nep-exp New Economics Papers
on Experimental Economics
Issue of 2015‒05‒16
twenty-one papers chosen by

  1. Donations, risk attitudes and time preferences: A study on altruism in primary school children By Silvia Angerer; Daniela Glätzle-Rützler; Philipp Lergetporer; Matthias Sutter
  2. How Transparency Kills Information Aggregation: Theory and Experiment By Fehrler, Sebastian; Hughes, Niall
  3. The Sound of Others: Surprising Evidence of Conformist Behavior By Crosetto, Paolo; Filippin, Antonio
  4. Program Evaluation and Spillover Effects By Angelucci, Manuela; Di Maro, Vincenzo
  5. Click'n'Roll: No Evidence of Illusion of Control By Filippin, Antonio; Crosetto, Paolo
  6. Spatial Coordination in Agglomeration Bonus Schemes with Transaction Costs and Communication: An Experimental Study By Simanti Banerjee; Timothy N. Cason; Frans P. de Vries; Nick Hanley
  7. Anti-Western conspiracy thinking and expectations of collusion: Evidence from Russia and China By Libman , Alexander; Vollan , Björn
  8. Firm-Specific Information and Explicit Collusion in Experimental Oligopolies By Francisco Gomez-Martin; Sander Onderstal; Joep Sonnemans
  9. Home Bias in Multimarket Cournot Games By Catherine Roux; Luís Santos-Pinto; Christian Thöni
  10. Forestry harvesting decisions in contrast to theory? Evidence from an economic experiment By Sauter, Philipp; Mußhoff, Oliver
  11. Are Notions of Fairness Path‐Dependent? Experimental Evidence from an Efficiency‐Wage Environment By Stan Hu; Stuart Mestelman Author_Name: William Scarth
  12. Grading Hampers Cooperative Information Sharing in Group Problem Solving By Anne-Sophie Hayek; Claudia Toma; Dominique Oberlé; Fabrizio Butera
  13. The Role of Critical Mass in Establishing a Successful Network Market: An Experimental Investigation By Bradley J. Ruffle, Avi Weiss, Amir Etziony
  15. The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment By Raj Chetty; Nathaniel Hendren; Lawrence F. Katz
  16. How does the preference for increasing payments depend on the size and source of the payments? By Duffy, Sean; Smith, John; Woods, Kristin
  17. The influence of group identity on farmer’s decision making: an experimental economics approach on a family farming case in Costa Rica By Schickramm, Lena; Saenz-Segura, Fernando; Schipper, Robert A.; Handgraaf, Michel
  18. Deviations from the real options benchmark - An experimental approach to (non) optimal investment decisions of conventional and organic hog farmers By Vollmer, Elisabeth; Hermann, Daniel; Mußhoff, Oliver
  19. Preschoolers’ Inductive Selectivity as a Function of Implicit and Conceptual Learning By Alexey A. Kotov; Tatyana N. Kotova; Elizaveta V. Vlasova
  20. Prenatal Testosterone Exposure Predicts Mindfulness – Does This Mediate Its Effect on Happiness? By Levent Neyse; Patrick Ring; Steven Bosworth
  21. The Career Effects of Scandal: Evidence from Scientific Retractions By Pierre Azoulay; Alessandro Bonatti; Joshua L. Krieger

  1. By: Silvia Angerer; Daniela Glätzle-Rützler; Philipp Lergetporer; Matthias Sutter
    Abstract: We present experimental evidence from a bilingual city in Northern Italy on whether the language spoken by a partner in a prisoner's dilemma game affects behavior and leads to discrimination. Running a framed field experiment with 828 six- to eleven-year old primary school children in the city of Meran, we find that cooperation generally increases with age, but that the gap between cooperation among in-group members and cooperation towards children speaking another language is considerable and increasing with age. This gap is due to both, in-group favoritism and language group discrimination.
    Keywords: Cooperation, discrimination, language, children, experiment
    JEL: C91 C93 D03
    Date: 2015–05
  2. By: Fehrler, Sebastian (University of Konstanz); Hughes, Niall (University of Warwick)
    Abstract: We investigate the potential of transparency to influence committee decision-making. We present a model in which career concerned committee members receive private information of different type-dependent accuracy, deliberate and vote. We study three levels of transparency under which career concerns are predicted to affect behavior differently, and test the model's key predictions in a laboratory experiment. The model's predictions are largely borne out – transparency negatively affects information aggregation at the deliberation and voting stages, leading to sharply different committee error rates than under secrecy. This occurs despite subjects revealing more information under transparency than theory predicts.
