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on Experimental Economics |
| By: | Houser, Daniel (George Mason University); List, John A. (University of Chicago); Piovesan, Marco (University of Copenhagen); Samek, Anya (University of Wisconsin-Madison); Winter, Joachim K. (University of Munich) |
| Abstract: | Acts of dishonesty permeate life. Understanding their origins, and what mechanisms help to attenuate such acts is an underexplored area of research. This study takes an economics approach to explore the propensity of individuals to act dishonestly across different economic environments. We begin by developing a simple model that highlights the channels through which one can increase or decrease dishonest acts. We lend empirical insights into this model by using an experiment that includes both parents and their young children as subjects. We find that the highest level of dishonesty occurs in settings where the parent acts alone and the dishonest act benefits the child rather than the parent. In this spirit, there is also an interesting effect of children on parents' behavior: in the child's presence, parents act more honestly, but there are gender differences. Parents act more dishonestly in front of sons than daughters. This finding has the potential of shedding light on the origins of the widely documented gender differences in cheating behavior observed among adults. |
| Keywords: | cheating, dishonesty, ethical judgment, social utility, field experiment |
| JEL: | C91 D63 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8906&r=exp |
| By: | Myrseth, Kristian Ove R. (School of Management, University of St. Andrews, St Andrews, KY16 9RJ, UK); Wollbrant, Conny E. (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | We show that Rand et al. (2012) and Rand et al. (2014)—who argue that cooperation is intuitive—provide an incorrect interpretation of their own data. They make the mistake of inferring intuition from relative decision times alone, without taking into account absolute decision times. We re-examine their data and find that the vast majority of their responses are slow, exceeding four seconds, even in time-pressure treatments intended to promote intuitive responses. Further, a plot of the average cooperation rates by decision time presents no clear relationship between decision time and cooperation. However, among the few decisions that were relatively fast (less than four seconds), there appears to be a positive—not negative— correlation between decision time and cooperation. We conclude that the data presented by Rand et al. (2012) and Rand et al. (2014) fail to provide evidence for the hypothesis that cooperation is intuitive. If anything, their data indicate the opposite. |
| Keywords: | Cooperation; Intuition; Decision times; Pro-social behavior |
| JEL: | D03 D64 H40 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0617&r=exp |
| By: | Takafumi Yamakawa (Osaka University); Yoshitaka Okano (School of Economics and Management, Kochi University of Technology); Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology) |
| Abstract: | This study clarifies the types of motives that are important as a source of cooperation in a linear public goods experiment. Our experimental design separates the contributions due to confusion, one-shot motives (which includes altruism, warm-glow, inequality aversion, and conditional cooperation), and multi-round motives (which includes a strategic motive under incomplete information, a failure of backward induction, and reciprocity). The experiment reveals that multi-round motives plays an important role in driving cooperative behavior. Confusion and one-shot motives play a minor role. |
| Keywords: | Cooperation, Motives, Public goods |
| JEL: | C72 C92 H41 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2015-15&r=exp |
| By: | C. Bram Cadsby (Department of Economics and Finance, University of Guelph); Ninghua Du (Laboratory of Mathematical Economics and School of Economics, Shanghai University of Finance and Economics); Ruqu Wang (Department of Economics, Queen?s University); Jun Zhang (Economics Discipline Group, School of Business, University of Technology Sydney) |
| Abstract: | Will generous return policies in auctions benefit bidders? We investigate this issue using second-price common-value auctions. Theoretically, we find that the bidding equilibrium is unique unless returns are free, in which case there exist multiple equilibria with different implications for sellers. Moreover, more generous return policies hurt bidders by eroding consumer surplus through higher bids. In the experiment, bids increase and bidders? earnings decrease with more generous return policies as predicted. With free returns, many bidders bid above the highest possible value, subsequently returning the item regardless of value. Though consistent with equilibrium behavior, this is not optimal for sellers. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gue:guelph:2015-01&r=exp |
| By: | O'Higgins, Niall (University of Salerno); Palomba, Arturo (University of Naples II); Sbriglia, Patrizia (University of Naples II) |
