nep-exp New Economics Papers
on Experimental Economics
Issue of 2015‒01‒31
29 papers chosen by

  1. Religious fragmentation, social identity and cooperation: Evidence from a artefactual field experiment in India By Surajeet Chakravarty ; Miguel A. Fonseca ; Sudeep Ghosh ; Sugata Marjit
  2. Intellectual property rights hinder sequential innovation: Experimental evidence By Brüggemann, Julia ; Crosetto, Paolo ; Meub, Lukas ; Bizer, Kilian
  3. Hearing the voice of future generations: A laboratory experiment of ``Demeny voting’’ By Yoshio Kamijo ; Yoichi Hizen ; Tatsuyoshi Saijo
  4. Got green milk? Field Experimental Trail of Consumer Demand for a Climate Label By Matsdotter, Elina ; Elofsson, Katarina ; Arntyr, Johan
  5. More than outcomes: The role of self-image in other-regarding behavior By Astrid Matthey ; Tobias Regner
  6. Investment in Outside Options as Opportunistic Behavior: An Experimental Investigation By Hodaka Morita ; Maroš Servátka
  7. Give Everybody a Voice! The Power of Voting in a Public Goods Experiment with Externalities By Christoph Engel ; Bettina Rockenbach
  8. To buy or not buy (insurance)? An experiment on public funds distribution under different rooted risks By Xu, Zhicheng ; Palma, Marco A.
  9. Equilibrium Selection in Similar Repeated Games: Experimental Evidence on the Role of Precedents By John Duffy ; Dietmar Fehr
  10. Quality Versus Quantity in Information Transmission: Theory and Experimental Evidence By ; Jonathan Lafky
  11. Commitment Problems in Conflict Resolution By Kimbrough, Erik ; Rubin, Jared ; Sheremeta, Roman ; Shields, Timothy
  12. Auction Mechanisms and Bidder Collusion: Bribes, Signals and Selection By Aniol Llorente-Saguer ; Ro'i Zultan
  13. Of the stability of partnerships when individuals have outside options, or why allowing exit is inefficient By Alexia Gaudeul ; Paolo Crosetto ; Gerhard Riener
  14. Multiple-Item Risk Measures By Lukas Menkhoff ; Sahra Sakha
  15. Soap Operas for for Female Micro Entrepreneur Training By Nakasone, Eduardo ; Torero, Maximo
  16. What Generates Growth in Microenterprises? Experimental Evidence on Capital, Labor and Training By Mel, Suresh de ; McKenzie, David ; Woodruff, Christopher
  17. Pour Some Sugar in Me: Does Glucose Enrichment Improve Decision Making? By Todd McElroy ; David L. Dickinson ; Nathan Stroh
  18. The Limits of Reputation in Platform Markets:An Empirical Analysis and Field Experiment By Chris Nosko ; Steven Tadelis
  19. Promoting handwashing and sanitation : evidence from a large-scale randomized trial in rural Tanzania By Briceno, Bertha ; Coville, Aidan ; Martinez , Sebastian
  20. Prestige as a Determining Factor of Food Purchases By Palma, Marco ; Ness, Meghan ; Anderson, David
  21. Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach By Patrick Kline ; Melissa Tartari
  22. Equity vs. Conservation: Can Payments for Environmental Services (PES) achieve both? By Vorlaufer, Miriam ; Wollni, Meike ; Ibañez, Marcela
  23. Are we all overconfident in the long run? Evidence from one million marathon participants. By Michał Krawczyk ; Maciej Wilamowski
  24. dynamics of assets liquidity and inequality in economies with decentralized markets By Maurizio Iacopetta
  25. Demand for Watershed Services: Understanding Local Preferences through a Choice Experiment in the Koshi Basin of Nepal By Rajesh Kumar Rai ; Mani Nepal ; Priya Shyamsundar ; Laxmi Dutt Bhatta
  26. Is Strawberry Advisory System (SAS) Feasible for Farmers of All Risk Preference Profiles? By Vorotnikova, Ekaterina ; Borisova, Tatiana ; VanSickle, John
  27. Toward an Understanding of the BDM: Predictive Validity, Gambling Effects, and Risk Attitude. By Sebastian Lehmann
  28. Consumers' preferences for Integrated Pest Management: Experimental insights By Biguzzi, Coralie ; Ginon, Emilie ; Gomez-y-Paloma, Sergio ; Langrell, Sergio ; Lefebvre, Marianne ; Marette, Stephan ; Mateu, Guillermo ; Sutan, Angela

  1. By: Surajeet Chakravarty (Department of Economics, University of Exeter ); Miguel A. Fonseca (Department of Economics, University of Exeter ); Sudeep Ghosh (Hong Kong Polytechnic University ); Sugata Marjit (Center for Studies in the Social Sciences, Calcutta. )
