nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒12‒03
seventeen papers chosen by
Daniel Houser
George Mason University

  1. Custom-made healthcare: An experimental investigation By Keser, Claudia; Montmarquette, Claude; Schmidt, Martin; Schnitzler, Cornelius
  2. First-Mover Advantage in Best-Of-Series: An Experiment Comparison of Role-Assignment Rules By Bradley J. Ruffle, Oscar Volij
  3. The Interplay between Public and Private Information in Asset Markets: Theoretical and Experimental Approaches By Alfarano, Simone; Camacho, Eva; Petrovic, Marko; Provenzano, Giulia
  4. Does Relative Grading Help Male Students? Evidence from a Field Experiment in the Classroom By Czibor, Eszter; Onderstal, Sander; Sloof, Randolph; van Praag, Mirjam C.
  5. Ingratiation: Experimental Evidence By Stéphane Robin; Agnieszka Rusinowska; Marie Claire Villeval
  6. Higher Intelligence Groups Have Higher Cooperation Rates in the Repeated Prisoner's Dilemma By Proto, Eugenio; Rustichini, Aldo; Sofianos, Andis
  7. Muti-Units Public Goods Provision Using Individualized Price Auctions: Experimental Evidences By Liu, Pengfei; Swallow, Stephen
  8. Choosing to Be Trained: Do Behavioral Traits Matter? By Dasgupta, Utteeyo; Gangadharan, Lata; Maitra, Pushkar; Mani, Subha; Subramanian, Samyukta
  9. Personality and Procedural Invariance: Effects on Bidding Behavior Across Induced Value Experimental Auction Mechanisms By Sackett-Brian, Hillary M.; Shupp, Robert
  10. Rewarding safer sex : conditional cash transfers for HIV/STI prevention By de Walque, Damien; Dow, William H.; Nathan, Rose
  11. Do We Learn from Our Own Experience or from Observing Others? By Ralph-C Bayer
  12. The Role of Financial Literacy and of Financial Education Interventions in Developing Countries By Margherita Calderone
  13. Socially-Responsible Certification Schemes for Smallholder Coffee Farmers: Economics of Giving and Consumer Utility By Verteramo Chiu, Leslie J.; Gómez, Miguel I.; Kaiser, Harry M.; Yan, Jubo
  14. Cost Efficient Joint Liability Lending By Ralph-C Bayer
  15. Recent Developments in Experimental Macroeconomics By Luba Petersen; Robert Amano; Oleksiy Kryvtsov
  16. How does the revelation of previous bid affect new bid? By Li, Yingzi; Gallardo, R. Karina; McCracken, Vicki; Yue, Chengyan; Luby, James; McFerson, James R.
  17. ANALYSING FARMERS’ USE OF PRICE HEDGING IN-STRUMENTS: AN EXPERIMENTAL APPROACH By Anastassiadis, Friederike; Feil, Jan-Henning; Mußhoff, Oliver; Schilling, Philipp

  1. By: Keser, Claudia; Montmarquette, Claude; Schmidt, Martin; Schnitzler, Cornelius
    Abstract: In this paper, we investigate in a controlled laboratory experiment physician behavior in the case of payment heterogeneity. In the experiment, each physician provides medical care to patients whose treatments are paid for either under fee-for-service (FFS) or capitation (CAP). We observe that physicians customize care in response to the payment system. A FFS patient receives considerably more medical care than the corresponding CAP patient with the same illness and treatment preference. Physicians over-serve FFS patients and under-serve CAP patients. After a CAP payment reduction in the experiment we observe neither a quantity reduction under CAP nor a spillover into the treatment of FFS patients.
    Keywords: experimental economics,physician reimbursement,capitation,Fee-For-Service,customization,fee regulation
    JEL: C91 I12 I18
    Date: 2014
  2. By: Bradley J. Ruffle, Oscar Volij (Wilfrid Laurier University)
    Abstract: Kingston (1976) and Anderson (1977) show that the probability that a given contestant wins a best-of-2k+1 series of asymmetric, zero-sum, binary-outcome games is, for a large class of assignment rules, independent of which contestant is assigned the advantageous role in each component game. We design a laboratory experiment to test this hypothesis for four simple role-assignment rules. Despite significant differences in the frequency of equilibrium play across the four assignment rules, our results show that the four rules are observationally equivalent at the series level: the fraction of series won by a given contestant and all other series outcomes do not differ across rules.
