nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒06‒07
sixteen papers chosen by
Daniel Houser
George Mason University

  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. Norm Enforcement in Social Dilemmas. An Experiment with Police Commissioners By David Dickinson; David Masclet; Marie Claire Villeval
  3. For Love or Reward? Characterising Preferences for Giving to Parents in an Experimental Setting By Maria Porter
  4. When do the Expectations of Others Matter? An Experiment on Distributional Justice and Guilt Aversion By Riccardo Ghidoni; Matteo Ploner
  5. Grading on a Curve, and other Effects of Group Size on All-Pay Auctions By James Andreoni; Andy Brownback
  6. Are teams less inequality averse than individuals? By Haoran He; Marie Claire Villeval
  7. Social Distance and Quality Ratings in Charity Choice By Alexander L. Brown; Jonathan Meer; J. Forrest Williams
  8. Measuring Ratchet Effects within a Firm: Evidence from a Field Experiment Varying Contractual Commitment By Bellemare, Charles; Shearer, Bruce S.
  9. Information Acquisition and Decisions under Risk and Ambiguity By Ralf Bergheim
  10. Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment By Tom Blake; Chris Nosko; Steven Tadelis
  11. A Field Experiment on Directed Giving at a Public University By Catherine C. Eckel; David Herberich; Jonathan Meer
  12. How Do Fair Value Measurements of Financial Instruments Affect Investments in Banks? By Ralf Bergheim; Jürgen Ernstberger; Michael W.M. Roos
  13. Identity changes and the efficiency of reputation systems By Wibral, Matthias
  14. Can Arts-Based Interventions Enhance Labor Market Outcomes among Youth? Evidence from a Randomized Trial in Rio de Janeiro By Carla Calero; Veronica Gonzales; Yuri Soares; Jochen Kluve; Carlos Henrique Corseuilt
  15. WHY MY PARTICIPATION MATTERS: Rent-seeking with endogenous prize determination By Klarizze Anne Puzon; Marc Willinger
  16. Recall Searching with and without Recall By Daniela Di Cagno; Tibor Neugebauer; Carlos Rodriguez-Palmero; Abdolkarim Sadrieh

  1. By: Li Hao (Walton College - University of Arkansas); Daniel Houser (Interdisciplinary Center for Economic Science, George Mason University - George Mason University); Lei Mao (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL)); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL))
    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.
    Keywords: Migration; risk preferences; strategic uncertainty; ambiguity; field experiment
    Date: 2014
  2. By: David Dickinson (Department of Economics - Appalachian State University); David Masclet (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL))
    Abstract: Do individuals trained in law enforcement punish or reward differently from typical student subjects ? We analyze norm enforcement behavior of newly appointed police commissioners in both a Voluntary Contribution Mechanism game and a Common Pool Resource game. Our experimental design includes treatments where a reward or sanction institution is exogenously imposed, as well as treatments with endogenous selection of the norm enforcement institution. Compared to a standard student-subject pool, police commissioners cooperate significantly more in both games. With exogenous institutions, police commissioners bear a higher burden of punishment costs than non-police subjects. When the norm enforcement institution is endogenous, all subjects vote more in favor of rewards over sanctions, but police subjects with some work experience are more likely to vote for sanctions. Police subjects also reward and sanction more than the others when the institution results from a majority vote.
    Keywords: Norm enforcement; Common Pool Resources; Voluntary Contribution Mechanism; Police officers; Experiment
    Date: 2014
  3. By: Maria Porter
    Abstract: This paper examines the motivation for intergenerational transfers between adult children and their parents, and the nature of preferences for such giving behaviour, in an experimental setting.� Participants in our experiment play a series of dictator games with parents and strangers, in which we vary endowments and prices for giving to each recipient.� We find that preferences for giving are typically rational.� When parents are recipients as opposed to strangers, participants display greater sensitivity to the price of giving, and a higher relative proclivity for giving.� Our findings also provide evidence of reciprocal motivations for giving, as players give more to parents who have full information regarding the context in which giving occurs.
    Keywords: transfer motives, intergenerational, dictator games, lab experiments, altruism, reciprocity
    JEL: C91 D12 D64
    Date: 2014–05–29
  4. By: Riccardo Ghidoni; Matteo Ploner
    Abstract: In a modified dictator game experiment, we study how distributional justice, measured by the proportionality between effort exerted and rewards obtained, and guilt feelings triggered by others’ expectations affect dictator’s choices. We consider these two sources of behavior in isolation and in interaction. Our results suggest that both justice concerns and guilt aversion are important drivers of behavior. However, the expectations of others are more relevant when the choice environment is likely to induce less equitable outcomes.
