nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒11‒28
twenty-six papers chosen by

  1. Voting on contributions to a threshold public goods game: An experimental investigation By Feige, Christian; Ehrhart, Karl-Martin; Krämer, Jan
  2. Bubbles, Crashes and Endogenous Uncertainty in Linked Asset and Product Markets By Erik O. Kimbrough; Taylor Jaworski
  3. Aspects of Behavior in Repeated Games: An Experimental Study By Douglas Davis; Asen Ivanov; Oleg Korenok
  4. The curse of knowledge increases self-selection into competition: Experimental evidence By Danz, David
  5. Risk, Uncertainty and Entrepreneurship: Evidence from a Lab-in-the-Field Experiment By Koudstaal, Martin; Sloof, Randolph; van Praag, Mirjam C.
  6. Do buyer groups facilitate collusion? By Normann, Hans-Theo; Rösch, Jürgen; Schultz, Luis Manuel
  7. De Gustibus Non Est Disputandum: An Experimental Investigation By Dasgupta, Utteeyo; Gangadharan, Lata; Maitra, Pushkar; Mani, Subha
  8. Why Do People Give? Testing Pure and Impure Altruism By Mark Ottoni-Wilhelm; Lise Vesterlund; Huan Xie
  9. Directed Giving: Evidence from an Inter-Household Transfer Experiment By Catia Batista; Dan Silverman; Dean Yang
  10. Reward, punishment and probabilities in policy measurements: An extra laboratory experiment about effectiveness and efficiency of incentives in palm oil production By Moser, Stefan; Mußhoff, Prof. Dr. Oliver
  11. Auctions and Leaks: A Theoretical and Experimental Investigation By Sven Fischer; Werner Güth; Todd R. Kaplan; Ro'i Zultan
  12. Growth and Inequality in Public Good Games By Gächter, Simon; Mengel, Friederike; Tsakas, Elias; Vostroknutov, Alexander
  13. Subsidies and the Persistence of Technology Adoption: Field Experimental Evidence from Mozambique By Michael R. Carter; Rachid Laajaj; Dean Yang
  14. The Effect of Communication Channels on Lying By Julian Conrads
  15. Higher Quality and Lower Cost from Improving Hospital Discharge Decision Making By James C. Cox; Vjollca Sadiraj; Kurt E. Schnier; John F. Sweeney
  16. Voting for burden sharing rules in public goods games By Gallier, Carlo; Kesternich, Martin; Sturm, Bodo
  17. Peer effects and risk sharing in experimental asset markets By Baghestanian, Sascha; Gortner, Paul J.; van der Weele, Joël J.
  18. Learning and Earning: Evidence from a Randomized Evaluation in India By Maitra, Pushkar; Mani, Subha
  19. Turf Wars By Herrera, Helios; Reuben, Ernesto; Ting, Michael M.
  20. Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors By Adnan Q. Khan; Asim I. Khwaja; Benjamin A. Olken
  21. What is ‘Fair’ Distribution under Collaboration?:Evidences from Lab-Experiments By Natsuka Tokumaru; Hiroyuki Uni
  22. Experimental Evidence on Distributional Effects of Head Start By Marianne P. Bitler; Hilary W. Hoynes; Thurston Domina
  23. Compliant sinners, obstinate saints: How power and self-focus determine the effectiveness of social influences in ethical decision making By Marko Pitesa; Stefan Thau
  24. "Making It Count": Evidence from a Field Study on Assessment Rules, Study Incentives and Student Performance By Chevalier, Arnaud; Dolton, Peter; Lührmann, Melanie
  25. Measuring risk preferences in rural Ethiopia: Risk tolerance and exogenous income proxies By Vieider, Ferdinand M.; Beyene, Abebe; Bluffstone, Randall; Dissanayake, Sahan; Gebreegziabher, Zenebe; Martinsson, Peter; Mekonnen, Alemu
  26. When the Price You See Is Not the Price You Get: A Bargaining Study By Sandro Shelegia; Joshua Sherman

  1. By: Feige, Christian; Ehrhart, Karl-Martin; Krämer, Jan
    Abstract: We introduce a binding unanimous voting rule to a public goods game with an uncertain threshold for the total group contribution. In a laboratory experiment we find that voting generates significantly higher total contributions than making individual voluntary contributions to the public good. Heterogeneity with regard to marginal costs of contribution makes coordination on the threshold value somewhat more di cult when voting, but apparently facilitates coordination when not voting. Homogeneous non-voting groups instead exhibit a breakdown of contributions commonly observed in linear public goods games, but unusual for a threshold setting. We also notice a preference for payoff symmetry over maximization of expected welfare in heterogeneous voting groups, which to a lesser extent also appears in nonvoting groups. Using a top-down rule, i.e., splitting the voting process into two separate votes on 1) total contribution and 2) individual contributions does not affect these results.
