|
on Experimental Economics |
|
Issue of 2015‒06‒20
forty papers chosen by |
| By: | Tor Eriksson (Department of Economics and Business, Aarhus School of Business and Social Sciences, Aarhus University. Fuglesangs Allé 4, 8210 Aarhus V, Denmark); Lei Mao (School of Insurance, Central University of Finance and Economics, Beijing, China) |
| Abstract: | Are people willing to sacrifice resources to save one’s and others’ face? In a laboratory experiment, we study whether individuals forego resources to avoid the public exposure of the least performer in their group. We show that a majority of individuals are willing to pay to preserve not only their self- but also other group members’ image. This behavior is frequent even in the absence of group identity. When group identity is more salient, individuals help regardless of whether the least performer is an in-group or an out-group. This suggests that saving others’ face is a strong social norm. |
| Keywords: | Saving face, social image, pro-social behavior, group identity, experiment |
| JEL: | C92 D03 M52 Z13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1515&r=exp |
| By: | Spiros Bougheas (Department of Economics, University of Nottingham.); Jeroen Nieboer (Department of Social Policy, London School of Economics and Political Science); Martin Sefton (Department of Economics, University of Nottingham) |
| Abstract: | We report a controlled laboratory experiment examining risk-taking and information aggregation in groups facing a common risk. The experiment allows us to examine how subjects respond to new information, in the form of both privately observed signals and signals reported from others. We find that a considerable number of subjects exhibit ‘reverse confirmation bias’: they place less weight on information from others that agrees with their private signal and more weight on conflicting information. We also find a striking degree of consensus when subjects make decisions on behalf of the group under a random dictatorship procedure. Reverse confirmation bias and the incidence of consensus are considerably reduced when group members can share signals but not communicate. |
| Keywords: | Group behavior; Teams; Decision Making; Risk; Experiment |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-07&r=exp |
| By: | Romain Baeriswyl (Swiss National Bank, Boersenstrasse 15, 8022 Zurich, Switzerland); Camille Cornand (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon Saint-Etienne, Ecully, F-69130, France; Université Lyon 2, Lyon, F-69007, France) |
| Abstract: | In an experimental monetary general equilibrium economy, we assess two processes of monetary injection : credit expansion vs. lump-sum monetary transfers. In theory, both processes are neutral and exert no real effect on allocation. In the experiment, however, credit expansion leads to substantial distortions of real allocation and relative prices, and exerts a redistributive effect across subjects. By contrast, an increase in money through lump-sum transfers does not distort real allocation. |
| Keywords: | laboratory experiment, money neutrality, credit expansion, lump-sum monetary transfers |
| JEL: | C92 E52 E58 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1516&r=exp |
| By: | Giovanna D'Adda (Department of Management, Economics and Industrial Organization (DIG), Politecnico di Milano); Michalis Drouvelis (Department of Economics, University of Birmingham.); Daniele Nosenzo (Department of Economics, University of Nottingham.) |
| Abstract: | We investigate norms of corruption using the norm-elicitation procedure introduced by Krupka and Weber (2013). We use a within-subject design whereby the norms are elicited from the same subjects who are observed making choices in a bribery game. We test whether the order in which the norm-elicitation task and the bribery game are conducted affects elicited norms and behavior. We find little evidence of order effects in our experiment. |
| Keywords: | social norms; norm elicitation; order effects; within-subject design; corruption; bribe game |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-02&r=exp |
| By: | Das, Abhishek; Gupta, Gautam |
| Abstract: | In this paper we use a heterogeneously endowed Overlapping Generation model (OLG) in an experimental framework. . In our experimental OLG economy young subjects are asked either to predict the inflation rate for the next period or to decide his/her savings for the current period. We find that for both the decisions neither higher amount of government expenditure nor the higher amount of money supply by monetary authority will move inflation rate towards equilibrium. We also find that that if there is much uncertainty, Friedman Conjecture will not work. |
| Keywords: | OLG-model; Expectations; Inflation; Stability; Monetary policy; Experiments |
| JEL: | C92 E21 E31 E52 |
| Date: | 2015–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65007&r=exp |
| By: | Simon Gaechter (Department of Economics, University of Nottingham.); Lingbo Huang (Department of Economics, University of Nottingham); Martin Sefton (Department of Economics, University of Nottingham) |
| Abstract: | We introduce the “ball-catching taskâ€, a novel computerized real effort task, which combines “real†efforts with induced material cost of effort. The central feature of the ball-catching task is that it allows researchers to manipulate the cost of effort function as well as the production function, which permits quantitative predictions on effort provision. In an experiment with piece-rate incentives we find that the comparative static and the point predictions on effort provision are remarkably accurate. We also present experimental findings from three classic experiments, namely, team production, gift exchange and tournament, using the task. All of the results are closely in line with the stylized facts from experiments using purely induced values. We conclude that the ball-catching task combines the advantages of real effort with induced values, which is useful for theory-testing purposes as well as for applications. |
