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on Experimental Economics |
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Issue of 2015‒06‒13
28 papers chosen by |
| By: | Aaron Kamm (Faculty of Economics and Business, University of Amsterdam, the Netherlands); Harold Houba (Faculty of Economics and Business Administration, VU University Amsterdam, the Netherlands) |
| Abstract: | This paper reports results from a laboratory experiment studying the role of asymmetries, both in payoffs and recognition probabilities, in a model of strategic bargaining with Condorcet cycles. Overall, we find only limited support for the equilibrium predictions. The main deviations from theory are: a) Subjects under-exploit their bargaining power by being more accommodating in their acceptance decision than predicted; b) subjects’ change in behavior in reaction to asymmetric recognition probabilities exhibits systematic deviations from theory. This suggests that subjects do not fully grasp the subtle effects asymmetries have on bargaining power, especially when the asymmetries relate to recognition probabilities. |
| Keywords: | Bargaining; Condorcet Paradox; Experiments; Voting; Committees |
| JEL: | C73 C78 C91 C92 D72 |
| Date: | 2015–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150071&r=exp |
| By: | Carlos Cueva Herrero (Dpto. Análisis Económico Aplicado); Aldo Rustichini (University of Minnesota) |
| Abstract: | The hypothesis that price stability would reliably increase with the fraction of women operating in financial markets has been frequently suggested in policy discussions. To test this hypothesis we conducted 10 male-only, 10 female-only and 10 mixed-gender experimental asset markets, and compared the effects of gender composition, confidence, risk attitude and cognitive skills. Male and female markets have comparable volatility and deviations from fundamentals, whereas mixed-gender markets are substantially more stable. On the other hand, higher average cognitive skills of the group are associated with reduced market volatility. Individual-level analysis shows that subjects with higher cognitive skills trade more rationally and earn significantly higher profits; similarly, mixed markets exhibit more rational behavior, particularly for traders with lower cognitive skills. Our results are demonstrated to hold in other experimental asset market studies, suggesting that a mixed-gender composition reduces mispricing across different types of asset markets. |
| Keywords: | asset market experiment, mispricing, price bubbles, gender, cognitive ability |
| JEL: | C91 C92 G02 G11 J16 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2015-06&r=exp |
| By: | Schmidt, Ulrich; Neyse, Levent; Aleknonyte, Milda |
| Abstract: | Standard economic theory assumes that individual risk taking decisions are independent from the social context. Recent experimental evidence however shows that the income of peers has a systematic impact on observed degrees of risk aversion. In particular, subjects strive for balance in the sense that they take higher risks if this gives them the chance to break even with their peers. The present paper is, to the best of our knowledge, the first systematic analysis of income inequality and risk taking. We perform a real-effort field experiment where inequality is introduced to different wage rates. After the effort phase subjects can invest (part of) their salary into a risky asset. Besides the above mentioned possibility of higher risk taking of low-wage individuals to break even with high-wage individuals, risk taking can be influenced by an income effect consistent with e.g. decreasing absolute risk aversion and a house money effect of high-wage individuals. Our results show that the dominant impact of inequality on risk taking is what can be termed a social house money effect: high-wage individuals take higher risks than low-wage individuals only if they are aware of the inequality in wages. |
| Keywords: | Risk; Inequality; Real Effort; Field Experiment; Social Comparison |
| JEL: | C91 C93 D63 D81 J31 |
| Date: | 2015–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64913&r=exp |
| By: | Heinrich, Timo; Mayrhofer, Thomas |
| Abstract: | We study higher-order risk preferences, i.e. prudence and temperance, next to risk aversion in social settings. Previous experimental studies have shown that higher-order risk preferences affect the choices of individuals deciding privately on lotteries that only affect their own pay-off. Yet, most risky and financially relevant decisions in the field are made in the social settings of households or organizations. We aim to narrow the gap between laboratory and field evidence by creating a more realistic decision making environment in the laboratory that allows us to identify the influence of different social settings under controlled conditions. We elicit higher-order risk preferences of individuals and systematic ally vary how an individual's decision is made (alone or while communicating with a partner) and who is affected by the decision (only the individual or the partner as well). In doing so, we can isolate the effects of other-regarding concerns and communication on choices. We observe that individuals become more risk-averse when the partner is able to communicate with the decision maker. However, we do not observe an influence of social settings on prudence and temperance. Our results reveal that the majority of choices are risk-averse, prudent, and temperate across social settings. |