    Keywords: public good,threshold uncertainty,experimental economics,unanimous voting,committee,heterogeneity
    JEL: C92 D71 H41
    Date: 2014
  2. By: Erik O. Kimbrough (Simon Fraser University); Taylor Jaworski (Queen's University)
    Abstract: In laboratory asset markets, subjects trade shares of a firm whose profits in a linked product market determine dividends. Treatments vary whether dividend information is revealed once per period or in real-time and whether the firm is controlled by a profit-maximizing robot or human subject. The latter variation induces uncertainty about firm behavior, bridging the gap between laboratory and field markets. Our data replicate well-known features of laboratory asset markets (e.g. bubbles), suggesting these are robust to a market-based dividend process. Compared to a sample of previous experiments, both real-time information revelation and endogenous uncertainty impede the bubble-mitigating impact of experience.
    Keywords: Asset Markets, Uncertainty, Experimental Economics
    JEL: C91 D84
    Date: 2014–10–29
  3. By: Douglas Davis (Virginia Commonwealth University); Asen Ivanov (Queen Mary University of London); Oleg Korenok (Virginia Commonwealth University)
    Abstract: We introduce a novel approach to studying behavior in repeated games - one that is based on the psychology of play. Our approach is based on the following six "aspects" of a player's behavior: round-1 cooperation, lenience, forgiveness, loyalty, leadership, and following. Using a laboratory experiment, we explore how aspects are correlated between each other in a given repeated game, how they are correlated with behavior at various histories in a given repeated game, and how each aspect is correlated across different repeated games. We also investigate whether two players' aspects from a given repeated game tend to predict the frequency of the cooperate-cooperate outcome if these two players are matched to play either the same kind of repeated game or an altogether different repeated game. An important feature of our study is that it addresses the question of cross-game prediction.
    Keywords: Repeated games, Prisoner's dilemma, Experiment, Cooperation
    JEL: C92 D03 D70
    Date: 2014–10
  4. By: Danz, David
    Abstract: The psychology literature provides ample evidence that people have difficulties taking the perspective of less-informed others. This paper presents a controlled experiment showing that this "curse of knowledge" can cause comparative overconfidence and overentry into competition. In a broader context, the results provide an explanation for the overconfidence of nascent entrepreneurs and the substantial rate of failure among new businesses.
    Keywords: curse of knowledge,hindsight bias,information projection,overconfidence,sorting,incentive schemes,competition,beliefs,experiments
    JEL: C91 D80 D82 D83 D84
    Date: 2014
  5. By: Koudstaal, Martin (University of Amsterdam); Sloof, Randolph (University of Amsterdam); van Praag, Mirjam C. (Copenhagen Business School)
    Abstract: Theory predicts that entrepreneurs have distinct attitudes towards risk and uncertainty, but empirical evidence is mixed. To better understand the unique behavioral characteristics of entrepreneurs and the causes of these mixed results, we perform a large 'lab-in-the-field' experiment comparing entrepreneurs to managers – a suitable comparison group – and employees (n = 2288). The results indicate that entrepreneurs perceive themselves as less risk averse than managers and employees, in line with common wisdom. However, when using experimental incentivized measures, the differences are subtler. Entrepreneurs are only found to be unique in their lower degree of loss aversion, and not in their risk or ambiguity aversion. This combination of results might be explained by our finding that perceived risk attitude is not only correlated to risk aversion but also to loss aversion. Overall, we therefore suggest using a broader definition of risk that captures this unique feature of entrepreneurs; their willingness to risk losses.
    Keywords: entrepreneurs, managers, risk aversion, loss aversion, ambiguity aversion, lab-in-the-field experiment
    JEL: L26 C93 D03 M13
    Date: 2014–10
  6. By: Normann, Hans-Theo; Rösch, Jürgen; Schultz, Luis Manuel
    Abstract: We explore whether lawful cooperation in buyer groups facilitates collusion in the product market. Buyer groups purchase inputs more economically. In a repeated game, abandoning the buyer group altogether or excluding single firms constitute credible threats. Hence, in theory, buyer groups facilitate collusion. We run several experimental treatments using three-firm Cournot markets to test these predictions and other effects like how buyer groups affect outcomes when group members can communicate. The experimental results show that buyer groups lead to lower outputs when groups can exclude single firms. Communication is often abused for explicit agreements and this strongly reduces competition.