| Keywords: | Experimental design, real effort task, induced values, incentives, piece-rate theory, team incentives, gift exchange, tournaments, online real effort experiments |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-08&r=exp |
| By: | Jonathan Schulz (Department of Economics, University of Nottingham.); Petra Thiemann (University of Southern California.); Christian Thoeni (University of Lausanne.) |
| Abstract: | In an experimental setup we investigate the effect of defaults on charitable giving. In the treatment group, subjects can either specify a charity of their choice, or select one from a default list of five well-known charities; in the control group we do not provide the list. In a sample of 869 subjects we find that offering a list of default charities doubles both the fraction of donors and the aggregate amount of donations. These findings point to the importance of psychological factors like affective reactions in donation decisions. |
| Keywords: | charitable giving; defaults; donation; affective reactions |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-06&r=exp |
| By: | Ulrich Schmidt; Levent Neyse; Milda Aleknonyte |
| 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: | C93 D63 J31 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:2000&r=exp |
| By: | Kathrin Dengler-Roscher (Institute of Economics, Ulm University, Germany); Natalia Montinari (Department of Economics, Lund University, Sweden); Marian Panganiban (Max Planck Institute for Research on Collective Goods, Bonn and Friedrich Schiller University, Jena, Germany); Matteo Ploner (Department of Economics and Management University of Trento, Italy); Benedikt Werner (Max Planck Institute for Research on Collective Goods, Bonn and Friedrich Schiller University, Jena, Germany) |
| Abstract: | How malleable are people's fairness ideals? Although fairness is an oft-invoked concept in allocation situations, it is still unclear whether and to what extent people's allocations reflect their fairness ideals. We investigate in a laboratory experiment whether people's fairness ideals vary with respect to changes in the order in which they undertake two allocation tasks. Participants first generate resources in a real- effort task and then distribute them. In the partial allocation task, the participant determines the earnings for himself and another participant. In the impartial allocation task, the participant determines the earnings for two other participants. We also manipulate the participants' experience, i.e, whether they took part in similar allocation experiments before. We find that participants are more likely to allocate more resources to themselves than what they earned in the real-effort task when they decide partially. Exclusively for inexperienced participants, deciding impartially first dampens selfish behavior when they decide partially. |
| Keywords: | fairness, proportionality principle, dictator, partial stakeholders, impartial spectators, fairness bias |
| JEL: | C72 C91 D63 D64 |
| Date: | 2015–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2015-006&r=exp |
| By: | Dengler-Roscher, Kathrin (Institute of Economics, Ulm University); Montinari, Natalia (Department of Economics, Lund University); Panganiban, Marian (Max Planck Institute for Research on Collective Goods, Bonn); Ploner, Matteo (Department of Economics and Management, University of Trento); Werner, Benedikt (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | How malleable are people’s fairness ideals? Although fairness is an oft-invoked concept in allocation situations, it is still unclear whether and to what extent people’s allocations reflect their fairness ideals. We investigate in a laboratory experiment whether people’s fairness ideals vary with respect to changes in the order in which they undertake two allocation tasks. Participants first generate resources in a real- effort task and then distribute them. In the partial allocation task, the participant determines the earnings for himself and another participant. In the impartial allocation task, the participant determines the earnings for two other participants. We also manipulate the participants’ experience, i.e., whether they took part in similar allocation experiments before. We find that participants are more likely to allocate more resources to themselves than what they earned in the real-effort task when they decide partially. Exclusively for inexperienced participants, deciding impartially first dampens selfish behavior when they decide partially. |
| Keywords: | Fairness; Proportionality Principle; Dictator; Partial Stakeholders; Impartial Spectators; Fairness Bias |
| JEL: | C72 C91 D63 D64 |
| Date: | 2015–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2015_017&r=exp |
| By: | David Kopanyi (Department of Economics, University of Nottingham); Anita Kopanyi-Peuker (University of Amsterdam) |