| Abstract: | There is little consensus on whether women are more generous than men; some research results indicate a higher propensity towards giving of female dictators, whilst others suggest the opposite. Two explanations have been put forward. According to the first one, women are more generous than men and the conflicting results are due to the way preferences are elicited (Eckel and Grossman, 2002), since women are more sensitive to "social cues" and their preferences are more "malleable" (Croson and Gneezy, 2009). According to the second one, the institutional culture and the role women have in society are key elements in shaping gender differences in preferences. In fact, in matrilineal societies (Gong et al.; 2014; Gneezy et al.; 2009), women are self-oriented, more competitive and less generous than men, since they have an important role as economic decision makers in the family and the society. We test these alternative hypotheses running Dictators experiments in Italy, a western country with a matrilineal culture, introducing – at the same time - social influence in the design. We find more support to the hypothesis on the cultural role in shaping preferences, rather than the effects of social influence. |
| Keywords: | social influence, gender, social preferences, experiments, dictator game |
| JEL: | C90 C91 D03 J16 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8860&r=exp |
| By: | van der Heijden, E.C.M. (Tilburg University, Center For Economic Research); Koç, E. (Tilburg University, Center For Economic Research); Ligthart, J.E. (Tilburg University, Center For Economic Research); Meijdam, A.C. (Tilburg University, Center For Economic Research) |
| Abstract: | Pensioners have increasingly more control over their income streams as a result of<br/>pension reforms, which gives them more freedom to save for their old age. We devise an experiment where subjects face a life-cycle optimization task with lifetime uncertainty and a given lifetime income. The aims are to test whether subjects' saving and consumption behaviour is affected by: (i) the steepness of the income profile; and (ii) the freedom to choose the steepness of the income prole before the optimization task. In general, subjects' consumption decisions deviate systematically from the optimal ones in the sense that they are overly sensitive to current income and financial wealth. Subject behavior is unaffected by the steepness of the income. When subjects are given such a flexibility their consumption decisions are relatively more sensitive to current income and financial wealth. |
| Keywords: | pensions; life-cycle model; Dynamic Optimization; rule of thumb; lab experiment |
| JEL: | C91 G23 H55 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:3de611f3-a000-4281-9747-29577a508867&r=exp |
| By: | Marco Kleine (Max Planck Institute for Innovation and Competition, Munich); Sebastian Kube (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | We study how upward communication – from workers to managers – about individual efforts affects the effectiveness of gift exchange as a contract-enforcement device for work teams. Our findings suggest that the use of such self-assessments can be detrimental to workers’ performance. In the controlled environment of a laboratory gift-exchange experiment, our workers regularly overstate their own contribution to the joint team output. Misreporting seems to spread distrust within the team of workers, as well as between managers and workers. This manifests itself in managers being less generous with workers’ payments, and in workers being more sensitive to the perceived kindness of their relative wage payments. By varying the source and degree of information about individual efforts between treatments, we see that precise knowledge about workers’ actual contributions to the team output is beneficial for the success of gift-exchange relationships. Yet, workers’ self-assessments can be a problematic tool to gather this information. |
| JEL: | J33 C92 M52 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2015_06&r=exp |
| By: | Onur Altindag; Theodore J. Joyce; Julie A. Reeder |
| Abstract: | In an effort to improve breastfeeding, the Oregon WIC Program tested whether a relatively low-cost telephone peer counseling initiative to support breastfeeding could increase the initiation and duration of exclusive breastfeeding among its participants. They conducted a large randomized field experiment (RFE) with over 1900 women from four WIC agencies in the state. In this study we use data from the RFE along with administrative data from the rest of the state to assess whether the results from the RFE can be extended to other agencies in the state. We find small or non-existent effects of peer counseling in the non-experimental settings, which suggest that the experimental estimates may reflect Hawthorne effects. We present evidence of selection into RFE in that exclusive breastfeeding among the controls is significantly greater than among women who were offered but declined to participate in the RFE as well as from women in the rest of the state who had no access to peer counseling. We conclude that despite the strong internal validity of the RFE, extending the program to other agencies in the state would have a limited impact at best on exclusive breastfeeding. |
| JEL: | I12 I18 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21013&r=exp |
| By: | Martin G. Kocher; Fangfang Tan; Jing Yu |
