nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒09‒29
fifteen papers chosen by
Daniel Houser
George Mason University

  1. Time for Helping By Anastasia Danilov; Timo Vogelsang
  2. Partner Selection into Policy Relevant Field Experiments By Belot, Michele; James, Jonathan
  3. The Effects of Home Computers on Educational Outcomes: Evidence from a Field Experiment with Community College Students By Fairlie, Robert
  4. Effects of stress on economic decision-making: Evidence from laboratory experiments By Delaney, Liam; Fink, Günther; Harmon, Colm
  5. Entrepreneurship Training, Risk Aversion and Other Personality Traits: Evidence from a Random Experiment By Fairlie, Robert
  6. Strategic Disclosure of Demand Information by Duopolists: Theory and Experiment By Jos Jansen; Andreas Pollak
  7. Effects of Experience, Knowledge and Signals on Willingness to Pay for a Public Good By LaRiviere, Jacob; Czajkowski, Mikolaj; Hanley, Nick; Aanesen, Margrethe; Falk-Peterson, Jannike; Tinch, Dugald
  8. The Spillover Effects of Monitoring: A Field Experiment. By Belot, Michele; Schroeder, Marina
  9. What is the Causal Effect of Information and Learning about a Public Good on Willingness to Pay? By Czajkowski, Mikolaj; Hanley, Nick; LaRiviere, Jacob; Simpson, Katherine
  10. Wishful Thinking By Guy Mayraz
  11. Testing the importance of search frictions, matching, and reservation prestige through randomized experiments in Jordan By Groh, Matthew; McKenzie, David; Shammout, Nour; Vishwanath, Tara
  12. Political Institutions and Corruption:An Experimental Examination of the "Right to Recall" By Sarah Mansour; Vjollca Sadiraj; Sally Wallace
  13. Social Distance, Reputation, Risk Attitude, Value Orientation and Equity in Economic Exchanges By Mohamed I. Gomaa; Stuart Mestelman; Mohamed Shehata
  14. The Impact of Information Provision on Agglomeration Bonus Performance: An Experimental Study on Local Networks By Banerjee, Simanti; de Vries, Frans P.; Hanley, Nick; van Soest, Daan
  15. Are Donors Afraid of Charities’ Core Costs? Scale Economies in Non-profit Provision and Charity Selection By Perroni, Carlo; Pogrebna, Ganna; Sandford, Sarah; Scharf, Kimberley

  1. By: Anastasia Danilov (University of Cologne); Timo Vogelsang (University of Cologne)
    Abstract: This study investigates whether individuals engage in prosocial behavior when it requires their time but not money. In a lab experiment with rigorous anonymity arrangements, subjects receive their payoff beforehand and can engage in a tedious task to increase the earnings of a passive recipient. We find that individuals work for a significant amount of time.
    Keywords: Laboratory experiment, social preferences, time, opportunity costs, volunteering, altruism
    JEL: C91 D64 J22
    Date: 2014–08–26
  2. By: Belot, Michele; James, Jonathan
    Abstract: This study investigates the issue of self-selection of stakeholders into participation and collaboration in policy-relevant experiments. We document and test the implications of self-selection in the context of randomised policy experiment we conducted in primary schools in the UK. The main questions we ask are (1) is there evidence of selection on key observable characteristics likely to matter for the outcome of interest and (2) does selection matter for the estimates of treatment eff ects. The experimental work consists in testing the e ffects of an intervention aimed at encouraging children to make more healthy choices at lunch. We recruited schools through local authorities and randomised schools across two incentive treatments and a control group. We document the selection taking place both at the level of local authorities and at the school level. Overall we nd mild evidence of selection on key observables such as obesity levels and socio-economic characteristics. We find evidence of selection along indicators of involvement in healthy lifestyle programmes at the school level, but the magnitude is small. Moreover, We do not find signifi cant di erences in the treatment e ffects of the experiment between variables which, albeit to a mild degree, are correlated with selection into the experiment. To our knowledge, this is the rst study providing direct evidence on the magnitude of self-selection in fi eld experiments.
