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on Experimental Economics |
| By: | Douglas Davis (Virginia Commonwealth University); Asen Ivanov (Queen Mary University of London); Oleg Korenok (Virginia Commonwealth University) |
| Abstract: | Using a laboratory experiment, we investigate whether a variety of behaviors in repeated games are related to an array of individual characteristics that are popular in economics: risk attitude, time preference, trust, trustworthiness, altruism, strategic skills in one-shot matrix games, compliance with first-order stochastic dominance, ability to plan ahead, and gender. We do find some systematic relationships. A subject's patience, gender, altruism, and compliance with first-order stochastic dominance have some limited systematic effects on her behavior in repeated games. At the level of a pair of subjects who are playing a repeated game, each subject's patience, gender, and ability to choose an available dominant strategy in a one-shot matrix game systematically affect the frequency of the cooperate-cooperate outcome. However, overall, the number of systematic relationships is surprisingly small. |
| Keywords: | Experiment, Repeated game, Individual characteristics |
| JEL: | C91 C92 D03 D70 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp728&r=exp |
| By: | Ghazala Azmat (Queen Mary University of London and CEP (LSE)); Barbara Petrongolo (Queen Mary University of London and CEP (LSE)) |
| Abstract: | We discuss the contribution of the experimental literature to the understanding of both traditional and previously unexplored dimensions of gender differences and discuss their bearings on labor market outcomes. Experiments have offered new findings on gender discrimination, and while they have identified a bias against hiring women in some labor market segments, the discrimination detected in field experiments is less pervasive than that implied by the regression approach. Experiments have also offered new insights into gender differences in preferences: women appear to gain less from negotiation, have lower preferences than men for risk and competition, and may be more sensitive to social cues. These gender differences in preferences also have implications in group settings, whereby the gender composition of a group affects team decisions and performance. Most of the evidence on gender traits comes from the lab, and key open questions remain as to the source of gender preferences -nature versus nurture, or their interaction- and their role, if any, in the workplace. |
| Keywords: | Gender, Field experiments, Lab experiments, Discrimination, Gender preferences |
| JEL: | J16 J24 J71 C91 C92 C93 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp724&r=exp |
| By: | James Andreoni; Alison Sanchez |
| Abstract: | We study whether actions are justified by beliefs, as is usually assumed, or whether beliefs are justified by actions. In our experiment, subjects participate in a trust game, after which they have an opportunity to state their beliefs about their opponent's actions. Subsequently, subjects participate in a task designed to "reveal" their true beliefs. We find that subjects who make selfish choices and show strategic sophistication falsely state their beliefs in order to project a more favorable social image. By contrast, their "revealed" beliefs were significantly more accurate, which betrayed these subjects as knowing that their selfishness was not justifiable by their opponent's behavior. |
| JEL: | C9 D03 D83 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20649&r=exp |
| By: | Gallier, Carlo; Reif, Christiane; Römer, Daniel |
| Abstract: | We investigate the dynamic effects of a charitable lottery and an income tax on donations. The analysis is based on a two-round dictator game with the subject's charity of choice as recipient and additional incentives in the first round only. The immediate effect of a charitable lottery leads to higher contributions and we cannot find substantial crowding out of voluntary contributions in the presence of an income tax. These economic interventions weakly spill-over to the subsequent donation decisions without additional incentives. Our results suggest the presence of consistency seeking behaviour. This is especially true for a subgroup of participants with a rule-based mind-set and our research shows the importance of the subjects' moral framework in the context of dynamic pro-social behaviour. |
| Keywords: | charitable giving,laboratory experiment,lottery,tax,voluntary contribution mechanism |
| JEL: | C91 D64 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14060&r=exp |
| By: | Nicolas Jacquemet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II); Adam Zylbersztejn (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne) |