| Abstract: | With this research we examine whether observing firm-specific production levels leads to a less competitive market outcome. We consider an endogenous information setting where firms can freely decide whether they want to share information about their past production levels. By voluntarily sharing information, firms can show their willingness to cooperate.We conduct a laboratory experiment where firms decide only about their production levels first, and the information they receive is exogenous (either no information, or aggregate / disaggregated information about others' production, in varying order). Later, firms can also decide whether to share their past production levels with others. We vary the kind of information firms receive: they receive the shared information either in aggregate or in disaggregated form. Our results show no difference in average total outputs across data aggregation and information settings. However, we observe more collusion when individual information was shared voluntarily. Our results show that subjects use voluntary sharing to show their intentions to cooperate. If they share information, they produce significantly less than if they do not share information. |
| Keywords: | Cournot competition, information, collusion, experiment |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-11&r=exp |
| By: | Damon Jones; Aprajit Mahajan |
| Abstract: | We conduct a field experiment designed to test theories of time-inconsistency, namely a "Beta-Delta" model of present bias. The experiment takes place in the context of a saving decision made by low-income tax filers who can deposit their income tax refund into an illiquid account. We find qualitative evidence consistent with present-biased preferences. The tradeoff between an earlier payment or a later one is much more skewed toward taking the early payment when the decision is made on the spot than when the decision is made in advance. We estimate a β and δ of 0.34 and 1.08 over an 8-month horizon, respectively, which translates into an annual discount rate of 164%. |
| JEL: | D14 D91 H24 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21272&r=exp |
| By: | Jeffrey Naecker (Stanford University) |
| Abstract: | There is significant variation in the percentage of adults registered as organ donors across the United States. Some of this variation may be due to characteristics of the sign-up process, in particular the form that is used when state residents renew or apply for their driver’s licenses. However, it is difficult to model and predict the success of the different forms with typical methods, due to the exceptionally large feature space and the limited data. To surmount this problem, I apply a methodology that uses data on subjective non-choice reactions to predict choices. I find that active (ie yes-no) framing of the designation question decreases designation rates by 2-3 percentage points relative to an opt-in framing. Additionally, I show that this methodology can predict behavior in an experimental setting involving social motives where we have good structural benchmarks. More generally, this methodology can be used to perform policy pseudo-experiments where field experiments would prove prohibitively expensive or difficult. |
| Keywords: | Organ donation, social preferences, lab experiment. |
| JEL: | C91 D12 H31 Q51 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:sip:dpaper:15-021&r=exp |
| By: | Englmaier, Florian; Roider, Andreas; Sunde, Uwe |
| Abstract: | In corporate practice, incentive schemes are often complicated even for simple tasks. Hence, the way they are communicated might matter. In a controlled field experiment, we study a minimally invasive change in the communication of a well-established incentive scheme - a reminder regarding the piece rate at the beginning of the shift. The experiment was conducted in a large firm where experienced managers work in a team production setting and here incentives for both quantity and quality of output are provided. While the treatment conveyed no additional material information and left the incentive system unchanged, it had significant positive effects on quantity and on managers' compensation. These effects are economically sizable and robust to alternative empirical specifications. We consider various potential mechanisms, where our preferred explanation - improved salience of incentives - is consistent with all of the findings |
| Keywords: | incentives; attention; salience; communication; field experiment |
| JEL: | M52 J30 D03 D80 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:507&r=exp |
| By: | Timothy N. Cason; Vai-Lam Mui |
| Abstract: | This paper reports an experiment to evaluate the effectiveness of repeated interactions in deterring leaders’ from using divide-and-conquer strategies to extract surplus from their subordinates, when every decision-maker involved is a group instead of an individual. We find that both the resistance rate by subordinates and the divide-and-conquer transgression rate by leaders are the same in the group and individual repeated coordinated resistance games. Similar to the individual game, adding communication to the group game can help deter opportunistic behavior by the leaders even in the presence of repetition. |
| Keywords: | Communication, Coordinated Resistance, Divide-and-Conquer, Laboratory experiment, Repeated Games, Group Decision-Making |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2015-13&r=exp |
| By: | Baert, Stijn |
| Abstract: | Correspondence studies are nowadays viewed as the most compelling avenue to test for hiring discrimination. However, these studies suffer from one fundamental methodological problem, as formulated by Heckman and Siegelman (The Urban Institute audit studies: Their methods and findings. In M. Fix, and R. Struyk (Eds.), Clear and convincing evidence: Measurement of discrimination in America, 1993), namely the bias in their results in case of group differences in the variance of unobserved determinants of hiring outcomes. In this study, the authors empirically investigate this bias in the context of gender discrimination. They do not find significant evidence for the predicted bias. |