    Keywords: Selection, Field Experiments, Randomised controlled trials, External Validity,
    Date: 2013
  3. By: Fairlie, Robert
    Abstract: There is no clear theoretical prediction regarding whether home computers are an important input in the educational production function. To investigate the hypothesis that access to a home computer affects educational outcomes, we conduct the first-ever field experiment involving the provision of free computers to students for home use. Financial aid students attending a large community college in Northern California were randomly selected to receive free computers and were followed for two years. Although estimates for a few measures are imprecise and cannot rule out zero effects, we find some evidence that the treatment group achieved better educational outcomes than the control group. The estimated effects, however, are not large. We also provide some evidence that students initially living farther from campus benefit more from the free computers than students living closer to campus. Home computers appear to improve students’ computer skills and may increase the use of computers at non-traditional times. The estimated effects of home computers on educational outcomes from the experiment are smaller than the positive estimates reported in previous studies. Using matched CPS data, we find estimates of educational effects that are considerably larger than the experimental estimates.
    Keywords: Education, Social and Behavioral Sciences, computers, technology, education, ICT, community college
    Date: 2014–09–11
  4. By: Delaney, Liam; Fink, Günther; Harmon, Colm
    Abstract: The ways in which preferences respond to the varying stress of economic environments is a key question for behavioral economics and public policy. We conducted a laboratory experiment to investigate the effects of stress on financial decision making among individuals aged 50 and older. Using the cold pressor task as a physiological stressor, and a series of intelligence tests as cognitive stressors, we find that stress increases subjective discounting rates, has no effect on the degree of risk-aversion, and substantially lowers the effort individuals make to learn about financial decisions.
    Keywords: stress, financial decisions, discounting, risk aversion, learning,
    Date: 2014
  5. By: Fairlie, Robert
    Abstract: A growing literature examines the relationship between personality traits and entrepreneurship, but no previous studies explore whether personality or psychological traits predispose individuals to benefit more from entrepreneurship training. To address selection issues, we use novel data from the largest-ever randomized control experiment providing entrepreneurship training in the United States. We find evidence indicating that individuals who are more risk tolerant benefit more from entrepreneurship training than less risk tolerant individuals. We find some limited evidence that individuals who have a preference for autonomy benefit more from entrepreneurship training in the short run, but we find no evidence of longer-term effects and no evidence of differential effects of entrepreneurship training for individuals who are more innovative.
    Keywords: Business, Education, Social and Behavioral Sciences, entrepreneurship, education, training, psychology, experiment
    Date: 2014–09–12
  6. By: Jos Jansen; Andreas Pollak
    Abstract: We study the strategic disclosure of demand information and product-market strategies of duopolists. In a setting where firms may fail to receive information, we show that firms selectively disclose information in equilibrium in order to influence their competitor's product-market strategy. Subsequently, we analyze the firms' behavior in a laboratory experiment. We find that subjects often use selective disclosure strategies, and this finding appears to be robust to changes in the information structure, the mode of competition, and the degree of product differentiation. Moreover, subjects in our experiment display product-market conduct that is largely consistent with theoretical predictions.
    Keywords: duopoly, Cournot competition, Bertrand competition, information disclosure, incomplete information, common value, product differentiation, asymmetry, skewed distribution, laboratory experiment
    JEL: C92 D22 D82 D83 L13 M4
    Date: 2014–09–01
  7. By: LaRiviere, Jacob; Czajkowski, Mikolaj; Hanley, Nick; Aanesen, Margrethe; Falk-Peterson, Jannike; Tinch, Dugald
    Abstract: This paper compares how increases in experience versus increases in knowledge about a public good affect willingness to pay (WTP) for its provision. This is challenging because while consumers are often certain about their previous experiences with a good, they may be uncertain about the accuracy of their knowledge. We therefore design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their WTP for it. Using data for two different public goods, we show qualitative equivalence of the effect of knowledge and experience on valuation for a public good. Surprisingly, though, we find that the causal effect of objective signals about the accuracy of a subject’s knowledge for a public good can dramatically affect their valuation for it: treatment causes an increase of $150-$200 in WTP for well-informed individuals. We find no such effect for less informed subjects. Our results imply that WTP estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states.
