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on Experimental Economics |
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Issue of 2014‒05‒17
25 papers chosen by |
| By: | Jérôme Hergueux (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Institut d'Études Politiques [IEP] - Paris - PRES Sorbonne Paris Cité - Fondation Nationale des Sciences Politiques [FNSP]); Nicolas Jacquemet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II) |
| Abstract: | Internet is a very attractive technology for the implementation of experiments, both in order to obtain larger and more diverse samples and as a field of economic research in its own right. This paper reports on an experiment performed both online and in the laboratory, designed to strengthen the internal validity of decisions elicited over the Internet. We use the same subject pool, the same monetary stakes and the same decision interface, and control the assignment of subjects between the Internet and a traditional university laboratory. We apply the comparison to the elicitation of social preferences in a Public Good game, a dictator game, an ultimatum bargaining game and a trust game, coupled with an elicitation of risk aversion. This comparison concludes in favor of the reliability of behaviors elicited through the Internet. We moreover find a strong overall parallelism in the preferences elicited in the two settings. The paper also reports some quantitative differences in the point estimates, which always go in the direction of more other-regarding decisions from online subjects. This observation challenges either the predictions of social distance theory or the generally assumed increased social distance in internet interactions. |
| Keywords: | Social experiment ; Field experiment ; Internet Methodology ; Randomized assignment |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00984211&r=exp |
| By: | L. Corazzini; A. Filippin; P. Vanin |
| Abstract: | We report results from an incentivized laboratory experiment to provide controlled evidence on the causal effects of alcohol consumption on risk preferences, time perception and altruism. Our design allows disentangling the pharmacological effects of alcohol intoxication from those mediated by expectations, as we compare behaviors of three groups of subjects: those participating to an experiment with no reference to alcohol, those exposed to the possibility of consuming alcohol but assigned to a placebo and those having effectively consumed alcohol. Once randomly assigned to one treatment, subjects were administered a series of consecutive economic tasks, being the sequence kept constant across treatments. After controlling for both the willingness to pay and the potential misperception of probabilities as elicited in the experiment, we do not detect any effect of alcohol in depleting subjects’ risk tolerance. On the contrary, we find that alcohol intoxication increases impatience. Moreover, we find that alcohol makes subjects less generous as we detect a negative relationship between the blood alcohol concentration and the amount of money donated to NGOs. |
| JEL: | D03 I10 C91 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp944&r=exp |
| By: | Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Jörg Franke (University of Dortmund (TU), Department of Economics); Ruslan Gurtoviy (University of Trier) |
| Abstract: | Our study analyzes the consequences of workers' participation in the wage setting process on effort exertion. The experimental design is based on a modified giftexchange game where the degree of workers’ involvement in the wage setting process is systematically varied among the workers. The experimental data reveals that workers' participation leads actually to a decline in effort exertion which can be explained by negative reciprocity of the respective worker. These results put some recently observed positive effects from workers' participation in experimental labor markets into perspective and are more in line with the ambiguous results from empirical studies. |
| Keywords: | participation, labor market, gift-exchange game, personnel economics, reciprocity |
| JEL: | C72 C91 J33 L23 M52 M55 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:dpaper:201407&r=exp |
| By: | Veronika A. Andorfer; Ulf Liebe |
| Abstract: | We address ethical consumption using a natural field experiment on the actual purchase of Fair Trade (FT) coffee in three supermarkets in Germany. Based on a quasi-experimental before-and-after design the effects of three different treatments - information, 20% price reduction, and a moral appeal - are analyzed. Sales data cover actual ethical purchase behavior and avoid problems of social desirability. But they offer only limited insights into the motivations of individual consumers. We therefore complemented the field experiment with a customer survey that allows us to contrast observed (ethical) buying behavior with self-reported FT consumption. Results from the experiment suggest that only the price reduction had the expected positive and statistically significant effect on FT consumption. In the customer survey, however, we find that the personal norm has the strongest effect on both self-reported and observed purchases of FT products. |
| Keywords: | ethical consumption, Fair Trade, natural field experiment, survey, observed and self-reported behavior |
| Date: | 2014–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:bss:wpaper:6&r=exp |
| By: | Brañas-Garza, Pablo; Kernohan, David; Oyediran, Olusegun; Rivas, M. Fernanda |
| Abstract: | This experimental study examines latent racial prejudice toward out-groups among 152 Spanish college students when they make guesses about the contributions of others in a public good game. Prejudice is examined firstly from the perspective of a two-sided, implicitly-held belief toward any of the specified out-groups: Africans, Asians, Latin Americans and Western. Secondly, from an ordinal perspective of highest negative (positive) prejudice. Lastly models of racial beliefs are fitted for the four out-groups. Results suggest subjects expect Africans and Latin Americans to be less cooperative, but Asians and Western to be more cooperative, than they actually are. We also find that racial prejudices do not have unique determinants across the out-groups under study, nor do the determining factors work in similar directions. |
