nep-exp New Economics Papers
on Experimental Economics
Issue of 2015‒07‒25
nineteen papers chosen by
Daniel Houser
George Mason University

  1. Investing to Cooperate: Theory and Experiment By Jean-Pierre Benoît; Roberto Galbiati; Emeric Henry
  2. Eliciting and Utilizing Willingness to Pay: Evidence from Field Trials in Northern Ghana By Berry, James; Fischer, Greg; Guiteras, Raymond
  3. Institutionalize reciprocity to overcome the public goods provision problem By Hiroki Ozono; Yoshio Kamijo; Kazumi Shimizu
  4. Leadership with Individual Rewards and Punishments By Gürerk, Özgür; Lauer, Thomas; Scheuermann, Martin
  5. Less is more: A Field Experiment on Matching By Guillen, Pablo; Hakimov, Rustamdjan
  6. Inflated reputations: leniency & moral wiggle room in trader feedback systems By Gary E. Bolton; David J. Kusterer; Johannes Mans
  7. Disentangling True from Self-Reported Attitude-Behavior Consistency: a KAP Survey Experiment By Marco Giani; Juan Carlos Munoz Mora; Philip Verwimp
  8. Price and Quantity “Collars” for Stabilizing Emissions Allowance Prices: An Experimental Analysis of the EU ETS Market Stability Reserve By Holt, Charles A.; Shobe, William
  9. Long Run Effects of Temporary Incentives on Medical Care Productivity By Pablo Celhay; Paul Gertler; Paula Giovagnoli; Christel Vermeersch
  10. Tax Debt Enforcement: Theory and Evidence from a Field Experiment in the United States By Ugo Troiano; Ricardo Perez-Truglia
  11. Adaptive Expectations with Correction Bias: Evidence from the lab By Annarita COLASANTE; Antonio PALESTRINI; Alberto RUSSO; Mauro GALLEGATI
  12. Electoral rules and political selection : theory and evidence from a field experiment in Afghanistan By Beath,Andrew; Christia,Fotini; Egorov,Georgy; Enikolopov,Ruben
  13. Promoting democracy in fragile states : insights from a field experiment in Liberia By Mvukiyehe,Eric; Samii,Cyrus Dara
  14. Silence is Golden:  Communication Costs and Team Problem Solving By Charness, Gary; Cooper, David; Grossman, Zachary
  15. Application of Comprehensive Nursing Intervention to Improve Social Support Level on Breastfeeding Women in China By Dai Hong-Xia
  16. Are Reemployment Services Effective? Experimental Evidence from the Great Recession By Peter Mueser; Marios Michaelides
  17. Which explanations for gender differences in competition are consistent with a simple game theoretic model? By Christopher Cotton; Cheng Li; Frank McIntyre; Joseph Price
  18. Why Don't Households Smooth Consumption? Evidence from a 25 Million Dollar Experiment By Jonathan Parker
  19. Migration and Consumption Insurance in Bangladesh By Melanie Morten; Corina Mommaerts; Ahmed Mobarak; Costas Meghir

  1. By: Jean-Pierre Benoît (London Business School (LBS)); Roberto Galbiati (Département d'économie); Emeric Henry (Département d'économie)
    Abstract: We study theoretically and in a lab-experiment how legal protection affects the level and type of investments in a setting where a player chooses an investment level before interacting repeatedly with the same set of agents. The investment stochastically affects the payoffs of the game in every subsequent period. We show that without legal protection: investments will be made since repeated interactions can serve as a substitute for legal enforcement; investments with less volatile returns are more likely; the investor might be forced to invest more to keep other players cooperative. Experimental results are broadly consistent with the theoretical findings.