| Keywords: | correspondence experiments,gender discrimination,unobserved heterogeneity |
| JEL: | J16 J71 M51 J41 C93 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201544&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); Noemi Pace (Universy Ca' Foscari of Venice, and CEIS Tor Vergata); Luca Panaccione (DEDI and CEIS, Università di Roma "Tor Vergata",) |
| Abstract: | This paper focuses on a bargaining experiment in which the privately informed seller of a company sends a value message to the uninformed potential buyer who then proposes a price for acquiring the company. Participants are constantly in the role of either seller or buyer and interact over 30 rounds with randomly changing partners in the other role. We test how overstating the value of the company, underpricing the received value message and acceptance of price offers are affected by experience and gender (constellation). Like in our companion paper on single play (Di Cagno et al. 2015) we control via treatments for awareness of gender (constellation). One main hypothesis is that gender (constellation) matters but that the effects become weaker with more experience and that the main experience effects apply across gender (constellations). |
| Keywords: | bargaining, cheap-talk, experience effect, experiment, gender, winner’s curse |
| JEL: | C78 C91 |
| Date: | 2015–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:346&r=exp |
| By: | Laurent Bouton (Department of Economics, Georgetown University); Micael Castanheira; Aniol Llorente-Saguer (School of Economics and Finance, Queen Mary, University London) |
| Abstract: | The rational-voter model is often criticized on the grounds that two of its central predictions (the paradox of voting and Duverger's Law) are at odds with reality. Recent theoretical advances suggest that these empirically unsound predictions might be an artifact of an (arguably unrealistic) assumption: the absence of aggregate uncertainty about the distribution of preferences in the electorate. In this paper, we propose direct empirical evidence of the effect of aggregate uncertainty in multicandidate elections. Adopting a theory-based experimental approach, we explore whether aggregate uncertainty indeed favors the emergence of non-Duverger's law equilibria in plurality elections. Our experimental results support the main theoretical predictions: sincere voting is a predominant strategy under aggregate uncertainty, whereas without aggregate uncertainty, voters massively coordinate their votes behind one candidate, who wins almost surely. |
| Keywords: | Rational Voter Model, Multicandidate Elections, Plurality, Aggregate Uncertainty, Experiments |
| JEL: | C92 D70 |
| Date: | 2015–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~15-15-03&r=exp |
| By: | Timothy N. Cason; Vai-Lam Mui |
| Abstract: | Effective deterrence of leader transgression is necessary for economic development, and coordinated resistance by citizens is key to deter leader transgression. Leaders, however, often employ a divide-and-conquer strategy to prevent successful coordinated resistance. This paper presents a laboratory experiment to investigate how social motivations and free-form communication (Rich Communication) can facilitate coordinated resistance. In our experiment, a leader first decides whether to extract surplus from a victim and shares it with a beneficiary. We provide direct statistical evidence that victims and beneficiaries communicate with different intensity and content: victims more quickly and vigorously engage in communication, while beneficiaries propose to acquiesce more frequently. The successful joint resistance rate increases almost four-fold (from 15 to 58 percent) when moving from the more restrictive communication treatments to Rich Communication. We also find that the significant impacts of rich communication are driven more by the responders’ ability to send free-form messages rather than the multiple and iterative opportunities to indicate intentions. |
| Keywords: | Rich Communication, Coordinated Resistance, Laboratory Experiment, Content Analysis, Divide-and Conquer |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2015-14&r=exp |
| By: | Matías Busso; Julián Cristia; Sarah Humpage |
| Abstract: | Many families fail to vaccinate their children despite the supply of these services at no cost. This study tests whether personal reminders can increase demand for vaccination. |
| Keywords: | Vaccination, Guatemala, Reminders, Field Experiment, Health, International |
| JEL: | F Z |
| Date: | 2015–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:2ea4bb4b7903470984f3296a1aeb3b31&r=exp |
| By: | John Griffin (U.S. Department of Defense) |
| Abstract: | Objectives: I examine risk premia and the influence of Knightian uncertainty in a laboratory market featuring a long-lived asset. Methods: I employ an experimental asset market, utilizing features which are designed to forestall bubbles and crashes. I alter the riskiness of the asset from market to market along two dimensions— expected variance and upside/downside potential. Furthermore, I include a treatment which introduces uncertainty with respect to the expected value of the asset. Results: Bubbles and crashes are absent. Positive, statistically significant risk premia emerge. The risk premia are not sensitive to expected variance, but do vary positively with the magnitude of potential loss. The introduction of Knightian uncertainty does not appear to influence market prices, however it does increase trading volume. Conclusions: When speculative activity is tempered, risk aversion is manifest in market prices. Subjects appear to view risk in the context of potential loss rather than volatility. Return premia for uncertainty are absent, suggesting a lack of uncertainty aversion. Increased trading activity in the presence of uncertainty may be due to differing opinions with regards to the value of the asset or to divergent levels of uncertainty aversion. |
