nep-exp New Economics Papers
on Experimental Economics
Issue of 2016‒01‒18
sixteen papers chosen by
Daniel Houser
George Mason University

  1. Do reciprocators exploit or resist moral wiggle room? An experimental analysis By Tobias Regner; Astrid Matthey
  2. Divided Majority and Information Aggregation: Theory and Experiment By Laurent Bouton; Micael Castanheira; Aniol Llorente-Saguer
  3. How Transparency Kills Information Aggregation : Theory and Experiment By Fehrler, Sebastian; Hughes, Niall
  5. To Switch or Not to Switch Payment Scheme? Determinants and Effects in a Bargaining Game By Arianna Galliera; Noemi Pace
  6. The Many Faces of Human Sociality: Uncovering the Distribution and Stability of Social Preferences By Adrian Bruhin; Ernst Fehr; Daniel Schunk
  7. Higher Intelligence Groups Have Higher Cooperation Rates in the Repeated Prisoner's Dilemma By Proto, Eugenio; Rustichini, Aldo; Sofianos, Andis
  8. Multicandidate Elections: Aggregate Uncertainty in the Laboratory By Laurent Bouton; Micael Castanheira; Aniol Llorente-Saguer
  9. Would depositors like to show others that they do not withdraw? Theory and Experiment By Markus Kinateder; Hubert Janos Kiss; Agnes Pinter
  10. Procedures for Eliciting Time Preferences By David Freeman; Paola Manzini; Marco Mariotti; Luigi Mittone
  11. An Experiment on Non-Zero Sum Colonel Blotto Games By Rafael Hortala-Vallve; Aniol Llorente-Saguer
  12. A Survey of the Empirical Evidence on PWYW Pricing By Greiff, Matthias; Egbert, Henrik
  13. The role of communication on an experimental market for tradable development rights By Proeger, Till; Meub, Lukas; Bizer, Kilian
  15. Correlates of Narrow Bracketing By Alexander K. Koch; Julia Nafziger
  16. Money and the Scale of Cooperation By Maria Bigoni; Gabriele Camera; Marco Casari

  1. By: Tobias Regner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Astrid Matthey (Max Planck Institute of Economics, Jena)
    Abstract: By now there is substantial experimental evidence that people make use of 'moral wiggle room' (Dana et al., 2007), that is, they tend to exploit moral excuses for selfish behavior. However, this evidence is limited to dictator games. In our experiment, a trust game variant, we study whether moral wiggle room also prevails, when reciprocity is a potential motivation for being generous. Trustees' back transfer choices are elicited for five different transfer levels of the trustor. Moreover, we ask trustees to provide their back transfer schedule for different scenarios that vary the implementation probability of the back transfer. This design allows us to identify subjects who reciprocate and analyze how these reciprocators respond to the provision of moral wiggle room. Our results suggest that moral wiggle room exists as well in the context of reciprocity. Among our subjects, 40% of the reciprocators exploited moral wiggle room.
    Keywords: social preferences, pro-social behavior, experiments, reciprocity, moral wiggle room, self-image concerns
    JEL: C72 C91 D03 D80
    Date: 2015–12–22
  2. By: Laurent Bouton (Georgetown University, Université Libre de Bruxelles, CEPR and NBER); Micael Castanheira (Université Libre de Bruxelles, FNRS and CEPR); Aniol Llorente-Saguer (Queen Mary University of London)
    Abstract: We propose a theory-based experimental approach to compare the properties of <i>approval voting</i> (AV) with those of <i>plurality</i>. This comparison is motivated by the theoretical predictions that, in our aggregate uncertainty setup, AV should produce close to first-best outcomes, while plurality will not. The experiment shows, first, that welfare gains are substantial. Second, both aggregate and individual responses are in line with theoretical predictions, and thus with strategic voting. Finally, subjects' behavior under AV highlights the need to study equilibria in asymmetric strategies.
