nep-exp New Economics Papers
on Experimental Economics
Issue of 2015‒04‒25
39 papers chosen by

  1. Peers at Work: From the Field to the Lab By Roel van Veldhuizen; Hessel Oosterbeek; Joep Sonnemans
  2. Can Violence Harm Cooperation? Experimental Evidence By De Luca, Giacomo; Sekeris, Petros; Spengler, Dominic
  3. Other-regarding Preferences, Group Identity and Political Participation: An Experiment By Pedro Robalo; Arthur Schram; Joep Sonnemans
  4. Risk, Uncertainty and Entrepreneurship: Evidence From a Lab-in-the-Field Experiment By Martin Koudstaal; Randolph Sloof; Mirjam van Praag
  5. Taking Punishment into Your Own Hands: An Experiment By Peter Duersch; Julia Müller
  6. Teaching through television: Experimental evidence on entrepreneurship education in Tanzania. By Bjorvatn, Kjetil; Cappelen, Alexander W.; Sekei, Linda Helgesson; Sørensen, Erik Ø.; Tungodden, Bertil
  7. Superstars need Social Benefits: An Experiment on Network Formation By Boris van Leeuwen; Theo Offerman; Arthur Schram
  8. Strong intrinsic motivation By Dessi, Roberta; Ristichini, Aldo
  9. Bidding for Nothing? The Pitfalls of overly Neutral Framing By Peter Dürsch; Julia Muller
  10. The Power of a Bad Example - A Field Experiment in Household Garbage Disposal By Robert Dur; Ben Vollaard
  11. Sadder but wiser: The Effects of Affective States and Weather on Ambiguity Attitudes By Aurélien Baillon; Philipp Koellinger; Theresa Treffers
  12. A Field Experiment in Motivating Employee Ideas By Susanne Neckermann; Michael Gibbs; Christoph Siemroth
  13. When do Fiscal Consolidations Lead to Consumption Booms? Lessons from a Laboratory Experiment By Martin Geiger; Wolfgang Luhan; Johann Scharler
  14. The Flipside of Comparative Payment Schemes By Thomas Buser; Anna Dreber
  15. Does Relative Grading help Male Students? Evidence from a Field Experiment in the Classroom By Eszter Czibor; Sander Onderstal; Randolph Sloof; Mirjam van Praag
  16. Effectiveness of regulatory interventions on firm behavior: a randomized field experiment with e-commerce firms By Huizingh, Eelko; Mulder, Machiel
  17. Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure By Ginger Zhe Jin; Michael Luca; Daniel Martin
  18. Ability Dispersion and Team Performance By Sander Hoogendoorn; Simon C. Parker; Mirjam van Praag
  19. Equilibrium Selection in Experimental Cheap Talk Games By Adrian de Groot Ruiz; Theo Offerman; Sander Onderstal
  20. Audit Rates and Compliance: A Field Experiment in Long-term Care By Maarten Lindeboom; Bas van der Klaauw; Sandra Vriend
  21. A Simultaneous Analysis of Turnout and Voting under Proportional Representation: Theory and Experiments By Aaron Kamm; Arthur Schram
  22. The Impact of Losing in a Competition on the Willingness to seek Further Challenges By Thomas Buser
  23. Knowing that You Matter, Matters! The Interplay of Meaning, Monetary Incentives, and Worker Recognition By Michael Kosfeld; Susanne Neckermann; Xiaolan Yang
  24. Program evaluation and spillover effects By Angelucci,M.; Di Maro,Vincenzo
  25. The Impact of Gender Diversity on the Performance of Business Teams: Evidence from a Field Experiment By Sander Hoogendoorn; Hessel Oosterbeek; Mirjam van Praag
  26. Sensitive survey questions: measuring attitudes regarding female circumcision through a list experiment By De Cao, Elisabetta; Lutz, Clemens
  27. Sorting through affirmative action: Three field experiments in Colombia By Ibañez, Marcela; Rai, Ashok; Riener, Gerhard
  28. Reflexivity, Expectations Feedback and almost Self-fulfilling Equilibria: Economic Theory, Empirical Evidence and Laboratory Experiments By Cars Hommes
  29. Choosing Voting Systems behind the Veil of Ignorance: A Two-Tier Voting Experiment By Matthias Weber
  30. Output Commitment through Product Bundling: Experimental Evidence By Jeroen Hinloopen; Wieland Mueller; Hans-Theo Normann
  31. Expectations in Experiments By Florian Wagener
  32. Parental human capital and effective school management : evidence from The Gambia By Blimpo,Moussa P.; Evans,David; Lahire,Nathalie
  33. Mode effects in mixed-mode economic surveys: Insights from a randomized experiment By Hsu, Joanne W.; McFall, Brooke H.