    Keywords: Justice, Guilt Aversion, Entitlement Rights, Experiments
    Date: 2014
  5. By: James Andreoni; Andy Brownback
    Abstract: We model contests with a fixed proportion of prizes, such as a grading curve, as all-pay auctions where higher effort weakly increases the likelihood of a prize. We find theoretical predictions for the effect of contest size on effort and test our predictions in a laboratory experiment that compares two-bidder auctions with one prize and 20-bidder auctions with ten prizes. Our results demonstrate that larger contests elicit lower effort by low-skilled students, but higher effort by high-skilled. Large contests also generate more accurate rankings of students and more accurate assignment of high grades to the high-skilled.
    JEL: C91 C92 H52
    Date: 2014–05
  6. By: Haoran He (School of Economics and Business Administration - Beijing Normal University / Beijing); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL))
    Abstract: We compare inequality aversion in individuals and teams by means of both within- and between-subject experimental designs, and we investigate how teams aggregate individual preferences. We find that team decisions reveal less inequality aversion than individual initial proposals in team decision-making. However, teams are no more selfish than individuals who decide in isolation. Individuals express strategically more inequality aversion in their initial proposals in team decision-making because they anticipate the selfishness of other members. Members with median social preferences drive team decisions. Finally, we show that social image has little influence because guilt and envy are almost similar in anonymous and non-anonymous interactions.
    Keywords: Team; inequity aversion; preference aggregation; social image; experiment
    Date: 2014
  7. By: Alexander L. Brown; Jonathan Meer; J. Forrest Williams
    Abstract: We conduct a laboratory experiment to examine how third-party ratings impact charity choice and donative behavior, particularly in regards to preferences for local charities. Subjects are given a menu of ten charities, with a mix of local and non-local organizations included. We vary whether third-party ratings are displayed on this menu. Subjects perform an effort task to earn money and can choose to donate to their selected charity. We find evidence that subjects' choice of charity is impacted by third-party evaluations but, somewhat surprisingly, there are no obvious preferences for local charities. These third-party assessments have some impact on the percent of earnings that subjects allocate to their selected charity; local charities also accrue more donations, though these results are somewhat imprecise.
    JEL: C91 D64 H41
    Date: 2014–05
  8. By: Bellemare, Charles (Université Laval); Shearer, Bruce S. (Université Laval)
    Abstract: We present results from a field experiment designed to measure the importance of managerial commitment to a contract within a firm that pays its workers piece rates. In the tree planting industry the piece rate paid to workers is determined as a function of the difficulty of the terrain to be planted. During the experiment, workers began planting a terrain at a trial piece rate, but were told this rate would be revised upwards if, after a few work days, average productivity was below that observed on a similar (control) terrain on which the firm had committed to the contract. Our results suggest that worker productivity was 20% to 40% lower in the absence of commitment. The reduction was less pronounced when workers had less time to benefit from any subsequent increase in the piece rate. This provides support for models of worker turnover as a means of overcoming ratchet effects.
    Keywords: ratchet effect, piece rates, incentive contracts, field experiments
    JEL: J33 M52 C93
    Date: 2014–05
  9. By: Ralf Bergheim
    Abstract: This paper experimentally investigates individual information acquisition and decisions in ambiguous situations in which the degree of ambiguity can endogenously and individually be decreased by the subjects. In particular, I analyze how risk aversion, ambiguity attitude and personality traits are related to an individual’s information acquisition prior to a decision and to the decision itself based on this information. I focus on urn decisions and conduct treatments that consider the loss and gain domain separately and that vary the amount of available information and the probabilistic structure.
    Keywords: Ambiguity aversion; risk aversion; experiment; decision making; information acquisition; personality traits
    JEL: C91 D03 D81
    Date: 2014–05
  10. By: Tom Blake; Chris Nosko; Steven Tadelis
    Abstract: Internet advertising has been the fastest growing advertising channel in recent years with paid search ads comprising the bulk of this revenue. We present results from a series of large scale field experiments done at eBay that were designed to measure the causal effectiveness of paid search ads. Because search clicks and purchase behavior are correlated, we show that returns from paid search are a fraction of conventional non-experimental estimates. As an extreme case, we show that brand-keyword ads have no measurable short-term benefits. For non-brand keywords we find that new and infrequent users are positively influenced by ads but that more frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses, resulting in average returns that are negative.