    Keywords: Multicandidate elections, Information aggregation, Plurality, Approval Voting, Laboratory experiments
    JEL: C72 C92 D70
    Date: 2015–12
  3. By: Fehrler, Sebastian (University of Konstanz and IZA); Hughes, Niall (Department of Economics, University of Warwick)
    Abstract: We investigate the potential of transparency to influence committee decisionmaking.We present a model in which career concerned committee members receive private information of different type-dependent accuracy, deliberate and vote. We study three levels of transparency under which career concerns are predicted to affect behavior differently, and test the model’s key predictions in a laboratory experiment. The model’s predictions are largely borne out - transparency negatively affects information aggregation at the deliberation and voting stages, leading to sharply different committee error rates than under secrecy. This occurs despite subjects revealing more information under transparency than theory predicts.
    Keywords: Committee Decision-Making ; Deliberation ; Transparency ; Career Concerns ; Information Aggregation ; Experiments ; Voting ; Strategic Communication
    JEL: C92 D71 D83
    Date: 2015
  4. By: Mamta Sharma; Akankasha Sharma
    Abstract: Sleep, a vital ingredient in life, is an active and complex rhythmic state that may get disturbed by a variety of reasons. Daytime sleepiness, sleep deprivation, and irregular sleep schedules are highly prevalent among college students, as 50% report daytime sleepiness and 70% attain insufficient sleep. The study aims to evaluate the efficacy of music therapy in improving disturbed sleep patterns and low self-worth of university students. It was hypothesized that Post-intervention sleep quality scores in experimental group would be significantly better than pre-intervention scores; and Music therapy would enhance self-worth of university students. Participants in the experimental group would show improved self-worth relative to the participants in the control group. A pre-post experimental-control assessment design was adopted. The Pittsburgh Sleep Quality Index (Buysse DJ et al 1989) and Contingencies of Self Worth (Crocker & Luhtanen, 2002) were administered to identify university students having faulty sleep patterns and low self-worth. Music therapy was given for consecutive three weeks for half an hour daily. After intervention, sleep quality index and contingencies of self-worth were re-administered to see the efficacy of music therapy. Results revealed that music therapy made a significant improvement in students’ sleep patterns as significant difference was observed between both experimental and control groups on Subjective sleep quality (t=1.21*), Sleep latency (t=2.63*), Sleep duration (t=2.24*), Habitual sleep efficiency (t=4.64**), Sleep disturbances (t=10.46**), and Daytime dysfunction (t=3.97*). The effect of intervention was also found to be significant for self-worth domains for subjects of experimental group on physical appearance (t=2.42*), Outdoing others in competition (t=1.39*), Academic competence (t=2.16*), Being a virtuous or moral person (t=2.09*), and God’s love (t=1.64*) as the difference between experimental and control group came out to be statistically significant. Key words: sleep patterns, self worth, music, music therapy
    Date: 2015–12
  5. By: Arianna Galliera (Department of Economics, University Of Venice Cà Foscari); Noemi Pace (Department of Economics, University Of Milan, Bicocca)
    Abstract: The incentive scheme selected in a laboratory experiment might trigger different type of behavior in participants. This paper is an attempt to screen the strategies adopted by agents in a bargaining game when buyer and seller have partly conflicting interests and are asymmetrically informed. We allow participants to choose the incentive scheme through which they will be paid at the end of the experiment controlling for past experience and individual characteristics. It is well known that payment method is highly correlated to the risk preferences shown by individuals, but little research is devoted to the analysis of the behavior induced by Random Lottery Incentive scheme (RLI for short) and Cumulative Scheme payment (CS for short) both on individual and social results. This paper aims to fill the gap.
    Keywords: bargaining, experiment, gender, payment scheme.