  34. Behaviorally Rational Expectations and Almost Self-Fulfilling Equilibria By Cars Hommes
  35. Watched by a Stranger: Influence of Observation on Individual Decision Making under Risk and Ambiguity By Tymula, Agnieszka; Whitehair, Jackson
  36. Ethnic Diversity and Team Performance: A Field Experiment By Sander Hoogendoorn; Mirjam van Praag
  37. Are Chinese Individuals prone to Money Illusion? By Heleen Mees; Philip Hans Franses
  38. An Experimental Investigation of Wage Taxation and Unemployment in Closed and Open Economies By Arno Riedl; Frans van Winden
  39. Overreporting vs. Overreacting: Commuters' Perceptions of Travel Times By Stefanie Peer; Jasper Knockaert; Paul Koster; Erik Verhoef

  1. By: Roel van Veldhuizen (WZB Berlin Social Science Center); Hessel Oosterbeek (Universiteit van Amsterdam); Joep Sonnemans (Universiteit van Amsterdam)
    Abstract: In an influential study, Mas and Moretti (2009) find that “worker effort is positively related to the productivity of workers who see him, but not workers who do not see him”. They interpret this as evidence that social pressure can reduce free riding. In this paper we report an attempt to reproduce the findings of Mas and Moretti in a lab experiment. Lab experiments have the advantage that they can shut down alternative channels through which workers can influence the productivity of colleagues whom they observe. Although the subjects in our experiment are aware of the productivity of others and although there is sufficient scope for subjects to vary their productivity, we find no evidence of the type of peer effects reported by Mas and Moretti. This suggests that their findings are less generalizable than has been assumed.
    Keywords: peer effects, experiment, laboratory experiment
    JEL: C91 J24
    Date: 2014–04–29
  2. By: De Luca, Giacomo; Sekeris, Petros; Spengler, Dominic
    Abstract: While folk theorems for dynamic renewable common pool resource games sustain cooperation as an equilibrium, the possibility of reverting to violence to appropriate the resource destroys the incentives to cooperate, because of the expectation of conflict when resources are sufficiently depleted. In this paper, we provide experimental evidence that individuals behave according to the theoretical predictions. For high stocks of resources, when conflict is a highly costly activity, participants cooperate less than in the control group, and they play the non-cooperative action with higher frequency. This comes as a consequence of the (correct) anticipation that, when resources run low, the conflict option is used by a large share of participants.
    Keywords: Experiment, Dynamic Game, Cooperation
    JEL: C72 C73 C91 D74
    Date: 2015–04–15
  3. By: Pedro Robalo (CREED, University of Amsterdam); Arthur Schram (CREED, University of Amsterdam); Joep Sonnemans (CREED, University of Amsterdam)
    Abstract: We experimentally study the relationship between other-regarding preferences, group identity and political participation. In doing so, we propose a novel group identity induction procedure that succeeds in creating environments where in-group bias is either high or low. At the individual level, we find that both altruistic subjects and group identifiers participate above average. The most competitive subjects participate much less often than other types, while the most altruistic subjects manage to sustain high participation levels. At the aggregate level, we observe only few statistically significant differences between environments where group identity is high and low. This suggests that the higher participation observed in field settings for close-knit (political) groups might be due to underlying mobilization processes rather than a heightened sense of group-belonging.
    Keywords: Group identity, Other-regarding preferences, Political participation, Participation Game, Experiment
    JEL: A13 C91 C92 D72
    Date: 2013–06–11
  4. By: Martin Koudstaal (University of Amsterdam); Randolph Sloof (University of Amsterdam, the Netherlands); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: Theory predicts that entrepreneurs have distinct attitudes towards risk and uncertainty, but empirical evidence is mixed. To better understand the unique behavioral characteristics of entrepreneurs and the causes of these mixed results, we perform a large ‘lab-in-the-field’ experiment comparing entrepreneurs to managers – a suitable comparison group – and employees (n = 2288). The results indicate that entrepreneurs perceive themselves as less risk averse than managers and employees, in line with common wisdom. However, when using experimental incentivized measures, the differences are subtler. Entrepreneurs are only found to be unique in their lower degree of loss aversion, and not in their risk or ambiguity aversion. This combination of results might be explained by our finding that perceived risk attitude is not only correlated to risk aversion but also to loss aversion. Overall, we therefore suggest using a broader definition of risk that captures this unique feature of entrepreneurs; their willingness to risk losses.
    Keywords: Entrepreneurs, managers, risk aversion, loss aversion, ambiguity aversion, lab-in- the field experiment
    JEL: L26 C93 D03
    Date: 2014–10–17
  5. By: Peter Duersch (University of Heidelberg); Julia Müller (Erasmus University Rotterdam)
    Abstract: In a punishment experiment, we separate the demand for punishment in general from the demand to conduct punishment personally. Subjects experience an unfair split of their earnings from a real effort task and have to decide on the punishment of the person who determines the distribution. First, it is established whether the allocator's payoff is reduced and, afterwards, subjects take part in a second price auction for the right to (physically) carry out the act of payoff reduction themselves. Subjects bid positive amounts and are happier if they get to punish personally.