| Keywords: | Beliefs, Implicit Cognition, Multiculturalism, Prejudice, Public Good Game, Stereotypes |
| JEL: | C91 H41 J15 |
| Date: | 2014–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55945&r=exp |
| By: | G. Camera; M. Casari; S. Bortolotti |
| Abstract: | We study the behavioral underpinnings of adopting cash versus electronic payments in retail transactions. A novel theoretical and experimental framework is developed to primarily assess the impact of sellers’ service fees and buyers’ rewards from using electronic payments. Buyers and sellers face a coordination problem, independently choosing a payment method before trading. In the experiment, sellers readily adopt electronic payments but buyers do not. Eliminating service fees or introducing rewards significantly boosts the adoption of electronic payments. Hence, buyers’ incentives play a pivotal role in the diffusion of electronic payments but monetary incentives cannot fully explain their adoption choices. Findings from this experiment complement empirical findings based on surveys and field data. |
| JEL: | E1 E4 E5 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp942&r=exp |
| By: | Ghazala Azmat; Barbara Petrongolo |
| Abstract: | Lab experiments are an increasingly valuable tool for understanding differences in how men and women are treated in the labour market. Dr Ghazala Azmat and Professor Barbara Petrongolo explore what has been learned about the extent to which differences in men and women's pay and employment opportunities can be explained by discrimination or by differences in their preferences or productivity. |
| Keywords: | Gender, field experiments, lab experiments, discrimination, gender preferences |
| JEL: | J16 J24 J71 C91 C92 C93 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:425&r=exp |
| By: | Morten Hedegaard (Department of Economics, Copenhagen University); Jean-Robert Tyran (Department of Economics, Copenhagen University) |
| Abstract: | We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but remarkably responsive to the "price of prejudice", i.e. to the opportunity cost of choosing a less productive worker on ethnic grounds. In addition, we find that the standard theory of statistical discrimination fails to explain observed choices, and that taking ethnic prejudice into account helps to predict the incidence of discrimination. |
| Keywords: | Field experiment, discrimination, labor market |
| JEL: | C93 J71 |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1409&r=exp |
| By: | Julie Chytilova (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Vaclav Korbel (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | Dishonest activities with negative consequences for others and society are often undertaken by individuals as well as groups of people. In this paper, we use a field experiment among students aged 11-16 years to study whether there is a difference between individual and group cheating behavior. We find that students cheat, but not to the maximum extent possible. On average, groups are more inclined to cheat than individuals, but there are important differences across age. While there is no evidence of dishonesty among younger individuals, older individuals as well as younger and older groups cheat and do so to a similar extent. The way in which groups are formed does not seem to matter. |
| JEL: | C93 D63 D70 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2014_06&r=exp |
| By: | Chowdhury, Subhasish; Sheremeta, Roman; Turocy, Theodore |
| Abstract: | We study experimentally the effects of cost structure and prize allocation rules on the performance of rent-seeking contests. Most previous studies use a lottery prize rule and linear cost, and find both overbidding relative to the Nash equilibrium prediction and significant variation of efforts, which we term ‘overspreading.’ We investigate the effects of allocating the prize by a lottery versus sharing it proportionally, and of convex versus linear costs of effort, while holding fixed the Nash equilibrium prediction for effort. We find the share rule results in average effort closer to the Nash prediction, and lower variation of effort. Combining the share rule with a convex cost function further enhances these results. We can explain a significant amount of non-equilibrium behavior by features of the experimental design. These results contribute towards design guidelines for contests based on behavioral principles that take into account implementation features of a contest. |
| Keywords: | rent-seeking, contest, contest design, experiments, quantal response, overbidding |
| JEL: | C72 C91 D72 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55922&r=exp |
| By: | Lahno, Amrei M.; 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 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:20822&r=exp |
| By: | Dr Richard Dorsett |
| 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. |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:11791&r=exp |
| By: | Ulf Liebe; Veronika A. Andorfer; Patricia A. Gwartney; Jürgen Meyerhoff |
| Abstract: | This research examines the role of social context in ethical consumption, specifically, the extent to which anonymity and social control influence individuals' decisions to purchase organic and Fair Trade coffee. Our research design overcomes biases of prior research by combining framing and discrete choice experiments in a survey. We systematically vary coffee growing method (organic or not), import status (Fair Trade or not), flavor, and price across four social contexts that vary in degree of anonymity and normative social control. The social contexts are buying coffee online, in a large grocery store, in a small neighborhood shop, and for a meeting of a human rights group. Subjects comprise 1,103 German and American undergraduate students. We find that social context indeed influences subjects' ethical consumer decisions, especially in situations with low anonymity and high social control. In addition, gender, coffee buying, and subjective social norms trigger heterogeneity regarding stated ethical consumption and the effects of social context. These results suggest previous research has underestimated the relevance of social context for ethical consumption and overestimated altruistic motives of ethical consumers. Our study demonstrates the great potential of discrete choice experiments for the study of social action and decision making processes in sociology. |
