants randomly assigned to the digital process take on average 31 percent less time to complete the process as compared to those randomly assigned to the manual one. Lastly, we find that information technologies significantly lower barriers in access to national identification cards by promoting a more equitable provision across the population. We discuss several channels through which technologies might be improving efficiency and promoting equity within this particular bureaucratic process. Overall, our findings suggest that information technologies might be achieving these goals by introducing efficiencies (such as reducing administrative shortcomings and transaction costs), and limiting the exercise of discretion by police officers within the renewal process.
    Keywords: Field experiments, government policy, human capital
    JEL: C93 O38 J24
    Date: 2014–03
  19. By: Dijkstra, P.T. (Groningen University)
    Abstract: We consider experimental markets of repeated homogeneous pricesetting duopolies. We investigate the effect on collusion of sequential versus simultaneous price setting. We also examine the effect on collusion of changes in the size of each subject's market share in case both subjects set the same price. Our results show that sequential price setting compared with simultaneous price setting facilitates collusion, if subjects have equal market shares or if the follower has the larger market share. With sequential price setting, we find more collusion if subjects have equal market shares rather than unequal market shares. We observe more collusion if the follower has the larger market share than if the follower has the smaller market share.
    Date: 2014
  20. By: He, Haoran; Chen, Yefeng; Last Name, First Name
    Abstract: One method to reduce greenhouse gas emissions is to subsidize emissions-reducing activities. The question is how to allocate such subsidies. Allocation through auctions is an emerging mechanism. In a controlled experimental market setting, we compare the effects of a variety of auction mechanisms for allocating subsidies for carbon emissions reduction in China. Besides the conventional auction mechanisms, we place particular focus on testing the actual performance of the auction mechanism proposed by Erik Maskin (2011). We find that, while the Maskin auction mechanism spends the most from a fixed subsidy budget and leads to the largest emissions reduction, its per-unit emissions reduction cost is higher than that of discriminatory and uniform-price auction mechanisms. Both the Maskin and uniform-price auctions outperform discriminatory auctions in price discovery. Furthermore, from the government’s perspective, the Maskin auctions exhibit the strongest improvement tendency with repeated auctions.
    Keywords: auctions, subsidy allocation, carbon dioxide, greenhouse gases, emissions reduction
    JEL: C91 C93 D64
    Date: 2014–04–18
  21. By: Luca Polonio; Sibilla Di Guida; Giorgio Coricelli
    Abstract: We used eye-tracking to measure the dynamic patterns of visual information acquisition in twoplayers normal form games. Participants played one-shot games in which either, neither, or only oneof the players had a dominant strategy. First, we performed a mixture models cluster analysis to groupparticipants into types according to the pattern of visual information acquisition observed in a singleclass of games. Then, we predicted agents’ choices in different classes of games, and observed thatpatterns of visual information acquisition were game invariant. Our method allowed us to predictwhether the decision process would lead to equilibrium choices or not, and to attribute out-ofequilibriumresponses to limited cognitive capacities or social motives. Our results suggest theexistence of individually heterogeneous-but stable-patterns of visual information acquisition basedon subjective levels of strategic sophistication and social preferences.
    Keywords: game theory; strategic sophistication; social preferences; attention; eye-tracking
    Date: 2014–04
  22. By: Bruno Martorano; Sudhanshu Handa; Carolyn Halpern; Harsha Thirumurthy; UNICEF Innocenti Research Centre
    Abstract: The risk and time preferences of individuals as well as their subjective expectations regarding the future are likely to play an important role in choice behaviour. Measurement of these individual characteristics in large-scale surveys has been a recent development and empirical evidence on their associations with behaviour remains limited. We summarize the results of measuring individuals’ attitudes towards inter-temporal choice, risk, and the future in a large-scale field survey in Kenya. We find very low rates of inconsistency in interpreting questions on time and risk preferences. Cash transfers alone do not appear to impact time discounting or risk aversion, but they do have an important impact on subjective well-being measures and on future perceptions of quality of life.
    Keywords: risk; surveys; transfer income;
    Date: 2014
  23. By: Alasdair Brown (University of East Anglia); Subhasish M. Chowdhury (University of East Anglia)
    Abstract: Contests are ubiquitous in economic and political settings. Contest designers often use tools to make a contest among asymmetric contestants more even, in order to either elicit higher effort levels, or for ethical reasons. Handicapping - in which stronger participants are a priori weakened - is one successful tool that is widely used in sports, promotional tournaments and procurement auctions. In this study we show theoretically that participants may also increase their destructive effort, and sabotage their rivals' performance, when handicapping is employed. We empirically verify this prediction using data on 19,635 U.K. horse-races in 2011 and 2012. Our results suggest that while a level field may be conducive to heightened positive effort in general, in a setting where both handicapping and sabotage (`interference') are present it also lays the ground for greater destruction.
    Date: 2014–04
  24. By: Ha Tu; Rebecca Gourevitch
    Abstract: This report examines efforts by New Hampshire state government over the past decade to use health care price transparency—notably through the creation of HealthCost, a public website comparing costs of median health care bundled prices—to encourage cost-conscious behavior by consumers and increase competition and efficiency among health care providers. The study found that although state transparency initiatives did not directly alter consumers' behavior, they have helped change health care market dynamics in important ways. By highlighting wide provider price gaps within the state, New Hampshire's transparency initiatives increased pressure on high-price hospitals to lower their rate demands and accelerated a statewide trend toward new insurance products that reward consumers for choosing efficient providers.
    Keywords: Health Care, Price Transparency Experiment, New Hampshire
    JEL: I
    Date: 2014–04–30

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