nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒07‒05
eighteen papers chosen by
Daniel Houser
George Mason University

  1. Raising the Price of Talk: An Experimental Analysis of Transparent Leadership By Daniel Houser; David M. Levy; Kail Padgitt; Sandra J. Peart; Erte Xiao
  2. People Do Not Discount Heavily in Strategic Settings, but They Believe Others Do. By Cary Deck; Salar Jahedi
  3. Single- and Double-Elimination All-Pay Tournaments By Cary Deck; Erik O. Kimbrough
  4. Experimenting with Behavior Based Pricing By Zuzana Brokesova; Cary Deck; Jana Peliova
  5. A New Perspective on the Issue of Selection Bias into Randomized Controlled Field Experiments By Belot, Michele; James, J
  6. When Is Speech Silver and Silence Golden ?A Field Experiment on an Information Campaign By Olivier Body
  7. Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field By Arun G. Chandrasekhar; Cynthia Kinnan; Horacio Larreguy
  8. Save the planet for humans’ sake: The relation between social and environmental value orientations By Kurt A. Ackermann; Eva Fleiß; Jürgen Fleiß; Ryan O. Murphy; Alfred Posch
  9. The Price of Empowerment: Experimental Evidence on Land Titling in Tanzania By Daniel Ayalew Ali; Matthew Collin; Klaus Deininger; Stefan Dercon; Justin Sandefur; Andrew Zeitlin
  10. The Standard Portfolio Choice Problem in Germany By Steffen Huck; Tobias Schmidt; georg Weizsäcker
  11. Keeping others in our mind or in our heart? Distribution games under cognitive load By Hauge, Karen Evelyn; Brekke, Kjell Arne; Johansson, Lars-Olof; Johansson-Stenman, Olof; Svedsäter, Henrik
  12. Channeling Remittances to Education: A Field Experiment Among Migrants from El Salvador By Kate Ambler; Diego Aycinena; Dean Yang
  13. Why does real-time information reduce energy consumption? By John Lynham; Kohei Nitta; Tatsuyoshi Saijo; Nori Tarui
  14. Do recruiters 'like' it? Online social networks and privacy in hiring: a pseudo-randomized experiment By Manant, Matthieu; Pajak, Serge; Soulié, Nicolas
  15. Dealing with randomisation bias in a social experiment: the case of ERA By Barbara Sianesi
  16. A Software for Asset Market Experiments By Stefan Palan
  17. Learning without Teachers? A Randomized Experiment of a Mobile Phone-Based Adult Education Program in Los Angeles - Working Paper 368 By Christopher Ksoll, Janny Aker, Danielle Miller, Karla C. Perez-Mendoza, and Susan L. Smalley
  18. Contests with Ambiguity By David Kelsey; Tigran Melkonyan

  1. By: Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); David M. Levy (Center for the Study of Public Choice and Department of Economics, George Mason University); Kail Padgitt (Tax Foundation); Sandra J. Peart (University of Richmond); Erte Xiao (Department of Social and Decision Sciences Carnegie Mellon University)
    Abstract: Does transparent leadership promote cooperative groups? We address this issue using a public goods experiment with exogenously selected leaders who are able to send non-binding contribution suggestions to the group. To investigate the effect of transparency in this setting we vary the ease with which a leader’s actions are known by the group. We find leaders’ suggestions encourage cooperation in all treatments, but that both leaders and their group members are more likely to follow leaders’ recommendations when institutions are transparent so that non-leaders can easily see what the leader does. Consequently, transparency leads to significantly more cooperation, higher group earnings and reduced variation in contributions among group members. Length: 46
    Keywords: experimental economics
    Date: 2014–06
  2. By: Cary Deck (University of Arkansas and Chapman University); Salar Jahedi (RAND Corporation)
    Abstract: Several studies have shown that people greatly discount future benefits and costs. However, most of the direct laboratory evidence of this phenomenon has focused on individual choice experiments. This paper investigates the degree to which the timing of payments affects behavior in four commonly studies strategic settings: a Prisoner's Dilemma game, a Stag-Hunt game, a First Price Auction and a Second Price Auction. In all four settings, a two week delay in payoffs has a comparable effect to a 20% reduc- tion in current payoffs. A follow-up study suggests that it is an individual's strategic response to the anticipated discount rate of others that might be driving this behavior rather than a participant's own discount factor.
    Keywords: Strategic Behavior, Time Discounting, Experiments.