| Abstract: | This paper experimentally examines the effect of electoral delegation on providing global public goods shared by several groups. Each group elects a delegate who can freely decide on each group member’s contribution to the global public good. Our results show that people mostly vote for delegates who assign equal contributions for every group member. However, in contrast to standard theoretical predictions, unequal contributions across groups drive cooperation down over time, and it decreases efficiency by almost 50% compared to the selfish benchmark. This pattern is not driven by delegates trying to exploit their fellow group members, as indicated by theory – quite to the opposite, other-regarding preferences and a re-election incentives guarantee that delegates assign equal contributions for all group members. It is driven by conditional cooperation of delegates across groups. Since the source of the resulting inefficiency is the polycentric nature of global public goods provision together with other-regarding preferences, we use the term P-inefficiency to describe our finding. |
| Keywords: | Global Public Goods, Delegation, Cooperation, Experiment |
| JEL: | C92 D72 H41 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2014-12_2&r=exp |
| By: | Michael Sanders |
| Abstract: | “Nudges" - small, usually cheap, interventions to alter the behaviour of individuals to improve their “health, wealth or happiness", are increasingly popular with governments and have thus far played a large role in the coalition government's attempts to encourage pro-social behaviour. The power of many of these nudges, such as the effect of priming in a trust-game type scenario, has been tested widely in the lab, but have proven difficult to replicate in the field. Although the laboratory allows a sterile environment, this is not always desirable - the real world is not sterile, and there are often many different factors competing for an individual's attention. We present the results of an experiment conducted during the course of a busy public engagement event at the University of Bristol, where members of the public, with little or no knowledge of economic theory, were invited to take part in a game during which they received incidental priming. We find that although the effect of... |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:13/330&r=exp |
| By: | Olga Gorelkina (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | Mechanism design theory strongly relies on the concept of Nash equilibrium. However, studies of experimental games show that Nash equilibria are rarely played and that subjects may be thinking only a finite number of iterations. We study one of the most influential benchmarks of mechanism design theory, the expected externality mechanism (D’Aspremont, Gerard-Varet, 1979) in a finite-depth environment described by the Lk model. While efficient implementation fails under certain conditions, our results provide a vindication of the mechanism in the convex quasi-linear environment with finitely-rational agents. |
| Keywords: | Bounded Rationality, Expected externality, externality mechanisms, Level-K |
| JEL: | D71 D82 C72 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2015_03&r=exp |
| By: | Toru Kitagawa; Aleksey Tetenov |
| Abstract: | One of the main objectives of empirical analysis of experiments and quasi-experiments is to inform policy decisions that determine the allocation of treatments to individuals with different observable covariates. We propose the Empirical Welfare Maximization (EWM) method, which estimates a treatment assignment policy by maximizing the sample analog of average social welfare over a class of candidate treatment policies. The EWM approach is attractive in terms of both statistical performance and practical implementation in realistic settings of policy design. Common features of these settings include: (i) feasible treatment assignment rules are constrained exogenously for ethical, legislative, or political reasons, (ii) a policy maker wants a simple treatment assignment rule based on one or more eligibility scores in order to reduce the dimensionality of individual observable characteristics, and/or (iii) the proportion of individuals who can receive the treatment is a priori limited due to a budget or a capacity constraint. We show that when the propensity score is known, the average social welfare attained by EWM rules converges at least at n^(-1/2) rate to the maximum obtainable welfare uniformly over a minimally constrained class of data distributions, and this uniform convergence rate is minimax optimal. In comparison with this benchmark rate, we examine how the uniform convergence rate of the average welfare improves or deteriorates depending on the richness of the class of candidate decision rules, the distribution of conditional treatment effects, and the lack of knowledge of the propensity score. We provide an asymptotically valid inference procedure for the population welfare gain obtained by exercising the EWM rule. We offer easily implementable algorithms for computing the EWM rule and an application using experimental data from the National JTPA Study. |
| Keywords: | randomized experiments, statistical treatment rules, minimax rate optimality, VC-dimension. |
| JEL: | C21 C44 C14 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:402&r=exp |
| By: | Hélène Couprie (Université de Cergy-Pontoise); Elisabeth Cudeville (Centre d'Economie de la Sorbonne - Paris School of Economics); Catherine Sofer (Centre d'Economie de la Sorbonne - Paris School of Economics) |