| Keywords: | ethical consumption, choice experiment, framing effect, social context, social norms |
| Date: | 2014–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:bss:wpaper:7&r=exp |
| By: | Hiromasa Takahashi (Faculty of International Studies, Hiroshima City University, Japan); Junyi Shen (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Kazuhito Ogawa (Faculty of Sociology, Kansai University, Japan) |
| Abstract: | We examine the influence of different compensation schemes on exertion of effort for differentiated tasks. The first type of task is assumed to be boring and has no intrinsic motivation, while the second is assumed to be interesting, and has a higher intrinsic motivation. The results are as follows: (1) in the first task, standard economic theory, which claims higher pay should result in higher effort, does not hold. (2) Standard economic theory holds for the second task, which predicts that the higher the incentive, the more effort one exerts, and achieves a higher performance on average. |
| Keywords: | Real effort experiment, Intrinsic motivation, Loss aversion, Fixed pay, Incentive pay |
| JEL: | M52 J33 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2014-20&r=exp |
| By: | Matias Busso; Sebastian Galiani |
| Abstract: | This paper provides the first experimental evidence on the effect of increased competition on the prices and quality of goods. We rely on an intervention that randomized the entry of 61 retail firms (grocery stores) into 72 local markets in the context of a conditional cash transfer program that serves the poor in the Dominican Republic. Six months after the intervention, product prices in the treated districts had decreased by about 6%, while product quality and service quality had not changed. Using a theoretical model, we arrive at the conclusion that the poor segments of the population in these markets care the most about prices and much less about quality. Our results are also informative to the design of social policies. They suggest that policymakers should pay attention to supply conditions even when the policies in question will only affect the demand side of the market. |
| JEL: | D4 I3 L1 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20054&r=exp |
| By: | Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Kariv, Shachar (University of California, Berkeley); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | We report an experimental test of the four touchstones of rationality in choice under risk – utility maximization, stochastic dominance, expected-utility maximization and small-stakes risk neutrality – with students from one of the best universities in the United States and one of the best universities in Africa, the University of Dar es Salaam. Although the US and the Tanzanian subjects come from different backgrounds and face different economic prospects, they are united by being among the most able in their societies. Importantly, many of whom will exercise an outsized influence over economic and political affairs. We find very small or no significant differences between the two samples in the degree of rationality according to a number of standard economic measures. An alternative approach is to take cognitive ability (IQ) as a proxy for economic rationality. We show that a canonical IQ test indicates a much larger development gap in rationality relative to our economic tests. |
| Keywords: | Development; rationality; revealed preference; stochastic dominance; expected utility; risk aversion; cognitive ability; experiment. |
| JEL: | D01 D03 D81 O12 |
| Date: | 2014–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2014_008&r=exp |
| By: | Drichoutis, Andreas C.; Lusk, Jayson; Pappa, Valentina |
| Abstract: | We conduct a field valuation experiment where we vary the valuation method (contingent valuation vs. inferred valuation) as well as the payment format (dichotomous choice vs. payment card). Willingness-to-accept and willingness-to-pay valuations are elicited in a within-subjects design for foods with climate neutral labels. We find a similar gap for valuations elicited with the contingent or the inferred valuation method. However, we also find that the gap can be muted by using a payment card elicitation format. |
| Keywords: | willingness to pay; willingness to accept; contingent valuation; inferred valuation; payment card; single bounded |
| JEL: | C93 D12 |
| Date: | 2014–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55831&r=exp |
| By: | Alexander W. Cappelen (Department of Economics, Copenhagen University); Ulrik H. Nielsen (Department of Economics, Copenhagen University); Bertil Tungodden (Norwegian School of Economics); Jean-Robert Tyran (Department of Economics, Copenhagen University); Erik Wengström (Department of Economics, Copenhagen University) |
| Abstract: | In this paper we provide new evidence showing that fair behavior is intuitive to most people. We find a strong association between a short response time and fair behavior in the dictator game. This association is robust to controls that take account of the fact that response time might be affected by the decision-maker's cognitive ability and swiftness. The experiment was conducted with a large and heterogeneous sample recruited from the general population in Denmark. We find a striking similarity in the association between response time and fair behavior across groups in the society, which suggests that the predisposition to act fairly is a general human trait. |
| Keywords: | Response Time, Dictator Game, Experiment, Fairness |
| JEL: | C90 D03 D60 |
| Date: | 2014–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1410&r=exp |
| By: | Michael Hallsworth; John List; Robert Metcalfe; Ivo Vlaev |