    Keywords: Investment; Experiments; Repeated Games; Property Rights
    JEL: C72 C73 C91 C92
    Date: 2014–05
  2. By: Berry, James; Fischer, Greg; Guiteras, Raymond
    Abstract: We demonstrate the benefits and feasibility of using the Becker-DeGroot-Marschak (BDM) mechanism to elicit precise, individual-level willingness to pay and thereby enhance the information generated by randomized experiments. With a relatively small sample and minor modifications to a standard field experiment design, we can directly estimate demand, study the effect of prices on usage through screening and psychological (sunk-cost) effects, and compute heterogeneous marginal treatment effects. Applying the mechanism to a field experiment studying clean drinking water technology in northern Ghana, we show that even in an environment with low literacy and numeracy, BDM produces sensible results. We find that although willingness to pay for clean water technology is low relative to the cost, demand is surprisingly inelastic at low prices; prices do not generate significant sunk-cost effects; and treatment effects are heterogeneous with respect to valuation and consistent with outcomes being affected by effort expenditure.
    Keywords: field experiments; health behavior; heterogeneous treatment effects; price mechanism
    JEL: C26 C93 D12 L11 L31 O12 Q51
    Date: 2015–07
  3. By: Hiroki Ozono (Faculty of Law, Economics and Humanities, Kagoshima University); Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Kazumi Shimizu (School of Political Science and Economics, Waseda University)
    Abstract: Cooperation is fundamental to human societies, and one of the important paths for its emergence and maintenance is reciprocity. In prisoner’s dilemma (PD) experiments, reciprocal strategies are often effective at attaining and maintaining high cooperation. In many public goods (PG) games or n-person PD experiments, however, reciprocal strategies are not successful at engendering cooperation. In the present paper, we attribute this difficulty to a coordination problem against free riding among reciprocators: Because it is difficult for the reciprocators to coordinate their behaviors against free riders, this may lead to inequality among players, which will demotivate them from cooperating in future rounds. We propose a new mechanism, institutionalized reciprocity (IR), which refers to embedding the reciprocal strategy as an institution (i.e., institutionalizing the reciprocal strategy). We experimentally demonstrate that IR can prevent groups of reciprocators from falling into coordination failure and achieve high cooperation in PG games. In conclusion, we argue that a natural extension of the present study will be to investigate the possibility of IR to serve as a collective punishment system.
    Keywords: operation, public goods game, laboratory experiment, institutionalized reciprocity, raise the stakes strategy, collective punishment
    JEL: C72 C91 C92 M54
    Date: 2015–07
  4. By: Gürerk, Özgür; Lauer, Thomas; Scheuermann, Martin
    Abstract: In a public goods experiment, leaders with reward or punishment power induce higher team cooperation compared to leader-free teams without any reward or punishment possibilities. When equipped with reward or punishment instruments, however, leader-free teams perform as well as teams with leaders.We conclude that the instruments as such are more effective in fostering cooperation than a leader.
    Keywords: Leadership, Public Goods, Punishment, Reward
    JEL: C92 H41 M5
    Date: 2015–07–17
  5. By: Guillen, Pablo; Hakimov, Rustamdjan
    Abstract: We run a field experiment to test the truth-telling rates of the theoretically strategy-proof Top Trading Cycles mechanism (TTC) under different information conditions. First, we asked first-year economics students enrolled in an introductory microeconomics unit about which topic, among three, they would most like to write an essay about. Most students chose the same favorite topic. Then we used TTC to distribute students equally across the three options. We ran three treatments varying the information the students received about the mechanism. In the first treatment students were given a description of the matching mechanism. In the second they received a description of the strategy-proofness of the mechanism without details of the mechanism. Finally, in the third they were given both pieces of information. We find a significant and positive effect of describing the strategy-proofness on truth-telling rates. ON the other hand, describing the matching mechanism has a significant and negative effect on truth-telling rates.
    Date: 2015–07
  6. By: Gary E. Bolton (UT Dallas); David J. Kusterer (University of Cologne); Johannes Mans (University of Cologne)
    Abstract: Reputation systems associated with Internet markets are known to be subject to strategic manipulation. The experiment we present suggests that this manipulation can extend to factors that have heretofore been overlooked: the leniency and moral wiggle room that arise from uncertainty about the source of transaction problems. Uncertainty about seller culpability leads to behaviors that reduce the informativeness of the feedback system, thereby diminishing the incentives for honest seller behavior. Under uncertainty, buyers pay about the same prices but get significantly less.