    JEL: C93 D22 L10 L20 L81 M37
    Date: 2014–05
  11. By: Catherine C. Eckel; David Herberich; Jonathan Meer
    Abstract: The use of directed giving - allowing donors to target their gifts to specific organizations or functions - is pervasive in fundraising, yet little is known about its effectiveness. We conduct a field experiment at a public university in which prospective donors are presented with either an opportunity to donate to the unrestricted Annual Fund, or an opportunity of donating to the Annual Fund and directing some or all of their donation towards the academic college from which they graduated. While there is no effect on the probability of giving, donations are significantly larger when there is the option of directing. However, the value of the option does not come directly from use, as very few donors choose to direct their gift.
    JEL: C93 D64 H41
    Date: 2014–05
  12. By: Ralf Bergheim; Jürgen Ernstberger; Michael W.M. Roos
    Abstract: This paper experimentally investigates how fair value measurements of financial instruments affect the decision of nonprofessional investors to invest in a bank’s shares. Specifically, we assess how investors respond to variations in net income resulting from fair value adjustments in trading assets and how the reliability of the fair value estimates affects their decision.
    Keywords: Banks; fair value accounting; nonprofessional investors; investment decision; experiment
    JEL: C91 G11 M41
    Date: 2014–05
  13. By: Wibral, Matthias
    Abstract: Reputation systems aim to induce honest behavior in online trade by providing information about past conduct of users. Online reputation, however, is not directly connected to a person, but only to the virtual identity of that person. Users can therefore shed a negative reputation by creating a new account. We study the effects of such identity changes on the efficiency of reputation systems. We compare two markets in which we exogenously vary whether sellers can erase their rating profile and start over as new sellers. Buyer trust and seller trustworthiness decrease significantly when sellers can erase their ratings. With identity changes, trust is particularly low towards new sellers since buyers cannot discriminate between truly new sellers and opportunistic sellers who changed their identity. Nevertheless, we observe positive returns on buyer investment under the reputation system with identity changes, and our evidence suggests that trustworthiness is higher than in the complete absence of a reputation system.
    Keywords: trust; reputation; identity changes
    JEL: C91 D02 L14
    Date: 2014
  14. By: Carla Calero; Veronica Gonzales; Yuri Soares; Jochen Kluve; Carlos Henrique Corseuilt
    Abstract: This paper provides findings of a small-scale, innovative labor training program that uses expressive arts and theatre as a pedagogical tool. The corresponding life skills training component is combined with a technical component teaching vocational skills. To our knowledge, this is the first paper to rigorously evaluate the effectiveness of a training program constructed around expressive arts. Using a randomized assignment of favela youth into program and control groups, we look at the short-run treatment effects on a comprehensive set of outcomes including employment and earnings as well as measures of personality traits and risk behavior.
    Keywords: Labor market training; youths; randomized controlled trial; life skills
    JEL: J24 J68 I38
    Date: 2014–05
  15. By: Klarizze Anne Puzon; Marc Willinger
    Abstract: We analyze an institutionalized rent-seeking game in which groups can endogenously choose the prize at stake, e.g. a common-pool resource. In the first stage, groups determine how much of the resource to protect and equally share. In the second stage, the unprotected fraction is competed for in a rent-seeking game. We consider two institutions varying in the extent by which subjects participate: majority voting (i.e. "unrestrained participation" where all group members participate in the protection stage) and dictatorial rule (i.e. "limited participation" where only one member decides in the protection stage) [...]
    Date: 2014–06
  16. By: Daniela Di Cagno (Department of Economics and Finance, LUISS Guido Carli University of Rome, Italy); Tibor Neugebauer (Luxembourg School of Finance, University of Luxembourg, Luxembourg); Carlos Rodriguez-Palmero (Department of Applied Economics, University of Valladolid, Spain); Abdolkarim Sadrieh (Department of Economics, University of Magdeburg, Germany)
    Abstract: We revisit the sequential search problem by Hey (1987). In a 2x2 factorial design, varying fixed and random cost treatments with and without recall, we address open research questions that were originally stated by Hey (1987). Our results provide clear evidence for Hey’s (1987) conjecture that recall negatively affects performance in sequential search. With experience, however, search behaviour with and without recall converges towards the optimal reservation rule. We further find that the utilization of reservation optimal rules are independent from the stochastic nature of the search cost.
    Keywords: Experiments, Search, Stopping rule, Recall Effect
    JEL: C90 D53 D92 G02 G11 G12
    Date: 2014

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