    Keywords: personal punishment, real effort task, experiment, auction
    JEL: C92 D03
    Date: 2013–05–27
  6. By: Bjorvatn, Kjetil (Dept. of Economics, Norwegian School of Economics and Business Administration); Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Sekei, Linda Helgesson (Development Pioneer Consultants); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Can television be used to teach and foster entrepreneurship among youth in developing countries? We report from a randomized control field experiment of an edutainment show on entrepreneurship broadcasted over almost three months on national television in Tanzania. The field experiment involved more than two thousand secondary school students, where the treatment group was incentivized to watch the edutainment show. We find short-term evidence of the edutainment show inspiring the viewers to become more interested in entrepreneurship and business and shaping non-cognitive traits such as risk- and time preferences, and long-term evidence of more business startups; in general, the treatment effects are more pronounced for the female viewers. However, we also find evidence that the encouragement of entrepreneurship discouraged investment in schooling;administrative data show a negative treatment effect on school performance and long-term survey data show that fewer treated students continue schooling.
    Keywords: Field experiment; edutainment; developing countries
    JEL: I25 O10
    Date: 2015–04–16
  7. By: Boris van Leeuwen (University of Amsterdam); Theo Offerman (University of Amsterdam); Arthur Schram (University of Amsterdam)
    Abstract: We investigate contributions to the provision of public goods on a network when efficient provision requires the formation of a star network. We provide a theoretical analysis and study behavior in a controlled laboratory experiment. In a 2x2 design, we examine the effects of group size and the presence of (social) benefits for incoming links. We find that social benefits are highly important. They facilitate convergence to equilibrium networks and enhance the stability and efficiency of the outcome. Moreover, in large groups social benefits encourage the formation of superstars: star networks in which the core contributes more than expected in the stage-game equilibrium. We show that this result is predicted by a repeated game equilibrium.
    Keywords: Network formation, networked public goods, peer production, social benefits, open source software
    JEL: C91 D85 H41
    Date: 2013–08–08
  8. By: Dessi, Roberta; Ristichini, Aldo
    Abstract: A large literature in psychology, and more recently in economics, has argued that monetary rewards can reduce intrinsic motivation. We investigate whether the negative impact persists when intrinsic motivation is strong, and test this hypothesis experimentally focusing on the motivation to undertake interesting and challenging tasks, informative about individual ability. We find that this type of task can generate strong intrinsic motivation, that is impervious to the effect of monetary incentives, particularly when the individual is "racing against himself". In our experiments, monetary incentives have no significant impact on performance. In a second experiment using the same kind of task but a setting designed to weaken intrinsic motivation, monetary incentives do have a significant, positive, effect on performance. This result confirms that our experimental setup may, with appropriate conditions, replicate the known crowding out effects.
    Date: 2015–04
  9. By: Peter Dürsch (University of Heidelberg, Germany); Julia Muller (Erasmus University Rotterdam, the Netherlands.)
    Abstract: Neutral framing is a standard tool of experimental economics. However, overly neutral instructions, which lack any contextual clues, can lead to strange behavior. In a contextless second price auction for a meaningless good, a majority of subjects enter positive bids - a case of cognitive experimenter demand effect. Subjects bid positive amounts because this is what they think they are tasked with in the experiment. Adding a second auction that has a context drastically reduces the positive bids in the meaningless first auction by reducing the cognitive experimenter demand effect.
    Keywords: Context, Neutral Framing, Experimenter Demand Effect, Experiment, Second-Price Auction
    JEL: C90 D44
    Date: 2014–05–25
  10. By: Robert Dur (Erasmus University Rotterdam, CESifo, and IZA); Ben Vollaard (Tilburg University, CentER, and TILEC)
    Abstract: Field-experimental studies have shown that people litter more in more littered environments. Inspired by these findings, many cities around the world have adopted policies to quickly remove litter. While such policies may prevent people from following the bad example of litterers, they may also invite free-riding on public cleaning services. We are the first to show that both forces are at play. We conduct a natural field experiment where, in a randomly assigned part of a residential area, the frequency of cleaning was drastically reduced during a three-month period. We find evidence that some people start to clean up after themselves when public cleaning services are diminished. However, the tendency to litter more dominates. We also find that these responses continue to exist for some time after the treatment has ended. <P> Forthcoming in <I>Environment & Behavior</I>.
    Keywords: littering, public services, free-riding, field experiment
    JEL: C93 H40 K42
    Date: 2012–07–03
  11. By: Aurélien Baillon (Erasmus University Rotterdam); Philipp Koellinger (University of Amsterdam); Theresa Treffers (Technical University Eindhoven)
    Abstract: Many important decisions are made without precise information about the probabilities of the outcomes. In such situations, individual ambiguity attitudes influence decision making. The present study identifies affective states as a transient cause of ambiguity attitudes. We conducted two random-assignment, incentive-compatible laboratory experiments, varying subjects’ affective states. We find that sadness induces choices that are closer to ambiguity-neutral attitudes compared with the joy, fear, and control groups, where decision makers deviate more from payoff-maximizing behaviors and are more susceptible to likelihood insensitivity. We also find a similar pattern in a representative population sample where cloudy weather conditions on the day of the survey - a proxy for sad affect - correlate with more ambiguity-neutral attitudes. Our results may help explain re al-world phenomena such as financial markets that react to regular fluctuations in weather conditions.
    Keywords: Ambiguity attitude, affect, joy, fear, sadness, weather, experiment.
