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on Experimental Economics |
| By: | Lian Xue (University of East Anglia); Stefania Sitzia (University of East Anglia); Theodore L. Turocy (University of East Anglia) |
| Abstract: | We replicate and extend a simple riskless choice experiment reported recently by Hochman et al. (2014) as supporting loss aversion for money. Participants select from among sets of standard playing cards, with values defined by a simple formula. In some sessions, participants are given a prepayment associated with some of the cards, which need not be the earnings- maximizing ones. We replicate the results of Hochman et al., but find the effect of prepayment is significantly modulated by the instructions; instructions which more explicitly link payments and choices eliminate the effect. Participants who have been in many economics experiments before do not choose differently than those who are relative novices. However, we find that a self-reported measure of confidence in mathematics is a strong predictor of maximization rates. These results are more consistent with a preference for defaults when evaluating alternatives requires cognitive effort. |
| Keywords: | loss aversion, prepayment, replication, mathematics self-confidence, lab rats |
| JEL: | C91 D83 |
| Date: | 2015–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:15-20&r=exp |
| By: | David Hugh-Jones (University of East Anglia) |
| Abstract: | I report on the validity of different measures of honest behaviour. Subjects from 15 countries took part in two web-based experiments: a coin flip with a reward for reporting "heads", and a quiz with the possibility of cheating. Participants also answered questions on moral attitudes, and on unethical real world behaviour. Honesty in the two experiments was correlated, and correlated with self-reports of behaviour. Answers to the attitudes questions did not correlate with the experimental measures or self-reported behaviour. The quiz experiment provides a useful way to measure individual honesty in an online setting. |
| Keywords: | honesty, lying, experiment, questionnaire |
| JEL: | D82 C93 C42 Z13 |
| Date: | 2015–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2015_02&r=exp |
| By: | Niall Flynn; Christopher Kah; Rudolf Kerschbamer |
| Abstract: | In an experiment we first elicit the distributional preferences of subjects and then let them bid for a lottery, either in a Becker-DeGroot-Marschak (BDM) mechanism or a Vickrey auction (VA). Standard theory predicts that altruistic subjects underbid in the VA -- compared to the BDM -- while spiteful subjects overbid in the VA. The data do not confirm those predictions. While we observe aggregate underbidding in the VA, the result is not driven by the choices of altruistic subjects. |
| Keywords: | Distributional preferences, BDM, Vickrey auction |
| JEL: | C91 C72 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2015-16_appendix&r=exp |
| By: | Dutcher, E. Glenn; Salmon, Timothy C.; Saral, Krista J. |
| Abstract: | In recent years, a growing number of studies have researchers opting to use "real" effort designs for laboratory experiments where subjects complete an actual task to exert effort rather than using what is perhaps a more traditional design of stylized effort where subjects simply choose an effort level from a pre-defined set. The commonly argued reason for real effort is that it makes the results more generalizable and field relevant. Some researchers go further and make a distinction between trivial and useful real effort, i.e. whether the task is only relevant for the experiment or if it leads to tangible production for some purpose outside of the experiment, and claim that the useful effort model is even more likely to be generalizable. We present an experiment designed to test whether these three modes of effort, stylized, trivial, and useful, have any impact on behavior in a public goods setting. We find that all three forms of effort lead to identical decision making and then discuss how these results help to inform us about the use of real effort in laboratory experiments. |
| Keywords: | Real Effort, Stylized Effort, Abstract Effort, Economics Experiments, Public Goods |
| JEL: | C9 C91 H41 |
| Date: | 2015–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68394&r=exp |
| By: | Guillén, 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 on. 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. |
| Keywords: | school choice,matching,field experiment |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2015208&r=exp |
| By: | Joao da Gama Batista; Domenico Massaro; Jean-Philippe Bouchaud; Damien Challet; Cars Hommes |
| Abstract: | We run experimental asset markets to investigate the emergence of excess trading and the occurrence of synchronised trading activity leading to crashes in the artificial markets. The market environment favours early investment in the risky asset and no posterior trading, i.e. a buy-and-hold strategy with a most probable return of over 600%. We observe that subjects trade too much, and due to the market impact that we explicitly implement, this is detrimental to their wealth. The asset market experiment was followed by risk aversion measurement. We find that preference for risk systematically leads to higher activity rates (and lower final wealth). We also measure subjects' expectations of future prices and find that their actions are fully consistent with their expectations. In particular, trading subjects try to beat the market and make profits by playing a buy low, sell high strategy. Finally, we have not detected any major market crash driven by collective panic modes, but rather a weaker but significant tendency of traders to synchronise their entry and exit points in the market. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1512.03743&r=exp |