| Abstract: | Wir untersuchen neben Risikoaversion auch Risikopräferenzen höherer Ordnung, d.h. "Prudence" und "Temperance" in sozialen Situationen. Experimentelle Studien haben bisher gezeigt, dass Risikopräferenzen höherer Ordnung die Entscheidungen von Individuen bestimmen, die isoliert zwischen Lotterien wählen, die nur ihre eigene Auszahlung bestimmen. Jedoch werden die meisten finanziell relevanten Entscheidungen unter Unsicherheit in sozialen Situationen getroffen, z.B. in Haushalten oder Organisationen. In unserer Studie verkleinern wir die Diskrepanz zwischen bisheriger Labor- und Feldevidenz, indem wir eine realistischere Entscheidungssituation im Labor kreieren. Sie erlaubt es, den Einfluss unterschiedlicher sozialer Einflüsse unter kontrollierten Bedingungen zu identifizieren. Wir erheben Risikopräferenzen höherer Ordnung von Individuen und variieren systematisch wie eine Entscheidung getroffen wird (alleine oder während der Kommunikation mit einem Partner) und wer von der Entscheidung betroffen ist (nur der Entscheider oder auch der Partner). So können wir den Einfluss von etwaigen "other-regarding concerns" und von Kommunikation auf die Entscheidungen isolieren. Wir beobachten, dass die Individuen risiko-averser entscheiden, wenn mit dem Partner kommuniziert werden kann. Wir beobachten jedoch keinen Einfluss der sozialen Situation auf Risikopräferenzen höherer Ordnung. Unsere Ergebnisse zeigen, dass die Mehrzahl der Entscheidungen über unterschiedliche soziale Situationen hinweg risikoavers, "prudent" und "temperate" ist. |
| Keywords: | experiment,individual decisions,group decisions,risk aversion,prudence,temperance |
| JEL: | C91 C92 D70 D81 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:508&r=exp |
| By: | Gallier, Carlo; Reif, Christiane; Römer, Daniel |
| Abstract: | We investigate the dynamic effects of a charitable lottery and an income tax on donations. The analysis is based on a two-round dictator game with the subject's charity of choice as recipient and additional incentives in the first round only. The immediate effect of a charitable lottery leads to higher contributions and we cannot find substantial crowding out of voluntary contributions in the presence of an income tax. These economic interventions weakly spill-over to the subsequent donation decisions without additional incentives. Our results suggest the presence of consistency seeking behaviour. This is especially true for a subgroup of participants with a rule-based mind-set and our research shows the importance of the subjects' moral framework in the context of dynamic pro-social behaviour. |
| Keywords: | Experiment,Charitable Giving,Lottery,Tax,Modified Dictator Game,Moral Balancing |
| JEL: | C91 D03 D64 H41 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14060r&r=exp |
| By: | Grimm, Veronika; Utikal, Verena; Valmasoni, Lorenzo |
| Abstract: | In this study, we investigate how and why people discriminate among different groups, including their own groups and multiple out-groups. In a laboratory experiment, we use dictator games for five groups to compare actual transfers to in-group and out-group agents with the respective beliefs held by dictators and recipients in these groups. We observe both in-group favoritism and discrimination among multiple out-groups. Individuals expect others to be in-group biased, as well as to be treated differently by different out-groups. Dictators' in-group favoritism is positively related to the degree of in-group favoritism they expect other dictators to exhibit. Moreover, we find that a dictator tends to be relatively more generous toward a specific out-group when he or she expects that dictators belonging to that out-group are generous toward members of his or her ingroup. |
| Keywords: | discrimination,experiment,group identity,dictator game,beliefs |
| JEL: | C91 C92 D84 D01 D64 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:052015&r=exp |
| By: | Baghestanian, Sascha; Gortner, Paul; Massenot, Baptiste |
| Abstract: | In an experimental setting in which investors can entrust their money to traders, we investigate how compensation schemes affect liquidity provision and asset prices. Investors face a trade-off between risk and return. At the benefit of a potentially higher return, they can entrust their money to a trader. However this investment is risky, as the trader might not be trustworthy. Alternatively, they can opt for a safe but low return. We study how subjects solve this trade-off when traders are either liable for losses or not, and when their bonuses are either capped or not. Limited liability introduces a conflict of interest because it makes traders value the asset more than investors. To limit losses, investors should thus restrict liquidity provision to force traders to trade at a lower price. By contrast, bonus caps make traders value the asset less than investors. This should encourage liquidity provision and decrease prices. In contrast to these predictions, we find that under limited liability investors contribute to asset price bubbles by increasing liquidity provision and that caps fail to tame bubbles. Overall, giving investors skin in the game fosters financial stability. |
| Keywords: | compensation,liquidity,experimental asset markets,bubbles |
| JEL: | C90 C91 D03 G02 G12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:108&r=exp |
| By: | Augurzky, Boris; Bauer, Thomas K.; Reichert, Arndt R.; Schmidt, Christoph M.; Tauchmann, Harald |
| Abstract: | We complement the empirical evidence on the sustainability of weight loss achieved through cash rewards and, for the first time, rigorously examine the potential of cash rewards to prevent weight cycling. In a three period randomized controlled trial, about 700 obese persons were first assigned to two treatment groups, which were promised cash contingent on the achievement of an individually assigned target weight, and to a control group. Successful participants were subsequently allocated to two treatment groups offered cash rewards for confirming the previously achieved target weight and to a control group. This is the first experiment of this kind that finds effects of weight loss rewards up to 18 months after they were removed. Additional rewards only significantly improve the sustainability of weight loss while they are in place. |