    Date: 2014
  3. By: Cary Deck (Department of Economics, University of Arkansas and Economic Science Institute, Chapman University); Erik O. Kimbrough (Department of Economics, Simon Fraser University)
    Abstract: Tournaments consisting of iterative matches are a common mechanism for determining how to allocate a prize. While participants are focused on their own outcomes, tournament organizers often have objectives such as maximizing the total investment or effort by the participants over the course of the tournament. For this reason it is important for organizers to understand the behavioral as well as the theoretical properties of different tournament structures. Given that laboratory experiments have consistently found high levels of overbidding in contests, one might suspect that double-elimination tournaments would generate substantially more total investment than single-elimination tournaments despite the two types of tournaments generating theoretically equivalent expected aggregate investment. This paper reports a set of laboratory experiments designed to test this comparison. The results indicate that aggregate investment is similar between the two tournaments. While observed behavior in the single-elimination tournament is quite similar to theoretical predictions, behavior in the double-elimination tournament appears to be impacted by an implicit, self-imposed budget constraint.
    Keywords: elimination tournaments, all-pay auctions, experiments
    JEL: C7 C9 D4 D7
    Date: 2014
  4. By: Zuzana Brokesova (University of Economics in Bratislava); Cary Deck (Sam M. Walton College of Business, University of Arkansas and Economic Science Institute, Chapman University); Jana Peliova (University of Economics in Bratislava)
    Abstract: Many purchases of differentiated goods are repeated, giving sellers the opportunity to engage in price discrimination based upon the shopper’s previous behavior by either offering loyalty discounts to repeat buyers or introductory rates to new customers. Recent theoretical work suggests that loyalty discounts are likely to be implemented when customer preferences are not stationary and sellers can pre-commit to prices for repeat buyers, but otherwise repeat buyers can be expected to pay the same or more than new buyers. This paper reports the results of a series of controlled laboratory experiments designed to empirically test the impact of these factors on pricing strategies, seller profit and total cost to consumers. Absent price pre-commitments, sellers in the lab engage in poaching when it is optimal to do so, but the ability to pre-commit leads to prices being relatively more favorable to loyal customers. Customer poaching increases seller profit and increases total consumer costs in the case of stable consumer preferences without price pre-commitment.
    Keywords: Strategic Behavior, Time Discounting, Experiments.
    JEL: C71 C91 D41
    Date: 2014
  5. By: Belot, Michele; James, J
    Date: 2014
  6. By: Olivier Body
    Keywords: communication; information acquisition; field experiment; effort
    JEL: C93 D80
    Date: 2014–06
  7. By: Arun G. Chandrasekhar; Cynthia Kinnan; Horacio Larreguy
    Abstract: Absence of well-functioning formal institutions leads to reliance on social networks to enforce informal contracts. Social ties may aid cooperation, but agents vary in network centrality, and this hierarchy may hinder cooperation. To assess the extent to which networks substitute for enforcement, we conducted high-stakes games across 34 Indian villages. We randomized subjects' partners and whether contracts were enforced to estimate how partners’ relative network position differentially matters across contracting environments. Socially close pairs cooperate even without enforcement; distant pairs do not. Pairs with unequal importance behave less cooperatively without enforcement. Thus capacity for cooperation depends on the underlying network.
    JEL: D03 D14 O16 Z13
    Date: 2014–06
  8. By: Kurt A. Ackermann (Chair of Decision Theory and Behavioral Game Theory, ETH Zurich); Eva Fleiß (Institute of Systems Sciences, Innovation and Sustainability Research, Karl-Franzens-University Graz); Jürgen Fleiß (Institute of Statistics and Operations Research, Karl-Franzens-University Graz); Ryan O. Murphy (Chair of Decision Theory and Behavioral Game Theory, ETH Zurich); Alfred Posch (Institute of Systems Sciences, Innovation and Sustainability Research, Karl-Franzens-University Graz)
    Abstract: The literature shows a significant correlation between people’s concerns for others and their concerns for the environment. However, these social and environmental considerations were commonly measured by means of attitude questionnaires that were not incentivized and did not readily facilitate a direct comparison of the results. In the present experiment, we employed a consistent incentivized method to assess subjects’ social value orientations (SVO) and their concerns for the environment and humanitarian aid. Subjects make real decisions with real consequences regarding the distribution of resources while the experimental design ensured comparability of subjects’ social preferences and their willingness to make tradeoffs for different environmental and social causes. We found that social and environmental value orientations are intertwined to some extent, but that the nature of the association is not simple. Nonetheless the results clearly show that people are generally willing to pay more for the benefit of people in need, compared to abstract environmental causes. We conclude that interventions to nudge people towards environment-friendly behavior may have a greater impact if human suffering as resulting from global warming is made salient.