    Keywords: committee decision-making, deliberation, transparency, career concerns, information aggregation, experiments, voting, strategic communication
    JEL: C92 D71 D83
    Date: 2015–04
  3. By: Crosetto, Paolo (Université de Grenoble); Filippin, Antonio (University of Milan)
    Abstract: It has been shown that subjects tend to follow others' behavior even when the external signals are uninformative. In this paper we go one step further, showing that conformism occurs even when the choices of others are not even presented to the subjects, but just indirectly perceived. We use the "Click" version of the Bomb Risk Elicitation Task, in which subjects can infer the behavior of others only from the mass of clicks heard. This signal is payoff-irrelevant and largely uninformative about the actual choices of the other participants. Moreover, it is never mentioned in the instructions and therefore it must be spontaneously (and possibly unconsciously) perceived in order to be used. We control the exposure of subjects to clicks by implementing treatments with and without earmuffs. Moreover, we test whether the introduction of a minimal form of commonality, i.e., facing a common rather than individual resolution of uncertainty, makes conformism more likely to emerge. We find strong evidence of conformist behavior even in such an adverse environment. Simply hearing the others clicking affects subjects' behavior. Introducing a common random draw results in a further dramatic shift of the average choices, in particular by women.
    Keywords: conformism, risk attitude, experiment
    JEL: C81 C91 D81
    Date: 2015–04
  4. By: Angelucci, Manuela (University of Michigan); Di Maro, Vincenzo (Jobs Knowledge Platform and World Bank)
    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: impact evaluation, spillover effects, field experiments, data collection, Indirect Treatment Effect, program mechanisms
    JEL: C93 C81 D62
    Date: 2015–04
  5. By: Filippin, Antonio (University of Milan); Crosetto, Paolo (Université de Grenoble)
    Abstract: Evidence of Illusion of Control – the fact that people believe to have control over pure chance events – is a recurrent finding in experimental psychology. Results in economics find instead little to no support. In this paper we test whether this dissonant result across disciplines is due to the fact that economists have implemented only one form of illusory control. We identify and separately tests in an incentive-compatible design two types of control: a) over the resolution of uncertainty, as usually done in the economics literature, and b) over the choice of the lottery, as sometimes done in the psychology literature but without monetary payoffs. Results show no evidence of illusion of control, neither on choices nor on beliefs about the likelihood of winning, thus supporting the hypotheses that incentives crowd out illusion of control.
    Keywords: Illusion of Control, experiment, risk elicitation, hypothetical bias
    JEL: B49 C91 D81
    Date: 2015–04
  6. By: Simanti Banerjee (University of Nebraska-Lincoln); Timothy N. Cason (Purdue University); Frans P. de Vries (University of Stirling); Nick Hanley (Department of Geography and Sustainable Development, University of St. Andrews)
    Abstract: Agglomeration Bonus (AB) schemes reward private landowners to spatially coordinate land use decisions to enhance the supply of ecosystem services. The AB mechanism creates a coordination game with multiple Pareto ranked Nash equilibria, which correspond to different spatially-coordinated land use patterns. This paper experimentally analyses subjects’ participation decisions, land use choices and AB performance in the presence of transaction costs, with and without the option to communicate with neighboring subjects in a local network setting. The experiment varies transaction costs at two levels (high and low), which affects the risks and payoffs of coordinating on the different equilibria. Results indicate a significant difference in participation under high and low transaction costs in the early stages of the experiment. Increased experience reduces participation rates and AB performance. Costless pre-play communication induces full participation and land use choice pertaining to the efficient Nash equilibrium. If communication is costly, the level of transaction costs affects participation levels, the degree of spatial coordination, and the ecosystem services benefits produced. Our study suggests that performance of Payment for Ecosystem Services schemes in general and the AB scheme in particular can be improved through mechanisms intended to reduce the costs associated with participation and communication.
