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on Experimental Economics |
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Issue of 2015‒04‒02
twenty-one papers chosen by |
| By: | Takehisa Kumakawa (Osaka University); Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology); Takehiko Yamato (Tokyo Institute of Technology) |
| Abstract: | What motivates subjects in their decision making is a lingering issue in public goods experiments. Using a nonlinear payoff function and a two-subject model, we create a one-toone correspondence between contributions and motivations, enabling us to isolate and identify the following three possible motivations: Nash, cooperative, and altruistic motivations. The experimental results show that Nash- motivated behavior accounts for more than 70% of all decisions. Some subjects reveal a cooperative motivation when they know the other subject's payoff information. Altruistic motivation is found to be rare throughout the experiment. |
| Keywords: | Motivation, Nash, Cooperation, Altruism, Voluntary contribution mechanism |
| JEL: | C92 H41 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2015-16&r=exp |
| By: | Rodriguez-lara, Ismael |
| Abstract: | We report experimental evidence on second-movers' behavior in the investment game (also known as the trust game) when there exists endowment heterogeneity. Using a within-subject analysis, we investigate whether second-movers have a tendency to be reciprocal (i.e., they return to first movers at least what they have received from them), or exhibit some taste for inequality aversion (i.e., they return a larger (smaller) share of the available funds to first-movers who are initially endowed with a lesser (larger) endowment, respectively). Our results suggest that second-movers' behavior is consistent across distribution of endowments, what indicates that second-movers (on average) do not take into consideration the level of endowments when making their decisions. This finding, in turn, implies that subjects behave according to our definition of reciprocity and that inequality-aversion receives little support from our data. |
| Keywords: | reciprocity, inequality aversion, investment game, trust game, endowment heterogeneity |
| JEL: | C72 C91 D3 D63 |
| Date: | 2015–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63313&r=exp |
| By: | Jeannette Brosig-Koch; Heike Hennig-Schmidt; Nadja Kairies-Schwarz; Daniel Wiesen |
| Abstract: | Mixed payment systems have become a prominent alternative to paying physicians through fee-for-service and capitation. While theory shows mixed payment systems to be superior, empirically, causal effects on physicians’ behavior are not well understood when introducing mixed systems. We systematically analyze the influence of fee-for-service, capitation, and mixed payment systems on physicians’ service provision. In a controlled laboratory setting, we implement an exogenous variation of the payment method. Participants, in the role of physicians, in the lab (N=213) choose quantities of medical services affecting patients’ health outside the lab. Behavioral data reveal significant overprovision of medical services under fee-for-service and significant underprovision under capitation, though less than predicted when assuming profit-maximization. Introducing mixed payment systems significantly reduces deviations from patient-optimal treatment. Responses to incentive systems can be explained by a behavioral model capturing physician altruism. We find substantial heterogeneity in physician altruism. Our results hold for medical and non-medical students. |
| Keywords: | Fee-for-service; capitation; mixed payment systems; physician altruism; laboratory experiment |
| JEL: | C91 I11 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0543&r=exp |
| By: | R. Orsini; E. Ciaramelli; C. Giannetti |
| Abstract: | The thought of one’s own death induces anxiety and threatens self-esteem. According to Terror Management Theory, to reduce this existential threat individuals typically embrace their cultural worldview, and seek for an increase in self-esteem and status by improving their productivity. Within an experimental economy setting, this paper investigates the effect of Mortality Salience (MS) on individual productivity, using for the first time a real-effort task where the economic incentive is to not perform. We investigated whether the improvement in productivity was significantly driven by self-esteem or status seeking, providing either private feedback alone or, additionally, public feedback. Always controlling for participants’ individual susceptibility to the MS induction, our results indicate that subjects generally tend to be more sensitive to in-group conformity under MS compared to a control (Music) induction condition. That is, they initially improve their performance to enhance self-esteem, but then homologate to average performance levels, consistent with the incentive not to perform. However, for a subset of less materialistic participants, with strong susceptibility to MS, performance levels constantly improved along the task. |