    Keywords: reputation, trust, leniency bias, electronic markets, experimental economics
    JEL: C9 D4
    Date: 2015–05–20
  7. By: Marco Giani; Juan Carlos Munoz Mora; Philip Verwimp
    Date: 2015–07
  8. By: Holt, Charles A.; Shobe, William
    Abstract: This paper reports the results of a laboratory experiment with financially motivated participants that is used to compare alternative proposals for managing the time path of emissions allowance prices in the face of random firm-specific and market-level structural shocks. In this setting, market performance measures such as social surplus are enhanced by the use of a price collar (auction reserve price and soft price cap). Comparable performance enhancements are not observed with the implementation of a quantity collar that adjusts auction quantities in response to privately held inventories of unused allowances. In fact, in some specifications, the quantity collar performed worse than no stabilization policy at all. The experiment implemented a specific set of structural elements, and extrapolation to other settings should be done with caution. Nevertheless, an examination of the observed behavioral patterns and deviations from optimal behavior suggests that a price collar has an important (although perhaps not exclusive) role to play in constructing an effective market stability reserve policy.
    Keywords: EU Emissions Trading System, market stability reserve, price collar, allowance prices, emissions allowances
    Date: 2015–06–25
  9. By: Pablo Celhay; Paul Gertler; Paula Giovagnoli; Christel Vermeersch
    Abstract: The adoption of new clinical practice patterns by medical care providers is often challenging, even when they are believed to be both efficacious and profitable. This paper uses a randomized field experiment to examine the effects of temporary financial incentives paid to medical care clinics for the initiation of prenatal care in the first trimester of pregnancy. The rate of early initiation of prenatal care was 34% higher in the treatment group than in the control group while the incentives were being paid, and this effect persisted at least 24 months or more after the incentives ended. These results are consistent with a model where the incentives enable providers to address the fixed costs of overcoming organizational inertia in innovation, and suggest that temporary incentives may be effective at motivating improvements in long run provider performance at a substantially lower cost than permanent incentives.
    JEL: I11 I13 I15
    Date: 2015–07
  10. By: Ugo Troiano (University of Michigan); Ricardo Perez-Truglia (Microsoft)
    Abstract: We present theory and evidence about the enforcement of tax delinquencies, which are tax debts incurred with the government. In our model, the tax agency relies on a financial penalty and a social penalty that involves publishing the names of tax delinquents online, a policy that is becoming increasingly common. We show that, when the tax agency cares about social welfare as well as revenues, the optimal policy involves a mix of financial and social penalties. We conducted a field experiment with 35,000 tax delinquents who owed half a billion dollars in three U.S. states. We find that increasing the salience of both financial and social penalties reduces tax delinquencies. We also provide suggestive evidence that, as predicted by our model, the effectiveness of social and financial penalties depends on the debtor's income garnishability.
    Date: 2015
  11. By: Annarita COLASANTE (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Antonio PALESTRINI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Alberto RUSSO (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Mauro GALLEGATI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: The present work analyzes the individual behavior in an experimental asset market in which the only task of each player is to predict the future price of an asset. To form their expectations, players see the past realization of the asset price in the market and the current information about the mean dividend and the interest rate. We investigate the mechanism of expectation formation in two dierent contexts: in the rst one the fundamental value is constant, while in the second the fundamental price increases over repetitions. The aim of this work is twofold: on the one hand, based on the nding of the recent literature about expectations, we investigate whether agents make their prediction according to adaptive expectation instead of rational one. On the other hand, we test the accuracy of the aggregate forecasts compared with the individual ones. Results show that there is heterogeneity both within and between groups. Agents follow adaptive rules to predict future prices and this implies that, in the majority of the cases, they coordinate on a price dierent from the fundamental value. We nd that there is a collective rationality instead of individual rationality. Indeed, each player makes systematic error forecast but, at the aggregate level, there are no signicant forecasting errors in the case in which the fundamental value is constant. In the context of increasing fundamental value, players are able to capture the trend but they underestimate that value.