| By: | Brook, Rebecca; Servátka, Maroš |
| Abstract: | Is nonverbal communication capable of affecting economic outcomes? We study the effect of anticipated approval and disapproval, expressed through emoticons, on generosity and show that it discourages selfish behavior. In our experiment subjects play a one-shot dictator game at the end of which the recipient can respond to the allocation by drawing an emoticon and sending it back to the dictator. While the observed effect of nonverbal communication is somewhat weaker than the anticipation of a verbal response, our results provide evidence that people are willing to trade-off pecuniary gains to avoid disapproval or seek approval of their peers and that the sheer anticipation of receiving a response, even nonverbal, is sufficient to change their behavior. |
| Keywords: | approval, disapproval, nonverbal communication, emotion, experiment, fairness, generosity, dictator game |
| JEL: | C91 D03 D04 D63 |
| Date: | 2015–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68260&r=exp |
| By: | Niall Flynn; Christopher Kah; Rudolf Kerschbamer |
| Abstract: | In an experiment we first elicit the distributional preferences of subjects and then let them bid for a lottery, either in a Becker-DeGroot-Marschak (BDM) mechanism or a Vickrey auction (VA). Standard theory predicts that altruistic subjects underbid in the VA -- compared to the BDM -- while spiteful subjects overbid in the VA. The data do not confirm those predictions. While we observe aggregate underbidding in the VA, the result is not driven by the choices of altruistic subjects. |
| Keywords: | Distributional preferences, BDM, Vickrey auction |
| JEL: | C91 C72 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2015-16&r=exp |
| By: | Proeger, Till; Meub, Lukas; Bizer, Kilian |
| Abstract: | Tradable development rights (TDR) are discussed as a mechanism to reduce land consumption while ensuring an efficient implementation of profitable building projects. We present a novel laboratory experiment on the feasibility of TDR and simulate the acquisition and trading of development rights. In particular, we investigate the effects of uncertainty in the revenues of land consumption projects. Overall, we find that TDR are reallocated as suggested by theory, although higher uncertainty has substantial detrimental effects on the distribution of land consumption projects and thus aggregate welfare. This enables us to formulate distinct policy implications for the design of TDR systems. |
| Keywords: | auction,economic experiment,land consumption,tradable planning permits,urban sprawl |
| JEL: | C91 C92 D8 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:270&r=exp |
| By: | Köhler, Katrin; Pagel, Beatrice; Rau, Holger A. |
| Abstract: | We analyze the role of worker participation for the success of minimum remuneration policies. In our experiments employers remunerate workers doing a real-effort task. We vary the way how a minimum remuneration policy is introduced. In the worker-participation treatment, workers bargain with the employer on the enforcement of the policy. In the control treatment the policy is exogenously introduced. We find a pronounced effort increase after the policy was enforced. An exogenous introduction has detrimental effects, i.e., employers frequently pay a premium to maintain performance. Thus, worker participation may be an effective means for maintaining reciprocity under minimum remuneration policies. |
| Keywords: | bargaining,experiment,real effort,worker participation |
| JEL: | C91 J31 J33 M52 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:267&r=exp |
| By: | Natalia Borzino (University of East Anglia); Enrique Fatas (University of East Anglia); Emmanuel Peterle (University of Gottingen) |
| Abstract: | We conduct a controlled laboratory experiment to investigate trust and trustworthiness in a networked investment game in which two senders interact with a receiver. We investigate to what extent senders and receivers comply with an exogenous and non-binding recommendation. We also manipulate the level of information available to senders regarding receiver’s behavior in the network. We compare a baseline treatment in which senders are only informed about the actions and outcomes of their own investment games to two information treatments. In the reputation treatment, senders receive ex ante information regarding the average amount returned by the receiver in the previous period. In the transparency treatment, each sender receives ex post additional information regarding the returning decision of the receiver to the other sender in the network. Across all treatments and for both senders and receivers, the non-binding rule has a significant and positive impact on individual decisions. Providing senders with additional information regarding receiver’s behavior affects trust at the individual level, but leads to mixed results at the aggregate level. Our findings suggest that reputation building, as well as allowing for social comparison could be efficient ways for receivers to improve trust within networks. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:15-21&r=exp |
| By: | Iryna Sikora |