| Abstract: | Experiments based on the Beard and Beil (1994) two-player coordination game robustly show that coordination failures arise as a result of two puzzling behaviors: (i) subjects are not willing to rely on others' self-interested maximization, and (ii) self-interested maximization is not ubiquitous. Such behavior is often considered to challenge the relevance of subgame perfectness as an equilibrium selection criterion, since weakly dominated strategies are actually used. We report on new experiments investigating whether inequality in payoffs between players, maintained in most lab implementations of this game, drives such behavior. Our data clearly show that the failure to maximize personal payoffs, as well as the fear that others might act this way, do not stem from inequality aversion. This result is robust to varying the saliency of decisions, repetition-based learning and cultural differences between France and Poland. |
| Keywords: | Coordination Failure ; Subgame perfectness ; Non-credible threats; Laboratory experiments; Social Preferences; Inequality Aversion |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01026080&r=exp |
| By: | Huck, Steffen; Schmidt, Tobias; Weizsäcker, Georg |
| Abstract: | We study an investment experiment conducted with a representative sample of German households. Respondents invest in a safe asset and a risky asset whose return is tied to the German stock market. Experimental investments correlate with beliefs about stock market returns and exhibit desirable external validity: they predict real-life stock market participation. But many households do not significantly react to an exogenous increase in the risky asset's return. The data analysis and analogous laboratory experiments suggest that task complexity decreases the responsiveness to incentives. Modifying the return of the (simpler) safe asset has a larger effect. |
| Keywords: | stock market expectations,stock market participation,portfolio choice,artefactual field experiment,financial literacy |
| JEL: | D1 D14 D84 G11 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2014308&r=exp |
| By: | David J. Deming; Noam Yuchtman; Amira Abulafi; Claudia Goldin; Lawrence F. Katz |
| Abstract: | We study employers' perceptions of postsecondary degrees using a field experiment. We randomly assign the sector and selectivity of institution to fictitious resumes and send them to real vacancy postings on a large online job board. According to our results, a bachelor's degree in business from a for-profit "online" institution is 22 percent less likely to receive a callback than a similar degree from a non-selective public institution. Degrees from selective public institutions are relatively more likely to receive callbacks from employers posting higher-salaried jobs, suggesting that employers value college quality and the likelihood of a successful match when contacting applicants. |
| JEL: | I21 J24 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20528&r=exp |
| By: | Groh, Matthew (World Bank); McKenzie, David (World Bank); Shammout, Nour (University of Michigan); Vishwanath, Tara (World Bank) |
| 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 tests 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 over 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, rejected this offer or quickly quit the job 83 percent of the time. A second experiment builds on the first by examining the willingness of educated, unemployed, youth to apply for jobs of varying levels of prestige. We find youth apply to only a small proportion of the job openings they are told about, with application rates higher for higher prestige jobs than lower prestige. Youth fail 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: | psychometrics, labor market matching, reservation prestige, youth unemployment, Jordan, randomized experiment |
| JEL: | O12 O15 J64 J08 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8518&r=exp |
| By: | Auspurg, Katrin (Goethe University Frankfurt); Iacovou, Maria (University of Cambridge); Nicoletti, Cheti (University of York) |
| Abstract: | Using an experimental design, we investigate the reasons behind the gendered division of housework within couples. In particular, we assess whether the fact that women do more housework may be explained by differences in preferences deriving from differences in gender identity between men and women. We find little evidence of any systematic gender differences in the preference for housework, suggesting that the reasons for the gendered division of housework lie elsewhere. |
| Keywords: | gender, housework, unpaid work, division of labor, experiment |
| JEL: | J16 J22 C35 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8569&r=exp |
| By: | Fehr, Dietmar; Schmid, Julia |
| Abstract: | Contest or auction designers who want to maximize the overall revenue are frequently concerned with a trade-off between contest homogeneity and inclusion of bidders with high valuations. In our experimental study, we find that it is not profitable to exclude the most able bidder in favor of greater homogeneity among the remaining bidders, even if the theoretical exclusion principle predicts otherwise. This is because the strongest bidders considerably overexert. A possible explanation is that these bidders are afraid they will regret a low but risky bid if they lose and thus prefer a strategy which gives them a lower but secure pay-off. |
| Keywords: | experiments,contests,all-pay auction,heterogeneity,regret aversion |
| JEL: | C72 C92 D84 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2014206&r=exp |
