New Economics Papers
on Experimental Economics
Issue of 2014‒07‒21
nine papers chosen by

  1. What Policies Increase Prosocial Behavior? An Experiment with Referees at the Journal of Public Economics By Raj Chetty; Emmanuel Saez; László Sándor
  2. Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment By Marcel Fafchamps; Simon Quinn
  3. Giving and promising gifts: experimental evidence on reciprocity from the field By J. Michelle Brock; Andreas Lange; Kenneth L. Leonard
  4. If I close my eyes, nobody will get hurt. The effect of ignorance on performance in a real effort experiment By Agne Kajackaite
  5. Detecting false positives in experimental auctions: A case study of projection bias in food consumption By Teresa Briz; Andreas C. Drichoutis; Rodolfo M. Nayga, Jr
  6. Sufficiency of an Outside Bank and a Default Penalty to Support the Value of Fiat Money: Experimental Evidence By Juergen Huber; Martin Shubik; Shyam Sunder
  7. Commons without Tragedy: Sampling Dynamics and Cooperative Resource Extraction By Juan Camilo Cárdenas; César Mantilla; Rajiv Sethi
  8. Selling Experiments: Menu Pricing of Information By Dirk Bergemann; Alessandro Bonatti; Alex Smolin
  9. Experimentation in Democratic Mechanisms By Volker Britz; Hans Gersbach