| JEL: | C91 C92 D12 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp997&r=exp |
| By: | Reischmann, Andreas |
| Abstract: | The Conditional Contribution Mechanism for public good provision gives all agents the possibility to condition their contribution on the total level of contribution provided by all agents. In this experimental study the mechanism's performance is compared to the performance of the Voluntary Contribution Mechanism. In an environment with binary contribution and linear valuations subjects play the mechanisms in a repeated setting. The mechanisms are compared in one case of complete information and homogeneous valuations and in a second case with heterogeneous valuations and incomplete information. In both cases a significantly higher contribution rate can be observed when the Conditional Contribution Mechanism is used. |
| Keywords: | Experimental Economics; Public Goods; Mechanism Design; Better Response Dynamics. |
| Date: | 2015–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0587&r=exp |
| By: | Baumann, Florian; Friehe, Tim |
| Abstract: | We investigate how third-party punishers and potential violators decide under evidentiary uncertainty in a take game. In line with the legal requirement and in contrast to economic models, neither the sanction nor the harm level affects the punishment probability, but the quality of evidence does have an impact. Potential violators' decisions are strongly influenced by the expected punishment probability but not by the level of the sanction. |
| Keywords: | experiment,standard of proof,third-party punishment |
| JEL: | K42 D81 C91 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:181&r=exp |
| By: | Fehr, Dietmar; Hakimov, Rustamdjan; Kübler, Dorothea |
| Abstract: | We report on experiments to replicate Plott and Zeiler's (2005) findings that the WTP-WTA gap disappears when using procedures that are aimed at reducing misunderstandings, such as training rounds for the BDM mechanism. Following the design by Plott and Zeiler (2005) and Isoni, Loomes, and Sugden (2011) who re-ran the Plott/Zeiler experiments to study the paid practice rounds with lotteries, we replicate the findings from the lottery tasks where a WTP-WTA gap is present in all studies. However, unlike in the two previous studies the WTP-WTA gap does not disappear in the main task where subjects state their WTA or WTP for a mug. We introduce two additional lottery tasks to classify subjects and find that even for the most rational group of subjects who never make dominated choices in the paid practice rounds, the WTP-WTA gap in the mug task exists. The findings are replicated in a similar experiment with USB sticks instead of mugs. |
| Keywords: | endowment effect,WTP-WTA gap,BDM mechanism,misconceptions,replication |
| JEL: | C72 C92 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2015204&r=exp |
| By: | Bradler, Christiane |
| Abstract: | Economic theory suggests that performance pay may serve as an effective screening device to attract productive agents. The existing evidence on the self-selection of agents is largely limited to job tasks where performance is driven by routine, well-defined procedures. This study presents evidence for a creative task and studies how agents self-select into a tournament-based scheme vs. a fixed pay scheme. The experiment allows for the measurement of creative productivity, risk preferences, self-assessments, gender, and other socio-economic characteristics such as the Big Five personality traits. Results show that the two payment schemes systematically attract agents with different characteristics. However, results differ fundamentally from previously found patterns. Agents did not self-select into the tournament scheme according to their creative productivity, but only according to their risk attitudes and self-assessments. The reason for the absence of a selection of the most creative agents into the tournament is that there exist substantial misjudgments of relative creative productivity. Further evidence from a representative German survey data set provides additional support for the experimental results suggesting external validity. |
| Keywords: | performance pay,tournaments,selection,sorting,creativity,experiment |
| JEL: | C91 D03 J33 M52 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:15021&r=exp |
| By: | Martin G. Kocher; Amrei Marie Lahno; Stefan T. Trautmann |
| 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: | 2015–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:qut:qubewp:wp033&r=exp |
| By: | Aurora García-Gallego (University Jaume I, LEE & Department of Economics); Penelope Hernández-Rojas (University of Valencia, ERI-CES & Department of Economics Analysis); Amalia Rodrigo-González (University of Valencia, Department of Corporate Finance) |