    Keywords: Bounded rationality, Expectation, Experiments
    JEL: C92 G12 G17
    Date: 2015–07
  12. By: Beath,Andrew; Christia,Fotini; Egorov,Georgy; Enikolopov,Ruben
    Abstract: Voters commonly face a choice between competent candidates and those with policy preferences similar to their own. This paper explores how electoral rules, such as district magnitude, mediate this trade-off and affect the composition of representative bodies and policy outcomes. The paper shows formally that anticipation of bargaining over policy causes voters in elections with multiple single-member districts to prefer candidates with polarized policy positions over more competent candidates. Results from a unique field experiment in Afghanistan are consistent with these predictions. Specifically, representatives elected in elections with a single multi-member district are better educated and exhibit less extreme policy preferences.
    Keywords: Parliamentary Government,E-Government,Housing&Human Habitats,Social Accountability
    Date: 2015–07–13
  13. By: Mvukiyehe,Eric; Samii,Cyrus Dara
    Abstract: A field experiment in rural Liberia is used to study democratic participation in fragile states. Fragile states are marked by political fragmentation, local patronage systems, and voter vulnerability. To understand the effects of such conditions on democratic expression through elections, the experiment introduced new forms of interaction between rural citizens and third-party actors: (i) civic education and town hall workshops directed by non-governmental organizations in communities over nine months and (ii) security committees that brought rural community representatives into monthly exchange with United Nations peacekeepers. Civic education workshops increased enthusiasm for electoral participation, produced a coordinated shift from parochial to national candidates, and increased willingness to report on manipulation. A program combining the two interactions had similar effects. The security committees had negligible effects. Barriers to political information and voter coordination appear to be important but resolvable problems for elections in fragile states.
    Date: 2015–07–15
  14. By: Charness, Gary; Cooper, David; Grossman, Zachary
    Abstract: Numerous studies have compared the performance of individuals and teams at solving intellective problems.  The ubiquitous finding in the economics literature is that teams out-perform individuals.  This result is intuitively appealing, as teams can benefit from sharing insights.  We analyze experiments comparing the performance of teams and individuals at solving a series of challenging logic puzzles.  Contrary to the existing literature, individuals meet or exceed the performance of teams on all measures.  If we impose a small cost of communication on teams, the performance of teams improves to closely resemble the performance of individuals.  Underlying these results is a definite negative relationship between frequency of communication and team performance.  We also document a strong gender effect.  Teams with more women perform considerably better even though men slightly outperform women when solving the puzzles individually.
    Keywords: Social and Behavioral Sciences, teams, communication, experimental economics
    Date: 2015–07–20
  15. By: Dai Hong-Xia (School of Health Science, Macao Polytechnic Institute)
    Abstract: Objectives: To evaluate the effects of application of ‘comprehensive nursing intervention’ on social support in Chinese breastfeeding women. Methods: The study was a prospective clinical experimental research. 313 postnatal women were recruited from 3 hospitals in Guangzhou by using cluster sampling method. The control group received general care with verbal education about breastfeeding without handbook, standard breastfeeding instruction and telephone follow-up. The treatment group received ‘comprehensive nursing intervention’, which composed of a practical handbook on breastfeeding, instruction of breastfeeding skills through face-to-face and one-on-one methods at bed-side within 24 hours postpartum. The participants accepted twice telephone follow-ups related to breastfeeding at 5 and 11 weeks postpartum. They completed 3 questionnaires on infant feeding and Social Support Rating Scale (SSRS) in the hospital, at 6 weeks and 3 months postpartum.. The T test, X2 test and analysis of variance (ANOVA) were used to evaluate the effects of intervention by using SPSS 17.0 software.Results: At 3 days, 6 weeks and 3 months postpartum, the exclusive breastfeeding rates of the treatment group (31.5%, 52.7%, 59.4%) were higher than the control group respectively (20.9%, 29.7%, 29.1%), p values were 0.006, 0.034, <0.001 and <0.001 respectively; The mean score of total SSRS in the treatment group was 40.58±5.33, which was higher than that of the control group (36.61±6.01) at 6 weeks postpartum, p<0.001. The results of two-way ANOVA found significant effect on time, group, and interaction between group and time on SSRS score (p<0.001). The percentage of language support of breastfeeding in the treatment group was 86.1%, which was higher than that of the control group (64.9%) at 3 months postpartum, p<0.001. The percentage of action support of infant feeding in the treatment group was 75.2%, which was higher than that of the control group (54.7%) at 3 months postpartum, p<0.001.Conclusions: Comprehensive nursing intervention of exclusive breastfeeding improved exclusive breastfeeding rates at 3 days, 6 weeks and 3 months postpartum, improved mother’s social support level and this effect could be lasted until 6weeks postpartum.