    Keywords: Coordination Games, Lab Experiments, Local Networks, Payment for Ecosystem Services
    JEL: C91 D83 D81 Q51 Q
    Date: 2015–05
  7. By: Libman , Alexander (BOFIT); Vollan , Björn (BOFIT)
    Abstract: Anti-Western conspiracies are frequently used by Governments to strengthen their power. We investigate the impact of conspiracy thinking on expectations of collusion among individuals in Russia and China. For this purpose, we conduct a novel laboratory experiment to measure expectations of collusion and several survey items related to conspiracy thinking. Our survey results indicate that anti-Western conspiracy thinking is widespread in both countries and correlates with distrust. We find a significant effect of anti-Western conspiracy thinking in China: Anti-Western conspiracy thinking correlates with lower expectations of collusion. We explain this result by stronger ingroup feeling emanating from the anti-Western sentiment. Our paper provides a first step in analyzing the economic implications of conspiracy thinking for society.
    Keywords: conspiracy thinking; Russia; China; trust; collusion experiments
    JEL: C91 D83 O17
    Date: 2015–04–29
  8. By: Francisco Gomez-Martin (University of Amsterdam); Sander Onderstal (University of Amsterdam); Joep Sonnemans (University of Amsterdam)
    Abstract: We experimentally study the effect of information about competitors’ actions on cartel stability and firms’ incentives to form cartels in Cournot markets. As in previous experiments, markets become very competitive when individualized information is available and participants cannot communicate. In contrast, when communication is possible, results reverse: Markets become less competitive and cartels become more stable when individualized information is available. We also observe that the extra profits that firms obtain thanks to the possibility to communicate are higher when individualized information is present, suggesting that firms have greater incentives to form cartels in that situation.
    Keywords: Cournot oligopoly; Cartels; Information; Experiments
    JEL: C92 L13 L41
    Date: 2015–05–10
  9. By: Catherine Roux; Luís Santos-Pinto; Christian Thöni
    Abstract: We explore the role played by trade costs for the home bias in trade. In a series of Cournot duopoly experiments with a home and an export market, we compare output choices when firms face different levels of export costs. We find that there is two-way trade in identical products and that firms hold the majority market share in their home market. The resulting home bias turns out to be, however, stronger than that predicted by theory, and it even occurs without trade costs. We have strong evidence that collusion contributes to the home bias observed in our experiment.
    Keywords: Intra-Industry Trade; Spatial Oligopoly; Home Bias; Collusion; Experiment
    JEL: F12 L13 C91
    Date: 2015–04
  10. By: Sauter, Philipp; Mußhoff, Oliver
    Keywords: Environmental Economics and Policy,
    Date: 2015–02
  11. By: Stan Hu; Stuart Mestelman Author_Name: William Scarth
    Abstract: We extend the study of efficiency‐wage environments via laboratory experiments in three ways. First, we introduce exogenous shocks that increase the opportunity for rejection of the gift‐exchange outcome. These additional tests emerge since we carefully derive a series of theoretical predictions so that support for efficiency wages requires much more than simply observing that wage and effort levels exceed what would emerge with competition. Second, we focus on how the exogenous shocks can affect how both suppliers and demanders of labour view what is fair. Finally, we provide evidence to bolster our confidence in the applicability of the payroll tax side liability equivalence proposition in public economics.
    Date: 2015–05
  12. By: Anne-Sophie Hayek; Claudia Toma; Dominique Oberlé; Fabrizio Butera
    Abstract: We hypothesized that individual grading in group work, a widespread practice, hampers information sharing in cooperative problem solving. Experiment 1 showed that a condition in which members’ individual contribution was expected to be visible and graded, as in most graded work, led to less pooling of relevant, unshared information and more pooling of less-relevant, shared information than two control conditions where individual contribution was not graded, but either visible or not. Experiment 2 conceptually replicated this effect: Group members primed with grades pooled less of their unshared information, but more of their shared information, compared to group members primed with neutral concepts. Thus, grading can hinder cooperative work and impair information sharing in groups.
