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on Experimental Economics |
| By: | Sule Alan (University of Essex); Seda Ertac (Koc University) |
| Abstract: | We report results from the impact evaluation of a randomized educational intervention targeted at elementary school children. The program uses case studies, stories and classroom activities to improve the ability to imagine future selves, and emphasizes forward-looking behavior. We find that treated students make more patient intertemporal choices in incentivized experimental tasks. The effect is stronger for students who are identified as present-biased in the baseline. Furthermore, using official administrative records, we find that treated children are significantly less likely to receive a low "behavioral grade". These results are persistent one year after the intervention, replicate well in a different sample, and are robust across different experimental elicitation methods. |
| Keywords: | intertemporal choice, randomized field experiments, non-cognitive skills |
| JEL: | C93 D91 I28 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2015-003&r=exp |
| By: | Takanori Ida; Wenjie Wang |
| Abstract: | We use a field experiment to examine how consumers respond to distinct combinations of default options (opt-in versus opt-out) and framing of economic incentives (gain versus loss). A randomized controlled trial (RCT) is implemented to investigate the demand reduction performance of three dynamic electricity pricing programs - opt-in critical peak pricing (CPP, incentive framed as loss), opt-out CPP, and opt-out peak time rebate (PTR, incentive framed as gain). We find that the opt-in customer enrollment rate is much higher than those documented in the literature are; our subjects’ high education levels and technology related experiences may have contributed largely to the mitigation of the opt-in default effect. In addition, we obtain precise estimates of the average treatment effects, with the treatment effect being most pronounced for customers assigned to the opt-in CPP group. This result is largely attributable to the high opt-in CPP enrollment rate and to the customer inertia generated by opt-out procedures. Furthermore, an “option to quit” effect is found among PTR customers. This finding is consistent with a growing behavioral literature highlighting that incentives framed as losses loom larger than those framed as gains. |
| Keywords: | Field Experiment, Behavioral Economics, Framing, Default Effect, Dynamic Elec- tricity Pricing. |
| JEL: | C23 C93 D03 Q41 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:kue:dpaper:e-14-018&r=exp |
| By: | Kamei, Kenju |
| Abstract: | A rich body of literature has proposed that pairs behave significantly differently from individuals due to a number of reasons such as group polarization. This paper experimentally compares cooperation behaviors between pairs and individuals in a finitely-repeated two-player public goods game (continuous prisoner’s dilemma game). We show that pairs contribute significantly more than individuals to their group accounts. Especially, when two pairs are matched with each other for the entire periods, they successfully build long-lasting cooperative relationships with their matched pairs. Our detailed analyses suggest that the enhanced cooperation behavior of pairs may be driven by (a) the mere fact that they have partners when they make decisions, (b) group polarization – those who initially prefer to contribute smaller amounts are more affected by the partners in their pairs, and (c) stronger conditional cooperation behavior of pairs to their matched pairs. |
| Keywords: | experiment, cooperation, dilemma, team work, public goods |
| JEL: | C91 C92 |
| Date: | 2015–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:62438&r=exp |
| By: | Heblich, Stephan; Lameli, Alfred; Riener, Gerhard |
| Abstract: | Does it matter if you speak with a regional accent? Speaking immediately reveals something of one's own social and cultural identity, be it consciously or unconsciously. Perceiving accents involves not only reconstructing such imprints but also augmenting them with particular attitudes and stereotypes. Even though we know much about attitudes and stereotypes that are transmitted by, e.g. skin color, names or physical attractiveness, we do not yet have satisfactory answers how accent perception affects human behavior. How do people act in economically relevant contexts when they are confronted with regional accents? This paper reports a laboratory experiment where we address this question. Participants in our experiment conduct cognitive tests where they can choose to either cooperate or compete with a randomly matched male opponent identified only via his rendering of a standardized text in either a regional accent or standard accent. We find a strong connection between the linguistic performance and the cognitive rating of the opponent. When matched with an opponent who speaks the accent of the participant's home region - the in-group opponent - individuals tend to cooperate significantly more often. By contrast, they are more likely to compete when matched with an accent speaker from outside their home region, the out-group opponent. Our findings demonstrate, firstly, that the perception of an out-group accent leads not only to social discrimination but also influences economic decisions. Secondly, they suggest that this economic behavior is not necessarily attributable to the perception of a regional accent per se, but rather to the social rating of linguistic distance and the in-group/out-group perception it evokes. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:177&r=exp |