| Abstract: | Die empirische Analyse untersucht zum einen die Nachhaltigkeit einer Gewichtsreduktion, die mittels Geldanreizen erzielt wurde, und zum anderen die Wirksamkeit von Geldanreizen zur Verhinderung des Jo-Jo-Effekts nach einer erfolgreichen Gewichtsreduktion. In einem drei-phasigen Feldexperiment wurden ca. 700 fettleibige Teilnehmer zunächst zufällig auf zwei Anreizgruppen und einer Kontrollgruppe verteilt. Unabhängig von der Gruppenzugehörigkeit sollten ein individuelles Gewichtsreduktionziel erreicht werden, wobei nur Mitglieder der Anreizgruppen eine Geldprämie für das Erreichen des Zieles erhalten konnten. Erfolgreiche Teilnehmer wurden danach erneut zufällig einer Kontrollgruppe und zwei Anreizgruppen zugewiesen, wobei das Halten des Zielgewichts nur für letztere durch eine Geldprämie inzentiviert wurde. Anders als in früheren Experimenten, können Effekt der Abnehmprämie selbst 18 Monate nach ihrem Auslaufen nachgewiesen werden. Monetäre Anreize zur Verhinderung des Jo-Jo-Effekt wirken hingegen nicht über ihr Auslaufen hinaus. |
| Keywords: | field experiment,weight cycling,sustainability,incentives |
| JEL: | I12 I18 D03 C93 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:530&r=exp |
| By: | Füllbrunn, Sascha; Luhan, Wolfgang J. |
| 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. |
| Abstract: | Ein großer Teil risikoreicher, ökonomischer Entscheidungen wird von Dritten anstelle der Betroffenen getroffen. In solchen Fällen sagt die eine Klasse theoretischer Modelle geringere Risikoaversion voraus, eine andere Klasse aber höhere Risikoaversion im Vergleich zur Situation, bei der der Betroffene selbst die Entscheidung trifft. Die bisherigen empirischen Ergebnisse aus Laborexperimenten sind ebenso gemischt oder finden keine Unterschiede zwischen der Entscheidung für sich selbst oder für andere Personen. Wir verwenden ein 'within-subjects' für unser Experiment, bei dem Vermögensverwalter in unterschiedlichen Stufen für sich selbst, für eine Gruppe von Klienten, oder für sich selbst und eine Gruppe von Klienten Investitionsentscheidungen treffen. Wir erhöhen dabei die Soziale Verantwortung über die Größe der Gruppe von Investoren, um Verantwortungseffekte zu verstärken. Unsere Ergebnisse zeigen, dass das Risiko bei der Investition für andere signifikant geringer ist als bei der Investition für sich selbst. Dieses Aggregat-Ergebnis ist allerdings nur durch eine unterdurchschnittlich risikoaverse Subpopulation unserer Stichprobe getrieben. Eine genauere Analyse der Investitionsmotive zeigt, dass die Vermögensverwalter gemäß ihrer Erwartung der Klienten-Präferenzen handeln. Wir passen eine Nutzenfunktion mit Verantwortungs-Gewichten an und finden, dass die beobachtete Riskioaversion bei gemeinschaftlichen Investitionen durch egoistische und soziale Präferenzen erklärt werden kann. Abschließend stellen wir unsere Ergebnisse in den Kontext der bisherigen Literatur und versuchen die gemischten, bisherigen Ergebnisse aufgrund unserer Erkenntnisse zu erklären. |
| Keywords: | financial decision making,social responsibility,decision making for others,risk preferences,experiment |
| JEL: | C91 D81 G11 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:551&r=exp |
| By: | Daniela Di Cagno (LUISS Guido Carli); Arianna Galliera (LUISS Guido Carli); Werner Güth (Luiss Guido Carli and Frankfurt School of Finance and Management); Luca Panaccione (DEDI and CEIS, Università di Roma "Tor Vergata",) |
| Abstract: | Similar to Fischbacher and G¨achter (2010) we try to understand and explain the motivation of participants when contributing to a public good. In the Hybrid Public Good experiment each of two interacting contributors chooses an independent contribution level and three adjusted contribution levels when (s)he, as the only adjusting player, learns that the other’s independent contribution is smaller, equal or larger than the own one. We systematically vary the probability that one player can adjust, based on such qualitative information, but maintain that no adaptation at all and adaptation by only one occurs with positive probability. Adaptation is framed in two ways, once by additively changing the own independent contribution and once by stating new contribution levels. Surprisingly, there is a strong framing effect which increases with experience. Reacting to coinciding independent contributions implies impressive conformity in contributing. Reacting to higher, respectively lower independent contributions implies average upward, and, more strongly, downward adaptation. |
| Keywords: | Public goods, experiments, voluntary contribution mechanism |
| JEL: | C91 C72 H41 |
| Date: | 2015–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:343&r=exp |
| By: | Brosig-Koch, Jeannette; Hennig-Schmidt, Heike; Kairies-Schwarz, Nadja; Wiesen, Daniel |
| Abstract: | Mixed payment systems have become a prominent alternative to paying physicians through fee-for-service and capitation. While theory shows mixed payment systems to be superior, empirically, causal effects on physicians' behavior are not well understood when introducing mixed systems. We systematically analyze the influence of fee-for-service, capitation, and mixed payment systems on physicians' service provision. In a controlled laboratory setting, we implement an exogenous variation of the payment method. Participants, in the role of physicians, in the lab (N=213) choose quantities of medical services affecting patients' health outside the lab. Behavioral data reveal significant overprovision of medical services under fee-for-service and significant underprovision under capitation, though less than predicted when assuming profit-maximization. Introducing mixed payment systems significantly reduces deviations from patient-optimal treatment. Responses to incentive systems can be explained by a behavioral model capturing physician altruism. We find substantial heterogeneity in physician altruism. Our results hold for medical and non-medical students. |