| Abstract: | Most household models assume that decisions taken inside the family are Pareto optimal. However, empirical studies cast doubts upon the efficiency assumption. The sharing of time among men and women between market work and household work is highly differentiated by gender. In this paper we examine whether couples deviate from efficiency in household production decisions, using an experimental design in which subjects are real couples. The aim of the experiment is to mimic the sharing of highly-gendered household tasks. We compare the sharing of gendered tasks to that of more neutral tasks. By measuring individual productivity in each task, we can see if couples tend to deviate from efficiency, and by how much in each case. As we show that they deviate more when sharing gendered tasks, we also explore why, looking at different possible explanations, and we find evidence of the impact of stereotypes on inefficiencies |
| Keywords: | Stereotypes; social norms; household production; time allocation; experiment; production function; household behavior; intra-household decision-making |
| JEL: | D13 J16 J22 C91 C92 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:15025&r=exp |
| By: | Proto, Eugenio (University of Warwick); Sgroi, Daniel (University of Warwick) |
| Abstract: | We perform an incentivized experiment designed to assess the accuracy of beliefs about characteristics and decisions. Subjects are asked to declare some specific choices and characteristics with different levels of observability from an external point of view, and typically formed through real world experiences. From the less observable mobile phone purchasing decisions, hypothetical restaurant choices, political views, happiness to the fully observable height and weight; after they are asked to report beliefs on statistics over the same items concerning other individuals living in the same environment. We test two main hypotheses: (i) whether for items not perfectly observable, individuals suffer of some type of bias in these beliefs; (ii) whether this bias would disappear for weight and height, when the information is perfectly available. We find a powerful and ubiquitous bias in perceptions that is "self-centered" in the sense that those at extremes tend to perceive themselves as closer to the middle of the distribution than is the case. Albeit weaker, this bias does not disappear when the information is readily available as in height and weight. We present evidence from our experiment that limited attention and self-serving deception can provide explanations for this bias and present important economic applications. |
| Keywords: | characteristics, attitudes, information, biased beliefs, self-centered bias |
| JEL: | D03 C83 D84 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8858&r=exp |
| By: | Christian Keller; David Reinstein; Gerhard Riener; Michael Sanders |
| Abstract: | When and how should a fundraiser ask for a donation from an individual facing an uncertain bonus income? A standard model of expected utility over outcomes predicts that the individual’s before choice – her ex-ante commitment conditional on her income – will be the same as her choice after the income has been revealed. Deciding “if you win, how much will you donate?” involves a commitment (i) over a donation for a state of the world that may not be realized and (ii) over uncertain income. Models involving reference-dependent utility, tangibility, and self-signaling predict more giving before, while theories of affect predict more giving after. In our online field experiment at a UK university, as well as in our laboratory experiments in Germany, charitable giving was significantly larger in the Before treatment than in the After treatment for male subjects, with a significant gender differential. |
| JEL: | D64 C91 L30 D01 D84 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:13/336&r=exp |
| By: | Stephen Knowles; Maroš Servátka (University of Canterbury); Trudy Sullivan |
| Abstract: | We conduct a field experiment to analyze the effect of deadline length on charitable giving. Subjects are invited to complete an online survey, with a donation going to charity if they do so. Participants are given either one week, one month or no deadline by which to respond. Donations are lower for the one month deadline, than for the other two treatments, consistent with the model of inattention developed in Taubinsky (2014) and also with the idea that not specifying a deadline conveys urgency. |
| Keywords: | Funding for this project was provided by the Department of Economics, Otago Business School, University of Otago |
| JEL: | C93 D64 |
| Date: | 2015–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:15/06&r=exp |
| By: | Janssen, Dirk-Jan; Weitzel, Utz; Füllbrunn, Sascha |
| Abstract: | We introduce the speculation elicitation task (SET) to measure speculative tendencies of individuals. The resulting SET-score allows us to investigate the role of individual speculative behavior on experimental asset market bubbles. The experimental results show that overpricing in asset markets composed of subjects with a high propensity to speculate (high SET-score) is significantly higher than in markets composed of subjects with a low propensity to speculate (low SET-score). We conclude that speculative tendencies are an important driver of price bubbles in experimental asset markets. |
| Keywords: | Speculation, Experimental Asset Markets, Finance |
| JEL: | C90 D40 D84 G10 |
| Date: | 2015–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63028&r=exp |
| By: | Meub, Lukas; Proeger, Till; Schneider, Tim; Bizer, Kilian |