    Keywords: buyer groups,cartels,collusion,communication,experiments,repeated games
    JEL: C7 C9 L4 L41
    Date: 2014
  7. By: Dasgupta, Utteeyo (Wagner College); Gangadharan, Lata (Monash University); Maitra, Pushkar (Monash University); Mani, Subha (Fordham University)
    Abstract: The goal of this paper is to examine stability in preferences using the Stigler-Becker state-dependent framework. Using a randomized intervention that changes the opportunity sets of individuals we construct a unique panel data from an artefactual field experiment and evaluate whether the change in the state space influences our selected indicators of preferences: risk, competitiveness, and confidence. We find that there is considerable heterogeneity of preferences across individuals at a point in time; risk and competitive preferences inter-temporally are consistent with state-dependent preferences, while measures of confidence seem to depend on past experiences.
    Keywords: preference stability, state contingent preferences, artefactual field experiment
    JEL: C9 D01 D03
    Date: 2014–10
  8. By: Mark Ottoni-Wilhelm; Lise Vesterlund; Huan Xie
    Abstract: The extant experimental design to investigate warm glow and altruism elicits a single measure of crowd-out. Not recognizing that impure altruism predicts crowd-out is a function of giving-by-others, this design's power to reject pure altruism varies with the level of giving-by-others, and it cannot identify the strength of warm glow and altruism preferences. These limitations are addressed with a new design that elicits crowd-out at a low and at a high level of giving-by-others. Consistent with impure altruism we find decreasing crowd-out as giving-by-others increases. However warm glow is weak in our experiment and altruism largely explains why people give.
    JEL: C92 H41
    Date: 2014–09
  9. By: Catia Batista; Dan Silverman; Dean Yang
    Abstract: We investigate the determinants of giving in a lab-in-the-field experiment with large stakes. Study participants in urban Mozambique play dictator games where their counterpart is the closest person to them outside their household. When given the option, dictators do a large fraction of giving in kind (in the form of goods) rather than cash. In addition, they share more in total when they have the option of giving in kind, compared to giving that can only be in cash. Qualitative post-experiment responses suggest that this effect is driven by a desire to control how recipients use gifted resources. Standard economic determinants such as the rate of return to giving and the size of the endowment also affect giving, but the effects of even large changes in these determinants are significantly smaller than the effect of the in-kind option. Our results support theories of giving where the utility of givers depends on the composition (not just the level) of gift-recipient expenditures, and givers thus seek control over transferred resources.
    JEL: C92 C93 D01 D03 D64 O17
    Date: 2014–10
  10. By: Moser, Stefan; Mußhoff, Prof. Dr. Oliver
    Abstract: Palm oil production creates negative externalities, e.g. through intensive fertiliser application. If policy wants to determine externalities an effective and efficient measurement seems desirable. Embedded in an extra laboratory field experiment on Sumatra, a business simulation game tests several incentives for reducing the use of fertiliser. These incentives are differently designed, i.e., either reward or punishment, varying in their magnitude and probability of occurrence but constant in the effect on expected income. Results show that participants react significantly different depending on the incentive design. A high reward with a low probability to occur was found to be the most effective and sustainable incentive design. For efficiency, a low and certain reward is indicated to be the best design.
    Keywords: policy measurement, effective incentive, efficient inventive, field experiment, business simulation game, Indonesia, Agricultural and Food Policy, Research Methods/ Statistical Methods,
    Date: 2014–09
  11. By: Sven Fischer (Max Planck Institute of Economics, Jena, and Max Planck Institute for Research on Collective Goods, Bonn); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Todd R. Kaplan (University of Exeter, and University of Haifa); Ro'i Zultan (Ben Gurion University of the Negev)
    Abstract: We study first- and second-price private value auctions with sequential bidding where second movers may discover the first movers bids. There is a unique equilibrium in the first-price auction and multiple equilibria in the second-price auction. Consequently, comparative statics across price rules are equivocal. We experimentally find that in the first-price auction, leaks benefit second movers but harm first movers and sellers. Low to medium probabilities of leak eliminate the usual revenue dominance of first-price over second-price auctions. With a high probability of a leak, second-price auctions generate higher revenue.