| Abstract: | In den letzten Jahren wurden klassische Entlohnungssysteme für Ärzte wie Einzelleistungsvergütung oder Kopfpauschale häufig durch gemischte Vergütungen ersetzt. Aus theoretischer Sicht sind diese gemischten Vergütungen den klassischen Vergütungen überlegen. Empirisch sind die kausalen Effekte der Einführung von gemischten Vergütungen auf das Arztverhalten jedoch unklar. Im Mittelpunkt dieses Beitrags steht die systematische Analyse der Verhaltenswirkungen von Kopfpauschale, Einzelleistungsvergütung und gemischten Vergütungssystemen. Mit Hilfe kontrollierter Laborexperimente werden die Arztvergütungen exogen variiert und die Auswirkungen auf die Behandlung von Patienten getestet. Im Rahmen des Experiments müssen die Teilnehmer in der Rolle des Arztes (N=213) über die Menge an medizinischen Leistungen entscheiden, die die Gesundheit realer Patienten außerhalb des Labors beeinflusst. Die Ergebnisse zeigen eine signifikante Überbehandlung bei der Einzelleistungsvergütung und eine signifikante Unterbehandlung bei der Kopfpauschale, allerdings in geringerem Ausmaß als dies theoretisch bei reiner Gewinnmaximierung prognostiziert wird. Die Einführung gemischter Vergütungssysteme reduziert die beobachteten Abweichungen von der patientenoptimalen Behandlung. Die Verhaltenswirkungen lassen sich mit Hilfe eines Verhaltensmodells abbilden, in dem den Teilnehmern ein gewisser Grad an Altruismus unterstellt wird. Der beobachtete Grad an Altruismus variiert stark zwischen den Teilnehmern. Die Befunde hängen nicht vom medizinischen Hintergrund der Teilnehmer ab und gelten damit sowohl für angehende Ärzte als auch für Studenten anderer Fachrichtungen. |
| Keywords: | fee-for-service,capitation,mixed payment systems,physician altruism,laboratory experiment |
| JEL: | C91 I11 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:543&r=exp |
| By: | Brosig-Koch, Jeannette; Kairies-Schwarz, Nadja; Kokot, Johanna |
| Abstract: | Most common physician payment schemes include some form of traditional capitation or fee-for-service payment. While health economics research often focuses on direct incentive effects of these payments, we demonstrate that the opportunity to sort into one's preferred payment scheme may also significantly affect medical treatment. Our study is based on an experiment testing individual sorting into fee-for-service and capitation payment under controlled laboratory conditions. A sequential design allows differentiating between sorting and incentive effects. We find a strong preference for fee-for-service payment, independent of subjects' prior experience with one of the two payment schemes. Our behavioral classification reveals that subjects who select into capitation deviate less from patient-optimal treatment than those who prefer fee-for-service payment. Moreover, comparing subjects' behavior before and after introducing the choice option, we find that subjects preferring fee-for-service become even less patient-oriented after this introduction. As a result, the opportunity to choose a payment scheme does not improve, but - if at all - worsens patient treatment in our experiment. Our findings stress the importance of acknowledging potential sorting and incentive effects in the analysis of physician payment schemes. |
| Abstract: | Die meisten der heutzutage verwendeten Arztvergütungen basieren auf der klassischen Einzelleistungsvergütung oder der Kopfpauschale. Während die gesundheitsökonomische Forschung häufig auf die direkten Anreizwirkungen dieser Vergütungssysteme fokussiert, wird hier gezeigt, dass auch die Möglichkeit, die eigene Vergütungsform frei zu wählen, die Behandlungsqualität signifikant beeinflussen kann. Die Studie basiert auf einem Experiment, in dem die Selektion in die Einzelleistungsvergütung und die Kopfpauschale unter kontrollierten Laborbedingungen getestet wird. Mit Hilfe eines sequentiellen Designs kann zwischen Anreiz- und Selektionseffekten differenziert werden. Zudem werden die beiden Vergütungsformen so gestaltet, dass sie identische Gewinnmöglichkeiten bieten. Die Ergebnisse offenbaren eine starke Präferenz für die Einzelleistungsvergütung - unabhängig von den vorherigen Erfahrungen der Teilnehmer mit den beiden Vergütungsformen. Die Analyse des Verhaltens vor der Einführung der Auswahlmöglichkeit zeigt, dass die Teilnehmer, die sich später in die Einzelleistungsvergütung selektieren, stärker von der patienten-optimalen Behandlung abweichen als die Teilnehmer, die sich später in die Kopfpauschale selektieren. Zudem nimmt bei den Teilnehmern, die die Einzelleistungsvergütung wählen, die Behandlungsqualität nach der Einführung der Auswahlmöglichkeit weiter ab. Im Ergebnis beobachten wir bei der Einführung einer Auswahlmöglichkeit zwischen Kopfpauschale und Einzelleistungsvergütung keine Verbesserung, sondern - wenn überhaupt - eine signifikante Verschlechterung der Behandlungsqualität. Die Befunde weisen darauf hin, dass bei der Beurteilung von Vergütungssystemen sowohl Anreizeffekte als auch potentielle Selektionseffekte zu berücksichtigen sind. |
| Keywords: | physician incentives,fee-for-service,capitation,payment choice,sorting effects,laboratory experiment |
| JEL: | C91 D84 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:529&r=exp |
| By: | Baghestanian, Sascha; Massenot, Baptiste |
| Abstract: | Do markets correct individual behavioral biases? In an experimental asset market, we compare the outcomes of a standard market economy to those of a an island economy that removed market interactions. We observe asset price bubbles in the market economy while prices are stable in the island economy. We also find that subjects took more risk following larger losses, resulting in larger prices and consistent with a gambling for resurrection motive. This motive can translate into bubbles in the market economy because higher prices increase average losses and thus reinforce the desire to resurrect. By contrast, the absence of such a strategic complementarity in island economies can explain the more stable outcome. These results suggest that markets do not correct behavioral biases, rather the contrary. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:104&r=exp |