    Keywords: Information, Beliefs, Field Experiment, Valuation, Uncertainty, Choice Experiment,
    Date: 2014
  8. By: Belot, Michele; Schroeder, Marina
    Abstract: We provide field experimental evidence of the effects of monitoring in a context where productivity is multi-dimensional and only one dimension is monitored and incentivised. We hire students to do a job for us. The job consists of identifying euro coins. We study the effects of monitoring and penalising mistakes on work quality, and evaluate spillovers on non- incentivised dimensions of productivity (punctuality and theft). We .nd that monitoring improves work quality only if incentives are large, but reduces punctuality substantially irrespectively of the size of incentives. Monitoring does not affect theft, with ten per cent of participants stealing overall. Our setting also allows us to disentangle between possible theoretical mechanisms driving the adverse effects of monitoring. Our .ndings are supportive of a reciprocity mechanism, whereby workers retaliate for being distrusted.
    Keywords: counterproductive behaviour, monitoring, experimentment,
    Date: 2013
  9. By: Czajkowski, Mikolaj; Hanley, Nick; LaRiviere, Jacob; Simpson, Katherine
    Abstract: In this study we elicit agents’ prior information set regarding a public good, exogenously give information treatments to survey respondents and subsequently elicit willingness to pay for the good and posterior information sets. The design of this field experiment allows us to perform theoretically motivated hypothesis testing between different updating rules: non-informative updating, Bayesian updating, and incomplete updating. We find causal evidence that agents imperfectly update their information sets. We also field causal evidence that the amount of additional information provided to subjects relative to their pre-existing information levels can affect stated WTP in ways consistent overload from too much learning. This result raises important (though familiar) issues for the use of stated preference methods in policy analysis.
    Keywords: Bayesian, Public Goods, Behavioral Economics, Stated Preference,
    Date: 2014
  10. By: Guy Mayraz
    Abstract: This paper presents a model and an experiment, both suggesting that wishful thinking is a pervasive phenomenon that aect decisions large and small. Agents in the model start out with state-dependent payos, and behave as if high-payo states are more likely. Subsequent choices maximize subjective-expected utility given these beliefs. Subjects in the experiment were paid in accordance with the future value of a nancial asset. Despite incentives for hedging, subjects gaining from high prices made higher predictions than subjects gaining from low prices. Comparative statics agreed with predictions. In particular, a large bonus for accurate predictions did not result in a smaller bias.
    Keywords: wishful thinking, optimism, pessimism, cognitive dissonance,
    JEL: D01 D03 D80 D81 D83 D84 G11
    Date: 2013
  11. By: Groh, Matthew; McKenzie, David; Shammout, Nour; Vishwanath, Tara
    Abstract: Unemployment rates for tertiary-educated youth in Jordan are high, as is the duration of unemployment. Two randomized experiments in Jordan were used to test different theories that may explain this phenomenon. The first experiment tested the role of search and matching frictions by providing firms and job candidates with an intensive screening and matching service based on educational backgrounds and psychometric assessments. Although more than 1,000 matches were made, youth rejected the opportunity to even have an interview in 28 percent of cases, and when a job offer was received, they rejected this offer or quickly quit the job 83 percent of the time. A second experiment built on the first by examining the willingness of educated, unemployed youth to apply for jobs of varying levels of prestige. Youth applied to only a small proportion of the job openings they were told about, with application rates higher for higher prestige jobs than lower prestige jobs. Youth failed to show up for the majority of interviews scheduled for low prestige jobs. The results suggest that reservation prestige is an important factor underlying the unemployment of educated Jordanian youth.
