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on Experimental Economics |
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Issue of 2015‒04‒11
fourteen papers chosen by |
| By: | Carpenter, Jeffrey P. (Middlebury College); Matthews, Peter Hans (Middlebury College) |
| Abstract: | There has been little systematic study of the mechanisms typically used to raise money for charity. One of the most common is the simple raffle in which participants purchase chances to win a prize at a constant price. We conduct a field experiment randomly assigning participants to four raffle treatments to examine the effectiveness of alternative incentive schemes designed to encourage either participation or volume. Our results confirm the importance of incentives in that we find revenue gains are available on both margins. Our experiment, and others like it, illustrates the power of field experiments to inform fundraising choices. |
| Keywords: | philanthropy, fundraising, incentives, public good, raffle, Tullock contest, field experiment |
| JEL: | H41 D03 D64 C93 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8952&r=exp |
| By: | Elwyn Davies; Marcel Fafchamps |
| Abstract: | This paper uses experimental methods to study the impact of limited enforcement and reputation on employer-worker relations in labour markets in Ghana. Participants, students recruited from universities in Accra, Ghana are designated as either employers or workers and play a gift-exchange game on a tablet computer. In this game, employers make wage offers to workers, who can then choose to accept or reject and, after accepting, what effort level to exert. Five treatments were used to assess the impact of limited enforcement, competition between employers and reputation. Each participants plays four games, consisting of five trading periods. We find different results from earlier experiments in developed countries: while these experiments have found strong evidence for relational contracting and conditional reciprocity, we do not find evidence for this. We find that a subgroup of workers exerts very low effort levels, but that this low effort of the workers is not punished by employers, who are not responsive in their wage offers to what the workers did previously. As a result, on average, the workers capture most of the profits. Introducing competition or a multilateral reputation mechanism does not significantly improve this. |
| Keywords: | Relational contracting, conditional reciprocity, gift-exchange game, punishment strategies, Ghana |
| JEL: | C71 D2 D86 E24 O16 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2015-08&r=exp |
| By: | A. Stefano Caria; Marcel Fafchamps |
| Abstract: | We run an artefactual field experiment in rural India which tests whether farmers can create efficient networks in a repeated link formation game, and whether group categorization results in homophily and loss of network efficiency. We find that the efficiency of the networks formed in the experiment is significantly lower than the efficiency which could be achieved under selfish, rational play. Many individual decisions are consistent with selfish rationality and with a concern for overall welfare, but the tendency to link with the ‘most popular’ farmer in the network causes large efficiency losses. When information about group membership is disclosed, social networks become more homophilous, but not significantly less efficient. Networks play an important role in the diffusion of innovations in developing countries. If they are inefficiently structured, there is scope for development policies that support diffusion. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2015-07&r=exp |
| By: | Martin Daniel Siyaranamual (Department of Economics, Padjadjaran University) |
| Abstract: | Social interactions may encourage the cooperative behaviours by triggering either self-image concerns (when one sees others’ decisions without being seen) or social-image concerns (when one’s decision is seen by others). A laboratory experiment is designed to compare these two concerns directly, using a four-players finitely repeated public goods experiment on two directed star networks, self-image and social-image networks. The comparison of the players voluntary contributions in both types of networks reveals that their contributing behaviours are statistically indistinguishable. However, the players who belong to the self-image network are more willing to conform with the group behaviours, meaning that they will increase (reduce) the contributions if theirs are below (above) their groups average. Furthermore, I also find evidence that the contributing behaviours are more stable in the self-image networks than in the social-image network. |
| Keywords: | Social-image; Self-image; Directed network; Public good experiment |
| JEL: | C92 D19 H41 Z13 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:201501&r=exp |
| By: | Philippe Aghion; Ernst Fehr; Richard Holden; Tom Wilkening |
| Abstract: | In this paper we conduct a laboratory experiment to test the extent to which Moore and Repullo's subgame perfect implementation mechanism induces truth-telling in practice, both in a setting with perfect information and in a setting where buyers and sellers face a small amount of uncertainty regarding the good's value. We find that Moore-Repullo mechanisms fail to implement truth-telling in a substantial number of cases even under perfect information about the valuation of the good. This failure to implement truthtelling is due to beliefs about the irrationality of one's trading partner. Therefore, although the mechanism should - in theory - provide incentives for truth-telling, many buyers in fact believe that they can increase their expected monetary payoff by lying. The deviations from truth-telling become significantly more frequent and more persistent when agents face small amounts of uncertainty regarding the good's value. Our results thus suggest that both beliefs about irrational play and small amounts of uncertainty about valuations may constitute important reasons for the absence of Moore-Repullo mechanisms in practice. |