| Abstract: | In an experiment on moral cleansing with an endogenously manipulated moral self-image, we examine the relevance of the addressee of an immoral action. The treatments differ such that cheating on a die roll reduces either the experimenter´s or another subject´s payoff. We find that cheating is highest and moral cleansing lowest when subjects cheat at the expense of the experimenter, while cheating is lowest and moral cleansing highest once cheating harms another subject. A subsequent measurement of subjects´ moral self-image supports our interpretation that the occurrence of moral cleansing crucially depends on the moral costs resulting from immoral actions directed at individuals in different roles. Our results can help to explain the different propensity to cheat and conduct moral cleansing when immoral actions harm either another person or the representatives of an organization. |
| Keywords: | dictator game,laboratory experiment,lying,moral balancing,moral,cleansing,self-image |
| JEL: | C91 D1 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:233&r=exp |
| By: | Hahn, Youjin (Monash University); Islam, Asadul (Monash University); Patacchini, Eleonora (Cornell University); Zenou, Yves (Stockholm University) |
| Abstract: | We study the causal impact of network centrality on educational outcomes using field experiments in primary schools in Bangladesh. After obtaining information on friendship networks, we randomly allocate students into groups and give them individual and group assignments. We find that groups that perform best are those whose members have high Katz-Bonacich and key-player centralities. Leaders are mostly responsible for this effect, while bad apples have little influence. Own Katz-Bonacich centrality is associated with better individual performance only if it is above the average centrality of the group. Further experiments reveal that leadership, as measured by network centrality, mainly captures non-cognitive skills, especially patience and competitiveness. |
| Keywords: | social networks, centrality measures, leaders, soft skills |
| JEL: | A14 C93 D01 I20 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8872&r=exp |
| By: | Peter Heemeijer; Ronald Heijmans |
| Abstract: | This experimental study investigates the behavior of banks in a large value payment system. More specifically, we look at 1) the reactions of banks to disruptions in the payment system and 2) the way banks behavior changes to incentives of the central bank. The game used in this experiment is a stylized version of a model of Bech and Garratt (2006) in which each bank can choose between paying in the morning (efficient) or in the afternoon (inefficient) and builds on the game by Abbink et al. (2010). The results show that a positive (bail out) or negative (punishment) incentive steers payments to the inefficient or efficient equilibrium, respectively. In contrast to our expectation, providing detailed information on disruptions steers payments towards the inefficient equilibrium. |
| Keywords: | payment systems; financial stability; experiment; decision making; central bank intervention |
| JEL: | C92 D70 D78 E58 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:466&r=exp |
| By: | Bezu, Sosina (School of Economics and Business, Norwegian University of Life Sciences); Holden , Stein (School of Economics and Business, Norwegian University of Life Sciences) |
| Abstract: | This paper explores generosity among anonymous villagers and sharing within families using a dictator game field experiment that was carried out in rural villages in Ethiopia. We find that generosity among anonymous villagers is very low compared with the findings in the dictator game literature. On average, the dictators in our sample allocate only 6% of their endowments to anonymous persons in the village, and three-fourths of the dictators keep all of their endowments to themselves when paired with anonymous persons. However, we found very high levels of sharing between husband and wife. In terms of gender differences, we find that women are not more generous towards anonymous persons, nor are they more likely to share within their families. In fact, there is some evidence, albeit weak, showing that women allocate less to anonymous persons than do men. Additionally, there is strong evidence that women are less likely to share their resources with their spouse than are men. |
| Keywords: | Dictator game; generosity; sharing; field experiment; Ethiopia; Africa |
| JEL: | C93 D03 O12 |
| Date: | 2015–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsseb:2015_004&r=exp |
| By: | Seebauer, Michael |
| Abstract: | This study investigates the effects of the provision of costly initiatives on policy efficiency in a laboratory experiment where a policy setter implements a status quo affecting the utility of the constituency. I vary treatments regarding the political institution (either purely representative or direct democracy where the status quo may be contested by the costly proposal of an alternative) and the appointment of the policy setter (either random or by election). In accordance to theoretical predictions, the experimental data reveal a substantial indirect effect of direct democracy inducing higher efficiency levels by serving as a credible threat towards the policy setter without actually being used. Moreover, the initiative impedes excessive candidate competition during elections reducing campaign costs and thus increasing overall efficiency. In contrast to theoretical predictions, the initiative is actually employed frequently, so there is also a sizeable direct effect of the initiative. However, this effect is generally overcompensated by the costs induced by the process. |
| Keywords: | Direct Democracy,Policy Decision,Efficiency,Laboratory Experiment |
| JEL: | D72 D61 C92 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:012015&r=exp |
