New Economics Papers
on Experimental Economics
Issue of 2014‒08‒02
sixteen papers chosen by

  1. Because I'm Worth It: A Lab-Field Experiment on the Spillover Effects of Incentives in Health By Paul Dolan; Matteo M. Galizzi
  2. The Dark Side of Leadership: An Experiment on Religious Heterogeneity and Cooperation in India. By Keuschnigg, Marc; Schikora, Jan
  3. Do leaders affect ethical conduct? By Giovanna d’Adda; Donja Darai; Roberto A. Weber
  4. Disorder, Social Capital, and Norm Violation: Three Field Experiments on the Broken Windows Thesis By Keuschnigg, Marc; Wolbring, Tobias
  5. How does the communication channel affect Word-of-Mouth: A Field Experiment By Rosa Cacabelos; Leif Brandes; Egon Franck
  6. Buying spatially-coordinated ecosystem services and biodiversity conservation on forest land: an experiment on the role of auction format and communication. By Anna Bartczak; Michał Krawczyk; Nick Hanley; Anne Stenger
  7. Private provision of a public good: cooperation and altruism of internet forum users By Ros-Galvez, Alejandro; Rosa-García, Alfonso
  8. The indirect effect of monetary incentives on deception By Janna Ter Meer
  9. Self discrimination: A field experiment on obesity By Antonios Proestakis; Pablo Branas-Garza; Praveen Kujal
  10. Accounting for Peer Effects in Treatment Response By Rokhaya Dieye; Habiba Djebbari; Felipe Barrera-Osorio
  11. Do-gooders and go-getters: career incentives, selection, and performance in public service delivery By Nava Ashraf; Oriana Bandiera; Scott Lee
  12. The Green Behaviour: Experimental Economics and Sustainable Real Estate By Bienert, Sven
  13. The Green Arbitrage Pricing Game By Bernet, Juerg R.; Vermeulen, Maarten
  14. Contests with a Prize Externality and Stochastic Entry By XiaoGang Che; Brad Humphreys
  15. Broken or Fixed Effects? By Charles E. Gibbons; Juan Carlos Suárez Serrato; Michael B. Urbancic
  16. The Winner’s Curse, Price Anchors and Bidder Characteristics: Evidence from Successful Residential Real Estate Auctions By Ryan, Paul; Branigan, Clare; Muckley, Cal

  1. By: Paul Dolan; Matteo M. Galizzi
    Abstract: We conduct a controlled lab-field experiment to directly test the short-run spillover effects of one-off financial incentives in health. We consider how incentives affect effort in a physical activity task - and then how they spillover to subsequent eating behaviour. Compared to a control group, we find that low incentives increase effort and have little effect on eating behaviour. High incentives also induce more effort but lead to significantly more excess calories consumed. The key behavioural driver appears to be the level of satisfaction associated with the physical activity task, which 'licensed' highly paid subjects to indulge in more energy-dense food.
    Keywords: Incentives in health, spillover effects, licensing, hidden costs of incentives
    JEL: C91 C93 D03 I10
    Date: 2014–07
  2. By: Keuschnigg, Marc; Schikora, Jan
    Abstract: We investigate voluntary contribution to public goods in culturally heterogeneous groups with a laboratory experiment conducted among 432 Hindu and Muslim subjects in India. With our specification of 'Leading by example' we test for an interaction effect between leadership and religious heterogeneity in a high stake environment. While cultural diversity does not affect contributions in the standard linear Public Goods Game, it reduces cooperation in the presence of a leader. Furthermore, we show that preferences for conditional cooperation are only prevalent in pure groups. In mixed groups, poor leadership and uncertainty about followers' reciprocity hinders the functionality of leadership as an institutional device to resolve social dilemmas.
    Keywords: leading by example; conditional cooperation; reciprocity; religious diversity; public goods game
    JEL: C92 H41 O12 Z12
    Date: 2014
  3. By: Giovanna d’Adda; Donja Darai; Roberto A. Weber
    Abstract: We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct—prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders’ strategies reveals that leaders’ statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders’ propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.
