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on Experimental Economics |
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Issue of 2014‒09‒08
seventeen papers chosen by |
| By: | Grolleau, Gilles; Kocher, Martin G.; Sutan, Angela |
| Abstract: | Does the extent of cheating depend on a proper reference point? We use a real effort task that implements a two (gain versus loss frame) times two (monitored performance versus unmonitored performance) between-subjects design to examine whether cheating is reference-dependent. Our experimental findings show that self-reported performance in the unmonitored condition is significantly higher than actual performance in the monitored condition - a clear indication for cheating. However, the level of cheating is by far higher in the loss frame than in the gain frame. Furthermore, men are much more strongly affected by the framing than women. |
| Keywords: | Cheating; Lying; Loss aversion; Experiment |
| JEL: | C91 D03 |
| Date: | 2014–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:21387&r=exp |
| By: | Peeters R.J.A.P.; Wolk K.L. (GSBE) |
| Abstract: | In this paper we present a mechanism to elicit and aggregate dispersed information. Our mechanism relies on the aggregation of intervals elicited using an interval scoring rule. We test our mechanism by eliciting beliefs about the termination times of a stochastic process in an experimental setting. We conduct two treatments, one with high and one with low volatility.Increasing the underlying volatility affects the location of the interval, yet it does not significantly affect its length. Consequently, individuals perform significantly better in the low volatility treatment than in the high volatility treatment. Next, we construct distributions by aggregating intervals across different individuals. Our results reveal that the predictive quality of the aggregated intervals as measured by the Hellinger distance to the true distribution increases by more than 30 when increasing the aggregation level from two to eight individuals. This shows that aggregating individual intervals may be an attractive solution when market mechanisms are infeasible. |
| Keywords: | Forecasting and Prediction Methods; Simulation Methods ; Design of Experiments: Laboratory, Individual; Expectations; Speculations; |
| JEL: | C53 D84 C91 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2014029&r=exp |
| By: | Crosetto, P.; Gaudeul, A. |
| Abstract: | We report the results of an original experiment that was designed to test the strength and robustness of the attraction effect. Rather than the usual simple tests for this effect, we consider a conceptually simple consumer purchasing task where alternatives are however difficult to evaluate. For the attraction effect to be observed, the consumer must go through two steps: the first is to find out that two or more options are comparable, which leads him to exclude the dominated alternatives. The second is to favor the dominant option over those that are not comparable. Our experiment allows us to determine whether and how many individuals stop before each of those two steps. The results confirm the existence of an attraction effect in our setting, but the effect is not strong. Indeed, only a minority of subjects perform the second step. The effect is not robust to introducing larger differences in prices among options and to widening the range of options to choose from. We conclude by showing that our subjects would benefit from relying more on performing asymmetric dominance editing rather than on their skills in the purchasing task. |
| Keywords: | ASYMMETRIC DOMINANCE EDITING;ATTRACTION EFFECT;COMPARABILITY;CONSUMER CHOICE;EXPERIMENTAL ECONOMICS;PRICING FORMATS |
| JEL: | C91 D12 D83 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:gbl:wpaper:2014-04&r=exp |
| By: | Silvia Angerer; Daniela Glätzle-Rützler; Philipp Lergetporer; Matthias Sutter |
| Abstract: | We study in a sample of 1,070 primary school children, aged seven to eleven years, how altruism in a donation experiment is related to children’s risk attitudes and intertemporal choices. Examining such a relationship is motivated by theories of reciprocal altruism that provide a cornerstone for understanding human social behavior. We find that higher risk tolerance and patience in intertemporal choice increase, in general, the level of donations, albeit the effects are non-linear. We confirm earlier results that altruism increases with age during childhood and that girls are more altruistic than boys. Having older brothers makes subjects less altruistic. |
| Keywords: | Altruism, donations, risk attitudes, intertemporal choices, experiment, children |
| JEL: | C91 D03 D63 D64 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2014-21&r=exp |
| By: | Maria Cubel (University of Barcelona and IEB); Ana Nuevo-Chiquero (University of Sheffield); Santiago Sanchez-Pages (Edinburgh School of Economics and University of Barcelona); Marian Vidal-Fernandez (University of New South Wales and IZA) |