| By: | Daniela Di Cagno (Luiss Guido Carli University of Rome, Rome, Italy); Arianna Galliera (Luiss Guido Carli University of Rome, Rome, Italy); Werner Güth (Max Planck Institute of Economics, Jena, Germany); Noemi Pace (University Ca’ Foscari of Venice, Venice, Italy); Luca Pannaccione (DEDI and CEIS, University of Rome Tor Vergata, Rome, Italy) |
| Abstract: | The privately informed seller of a company sends a value message to the uninformed potential buyer who then proposes a price for the company. “Make-up” is measured by how much the true value is overstated, “Suspicion” by how much the price offer differs from the value message. Treatments vary in information about gender via (not) informing about the gender constellation and in embeddedness of gender information. Female participants engage more in “make-up”, i.e. overstate more the value of the company, but are not more “suspicious”. Furthermore, homogeneous female constellations make up more. |
| Keywords: | bargaining, experiment, gender |
| JEL: | C78 C91 J16 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2014:26&r=exp |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | Both in the US and in Europe, antitrust authorities prohibit merger not only if the merged entity, in and of itself, is no longer sufficiently controlled by competition. The authorities also intervene if, post merger, the market structure has changed such that "tacit collusion" or "coordinated effects" become disturbingly more likely. It seems that antitrust neglects the fact that, for more than 50 years, economists have been doing experiments on this very question. Almost any conceivable determinant of higher or lower collusion has been tested. This paper standardises the evidence by way of a meta-study, and relates experimental findings as closely as possible to antitrust doctrine. |
| JEL: | D43 K21 L13 L41 C91 D22 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2015_04&r=exp |
| By: | Pierre C. Boyer; Nadja Dwenger; Johannes Rincke |
| Abstract: | This paper studies how imposing norms on contribution behavior affects individuals' intrinsic motivation. We consider an urban area in Germany where the Catholic Church collects a local church levy as a charitable donation, despite the fact that the levy is legally a tax. In cooperation with the church, we design a natural randomized field experiment with letter treatments informing individuals that the church levy is in fact a tax. Guided by a simple theoretical model, we use baseline contribution behavior to measure individuals' intrinsic motivation and demonstrate that treatment effects differ strongly across motivational types. Among weakly intrinsically motivated individuals, communicating the existence of a legal norm results in a significant crowd-out of intrinsic motivation. In contrast, strongly intrinsically motivated individuals do not show any treatment response. We cross-validate our findings using alternative motivational measures derived from an extensive post-treatment survey. |
| Keywords: | intrinsic motivation, crowding out, charitable giving, taxes, public goods, natural randomized field experiment |
| JEL: | C93 D03 H26 H41 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2014-23&r=exp |
| By: | Lore Vandewalle (Graduate Institute of International and Development Studies - Department of International Economics); Vincent Somville (Chr. Michelsen Institute) |
| Abstract: | A growing share of the world population is getting access to a formal bank account. This allows a move from cash to account based payments. Grounding our hypothesis in behavioral economics, we conjecture that being paid on an account instead of in cash can play a major role in encouraging savings. When paid on the account, the money is saved by default, while - as long as payments are done in cash - the money is ready to be spent. We test our hypothesis in rural India, with villagers who either had an account, or were asked to open one. They received weekly payments of Rs 150 for about 10 consecutive weeks. We randomly allocated them to being paid on the account (treated) or in cash (control). We find that the treatment increases the account balance by about 110 percent, and that the effect is long lasting. The control villagers do not save more in other assets, but increase their expenditures on regular consumption items. We exclude two alternative mechanisms that could explain the result. First, using lab in the field games, we show that the treatment does not enhance the trust in or empathy towards the banker. Second, we provide evidence against the treated having developed an active savings habit on the account: they behave like the control, when we switch from account to cash payments. |
| Keywords: | Savings, Finance, Behavioral Economics |
| JEL: | D14 C93 D03 G21 O16 |
| Date: | 2015–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp01-2015&r=exp |
| By: | Alexey A. Kotov (National Research University Higher School of Economics); Liana B. Agrba; Elizaveta V. Vlasova (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Tatyana N. Kotova (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | Subjects were given classic category formation tasks with feedback. We used two types of categories—statistically dense and statistically sparse. We conducted four experiments to assess the influence of sign type (experiment 1) and the interference of redundant actions performed with the sign (experiment 2) on the performance of learning different types of categories. We found that in the case of dense category formation, the visual distinction of the sign from other object features is more important. In the case of sparse category formation, easy verbalization is more important. Additionally we showed that verbal interference, directed at the actions with the sign, improves sparse category formation, but worsens dense category formation. The results of our experiments are discussed in accordance with the Competition Between Verbal and Implicit Systems (COVIS) model of multiple systems of categorization. |