| By: | Koch, Alexander K. (Aarhus University); Nafziger, Julia (Aarhus University) |
| Abstract: | We conduct a real-effort experiment to test whether workers reciprocate generous wages by managers when workers are tempted to surf the internet. Further, we investigate how an active policy of restricting the usage of the internet affects the workers' motivation. We observe that the temptation of the internet hampers workers' willingness to reciprocate fair wages. Yet, when the manager makes an active choice not to deny internet access, workers perceive the "freedom from control" as a gift which they reciprocate with high effort. Whether the positive "freedom from control" aspect or the negative temptation aspect dominates depends on the worker's reciprocity: for highly reciprocal workers the control aspect dominates; for non-reciprocal workers the temptation aspect dominates. |
| Keywords: | gift exchange, temptation, hidden costs of control |
| JEL: | C91 D03 J33 M52 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9084&r=exp |
| By: | Dieckmann, Anja; Fischbacher, Urs; Grimm, Veronika; Unfried, Matthias; Utikal, Verena; Valmasoni, Lorenzo |
| Abstract: | We conduct an experimental study among European citizens regarding cross-cultural perceptions related to trust in two dimensions: volunteerism and honesty. We use representative samples from five major economies of the Euro area: France, Germany, Italy, the Netherlands, and Spain. We find that European citizens rely on nationality to infer behavior. Assessments of behavior show a north/south pattern in which participants from northern countries are perceived to be more honest and to provide more effort in a volunteering game than are participants from southern countries. Actual behavior is, however, not always in line with these assessments. Assessments of honesty show strong evidence of social projection: Participants expect other European citizens to be less honest if they are culturally closer to themselves. Assessments of volunteerism instead show a similar north/south-pattern in which both northern and southern Europeans expect higher performance of northerners than they do of southerners. |
| Keywords: | Cross-cultural perceptions,Europe,Honesty,Real effort,Representative experiment |
| JEL: | D82 D84 C93 Z13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:042015&r=exp |
| By: | Deversi, Marvin |
| Abstract: | In an experimental setting impulse-response behaviour in intuitive inflation forecasting is analysed. Participants were asked to forecast future values of inflation for a fictitious economy after receiving charts and lists of past values of inflation and output gap. Thirty periods were forecasted stepwise and feedback on performance was provided after each period. In a between subjects design, participants experienced a negative or positive supply shock. The results suggest that participants barely report rational forecasts. Instead, simple backward-looking rules describe stated forecast series. Forecasting is heterogeneous across agents and over time. Before the shock, most participants can be described by natural expectations. Due to the shocks 69% of participants are found to switch their forecasting rule. After the negative supply shock, subjects increase efficiency of forecasts. But, after a positive supply shock efficiency drops down to zero; this is evidence for a negativity bias. As a main result, macroeconomic shocks do alter the way experimental participants form intuitive inflation forecasts, however, to what extent depends on the shocks' characteristics. |
| Abstract: | Die vorliegende Studie untersucht die Effekte makroökonomischer Extremsituationen auf das intuitive Vorhersageverhalten von Individuen in einer experimentellen Umgebung. Die Probanden haben die Aufgabe, zukünftige Werte der Inflation einer fiktiven Volkswirtschaft vorherzusagen. Dies geschieht, nachdem sie die historische Entwicklung des Bruttoinlandsprodukts und der Inflation entsprechender Volkswirtschaft in grafischer und tabellarischer Form erhalten haben. In 30 Perioden werden jeweils Vorhersagen über die Inflation in der nächsten Periode verlangt, wobei die Probanden entsprechend der Präzision ihrer Vorhersage bezahlt werden. Nach jeder Prognose erhalten sie ein Feedback. Während der Vorhersageperioden erfahren die Probanden einen ein-periodischen, nicht-vorhersehbaren Schock; die Simulation einer Extremsituation. In einem between-subjects-design wird ein positiver oder negativer Angebotsschock induziert. Die Ergebnisse zeigen, dass nur sehr wenige Probanden rationale Vorhersagen abgeben. Eher lassen sich die Prognosereihen anhand einfacher statistischer Regeln, sog. Heuristiken, beschreiben. 69 Prozent der Probanden wechseln ihre Vorhersageheuristik durch den Schock. Nach dem negativen Angebotsschock steigt die statistische Effizienz der Vorhersagen stark an. Nach dem positiven Schock ist dies allerdings nicht zu beobachten. Dies ist Evidenz für einen sog. negativity bias. Es zeigt sich also, dass makroökonomische Extremsituationen das Vorhersageverhalten von Experimentteilnehmern beeinflussen. Allerdings variieren die Effekte entsprechend der Charakteristika der Extremsituation. |
| Keywords: | macroeconomic experiment,inflation expectations,intuitive forecasting,shocks,heterogeneity |
| JEL: | C91 D84 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:528&r=exp |
| By: | Bergheim, Ralf |