    Abstract: We study the role of village-level religious fragmentation on intra- and inter-group cooperation in India. We report on data on two-player Prisoners’ Dilemma and Stag Hunt experiments played by 516 Hindu and Muslim participants in rural India. Our treatments are the identity of the two players and the degree of village-level religious heterogeneity. In religiously-heterogeneous villages, cooperation rates in the Prisoners’ Dilemma are higher when subjects play with another in-group member for both Hindus and Muslims, but to a much lesser extent in the Stag Hunt game. This suggests that positive in-group biases operate primarily on the willingness to achieve socially efficient outcomes, rather than through beliefs about the actions by one's counterpart. Interestingly, cooperation rates among people of the same religion are significantly lower in homogeneous villages than in fragmented villages in both games. This is likely because a sense of group identity is only meaningful in the presence of an out-group. This, together with little evidence for out-group prejudice in either game, means religious diversity is beneficial.
    Keywords: Social Identity, Social Fragmentation, Artefactual Field Experiment.
    JEL: C93 D03 H41
    Date: 2015
  2. By: Brüggemann, Julia ; Crosetto, Paolo ; Meub, Lukas ; Bizer, Kilian
    Abstract: In this paper we contribute to the discussion on whether intellectual property rights foster or hinder innovation by means of a laboratory experiment. We introduce a novel Scrabble-like creativity task that captures most essentialities of a sequential innovation process. We use this task to investigate the effects of intellectual property allowing subjects to assign license fees to their innovations. We find intellectual property to have an adversely effect on welfare as innovations become less frequent and less sophisticated. Communication among innovators is not able to prevent this detrimental effect. Introducing intellectual property results in more basic innovations and subjects fail to exploit the most valuable sequential innovation paths. Subjects act more self-reliant and non-optimally in order to avoid paying license fees. Our results suggest that granting intellectual property rights hinders innovations, especially for sectors characterized by a strong sequentiality in innovation processes.
    Keywords: innovation,intellectual property,laboratory experiment,real effort task,creativity
    JEL: C91 D89 K39
    Date: 2015
  3. By: Yoshio Kamijo (School of Economics and Management, Kochi University of Technology ); Yoichi Hizen (School of Economics and Management, Kochi University of Technology ); Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology )
    Abstract: We report the first experimental evidence on the effect of ``Demeny voting,’’ wherein some people (e.g., parents) are given additional votes as proxy for the future generation (e.g., their children). In our experiment, three subjects are separated into the present and future generations, two of them regarded as the present generation. The present generation members are asked to determine the resource allocation between the present and future generations by majority voting. We compare voting behaviors and outcomes between ordinary majority voting (i.e., each of the two in the present generation has one vote) and Demeny voting (i.e., one of the two has two votes while the other has one vote). We obtain mixed evidence on whether the outcome of Demeny voting reflects the interest of the future generation. A remarkable finding is that half of the subjects who voted in favor of the future generation under ordinary voting reversed their decisions when they were given only one vote under Demeny voting; that is, they voted in favor of the present generation. This finding highlights the need, when planning to introduce Demeny voting, to consider the behaviors of not only people who are given additional votes but also those with only one vote. Finally, we compare voting behaviors between male and female subjects. We find that female subjects use their additional votes for the future generation more frequently than male subjects do, implying that women are less likely to abuse their proxy position than are men.
    Keywords: Aging Society, Demeny Voting, Laboratory Experiment
    JEL: C91 D72 J13
    Date: 2015–01
  4. By: Matsdotter, Elina ; Elofsson, Katarina ; Arntyr, Johan
    Abstract: A majority of consumers claim to prefer climate labelled food over non-labelled alternatives. However, there is limited empirical evidence that such labels actually influence consumer behaviour when shopping. In a randomized field experiment, conducted in 17 retrial stores in Sweden, the short run effects of a voluntary climate labelling scheme on milk demand were measured. Results suggest that climate labelling increased demand by approximately 7%. The response is significantly smaller than suggested by consumer surveys, but larger than observed in earlier studies of actual purchasing behavior where quantitative information on climate impact is provided.