| Abstract: | Tax collection problems date back to the earliest recorded history of mankind. This paper begins with a simple theoretical construct of paying (rather than declaring) taxes, which we argue has been an overlooked aspect of tax compliance. This construct is then tested in two large natural field experiments. Using administrative data from more than 200,000 individuals in the UK, we show that including social norms and public goods messages in standard tax payment reminder letters considerably enhances tax compliance. The field experiments increased taxes collected by the Government in the sample period and were cost-free to implement, demonstrating the potential importance of such interventions in increasing tax compliance. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00391&r=exp |
| By: | Mariana Blanco; Juan Fernando Vargas; Patricio S. Dalton |
| Abstract: | Abstract: We investigate whether and how the type of unemployment benefit institution affects productivity. We designed a eld 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 benefit. 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 Benets, Workfare, Productivity, Self-esteem, Shame. |
| JEL: | J24 J65 J45 |
| Date: | 2013–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:011015&r=exp |
| By: | Giovanni Giusti; Janet Hua Jiang; Yiping Xu |
| Abstract: | We study the formation of price bubbles on experimental asset markets where cash earns interest. There are two main conclusions. The first is that paying positive interest on cash is ineffective in diminishing bubbles through the reducing-active-participation channel. The second is that the fundamental value generating process plays a critical role in the formation of asset bubbles in the laboratory. In particular, bubbles tend to occur whenever there is a conflict between the sign of the time trend of the fundamental value and the sign of the expected dividend payment. This explanation is consistent with all existing studies that analyze the role of fundamental value processes in inducing bubbles on experimental asset markets. |
| Keywords: | Asset Pricing, Financial markets, Financial stability |
| JEL: | C90 G10 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:14-18&r=exp |
| By: | Dr Richard Dorsett |
| Abstract: | A recent experimental programme for unemployed welfare recipients in the UK found that temporary earnings supplements combined with post-employment services led to increased employment rates. This paper examines whether these overall impacts are due to employment entry or employment retention effects. Findings from a multivariate mixed proportional hazards model suggest that entry effects dominated initially but that longer-term impacts were primarily due to increased retention. This retention effect persisted beyond the operational period of the programme and was evident even after controlling for the effect of employment experience. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:11598&r=exp |
| By: | Mariana Blanco; Juan Fernando Vargas |
| Abstract: | Low take up of stigma-free social benefits is often blamed on information asymmetries or administrative barriers. There is limited evidence on which of these potential channels is more salient in which contexts. We designed and implemented a randomized controlled trial to assess the extent to which informational barriers are responsible for the prevalent low take-up of government benefits among Colombian conflict-driven internal refugees. We provide timely information on benefits eligibility responsible for the prevalent low take-up of government benefits among Colombian ity via SMS to a random half of the displaced household that migrated to Bogota over a 6-month period. We show that improving information increases benefits' take up. However, the effect is small and only true for certain type of benefits. Hence, consistent with previous experimental literature, the availability of timely information explains only part of the low-take up rates and the role of administrative barriers and bureaucratic processes should be tackled to increase the well-being of internal refugees in Colombia. |
| Keywords: | Information asymmetries, take-up rate, SMS, RCT |
| JEL: | D82 C93 |
| Date: | 2013–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:011036&r=exp |
| By: | Schudy, Simeon; Utikal, Verena |
| Abstract: | We provide evidence that people have preferences for data privacy and show that these preferences partly reflect people’s interest in controlling who receives their private information. Participants of an experiment face the decision to share validated personal information with peers. We compare preferences for sharing potentially embarrassing information (body weight and height) and non-embarrassing information (address data) with geographically proximate or distant peers. We find that i) participants are willing to give up substantial monetary amounts in order to keep both types of information private, ii) data types are valued differently, and iii) prices for potentially embarrassing information tend to be higher for geographically proximate than distant peers. |
| Keywords: | preferences; data privacy; information transmission; experiment |
| JEL: | C91 D80 D82 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:20791&r=exp |
| By: | Andrew Beath; Fotini Christia; Georgy Egorov; Ruben Enikolopov |
| Abstract: | We examine the effect of electoral rules on the quality of elected officials using a unique field experiment which induced randomized variation in the method of council elections in 250 villages in Afghanistan. In particular, we compare at-large elections, with a single multi-member district, to district elections, with multiple single member districts. We propose a theoretical model where the difference in the quality of elected officials between the two electoral systems occurs because elected legislators have to bargain over policy, which induces citizens in district elections to vote strategically for candidates with more polarized policy positions even at the expense of candidates' competence. Consistent with the predictions of the model, we find that elected officials in at-large elections are more educated than those in district elections and that this effect is stronger in more heterogeneous villages. We also find evidence that elected officials in district elections have more biased preferences. |
| JEL: | D72 D78 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20082&r=exp |