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on Experimental Economics |
| By: | Buser, Thomas (School of Economics); Dreber, Anna (Department of Economics); Mollerstrom, Johanna (Interdisciplinary Center for Economics Science (ICES)) |
| Abstract: | Women are often less willing than men to compete, even in tasks where there is no gender gap in performance. Also, many people experience competitive contexts as stressful and previous research has documented that men and women sometimes react differently to acute stressors. We use two laboratory experiments to investigate whether factors related to stress can help explain the gender gap in competitiveness. Experiment 1 studies whether stress responses (measured with salivary cortisol and through self-assessment) to taking part in a mandatory competition predict individual willingness to participate in a voluntary competition. We find that while the mandatory competition does increase stress levels, there is no gender difference in this reaction. Cortisol response does not predict willingness to compete for men but is positively and significantly correlated with choosing to enter the voluntary competition for women. In Experiment 2 we exogenously induce stress using the cold-pressor task. We find no causal effect of stress on competitiveness for the sample as a whole and only tentative evidence of a positive effect for women. In summary, even though there are some gender differences in the relation between stress responses and the decision to enter a competition or not, these cannot explain the general gender gap in willingness to compete that is generally found in the literature and which we replicate. |
| Keywords: | Gender differences; Competitiveness; Experiment; Cortisol; Stress |
| JEL: | C90 C91 J16 J71 |
| Date: | 2015–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1071&r=exp |
| By: | Brice Corgnet (Chapman University, Economic Science Institute); Ludivine Martin (Luxembourg Institute of Socio-Economic Research); Peguy Ndodjang (Luxembourg Institute of Socio-Economic Research); Angela Sutan (ESC Dijon, LESSAC) |
| Abstract: | Influence costs models predict that organizations should limit managerial discretion to deter organizational members from engaging in wasteful politicking activities. We test this conjecture in a controlled, yet realistic, work environment in which we allow employees to influence managers’ decisions about rewards. We find that influence activities are pervasive and significantly lower organizational performance. Organizational performance suffers because principals offer weaker incentives when influence activities are allowed than when they are not. Importantly, we show that equal pay incentive schemes perform better when influence activities are available than when they are not. Our results thus support the idea that prevalent politicking activities may account for the widespread use of bureaucratic, and apparently inefficient, compensation rules in organizations. |
| Keywords: | Influence activities, incentive theory, theory of the firm, organizational economics |
| JEL: | C91 D23 D86 M52 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:15-09&r=exp |
| By: | Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves |
| Abstract: | We study the relationship between network centrality and educational outcomes using a field experiment in primary schools in Bangladesh. After obtaining information on friendship networks, we randomly allocate students into groups and give them individual and group assignments. We find that the groups that perform the best are those whose members have high Katz-Bonacich and key-player centralities. Leaders are mostly responsible for this effect, while bad apples have little influence. Group members' network centrality is also important in shaping individual performance. We show that network centrality captures non-cognitive skills, especially patience and competitiveness. |
| Keywords: | leaders; Network centrality; soft skills; team work |
| JEL: | A14 C93 D01 I20 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10631&r=exp |
| By: | Glimcher, Paul W.; Tymula, Agnieszka |
| Abstract: | Weather, in particular the intensity and duration of sunshine (luminance), has been shown to significantly affect marketoutcomes. Yet, because of the complexity of market interactions we do not know how human behavior is affected by luminance in a way that could inform microeconomic choice models. In this paper, we use data from an incentive compatible, decision making experiment conducted daily over a period of two years and from the US Earth System Research Laboratory luminance sensor to investigate the impact of luminance on risk preferences, ambiguity preferences, choice consistency and dominance violations. We find that luminance levels affect all of these. Age and gender influence the strength of some of these effects. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2015-11&r=exp |
| By: | Jordi Brandts; Ayça Ebru Giritligil; Roberto A. Weber |