    Date: 2014–06–17
  9. By: Daniel Ayalew Ali; Matthew Collin; Klaus Deininger; Stefan Dercon; Justin Sandefur; Andrew Zeitlin
    Abstract: We report on a randomized field experiment using price incentives to address both economic and gender inequality in land tenure formalization. During the 1990s and 2000s, nearly two dozen African countries proposed de jure land reforms extending access to formal, freehold land tenure to millions of poor households. Many of these reforms stalled. Titled land remains the de facto preserve of wealthy households and, within households, men. Beginning in 2010, we tested whether price instruments alone can generate greater inclusion by offering formal titles to residents of a low-income, unplanned settlement in Dar es Salaam at a range of subsidized prices, as well as additional price incentives to include women as owners or co-owners of household land. Estimated price elasticities of demand confirm that prices – rather than other implementation failures or features of the titling regime – are a key obstacle to broader inclusion in the land registry, and that some degree of pro-poor price discrimination is justified even from a narrow budgetary perspective. In terms of gender inequality, we find that even small price incentives for female co-titling achieve almost complete gender parity in land ownership with no reduction in demand.
    Keywords: land titling, formalization, gender, field experiment, Tanzania
    JEL: J16 K11 O12 O18 Q15
    Date: 2014
  10. By: Steffen Huck; Tobias Schmidt; georg Weizsäcker
    Abstract: We study behavior in an investment experiment conducted with a representative sample of German households (SOEP-IS). Respondents allocate a fixed budget between a safe asset and a risky asset whose returns are tied to the German stock market and earn monetary returns based on their decisions. Experimental investment choices correlate with beliefs about stock market returns and exhibit desirable external validity: They are a strong predictor for real-life stock market participation. The experimental set-up allows exogenous modification of the risky asset's return but investments are inelastic except for financially savvy subsamples. A laboratory experiment accompanies the data collection and yields similar results.
    Keywords: Stock market expectations, stock market participation, portfolio choice, artefactual field experiment, SOEP
    JEL: D1 D14 D84 G11
    Date: 2014
  11. By: Hauge, Karen Evelyn (Frisch Centre for Economic Research); Brekke, Kjell Arne; Johansson, Lars-Olof (Department of Psychology); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Svedsäter, Henrik
    Abstract: It has recently been argued that giving is spontaneous while greed is calculated (Rand et al. 2012). If greed is calculated we would expect that cognitive load, which is assumed to reduce the influence of cognitive processes, should affect greed. In this paper we study both charitable giving and the behavior of dictators under high and low cognitive load, to test if greed is affected by the load. In the dictator games we use both a give frame, where the dictators are given an amount that they may share with a partner, and a take frame, where dictators may take from an amount initially allocated to the partner. The results show consistently that the behavioral effect in terms of allocated money of the induced load is small if at all existent. At the same time, follow-up questions indicate that the subjects’ decisions are more driven by their feelings and less driven by their thoughts under cognitive load.
    Keywords: Cognitive load; Dictator games; Social preferences; Pro-social behavior; altruism
    JEL: C91 D64
    Date: 2014–06
  12. By: Kate Ambler; Diego Aycinena; Dean Yang
    Abstract: We implement a randomized experiment offering Salvadoran migrants matching funds for educational remittances, which are channeled directly to a beneficiary student in El Salvador chosen by the migrant. The matches lead to increased educational expenditures, higher private school attendance, and lower labor supply of youths in El Salvador households connected to migrant study participants. We find substantial “crowd-in” of educational investments: for each $1 received by beneficiaries, educational expenditures increase by $3.72. We find no shifting of expenditures away from other students, and no effect on remittances.
    JEL: C93 F22 F24 H24 I22 J15 O15
    Date: 2014–06
  13. By: John Lynham (Department of Economics, University of Hawaii at Manoa and UHERO); Kohei Nitta (Department of Economics, University of Hawaii at Manoa); Tatsuyoshi Saijo (School of Management, Kochi University of Technology); Nori Tarui (Department of Economics, University of Hawaii at Manoa)
    Abstract: A number of studies have estimated how much energy conservation is achieved by providing households with real-time information on energy use via in-home displays. However, none of these studies tell us why real-time information changes energy-use behavior. We explore the causal mechanisms through which real-time information affects energy consumption by conducting a randomized-control trial with residential households. The experiment disentangles two competing mechanisms: (i) learning about the energy consumption of various activities, the “learning effectâ€, versus (ii) having a constant reminder of energy use, the “saliency effectâ€. We have two main results. First, we find a statistically significant treatment effect from receiving real-time information. Second, we find that learning plays a more prominent role than saliency in driving energy conservation. This finding supports the use of energy conservation programs that target consumer knowledge regarding energy use.