| Keywords: | categorization, concept formation, sign, category structure, learning. |
| JEL: | C91 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:35psy2015&r=exp |
| By: | Luba Petersen (Simon Fraser University); Guidon Fenig (University of British Columbia) |
| Abstract: | How does the allocation of scarce jobs and production influence their supply? We present the results of a macroeconomics laboratory experiment that investigates the effects of alternative rationing schemes on economic stability. Participants play the role of consumer-workers who interact in labor and output markets. All output, which yields a reward to participants, must be produced through costly labor. Automated firms hire workers to produce output so long as there is sufficient demand for all production. Thus, either labor hours or output units are rationed. Random queue, equitable, and priority (i.e., property rights) schemes are compared. Production volatility is the lowest under a priority rationing rule and is significantly higher under a scheme that allocates the scarce resource through a random queue. Production converges toward the high steady state under a priority rule, but can diverge to significantly low levels under a random queue or equitable rule where there is the opportunity for and perception of free-riding. At the individual level, rationing in the output market leads consumer-workers to supply less labor in subsequent periods. A model of myopic decision making is developed to rationalize the results. |
| Keywords: | rationing, allocation rules, unemployment, experimental macroeconomics, laboratory experiment, general equilibrium |
| JEL: | C92 E13 H31 H4 E62 |
| Date: | 2015–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp15-02&r=exp |
| By: | Díez-Amigo, Sandro |
| Abstract: | According to the existing evidence some higher education admission tests may be screening out students who, despite a relative lack of specific knowledge, possess as much intellectual ability as their peers. If this is the case, students from disadvantaged socioeconomic backgrounds are likely to be disproportionately affected, since they generally receive a primary and secondary education of worse quality than their better-off peers, often resulting in significant knowledge gaps. Also, although in some cases these formative shortcomings might be too large to be feasibly addressed at the time of enrollment in higher education, it is plausible to think that in some cases they may perhaps be relatively easy to remedy. In view of all this, in this paper I present a diagnostics experiment, aimed at helping to better understand this issue. In particular, I custom-designed a multiple-choice test, intended to measure an individual's mathematical ability, while minimizing the reliance on previously acquired knowledge. Also, I put together a two page "cheat sheet", which outlined all the necessary concepts to successfully complete the exam, without providing any explicit answers. This test was subsequently used to evaluate the candidates applying for admission into a special access program at one of the leading Chilean universities. A staged randomized control trial was used to measure the difference in academic performance (i.e. number of correctly answered questions) across the three parts of the exam between students who received a "cheat sheet" after the first or second parts of the test, respectively. As expected, "cheat sheets" improved the average performance of candidates on the exam, but their impact varied considerably across individuals. Most importantly, "cheat sheets" proved significantly more beneficial (in terms of improved test performance) to those students who were more likely to have had a secondary education of lower quality. This result has important implications for educational policies in Chile and elsewhere, suggesting that a transition to ability-focused admission tests would facilitate the access to higher education for talented students from disadvantaged backgrounds. |
| Keywords: | Equality of Opportunity; Higher Education; Education Policy; Policy Evaluation; Economic Development |
| JEL: | A12 I2 J15 O15 |
| Date: | 2014–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:62914&r=exp |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Michael Kurschilgen (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | According to Adam Smith (1790), human selfishness can be restrained by introspection. We test the effect of introspection on people’s willingness to cooperate in a public good game. Drawing on the concept of identity utility (George A. Akerlof and Rachel E. Kranton, 2000), we show theoretically that introspection may enhance cooperation by increasing the relative cost of deviating from one’s self-image. Experimentally, we induce introspection through the elicitation of (normative) expectations. Our results show that introspection causally increases cooperation. Both home-grown idealism and the experiences with the cooperativeness of the environment predict individual cooperativeness throughout the game. |