| Abstract: | In many areas of social life, individuals receive information about a particular issue of interest from multiple sources. When these sources are connected through a network, then proper aggregation of this information by an individual involves taking into account the structure of this network. The inability to aggregate properly may lead to various types of distortions. In our experiment, four agents all want to find out the value of a particular parameter unknown to all. Agents receive private signals about the parameter and can communicate their estimates of the parameter repeatedly through a network, the structure of which is known by all players. We present results from experiments with three different networks. We find that the information of agents who have more outgoing links in a network gets more weight in the information aggregation of the other agents than under optimal updating. Our results are consistent with the model of “persuasion bias” of DeMarzo et al. (2003). |
| Keywords: | persuasion bias, experiments, bounded rationality |
| JEL: | C92 D03 D83 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:829&r=exp |
| By: | Harin, Alexander |
| Abstract: | A possibility of the existence of a discontinuity of Prelec’s (probability weighting) function at the probability p = 1 is discussed. This possibility is supported by the purely mathematical theorems and the “certain–uncertain” inconsistency of the random–lottery incentive experiments. The results of the well-known experiment support it as well. |
| Keywords: | Prelec; utility; prospect theory; probability weighting function; Luce; |
| JEL: | C0 C02 C1 C8 C9 C91 C93 D01 D8 D81 G02 G11 |
| Date: | 2015–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64672&r=exp |
| By: | Isa Hafalir; Rustamdjan Hakimov; Dorothea Kubler; Morimitsu Kurino |
| Abstract: | We theoretically and experimentally study a college admissions problem in which colleges accept students by ranking students’ efforts in entrance exams. Students’ ability levels affect the cost of their efforts. We solve and compare equilibria of “centralized college admissions” (CCA) where students apply to all colleges and “decentralized college admissions” (DCA) where students only apply to one college. We show that lower ability students prefer DCA whereas higher ability students prefer CCA. Many predictions of the theory are supported by the experiments, yet we find a number of differences that render DCA less attractive than CCA compared to the equilibrium benchmark. |
| URL: | http://d.repec.org/n?u=RePEc:cmu:gsiawp:-566341594&r=exp |
| By: | Anita Kopányi-Peuker (Faculty of Economics and Business, University of Amsterdam, the Netherlands); Theo Offerman (Faculty of Economics and Business, University of Amsterdam, the Netherlands); Randolph Sloof (Faculty of Economics and Business, University of Amsterdam, the Netherlands) |
| Abstract: | One acclaimed role of managers is to monitor workers in team production processes and discipline them through the threat of terminating them from the team (Alchian and Demsetz, 1972). We extend a standard weakest link experiment with a manager that can decide to replace some of her team members at a cost. The amount of contractual commitment (‘termination possibilities’) and the precision of the manager’s monitoring information serve as treatment variables. Our results show that the fear of exclusion has a profound effect on team performance even if workers are imperfectly monitored; the most flexible contract induces the highest output while the one with no firing possibilities leads to the lowest production. However, once the fear is eliminated for some workers, because permanent workers cannot be fired after a probation phase, effort levels steadily decrease. |
| Keywords: | team-production; weakest-link game; exclusion; probation; experiment |
| JEL: | C72 C92 M51 M55 |
| Date: | 2015–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150067&r=exp |
| By: | Marianna Baggio; Luigi Mittone |
| Abstract: | The development and use of long-lived public goods involves more than one demographic generation, leaving the classic literature on voluntary provisions partially unfit to explain complex phenomena such as welfare systems, climate policies and major infrastructure projects. This paper proposes a model that explains how equilibrium is reached in a context where a public good is produced by one generation of individuals and the following generation reaps the benefits of it. Within this model the case of intergenerational public goods production is explained using a spillover rule, where a percentage of the public good produced in time t by experimental parents will integrate the endowment of their artifactual children in t+1. A cascade mechanism allows also for the rebirth of three generations of players, mimicking the biological and anthropological mechanisms of gene transmission and intergenerational altruism. Experimental evidence shows that subjects who are reminded of their lineage membership tend to contribute more compared to those who are not included in a dynastic model. More importantly, results show that the real dynastic background of individuals is a prominent influence in the levels of investment in public goods. |
| Keywords: | public goods, generations, intergenerational spillovers, intergenerational altruism, OLG. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:1502&r=exp |
| By: | Altmann, Steffen; Falk, Armin; Jäger, Simon; Zimmermann, Florian |