| Keywords: | Risk Premia, Risk Aversion, Loss Aversion, Ambiguity, Uncertainty |
| JEL: | C92 D81 D83 G11 G12 |
| URL: | http://d.repec.org/n?u=RePEc:frd:wpaper:dp2015-01&r=exp |
| By: | Doruk Ä°riÅŸ; Jungmin Lee; Alessandro Tavoni |
| Abstract: | The provision of global public goods, such as climate change mitigation and managing fisheries to avoid overharvesting, requires the coordination of national contributions. The contributions are managed by elected governments who, in turn, are subject to public pressure on the matter. In an experimental setting, we randomly assign subjects into four teams, and ask them to elect a delegate by a secret vote. The elected delegates repeatedly play a one shot public goods game in which the aim is to avoid losses that can ensue if the sum of their contributions falls short of a threshold. Earnings are split evenly among the team members, including the delegate. We find that delegation causes a small reduction in the group contributions. Public pressure, in the form of teammates’ messages to their delegate, has a significant negative effect on contributions, even though the messages are designed to be payoff-inconsequential (i.e., cheap talk). The reason for the latter finding is that delegates tend to focus on the least ambitious suggestion. In other words, they focus on the lower of the two public good contributions preferred by their teammates. This finding is consistent with the prediction of our model. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp186&r=exp |
| By: | Daniele Nosenzo (Department of Economics, University of Nottingham.); Fabio Tufano (Department of Economics, University of Nottingham.) |
| Abstract: | We study the effects of voluntary participation on public good provision. Voluntary participation may foster cooperation through two mechanisms: an entry mechanism, which leads to assortative selection of interaction partners, or an exit mechanism, whereby the opportunity to leave the partnership can be used as a means to resist exploitation by free-riders. We examine the relative effectiveness of these two mechanisms in a one-shot, two-person public goods game experiment. We find that voluntary participation has a positive effect on public good provision through the exit mechanism, but we do not find evidence of a positive effect of entry. Assortative selection of interaction partners seems to play a minor role in our setting, whereas the threat of costly exit is a powerful force to discipline free-riding. |
| Keywords: | public goods; cooperation; voluntary participation; exit; entry; experiment |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-04&r=exp |
| By: | Pedro Rey-Biel (Universitat Autònoma de Barcelona and Barcelona GSE); Roman Sheremeta (Weatherhead School of Management at Case Western Reserve University and the Economic Science Institute at Chapman University); Neslihan Uler (Institute for Social Research at the University of Michigan) |
| Abstract: | We study how giving depends on income and luck, and how culture and information about the determinants of others’ income affect this relationship. Our data come from an experiment conducted in two countries, the US and Spain, which have different beliefs about how income inequality arises. We find no cross-cultural differences in giving when individuals are informed about the determinants of income, but when uninformed, Americans give less than Spanish. Culture and information not only affect individual giving, but also the determinants of giving and the beliefs about how income inequality arises. Beliefs partially moderate cross-cultural differences in giving. |
| Keywords: | individual giving, information, culture, beliefs, laboratory experiment |
| JEL: | C91 D64 D83 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:15-12&r=exp |
| By: | Ekaterina Sherstyuk (University of Hawaii at Manoa, Department of Economics); Nori Tarui (University of Hawaii at Manoa, Department of Economics); Majah-Leah Ravago (School of Economics, University of the Philippines Diliman); Tatsuyoshi Saijo (Kochi University of Technology) |
| Abstract: | Dynamic externalities are at the core of many long-term environmental problems, from species preservation to climate change mitigation. We use laboratory experiments to compare welfare outcomes and underlying behavior in games with dynamic externalities under two distinct settings: traditionally studied games with infinitely-lived decision makers, and more realistic intergenerational games. We show that if decision makers change across generations, resolving dynamic externalities becomes more challenging for two distinct reasons. First, decision makers' actions may be short-sighted due to their limited incentives to care about the future generations' welfare. Second, even when the incentives are perfectly aligned across generations, increased strategic uncertainty of the intergenerational setting may lead to an increased inconsistency of own actions and beliefs about the others, making own actions more myopic. Access to history and advice from previous generations may improve dynamic efficiency, but may also facilitate coordination on non-cooperative action paths. |
| Keywords: | Economic experiments, dynamic externalities, intergenerational games, climate change |