| Abstract: | The theoretical communication model by Gossner et al. (2006) (GHN henceforth) based on the matching pennies game has recently been implemented by García-Gallego et al. (2013) (GHR henceforth) in the lab, emphasizing the transmission of information among players with aligned incentives. The present work contributes to characterize the optimal structure of the equilibrium strategies or the set up under consideration. Also, we establish the length of the sequence of the experimental game for which the players' optimal strategy is the majority rule, considering a minimal length of 3. Finally, we aim at testing the model by GHN (2006). Experimental findings give! support to the theoretical results in GHN (2006). |
| Keywords: | experiments, coordination, cheap-talk, efficiency |
| JEL: | D8 C91 C73 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2015/03&r=exp |
| By: | Lauri Saaksvuori (University of Hamburg); Abhijit Ramalingam (University of East Anglia) |
| Abstract: | This paper examines how third-party surveillance influences preferences over distributional outcomes. In addition, we examine what motivates people to invest economic resources to monitor decision-making processes. Our results show that a large majority of individuals is willing to pay for a right to monitor decision-making processes over distributional outcomes despite pecuniary incentives to the contrary. We find that electronic third-party surveillance does not affect distributional outcomes in a three-person ultimatum game. Finally, we find that third- parties are the most over-optimistic about their own outcomes when they have a chance to signal their presence to the negotiators. Our results suggest that people may overestimate the impact of transparent decision-making on economic outcomes. |
| Keywords: | bargaining, communication, distributional preferences, experiment, negotiations, surveillance |
| JEL: | C72 C92 D01 D03 D83 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:15-01&r=exp |
| By: | Jean-Christian Tisserand (CRESE) |
| Abstract: | The ultimatum game undoubtely lists the largest experimental literature of the past three decades. In this article, we focus on the choice of the proposer of the ultimatum game and the explanatory variables that may influence the amount offered. We perform a meta-analysis with a total of 97 observations from simple ultimatum game gathered through 42 articles published between 1983 and 2012. While the theoretical prediction announces that the equilibrium offer should be zero, our results show that the weighted average offer is 42.3% of the amount at stake. Among the numerous variables studied, only being an economist has a significant impact on the amounts offered. |
| Keywords: | Meta-analysis, Ultimatum game, Experimental economics, Microeconomics, Behavioral economics |
| JEL: | C78 C91 D03 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:0802032&r=exp |
| By: | Christopher Boyce (Management School, University of Stirling); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Nick Hanley (Department of Geography and Sustainable Development, University of St Andrews); Charles Noussair (Department of Economics, Tilburg University); Michael Townsend (National Institute for Water and Atmosphere Ltd); Steve Tucker (School of Management, University of Waikato) |
| Abstract: | This paper tests whether changes in “incidental emotions” lead to changes in economic choices. Incidental emotions are experienced at the time of an economic decision but are not part of the payoff from a particular choice. As such, the standard economic model predicts that incidental emotions should not affect behavior, yet many papers in the behavioral science and psychology literatures find evidence of such effects. In this paper, we used a standard procedure to induce different incidental emotional states in respondents, and then carried out a choice experiment on changes to an environmental good (beach quality). We estimated preferences for this environmental good and willingness to pay for changes in this good, and tested whether these were dependent on the particular emotional state induced. We also tested whether choices became more or less random when emotional states were induced, based on the notion of randomness in a standard random utility model. Contrary to our a-priori hypothesis we found no significant evidence of treatment effects, implying that economists need not worry about the effects of variations in incidental emotions on preferences and the randomness of choice, even when there is measured (induced) variation in these emotions. |
| Keywords: | choice experiments, behavioral economics, ecosystem services, emotions, rationality |
| JEL: | Q51 Q57 D03 D87 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2015-13&r=exp |
| By: | Christopher Boyce (Management School,University of Stirling, Scotland, UK); Mikolaj Czajkowski (University of Warsaw, Department of Economic Sciences, Poland); Nick Hanley (Department of Geography and Sustainable Development, University of St. Andrews); (Department of Geography and Sustainable Development, University of St. Andrews); Charles Noussair (Department of Economics, Tilburg University, the Netherlands); Michael Townsend (National Institute for Water and Atmosphere Ltd, Hamilton, New Zealand); Steve Tucker (School of Management, University of Waikato, New Zealand) |