    Keywords: Exclusive Breastfeeding, Nursing Intervention, Social Support, Chinese, Postpartum Women
    JEL: I10
  16. By: Peter Mueser (University of Missouri); Marios Michaelides (University of Cyprus)
    Abstract: We report the results of a random assignment study of a reemployment program implemented in the United States during the Great Recession. The program expedited participant exit from Unemployment Insurance (UI), produced significant UI savings, and improved participant employment rates and earnings. These effects are associated with: (1) increased participant UI exit prior to services receipt, indicating an effect due to participant efforts to avoid program requirements; and (2) greater exit subsequent to services, implying that the services themselves helped participants conduct an effective job search. Our findings provide compelling evidence that reemployment programs can be effective during recessions.
    Keywords: Great Recession, job search services, unemployment, unemployment compensation, program evaluation.
    JEL: J6 H4
    Date: 2015–07
  17. By: Christopher Cotton (Queen's University); Cheng Li (Mississippi State University); Frank McIntyre (Rutgers University); Joseph Price (Brigham Young University)
    Abstract: A number of recent studies show that males may increase their performance by more than females in response to competitive incentives. The literature suggests that such a male competitive advantage may contribute to observed gender gaps in labor force pay and achievement. Understanding which factors may be driving these gender differences is essential for designing policies that promote quality. Using a game theoretic model of contests, we consider a variety of explanations for the male competitive advantage that have been proposed in the empirical and experimental literature. Comparing the testable predictions of the model with the empirical evidence from past papers, we reject explanations involving male over-confidence, misperceptions about relative ability, and some types of preference differences. Explanations involving female under-confidence and differences in risk aversion are consistent with the significant evidence. Two explanations provide perfect matches to observed performance patterns: (i) males are better than females at handling competitive pressure, and (ii) males enjoy competition more or have greater desire to win than females.
    Keywords: contests, gender differences, competitive incentives
    JEL: D74 J16 J24 J78
    Date: 2015–05
  18. By: Jonathan Parker
    Abstract: This paper evaluates theoretical explanations for the propensity of households to increase spending in response to the arrival of predictable, lump-sum payments, using households in the Nielsen Consumer Panel who received $25 million in Federal stimulus payments that were distributed randomly across weeks. The pattern of spending is inconsistent with models in which identical households cycle through high and low response states as they manage liquidity. Instead, the propensity spend is a persistent household trait. This trait is unrelated to expectation errors, almost unrelated to crude measures of procrastination and self-control, moderately related to measures of sophistication and planning, and highly related to a measure of impatience.
    JEL: D14 E21
    Date: 2015–07
  19. By: Melanie Morten (Stanford University); Corina Mommaerts (Yale University); Ahmed Mobarak (Yale University); Costas Meghir (Yale University)
    Abstract: We investigate the relationship between seasonal migration and informal risk sharing in rural Bangladesh. We use data from a randomized controlled trial which provided incentives for households to migrate (Bryan et al., 2014). Using this experimental variation, we first provide evidence of the effect of decreasing migration costs on endogenous risk sharing in the village. We then investigate the mechanisms of this effect. We undertake a semi-parametric analysis of the source of income shocks, source of insurance and measurement error. Next, we characterize a dynamic model of migration and endogenous risk sharing, incorporating investment in learning about migration possibilities. Estimation of the model is in progress; we plan to analyze the welfare effect of alternative policies to encourage migration, such as access to credit and further reductions in the cost of migrating.
    Date: 2015

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