| Keywords: | Implementation theory, incomplete contracts, experiments |
| JEL: | D23 D71 D86 C92 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:189&r=exp |
| By: | Bjedov, Tjaša (University of Fribourg); Madies, Thierry (University of Fribourg); Villeval, Marie Claire (CNRS, GATE) |
| Abstract: | We study the impact of communication on behavior in a two-stage coordination game with asymmetric payoffs. We test experimentally whether individuals can avoid a head-to-head confrontation by means of coordinated strategies. In particular we analyze whether and how quickly a conflict-avoidance take-turn strategy can emerge. First, our results show that players learn to solve the conflict by choosing opposite options at both stages of the game. Second, many adopt a take-turn strategy to sustain coordination over time and alleviate the inequality induced by the asymmetry of payoffs. Third, communication increases the likelihood of conflict resolution even when a single pair member has the right to communicate. |
| Keywords: | coordination, communication, turn taking, conflict, experiment |
| JEL: | C91 D74 L15 H71 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8953&r=exp |
| By: | James C. Cox; Wafa Hakim Orman |
| Abstract: | Trust and trustworthiness are crucial to amelioration of social dilemmas. Distrust and malevolence aggravate social dilemmas. We use an experimental moonlighting game with a sample of the U.S. population, oversampling immigrants, to observe interactions between immigrants and native-born Americans in a social dilemma situation that can elicit both benevolent and malevolent actions. We survey participants in order to relate outcomes in the moonlighting game to demographic characteristics and traditional, survey-based measures of trust and trustworthiness and show that they are strongly correlated. Overall, we find that immigrants are as trusting as native-born U.S. citizens when they interact with native-born citizens but do not trust other immigrants. Immigrants appear to be less trustworthy overall but this finding disappears when we control for demographic variables. Women and older people are less likely to trust but no more or less trustworthy. Highly religious immigrants are less trusting and less trustworthy than both other immigrants and native-born Americans. |
| Keywords: | experiment, trust, trustworthiness, religiosity, immigrants, native-born |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2015-03&r=exp |
| By: | GRANDJEAN, Gilles (CEREC, Université Saint-Louis - Bruxelles); MANTOVANI, Marco (CEREC, Université Saint-Louis - Bruxelles; DEMS, University of Milan - Bicocca); MAULEON, Ana (CEREC, Université Saint-Louis - Bruxelles; Universit√© catholique de Louvain, CORE, Belgium); VANNETELBOSCH, Vincent (CEREC, Université Saint-Louis - Bruxelles; Université catholique de Louvain, CORE, Belgium) |
| Abstract: | The paper analyzes the role of the structure of communication - i.e. who is talking with whom - on the choice of messages, on their credibility and on actual play. We run an experiment in a three-player coordination game with Pareto ranked equilibria, where a pair of agents has a profitable joint deviation from the Pareto-dominant equilibrium. According to our analysis of credibility, the subjects should communicate and play the Pareto optimal equilibrium only when communication is public. When pair of agents exchange messages privately, the players should play the Pareto dominated equilibrium and disregard communication. The experimental data conform to our predictions: the agents reach the Pareto-dominant equilibrium only when announcing to play it is credible. When private communication is allowed, lying is prevalent, and players converge to the Pareto-dominated equilibrium. Nevertheless, at the individual level, players’ beliefs and choices tend to react to messages even when these are non-credible. |
| Date: | 2014–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2014042&r=exp |
| By: | Jacob LaRiviere (Department of Economics, University of Tennessee); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Nick Hanley (Department of Geography and Sustainable Development, University of St Andrews); Katherine Simpson (Economics Division, University of Stirling) |
| Abstract: | We use a novel field experiment which jointly tests two implicit assumptions of updating models in a joint framework: that new information leads to new knowledge and that new knowledge can affect economic decisions. In the experiment, we elicit subjects’ prior knowledge state about a good’s attributes, exogenously vary how much new information about good attributes we provide to subjects, elicit subjects’ valuation for the good, and elicit posterior knowledge states about the same good attributes. Testing for changes in knowledge jointly with changes in preferences allows us to horserace updating models more completely than previous studies since we observe ex ante and ex post knowledge states. Our results are consistent with a model of incomplete learning, fatigue and either confirmation bias or costly search coupled with unbiased priors. |
| Keywords: | Learning, Information, Bayesian Updating, Behavioral Economics |
| JEL: | D83 D81 Q51 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2015-14&r=exp |
| By: | Kudo, Yuya; Shonchoy, Abu S.; Takahashi, Kazushi |