| Abstract: | This paper explores how exposure to the ideas of others is embraced in creative-process technology. We report evidence from a two-stage real-effort lab experiment, in which subjects perform creative idea-generation tasks. In the  first stage, we control whether the output of other players is observed; this design allows us to quantify the effect of new ideas on creative productivity. In the second stage, we make ideas costly and elicit the subject's Âwillingness to pay for them. We characterize investment behaviour in this creative environment by comparing expected monetary bene ts from increased productivity to the cost of exposure. Our results show that observing output of others boosts productivity in creative tasks, but only when it discloses previously unknown items and the output of low creative-ability players is not found to be benefi cial. When ideas become costly, subjects do not act in a pro t-maximizing way. We fi nd that they pursue lower costs and systematically overinvest in output of less creative players. This effect is more pronounced for females, risk-averse, more self-confident subjects and those of lower creative ability. As ideas of less creative participants are rarely original, this behaviour does not lead to the highest possible level of creative production in aggregate. |
| JEL: | C91 D03 D24 D61 |
| Date: | 2015–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2015:psi700&r=exp |
| By: | Almas, Ingvild; Armand, Alex; Attanasio, Orazio; Carneiro, Pedro |
| Abstract: | This paper studies how targeted cash transfers to women affect their empowerment. We use a novel identification strategy to measure women's willingness to pay to receive cash transfers instead of their partner receiving it. We apply this among women living in poor households in urban Macedonia. We match experimental data with a unique policy intervention (CCT) in Macedonia offering poor households cash transfers conditional on having their children attending secondary school. The program randomized whether the transfer was offered to household heads or mothers at municipality level, providing us with an exogenous source of variation in (offered) transfers. We show that women who were offered the transfer reveal a lower willingness to pay, and we show that this is in line with theoretical predictions. |
| Keywords: | cash transfers; empowerment; gender; intra-household |
| JEL: | D13 J16 O12 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10973&r=exp |
| By: | Tim Grebe; Radosveta Ivanova-Stenzel; Sabine Kröger |
| Abstract: | We study experimentally the effect of bargaining power in two sequential mechanisms that offer the possibility to trade at a fixed price before an auction. In the “Buy-It-Now” format, the seller has the bargaining power and offers a price prior to the auction; whereas in the “Sell-It-Now” format, it is the buyer. Both formats are extensively used in online and offline markets. Despite very different strategic implications for buyers and sellers, results from our experiment suggest no effects of bargaining power on aggregate outcomes. There is, however, substantial heterogeneity within sellers. Sellers who ask for high prices not only benefit from having the bargaining power but also earn revenue above those expected in the auction. |
| Keywords: | Buy-It-Now price, Sell-It-Now price, private value auction, single item auction, sequential selling mechanism, fixed price, auction. |
| JEL: | C72 C91 D44 D82 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1522&r=exp |
| By: | Gaudeul, Alexia; Giannetti, Caterina |
| Abstract: | We study in the laboratory the impact of private information revelation on the selection of partners when forming individual networks. Our experiment combines a "network game" and a "public-good game". In the network game, individuals decide with whom to form a link with, while in the public-good game they decide whether or not to contribute. The variations in our treatments allow us to identify the effect of revealing one´s name on the probability of link formation. Our main result suggests that privacy mechanisms affect partner selection and the consequent structure of the network: when individuals reveal their real name, their individual networks are smaller but their profits are higher. This indicates that the privacy costs of revealing personal information are compensated by more productive links. |
| Keywords: | privacy,social networks,public goods,trust |
| JEL: | D12 D85 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:269&r=exp |
| By: | David Hugh-Jones (University of East Anglia) |
| Abstract: | The honesty of resident nationals of 15 countries was measured in two experiments: reporting a coin flip with a reward for "heads", and an online quiz with the possibility of cheating. There are large differences in honesty across countries. Average honesty correlates with per capita GDP: this relationship is driven mostly by GDP differences arising before 1950, rather than by GDP growth since 1950, suggesting that the growth-honesty relationship was more important in earlier periods than today. The experiment also elicited participants' beliefs about honesty in different countries. Beliefs were not correlated with reality. Instead they appear to be driven by cognitive biases, including self-projection. |
| Date: | 2015–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2015_01&r=exp |
| By: | Marcela Jaime Torres (University of Gothenburg – University of Concepcion) |
| Abstract: | This paper investigates the effects of an information campaign aimed at encouraging residential water-savings in Colombia. The experiment was organized as a randomised control trial, consisting of monthly delivery of consumption reports including normative messages during one year. We first evaluate the direct and indirect effects of the campaign, and then we investigate whether indirect effects are due to social networks. Results indicate that social information and appeal to norm-based behaviour has decreased water use by 5.4% during the first year following the intervention. We also find significant but short-term evidence of spillover effects. Nevertheless, these effects cannot be explained by social networks alone when social connectedness is proxied by both social and geographic proximity. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:lae:wpaper:201469&r=exp |