    Keywords: Climate labelling, milk, voluntary policy instruments, randomized controlled trial, consumer demand, Consumer/Household Economics,
    Date: 2014–08
  5. By: Astrid Matthey (Max Planck Institute of Economics, Jena ); Tobias Regner (Max Planck Institute of Economics, Jena )
    Abstract: We conduct a modified dictator game in order to analyze the role self-image concerns play in other-regarding behavior. While we generally follow Konow (2000), a cognitive dissonance-based model of other-regarding behavior in dictator games, we relax one of its assumptions as we allow for individual heterogeneity among individuals' standards of behavior. Subjects' self-image, their belief regarding the average socially appropriate behavior of others and our proxies for the cognitive dissonance costs are positively correlated with the dictator game choices. We also find that subjects whose choices involve two psychologically inconsistent cognitions indeed report higher levels of experienced conflict and take more time for their decisions (our proxies for cognitive dissonance).
    Keywords: social preferences, other-regarding behavior, self-image, cognitive dissonance, social norms
    JEL: C72 C91 D03 D80
    Date: 2014–12–21
  6. By: Hodaka Morita ; Maroš Servátka (University of Canterbury )
    Abstract: We contribute to the theory of the firm by experimentally investigating a bilateral trade relationship in which standard theory assuming self-regarding preferences predicts that the seller will be better off by investing in the outside option to improve his bargaining position. The seller’s investment, however, might negatively affect the buyer’s other-regarding preferences if the investment is viewed as opportunistic. We find overall support for our hypotheses that arise from the link between other-regarding behavior and opportunism. In our experiment the seller can become worse off by investing, suggesting that costly solutions to opportunistic behavior such as vertical integration may be unnecessary.
    Keywords: altruism, experiment, relationship-specific investment, opportunistic behavior, other-regarding preferences, outside option, theory of the firm
    JEL: C91 L20
    Date: 2014–11–11
  7. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn ); Bettina Rockenbach (University of Cologne )
    Abstract: We study the effect of voting when insiders’ public goods provision may affect passive outsiders. Without voting insiders’ contributions do not differ, regardless of whether outsiders are positively or negatively affected or even unaffected. Voting on the recommended contribution level enhances contributions if outsiders are unaffected and internalizes the negative externality by lowering contributions when outsiders are negatively affected. Remarkably, voting does not increase contributions when it would be most desirable, i.e. with a positive externality. Here, participants vote for high contributions, yet compliance is poor. Unfavorable payoff comparisons to the outsiders that gain a windfall profit drive contributions down.
    Keywords: experiment, Public Good, externality, voting
    JEL: H41 D43 L13 C92 C91 D62 D03 H23
    Date: 2014–11
  8. By: Xu, Zhicheng ; Palma, Marco A.
    Abstract: The distribution of income and wealth resulting from risk-taking behavior significantly affects cooperation and risk-sharing in many areas in many governmental programs, including health insurance and agricultural production. This paper studies redistributive decision making and fairness preferences under different rooted risks using a laboratory experiment, in the treatment of which the subjects can endogenously determine whether they want to buy insurance before they face one of three possible outcomes that will be realized with equal probability. If the first outcome is realized, a high payment will be delivered regardless of whether the subject buys insurance or not. The second risk is an avoidable loss contingent upon the subject buying insurance. The third outcome is an inevitable loss, i.e., minimum payment will be delivered no matter if the subject has or does not have insurance. Then we investigate fairness preferences of randomly paired subjects who are informed about the choices and outcomes for both parties and are asked to make redistributive tasks. The experimental design mimics the scenario of risk-sharing in health insurance and agricultural production. We find that how people make redistributive decisions depends on the insurance purchase decisions and income inequality. The results provide some policy implications for improving insurance efficiency.
    Keywords: fairness, insurance, Health Economics and Policy, Institutional and Behavioral Economics, Public Economics, Risk and Uncertainty, C91, D31, D63,
    Date: 2015
  9. By: John Duffy (Department of Economics, University of California-Irvine ); Dietmar Fehr (WZB Berlin, Germany )
    Abstract: We report on an experiment examining behavior and equilibrium selection in two similar, infinitely repeated games, Stag Hunt and Prisoner's Dilemma under anonymous random matching. We are interested in the role that precedents may play for equilibrium selection between these two stage game forms. We find that a precedent for efficient play in the repeated Stag Hunt game does not carry over to the repeated Prisoner's Dilemma game despite the possibility of efficient play in the latter game. Similarly, a precedent of inefficient play in the Prisoner's Dilemma game does not extend to the repeated Stag Hunt game. We conclude that equilibrium selection between similar repeated games has little to do with historical precedents and is mainly determined by strategic considerations associated with the different payoffs of these similar repeated games.