| Abstract: | This paper experimentally investigates individual information acquisition and decisions in ambiguous situations in which the degree of ambiguity can endogenously and individually be decreased by the subjects. In particular, I analyze how risk aversion, ambiguity attitude and personality traits are related to an individual's information acquisition prior to a decision and to the decision itself based on this information. I focus on urn decisions and conduct treatments that consider the loss and gain domain separately and that vary the amount of available information and the probabilistic structure. I find that risk and ambiguity aversion affect the information acquisition but are less influential for the decisions between two ambiguous urns according to several heuristics. In contrast, personality traits and an individual's primary decision type turn out to have an impact on both information acquisition and decisions. I observe that under this study's presentation format the reflection effect is reversed for negative and positive payoffs in low probability treatments compared to corresponding results under a descriptive presentation format. |
| Abstract: | Die experimentelle Studie untersucht die individuelle Informationsnachfrage und Entscheidung in Situationen, in denen der Grad an Unsicherheit endogen variiert werden kann. Durch Informationsakquise ist es den Probanden möglich, die vorherrschende Ambiguität über die Wahrscheinlichkeitsstruktur eines Entscheidungsproblems zwischen zwei Urnen zu Risiko zu reduzieren. Die Studie untersucht, wie Risikoaversion, die Einstellung zu Ambiguität und verschiedene Persönlichkeitsmerkmale sowohl die Nachfrage nach Information als auch die Entscheidung selber beeinflussen. Die Resultate zeigen, dass die individuelle Risikoaversion und die Einstellung zu Ambiguität einen signifikanten Einfluss auf die Informationsnachfrage haben. Hingegen werden die Entscheidungen anhand verschiedener Heuristiken nicht durch diese individuellen Eigenschaften erklärt. Darüber hinaus findet die Studie Hinweise darauf, dass sich der reflection effect unter dem gewählten Präsentationsformat im Vergleich zur Literatur umkehrt. |
| Keywords: | ambiguity aversion,risk aversion,experiment,decision making,information acquisition,personality traits |
| JEL: | C91 D03 D81 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:488&r=exp |
| By: | Kathleen Ngangoué; Georg Weizsäcker |
| Abstract: | Our market experiment investigates the extent to which traders learn from the price, differentiating between situations where orders are submitted before versus after the price has realized. When market participants have to submit their bids conditional on the price, they show a bias by reacting only to their private information and not to the hypothetical value of the price. In a sequential trading mechanism, where the price is known at the bid submission, bids react to price to an extent that is roughly consistent with the benchmark theory. |
| Keywords: | Naive expectations, asymmetric information, rational expectations, sequential markets |
| JEL: | D82 D81 C91 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1487&r=exp |
| By: | Calero, Carla; Gonzales, Veronica; Soares, Yuri; Kluve, Jochen; Corseuil, Carlos Henrique |
| Abstract: | This paper provides findings of a small-scale, innovative labor training program that uses expressive arts and theatre as a pedagogical tool. The corresponding life skills training component is combined with a technical component teaching vocational skills. To our knowledge, this is the first paper to rigorously evaluate the effectiveness of a training program constructed around expressive arts. Using a randomized assignment of favela youth into program and control groups, we look at the short-run treatment effects on a comprehensive set of outcomes including employment and earnings as well as measures of personality traits and risk behavior. We find positive short-run employment and earnings impacts five months after the program finalized; no impacts are found for shorter periods. These short-run impacts are economically very large, compared to those typically found in the literature: a 33.3 per cent increase in the probability of being employed, and a 23.6 per cent increase in earnings. We find no evidence of significant program impacts on other outcomes, including personality-related traits, providing evidence that these traits may not be malleable for young adults in the short-run. We argue that the estimated labor market impacts are due to a combination of both skills formation and signaling of higher quality workers to employers. |
| Keywords: | labor market training,youths,randomized controlled trial,life skills |
| JEL: | J24 J68 I38 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:486&r=exp |
| By: | Balafoutas, Loukas (University of Innsbruck); Beck, Adrian (University of Innsbruck); Kerschbamer, Rudolf (University of Innsbruck); Sutter, Matthias (University of Cologne) |
| Abstract: | We experimentally examine the impact of tax evasion attempts on the performance of credence goods markets, where contractual incompleteness results from asymmetric information on the welfare maximizing quality of the good. Our results suggest that tax evasion attempts – independently of whether they are successful or not – lead to efficiency losses in the form of too low quality and less frequent trade. Thus, shadow economies may reduce welfare not only by inducing agents to incur costs to hide or to uncover taxable transactions, by imposing risk on risk-averse tax evaders and by distorting competition, but also by creating an additional efficiency loss in the underlying market by forfeiting possible gains from trade and by inducing insufficient quality provision. We call this the hidden costs of tax evasion. |
| Keywords: | tax evasion, expert services, credence goods, fraud, experiment |
| JEL: | C72 C91 D82 H26 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9085&r=exp |
| By: | Kairies-Schwarz, Nadja; Kokot, Johanna; Vomhof, Markus; Wessling, Jens |