| By: | Michele Belot (University of Edinburgh); Marina Schroeder (University of Cologne) |
| Abstract: | Are some people more memorable than others? We conduct an experiment in a real work setting - academia. A month after two international conferences, participants are asked to recall presenters' names, institutions and the papers they presented. We find that people recall distinctive "minority" attributes of presenters (such as being female or non-white) and better recall identities of ethnic minorities. In contrast, academic achievements have little explanatory power on the probability of being remembered. These findings provide evidence for a potential value of standing out and have implications for our understanding of the formation of professional networks. |
| Keywords: | memory, discrimination, field experiment |
| JEL: | C93 D83 J15 J16 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:06-06&r=exp |
| By: | Ye-Feng Chen (Zhejiang University - Zhejiang University - ZJU (CHINA)); Shu-Guang Jiang (Shandong University - Shandong University); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We investigate corruption as a social dilemma by means of a bribery game in which a risk of collective failure is introduced when the number of public officials accepting a bribe from firms reaches a certain threshold. We show that, despite the social risk, the pursuit of individual interest prevails and leads to the elimination of honest officials over time. Reducing the size of the groups while increasing the probability of collective failure diminishes the public officials' corruptibility but is not sufficient to eliminate the tragedy of corruption altogether. |
| Keywords: | experiment,coordination,collective failure,social dilemma,bribing,Corruption |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01236660&r=exp |
| By: | Habib, Sameh; Friedman, Daniel; Crockett, Sean; James, Duncan |
| Abstract: | We introduce new graphical displays that present binary choice lotteries via three dimensional rotating pie charts whose heights represent the prize amounts. We compare four graphical versions to the original text-only Holt & Laury (2002) multiple price list. Parametric and non-parametric measures of risk preferences are found to shift towards risk neutrality for the graphical displays. |
| Keywords: | Multiple Price List,Elicitation,Risk Aversion,Experiment |
| JEL: | C91 D81 D89 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmdn:spii2015501&r=exp |
| By: | Denise Laroze (University of Essex); David Hugh-Jones (University of East Anglia); Arndt Leininger (Hertie School of Governance) |
| Abstract: | Bargaining and coalition building is a central part of modern politics. Typically, game-theoretic models cannot predict a unique equilibrium. One possibility is that coalitions are formed on the basis of social identity loyalty to a gender, ethnic or political in-group. We test the effect of gender, race and ideological distance on coalition formation in a majority-rule bargaining experiment. Despite the absence of any incentives to do so, we find that ideological distance significantly affects offers made to potential coalition partners. As a result, coalitions tend to be ideologically coherent, even though there is no ideological policy output. We conclude that social identity considerations can determine equilibria in coalition formation. |
| Keywords: | coalition formation, laboratory experiments, Baron and Ferejon model, legislative bargaining, social identity |
| Date: | 2015–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2015_03&r=exp |
| By: | Julia M. Rohrer; Boris Egloff; Stefan C. Schmukle |
| Abstract: | This study examined the long-standing question of whether a person’s position among siblings has a lasting impact on that person’s life course. Empirical research on the relation between birth order and intelligence has convincingly documented that performances on psychometric intelligence tests decline slightly from firstborns to laterborns. By contrast, the search for birth-order effects on personality has not yet resulted in conclusive findings. We used data from three large national panels from the United States (N = 5,240), Great Britain (N = 4,489), and Germany (N = 10,457) to resolve this open research question. This data base allowed us to identify even very small effects of birth order on personality with sufficiently high statistical power and to investigate whether effects emerge across different samples. We furthermore used two different analytical strategies by comparing siblings with different birth-order positions (i) within the same family (within-family design) and (ii) between different families (between-family design). In our analyses, we confirmed the expected birth-order effect on intelligence. We also observed a significant decline of a tenth of a standard deviation in self-reported intellect with increasing birth-order position, and this effect persisted after controlling for objectively measured intelligence. Most important, however, we consistently found no birth-order effects on extraversion, emotional stability, agreeableness, conscientiousness, or imagination. On the basis of the high statistical power and the consistent results across samples and analytical designs, we must conclude that birth order does not have a lasting effect on broad personality traits outside of the intellectual domain. |
| Keywords: | Birth Order, Personality, Big Five, Intelligence, Within-family Analyses, Siblings |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp807&r=exp |