    Keywords: Sentiment; Equilibrium selection; Precedent; Beliefs; Stag hunt; Prisoner's dilemma; Repeated games; Experimental economics.
    JEL: C72 C73 C92 D83
    Date: 2014–12
  10. By: ; Jonathan Lafky
    Abstract: Information sharing has become increasingly important in helping consumers make better, more informed choices over competing products. Our project uses a novel theoretical framework and laboratory experiments to analyze three simple, commonly used incentive schemes against an unincentivized baseline. Each incentive scheme has qualitatively different theoretical predictions for behavior and efficiency, while our laboratory experiments examine the degree to which these differences manifest themselves, and the best-cast theory`s robustness to human behavior. Our findings indicate the possibility for substantial efficiency gains by introducing incentives that reward information sharing, even where those incentives drive a wedge between those sending and those receiving information.
    Keywords: Information Sharing, Ratings, Incentives, Honesty
    JEL: C72 C92 D82 D83
    Date: 2015–01
  11. By: Kimbrough, Erik ; Rubin, Jared ; Sheremeta, Roman ; Shields, Timothy
    Abstract: Commitment problems are inherent to non-binding conflict resolution mechanisms, since an unsatisfied party can ignore the resolution and initiate conflict. We provide experimental evidence suggesting that even in the absence of binding contractual agreements individuals often avoid conflict by committing to the outcome of a conflict resolution mechanism. Commitment problems are mitigated to a greater extent for groups that opt-in to the conflict resolution mechanism, but only when opting-in is costly. Although conflict rates are higher when opting-in is costly than when it is free or exogenously imposed, commitment problems are greatly reduced among those groups who choose to opt-in.
    Keywords: conflict resolution, commitment problem, opting-in, contests, experiments
    JEL: C72 C91 D72
    Date: 2015–01–10
  12. By: Aniol Llorente-Saguer (School of Economics and Finance, Queen Mary, University of London ); Ro'i Zultan (Department of Economics, Ben-Gurion University )
    Abstract: The theoretical literature on collusion in auctions suggests that the first-price mechanism can deter the formation of bidding rings. In equilibrium, collusive negotiations are either successful or are avoided altogether, hence such analysis neglects the effects of failed collusion attempts. In such contingencies, information revealed in the negotiation process is likely to affect the bidding behavior in firstprice (but not second-price) auctions. We test experimentally a setup in which collusion is possible, but negotiations often break down and information is revealed in an asymmetric way. The existing theoretical analysis of our setup predicts that the first-price mechanism deters collusion. In contrast, we find the same level of collusion in first-price and second-price auctions. Furthermore, failed collusion attempts distort the bidding behavior in the ensuing auction, leading to loss of efficiency and eliminating the revenue dominance typically observed in first-price auctions.
    Keywords: Collusion, experiment, auctions, bribes
    JEL: C72 C91 D44
    Date: 2014–11
  13. By: Alexia Gaudeul (DFG RTG 1411, Friedrich-Schiller-Universität Jena ); Paolo Crosetto (UMR GAEL INRA, Université Pierre Mendès France, Grenoble ); Gerhard Riener (DICE, Heinrich-Heine-Universität Düsseldorf )
    Abstract: Should people be allowed to leave joint projects freely or should they be deterred from breaking off? This depends on why people stop collaborating and whether they have good reasons to do so. We explore the factors that lead to the breakdown of partnerships by studying a public good game with imperfect public monitoring and an exit option. In our experiment, subjects were assigned a partner with whom they could contribute over several periods to a public good with stochastic outcomes. They could choose in each period between participating in the public project or working on their own. We find there was excessive exit especially because subjects over-estimated the likelihood their partner would leave. Treatments with high barriers to exit generated higher welfare overall as they fostered stability and prevented inefficient breakdowns in relationships. There were differences across treatments in the intensity with which different factors drove the choice to work alone. Differences in expected payoffs between independent and group work were more important as a driver of exit in treatments with low barriers to exit. The intensity of other factors was more constant across treatments, including whether the common project failed in the previous period, the belief that one's partner did not want to maintain the partnership and the belief that he exerted less effort than oneself.