| By: | Davis, Douglas (Virginia Commonwealth University); Prescott, Edward Simpson (Federal Reserve Bank of Richmond) |
| Abstract: | An unresolved issue regarding the implementation of 'contingent capital' bonds regards identifying the best mechanism for triggering the conversion of debt into equity. This paper reports a laboratory experiment that builds on previous work to evaluate the relative desirability of two leading candidate mechanisms: a price informed regulator and a mechanistic fixed-price trigger. We find that the conversion rule in effect determines the desirability of these two mechanisms. When the conversion increases incumbent equity value, a fixed trigger is preferable, but when the conversion decreases value, the reverse holds. Two modifications for improving the regulator mechanism, creating regulator bias (e.g., giving a regulator asymmetric rewards over intervention) and probabilistically providing a regulator with non-market information, only enhance this result. |
| JEL: | C92 G14 G28 |
| Date: | 2015–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:15-02&r=exp |
| By: | Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Hiroki Ozono (Kagoshima University); Kazumi Shimizu (Waseda University) |
| Abstract: | We examine three tools that can enhance coordination success in a repeated multiple-choice coordination game. Gradualism means that the game starts as an easy coordination problem and moves gradually to a more difficult one. The Endogenous Ascending mechanism implies that a gradual increase in the upper bound of coordination occurs only if coordination with the Pareto superior equilibrium in a stage game is attained. The Endogenous Descending mechanism requires that when the game's participants fail to coordinate, the level of the next coordination game be adjusted such that the game becomes simpler. We show that gradualism may not always work, but in such instances, its effect can be reinforced by endogeneity. Our laboratory experiment provides evidence that a mechanism that combines three tools, herein termed the ``Gradualism with Endogenous Ascending and Descending (GEAD)'' mechanism, works well. We discuss how the GEAD mechanism can be applied to real-life situations that suffer from coordination failure. |
| Keywords: | Coordination Failure, Minimum Effort Game, Laboratory Experiment, Target Adjustment, Gradualism, Endogenous Ascending, Endogenous Descending |
| JEL: | C72 C91 C92 M54 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2015-11&r=exp |
| By: | Bernstein, Shai (Stanford University); Korteweg, Arthur (Stanford University); Laws, Kevin (AngelList, LLC) |
| Abstract: | Which start-up characteristics are most important to investors in early-stage firms? This paper uses a randomized field experiment involving 4,500 active, early stage investors. The experiment is implemented by AngelList, an online platform that matches investors with start-ups seeking capital. The experiment randomizes investors' information sets on start-up characteristics through the use of nearly 17,000 emails. The average investor responds strongly to information about the founding team, but not to information about either firm traction or existing lead investors. This is in contrast to the least experienced investors, who respond to all categories of information. Our results suggest that information about human assets is causally important for the funding of early-stage firms. |
| JEL: | D23 G32 L26 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3006&r=exp |
| By: | Brañas-Garza, Pablo; Coulson, Mark; Kernohan, David; Oyediran, Olusegun; Rivas, M. Fernanda |
| Abstract: | This study examined latent racial prejudice towards specified out-groups among 152 Spanish college students in a two-stage research strategy using a public goods game. When asked how generous various out-groups are, Asian, and Western groups were perceived as more generous than the in-group, whereas African and Latin American groups were perceived as less generous. When participants were incentivized, with payoff contingent on the accuracy of guesses, and accuracy quantified as performance of the relevant groups in a similar task to the one employed here, participants evidenced prejudice against African and Latin American groups, and towards Asian and Western groups. Models of racial beliefs were fitted for the four groups, however we do not find satisfactory explanations for why questionnaire response and lab behaviour did not match. Implications of the use of behavioural economic games in prejudice research are discussed. |
| Keywords: | Beliefs; Prejudice; Public Goods Game |
| JEL: | C91 H41 J15 |
| Date: | 2014–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:62377&r=exp |
| By: | Sahni, Navdeep (Stanford University); Zou, Dan (University of Chicago); Chintagunta, Pradeep (University of Chicago) |