    Keywords: experimental economics, two-sided competitions, best-of series, asymmetric game, psychological pressure
    JEL: C90 D02 L83
    Date: 2014–09–30
  3. By: Alfarano, Simone; Camacho, Eva; Petrovic, Marko; Provenzano, Giulia
    Abstract: In this paper we will give an overview of the more relevant results on the theoretical and experimental research related to public and private information dissemination and aggregation in asset markets, focusing mainly on the contemporaneous presence of public and private information and its effect on market performance. We conclude that the theoretical literature is more developed than the experimental one when dealing with public information and its role in different economic environments. Therefore, a promising research avenue opens for experimentally testing the different, and often contradictory, theoretical results.
    Keywords: experiments,financial markets,private and public information,central bank information
    JEL: C92 D82 G14
    Date: 2014
  4. By: Czibor, Eszter (University of Amsterdam); Onderstal, Sander (University of Amsterdam); Sloof, Randolph (University of Amsterdam); van Praag, Mirjam C. (Copenhagen Business School)
    Abstract: The provision of non-pecuniary incentives in education is a topic that has received much scholarly attention lately. Our paper contributes to this discussion by investigating the effectiveness of grade incentives in increasing student performance. We perform a direct comparison of the two most commonly used grading practices: the absolute (i.e., criterion-referenced) and the relative (i.e., norm-referenced) grading schemes in a large-scale field experiment at a university. We hypothesize that relative grading, by creating a rank-order tournament in the classroom, provides stronger incentives for male students than absolute grading. In the full sample, we find weak support for our hypothesis. Among the more motivated students we find evidence that men indeed score significantly higher on the test when graded on a curve. Female students, irrespective of their motivation, do not increase their scores under relative grading. Since women slightly outperform men under absolute grading, grading on a curve actually narrows the gender gap in performance.
    Keywords: education, test performance, grade incentives, competition, gender, field experiment
    JEL: I21 I23 A22 D03 C93
    Date: 2014–08
  5. By: Stéphane Robin (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL)); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL))
    Abstract: We investigate experimentally ingratiatory behavior expressed by opinion conformity. Both individuals' performance at a task and their opinions on various topics can be observed before unequal payoffs are assigned by a second mover. In some treatments, first movers can change their opinion after learning that held by the second mover. We find evidence of high ingratiation indices, as opinion conformity is rewarded. However, second movers reward conformity less when it is common knowledge that opinions can be manipulated strategically. Introducing a monetary cost for changing opinion reduces ingratiation. Introducing performance-related pay for the second mover makes ingratiation less rewarding but does not eliminate it completely. Reducing the noise in the measurement of ability has little effect.
    Keywords: Ingratiation; opinion conformity; favoritism; discrimination; social distance; experiment
    Date: 2014
  6. By: Proto, Eugenio (University of Warwick); Rustichini, Aldo (University of Minnesota); Sofianos, Andis (University of Warwick)
    Abstract: Intelligence affects social outcomes of groups. A systematic study of the link is provided in an experiment where two groups of subjects with different levels of intelligence, but otherwise similar, play a repeated prisoner's dilemma. The initial cooperation rates are similar, it increases in the groups with higher intelligence to reach almost full cooperation, while declining in the groups with lower intelligence. The difference is produced by the cumulation of small but persistent differences in the response to past cooperation of the partner. In higher intelligence subjects, cooperation after the initial stages is immediate and becomes the default mode, defection instead requires more time. For lower intelligence groups this difference is absent. Cooperation of higher intelligence subjects is payoff sensitive, thus not automatic: in a treatment with lower continuation probability there is no difference between different intelligence groups.
    Keywords: repeated prisoner dilemma, cooperation, intelligence
    JEL: C73 C92
    Date: 2014–09
  7. By: Liu, Pengfei; Swallow, Stephen
    Keywords: Public Good Provision, Multi-units Provision, Experimental Economics, Individualized Pricing, Ecosystem Service, Environmental Economics and Policy, Institutional and Behavioral Economics, Public Economics, Q56, Q57, C72,
    Date: 2014
  8. By: Dasgupta, Utteeyo (Wagner College); Gangadharan, Lata (Monash University); Maitra, Pushkar (Monash University); Mani, Subha (Fordham University); Subramanian, Samyukta (Pratham)
    Abstract: In this paper, we examine the determinants of self-selection into a vocational training program in India. To do this we combine data from an artefactual field experiment with survey data collected from the targeted community. We find that applicants and non-applicants differ in terms of socio-economic characteristics (measured using a survey), as well as selected behavioral traits (elicited using an artefactual field experiment). Even after controlling for a range of socio-economic characteristics, we find that individuals who have higher tolerance for risk, and are more competitive, are more likely to apply to the training program. This suggests that focusing only on the socio-economic and demographic characteristics might not be sufficient to fully explain selection into the program. Participants' behavioral traits are also crucial in influencing take up rates in such programs. Our results suggest that as a methodology, there is valuable information to be gained by dissecting the black box of unobservables using data on behavioral traits.