| JEL: | C92 D62 D90 Q54 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201509&r=exp |
| By: | Jesse Chandler; Gabriele Paolacci; Eyal Peer; Pam Mueller; Kate A. Ratliff |
| Abstract: | Although researchers often assume their participants are naive to experimental materials, this is not always the case. We investigated how prior exposure to a task affects subsequent experimental results. |
| Keywords: | nonnaïveté, repeated participation, effect sizes, judgment and decision making, panel conditioning, research methods, open data, open materials |
| JEL: | C |
| Date: | 2015–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:bffac982a56e4cfba3659e74a7622005&r=exp |
| By: | Tom Lane (School of Economics, University of Nottingham) |
| Abstract: | Economists are increasingly using experiments to study and measure discrimination between groups. In a meta-analysis containing 447 results from 77 studies, we find groups significantly discriminate against each other in roughly a third of cases. Discrimination varies depending upon the type of group identity being studied: it is stronger when identity is artificially induced in the laboratory than when the subject pool is divided by ethnicity or nationality, and higher still when participants are split into socially or geographically distinct groups. In gender discrimination experiments, there is significant favouritism towards the opposite gender. There is evidence for both taste-based and statistical discrimination; tastes seem to drive the relatively strong discrimination with artificial identity, while statistical motivations moderate it. Relative to all other decision-making contexts, discrimination is much stronger when participants are asked to allocate payoffs between passive ingroup and out-group members. Students and non-students appear to discriminate equally. We discuss possible interpretations and implications of our findings. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-03&r=exp |
| By: | Michalis Drouvelis (Department of Economics, University of Birmingham.); Daniele Nosenzo (Department of Economics, University of Nottingham.); Martin Sefton (Department of Economics, University of Nottingham.) |
| Abstract: | We study, experimentally, how two alternative incentive mechanisms affect team performance, and how a team chooses between alternative mechanisms. We study a group incentive mechanism, where team output is shared equally among team members, and a hierarchical mechanism team output is allocated by a team leader. Our experiment examines these mechanisms in both homogeneous teams, where workers have identical productivities and in heterogeneous teams, where workers vary in their productivity. Our results are robust to whether teams are homogeneous or heterogeneous. We find that output is higher when a leader has the power to allocate output, but this mechanism also generates large differences between earnings of leaders and other team members. When team members can choose how much of team output is to be shared equally and how much is to be allocated by a leader, they tend to restrict the leader’s power to distributing less than half of the pie. |
| Keywords: | Team Production, Leadership, Reward Power, Delegation, Experiment |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-05&r=exp |
| By: | Youjin Hahn; Asadul Islam; Eleonora Patacchini; Yves Zenou |
| 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: | Network centrality, team work, leaders, soft skills |
| JEL: | A14 C93 D01 I20 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2015-35&r=exp |
| By: | Simone Quercia (University of Bonn, Institute for Applied Microeconomics (IAME)) |
| Abstract: | Betrayal aversion has been operationalized as the evidence that subjects demand a higher risk premium to take social risks compared to natural risks. This evidence has been first shown by Bohnet and Zeckhauser (2004) using an adaptation of the Becker – DeGroot – Marshak mechanism (BDM, Becker et al. (1964)). We compare their implementation of the BDM mechanism with a new version designed to facilitate subjects’ comprehension. We find that, although the two versions produce different distributions of values, the size of betrayal aversion, measured as an average treatment difference between social and natural risk settings, is not different across the two versions. We further show that our implementation is preferable to use in practice as it reduces substantially subjects’ mistakes and hence the likelihood of noisy valuations. |
| Keywords: | experiments, betrayal aversion, trust game, Becker – DeGroot – Marshak mechanism, preference elicitation |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-09&r=exp |
| By: | Freeman, David; Halevy, Yoram; Kneeland, Terri |
| Abstract: | We experimentally study the effect of embedding pairwise choices between lotteries within a choice list on measured risk attitude. Subjects choose the riskier lottery significantly more often when responding to a choice list. This failure of incentive compatibility can be rationalized by the interaction between non-expected utility and the random incentive system, as suggested by Karni and Safra (1987). |
| Keywords: | random incentive system, isolation, independence axiom, multiple price list, reduction of compound lotteries, preference reversals. |
| JEL: | D81 C91 |
| Date: | 2015–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:pmicro:yoram_halevy-2015-9&r=exp |
| By: | Barrera-Osorio,Felipe; Raju,Dhushyanth |