| By: | Behaghel, Luc (Paris School of Economics); Crépon, Bruno (CREST); Le Barbanchon, Thomas (CREST) |
| Abstract: | We evaluate an experimental program in which the French public employment service anonymized resumes for firms that were hiring. Firms were free to participate or not; participating firms were then randomly assigned to receive either anonymous resumes or name-bearing ones. We find that participating firms become less likely to interview and hire minority candidates when receiving anonymous resumes. We show how these unexpected results can be explained by the self-selection of firms into the program and by the fact that anonymization prevents the attenuation of negative signals when the candidate belongs to a minority. |
| Keywords: | anonymous applications, discrimination, randomized experiment |
| JEL: | J71 J78 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8517&r=exp |
| By: | Baert, Stijn (Ghent University); Omey, Eddy (Ghent University) |
| Abstract: | We study the causal impact of revealing pro-unionism during the recruitment stage on hiring chances. To this end, we conduct a randomised field experiment in the Belgian labour market. When matched with employer and sector data, the experimentally gathered data enable us to test the heterogeneity of discrimination against pro-union applicants by the union density in the sector and the size of the firm. We find that disclosure of pro-unionism affects hiring chances in a negative way and that – in line with our expectations based on the literature – this negative impact is stronger in highly unionised sectors. |
| Keywords: | hiring discrimination, union density, trade unions, randomised field experiments |
| JEL: | J53 J71 C93 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8516&r=exp |
| By: | Alberto Cavallo; Guillermo Cruces; Ricardo Perez-Truglia |
| Abstract: | Inflation expectations in household surveys tend to be vastly heterogeneous. The literature has been unable to distinguish empirically between alternative explanations, such as the existence of rational inattention (according to which individuals will not continuously gather costly information) and the use of information from personal shopping experiences (which can be diverse and inaccurate). To better understand the importance of these mechanisms, we use evidence from field experiments with nearly 10,000 subjects conducted in both a low-inflation country (the United States) and a high-inflation country (Argentina). We introduce a novel experimental design which, when combined with unique data sources, allows us to quantify how much weight individuals assign to each source of information about inflation. Our novel experimental framework addresses one of the most important concerns with survey experiments by separating genuine from spurious learning. We find that individuals are highly influenced by information on both inflation statistics and price changes of specific products. The results are consistent with rational inattention, since there is greater learning in a low-inflation setting where the stakes are lower (the United States), and also from information that is less costly to understand (individual supermarket prices). To further assess the importance of personal experiences, we conducted field experiments which combined data from actual products purchased by the subjects with their historical prices. We find that individuals form inflation expectations using their own memories about the price changes of supermarket products they buy, but those memories are nearly orthogonal to the actual price changes. |
| JEL: | C93 D83 E31 E58 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20576&r=exp |
| By: | Esther Duflo; Michael Greenstone; Rohini Pande; Nicholas Ryan |
| Abstract: | In collaboration with a state environmental regulator in India, we conducted a field experiment to raise the frequency of environmental inspections to the prescribed minimum for a random set of industrial plants. The treatment was successful when judged by process measures, as treatment plants, relative to the control group, were more than twice as likely to be inspected and to be cited for violating pollution standards. Yet the treatment was weaker for more consequential outcomes: the regulator was no more likely to identify extreme polluters (i.e., plants with emissions five times the regulatory standard or more) or to impose costly penalties in the treatment group. In response to the added scrutiny, treatment plants only marginally increased compliance with standards and did not significantly reduce mean pollution emissions. To explain these results and recover the full costs of environmental regulation, we model the regulatory process as a dynamic discrete game where the regulator chooses whether to penalize and plants choose whether to abate to avoid future sanctions. We estimate this model using original data on 10,000 interactions between plants and the regulator. Our estimates imply that the costs of environmental regulation are largely reserved for extremely polluting plants. Applying the cost estimates to the experimental data, we find the average treatment inspection imposes about half the cost on plants that the average control inspection does, because the randomly assigned inspections in the treatment are less likely than normal discretionary inspections to target such extreme polluters. |