    Keywords: Leadership, ethics, dishonesty, experiment
    JEL: C92 C72 D03
    Date: 2014–07
  4. By: Keuschnigg, Marc; Wolbring, Tobias
    Abstract: Adding to the debate about the “broken windows” thesis we discuss an explanation of minor norm violation based on the assumption that individuals infer expected sanctioning probabilities from contextual cues. We modify the classical framework of rational crime by signals of disorder, local social control, and their interaction. Testing our implications we present results from three field experiments showing that violations of norms, which prevent physical as well as social disorder, foster further violations of the same and of different norms. Varying the net gains from deviance it shows that disorder effects are limited to low cost situations. Moreover, we provide suggestive evidence that disorder effects are significantly stronger in neighborhoods with high social capital.
    Keywords: broken windows theory; disorder; field experiment; low cost situations; norm violation; social capital
    JEL: C9 C93 K42 R23 Z13
    Date: 2014
  5. By: Rosa Cacabelos (Department of Business Administration, University of Zurich); Leif Brandes (Department of Business Administration, University of Zurich); Egon Franck (Department of Business Administration, University of Zurich)
    Date: 2013–12
  6. By: Anna Bartczak (Faculty of Economic Sciences, University of Warsaw; Warsaw Ecological Economics Center); Michał Krawczyk (Faculty of Economic Sciences, University of Warsaw; Warsaw Ecological Economics Center); Nick Hanley (Department of Geography and Sustainable Development, University of St Andrews); Anne Stenger (INRA, Laboratoire d'Économie Forestière)
    Abstract: Procurement auctions are one of several policy tools available to incentivise the provision of ecosystem services and biodiversity conservation. Successful biodiversity conservation often requires a landscape-scale approach and the spatial coordination of participation, for example in the creation of wildlife corridors. In this paper, we use a laboratory experiment to explore two features of procurement auctions in a forest landscape—the pricing mechanism (uniform vs. discriminatory) and availability of communication (chat) between potential sellers. We modify the experimental design developed by Reeson et al. (2011) by introducing uncertainty (and hence heterogeneity) in the production value of forest sites as well as an automated, endogenous stopping rule. We find that discriminatory pricing yields to greater environmental benefits per government dollar spent, chiefly due to better coordination between owners of adjacent plots. Chat also facilitates such coordination but also seems to encourage collusion in sustaining high prices for the most environmentally attractive plots. These two effects offset each other, making chat neutral from the viewpoint of maximizing environmental effect per dollar spent.
    Keywords: conservation auctions, spatial coordination, chat in experiments, discriminatory and uniform auctions, biodiversity conservation, provision of ecosystem services
    JEL: C92 D44 Q23 Q57 Q58
    Date: 2014
  7. By: Ros-Galvez, Alejandro; Rosa-García, Alfonso
    Abstract: We run an experiment with users of internet message boards. We find that forum users cooperate more with partners of their own forum than with partners from a different forum but they are equally altruistic when they made a gift to a partner of their forum or from another one. We also find that individuals are more active in the forums, the more altruistic they are; however, we find no relation between activity in the forum and cooperation. These results suggest that the public good provided in internet forums is mainly provided by a group of unconditional altruistic group of users, and that the feeling of community supports the cooperation in that provision.
    Keywords: internet forums; public good provision; altruism; cooperation
    JEL: C9 C90 H41 H42 L86
    Date: 2014–07–25
  8. By: Janna Ter Meer (University of Cologne)
    Abstract: This paper investigates whether working under competitive or cooperative incentives affects deception in a subsequent, unrelated task. I use a laboratory study with two stages. First, participants work under a piece rate, tournament or team incentive in a real effort task. The second part consists of a sender-receiver game where the sender can gain financially at the expense of the receiver by sending a deceptive message. I find that senders who worked under tournament incentives are less honest than those who worked under a piece rate. I find no increase in honesty for those who performed under team incentives relative to the piece rate. Interestingly, this only holds when participants are not informed about their relative performance during the work task. When such feedback is provided I find that relative performance affects honesty across all incentive conditions. In particular, honesty decreases as relative performance differences become small.