| Abstract: | This paper presents evidence from the first three years of a randomized controlled trial of a government-administered pilot teacher performance pay program in Punjab, Pakistan. The program offers yearly cash bonuses to teachers in a sample of public primary schools with the lowest mean student exam scores in the province. Bonuses are linked to three school-level indicators: the gain in student exam scores, the gain in school enrollment, and the level of student exam participation. Bonus receipt and size are also randomly assigned across schools according to whether or not the teacher is the school?s head. On average, the program increases school enrollment by 4.1 percent and student exam participation rates by 3.4 percentage points, both in the third year. The analysis does not find that the program increases student exam scores in any year. Mean impacts are similar across program variants. The positive mean impact on school enrollment is mainly seen in urban schools and the positive mean impact on student exam participation rates is only seen in rural schools. |
| Date: | 2015–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7307&r=exp |
| By: | Nadine Chlaß; Lata Gangadharan; Kristy Jones |
| Abstract: | Charitable donations are often made through intermediaries who can fund themselves from these same donations. Donors who purchase charitable output through an intermediary incur a principal-agent problem with unobservable prices. We compare charitable giving in an experiment with and without intermediation. Overall, donors give less when an intermediary is introduced, a decision which can only be partly explained by donors’ beliefs about the price of charitable output. However, this overall result can be attributed to only 41 per-cent of all donors. 59 per-cent of all donors in fact give as much or more with than without intermediation. Responses to intermediation can be explained by characteristics of donors’ moral judgment. |
| Keywords: | charitable giving; altruism; intermediation; charitable institutions, price elasticity; moral judgment reasoning |
| JEL: | C91 D64 L31 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2015-18&r=exp |
| By: | Christine L. Exley (Stanford University) |
| Abstract: | Decisions involving charitable giving often occur under the shadow of risk. A common finding is that potential donors give less when there is greater risk that their donation will have less impact. While this behavior could be fully rationalized by standard economic models, this paper shows that an additional mechanism is relevant: the use of risk as an excuse not to give. In a laboratory study, participants evaluate risky payoffs for themselves and risky payoffs for a charity. When their decisions do not involve tradeoffs between money for themselves and the charity, they respond very similarly to self risk and charity risk. By contrast, when their decisions force tradeoffs between money for themselves and the charity, participants act more averse to charity risk and less averse to self risk. These altered responses to risk bias participants towards choosing payoffs for themselves more often, consistent with excuse-driven responses to risk. Additional results support the existence of excuse-driven types. |
| Keywords: | Charitable giving; prosocial behavior; altruism; risk preferences. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:sip:dpaper:15-013&r=exp |
| By: | Ricardo Perez-Truglia; Ugo Troiano |
| Abstract: | We study shaming as a policy to improve tax debt collection. First, we show that when the tax agency focuses on private welfare and revenues, the optimal policy may involve a mix of financial and shaming penalties. Second, we present evidence from a field experiment with 34,344 tax delinquents who owed half a billion dollars in three U.S. states. We find that increasing the salience of financial and shaming penalties reduces tax delinquency. We also provide suggestive evidence that the effectiveness of these penalties depends on the garnishability of the debtor's income as in the model. |
| JEL: | H26 H63 K42 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21264&r=exp |
| By: | Hélène Couprie (THEMA - Théorie Economique, Modélisation et Applications - Université de Cergy Pontoise); Elisabeth Cudeville (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Catherine Sofer (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics) |
| Abstract: | Most household models assume that decisions taken inside the family are Pareto optimal. However, empirical studies cast doubts upon the efficiency assumption. The sharing of time among men and women between market work and household work is highly differentiated by gender. In this paper we examine whether couples deviate from efficiency in household production decisions, using an experimental design in which subjects are real couples. The aim of the experiment is to mimic the sharing of highly-gendered household tasks. We compare the sharing of gendered tasks to that of more neutral tasks. By measuring individual productivity in each task, we can see if couples tend to deviate from efficiency, and by how much in each case. As we show that they deviate more when sharing gendered tasks, we also explore why, looking at different possible explanations, and we find evidence of the impact of stereotypes on inefficiencies. |