    Keywords: barriers to exit, cooperation, outside option, imperfect public monitoring, partnerships, public good game, repeated game, social risk
    JEL: C23 C92 H41
    Date: 2015–01–15
  14. By: Lukas Menkhoff ; Sahra Sakha
    Abstract: We compare seven established risk elicitation methods and investigate how they explain an extensive set of risky behavior from a large household survey. We find overall positive correlation between items and low explanatory power in terms of behavior. Using an average of seven risk elicitation methods reduces measurement noise and yields more predictive power. A reduced set of risk items yields the same external validity as the average of all seven methods. Hence, our multiple-item risk measures offer a more reliable way to measure risk preferences. Our results caution against the reliability of one risk method alone due to noise
    Keywords: Risk attitude; lab-in-the-field experiments; household survey; economic development
    JEL: D81 C93 O12
    Date: 2014–12
  15. By: Nakasone, Eduardo ; Torero, Maximo
    Abstract: We analyze the impact of the Strengthening Women Entrepreneurship in Peru (SWEP) program. SWEP trained female micro-entrepreneurs on business management practices (e.g. accounting, marketing, etc.). The training was provided in 4-5 hour sessions using soap operas and practical exercises specifically designed for the program. We conducted a field experiment among a group a micro-entrepreneurs based in two Peruvian cities (Lima and Piura) to investigate whether SWEP had a positive impact on its beneficiaries. Our results show the program positively affected the adoption of business practices taught by the program. In particular, those who received the training were 4-6 percentage points more likely to assign themselves a fixed salary (rather than taking cash from their businesses based on personal needs) and 6-11 percentage points more likely to keep better records of potential business contacts. We also find some positive impacts on the adoption of bookkeeping practices (4-6 percentage points), though this result is not significant across all of our specifications. While these changes in adoption rates were large compared to their baseline levels, they were rather small in absolute terms. Therefore, we do not find any impact on average business performance, household expenditures, or women empowerment in the household. Qualitative information suggests that micro entrepreneurs were satisfied with the training, but considered that many of the practices taught by the program were difficult to follow because of time constraints.
    Keywords: Trainig, Women entrepeneurship, impact evaluation, RCT
    JEL: D2 D22 J1 J2 J24 J3
    Date: 2014–10
  16. By: Mel, Suresh de (University of Peradeniya, ); McKenzie, David (World Bank Research Group ); Woodruff, Christopher (The University of Warwick )
    Abstract: Previous research shows that capital injections lead to higher profits in microenterprises, but to little sustained growth. We conduct an experiment which provides overlapping treatments designed to provide capital, incentives to hire new employees and management training. Working with a sample of 1,525 Sri Lankan enterprises with two or fewer paid employees at baseline, we find that the treatments have largely temporary effects, suggesting that while they may speed convergence to a steady state, they do not appear to put firms on a different growth path. Wage incentives lead to higher levels of employment, but not to higher profits, suggesting that the typical firm does not face constraints to hiring which result in the marginal product of labor exceeding the market wage rate. We use data from surveys of wage workers and SME owners conducted at the same time as the baseline survey to estimate characteristics associated with entrepreneurial ability. We find that highability firms, if anything, benefit less from the treatments. The results are consistent with the view of the world illuminated by Lucas‟ 1978 model of firm size distribution.
    Keywords: Microenterprises
    Date: 2014
  17. By: Todd McElroy ; David L. Dickinson ; Nathan Stroh
    Abstract: In the current study we explore whether enriching the brain’s supply of glucose will improve the quality and speed of decision making. Prior research shows that glucose enrichment supports cognition and more recent research has shown it can improve decision making on some tasks. To test our hypothesis we used a standardized decision inventory and measured response times. The findings show that supplemental glucose improves decision making but only in complex decision tasks. The findings also show that enrichment leads to faster decision response times across decision types. Key Words: Glucose, response time, A-DMC, thinking, experiments
    JEL: C91
    Date: 2014
  18. By: Chris Nosko ; Steven Tadelis
    Abstract: We argue that reputation mechanisms used by platform markets suffer from two problems. First, buyers may draw conclusions about the quality of the platform from single transactions, causing a reputational externality across sellers. Second, for a variety of reasons we discuss, reputations will be biased. We document these problems using eBay data and claim that platforms can benefit from identifying and promoting higher quality sellers. We create an unobservable measure of seller quality and demonstrate the benefits of our approach through a controlled experiment that prioritizes better quality sellers. We highlight the importance of reputational externalities and chart an agenda that aims to create more realistic models of platform markets.