| Abstract: | Despite continuous efforts to improve the coverage, the access to electricity remains insufficient in many developing countries, particularly in geographically challenged locations, due mostly to the high cost of grid extension. To rigorously investigate the effectiveness of solar products as an alternative in remote areas, we conducted a randomized controlled trial in river islands of northern Bangladesh where no grid-based electricity is available. We found that solar lanterns significantly increased home study hours among schooled children, especially in the night and before exams. School attendance rate also initially increases due to the provision of solar lamps, although such effects fade away over time. The increased study time and initial school attendance rate, however, did not improve children's exam results. We also found marginal improvements on health-related indicators, such as eye redness and irritation, but negligible impacts on respiratory indicators. Households that received solar lanterns substituted the traditional lighting sources with modern technology, leading to a significant decrease in annual biomass fuel consumptions, particularly kerosene. Finally, treated households showed a greater self-reported willingness to purchase solar products compared with the control group. |
| Keywords: | Bangladesh, Solar energy, Electric power, Household, Children, Education, Poverty |
| JEL: | O13 O18 Q41 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper502&r=exp |
| By: | James Berry; Dean Karlan; Menno Pradhan |
| Abstract: | We evaluate, using a randomized trial, two school-based financial literacy education programs in government-run primary and junior high schools in Ghana. One program integrated financial and social education, whereas the second program only offered financial education. Both programs included a voluntary after-school savings club that provided students with a locked money box. After nine months, both programs had significant impacts on savings behavior relative to the control group, mostly because children moved savings from home to school. We observed few other impacts. We do find that financial education, when not accompanied by social education, led children to work more compared to the control group, whereas no such effect is found for the integrated curriculum; however, the difference between the two treatment effects on child labor is not statistically significant. |
| JEL: | D14 J22 J24 O12 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21068&r=exp |
| By: | Dalton, P.S. (Tilburg University, Center For Economic Research); Gonzalez Jimenez, V.H. (Tilburg University, Center For Economic Research); Noussair, C.N. (Tilburg University, Center For Economic Research) |
| Abstract: | Abstract: To boost employees’ performance, firms often offer monetary bonuses when production goals are reached. However, the evidence suggests that the particular level of a goal is critical to the effectiveness of this practice. Goals must be challenging yet achievable. Computing optimal goals when employees have private information about their own abilities is often not feasible for the firm. To solve this problem, we propose a compensation scheme in which workers set their own production goals. We provide a simple model of self-chosen goals and test its predictions in the laboratory. The evidence we<br/>find in the laboratory confirms our model’s predictions for men, but not for women. Men exert greater effort under the self-chosen goal contract system than under a piece rate contract. In contrast, women perform worse under the self-chosen goal contract. Further analysis suggests that this is because women fail to set goals that are challenging enough, because they are less likely to update their goals to take into account their improving performance as they repeat the task. |
| Keywords: | contracts; bonus; endogenous goals; productivity; intrinsic motivation; challenge seeking; gender differences |
| JEL: | C91 C92 J16 J24 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:35daceab-34bc-4bd2-b330-ec03da6b06b7&r=exp |
| By: | Pedro Carneiro; Oswald Koussihouèdé; Nathalie Lahire; Costas Meghir; Corina Mommaerts |
| Abstract: | The impact of school resources on the quality of education in developing countries may depend crucially on whether resources are targeted efficiently. In this paper we use a randomized experiment to analyze the impact of a school grants program in Senegal, which decentralized a portion of the country’s education budget. We find large positive effects on test scores at younger grades that persist at least two years. We show that these effects are concentrated among schools that focused funds on human resources improvements rather than school materials, suggesting that teachers and principals may be a central determinant of school quality. |
| JEL: | H52 I22 I25 O15 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21063&r=exp |
| By: | Jensen, Bente (Aarhus University); Jensen, Peter (Aarhus University); Rasmussen, Astrid Würtz (Aarhus University) |
| Abstract: | From 2011 to 2013 a randomized controlled trial has been run in Danish preschools to obtain evidence on improvements of early childhood education by providing training to the preschool teachers. The purpose of the intervention is to improve child socio-emotional outcomes (measured by SDQ), especially for socially disadvantaged children. The intervention preschools received extra training of the preschool teachers, whereas control preschools did not receive any training. The results show improvements in several subscales of the SDQ scale. However, the intervention proves less beneficial for socially disadvantaged children, in particular as a consequence of unfavorable preschool characteristics. |
| Keywords: | preschools, childcare, child development, RCT, professional development, intervention |
| JEL: | I21 J13 J24 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8957&r=exp |