| Abstract: | Recent health policy reforms try to increase consumer choice. We use a laboratory experiment to analyze consumers' tastes in typical contract attributes of health insurances and to investigate their relationship with individual risk preferences. First, subjects make consecutive insurance choices varying in the number and types of contracts offered. Then, we elicit individual risk preferences according to Cumulative Prospect Theory. Applying a latent class model to the choice data, reveals five classes of consumers with considerable heterogeneity in tastes for contract attributes. From this, we infer distinct behavioral strategies for each class. The majority of subjects use minimax strategies focusing on contract attributes rather than evaluating probabilities in order to maximize expected payoffs. Moreover, we show that using these strategies helps consumers to choose contracts, which are in line with their individual risk preferences. Our results reveal valuable insights for policy makers of how to achieve efficient consumer choice. |
| Abstract: | Jüngste Gesundheitsreformen versuchen, Wahlmöglichkeiten für Konsumenten zu verbessern. Wir verwenden ein Laborexperiment, um die Präferenzen von Konsumenten für typische Vertragsattribute von Krankenversicherungen zu analysieren und um ihre Beziehung zu individuellen Risikopräferenzen zu untersuchen. Zuerst treffen Teilnehmer aufeinanderfolgende Versicherungsentscheidungen, die in der Anzahl und der Art der angebotenen Verträge variieren. Anschließend erheben wir individuelle Risikopräferenzen im Sinne der kumulativen Prospect Theory. Ein auf die Entscheidungsdaten angewandtes Latent Class Modell kann fünf Klassen von Konsumenten mit einer beachtlichen Heterogenität in Präferenzen für Vertragsattribute identifizieren. Davon ausgehend leiten wir spezifische Verhaltensstrategien für jede Klasse ab. Die Mehrheit der Teilnehmer wendet Minimax-Strategien an und konzentriert sich auf Vertragsattribute, anstatt Wahrscheinlichkeiten zu bewerten um die erwartenden Auszahlungen zu maximieren. Ferner zeigen wir, dass die Anwendung dieser Strategien Konsumenten hilft, Verträge zu wählen, die mit ihren individuellen Risikopräferenzen übereinstimmen. Unsere Ergebnisse liefern wertvolle Einsichten für politische Entscheidungsträger, wie sie effiziente Wahlmöglichkeiten für Konsumenten erreichen können. |
| Keywords: | health insurance,risk preferences,heterogeneity,heuristics,laboratory experiment,cumulative prospect theory |
| JEL: | C91 I13 D81 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:537&r=exp |
| By: | Shinichi Hirota (School of Commerce, Waseda University); Juergen Huber (Dept. of Finance, University of Innsbruck); Thomas Stock (Dept. of Banking and Finance, University of Innsbruck); Shyam Sunder (School of Management and Cowles Foundation, Yale University) |
| Abstract: | We examine how different investment horizons, and consequently the number of hands through which a security passes during its life, affect prices in a laboratory market populated by overlapping generations of investors. We find that (i) price deviations are larger in markets populated only by short-horizon investors compared to markets with long-horizon investors; (ii) for a given maturity of security, price deviations increase as investment horizons shrink (and frequency of transfers increases); and (iii) short investment horizons create upward pressure on prices when liquidity is high and downward pressure when liquidity is low. |
| Keywords: | Experimental finance, Short-horizon investors, Rational expectations, Price efficiency, Overlapping generations |
| JEL: | C91 G11 G12 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2001&r=exp |
| By: | Peter Z. Schochet |
| Abstract: | This report discusses the statistical theory underlying the RCT-YES software, which is being developed to estimate and report the effects of interventions and policies for a wide range of experimental designs. |
| Keywords: | Randomized Controlled Trials, Impact Estimation, Quantitative Methods, Causal Inference, Education Interventions |
| JEL: | I |
| Date: | 2015–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:a0c005c003c242308a92c02dcca08793&r=exp |
| By: | Bergheim, Ralf; Ernstberger, Jürgen; Roos, Michael W. M. |
| Abstract: | This paper experimentally investigates how fair value measurements of financial instruments affect the decision of nonprofessional investors to invest in a bank's shares. Specifically, we assess how investors respond to variations in net income resulting from fair value adjustments in trading assets and how the reliability of the fair value estimates affects their decision. We find that investment decreases as a result of transitions from the first to the third level and we even observe lower investments in case of positive changes in income. Investment decreases most if negative valuation adjustments are based on level 1 estimates suggesting that down pricing by the market is considered as a worse signal than model-based decreases in net income. For larger positive and negative adjustments the impact of valuation levels on investment turns out to be limited. Our results do not provide evidence that Fair Value Accounting per se induces pro-cyclical investment behavior. |
| Abstract: | Die experimentelle Studie untersucht, wie die Bewertung zum Fair Value die Investitionsentscheidung nicht-professioneller Investoren beeinflusst. Dabei wird die Entscheidung, in Aktien einer Bank zu investieren, in Reaktion auf verschieden hohe Bewertungsänderungen der Aktiva Position 'Wertpapiere' der Bank untersucht. Es erfolgt des Weiteren eine differenzierte Betrachtung der Auswirkungen der Fair Value Hierarchie (Level 1-3) auf die Investitionsbereitschaft. Die Resultate zeigen, dass die Investitionsbereitschaft sowohl für negative als auch positive Bewertungsänderungen abnimmt. Die geringste Investitionsbereitschaft wird im Fall von negativen Bewertungsänderungen auf Grundlage beobachtbarer Marktpreise beobachtet (Level 1). |