    JEL: M52 C92 D02 D03
    Date: 2014–07–07
  9. By: Antonios Proestakis (Institute for Health and Consumer Protection); Pablo Branas-Garza (Middlesex University); Praveen Kujal (Middlesex University)
    Abstract: Empirical evidence suggests that physical characteristics such as obesity can result in a salary gap in the work place. It is, however, not clear how much of this (gap) is due to factors emanating from the demand or supply side of the market. In this paper we use a field experiment to study whether a part of this wage gap can be attributed to personality traits of individuals on the supply side. Monitors randomly select individuals to respond to a questionnaire. Individuals can make money requests for completing the questionnaire. In the questionnaire they also self-report several personality chracteristics. We find that the more obese individuals perceive themselves to be, lesser is the money they request. The negative association between money requests and obesity is mostly driven by female participants. The effect of (self-perceived) non-obese individuals is asymmetric across gender. Self perceived "normal" females, perceived thin by the monitors, request more, meanwhile, males in this category request less relative to those that do not overstate their obesity levels. Our results suggest that lower salary request may anchor obese individuals to lower thresholds and may partly explain the wage gap.
    Date: 2014–07
  10. By: Rokhaya Dieye (Department of Economics, Université Laval); Habiba Djebbari (Department of Economics, Université Laval); Felipe Barrera-Osorio (Harvard Graduate School of Education, Harvard University)
    Abstract: When one’s treatment status affects the outcomes of others, experimental data are not sufficient to identify a treatment causal impact. In order to account for peer effects in program response, we use a social network model. We estimate and validate the model on experimental data collected for the evaluation of a scholarship program in Colombia. By design, randomization is at the student-level. Friendship data reveals that treated and untreated students interact together. Besides providing evidence of peer effects in schooling, we find that ignoring peer effects would have led us to overstate the program actual impact.
    Keywords: Education, social network, impact evaluation
    JEL: C31 C93 I22
    Date: 2014–07
  11. By: Nava Ashraf; Oriana Bandiera; Scott Lee
    Abstract: We study how career incentives affect who selects into public health jobs and, through selection, their performance while in service. We collaborate with the Government of Zambia to experimentally vary the salience of career vs. social benefits of a newly created health worker position when recruiting agents nationally. We follow the entire first cohort from application to performance in the field and measure impacts at every stage. We find that making career incentives salient attracts more qualified applicants with stronger career ambitions without displacing pro-social preferences, which are high in both treatments. Health workers attracted by career incentives are more effective at delivering health services and are equally likely to remain in their posts over the course of 18 months. Career incentives, far from selecting the "wrong" types, attract talented workers who deliver health services effectively.
    Date: 2014–07
  12. By: Bienert, Sven
    Abstract: The importance of lowering the ecological footprint of human kind to a sustainable level is meanwhile unquestionable. The number of green products is increasing, but the product itself is not sufficient to reduce the ecological imbalance. Since life-cycle-assessments and life-cycle-cost approaches in real estate investments became common, it is known that not just the construction but the sustainable operation of a building leads to the most ecological benefit. Therefore, consumer behaviour is the key to enable and push a sustainable development. By now, the real estate industry focused mainly on the property side rather than on the user and his behaviour. Addressing this issue, the research idea of the study is to introduce experimental and behavioural economics as well as aspects of game theory within sustainable real estate in order to reveal the triggers of individual user behaviour. The paper combines subsequently three disciplines: Game theory/ experimental economics, real estate and sustainability. Theoretical and practical findings of this study should enable companies to address the 'right' issues and to develop adequate incentive schemes for their employees in order to trigger 'green behaviour' and finally limit resource use to reduce operating expenses. Furthermore, efficient strategies to increase personal involvement for climate protection are developed and detailed insights regarding user behaviour are given.