    JEL: D03 D81
    Date: 2014–04–01
  12. By: Susanne Neckermann (Erasmus University Rotterdam, the Netherlands, and ZEW, Germany); Michael Gibbs (University of Chicago, United States, and IZA, Germany); Christoph Siemroth (University of Mannheim, Germany)
    Abstract: We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas.
    Keywords: innovation, rewards, creativity, field experiment
    JEL: C93 J24 M52 O32
    Date: 2014–04–08
  13. By: Martin Geiger; Wolfgang Luhan; Johann Scharler
    Abstract: According to the expectations channel, a fiscal consolidation may give rise to less contractionary, or even expansionary effects on consumption, despite a decline in current disposable income. Intuitively, people may accumulate a stock of savings in anticipation of the consolidation and may start to reduce their savings to support consumption once it occurs. We design a laboratory experiment to study the conditions under which the expectations channel operates. Our results indicate that fiscal consolidations that occur in an unsustainable fiscal environment exert less contractionary effects on consumption, which supports the expectations channel. We also find that the expectations channel is more pronounced if the fiscal authority can convincingly commit to abstain from tax increases in the future, whereas increasing subjects' level of awareness by running a transparent policy has only little influence on the outcomes.
    Keywords: Expansionary Fiscal Consolidation, Expectations, Intertemporal Choice, Experimental Macroeconomics
    JEL: C91 E21 E62
    Date: 2015–04
  14. By: Thomas Buser (University of Amsterdam); Anna Dreber (Stockholm School of Economics, Sweden)
    Abstract: Comparative payment schemes and tournament-style promotion mechanisms are ubiquitous in the work place. We test experimentally whether they have a negative impact on the willingness to cooperate. Participants first perform in a simple task and then participate in a public goods game. The payment scheme for the task varies across treatment groups. Compared to a piece-rate scheme, individuals in a winner-takes-all competition are significantly less cooperative in the public goods game. A lottery treatment, where the winner is decided by luck, has the same effect. In a competition treatment with feedback, winners cooperate as little as participants in the other treatments, whereas losers cooperate even less. All three treatments lead to substantial losses in the realised social surplus from the public good while having no significant impact on performance. The public go ods game is payoff-independent and is played with a separate set of others; we therefore estimate a psychological effect of comparative pay on the willingness to cooperate.
    Keywords: comparative pay; competition; cooperation; gender differences; incentive schemes
    JEL: D03 D23 J16 J33
    Date: 2013–11–28
  15. By: Eszter Czibor (University of Amsterdam); Sander Onderstal (University of Amsterdam); Randolph Sloof (University of Amsterdam); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: The provision of non-pecuniary incentives in education is a topic that has received much scholarly attention lately. Our paper contributes to this discussion by investigating the effectiveness of grade incentives in increasing student performance. We perform a direct comparison of the two most commonly used grading practices: the absolute (i.e., criterion-referenced) and the relative (i.e., norm-referenced) grading schemes in a large-scale field experiment at a university. We hypothesize that relative grading, by creating a rank-order tournament in the classroom, provides stronger incentives for male students than absolute grading. In the full sample, we find weak support for our hypothesis. Among the more motivated students we find evidence that men indeed score significantly higher on the test when graded on a curve. Female students, irrespective of their motivation, do not increase their scores under relative grading. Since women slightly outperform men under absolute grading, grading on a curve actually narrows the gender gap in performance.
    Keywords: Education, Test performance, Grade incentives, Competition, Gender, Field experiment
    JEL: I21 I23 A22 D03 C93
    Date: 2014–08–28
  16. By: Huizingh, Eelko; Mulder, Machiel (Groningen University)
    Abstract: Economic regulators use a number of instruments to change the behavior of economic agents, but only limited evidence exists on the effectiveness of such regulatory interventions. We conduct a randomized field experiment to determine the effects of two interventions aimed at e-commerce firms by a regulatory authority in order to let these firms meet legal obligations regarding information disclosure to protect consumer interests. We measure the compliance behavior of e-commerce firms in both a treatment group and a control group before and after two interventions. The first regulatory intervention concerns sending personalized letters to firms (firm-specific guidance), whereas the second intervention includes a number of dedicated publications and presentations by the regulatory authority (industry guidance). We find that both of these interventions have hardly any effect, neither in the short term nor in the long term. We conclude that regulatory interventions in the form of providing only guidance on the legal rules to firms are not effective strategies to influence their behavior.
    Date: 2014
  17. By: Ginger Zhe Jin; Michael Luca; Daniel Martin
    Abstract: A central prediction of information economics is that market forces can lead businesses to voluntarily provide information about the quality of their products, yet little voluntary disclosure is observed in the field. In this paper, we demonstrate that the inconsistency between theory and reality is driven by a fundamental failure in consumer inferences when sellers withhold information. Using a series of laboratory experiments, we implement a simple disclosure game in which senders can verifiably report quality to receivers. We find that senders disclose less often than equilibrium would predict. Receivers are not sufficiently skeptical about undisclosed information – they underestimate the extent to which no news is bad news. Senders generally take advantage of receiver mistakes. We find that providing disclosure rates by quality score helps to improve receiver inferences.