| Abstract: | While survey data supports a strong relationship between personality and labor market outcomes, the exact mechanisms behind this association remain unexplored. In this paper, we take advantage of a controlled laboratory set-up to test whether this relationship operates through productivity, and isolate this mechanism from other channels such as bargaining ability or self-selection into jobs. Using a gender neutral real-effort task, we analyse the impact of the Big Five personality traits on performance. We find that more neurotic subjects perform worse, and that more conscientious individuals perform better. These findings are in line with previous survey studies and suggest that at least part of the effect of personality on labor market outcomes operates through productivity. In addition, we find evidence that gender and university major affect the impact of the Big Five personality traits on performance. |
| Keywords: | Big-Five; personality traits; experiment; labour productivity; performance |
| JEL: | C91 D03 J3 M5 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2014012&r=exp |
| By: | Zoe Bett (University of East Anglia); Anders Poulsen (University of East Anglia); Odile Poulsen (University of East Anglia) |
| Abstract: | We consider coordination situations with a conflict of interest, and experimentally vary the inefficiency of an equal earnings equilibrium, as well as the number of efficient and unequal earnings equilibria. We observe that equality, as long it is not extremely inefficient, remains very salient, and primarily because it offers players a way to avoid a coordination failure in selecting between the efficient unequal earnings equilibria, and less because subjects have a strong inherent preference for equality. |
| Keywords: | equality, efficiency, coordination, salience, level-k model |
| JEL: | C70 C72 C92 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:13-02-r&r=exp |
| By: | Kyung Hwan Baik (Sungkyunkwan University); Subhasish M. Chowdhury (University of East Anglia); Abhijit Ramalingam (University of East Anglia) |
| Abstract: | We investigate the effects of Partner and Stranger matching in contest experiments and find no difference in the level or distribution of bids across matching protocols. However, demographic and individual strategy effects are different with different matching. Hence, unless one is interested in the demographic effects, or a Stranger matching is needed for the specific research, using a Partner matching is preferred since it allows more flexibility in logistics and data analysis. |
| Keywords: | contest, experiment, matching protocol, economic methodology |
| JEL: | B41 C72 C91 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:13-11&r=exp |
| By: | Andrew Dillon (Michigan State University); Jed Friedman (World Bank); Pieter Serneels (University of East Anglia) |
| Abstract: | Agricultural and other physically demanding sectors are important sources of growth in developing countries but prevalent diseases such as malaria adversely impact the productivity, labor supply, and occupational choice of workers in these sectors by reducing physical capacity. This study identifies the impact of malaria on worker earnings, labor supply, and daily productivity by randomizing the temporal order at which piece-rate workers at a large sugarcane plantation in Nigeria are offered malaria testing and treatment. The results indicate a significant and substantial intent to treat effect of the intervention – the offer of a workplace based malaria testing and treatment program increases worker earnings by approximately 10% over the weeks following the mobile clinic visit. The study further investigates the effect of health information by contrasting program effects by workers revealed health status. For workers who test positive for malaria, the treatment of illness increases labor supply, leading to higher earnings. For workers who test negative, and especially for those workers most likely to be surprised by the healthy diagnosis, the health information also leads to increased earnings via increased productivity. Possible mechanisms for this response include selection into higher return occupations as a result of changes in the perceived cost of effort. A model of the worker labor decision that includes health perceptions in the decision to supply effort suggests that, in endemic settings with poor quality health services, inaccurate health perceptions may lead workers to misallocate labor thus resulting in sub-optimal production and occupational choice. The results underline the importance of medical treatment but also of access to improved information about one’s health status, as the absence of either may lead workers to deliver lower than optimal effort levels in lower return occupations. |
| Keywords: | malaria, labor supply, labor productivity, randomized experiment |
| JEL: | I21 J22 J24 O12 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:14-05&r=exp |
| By: | Peter G. Moffatt (University of East Anglia); Stefania Sitzia (University of East Anglia); Daniel John Zizzo (University of East Anglia) |