    Keywords: energy efficiency; energy conservation; real-time information; experiment
    JEL: D03 D12 Q41 Q48
    Date: 2014–06
  14. By: Manant, Matthieu; Pajak, Serge; Soulié, Nicolas
    Abstract: With the advance of online social networks, the screening of applicants during hiring can extend beyond the usual application material. Although browsing the online profile of an applicant raises ethical issues, this practice potentially improves the job matching, at virtually no cost to the employer. In this paper, we investigate the use of online social networks as a reliable source of information for recruiters on applicants in the French job market. We set up a field experiment using real accountant job offers in the greater Paris area. We adjust the content of Facebook accounts to manipulate the perceived origins of applicants (hometown and language spoken) and analyze the impact on the number of callbacks received from employers. The signal we manipulate to distinguish applicants is available only within the online profile, not the application material. During a 12 month period from March 2012 to March 2013, we submitted more than 800 applications. The test applicant received a third fewer callbacks compared to the control applicant, a significant difference. Our results suggest that online profiles are used indeed to screen applicants, and that this occurs early in the hiring process. During the course of the experiment, a change to the standard Facebook layout sent a part of our signal, namely the language spoken by the applicants, into a sub-tab not directly visible from the front page. This exogenous change (clicking on a tab is now required to access the information) allowed us to measure the recruiter's depth of search. In subsequent months, the gap between the two applicant types shrank and virtually disappeared. This suggests that screening is superficial, illustrating the existence of employer search costs for browsing an entire profile.
    Keywords: Online Social Network; Labor Market Discrimination; Privacy; Field experiment
    JEL: D82 D83 M5
    Date: 2014–06–24
  15. By: Barbara Sianesi (Institute for Fiscal Studies and IFS)
    Abstract: One of the most powerful critiques of the use of randomised experiments in the social sciences is the possibility that individuals might react to the randomisation itself, thereby rendering the causal inference from the experiment irrelevant for policy purposes. In this paper we set out a theoretical framework for the systematic consideration of “randomisation bias”, and provide what is to our knowledge the first empirical evidence on this form of bias in an actual social experiment, the UK Employment Retention and Advancement (ERA) study. Specifically, we empirically test the extent to which random assignment has affected the process of participation in the ERA study. We further propose a non-experimental way of assessing the extent to which the treatment effects stemming from the experimental sample are representative of the impacts that would have been experienced by the population who would have been exposed to the program in routine mode. We consider both the case of administrative outcome measures available for the entire relevant sample and of survey-based outcome measures. For the case of survey outcomes we extend our estimators to also account for selective non-response based on observed characteristics. Both for the case of administrative and survey data we further extend our proposed estimators to deal with the nonlinear case of binary outcomes.
    Date: 2014–05
  16. By: Stefan Palan (Institute of Banking and Finance, Karl-Franzens-University Graz; Department of Banking and Finance, Leopold-Franzens-University Innsbruck)
    Abstract: In this article we lay out requirements for an experimental market software for financial and economic research. We then discuss existing solutions. Finally, we introduce an open source market software which is characterized by extensibility and ease of use, while offering nearly all of the required functionality.
    Date: 2014–06–13
  17. By: Christopher Ksoll, Janny Aker, Danielle Miller, Karla C. Perez-Mendoza, and Susan L. Smalley
    Abstract: Over 755 million adults worldwide are unable to read and write in any language. Yet the widespread introduction of information and communication technology offers new opportunities to provide standardized distance education to underserved illiterate populations in both developed and developing countries. Using data from a randomized experiment of an innovative mobile phone-based adult education program (Cell-Ed) in Los Angeles, we find that the Cell-Ed program significantly increased students’ basic and broad reading scores, equivalent to a 2-4 year increase in reading levels over a four-month period. The program also increased participants’ self-esteem by 7 percent as compared with the comparison group. These results are robust to correcting for non-random attrition using a variety of non-parametric methods, including using the phase-in design to tighten the Lee bounds. Our results suggest that there is great scope for using information technology as a means of improving educational skills for illiterate adults.
    Keywords: education, communication technology, cell-ed
    JEL: D1 I2 O1 O3
    Date: 2014–05
  18. By: David Kelsey (Department of Economics, University of Exeter); Tigran Melkonyan (University of Warwick)
    Abstract: The paper examines the e¤ect of ambiguity on contests where multiple parties expend resources to win a prize. We develop a model where contenders perceive ambiguity about their opponents’ strategies and determine how perceptions of ambiguity and attitudes to ambiguity affect equilibrium choice. The paper also investigates how equilibrium under ambiguity is related to behavior where contenders have expected utility preferences. Our model can explain experimental results such as overbidding and overspreading relative to Nash predictions.
    Keywords: Ambiguity, Contests, Choquet expected utility, neo-additive preferences.
    JEL: D81
    Date: 2014

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