    JEL: C9 D8 K2 L51
    Date: 2015–04
  18. By: Sander Hoogendoorn (CPB Netherlands Bureau for Economic Policy Analysis, the Netherlands); Simon C. Parker (Ivey Business School, Western University, London, Canada); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: What is the effect of dispersed levels of cognitive ability of members of a (business) team on their team’s performance? This paper reports the results of a field experiment in which 573 students in 49 teams start up and manage real companies under identical circumstances. We ensured exogenous variation in — otherwise random — team composition by assigning students to teams based on their measured cognitive abilities (Raven test). Each team performs a variety of tasks, often involving complex decision making. The key result of the experiment is that the performance of business teams first increases and then decreases with ability dispersion. We seek to understand this finding by developing a model in which team members of different ability levels form sub-teams with other team members with similar ability levels to specialize in different productive tasks. Diversity spreads production over different tasks in order to escape diminishing marginal returns under specialization. The model comes with a boundary condition: our experimental finding is most likely to emerge in settings where different tasks exhibit moderate differences in their productive contributions to total output.
    Keywords: Ability dispersion, team performance, field experiment, entrepreneurship
    JEL: C93 D83 J24 L25 L26 M13 M54
    Date: 2014–05–06
  19. By: Adrian de Groot Ruiz (Radboud University Nijmegen, the Netherlands); Theo Offerman (Amsterdam School of Economics, University of Amsterdam, the Netherlands); Sander Onderstal (Amsterdam School of Economics, University of Amsterdam, the Netherlands)
    Abstract: In the past, many refinements have been proposed to select equilibria in cheap talk games. Usually, these refinements were motivated by a discussion of how rational agents would reason in some particular cheap talk games. In this paper, we propose a new refinement and stability measure that is intended to predict actual behavior in a wide range of cheap talk games. According to our Average Credible Deviation Criterion (ACDC), the stability of an equilibrium is determined by the frequency and size of credible deviations. ACDC organizes the results from several cheap talk experiments in which behavior converged to equilibrium, even in cases where other criteria do not make a prediction.
    Keywords: Cheap talk, Neologism proofness, Credible deviation, Refinement, ACDC, Experiment
    JEL: C72 C92 D82 D83
    Date: 2015–01–15
  20. By: Maarten Lindeboom (VU University Amsterdam); Bas van der Klaauw (VU University Amsterdam); Sandra Vriend (VU University Amsterdam)
    Abstract: We provide evidence from a large-scale field experiment on the causal effects of audit rules on compliance in a market for long-term care. In this setting care should be provided quickly and, therefore, the gatekeeper introduced ex-post auditing. Our results do not show significant effects of variations in random audit rates and switching to a conditional audit regime on the quantity and quality of applications for care. We also do not find evidence for heterogeneous effects across care providers differing in size or hospital status. Our preferred explanation for the lack of audit effects is the absence of direct sanctions for noncompliance. The observed divergence of audit rates in the conditional audit regime is the consequence of sorting and thus identifies the quality of application behavior of providers.
    Keywords: auditing, field experiment, compliance, feedback, long-term care
    JEL: C93 H51 I18
    Date: 2014–03–18
  21. By: Aaron Kamm (University of Amsterdam); Arthur Schram (University of Amsterdam)
    Abstract: In a system of proportional representation, we study the interaction between a voter’s turnout decision and her party choice, and how these relate to party polarization. Quantal response equilibria predict such interaction effects. In particular they predict (i) a Polarization Effect: reduced strategic party choice when voting is voluntary makes voters more likely to vote for extreme parties (conditional on voting at all); (ii) an Extremist Effect: voters supporting extreme parties are most likely to vote; (iii) a Turnout Effect: party polarization increases voter turnout. We provide data from a laboratory experiment that support these theoretical predictions. In addition, we provide supporting empirical evidence from real world elections. Hence, the interaction between turnout and strategic voting that has been neglected in most of the previous literature is shown to be important.
    Keywords: Voting behavior, Proportional representation, Political participation, Strategic voting, Experimental Economics
    JEL: C92 D72
    Date: 2013–12–05
  22. By: Thomas Buser (University of Amsterdam)
    Abstract: How do people react to setbacks and successes? I introduce a new measure of challenge-seeking to determine the effect of winning and losing in a competition on the willingness to seek further challenges. Participants in a lab experiment compete in two-person tournaments and are then informed of their score and the outcome of the competition. Conditional on the score, winning or losing is random. Participants then have to decide on a performance target for a second round: the higher the target, the higher the potential reward, but participants who do not reach the target earn nothing. I find that, conditional on first round scores, losers go for a more challenging target but perform worse, leading to lower earnings and a higher probability of failure. These findings could have important implications for our understanding of individual career paths. Early outcomes coul d alter the probability of success and failure in the long term.