    Keywords: selection, artefactual field experiment, behavioral traits, household survey, training program
    JEL: J24 C93 C81
    Date: 2014–10
  9. By: Sackett-Brian, Hillary M.; Shupp, Robert
    Abstract: A growing literature exists on the design, implementation and evaluation of experimental auctions with a variety of non-market valuation applications. With behavioral economic models becoming more mainstreamed in the discipline, a natural question arises about how personality traits might affect bidding behavior in experimental auctions. To address this question, a series of induced-value experiments were carried out in the fall of 2012. Personality traits were measured in pre- and post-surveys aligning with the Midlife Development Inventory Analysis. Regression analysis determined the effects of personality traits on over- and under-bidding behaviors across four frequently used auction mechanism: the Becker-Degroot-Marschak, 2nd Price, Random Nth Price, and English auctions. Results indicate that only the BDM and Random Nth price auctions are significantly affected by personality profile. Specifically, openness, extraversion, and neuroticism are associated with overbidding behavior and agreeableness is associated with underbidding behaviors.
    Keywords: Experimental Auctions, Personality, Procedural Invariance, Behavior, Institutional and Behavioral Economics, Research Methods/ Statistical Methods,
    Date: 2014
  10. By: de Walque, Damien; Dow, William H.; Nathan, Rose
    Abstract: Incentive-based policies have been shown to be powerful in many areas of behavior, but have rarely been tested in the sexual domain. The Rewarding Sexually Transmitted Infection Prevention and Control in Tanzania (RESPECT) study is a randomized controlled trial testing the hypothesis that a system of rapid feedback and positive reinforcement that uses cash as the primary incentive can be used to reduce risky sexual activity among young people, male and female, who are at high risk of HIV infection. The study enrolled 2,399 participants in 10 villages in rural southwest Tanzania. The intervention arm received conditional cash transfers that depended on negative results of periodic screenings for sexually transmitted infections, an objectively measured marker for risky sexual behavior. The intervention arm was further divided into two subgroups, one receiving a high value payment of up to $60 over the course of the study ($20 payments every four months) and the other receiving a lower value payment of up to $30 ($10 payments every four months). At the end of the one year of intervention, the results showed a significant reduction in sexually transmitted infections in the group that was eligible for the $20 payments every four months, but no such reduction was found for the group receiving the $10 payments. The effects were stronger among the lower socioeconomic and higher risks groups. The results of a post-intervention follow-up survey conducted one year after discontinuing the intervention indicate a sustained effect among males, but not among females.
    Keywords: Disease Control&Prevention,Health Monitoring&Evaluation,Population Policies,Adolescent Health,Gender and Health
    Date: 2014–11–01
  11. By: Ralph-C Bayer (School of Economics, University of Adelaide)
    Abstract: Learning in real life is based on different processes. Humans learn to a certain extent from their own experience but also learn by observing what non directly related others have done. In this paper we propose a generalized payoff assessment learning (GPAL) model which enables us to evaluate the relative influences of these two different models of learning. We apply GPAL to a homogeneous good Bertrand duopoly experiment with random matching and population pricing information. The model explains the observed pricing and learning behavior at least as well and often better than learning models from the literature but has the advantage that the relative influence of the learning models can be estimated. We find that the own experience overwhelmingly dominates learning, despite the useful information about behavior of potential future opponents contained in the population price distribution.