| Keywords: | experiment, Social Dilemma, Identity, Expectations, Introspection |
| JEL: | H41 D63 C90 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2015_01&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: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:kue:dpaper:e-14-010&r=exp |
| By: | Hitoshi Shigeoka; Katsunori Yamada |
| Abstract: | Economists have long been concerned that negative attitudes about relative income reduce social welfare. This paper investigates whether such attitudes can be mitigated by a simple information treatment. Toward this end, we conducted an original randomized online survey experiment in the US and the UK. As a baseline result, we find that UK respondents compare their incomes with othersf at a much higher rate than US subjects do. Additionally, we find that our information treatment---suggesting that comparing income with others may diminish their welfare even when income levels are actually increasing---made respondents compare incomes more, rather than less. Interestingly, we find such effects only among UK respondents. The mechanism for this among UK respondents seems to be driven by those who are initially less comparison-conscious becoming more comparison-conscious, indicating that our information treatment gives moral glicenseh to make comparisons by informing that others actually do. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:930&r=exp |
| By: | Tatsuyoshi Saijo (School of Management, Kochi University of Technology) |
| Abstract: | This paper proposes an alternative explanation for the sandwich property in voluntary contribution mechanism experiments. This property refers to the phenomenon of experimental data being ``sandwiched'' between a Nash equilibrium above the midpoint of the endowment and a Nash equilibrium below this midpoint. The explanation is in terms of the instability of the system with best response dynamics, i.e., ``pulsing'' behaviors, in nonlinear environments rather than the quantal response equilibrium analysis. Since most experimental models are unstable in quasilinear environments (where the utility function is linear in a private good and nonlinear in a public good), and Cobb–Douglas environments, using equilibrium analysis is problematic. |
| JEL: | C62 C72 C92 H41 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2015-13&r=exp |
| By: | Luisa Herbst; Kai A. Konrad; Florian Morath |
| Abstract: | We study the role of an imbalance in fighting strengths when players bargain in the shadow of conflict. Our experimental results suggest: In a simple bargaining game with an exogenous mediation proposal, the likelihood of conflict is independent of the balance of power. If bargaining involves endogenous demand choices, however, the likelihood of conflict is higher if power is more imbalanced. Even though endogenous bargaining outcomes reflect the players unequal fighting strengths, strategic uncertainty causes outcomes to be most efficient when power is balanced. In turn, the importance of exogenous mediation proposals depends on the balance of power. |
| Keywords: | Conflict, balance of power, contest, bargaining, Nash demand game, conflict resolution, asymmetries, experiment |
| JEL: | C78 C91 D72 D74 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2014-13_2&r=exp |
| By: | Kocher, Martin G.; Lahno, Amrei Marie; Trautmann, Stefan T. |
| Abstract: | An extensive literature has studied ambiguity aversion in economic decision making, and how ambiguity aversion can account for empirically observed violations of expected utility-based theories. Almost all relevant applied models presume a general dislike of ambiguity. In this paper, we provide a systematic experimental assessment of ambiguity attitudes in different likelihood ranges and in the gain domain, the loss Domain and with mixed outcomes. We draw on a unified framework with more than 500 participants and find that ambiguity aversion is the exception, not the rule. We replicate the usual finding of ambiguity aversion for moderate likelihood gains. However, when introducing losses or lower likelihoods, we observe either ambiguity neutrality or even ambiguity seeking behavior. Our results are robust to different elicitation procedures. |
| Keywords: | ambiguity aversion; decision under uncertainty; Ellsberg experiments |
| JEL: | C91 D81 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:23817&r=exp |
| By: | Raj Chande; Michael Luca; Michael Sanders; Zhi Soon; Oana Borcan; Netta Barak-Corren; Elizabeth Linos; Elspeth Kirkman |
| Abstract: | Roughly 20% of adults in the OECD lack basic numeracy and literacy skills. In the UK, many colleges offer fully government subsidized adult education programs to improve these skills. Constructing a unique dataset consisting of weekly attendance records for 1179 students, we find that approximately 25% of learners stop attending these programs in the first ten weeks and that average attendance rates deteriorate by 20% in that time. We implement a large-scale field experiment in which we send encouraging text messages to students. Our initial results show that these simple text messages reduce the proportion of students that stop attending by 36% and lead to a 7% increase in average attendance relative to the control group. The effects on attendance rates persist through the three weeks of available data following the initial intervention. |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:13/335&r=exp |