    Keywords: competition, challenge seeking, career decisions, laboratory experiment, gender
    JEL: C91 D03 J16 J01
    Date: 2014–07–07
  23. By: Michael Kosfeld (Goethe University Frankfurt , Germany); Susanne Neckermann (Erasmus University Rotterdam, the Netherlands, ZEW, Germany); Xiaolan Yang (Zhejiang University, Hangzhou , P R China)
    Abstract: We manipulate workers' perceived meaning of a job in a field experiment. Half of the workers are informed that their job is important, the other half are told that their job is of no relevance. Results show that workers exert more effort when meaning is high, corroborating previous findings on the relationship between meaning and work effort. We then compare the effect of meaning to the effect of monetary incentives and of worker recognition via symbolic awards. We also look at interaction effects. While meaning outperforms monetary incentives, the latter have a robust positive effect on performance that is independent of meaning. In contrast, meaning and recognition have largely similar effects but interact negatively. Our results are in line with image-reward theory (Benabou and Tirole 2006) and suggest that meaning and worker recognition operate via the same channel, namely image seeking.
    Keywords: Meaning, monetary incentives, worker recognition, field experiment
    JEL: C93 J33 M12 M52
    Date: 2014–04–01
  24. By: Angelucci,M.; Di Maro,Vincenzo
    Abstract: This paper is a practical guide for researchers and practitioners who want to understand spillover effects in program evaluation. The paper defines spillover effects and discusses why it is important to measure them. It explains how to design a field experiment to measure the average effects of the treatment on eligible and ineligible subjects for the program in the presence of spillover effects. In addition, the paper discusses the use of nonexperimental methods for estimating spillover effects when the experimental design is not a viable option. Evaluations that account for spillover effects should be designed such that they explain the cause of these effects and whom they affect. Such an evaluation design is necessary to avoid inappropriate policy recommendations and neglecting important mechanisms through which the program operates.
    Keywords: Disease Control&Prevention,Science Education,Labor Policies,Scientific Research&Science Parks,Population Policies
    Date: 2015–04–21
  25. By: Sander Hoogendoorn (University of Amsterdam); Hessel Oosterbeek (University of Amsterdam); Mirjam van Praag (University of Amsterdam)
    Abstract: This discussion paper resulted in an article in <I>Management Science</I>. Volume 59 issue 7, pages 1514-1528.<P> This paper reports on a field experiment conducted to estimate the impact of the share of women in business teams on their performance. Teams consisting of undergraduate students in business studies start up a venture as part of their curriculum. We manipulated the gender composition of teams and assigned students randomly to teams, conditional on their gender. We find that teams with an equal gender mix perform better than male-dominated teams in terms of sales and profits. We explore various mechanisms suggested in the literature to explain this positive effect of gender diversity on performance (including complementarities, learning, monitoring, and conflicts) but find no support for them. The paper was accepted for publication in <I>Management Science</>.
    Keywords: Gender diversity, team performance, entrepreneurship, field experiment, entrepreneurship education, board effectiveness
    JEL: J16 L25 L26 M13 C93
    Date: 2011–04–11
  26. By: De Cao, Elisabetta; Lutz, Clemens (Groningen University)
    Date: 2014
  27. By: Ibañez, Marcela; Rai, Ashok; Riener, Gerhard
    Abstract: Affirmative action to promote women's employment is a intensely debated policy. Do affirmative action policies attract women and does it come at a cost of deterring high qualified men? In three field experiments in Colombia we compare characteristics of job-seekers who are told of the affirmative action selection criterion before they apply with those who are only told after applying. We find that the gains in attracting female applicants far outweigh the losses in male applicants. Affirmative action is more effective in areas with larger female discrimination and deters male job-seekers from areas with low discrimination.
    Keywords: Field experiment,Affirmative action,Labor market,Gender participation gap
    JEL: J21 J24 J48 C93
    Date: 2015
  28. By: Cars Hommes (University of Amsterdam)
    Abstract: We discuss recent work on bounded rationality and learning in relation to Soros' principle of reflexivity and stress the empirical importance of non-rational, almost self-fulfilling equilibria in positive feedback systems. As an empirical example, we discuss a behavioral asset pricing model with heterogeneous expectations. Bubble and crash dynamics is triggered by shocks to fundamentals and amplified by agents switching endogenously between a mean-reverting fundamental rule and a trend-following rule, based upon their relative performance. We also discuss learning-to-forecast laboratory experiments, showing that in positive feedback systems individuals coordinate expectations on non-rational, almost self-fulfilling equilibria with persistent price fluctuations very different from rational equilibria. Economic policy analysis may benefit enormously by focussing on efficiency and welfare gains in correcting mispricing of almost self-fulfilling equilibria.
    Keywords: Expectation feedback, self-fulfilling beliefs, heuristic switching model, experimental macroeconomics
    JEL: D84 D83 E32 C92
    Date: 2013–12–17
  29. By: Matthias Weber (CREED, University of Amsterdam)
    Abstract: There are many situations in which different groups make collective decisions by committee voting, with each group represented by a single person. A natural question is what voting system such a committee should use. Concepts based on voting power provide guidelines for this choice. The two most prominent concepts require the Banzhaf power index to be proportional to the square root of group size or the Shapley-Shubik power index to be proportional to group size. Instead of studying the choice of voting systems based on such theoretical concepts, in this paper, I ask which systems individuals actually prefer. To answer this question, I design a laboratory experiment in which participants choose voting systems. I find that people behind the veil of ignorance prefer voting systems following the rule of proportional Shapley-Shubik power; in front of the veil subjects pr efer voting systems benefiting their own group. Participants' choices can only partially be explained by utility maximization or other outcome based concepts.