  1. By: Raj Chetty; Emmanuel Saez; László Sándor
    Abstract: We evaluate policies to increase prosocial behavior using a field experiment with 1,500 referees at the Journal of Public Economics. We randomly assign referees to four groups: a control group with a six week deadline to submit a referee report, a group with a four week deadline, a cash incentive group rewarded with $100 for meeting the four week deadline, and a social incentive group in which referees were told that their turnaround times would be publicly posted. We obtain four sets of results. First, shorter deadlines reduce the time referees take to submit reports substantially. Second, cash incentives significantly improve speed, especially in the week before the deadline. Cash payments do not crowd out intrinsic motivation: after the cash treatment ends, referees who received cash incentives are no slower than those in the four-week deadline group. Third, social incentives have smaller but significant effects on review times and are especially effective among tenured professors, who are less sensitive to deadlines and cash incentives. Fourth, all the treatments have little or no effect on agreement rates, quality of reports, or review times at other journals. We conclude that small changes in journals’ policies could substantially expedite peer review at little cost. More generally, price incentives, nudges, and social pressure are effective and complementary methods of increasing prosocial behavior.
    JEL: H23 H41
    Date: 2014–07
  2. By: Marcel Fafchamps; Simon Quinn
    Abstract: We run a novel field experiment to link managers of African manufacturing firms. The experiment features exogenous link formation, exogenous seeding of information and exogenous assignment to treatment and placebo. We study the impact of the experiment on firm business practices outside of the lab. We find that the experiment successfully created new variation in social networks. We find some limited evidence of diffusion of management practices, particularly in terms of firm formalisation and innovation. Such diffusion appears to be a combination of diffusion of innovation and simple imitation
    JEL: D22 L26 O33
    Date: 2014
  3. By: J. Michelle Brock (European Bank for Reconstruction and Development); Andreas Lange (University of Hamburg, Department of Economics); Kenneth L. Leonard (University of Maryland, Department of Agricultural and Resource Economics)
    Abstract: In this study, we consider how gift-exchange and bonus systems function in a natural field setting by measuring the effort response of participants to non-monetary gifts over time. Our field experiment tests the difference in effort response to unconditional gifts delivered immediately, promised unconditional gifts delivered later, and conditional gifts linked to reaching a specific performance target. We find important benefits from promising to give an unconditional gift later: participants respond positively to a promised gift twice by increasing effort when the gift is promised and again when it is received. A promised gift outperforms both the unconditional gift delivered immediately, which leads to a single positive response, and the conditional gift based on performance, which does not trigger any significant behavioural change after the gift is delivered. The study lends insights into the relative effectiveness of gift-exchange and bonus systems and the temporal structure of reciprocal exchange.
    Keywords: gift exchange, reciprocity, health care, field experiment, Tanzania
    JEL: C93 I1 J41 O1
    Date: 2014–01
  4. By: Agne Kajackaite (University of Cologne)
    Abstract: This paper tests whether staying ignorant about the negative consequences of one's own actions affects agents' performance in a real effort experiment. We conducted treatments in which subjects' effort either increased only one's own payoff or also increased the donation to a bad charity. Ignorance was introduced by letting agents to decide whether or not to learn if the effort benefits the charity. Overall, we find that in the conditions with complete information agents exert significantly higher efforts if there are no benefits for the bad charity. With respect to ignorance, we show that (i) almost a third of agents stay ignorant, and (ii) the ignorant agents exert significantly more effort than agents who know that their effort benefits the bad charity. We also find evidence for a sorting of low social types into ignorance, as exogenously uninformed agents exert less effort than ignorant agents.
    Keywords: ignorance, moral wiggle room, experiment, real effort
    JEL: C91 D03 D80 M52
    Date: 2014–06
  5. By: Teresa Briz (Departamento de Econom a, E.T.S.Ingenieros Agr onomos, Universidad Polit ecnica de Madrid, Madrid,); Andreas C. Drichoutis (Department of Agricultural Economics, Agricultural University of Athens, Greece); Rodolfo M. Nayga, Jr (Department of Agricultural Economics & Agribusiness, Division of Agriculture, University of Arkansas, Fayetteville, AR 72701, USA,)
    Abstract: In this paper we argue that valuable information can be conveyed by looking at data coming from the training rounds of experimental auctions. As a case study, we use data from an experiment that seeks to elaborate on the mediating role of mood states on projection bias. Following a mood induction procedure, subjects are found to bid more under negative mood (as compared to positive mood) for products that are delivered in the future but bid less under negative mood for products that are delivered in present time. We show that if one had neglected insights gained from the training auction data, the researcher would have fallen prey to a case of a false positive result.
    Keywords: projection bias, experimental auctions, type I error, false positive
    JEL: C12 C90
    Date: 2014
  6. By: Juergen Huber (University of Innsbruck, Austria); Martin Shubik (Cowles Foundation, Yale University); Shyam Sunder (School of Management & Cowles Foundation, Yale University)
    Abstract: We present a model in which an outside bank and a default penalty support the value of fiat money, and experimental evidence that the theoretical predictions about the behavior of such economies, based on the Fisher-condition, work reasonably well in a laboratory setting. The import of this finding for the theory of money is to show that the presence of a societal bank and default laws provide sufficient structure to support the use of fiat money and use of the bank rate to influence inflation or deflation, although other institutions could provide alternatives.
    Keywords: Experimental gaming, Bank, Fiat money, Outside bank, General equilibrium
    JEL: C73 C91
    Date: 2014–07
  7. By: Juan Camilo Cárdenas; César Mantilla; Rajiv Sethi
    Abstract: This paper reconsiders evidence from experimental common pool resource games from the perspective of a dynamic model of sampling. Despite being parameter-free, the model is able to replicate some striking features of the data: monotonic frequency distributions, the persistent use of strictly dominated actions, and stable heterogeneity in choices. We argue that these patterns cannot be fully accounted for by existing theories based on other-regarding preferences and norms, and that the dynamics of sampling provide a useful complementary explanation for behavior in social dilemmas.
    Keywords: Common Pool Resources; Experiments; Sampling Equilibrium
    JEL: C73 C91 D03 H41 Q20
    Date: 2013–09–10
  8. By: Dirk Bergemann (Cowles Foundation, Yale University); Alessandro Bonatti (MIT); Alex Smolin (Dept. of Economics, Yale University)
    Abstract: A monopolist sells informative experiments to heterogeneous buyers. Buyers differ in their prior information, and hence in their willingness to pay for additional signals. The monopolist can profitably offer a menu of experiments. We show that, even under costless information acquisition and free degrading of information, the optimal menu is quite coarse. The seller offers at most two experiments, and we derive conditions under which at vs. discriminatory pricing is optimal.
    Keywords: Experiments, Mechanism design, Price discrimination, Product differentiation, Selling information
    Date: 2014–07
  9. By: Volker Britz (ETH Zurich, Switzerland); Hans Gersbach (ETH Zurich, Switzerland)
    Abstract: We examine whether and how democratic procedures can achieve socially desirable public good provision in the presence of deep uncertainty about the benefits of the public good, i.e., when citizens are able to identify the distribution of benefits only if they aggregate their private information. Some members of the society, however, are harmed by socially desirable policies and try to manipulate information aggregation by misrepresenting their private information. We show that information can be aggregated and the socially desirable policy implemented under a new class of democratic mechanisms involving an experimentation group. Those mechanisms reflect the principles of liberal democracy, are prior{free, and involve a differential tax treatment of experimentation group members which motivates them to reveal their private information truthfully. Conversely, we show that standard democratic mechanisms with an arbitrary number of voting rounds but no experimentation do not generally lead to the socially desirable policy. Finally, we demonstrate how experimentation can be designed in such a way that differential tax treatments occur only off the equilibrium path.
    Keywords: Democratic Mechanisms; Experimentation; Public Goods; Voting; Information Aggregation
    JEL: D62 D72 H40
    Date: 2014–07

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