    Keywords: auctions, espionage, collusion, laboratory experiments
    JEL: C72 C91 D44
    Date: 2014–11–11
  12. By: Gächter, Simon (University of Nottingham); Mengel, Friederike (University of Essex); Tsakas, Elias (Maastricht University); Vostroknutov, Alexander (Maastricht University)
    Abstract: In a novel experimental design we study public good games with dynamic interdependencies. Each agent's income at the end of a period serves as her endowment in the following period. In this setting growth and inequality arise endogenously allowing us to address new questions regarding their interplay and effect on cooperation levels. In stark contrast to standard public good experiments, we find that contributions are increasing over time even in the absence of punishment possibilities. Inequality and group income are positively correlated for poor groups, but negatively correlated for rich groups. There is very strong path dependence: inequality in early periods is strongly negatively correlated with group income in later periods. These results give new insights into why people cooperate and should make us rethink previous results from the literature on repeated public good games regarding the decay of cooperation in the absence of punishment.
    Keywords: public goods, inequality, growth
    JEL: C92 H41 D63
    Date: 2014–09
  13. By: Michael R. Carter; Rachid Laajaj; Dean Yang
    Abstract: We report the results of a randomized experiment testing impacts of subsidies for modern agricultural inputs in rural Mozambique. One-time provision of a voucher for fertilizer and improved seeds leads to substantial increases in fertilizer use, which persist through two subsequent agricultural seasons. Voucher receipt also leads to large, persistent increases in household agricultural production and market sales, per capita consumption, assets, durable good ownership, and housing improvements. Consistent with learning models of the adoption decision, we find positive treatment effects on farmers' estimated returns to the input package. We also document positive cross-household treatment spillovers: one's own fertilizer use rises in the number of social network members receiving vouchers. Our findings are consistent with theoretical models predicting persistence of impacts of temporary technology adoption subsidies, in particular due to learning effects.
    JEL: O13 O16 O33
    Date: 2014–09
  14. By: Julian Conrads (University of Cologne)
    Abstract: This paper investigates the effect of different channels of communication on lying behavior. A simple coin flip game with four coin tosses is adapted in which subjects have monetary incentives to misreport their private information. The treatments differ with respect to the communication channel employed to convey the private information, i.e., face-to face, phone, computer-mediated, and online. Against the hypotheses, the results show that a majority of subjects lies independently of communication channel in use. However, the decision whether to lie either to some or the full extent depends on the communication channel. Compared to more socially-distant communication, direct communication encourages partial lying, but decreases lying to the extreme. Women tend to lie to the full extent only under online communication. Social distance considerations and the probability of being detect lying may drive observed behavioral patterns. The findings highlight the relevance of lying costs in relation to the decision making environment.
    Keywords: experiment, private information, lying costs, communication
    JEL: C91 D63 D82 D83
  15. By: James C. Cox; Vjollca Sadiraj; Kurt E. Schnier; John F. Sweeney
    Abstract: null
    Keywords: Healthcare, Experiment, Clinical Decision Support System, Risk, Default Option
    JEL: C91 D81 I10
    Date: 2014–11
  16. By: Gallier, Carlo; Kesternich, Martin; Sturm, Bodo
    Abstract: In this experiment, we endogenize the choice of which contribution scheme is implemented in a public goods game. We investigate three rule-based contribution schemes. In a first step, players agree on a common group provision level using the principle of the smallest common denominator. Subsequently, this group investment is allocated according to a specific rule to individual minimum contributions. The game is implemented either as a Single- or a Multi-Phase Game. In the Single-Phase Game, the contribution schemes are exogenously implemented. In the Multi-Phase Game, we let subjects vote on the rule-based contribution schemes. If a scheme obtains a sufficient majority it is implemented. In case no sufficient majority is reached, subjects have to make their contributions to the public good using the voluntary contribution mechanism (VCM). Our results suggest that the endogenous choice of a contribution scheme has an impact on the level of contributions. In case of a rule-based contribution scheme which equalizes payoffs, contributions are higher if subjects choose the scheme than in case the scheme is implemented exogenously. In contrast, contributions are higher if the VCM is implemented exogenously than in case a sufficient majority cannot be obtained and, therefore, subjects have to play the VCM.