    Keywords: assembly voting, EU council, Penrose's Square Root Rule, optimal voting rule
    JEL: D71 D72 C91
    Date: 2014–04–01
  30. By: Jeroen Hinloopen (University of Amsterdam); Wieland Mueller (Vienna University); Hans-Theo Normann (Heinrich-Heine University)
    Abstract: This discussion paper resulted in a publication in <I>European Economic Review</I> (2014), 164-180.<P> We analyze the impact of product bundling in experimental markets. One firm has monopoly power in a first market but competes with another firm in a second market. We compare treatments where the multiproduct firm (i) always bundles, (ii) never bundles, and (iii) chooses whether or not to bundle. We also contrast the simultaneous and the sequential order of moves in the duopoly market. Our data indicate support for the theory of product bundling: with bundling and simultaneous moves, the multiproduct firm offers the predicted number of units. When the multiproduct firm is the Stackelberg leader, the predicted equilibrium is better attained with bundling, especially when it chooses to bundle, even though in theory bundling should not make a difference here. In sum, bundling works as a commitment device that enables the transfer of market power from one market to another.
    Keywords: Cournot; commitment; experiments; product bundling; Stackelberg
    JEL: C92 D43 L11 L12 L41
    Date: 2011–11–28
  31. By: Florian Wagener (CeNDEF, University of Amsterdam)
    Abstract: The rational expectations hypothesis is one of the cornerstones of current economic theorising. This review discusses a number of experiments that focus on expectation formation by human subjects and analyses the implications for the rational expectations hypothesis. The experiments show that most agents are weakly rational and that their expectations coordinate quickly; but the strong rational expectations hypothesis poorly describes the expectational dynamics and is outperformed by other hypotheses.
    Keywords: Rational expectations, expectation formation, laboratory experiments, human subjects
    JEL: D84
    Date: 2013–08–29
  32. By: Blimpo,Moussa P.; Evans,David; Lahire,Nathalie
    Abstract: Education systems in developing countries are often centrally managed in a top-down structure. In environments where schools have different needs and where localized information plays an important role, empowerment of the local community may be attractive, but low levels of human capital at the local level may offset gains from local information. This paper reports the results of a four-year, large-scale experiment that provided a grant and comprehensive school management training to principals, teachers, and community representatives in a set of schools. To separate the effect of the training from the grant, a second set of schools received the grant only with no training. A third set of schools served as a control group and received neither intervention. Each of 273 Gambian primary schools were randomized to one of the three groups. The program was implemented through the government education system. Three to four years into the program, the full intervention led to a 21 percent reduction in student absenteeism and a 23 percent reduction in teacher absenteeism, but produced no impact on student test scores. The effect of the full program on learning outcomes is strongly mediated by baseline local capacity, as measured by adult literacy. This result suggests that, in villages with high literacy, the program may yield gains on students'learning outcomes. Receiving the grant alone had no impact on either test scores or student participation.
    Keywords: Primary Education,Education For All,Secondary Education,Tertiary Education,Effective Schools and Teachers
    Date: 2015–04–13
  33. By: Hsu, Joanne W. (Board of Governors of the Federal Reserve System (U.S.)); McFall, Brooke H. (University of Michigan)
    Abstract: Web-based surveys have become increasingly common in economic, marketing, and other social science research. However, questions exist about the comparability of data gathered using a web interview and data gathered using more traditional survey modes, particularly for surveys on household economic behavior. Differences between data from different survey modes may arise through two different mechanisms: sample selectivity due to (lack of) web access and mode effects. This study leverages the randomized experimental design of the mixed-mode Cognitive Economics Study to examine mode effects separately from sample selectivity issues. In particular, we examine differences in survey response rates, item nonresponse, and data quality due to mode effects. Our results indicate that, in contrast to mail mode, web mode surveys (1) attain higher response rates among web users, (2) display lower item nonresponse, and (3) elicit more precise values for financial measures. We conclude that, for web-using populations, web mode surveys appear to result in more usable data than mail mode surveys, and these data appear to be of high quality. However, we also find no systematic mode differences in the categorical distributions of responses to items, providing no evidence that pooling data from the two modes is inadvisable.
    Keywords: Data quality; household surveys; mode effects; response rates
    Date: 2015–02–05
  34. By: Cars Hommes (CeNDEF, University of Amsterdam)
    Abstract: Rational expectations assumes perfect, model consistency between beliefs and market realizations. Here we discuss behaviorally rational expectations, characterized by an observable, parsimonious and intuitive form of consistency between beliefs and realizations. We discuss three case-studies. Firstly, a New Keynesian macro model with a representative agent learning an optimal, but misspecied, AR(1) rule to forecast inflation consistent with observed sample mean and first-order autocorrelations. Secondly, an asset pricing model with heterogeneous expectations and agents switching between a mean-reverting fundamental rule and a trend-following rule, based upon their past performance. The third example concerns learning-to-forecast laboratory experiments, where under positive feedback individuals coordinate expectations on non-rational, almost self-fulling equilibria with persistent price fluctuations very different from rational equilibria.