| Abstract: | La plupart des modèles de ménages supposent que les décisions prises à l'intérieur de la famille sont Pareto-optimales. Cependant, les études empiriques mettent en doute l'hypothèse d'efficience. Le partage du temps passé par les hommes et les femmes entre le marché du travail et les tâches domestiques est très différencié selon le sexe. Dans cet article, nous examinons si les couples s'écartent de l'efficience pour les décisions de production, en utilisant un protocole expérimental dont les sujets sont de vrais couples. Le but de l'expérience consiste à mimer le partage de tâches domestiques très genrées. Nous comparons le partage des tâches genrées à celui des tâches plus neutres. En mesurant la productivité individuelle dans chaque tâche, nous pouvons voir si les couples ont tendance à s'écarter de l'efficience et de combien dans chaque cas. Comme nous montrons qu'ils devient plus lorsqu'ils effectuent des tâches genrées, nous nous efforçons d'en trouver des explications, en examinant différentes causes possibles et nous mettons en évidence un impact des stéréotypes sur l'inefficience. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01162474&r=exp |
| By: | Deniz Aydin (Stanford University) |
| Abstract: | This paper presents novel tests of competing models of intertemporal consumption behavior using unique European administrative panel data on income, spending and assets. I estimate the marginal propensity to consume (MPC) out of ‘liquidity’ -the debt response to a change in borrowing capacity- using changes in credit card limits in a randomized controlled trial implemented in September 2014 involving fifty-five thousand individuals. I obtain four empirical results: First, borrowing constraints change consumption dynamics even when they are not strictly binding. Two-thirds of the population accumulate a significant average of 20 cent of debt per dollar limit increase, relative to the control group. Second, the heterogeneity of the MPC is exclusively in line with precautionary models, a decreasing function of cash-on-hand. Third, the debt response to liquidity and credit card utilization are stationary. Fourth, additional liquidity is spent mostly on durables and services using installments, with a smaller fraction spent on non-durables and taken out as cash advances. I then use a workhorse Bewley model with realistic income risk and show that the joint dynamics of consumption, debt and the balance sheet in response to a change in borrowing constraints can be used to calibrate and test intertemporal models. Debt response to liquidity shocks identifies preference parameters via a simulated moments estimator. Hump-shaped debt response and mean-reverting credit card utilization are not consistent with myopia as the underlying preferences. |
| Keywords: | consumption, debt, borrowing con- straints, precautionary saving, permanent income hypothesis, field experiment. |
| JEL: | C93 D12 D14 D91 E21 E44 E51 G21 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:sip:dpaper:15-010&r=exp |
| By: | Beyene,Abebe D.; Bluffstone,Randall; Gebreegziabher,Zenebe; Martinsson,Peter; Mekonnen,Alemu; Vieider,Ferdinand |
| Abstract: | This paper uses a randomized experimental design and real-time electronic stove use monitors to evaluate the frequency with which villagers use improved biomass-burning Mirt injera cookstoves in rural Ethiopia. Understanding whether, how much, and why improved cookstoves are used is important, because use of the improved stove is a critical determinant of indoor air pollution reductions, and reduced greenhouse gas emissions due to lower fuelwood consumption. Confirming use is, for example, a critical aspect of crediting improved cookstoves? climate change benefits under the United Nations Reducing Emissions from Deforestation and Forest Degradation Programme. The paper finds that Ethiopian households in the study area do use the Mirt stove on a regular basis, taking into account regional differences in cooking patterns. In general, stove users also use their Mirt stoves more frequently over time. Giving the Mirt stove away for free and supporting community-level user networks are estimated to lead to more use. The study found no evidence, however, that stove recipients use the stoves more if they have to pay for them, a hypothesis that frequently arises in policy arenas and has also been examined in the literature. |
| Keywords: | E-Business,Disease Control&Prevention,Energy Conservation&Efficiency,Climate Change Mitigation and Green House Gases,Energy and Environment |
| Date: | 2015–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7297&r=exp |
| By: | John Deke |
| Abstract: | This update answers frequently asked questions about the implications of clustering in clustered randomized controlled trials (RCTs). |
| Keywords: | TPP, Teenage Pregnancy Prevention, Technical Assistance, Evaluation |
| JEL: | I |
| Date: | 2013–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:0c842aaf76d3439c9ea77bd831d70233&r=exp |
| By: | Jun Gu; Annika Mueller; Ingrid Nielsen; Jason Shachat; Russell Smyth |
| Abstract: | The last decade has seen a massive influx of Chinese migrants to sub-Saharan Africa, where many have opened small businesses to compete amongst local merchants. These Chinese have often met resistance from the local competition, resulting in a sharp social divide. The current paper draw’s on Allport’s (1954) contact hypothesis theory and reports on the results of two experimental studies that examined the effects of direct and imagined contact on indigenous Malawian shopkeepers’ willingness to spend future time with their Chinese counterparts. Results show that direct contact led to Malawians’ greater willingness to spend time with their Chinese counterparts, and this effect persisted over a time period of ten days, when a follow up survey was conducted. In contrast, imagined contact did not change Malawians’ willingness to spend future time with Chinese. Implications of these results for China’s ambitions to introduce its development model into Africa are discussed. |
| Keywords: | Chinese migrants in Africa, social contact, Chinese small business |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2015-04&r=exp |