| Keywords: | banks,fair value accounting,nonprofessional investors,investment decision,experiment |
| JEL: | C91 G11 M41 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:487&r=exp |
| By: | Heike Hennig-Schmidt (University of Bonn); Gari Walkowitz (University of Cologne) |
| Abstract: | This paper aims to better understand negotiation behaviour between Germans and Chinese. We study intra- and inter-cultural bargaining in negotiations with asymmetric outside options. Our analysis is based on team decisions and verbal transcripts of video-recorded within- and between-team discussions. The data show the importance of aspiration formation in combination with equity concerns. Before the negotiation starts, all teams already have formulated goals that can be traced during the subsequent negotiation. Moreover, all first offers and demands and the majority of final outcomes represent equitable shares of the amount at stake. Teams often agree upon the 'Split the Difference' allocation, which represents a feasible and justifiable compromise. Chinese typically gather as much information on their counterparts as possible, anticipate and simulate their counterparts' behavior and make harmony an issue. German teams, however, put great emphasis on fairness issues and aim at efficient outcomes by reaching an acceptable payoff within reasonable time. |
| Keywords: | Bargaining, Negotiation, Culture, Aspirations, Equity, Experiment |
| JEL: | C7 F51 C92 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:06-01&r=exp |
| By: | Bensch, Gunther; Peters, Jörg |
| Abstract: | Today 2.6 billion people in developing countries rely on biomass as primary cooking fuel, with profound negative implications for their well-being. Improved biomass cooking stoves are alleged to counteract these adverse effects. This paper evaluates take-up and impacts of low-cost improved stoves through a randomized controlled trial. The randomized stove is primarily designed to curb firewood consumption but not smoke emissions. Nonetheless, we find considerable effects not only on firewood consumption, but also on smoke exposure and smoke-related disease symptoms - induced by behavioural changes at the intensive margin affecting outside cooking and cooking time due to the new stove. |
| Abstract: | Fast drei Milliarden Menschen in Entwicklungsländern kochen auf traditionelle Art und Weise mit Biomasse. Damit einhergehende Folgen sind unter anderem eine verstärkte Abholzung der Wälder und eine ausgeprägte Rauchpartikelbelastung der Haushalte. Kochöfen, die eine effizientere und sauberere Verbrennung ermöglichen, gelten als probates Mittel, negativen Effekten auf die Lebensbedingungen der betroffenen Bevölkerung entgegenzuwirken und den Holzverbrauch zu reduzieren. Dieser Beitrag untersucht die Einführung und in der Folge auftretende Wirkungen von verbesserten und zugleich einfachen Kochöfen anhand einer randomisierten kontrollierten Studie im ländlichen Senegal. Der untersuchte Ofen ist in erster Linie dazu konzipiert den Feuerholzverbrauch zu reduzieren und günstig lokal herstellbar zu sein. Jedoch lassen sich auch erhebliche positive Gesundheitswirkungen nachweisen, die einer geringeren Rauchbelastung zugeschrieben werden, welche wiederum auf Verhaltensänderungen zurückzuführen ist: Haushalte kochen vermehrt im Freien und Köche verbringen deutlich weniger Zeit an der Feuerstelle. Diese Beobachtungen liefern weitere Evidenz dafür, dass die Effektivität von technologieorientierten Interventionen stark von dem Verhalten, wie die neue Technologie genutzt wird, beeinflusst werden kann. |
| Keywords: | impact evaluation,randomized controlled trial,respiratory disease symptoms,energy access,technology adoption |
| JEL: | C93 O12 O13 Q53 Q56 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:494&r=exp |
| By: | Bollinger, Bryan (Duke University); Hartmann, Wesley R. (Stanford University) |
| Abstract: | A fixed cost investment in home automation technology can eliminate consumers' marginal costs of responding to changing demand conditions. We estimate the welfare effects of a home automation technology using a field experiment run by a large electric utility that randomly assigned both a technology and price treatment. Average treatment effects reveal that the home automation technology reduces demand more than twice as much as an alternative technology that only informs consumers of price changes. Furthermore, the average demand reductions during critical price events provide sufficient supply-side welfare gains to fully offset the installation costs of the device. Finally, we estimate household-specific treatment effects by matching households on their pre-treatment policy functions. This demonstrates the additional surplus gained by the utility if it targeted these treatments to households with the largest estimated demand responses. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3274&r=exp |
| By: | Anek Belbase; Norma B. Coe; April Yanyuan Wu |
| Abstract: | While life insurance purchase decisions have long been studied, we still do not know how people decide if they need insurance or how much they need. Using in-depth interviews, we peer into the black box of employee decision-making to learn what people know about this employee-benefit, and how they decide if it is of value to them. We find that individuals understand the need for life insurance but find many behavioral economic barriers to getting adequate coverage, including mental accounting, money illusion, and the strong role of defaults. We then conduct an online experiment of the hypothetical employee-benefit purchase scenario and find a few, simple interventions could help individuals better decide their life insurance needs. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2015-5&r=exp |