    JEL: D82 L15 L21 L86
    Date: 2015–01
  19. By: Briceno, Bertha ; Coville, Aidan ; Martinez , Sebastian
    Abstract: The association between hygiene, sanitation, and health is well documented, yet thousands of children die each year from exposure to contaminated fecal matter. At the same time, evidence on the effectiveness of at-scale behavior change interventions to improve sanitation and hygiene practices is limited. This paper presents the results of two large-scale, government-led handwashing and sanitation promotion campaigns in rural Tanzania. For the campaign, 181 wards were randomly assigned to receive sanitation promotion, handwashing promotion, both interventions together, or neither. One year after the end of the program, sanitation wards increased latrine construction rates from 38.6 to 51 percent and reduced regular open defecation from 23.1 to 11.1 percent. Households in handwashing wards show marginal improvements in handwashing behavior related to food preparation, but not at other critical junctures. Limited interaction is observed between handwashing and sanitation on intermediate outcomes: wards that received both handwashing and sanitation promotion are less likely to have feces visible around their latrine and more likely to have a handwashing station close to their latrine facility relative to individual treatment groups. Final health effects on child health measured through diarrhea, anemia, stunting, and wasting are absent in the single-intervention groups. The combined-treatment group produces statistically detectable, but biologically insignificant and inconsistent, health impacts. The results highlight the importance of focusing on intermediate outcomes of take-up and behavior change as a critical first step in large-scale programs before realizing the changes in health that sanitation and hygiene interventions aim to deliver.
    Keywords: Health Monitoring&Evaluation,Hygiene Promotion and Social Marketing,Housing&Human Habitats,Disease Control&Prevention,Population Policies
    Date: 2015–01–01
  20. By: Palma, Marco ; Ness, Meghan ; Anderson, David
    Abstract: This study investigated how prestige seeking behavior influences food choices to the point of becoming a symbol of social status. Participants in the study were classified into unobserved latent classes according to their prestige and social status seeking behavior. The majority of the participants were classified as “Utilitarian Buyers” who purchase goods based on their functionality and are not concerned with the prestige or social status of conspicuous products. In addition, there were three other latent classes found and based on their characteristics they were described as “Ambitious Shoppers”, “Affluent Elitists”, and “Prestige Lovers”. Evidence was found of prestige seeking behavior motivated by invidious comparison or higher-class individuals seeking to differentiate themselves from lower-class individuals; and also motivated by pecuniary emulation, or individuals from a lower class buying prestigious goods in order to be perceived as members of a higher class. Findings from this study revealed that the effects of differentiating food labeling attributes had a higher impact for individuals classified into classes with prestige-seeking behavior to attain an elevated social status.
    Keywords: Experimental Economics, Pecuniary Consumption, Prestige, Willingness to Pay, Food Consumption/Nutrition/Food Safety, C91, D11, D12, E21,
    Date: 2015
  21. By: Patrick Kline ; Melissa Tartari
    Abstract: We study the short-term impact of Connecticut's Jobs First welfare reform experiment on women’s labor supply and program participation decisions. A non-parametric optimizing model is shown to restrict the set of counterfactual choices compatible with each woman's actual choice. These revealed preference restrictions yield informative bounds on the frequency of several intensive and extensive margin responses to the experiment. We find that welfare reform induced many women to work but led some others to reduce their earnings in order to receive assistance. The bounds on this latter “opt-in” effect imply that intensive margin labor supply responses are non-trivial.
    JEL: C14 H20 J22
    Date: 2015–01
  22. By: Vorlaufer, Miriam ; Wollni, Meike ; Ibañez, Marcela
    Abstract: This paper investigates the trade-off between equity and conservation outcomes of two alternative Payment for Environmental Services (PES) schemes, using the results of a framed field experiment (public good game). Particularly, we investigate two alternative PES schemes under endowment heterogeneity and heterogeneity in the opportunity costs of conservation. We test an equal PES scheme, where a fixed flat rate per conserved hectare is paid and an unequal PES scheme, which compensates according to the opportunity costs of conservation. Main findings indicate that the introduction of an unequal PES scheme does not necessarily come at the cost of conservation. Furthermore, the results show that an unequal PES may function as a redistribution instrument by realigning earnings towards the low-endowed subjects.