    Date: 2013
  13. By: Bernet, Juerg R.; Vermeulen, Maarten
    Abstract: The 'Green Arbitrage Pricing Game' is a behavioral approach to the dynamics of property pricing under changing environmental regulation, social responsibility and economic expectations. Investors, asset managers, developers and occupiers of buildings find themselves in a situation, where each has a dominant strategy with the negative side effect to increase greenhouse gas emissions. But the resulting economic outcome for all is worse than using their dominated strategies to incorporate environmental externalities.A real world business case is simulating this dilemma based on the economic and social concepts of game theory. The laboratory setting in the structure of an extensive collective-action game with imperfect information is delivering experimental evidence of practical management solutions. In their roles of property investors and fund managers the players learn to understand the dynamics of the green property dilemma and to make viable strategic choices for resolving it. The game is facilitated by the strategy training toolkit 'RealInvestor' developed at the EURO Institute of Real Estate Management ( The real world business case tackles institutional investments in the Australian office market. The simulation data is based on current input from the Green Building Council of Australia. First sets of the 'Green Arbitrage Pricing Game' were played at University of Reading, Henley Business School, School of Real Estate & Planning (United Kingdom), at Danube University Krems, Department of Building and Environment, Center of Real Estate Economics (Austria), and at Bauhaus University Weimar, Faculty of Civil Engineering (Germany). The outcome of these game sets has delivered workable strategic solutions to responsible real estate investment management.
    Date: 2013
  14. By: XiaoGang Che (Durham University Business School); Brad Humphreys (West Virginia University, College of Business and Economics)
    Abstract: We analyze a contest with stochastic participation and a prize externality. A unique symmetric equilibrium exists in the contest. We demonstrate that the presence of a prize externality affects individual equilibrium spending but active participants always face the same expected payoff as in a contest without a prize externality. A positive prize externality gives a higher impact on individual equilibrium spending than a negative prize externality. Regardless of the existence and the sign of a prize externality, ex-post over-dissipation occurs if the actual number of participants is sufficiently large. Independent of the prize externality's sign, active participants spend less but face a higher payoff compared to a fixed-participation contest with the same expected number of players.
    Keywords: Tullock contest; Prize externality; stochastic entry
    JEL: C72 D72 D82
    Date: 2014–05
  15. By: Charles E. Gibbons; Juan Carlos Suárez Serrato; Michael B. Urbancic
    Abstract: This paper provides empirical evidence of an established theoretical result: in the presence of heterogeneous treatment effects, OLS is generally not a consistent estimator of the sample-weighted average treatment effect (SWE). We propose two alternative estimators that do recover the SWE in the presence of group-specific heterogeneity. We derive tests to detect the presence of heterogeneous treatment effects and to distinguish between the OLS and SWE. We document that heterogeneous treatment effects are common and the SWE is often statistically and economically different from the OLS estimate by extending eight influential papers. In all but one paper, there is statistically significant treatment effect heterogeneity; in five, the SWE is statistically different from the OLS estimator; and in five, the SWE and OLS estimators are economically different.
    JEL: C18 C21
    Date: 2014–07
  16. By: Ryan, Paul; Branigan, Clare; Muckley, Cal
    Abstract: This paper explores the impact of behavioral biases, specifically the winner’s curse and anchoring and insufficient adjustment on auction outcomes in the Dublin residential real estate market in the period immediately preceding the peak of what became the biggest property crash in recent history in the developed world. In addition, we investigate whether the incidence of these biases is conditioned by two bidder characteristics, his/ her gender and whether the winning bidder is experienced in the residential real estate market. We find that bidders do not shade their auction bids to avoid the winner’s curse, and that auction outcomes are driven by bidder anchoring on the advertised auction guide price, and also the initial auction bid announced by the auctioneer, and are less influenced by the comparable sales prices of similar properties or prices derived from a hedonic asset pricing model. In addition, we find, contrary to expectations, that female bidders are no less prone to behavioural biases in decision making than their male counterparts and that winning experienced bidders, despite their level of expertise, tend on average to pay more for comparable properties than their less experienced counterparts. Our results in aggregate can be interpreted as being consistent with a market where behavioral biases play a part in driving auction prices and are consistent with the arguments made by Shiller (2007, 2008) in his analysis of the US sub- prime crisis.
    Date: 2014

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