    Keywords: public goods,endogenous institutions,minimum contribution rules,cooperation
    JEL: C72 C92 H41
    Date: 2014
  17. By: Baghestanian, Sascha; Gortner, Paul J.; van der Weele, Joël J.
    Abstract: Previous research has documented strong peer effects in risk taking, but little is known about how such social influences affect market outcomes. The consequences of social interactions are hard to isolate in financial data, and theoretically it is not clear whether peer effects should increase or decrease risk sharing. We design an experimental asset market with multiple risky assets and study how exogenous variation in real-time information about the portfolios of peer group members affects aggregate and individual risk taking. We find that peer information ameliorates under-diversification that occurs in a market without such information. One reason is that peer information increases risk aversion and induces a concern for relative income position that may reduce or amplify risk taking, depending on whether the context highlights the most or least successful trader. Thus, contrary to conventional wisdom, we show that social interactions may help to reduce earnings volatility in financial markets, and we discuss implications for institutional design.
    Keywords: peer effects,laboratory experiments,asset markets
    JEL: D53 D83 G11
    Date: 2014
  18. By: Maitra, Pushkar (Monash University); Mani, Subha (Fordham University)
    Abstract: This paper presents the treatment effects from participating in a subsidized vocational training program targeted at women residing in low-income households in India. We combine pre-intervention data with two rounds of post-intervention data from a randomized field experiment to quantify the 6- and 18-month treatment effects of the program. The 6-month effects of the program indicate that women who were offered the training program are 6 percentage points more likely to be employed, 4 percentage points more likely to be self-employed, work 2.5 additional hours per week, and earn 150 percent more per month than women in the control group. Using a second round of follow-up data collected 18 months after the intervention, we find that the 6-month treatment effects are all sustained over this period. Our findings indicate credit constraints, distance, and lack of proper child care support as important barriers to program completion. Further, we also rule out two alternative mechanisms – signalling and behavior that could drive these findings. Finally, a simple cost-benefit analysis suggests that the program is highly cost-effective.
    Keywords: vocational training, panel data, India, economic returns, field experiment
    JEL: I21 J19 J24
    Date: 2014–10
  19. By: Herrera, Helios (HEC Montreal); Reuben, Ernesto (Columbia University); Ting, Michael M. (Columbia University)
    Abstract: Turf wars commonly occur in environments where competition undermines collaboration. We develop a game theoretic model and experimental test of turf wars. The model explores how team production incentives ex post affect team formation decisions ex ante. In the game, one agent decides whether to share jurisdiction over a project with other agents. Agents with jurisdiction decide whether to exert effort and receive a reward based on their relative performance. Hence, sharing can increase joint production but introduces competition for the reward. We find that collaboration has a non-monotonic relationship with both productivity and rewards. The laboratory experiment confirms the model's main predictions. We also explore extensions of the basic model, including one where each agent's productivity is private information.
    Keywords: turf war, bureaucracy, jurisdiction, competition, information withholding
    JEL: D73 D74 D82
    Date: 2014–10
  20. By: Adnan Q. Khan; Asim I. Khwaja; Benjamin A. Olken
    Abstract: Performance pay for tax collectors has the potential to raise revenues, but might come at a cost if taxpayers face undue pressure from collectors. We report the first large-scale field experiment on these issues, where we experimentally allocated 482 property tax units in Punjab, Pakistan into one of three performance-pay schemes or a control. After two years, incentivized units had 9.3 log points higher revenue than controls, which translates to a 46 percent higher growth rate. The scheme that rewarded purely on revenue did best, increasing revenue by 12.8 log points (62 percent higher growth rate), with little penalty for customer satisfaction and assessment accuracy compared to the two other schemes that explicitly also rewarded these dimensions. Further analysis reveals that these revenue gains accrue from a small number of properties becoming taxed at their true value, which is substantially more than they had been taxed at previously. The majority of properties in incentivized areas in fact pay no more taxes, but do report higher bribes. The results are consistent with a collusive setting in which performance pay increases collector's bargaining power over taxpayers, who either have to pay higher bribes to avoid being reassessed, or pay substantially higher taxes if collusion breaks down.