| Abstract: | We conduct a large-scale field experiment in the German labor market to investigate how information provision affects job seekers’ employment prospects and labor market outcomes. Individuals assigned to the treatment group of our experiment received a brochure that informed them about job search strategies and the consequences of unemployment, and motivated them to actively look for new employment. We study the causal impact of the brochure by comparing labor market outcomes of treated and untreated job seekers in administrative data containing comprehensive information on individuals’ employment status and earnings. While our treatment yields overall positive effects, these tend to be concentrated among job seekers who are at risk of being unemployed for an extended period of time. Specifically, the treatment effects in our overall sample are moderately positive but mostly insignificant. At the same time, we do observe pronounced and statistically significant effects for individuals who exhibit an increased risk of long-term unemployment. For this group, the brochure increases employment and earnings in the year after the intervention by roughly 4%. Given the low cost of the intervention, our findings indicate that targeted information provision can be a highly effective policy tool in the labor market. |
| Keywords: | Field Experiment; Job Search; Unemployment |
| JEL: | D8 J64 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10621&r=exp |
| By: | Sascha Füllbrunn; Wolfgang J. Luhan |
| Abstract: | Decision makers often take risky decisions on the behalf of others rather than for themselves. Competing theoretical models predict both, higher as well as lower levels of risk aversion when taking risk for others, and the experimental evidence is mixed. In our within-subject design, money managers have substantial responsibility by taking investment decisions for themselves and for a group of six clients, when payments are either fixed or perfectly aligned. We find that money managers invest significantly less for others than for themselves (cautious shift) which is mainly driven by a less risk averse sub sample. Digging deeper we find money managers to rather act in line with what they believe the clients would invest for themselves. We derive a responsibility weighting function to show that with a perfectly aligned payment the money manager weights egoistic and social preferences. Finally we bring our results in perspective with the mixed experimental literature. |
| Keywords: | Financial decision making; social responsibility; decision making for others; risk preferences; experiment |
| JEL: | C91 D81 G11 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0551&r=exp |
| By: | Michael Hallsworth; John A. List; Robert D. Metcalfe; Ivo Vlaev |
| Abstract: | Framing remains one of the pillars of behavioral economics. While framing effects have been found to be quite important in the lab, what is less clear is how well evidence drawn from naturally-occurring settings conforms to received laboratory insights. We use debt obligation to the UK government as a case study to explore the ‘omission bias’ present in decision making with large stakes. Using a natural field experiment that generates nearly 40,000 observations, we find that repayment rates are roughly doubled when the act is reframed as one of commission rather than omission. We estimate that this reframing of the perceived nature of the action generated over $1.3 million of new yield. We find evidence that this behavior may result from a deliberate ‘omission strategy’, rather than a behavioral bias, as is often assumed in the literature. Our natural field experiment highlights that behavioral economics is much more than a series of empirical exercises to quench the intellectual curiosity of academics. |
| JEL: | C9 C93 H2 K0 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21210&r=exp |
| By: | Elise Huillery (ECON - Département d'économie - Sciences Po); Juliette Seban (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS) |
| Abstract: | Performance-based financing becomes a common strategy to improve health sector quality. The findings of this paper imply that performance-based financing should take motivational effects and levels of provider capacity into account. Using a field experiment in the Democratic Republic of Congo, we find that financial incentives led to more effort from health workers on rewarded activities, without deterring effort on non-rewarded activities. We also find a shift from intrinsic to extrinsic motivation. Finally, the increased effort by health workers proved unsuccessful and led to a reduction in revenue, suggesting that health workers lacked the capacity to develop appropriate strategies to perform. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-01071880&r=exp |
| By: | Sara B. Heller; Anuj K. Shah; Jonathan Guryan; Jens Ludwig; Sendhil Mullainathan; Harold A. Pollack |