    Keywords: Learning, Information, Bertrand Duopoly, Experiment
    JEL: C91 D83 L13
    Date: 2013–11
  12. By: Margherita Calderone
    Abstract: Financial literacy has received increased attention since the global financial crisis and the literature confirms that it is correlated with higher household well-being. In parallel, financial education programs have grown in popularity and an increasing number of countries are developing national financial education strategies and making more investments in related programs. However, the evidence from field experimental research linking financial education interventions and household financial outcomes in developing countries provides mixed results. New findings from recent experiments suggest that well designed and targeted training programs can indeed be successful in increasing formal savings and promoting responsible financial behaviors.
    Date: 2014
  13. By: Verteramo Chiu, Leslie J.; Gómez, Miguel I.; Kaiser, Harry M.; Yan, Jubo
    Abstract: We study consumer preferences for socially-responsible certified coffee based on alternative ways to distribute the price premium of the product. We use Becker, DeGroot, and Marschak (BDM) auctions in an experimental setting to elicit consumer willingness to pay for two socially-responsible certified coffee systems: the existing Fair Trade and a hypothetical certification called Sustainable Trade. These certification schemes differ in the way the price premium is given to producers. In the Fair Trade certifications growers receive a cash transfer whereas in the Sustainable Trade certification a portion of the premium is allocated to a social project in the grower’s community. We segment consumers as donors and non-donors and show that individuals who donate have strong preferences for certification systems that support social projects relative no non-donors. We also find that consumer attitudes toward donating have a strong effect on their willingness to pay for certified coffee. This effect is higher for consumers that donate a higher part of their income to charities.
    Keywords: Social Certifications, Fair Trade, Altruism, Consumer Demand, Experimental Auctions., Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Marketing,
    Date: 2014
  14. By: Ralph-C Bayer (School of Economics, University of Adelaide)
    Abstract: Traditional micro-lending schemes suffer from high transaction costs relative to the loan size, which renders many small loans uneconomical. This paper proposes an alternative lending protocol with lower transaction costs and shows that in theory repayment rates are not compromised. We then use laboratory experiments to confirm this finding. Finally we conclude that our lending protocol if implemented could improve social welfare by reducing transaction cost.
    Keywords: micro nance, group lending, group liability, joint liability.
    JEL: C70 C92 D71 D82 O12 O16
    Date: 2013–11
  15. By: Luba Petersen (Simon Fraser University); Robert Amano (Bank of Canada); Oleksiy Kryvtsov (Bank of Canada)
    Abstract: This article describes experimental economics, in general, and new developments in experimental macroeconomics, in particular. The approach has a clear niche in providing evidence on economic phenomena that cannot be observed directly or that are difficult to measure. Experimental work conducted by Bank of Canada economists has shed light on a number of issues important to monetary policy, such as the relative efficacy between price-level and inflation targeting, and the nature of inflation expectations formation.
    Keywords: Inflation and prices, Monetary policy framework
    JEL: C C9 E E3 E31 E5 E52
    Date: 2014–09
  16. By: Li, Yingzi; Gallardo, R. Karina; McCracken, Vicki; Yue, Chengyan; Luby, James; McFerson, James R.
    Abstract: This study investigates the effect of the revelation of posted bids in second-price experimental auctions for apple quality attributes under the experimental design where information is added progressively across rounds. We find that the revelation of posted bids does not bias the following bids and that increased information about the apple increases the accuracy of participants’ following bids. Therefore, the final round bids are used to evaluate consumers’ willingness to pay for the apple attributes of interest in this study. Consumers are found to prefer large, firm, sweet, crisp and less defects coverage apples.
    Keywords: affiliation, experimental auctions, posted prices, willingness-to-pay, apple attributes, Demand and Price Analysis, Marketing,
    Date: 2014
  17. By: Anastassiadis, Friederike; Feil, Jan-Henning; Mußhoff, Oliver; Schilling, Philipp
    Abstract: This paper analyses the influencing factors of farmers’ use of price hedging instruments (PHIs) based upon a discrete choice experiment with German grain farmers. A mixed logit model is used to determine whether farmers’ choices of PHIs against cash sales are influenced by their price expectation, their risk attitude and their available storage capacities. The results show that farmers with a price expectation below the actual price level have a higher preference for using PHIs against cash sales in general and that the individual degree of risk aversion can have a significant impact on farmers’ choices of a specific PHI. A generally lower preference of farmers with available storage capacities for using PHIs as assumed in many theoretical contributions in the literature, however, cannot be confirmed.
    Keywords: Price hedging instruments, grain marketing, discrete choice experiment, mixed logit, Demand and Price Analysis, Farm Management,
    Date: 2014–09

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