| JEL: | D22 L51 Q56 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20590&r=exp |
| By: | Blaufus, Kay; Braune, Matthias; Hundsdoerfer, Jochen; Jacob, Martin |
| Abstract: | In a real-effort laboratory experiment to manipulate evasion opportunities, we study whether the moral evaluation of tax evasion is subject to a self-serving bias. We find that tax morale is egoistically biased: Subjects with the opportunity to evade taxes judge tax evasion as less unethical as opposed to those who cannot evade. The detection probability does not affect this result. Further, we do not find moral spillover effects, for example, on legal activities. |
| Keywords: | Evasion,Tax Morale,Tax Compliance,Self-Serving Bias,Moral Spillover |
| JEL: | H20 H26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:174&r=exp |
| By: | Christina Aperjis; Ciril Bosch-Rosa; Daniel Friedman; Bernardo A. Huberman |
| Abstract: | When should a necessary inconvenience be introduced gradually, and when should it be imposed all at once? The question is crucial to web content providers, who in order to generate revenue must sooner or later introduce advertisements, subscription fees, or other inconveniences. Assuming that eventually people fully adapt to changes, the answer depends only on the shape of the survivor curve S(x), which represents the fraction of a user population willing to tolerate inconveniences of size x (Aperjis and Huberman 2011). We report a new laboratory experiment that, for the rst time, estimates the shape of survivor curves in several dierent settings. We engage laboratory subjects in a series of six desirable activities, e.g., playing a video game, viewing a chosen video clip, or earning money by answering questions. For each activity we introduce a chosen level x 2 [xmin; xmax] of a particular inconvenience, and each subject chooses whether to tolerate the inconvenience or to switch to a bland activity for the remaining time. Our key nding is that, in general, the survivor curve is log-convex. Theory suggests therefore that introducing inconveniences all at once will generally be more protable for web content providers. |
| Keywords: | Internet monetization; online advertising; pricing; reference points; adaptation; laboratory experiment |
| JEL: | C91 D40 L11 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2014-058&r=exp |
| By: | Michal Bauer (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic; CERGE-IE, Charles University in Prague); Nathan Fiala (University of Connecticut); Ian Levely (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic) |
| Abstract: | We use a set of experiments to study the effects of forced military service for a rebel group on social capital. We examine the case of Northern Uganda, where recruits did not self-select nor were systematically screened by rebels. We find that individual cooperativeness robustly increases with length of soldiering, especially among those who soldiered during early age. Parents of ex-soldiers are aware of the behavioral difference: they trust ex-soldiers more and expect them to be more trustworthy. These results suggest that the impact of child soldiering on social capital, in contrast to human capital, is not necessarily detrimental. |
| JEL: | C93 D03 D74 O12 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2014_20&r=exp |
| By: | Rich, Judy (University of Portsmouth) |
| Abstract: | Sixty-seven field experiments of discrimination in markets conducted since 2000 across seventeen countries were surveyed. Significant and persistent discrimination was found on all bases in all markets. High levels of discrimination were recorded against ethnic groups, older workers, men applying to female-dominated jobs and homosexuals in labour markets. Minority applicants for housing needed to make many more enquiries to view properties. Geographical steering of African-Americans in US housing remained significant. Higher prices were quoted to minority applicants buying products. More information made no significant improvement to minority applicant outcomes. Clear evidence of statistical discrimination was found only in product markets. |
| Keywords: | field experiments, discrimination, survey, meta analysis |
| JEL: | J7 C93 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8584&r=exp |
| By: | Flory, Jeffrey A. |
| Abstract: | Work in progress, results are preliminary. Please ask permission before citing. |
| Keywords: | Savings accounts, financial access, gender and adoption, information, Community/Rural/Urban Development, Consumer/Household Economics, International Development, D14, D83, O12, O16, G21, |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea14:171879&r=exp |
| By: | Jones, Michael S.; House, Lisa A.; Gao, Zhifeng |
| Keywords: | Online surveys, web surveys, attribute non attendance, satisficing behavior, Agribusiness, Marketing, Research Methods/ Statistical Methods, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea14:169651&r=exp |