| Abstract: | This paper tests whether changes in “incidental emotions” lead to changes in economic choices. Incidental emotions are experienced at the time of an economic decision but are not part of the payoff from a particular choice. As such, the standard economic model predicts that incidental emotions should not affect behavior, yet many papers in the behavioral science and psychology literatures find evidence of such effects. In this paper, we used a standard procedure to induce different incidental emotional states in respondents, and then carried out a choice experiment on changes to an environmental good (beach quality). We estimated preferences for this environmental good and willingness to pay for changes in this good, and tested whether these were dependent on the particular emotional state induced. We also tested whether choices became more or less random when emotional states were induced, based on the notion of randomness in a standard random utility model. Contrary to our a-priori hypothesis we found no significant evidence of treatment effects, implying that economists need not worry about the effects of variations in incidental emotions on preferences and the randomness of choice, even when there is measured (induced) variation in these emotions. |
| Keywords: | choice experiments, behavioral economics, ecosystem services, emotions, rationality |
| JEL: | Q51 Q57 D03 D87 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:sss:wpaper:2015-08&r=exp |
| By: | Francesco Bogliacino; Iván González Gallo |
| Abstract: | In this article we test the main hypotheses of the behavioural theory of entrepreneurship, namely that risk preferences are reference-dependent, that entrepreneurs are not ambiguity-averse and that aspirations act as a reference point in the sense postulated by Prospect Theory. We use an experimental methodology to elicit risk preferences and we manipulate aspirations by means of a psychological priming technique to guarantee exogenous variation of the independent variable. We also assess the relationship between risk preferences and correlates at the firm and individual level. Although causality cannot be established, as expected the risk preferences are mainly related with individual characteristics. If we look at the relationship between biases and firm performance we see some effect of loss aversion in interaction with personality traits (locus of control) and level of risk propensity. Our experimental fieldwork has been conducted in Colombia. |
| Keywords: | Experiments, Prospect Theory, Aspirations, Entrepreneurship. |
| JEL: | C93 D81 L26 O54 |
| Date: | 2015–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:col:000178:012652&r=exp |
| By: | Desai, Naman |
| Abstract: | This paper examines the effect of SAS No. 99 recommended group brainstorming on the auditor’s search for potential material misstatements and assessments of fraud risk in the presence of different levels of pressures and opportunities. We argue that there are potential differences in the auditor’s evaluation of pressures and opportunities while searching for potential material misstatements and assessing fraud risk, and these differences could be exaggerated when auditors brainstorm in groups. The results of a 2 x 2 x 2 between-subjects experiment (in which pressures and opportunities were manipulated at high and low levels, and brainstorming occurred individually or in three member audit teams) indicate that auditors found a significantly greater number of potential material misstatements when they observed high pressures and low opportunities compared to when they observed low pressures and high opportunities (even though there was an equal number of potential material misstatements across in all the treatments). Furthermore, this difference was significantly increased when auditors performed group brainstorming. Similarly, auditors’ assessments of fraud risk were significantly higher when they observed high pressures and low opportunities as compared to when they observed low pressures and high opportunities. Again, this difference was significantly increased when auditors performed group brainstorming. |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:13318&r=exp |
| By: | Huck, Steffen; Lünser, Gabriele K.; Tyran, Jean-Robert |
| Abstract: | We experimentally examine the effects of price competition in markets for expe-rience goods where sellers can build up reputations for quality. We compare price competition to monopolistic markets and markets where prices are exogenously fixed (somewhere between the endogenous oligopoly and monopoly prices). While oligopolies benefit consumers regardless of whether prices are fixed or endoge-nously chosen, we find that price competition lowers efficiency as consumers pay too little attention to reputation for quality. This provides empirical support to recent models in behavioral industrial organization that assume that consumers may with increasing complexity of the market place focus on selected dimensions of products. We also find that consumers' attention to quality and, hence, provided quality drops when regulated prices are set at levels that are too low. |