    Keywords: Labor Markets,Tertiary Education,Disability,Labor Policies,Labor Management and Relations
    Date: 2014–09–01
  12. By: Sarah Mansour; Vjollca Sadiraj; Sally Wallace
    Abstract: Countries around the world are concerned with corruption as it potentially undermines confidence in government and may reduce the efficiency of public goods provision. While there has been a significant amount of research devoted to identifying the causes of corruption there has been little empirical research on the impact of political institutions on corruption. Given that many nascent governments are establishing new political systems, the time is right for understanding the role that political institutions may play in enhancing or mitigating corruption. This paper uses a series of laboratory experiments to examine the impact of the right to recall government officials' on the level of government corruption. We find experimental evidence suggesting that such an institution can decrease the level of corruption in government through the increased accountability it imposes on elected politicians, and equity of the system, in terms of income distribution, may also be enhanced.
    Keywords: Political economy, corruption, transition economies, experiment, public goods
    Date: 2014–09
  13. By: Mohamed I. Gomaa; Stuart Mestelman; Mohamed Shehata
    Abstract: The objective of this paper is to use the ultimatum game setting in a controlled laboratory environment to provide additional empirical evidence on the puzzling phenomenon of why some economic agents may reject non-trivial offers for distributing the surplus of an economic transaction, while others may accept very trivial amounts. Previous research across disciplines (economics, biology, philosophy, sociology and psychology) has studied this phenomenon. These studies provide numerous explanations of such contradictory behavior, most of which are unobservable and vary across economic agents. Our research design attempts to control for this unobserved heterogeneity across agents by using the dual-role design where the participants simultaneously play the roles of both the sender and recipient with two anonymous partners in a multi-period ultimatum game. This design allows us to develop a fairness index for each participant. The fairness index is then used as an explanatory variable to help understand the agents’ decisions to accept or reject the proposed distribution of resources. We use a multi-period within-subjects design to control for some of the unobserved heterogeneity across subjects. In addition, measure subjects’ risk attitudes and value orientations and explicitly include them in the regression analysis. The results show that the fairness index is a crucial determinant of agents’ decisions to accept or reject the proposed splits. Furthermore, while individuals’ social value orientations are not significant determinants of whether or not an offer is accepted, risk attitudes are important.
    Keywords: ultimatum games, fairness, social distance, value orientation, risk preference
    Date: 2014–09
  14. By: Banerjee, Simanti; de Vries, Frans P.; Hanley, Nick; van Soest, Daan
    Abstract: The Agglomeration Bonus (AB) is a mechanism to induce adjacent landowners to spatially coordinate their land use for the delivery of ecosystem services from farmland. This paper uses laboratory experiments to explore the performance of the AB in achieving the socially optimal land management configuration in a local network environment where the information available to subjects varies. The AB poses a coordination problem between two Nash equilibria: a Pareto dominant and a risk dominant equilibrium. The experiments indicate that if subjects are informed about both their direct and indirect neighbors’ actions, they are more likely to coordinate on the Pareto dominant equilibrium relative to the case where subjects have information about their direct neighbors’ action only. However, the extra information can only delay – and not prevent – the transition to the socially inferior risk dominant Nash equilibrium. In the long run, the AB mechanism may only be partially effective in enhancing delivery of ecosystem services on farming landscapes featuring local networks.
    Keywords: Agglomeration bonus, agri-environment schemes, biodiversity conservation, ecosystem services, information spillovers, Payments for Ecosystem Services, spatial coordination,
    Date: 2013
  15. By: Perroni, Carlo (Department of Economics and CAGE, University of Warwick); Pogrebna, Ganna (Warwick Manufacturing Group, University of Warwick); Sandford, Sarah (London School of Economics); Scharf, Kimberley (Department of Economics and CAGE, University of Warwick)
    Abstract: We study contestability in non-profit markets where non-commercial providers supply a homogeneous collective good or service through increasing-returns-to-scale technologies. Unlike in the case of for-profit markets, in the non-profit case the absence of price-based sales contracts between providers and donors means that fixed costs are directly relevant to donors, and that they can translate into an entry barrier, protecting the position of an inefficient incumbent; or that, conversely, they can make it possible for inefficient newcomers to contest the position of a more efficient incumbent. Evidence from laboratory experiments show that fixed cost driven trade-offs between payoff dominance and perceived risk can lead to inefficient selection.
    Keywords: Not-for-profit Organizations, Entry, Core Funding
    Date: 2014

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