    Keywords: Public good game, Endowment heterogeneity, Productivity heterogeneity, Payments for Environmental Services (PES), Equity, Environmental Economics and Policy,
    Date: 2014–08
  23. By: Michał Krawczyk (Faculty of Economic Sciences, University of Warsaw ); Maciej Wilamowski (Faculty of Economic Sciences, University of Warsaw )
    Abstract: In this project we sought to contribute to extant literature on overconfidence by identifying it in a large, heterogeneous sample making familiar, repeated choices in a natural environment which provides direct feedback. In Study 1 we elicited predictions of own finishing time among participants of the 2012 Warsaw Marathon. Their prediction errors turned out to be very highly correlated with the change in pace over the course of the run. In Study 2 we thus took this change in pace as a proxy for self-confidence and used existing field data of around one million participants. Both studies indicate that males as well as youngest and oldest participants tend to be more confident. In Study 2 we are also able to investigate national and cultural dimensions, confirming previously reported findings of relative overconfidence in Asians and providing some novel results, i.a. that relatively conservative societies tend to be more self-confident.
    Keywords: overconfidence, performance forecasts, gender differences, age effects, national culture
    JEL: C93 D01 Z1
    Date: 2015
  24. By: Maurizio Iacopetta (OFCE )
    Abstract: An algorithm for computing Dynamic Nash Equilibria (DNE) in an extended ver- sion of Kiyotaki and Wright (1989) (hereafter KW) is proposed. The algorithm com- putes the equilibrium pro.le of (pure) strategies and the evolution of the distribution of three types of assets across three types of individuals. It has two features that together make it applicable in a wide range of macroeco- nomic experiments: (i) it works for any feasible initial distribution of assets; (ii) it allows for multiple switches of trading strategies along the transitional dynamics. The algorithm is used to study the relationship between liquidity, production, and inequality in income and in welfare, in economies where assets fetch di¤erent returns and agents have heterogeneous skills and preferences. One experiment shows a case of reversal of fortune. An economy endowed with a low-return asset takes over a similar economy endowed with a high-return asset because, in the former economy, a group of agents abandon a rent-seeking trading behavior and increase their income by trading and producing more intensively. A second experiment shows that a reduction of market frictions leads both to higher income and lower inequality. Other experiments evaluate the propagation mechanism of shocks that hit the assets.returns. A key result is that trade and liquidity tend to squeeze income inequality.
    Keywords: Trading strategies; Liquidity; Matching; Decentralized markets
    JEL: C61 C63 E41 E27 D63
    Date: 2014–12
  25. By: Rajesh Kumar Rai ; Mani Nepal ; Priya Shyamsundar ; Laxmi Dutt Bhatta
    Abstract: In this study, we undertake a choice experiment in order to identify differences in local demand for watershed services in the Koshi basin of Nepal. We first examine the possibility of using a non-monetary numéraire to estimate household willingness-to-pay for watershed services. Survey results indicate that while some 50% of the population is willing to pay in monetary terms for environmental services, this number goes up to 75% when asked to contribute in labor time. Social benefits from environmental services are 1.4 to 2.2 times higher in labor hours relative to benefits estimated in monetary terms. Thus, in developing countries, households are more likely to express their demand for watershed services by offering their time rather than making a monetary payment. Our results also suggest that locational differences matter. Down-stream community members, who practice commercial vegetable farming, have a higher demand for watershed services and are willing to pay a third more than upstream farmers for these services.