| Keywords: | Markets,Price competition,Behavioral IO,Price regulation,Reputation,Trust,Moral hazard,Experience goods |
| JEL: | C72 C90 D40 D80 L10 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2013312r&r=exp |
| By: | J.M.J. Delnoij; K.J.M. De Jaegher; S. Rosenkranz |
| Abstract: | This paper experimentally analyzes how consumers decide between entering a fixed price, an ascending auction or a BIN auction. We find that such entry decisions depend both on potential payoffs (price aspects) and consumer characteristics (non-price aspects). For values smaller than or equal to BIN prices, subjects are more likely to enter a mechanism that involves bidding. Conversely, for values greater than BIN prices, subjects are more likely to enter a mechanism that involves immediate buying. We further find that price aspects mainly play a role for values greater than BIN prices, whereas non-price aspects play a role for values smaller than or equal to BIN prices. Impatience makes subjects less likely to enter a mechanism involving bidding, whereas sensation seekingness and regret make subjects more likely to enter such a mechanism. Gender also has an impact on entry decisions. |
| Keywords: | Entry decisions, Fixed price, Ascending auction, Buy-It-Now auction |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:1402&r=exp |
| By: | Eddie Dekel; Michele Piccione |
| Abstract: | Under sequential voting, voting late enables conditioning on which candidates are viable, while voting early can influence the field of candidates. But the latter effect can be harmful: shrinking the field increases not only the likelihood that future voters vote for one's favorite candidate, but also that they vote for an opponent. Specifically, if one's favorite candidate is significantly better than all others then early voting is disadvantageous and all equilibria are equivalent to simultaneous voting. Conversely, when some other candidate is almost as good then any Markov, symmetric, anonymous equilibrium involves sequential voting (and differs from simultaneous voting). |
| JEL: | D72 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:61288&r=exp |
| By: | Hirokazu Yoshikawa; Diana Leyva; Catherine E. Snow; Ernesto Treviño; M. Clara Barata; Christina Weiland; Celia J. Gomez; Lorenzo Moreno; Andrea Rolla; Nikhit D’Sa; Mary Catherine Arbour |
| Abstract: | The authors assessed impacts on classroom quality and on 5 child language and behavioral outcomes of a 2-year teacher professional-development program for publicly funded prekindergarten and kindergarten in Chile. This cluster-randomized trial included 64 schools (child N = 1,876). The program incorporated workshops and in-classroom coaching. We found moderate to large positive impacts on observed emotional and instructional support as well as classroom organization in prekindergarten classrooms after 1 year of the program. After 2 years of the program, moderate positive impacts were observed on emotional support and classroom organization. No significant program impacts on child outcomes were detected at posttest (1 marginal effect, an increase in a composite of self-regulation and low problem behaviors, was observed). Professional development for preschool teachers in Chile can improve classroom quality. More intensive curricular approaches are needed for these improvements to translate into effects on children. |
| Keywords: | Teacher Professional Development, Chile, Preschool Classroom Quality, Child Outcomes, International, Early Childhood |
| JEL: | F Z |
| Date: | 2015–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:79a54e7d62e84932a7ccf214454adb09&r=exp |
| By: | Arthur Schram; Jordi Brandts; Klarita Gërxhani |
| Abstract: | Competition typically involves two main dimensions, a rivalry for resources and the ranking of relative performances. If socially recognized, the latter yields a ranking in terms of social status. The rivalry of resources resulting from interacting under a competitive incentive scheme has been found to negatively affect women’s performance relative to that of men. However, little is known about gender differences in the performance consequences of status ranking. We find that in anticipation of ranking women perform more poorly than men while there is no performance difference without status ranking. This is important because recent studies argue that women may be underrepresented in top positions because they shy away from –and sometimes underperform under– competition. It has been argued that adapting the institutions under which competition takes place could improve women’s position. Our results suggest that increased participation in competitive environments could harm women’s labor market success along a different channel. We thus highlight an overlooked impediment for workplace promotion of women that may have major implications for the design of labor market competitions. |
| Keywords: | status, competition, gender, experiments |
| JEL: | C91 J16 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:817&r=exp |