| Abstract: | This paper describes how automatic behavior can drive disparities in youth outcomes like delinquency and dropout. We suggest that people often respond to situations without conscious deliberation. While generally adaptive, these automatic responses are sometimes deployed in situations where they are ill-suited. Although this is equally true for all youths, disadvantaged youths face greater situational variability. This increases the likelihood that automaticity will lead to negative outcomes. This hypothesis suggests that interventions that reduce automaticity can lead to positive outcomes for disadvantaged youths. We test this hypothesis by presenting the results of three large-scale randomized controlled trials (RCTs) of interventions carried out on the south and west sides of Chicago that seek to improve the outcomes of low-income youth by teaching them to be less automatic. Two of our RCTs test a program called Becoming a Man (BAM) developed by Chicago-area non-profit Youth Guidance; the first, carried out in 2009-10, shows participation improved schooling outcomes and reduced violent-crime arrests by 44%, while the second RCT in 2013-14 showed participation reduced overall arrests by 31%. The third RCT was carried out in the Cook County Juvenile Temporary Detention Center (JTDC) in 2009-11 and shows reductions in return rates of 22%. We also present results from various survey measures suggesting the results do not appear to be due to changes in mechanisms like emotional intelligence or self-control. On the other hand results from some decision-making exercises we carried out seem to support reduced automaticity as a key mechanism. |
| JEL: | C91 C93 D03 D1 I24 I3 I32 K42 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21178&r=exp |
| By: | Agnes Baeker; Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier) |
| Abstract: | Recent research has shown that the presence of peers can increase individual output both in the lab and the eld. This paper tests for negative side effects of peer settings. We investigate whether peer settings are particularly prone to cheating even if they do not provide additional monetary benets of cheating. Participants in our real effort experiment had the opportunity to cheat when declaring their output levels. Although cheating did not have different monetary consequences when working alone than when working in the presence of a peer, we find that cheating is a more severe problem in peer settings. |
| Keywords: | cheating, peer effects, organizational design, personnel economics, experimental economics |
| JEL: | J20 J30 M50 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:dpaper:201506&r=exp |
| By: | Anouar El Haji (Faculty of Economics and Business, University of Amsterdam, the Netherlands); Sander Onderstal (Faculty of Economics and Business, University of Amsterdam, the Netherlands) |
| Abstract: | In a laboratory experiment, we compare two auction mechanisms that determine the sequence of service to queued customers. In the server-initiated auction, the server, when idle, sells the right to be served next to the highest bidding customer in the queue and distributes the proceeds among the remaining customers. We show that this mechanism has an efficient equilibrium. In the customer-initiated auction, new arrivals can sequentially trade places with queued customers. This mechanism does not have an efficient equilibrium. We use two novel experimental protocols to examine the behavioral properties of both auction mechanisms. We find that, on average, the server-initiated auction and the customer-initiated auction perform equally well in terms of efficiency gain. Moreover, participants indicate that they find the server-initiated auction a fairer mechanism than the customer-initiated auction. When voting between the two auctions, participants tended to favor the server-initiated auction. We also find evidence of endowment and sunk-cost effects, which partially explains deviations from standard theory predictions. |
| Keywords: | Queuing; Auctions; Laboratory experiments; Endowment effect; Sunk-cost effect |
| JEL: | C44 C91 D44 |
| Date: | 2015–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150063&r=exp |
| By: | Kim Lehrer (Département d'Économique, Université de Sherbrooke); Catherine Porter (Department of Accountancy, Economics and Finance, Heriot-Watt University) |
| Abstract: | We play a modified dictator game in Uganda with students, civil servants, and individ- uals from the private sector. The sample includes both Ugandans and expatriates. In the dictator game, participants divide a sum of (real) money between themselves and a local charity. In a "turning a blind eye" treatment, participants are rst given the choice of knowing the identity of the recipient. Finally, participants are asked whether they wish to add their own money to the amount of the endowment they chose to allocate to their selected charity. Contrary to many experimental findings, non-students (civil servants) are not significantly more generous than students. In fact, after controlling for demographic characteristics, their average donation is significantly lower than that of students. Very few individuals donate their own money, despite 30% of participants donating the full endowment. Attitudes to charities do not predict the amount donated in the expected way. Length: 36 pages |
| Keywords: | Dictator game, charitable giving, philanthropy, Uganda |
| JEL: | C72 D63 D64 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:15-07&r=exp |