| Abstract: | We analyze lottery-choice data in a way that separately estimates the effects of risk aversion and complexity aversion, and allows both both of these to vary between individuals, and also to change with experience. The data is from an experiment in which 80 subjects engage in a sequence of 54 choices between pairs of lotteries. The lotteries always have the same expected value, but they differ in terms of variance and the level of complexity. Complexity is represented by the number of different outcomes in the lottery, and is either 1 (sure win), 3 (simple), 6 (complex) or 27 (very complex). A finite mixture random effects model is estimated which assumes that a proportion of the population are complexity neutral, and we find that around 32% of the population are complexity neutral. In those subjects who do react to complexity, there is a bias towards complexity aversion at the start of the experiment, but complexity aversion reduces with experience, to the extent that the average subject is complexity neutral by the end of the experiment. Around 23% of subjects appear complexity loving. Some of these findings are consistent with switching patterns seen in the choice data. Complexity aversion is found to increase with age, and is found to be higher for non-UK students than for UK students. |
| Keywords: | complexity aversion, complexity preferences, risk preferences, mixture models, learning |
| JEL: | C91 D03 D81 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:14-06&r=exp |
| By: | Lucio Castro; Carlos Scartascini |
| Abstract: | Tax evasion is a pervasive problem in many countries. In particular, some developing countries do not collect even half of what they would if taxpayers complied with the written letter of the law. The academic literature has not been oblivious to the need to explain why people pay (or do not pay) taxes. However, the empirical literature has not yet reached consensus. This paper reports the results of a large field experiment that tried to affect compliance by influencing property tax taxpayers’ beliefs regarding the levels of enforcement, equity, and fairness of the tax system in a municipality in Argentina. Results indicate that the most effective message was one that stated the actual fines and potential legal consequences taxpayers may face in the case of noncompliance (tax compliance increased by more than 4 percentage points). No average effects are found for the treatments designed to affect beliefs about the equity and fairness of the system. However, the evidence also points out that not every taxpayer updates his or her beliefs in the same direction, as relevant heterogeneous effects are found across the population. The evidence in this paper advances the state of knowledge and may help to reconcile some of the different results in the literature. |
| JEL: | C93 D03 H26 H41 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:idb-wp-472&r=exp |
| By: | Nyqvist, Martina Bjorkman; de Walque, Damien; Svensson, Jakob |
| Abstract: | This paper presents the results of two field experiments on local accountability in primary health care in Uganda. Efforts to stimulate beneficiary control, coupled with the provision of report cards on staff performance, resulted in significant improvements in health care delivery and health outcomes in both the short and the longer run. Efforts to stimulate beneficiary control without providing information on performance had no impact on quality of care or health outcomes. The paper shows that informed users are more likely to identify and challenge (mis)behavior by providers and as a result turn their focus to issues that they can manage locally. |
| Keywords: | Health Monitoring&Evaluation,Housing&Human Habitats,Health Systems Development&Reform,Population Policies,Disease Control&Prevention |
| Date: | 2014–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7015&r=exp |
| By: | Rosangela Bando; Xia Li |
| Abstract: | In-service teacher training aims to improve the supply of public education. A randomized experiment was conducted in Mexico to test whether teacher training could increase teacher efficiency in public secondary schools. After seven and a half months of exposure to a trained teacher, students improved their English. This paper explores two mechanisms through which training can affect student learning. First, trained teachers improved their English by 0.35 standard deviations in the short run. Teachers in the control group caught up with treatment teachers by the end of the school year in part because teachers in the treatment group reduced out-of-pocket expenditures to learn English in 53 percent. Second, teachers changed classroom practices by providing more opportunities for students to actively engage in learning. This evidence suggests that teacher training may be effective at improving student learning and that teacher incentives may play a role in mediating its effects. |
| Keywords: | Primary & Secondary Education, Teacher Education & Quality, Secondary education, English as a second language, Teacher training, Analysis of education, Human capital formation |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:86173&r=exp |
| By: | Fehr, Ernst (University of Zurich); Powell, Michael (Northwestern University); Wilkening, Tom (University of Melbourne) |