| Abstract: | The prevalence and widespread usage of email has given businesses a direct and cost effective way of providing consumers with targeted promotional offers. While targeted promotions are expected to increase the demand for the promoted products, are these promotions effective in increasing revenues? Do they have effects beyond acting as price reductions? We study these questions using individual-level data from 70 randomized experiments run by a large online ticket resale platform. We measure the impact of emailed promotions by comparing purchases by individuals who received the experimental promotions with purchases by those who did not receive the offers because of the experimental randomization. We find that the offers cause the average expenditure to increase by $3.03 (a 37.2% increase) during the promotion window. However, ninety percent of these gains are not through redemption of the offers. Interestingly, the promotion causes carryover to the week after the promotion expires; we find that spending increases by $1.55 in the week after the offer expires. Additionally, we find evidence for cross category spillovers to non-promoted products--offers not applicable to a ticket genre cause an increase in spending in that genre. We conclude that emailed promotions can serve as a form of "advertising" for the firm's products. |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3243&r=exp |
| By: | Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology); Yoshitaka Okano (School of Economics and Management, Kochi University of Technology); Takafumi Yamakawa (Osaka University) |
| Abstract: | Consider a situation where players in a prisoner's dilemma game can approve or reject the other's choice such as cooperation or defection. If both players approve the other's choice, the outcome is the one they chose, whereas if either one rejects the other's choice, the outcome is the one when both defect, which we name the approval mechanism herein (this is inspired by the Cold War doctrine of mutually assured destruction). Experimentally, we find that the cooperation rate with the approval mechanism is 90% in round one and averages 93.2% across the 19 rounds. The questionnaire analysis also allows us to find that subjects' behavior is consistent with subgame perfect elimination of weakly dominated strategies (SPEWDS) rather than Nash equilibrium (NE) or subgame perfect Nash equilibrium (SPNE) behavior. Theoretically, this mechanism implements cooperation in SPEWDS, but not in NE or SPNE. |
| Keywords: | prisoner’s dilemma, approval mechanism, mutually assured destruction, cooperation, subgame perfect elimination of weakly dominated strategies, experiment |
| JEL: | C72 C73 C92 D74 P43 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2015-12&r=exp |
| By: | Bäker, Agnes; Güth, Werner; Pull, Kerstin; Stadler, Manfred |
| Abstract: | In three-person envy games, an allocator, a responder, and a dummy player interact. Since agreement payoffs of responder and dummy are exogenously given, there is no tradeoff between allocator payoff and the payoffs of responder and dummy. Rather, the allocator chooses the size of the pie and thus - being the residual claimant - defines his own payoff. While in the dictator variant of the envy game, responder and dummy can only refuse their own shares, in the ultimatum variant, the responder can accept or reject the allocator's choice with rejection leading to zero payoffs for all three players. Comparing symmetric and asymmetric agreement payoffs for responder and dummy shows that equality concerns are significantly context-dependent: allocators are willing to leave more money on the table when universal equality can be achieved than when only partial equality is at stake. Similarly, equality seeking of responders is most prominent when universal equality is possible. |
| Keywords: | envy games,experimental economics |
| JEL: | C72 C91 D63 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:79&r=exp |
| By: | Brice Corgnet (Economic Science Institute, Argyros School of Business and Economics, Chapman University); Antonio M. Espín (Economics Department, Middlesex University Business School and Granada Lab of Behavioral Economics (GLoBE), Universidad de Granada); Roberto Hernán-González (Granada Lab of Behavioral Economics (GLoBE), Universidad de Granada and Business School, University of Nottingham) |
| Abstract: | Even though human social behavior has received considerable scientific attention in the last decades, its cognitive underpinnings are still poorly understood. Applying a dual-process framework to the study of social preferences, we show in two studies that individuals with a more reflective/deliberative cognitive style, as measured by scores on the Cognitive Reflection Test (CRT), are more likely to make choices consistent with “mild” altruism in simple non-strategic decisions. Such choices increase social welfare by increasing the other person’s payoff at very low or no cost for the individual. The choices of less reflective individuals (i.e. those who rely more heavily on intuition), on the other hand, are more likely to be associated with either egalitarian or spiteful motives. We also identify a negative link between reflection and choices characterized by “strong” altruism, but this result holds only in Study 2. Moreover, we provide evidence that the relationship between social preferences and CRT scores is not driven by general intelligence. We discuss how our results can reconcile some previous conflicting findings on the cognitive basis of social behavior. |
| Keywords: | dual-process; reflection; intuition; social preferences; altruism; spitefulness; prosocial behavior;antisocial behavior; inequality aversion |
| JEL: | C91 D03 D87 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:15-04&r=exp |
| By: | Uri Gneezy; Alex Imas; John List |