    Keywords: information sharing; grades; hidden profiles; cooperation; mixed-motives
    Date: 2015–05–06
  13. By: Bradley J. Ruffle, Avi Weiss, Amir Etziony (Wilfrid Laurier University)
    Abstract: A network market is a market in which the benefit each consumer derives from a good is an increasing function of the number of consumers who own the same or similar goods. A major obstacle that plagues the introduction of a network good is the ability to reach critical mass, namely, the minimum number of buyers required to render purchase worthwhile. This can be likened to a coordination game with multiple Pareto-ranked equilibria. Through a series of experiments, we study consumers' ability to coordinate on purchasing the network good. Our results highlight the central importance of the level of the critical mass. Neither an improved reward-risk ratio through lower prices nor previous success at a lower critical mass facilitates the establishment of a network market when the critical mass is sufficiently high.
    Keywords: experimental economics, network goods, coordination game, critical mass
    JEL: C92 L19
    Date: 2015–05–12
  14. By: Neslihan Lok (Akdeniz University, Nursing Faculty, Psychiatric Nursing Department); Sefa Lok (Selcuk University, School of Physical Education and Sports, Coaching Education Department)
    Abstract: Introduction: Mild cognitive impairment is the pathological case in which the individual is between dementia and healthy. Therefore, especially in the protection, it is necessary to maintain and protect the cognitive functions. The physical activities exercised by the old people are crucial in increasing the cognitive functions or in maintenance of the present condition.Aim: In this research, the aim is to analyse the effects of the physical activities on the cognitive functions of the old people with mild cognitive impairment.Methods: The research was organized within the order of pretest-posttest design as experimental type using control groups. For the experiment, 25 old people with mild cognitive impairment who were convenient for physical activities were selected with regard to the doctors’ advice. For the control group, a group of old people with mild cognitive impairment was listed. For the old people in the experimental group, a physical activity programme was applied including 30 minutes walk and 30 minutes regular exercise three days in a week which had continued for four weeks. Nothing was applied on the control group. Sociodemographic form and Standardized Mini Mental Test were applied on the old people both before and after the activity. The data has been analysed using Mann Whitney U test and percentage distributions.Results: The average age of the experimental group is 71.3±3.6and the control group is 70.2±42. The average mini mental test point of the old people in the experimental group before the activity (20.6±2.4) increased considerably after the activity (24.3±3.6) and the difference is significant statistically (p<0.05). When the mini mental test points of the experimental and control group was compared after the activity, it was found out that the experimental group has higher points compared to the experimental group and the difference is significant (p<0.05).Conclusions: Regular and a three-day week physical activity program improved the cognitive functions of the old people with mild cognitive impairment.
    Keywords: Elderly, Mild cognitive impairment, Physical activity, Cognitive functions
    JEL: I19
  15. By: Raj Chetty; Nathaniel Hendren; Lawrence F. Katz
    Abstract: The Moving to Opportunity (MTO) experiment offered randomly selected families living in high-poverty housing projects housing vouchers to move to lower-poverty neighborhoods. We present new evidence on the impacts of MTO on children's long-term outcomes using administrative data from tax returns. We find that moving to a lower-poverty neighborhood significantly improves college attendance rates and earnings for children who were young (below age 13) when their families moved. These children also live in better neighborhoods themselves as adults and are less likely to become single parents. The treatment effects are substantial: children whose families take up an experimental voucher to move to a lower-poverty area when they are less than 13 years old have an annual income that is $3,477 (31%) higher on average relative to a mean of $11,270 in the control group in their mid-twenties. In contrast, the same moves have, if anything, negative long-term impacts on children who are more than 13 years old when their families move, perhaps because of disruption effects. The gains from moving fall with the age when children move, consistent with recent evidence that the duration of exposure to a better environment during childhood is a key determinant of an individual's long-term outcomes. The findings imply that offering families with young children living in high-poverty housing projects vouchers to move to lower-poverty neighborhoods may reduce the intergenerational persistence of poverty and ultimately generate positive returns for taxpayers.
    JEL: H53 I32 I38 R38
    Date: 2015–05
  16. By: Duffy, Sean; Smith, John; Woods, Kristin
    Abstract: It is well-known that subjects can exhibit a preference for increasing payments. Smith (2009a) makes a related prediction that the difference between the preference increasing wage payments and the preference for increasing non-wage payments will be largest for intermediate payments. We find evidence consistent with this prediction. Consistent with previous experiments, we find that the preference for increasing payments is increasing in the size of the payments. Also consistent with the literature, we find that the preference for increasing wage payments is stronger than the preference for non-wage payments.