| Abstract: | The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational and institutional economics. However, subgame-perfect implementation (SPI) mechanisms – which are based on off-equilibrium arbitration clauses that impose fines for lying and the inappropriate use of arbitration – can be used to render payoff-relevant observable information verifiable. Thus, if SPI mechanisms work as predicted, they undermine the foundations of important economic results based on the observable but non-verifiable assumption. Empirical evidence on the effectiveness of SPI mechanisms is, however, scarce. In this paper we show experimentally that SPI mechanisms have severe behavioral limitations. They induce retaliation against legitimate uses of arbitration and thus make the parties reluctant to trigger arbitration. The inconsistent use of arbitration eliminates the incentives to take first-best actions and leads to costly disagreements such that individuals – if given the choice – opt out of the mechanism in the majority of the cases. Incentive compatible redesigns of the mechanism solve some of these problems but generate new ones such that the overall performance of the redesigned mechanisms remains low. Our results indicate that there is little hope for SPI mechanisms to solve verifiability problems unless they are made retaliation-proof and, more generally, robust to other-regarding preferences. |
| Keywords: | implementation theory, incomplete contracts, experiments |
| JEL: | D23 D71 D86 C92 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8404&r=exp |
| By: | Melanie Parravano (University of East Anglia); Odile Poulsen (University of East Anglia) |
| Abstract: | We collect data from symmetric and asymmetric coordination games with a focal point and vary the stake size. The data show that in symmetric games coordination on the label-salient strategy increases with stake size. By contrast, in asymmetric games the coordination rates do not vary with stake size and are close to the levels predicted by both the mixed Nash equilibrium and the level-k model used by Crawford, Gneezy, and Rottenstreich (2008). These findings suggest that players’ mode of reasoning, and the extent to which it can be explained by team reasoning or a level-k model, crucially depends on the symmetry or asymmetry of the coordination payoffs. |
| Keywords: | coordination, labels, focal point, stake size, payoff asymmetry |
| JEL: | C70 C72 C92 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:14-07&r=exp |
| By: | Shyamal Chowdhury; Prabal Roy Chowdhury; Kunal Sengupta |
| Abstract: | This paper develops a theory of sequential lending in groups in micro-finance that centers on the notion of dynamic incentives, in particular the simple idea that default incentives should be relatively uniformly distributed across time. In a framework that allows project returns to accrue over time (rather than at a single point), as well as strategic default, we show that sequential lending can help resolve problems arising out of coordinated default, thus improving project efficiency vis-a-vis individual lending. Inter alia, we also provide a justification for the use of frequent repayment schemes, as well as demonstrate that, depending on how it is manifested, social capital has implications for project efficiency and borrower default. We then examine the optimal choices for the MFI, demonstrating that the MFI opts for higher project sizes under group lending with limited collusion, and also provide a plausible explanation of the transition from group to individual lending. |
| Keywords: | collusion; coordinated default; dynamic incentives; group-lending; micro- finance; sequential financing; social capital; social sanctions |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2014-07&r=exp |
| By: | Tara Mitchell (Institute for International Integration Studies, Trinity College Dublin) |
| Abstract: | This paper investigates an important channel through which access to market information could increase the prices that producers receive from middlemen. I develop a model of trade between a farmer and a middleman, allowing for different types of middlemen, and provide an empirical test of the theory from a framed field experiment carried out in India. The model predicts a non-monotonic relationship between the benefit of information and the cost of switching to a new middleman. I find that middlemen differ in their attitudes towards fairness and the benefit of information to the farmer varies with the cost of switching. |
| Keywords: | Development, Agriculture, Information, Middlemen |
| JEL: | O12 O13 Q13 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:iis:dispap:iiisdp456&r=exp |
| By: | Nee, Victor (Department of Sociology, Cornell University); Opper, Sonja (Department of Economics, Lund University); Holm, Hakan J. (Department of Economics, Lund University) |
| Abstract: | This paper examines how social relations and norms contribute to the emergence of generalized trust in economic action. Our core proposition is that the more positive the local social exchange relationship, the greater an actor’s propensity to place trust in strangers. Our research design integrates behavioral measures elicited by incentivized experimental trust games with survey data using a random sample of 540 founding CEOs of manufacturing firms in the Yangzi delta region of China. Our analysis shows that characteristics of repeated social exchange—depth, prosociality and control—are positively associated with an economic actor’s proclivity for generalized trust. Founder CEOs with deeper and more valued exchange relations are more likely to trust strangers. Likewise, we find robust evidence of a positive association between beliefs in the effectiveness of community social control and trust in strangers. |
| Keywords: | Generalized Trust; Networks; Social Exchange; Norms; CEOs |
| JEL: | C90 D85 L26 |
| Date: | 2014–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2014_030&r=exp |