| Abstract: | We introduce a simple, easy to implement instrument for jointly eliciting risk and ambiguity attitudes. Using this instrument, we structurally estimate a two-parameter model of preferences. Our findings indicate that ambiguity aversion is significantly overstated when risk neutrality is assumed. This highlights the interplay between risk and ambiguity attitudes as well as the importance of joint estimation. In addition, over our stakes levels we find no difference in the estimated parameters when incentives are real or hypothetical, raising the possibility that a simple hypothetical question can provide insights into an individuals preferences over ambiguity in such economic environments. |
| JEL: | C9 C91 C92 C93 D81 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20982&r=exp |
| By: | Brice Corgnet (Chapman University); Roberto Hernán-González (University of Nottingham) |
| Abstract: | Despite its central role in the theory of incentives, empirical evidence of a tradeoff between risk and incentives remains scarce. We reexamine this empirical puzzle in a controlled laboratory environment so as to isolate possible confounding factors encountered in the field. In line with the principal-agent model, we find that principals increase fixed pay while lowering performance pay when the relationship between effort and output is noisier. Unexpectedly, agents produce substantially more in the noisy environment than in the baseline despite lesser pay for performance. We show that this result can be accounted for by introducing agents’ loss aversion in the principal-agent model. Our findings call for an extension of standard agency models and for a reassessment of apparently inefficient management practices. |
| Keywords: | Principal-agent models, incentive theory, loss aversion, laboratory experiments |
| JEL: | C92 D23 D86 M54 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:15-05&r=exp |
| By: | Sutan, Angela (Groupe ESC Dijon Bourgogne, LESSAC Laboratoire d'Expérimentation en en Sciences Sociales et Analyse des Comportements et LAMETA); Vranceanu, Radu (ESSEC Business School) |
| Abstract: | This paper reports results from a three-player variant of the ultimatum game in which the Proposer can delegate to a third party his decision regarding how to share his endowment with a Responder with a standard veto right. However, the Responder cannot verify whether the delegation is effective or the third party merely plays a “scapegoat” role while the decision is made by the Proposer himself. In this imperfect information setting, the Proposer can send an unverifiable message declaring his delegation strategy. The most interesting strategy is “false delegation”, in which the Proposer makes the decision but claims to have delegated it. In our sample, the recourse to false delegation is significant, and a significant number of potential Delegates accept serving in the scapegoat role. However, there are many honest Proposers, and 20% of all Delegates will refuse to be the accomplices of a dishonest Proposer. Responders tend to more readily accept poor offers in a setup that permits lying about delegation; the acceptance rate of the poor offer is the highest when Delegates can refuse the scapegoat role. |
| Keywords: | delegation of responsibility; lies; communications strategy; ultimatum game; dishonesty |
| JEL: | C72 C91 D82 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:essewp:dr-15002&r=exp |
| By: | Casey, Katherine E. (Stanford University); Glennerster, Rachel (?); Bidwell, Kelly (?) |
| Abstract: | This project explores whether giving voters information about candidates and policy facilitates more informed voting and greater electoral accountability. In the information poor environment of Sierra Leone, we use a set of randomized experiments to estimate the impacts of structured debates between Parliamentary candidates on voter knowledge and behavior. We find evidence for strong positive impacts on general political knowledge, knowledge of candidate qualifications and policy stances; improved alignment between the policy preferences of voters and their selected candidate; greater voter openness to candidates from all parties; and increased vote shares for the candidate who performed the best during the debates. We further document an endogenous response by candidates, who increased their campaign effort in communities where videotapes of the debates were screened in public gatherings. A complementary series of treatment arms administered at the individual level unpacks the different types of information delivered by the debates, and finds evidence that voters respond to both candidate charisma and "hard facts" about policy stances and professional qualification. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3066&r=exp |
| By: | Brocas, Isabelle; Carrillo, Juan D; Combs, T. Dalton; Kodaverdian, Niree |
| Abstract: | Employing a variant of GARP, we study consistency in aging by comparing the choices of younger adults (YA) and older adults (OA) in a 'simple', two-good and a `complex' three-good condition. We find that OA perform worse than YA in the complex condition but similar in the simple condition. Working memory scores correlate significantly with consistency levels. Finally, OA are more prone to use simple heuristics than YA, and this helps them behave consistently in the simple condition. Our findings suggest that the age-related deterioration of neural faculties responsible for working memory is an obstacle for consistent decision-making. |
| Keywords: | aging; complexity; laboratory experiments; revealed preferences |
| JEL: | C91 D11 D12 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10457&r=exp |