    Keywords: Choice Experiment, Labor Contribution, Mode of Payment, Opportunity Cost of Time, Watershed Services
  26. By: Vorotnikova, Ekaterina ; Borisova, Tatiana ; VanSickle, John
    Abstract: The Strawberry Advisory System (SAS) was developed to improve temporal precision of fungicide application. Based on Net Present Value (NPV), it outperforms the traditional fungicide application method given weather and market conditions typical for Florida (Vorotnikova et al., 2014). This study uses stochastic dominance and efficiency with respect to a function (SDRF and SERF) criterion to rank ten-year NPV for SAS-based and traditional fungicide application methods, given a range of farmers’ risk preferences. SERF is a valuable tool because it incorporates a utility function and a range of decision-maker risk preferences. Data from two production experiments were used: 1) research trials at the University of Florida’s farm, and 2) field experiments at seven commercial strawberry farms, located in different Florida counties. Each experiment included two diseases, anthracnose and Botrytis, and two cultivars, more- and less-disease resistant. The results based on research trials show that for both diseases and cultivars, the SAS-based method is the most preferred given any farmers’ risk aversion levels. However, the results based on results from commercial farms show that while the SAS-based method ranks higher for the more-resistant cultivar, the traditional fungicide application method is preferred for the less-resistant cultivar, for any farmers’ risk preference.
    Keywords: stochastic efficiency, risk, production, Agribusiness, Production Economics, Risk and Uncertainty,
    Date: 2015–01–15
  27. By: Sebastian Lehmann (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg )
    Abstract: Pricing research suggests incentive-compatible evaluations when consumers’ situation-specific WTP is to be elicited. Especially, the lottery-based Becker-DeGroot-Marschak-mechanism (BDM) is recommended, as it seems to outperform other elicitation methods. In this study, the BDM was used to measure subjects’ WTP for eight shopping goods in binding purchase settings. In accordance with previous studies, the validity of elicited WTP measures was checked within subjects with respect to indicators of face and criterion validity (such as interest in buying, preference ratings, and compliance rates). In addition, this study observed real purchases of a separate validation sample measured under identical circumstances, thus assessing the predictive validity of WTPs elicited with the BDM. As a result, the BDM-based WTPs reveal a sufficient degree of internal face and criterion validity. However, the external validity in terms of predictive validity between WTP-based prediction and purchases of the validation sample seems limited. Specifically, this study found a substantial overestimation of WTP, and thus in the corresponding purchase rates in the BDM. Hence, a potential bias is indicated. However, contrary to the suggestions of earlier research, individual risk attitude or loss aversion, hence a potential gambling effect, seems not to bias BDM results or the decision whether to buy or not.
    Keywords: BDM, price research, WTP, gambling effect, risk attitude
    JEL: A20 D83 O30
    Date: 2014–12
  28. By: Biguzzi, Coralie ; Ginon, Emilie ; Gomez-y-Paloma, Sergio ; Langrell, Sergio ; Lefebvre, Marianne ; Marette, Stephan ; Mateu, Guillermo ; Sutan, Angela
    Abstract: This article aims to analyse consumers' preferences for Integrated Pest Management (IPM), in comparison to conventional and organic food products. It analyses the case of tomatoes, based on experimental data of 189 French consumers. We find that consumers are more interested in information on the production system than on the characteristics of the final product in terms of pesticide residue levels, and more in IPM than organic. While information on IPM production increases consumers' willingness to buy IPM products, extra information on the residue levels in IPM tomatoes has not significant impact. We find that the reduction of the shelf space for conventional tomatoes benefits equally to organic and IPM, whatever the prices. However, in a scenario of prohibition of conventional crop protection methods, the winning market segment between organic and IPM depends on the price difference between these products. These results contribute to the understanding of consumers' reaction to the transition towards IPM as the standard in European farming. It provides interesting results on the nature of information that should be communicated to consumers to increase understanding of IPM.
    Keywords: Integrated Pest Management, Integrated production, Organic, Tomatoes, Experiment, Pesticide, Sustainable Use of pesticides Directive, Consumer/Household Economics,
    Date: 2014–08
  29. By: Yumiko Baba
    Abstract: A German internet auction site creates a new auction procedure as an application for iPhone. It is a Dutch auction with time credit. First, the seller announces a time credit fee rate. Next, each bidder purchases time credit and pays corresponding participation cost. Lastly, a Dutch auction starts and those who buy positive time credit can submit bids. A bidder cannot stay in an auction longer than the amount of time credit he purchased in advance. We can solve the model explicitly for uniform distribution functions and show that the equilibrium time credit fee rate is positive. We cannot collect field data because it is not approved by Apple yet. Therefore, we ran an experiment and found that we could reject the null hypothesis of the seller's revenues being the same between a Dutch auction with zero and positive time credit fee rates. The seller fs revenues from Dutch auctions with time credit are close to the one from the optimal auction mechanism, but our data shows the rate of time credit does not affect the seller's revenue as long as it is strictly positive, which contradicts to the theoretical prediction.

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.