    JEL: D73 H26
    Date: 2014–10
  21. By: Natsuka Tokumaru; Hiroyuki Uni
    Date: 2014–09
  22. By: Marianne P. Bitler; Hilary W. Hoynes; Thurston Domina
    Abstract: This study provides the first comprehensive analysis of the distributional effects of Head Start, using the first national randomized experiment of the Head Start program (the Head Start Impact Study). We examine program effects on cognitive and non-cognitive outcomes and explore the heterogeneous effects of the program through 1st grade by estimating quantile treatment effects under endogeneity (IV-QTE) as well as various types of subgroup mean treatment effects and two-stage least squares treatment effects. We find that (the experimentally manipulated) Head Start attendance leads to large and statistically significant gains in cognitive achievement during the pre-school period and that the gains are largest at the bottom of the distribution. Once the children enter elementary school, the cognitive gains fade out for the full population, but importantly, cognitive gains persist through 1st grade for some Spanish speakers. These results provide strong evidence in favor of a compensatory model of the educational process. Additionally, our findings of large effects at the bottom are consistent with an interpretation that the relatively large gains in the well-studied Perry Preschool Program are in part due to the low baseline skills in the Perry study population. We find no evidence that the counterfactual care setting plays a large role in explaining the differences between the HSIS and Perry findings.
    JEL: H52 I20 I38
    Date: 2014–08
  23. By: Marko Pitesa (GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM)); Stefan Thau (LBS - London Business School - London Business School)
    Abstract: In this research, we examine when and why organizational environments influence how employees respond to moral issues. Past research proposed that social influences in organizations affect employees' ethical decision making, but did not explain when and why some individuals are affected by the organizational environment and some disregard it. To address this problem, we drew on research on power to propose that power makes people more self-focused, which, in turn, makes them more likely to act upon their preferences and ignore (un)ethical social influences. Using both experimental and field methods, we tested our model across the three main paradigms of social influence: informational influence (Study 1 and 2), normative influence (Study 3), and compliance (Study 4). Results offer converging evidence for our theory.
    Keywords: ethical decision making, power, social influences, self-focus
    Date: 2013–06–03
  24. By: Chevalier, Arnaud (IZA); Dolton, Peter (University of Sussex); Lührmann, Melanie (Royal Holloway, University of London)
    Abstract: This paper examines a quasi-experiment in which we encourage student effort by setting various weekly incentives to engage in online tests. Our identification strategy exploits i) weekly variation in incentives to determine their impact on student effort, and ii) controlled cross-group variation in assessment weighting. Assessment weighting strongly encourages quiz participation, without displacing effort over the year. We estimate the return to a quiz at around 0.15 of a standard deviation in exam grade. Effort in our study increases most for students at and below median ability, resulting in a reduction of the grade gap by 8%.
    Keywords: incentive, feedback, effort, higher education
    JEL: I23 D20
    Date: 2014–10
  25. By: Vieider, Ferdinand M.; Beyene, Abebe; Bluffstone, Randall; Dissanayake, Sahan; Gebreegziabher, Zenebe; Martinsson, Peter; Mekonnen, Alemu
    Abstract: Risk aversion has generally been found to decrease in income or wealth. This may lead one to expect that poor countries will be more risk averse than rich countries. Recent comparative findings with students, however, suggest the opposite, giving rise to a riskincome paradox. We test this paradox by measuring the risk preferences of over 500 household heads spread over the highlands of Ethiopia. We do so using certainty equivalents, which have rarely been used in developing countries, but permit us to relate the findings to a host of evidence from the West. We find high degrees of risk tolerance, in agreement with the student comparisons finding higher risk tolerance in poorer countries. We also find risk tolerance to increase in income proxies, thus completing the paradox. We thereby use income proxies that can be considered as exogenous, allowing us to conclude that at least part of the causality must run from income to risk tolerance. We furthermore provide extensive methodological discussions on measuring and estimating risk preferences in development settings.
    Keywords: risk preferences,development,experimental methodology
    JEL: C93 D03 D80 O12
    Date: 2014
  26. By: Sandro Shelegia; Joshua Sherman
    Abstract: Although (or because) it is uncommon to observe consumers bargaining at retail stores in the Western world, the circumstances under which retail rms are actually willing to bargain is largely unknown. We construct a theoretical model in order to better understand how price and rm characteristics in uence a rm's incentives to bargain and test the model's predictions by conducting a eld experiment at nearly 300 stores throughout Vienna, Austria. In particular, we analyze the extent to which retail rms throughout Vienna consent to granting a discount when asked. A discount was granted approximately 40% of the time, and the average positive discount was approximately 10% o of a product's posted price. We relate rms' willingness to bargain to price and rm characteristics, in line with our theory.
    JEL: L81 D12 C78 C93
    Date: 2014–11

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