    Keywords: Expectation feedback, self-fullling beliefs, heuristic switching model, experimental economics
    JEL: D84 D83 E32 C92
    Date: 2013–12–16
  35. By: Tymula, Agnieszka; Whitehair, Jackson
    Abstract: Presence of peers is often identified as the main source of welfare-decreasing decision-making in young adulthood and adolescence. The mechanism through which peers exert this influence is not fully understood. In this paper, using an incentive compatible experiment, we investigate whether young people's willingness to accept known and unknown risks changes in the presence of a stranger of the same age compared to in private and whether preferences are affected by having observed others decisions. We find that behavioural changes caused by observation are different for men and women and are mediated through beliefs on own and observer's risk-taking. The results suggest that different approaches should be useful to mitigate consequences of observation on behaviour.
    Keywords: observation, peer effects, risk, uncertainty
    Date: 2015–04
  36. By: Sander Hoogendoorn (University of Amsterdam); Mirjam van Praag (University of Amsterdam)
    Abstract: One of the most salient and relevant dimensions of team heterogeneity is ethnicity. We measure the impact of ethnic diversity on the performance of business teams using a field experiment. We follow 550 students who set up 45 real companies as part of their curriculum in an international business program in the Netherlands. We exploit the fact that companies are set up in realistic though similar circumstances and that we, as outside researchers, had the unique opportunity to exogenously vary the ethnic composition of otherwise randomly composed teams. The student population consists of 55% students with a non-Dutch ethnicity from 53 different countries of origin, enabling us to include extremely diverse teams in our study. We find that a moderate level of ethnic diversity has no effect on team performance in terms of business outcomes (sales, prots and prots per share). However, if at least the majority of team members is ethnically diverse then more ethnic diversity seems to affect the performance of teams positively. Our data suggest that this positive effect might be related to the more diverse pool of relevant knowledge facilitating (mutual) learning within ethnically diverse teams.
    Keywords: Ethnic diversity, team performance, field experiment, entrepreneurship, (mutual) learning
    JEL: J15 L25 C93 L26 M13 D83
    Date: 2012–07–13
  37. By: Heleen Mees (New York University, Wagner Graduate School of Public Service, United States); Philip Hans Franses (Erasmus University Rotterdam, the Netherlands)
    Abstract: We replicate the landmark study of Shafir, Diamond and Tversky (1997) to examine whether individuals in China are prone to money illusion. We find that money illusion is prevalent in China as well. Respondents in the Chinese sample are often somewhat more likely to base decisions on the real monetary value of economic transactions compared to respondents in the U.S. sample. If asked explicitly to evaluate a transaction in terms of happiness or satisfaction, instead of economic terms, money illusion among respondents in the Chinese sample is comparable to money illusion among respondents in the U.S. sample.
    Keywords: Money illusion, Experimental economics, Financial behavior, Psychology of money
    JEL: C91
    Date: 2011–10–14
  38. By: Arno Riedl; Frans van Winden (University of Amsterdam)
    Abstract: We investigate experimentally the economic effects of wage taxation to finance unemployment benefits for a closed economy and an international economy. The main findings are the following. (i) There is clear evidence of a vicious circle in the dynamic interaction between the wage tax and unemployment. (ii) Employment is boosted by budget deficits but subsequent tax rate adjustments to balance the budget lead to employment levels substantially lower than theoretically predicted. (iii) A sales risk for producers due to price uncertainty on output markets appears to cause a downward pressure on factor employment. For labor the wage tax exacerbates this adverse effect.<P>This discussion paper resulted in a publication in the <A href=""><I>European Economic Review</I></A>.(51(4) 871-900.)
    Keywords: Experiments; international economics; wage taxation; unemployment
    JEL: C90 D50 E24 F41
  39. By: Stefanie Peer (VU University Amsterdam, and Institute for the Environment and Regional Development, Vienna University of Economics and Business, Austria); Jasper Knockaert (VU University Amsterdam); Paul Koster (VU University Amsterdam); Erik Verhoef (VU University Amsterdam)
    Abstract: We asked participants of a large-scale, real-life peak avoidance experiment to provide estimates of their average in-vehicle travel time for their morning commute. Comparing these reported travel times to the corresponding actual travel times, we find that travel times are overstated by a factor of 1.5 on average. We show that driver- and link-specic characteristics partially explain the overstating. Using stated and revealed preference data, we investigate whether the driverspecific reporting errors are consistent with the drivers' scheduling behavior in reality as well as in hypothetical choice experiments. For neither case, we find robust evidence that drivers behave as if they misperceived travel times to a similar extent as they misreported them, implying that reported travel times do neither represent actual nor perceived travel times truthfully. The results presented in this paper are thus a strong caveat against the uncritical use of reported travel time data in transport research and policy.
    Keywords: travel time perception, reported travel times, valuation of travel time, departure time choices, peak avoidance experiment, panel latent class models, revealed preference (RP) data
    JEL: C25 D83 D84 R41
    Date: 2013–08–26

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.