    Keywords: time preference; sequences; intertemporal choice; economic psychology
    JEL: C91 D90
    Date: 2015–05–07
  17. By: Schickramm, Lena; Saenz-Segura, Fernando; Schipper, Robert A.; Handgraaf, Michel
    Abstract: A successful family farming sector is strategic for developing rural areas, but is is endangered by household-specific market failures, high transaction costs and low bargaining power. Contract farming and collective actions are two common institutional devices for acquiring a level of certainty regarding market information, delivery conditions and procurement prices. Farmers’ associations is one of the common form of collective actions, but faces problems of opportunistic behaviour from their participating members. The intensity of group identity felt by an individual member is an essential determinant of the level of commitment and support granted towards the association. This case study analyzes the interdependence between individual identification intensity and revealed commitment for a commodity specific association that is based on individual membership. Members and non-members of the association participated in a questionnaire followed by a natural field experiment concerning their social identity towards the existing pepper association. By manipulating the social identity variable it could be seen that social identity has an influence on the participation of the individual in the association. This effect could be found for members and non-members alike. Strengthened social identity generally increased the participation of the individual in the organisation.
    Keywords: Collective actions, social identity, willingness to participate, pepper, Farm Management,
    Date: 2015–04
  18. By: Vollmer, Elisabeth; Hermann, Daniel; Mußhoff, Oliver
    Keywords: Financial Economics, Livestock Production/Industries,
    Date: 2015–02
  19. By: Alexey A. Kotov (National Research University Higher School of Economics); Tatyana N. Kotova (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Elizaveta V. Vlasova (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: Since pre-school age, children rely on contextual information while generalizing information about new objects. It is still uncertain what underlies this inductive selectivity; whether it is associative learning, which depends on the numbers of features that an object has, or conceptual learning, which depends on the features’ content. In the first experiment, we varied the contextual information and found that 4-5-year-olds rely more on contextual features of the object (shape and colour of the background), but not on spatial ones (location). In the second experiment we varied the combination of context features and showed that, given a lack of information about an object (shape only), children rely on contextual spatial features more than on the object’s features. Moreover, they prefer not to rely on contextual information at all if the object’s information was modified (same shape but different colour). Together, these results indicate the dependence of inductive selectivity on conceptual learning, not only associative learning.
    Keywords: inductive selectivity, induction, associative learning, conceptual learning, preschoolers
    JEL: C91
    Date: 2015
  20. By: Levent Neyse; Patrick Ring; Steven Bosworth
    Abstract: This study investigates the connection between mindfulness and prenatal testosterone exposure and explores whether this is related to the relationship between mindfulness and human well-being as captured by three separate measures. In a sample of 90 German student participants, we find that subjects’ digit ratio – a reliable indicator for exposure to prenatal testosterone – predicts their Mindful Attention Awareness Scale (MAAS) scores. Respondents with moderate levels of testosterone exposure have the highest MAAS scores. We additionally elicit participants’ self-reported general life satisfaction and current happiness levels as well as their estimates about others’ general life satisfaction. We find that MAAS strongly predicts absolute and relative life satisfaction and also current happiness levels, but digit ratios do not mediate the relationship between human well-being and mindfulness
    Keywords: Mindfulness; Digit ratio (2D:4D); Prenatal Testosterone; Life Satisfaction; Happiness
    JEL: L8 O5
    Date: 2015–04
  21. By: Pierre Azoulay; Alessandro Bonatti; Joshua L. Krieger
    Abstract: Scandals permeate social and economic life, but their consequences have received scant attention in the economics literature. To shed empirical light on this phenomenon, we investigate how the scientific community's perception of a scientist's prior work changes when one of his articles is retracted. Relative to non-retracted control authors, faculty members who experience a retraction see the citation rate to their articles drop by 10% on average, consistent with the Bayesian intuition that the market inferred their work was mediocre all along. We then investigate whether the eminence of the retracted author, and the publicity surrounding the retraction, shape the magnitude of the penalty. We find that eminent scientists are more harshly penalized than their less-distinguished peers in the wake of a retraction, but only in cases involving fraud or misconduct. When the retraction event had it source in "honest mistakes," we find no evidence of differential stigma between high- and low-status faculty members.
    JEL: O31 O33
    Date: 2015–05

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