    JEL: C78 C91 D82 J16 J33
    Date: 2015
  6. By: Adrian Bruhin (University of Lausanne); Ernst Fehr (University of Zurich); Daniel Schunk (Johannes Gutenberg University of Mainz)
    Abstract: There is vast heterogeneity in the human willingness to weigh others’ interests in decision making. This heterogeneity concerns the motivational intricacies as well as the strength of other-regarding behaviors, and raises the question how one can parsimoniously model and characterize heterogeneity across several dimensions of social preferences while still being able to predict behavior over time and across situations. We tackle this task with an experiment and a structural model of preferences that allows us to simultaneously estimate outcome-based and reciprocity-based social preferences. We find that non-selfish preferences are the rule rather than the exception. Neither at the level of the representative agent nor when we allow for several preference types do purely selfish types emerge. Instead, three temporally stable and qualitatively different other-regarding types emerge endogenously, i.e., without pre-specifying assumptions about the characteristics of types. When ahead, all three types value others’ payoffs significantly more than when behind. The first type, which we denote as strongly altruistic type, is characterized by a relatively large weight on others’ payoffs – even when behind – and moderate levels of reciprocity. The second type, denoted as moderately altruistic type, also puts positive weight on others’ payoff, yet at a considerable lower level, and displays no positive reciprocity while the third type is behindness averse, i.e., puts a large negative weight on others’ payoffs when behind and behaves selfishly otherwise. We also find that there is an unambiguous and temporally stable assignment of individuals to types. Moreover, the three-type model substantially improves the (out-of-sample) predictions of individuals’ behavior across additional games while the information contained in subject-specific parameter estimates leads to no or only minor additional predictive power. This suggests that a parsimonious model with three types captures the bulk of the predictive power contained in the preference estimates.
    Keywords: Social Preferences, Heterogeneity, Stability, Finite Mixture Models
    JEL: C49 C91 D03
    Date: 2016–01–04
  7. By: Proto, Eugenio (Department of Economics, University of Warwick); Rustichini, Aldo (Department of Economics, University of Minnesota); Sofianos, Andis (Department of Economics, University of Warwick)
    Abstract: Intelligence affects the social outcomes of groups. A systematic study of the link is provided in an experiment where two groups of subjects with different levels of intelligence, but otherwise similar, play a repeated prisoner's dilemma. Initial cooperation rates are similar, but increase in the groups with higher intelligence to reach almost full cooperation, while they decline in the groups with lower intelligence. Cooperation of higher intelligence subjects is payo sensitive and not automatic: in a treatment with lower continuation probability there is no difference between different intelligence groups.
    Keywords: Repeated Prisoner's Dilemma ; Cooperation ; Intelligence
    JEL: C73 C91 C92
    Date: 2015
  8. By: Laurent Bouton (Georgetown University, Université Libre de Bruxelles, CEPR and NBER); Micael Castanheira (Université Libre de Bruxelles, FNRS and CEPR); Aniol Llorente-Saguer (Queen Mary University of London)
    Abstract: The rational-voter model is often criticized on the grounds that two of its central predictions (the <i>paradox of voting</i> and <i>Duverger's Law</i>) 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 <i>aggregate uncertainty</i> 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: 2015–12
  9. By: Markus Kinateder (Departamento de Economía, Edificio de Amigos, Universidad de Navarra); Hubert Janos Kiss (Momentum Game Theory Research Group - Institute of Economics - Centre for Economic and Regional Studies - Hungarian Academy of Sciences and Department of Economics, Eötvös Loránd University); Agnes Pinter (Department of Economic Analysis, Universidad Autónoma de Madrid)
    Abstract: There is an asymmetry regarding what previous decisions depositors may observe when choosing whether to withdraw or keep the money deposited: it is more likely that withdrawals are observed. We study how decision-making changes if depositors are able to make their decision to keep their funds in the bank visible to subsequent depositors at a cost. We show theoretically in a Diamond-Dybvig setup that without this signaling option multiple equilibria are possible, while signaling makes the no-run outcome the unique equilibrium. We test if the theoretical predicitions hold in a lab experiment. We find that indeed when signaling is available, bank runs are less likely to arise and signaling is extensively used.
    Keywords: Bank runs, Asymmetric information, Experimental evidence, Signaling
    JEL: C72 C91 D80 G21
    Date: 2015–10
  10. By: David Freeman (Simon Fraser University); Paola Manzini (University of St Andrews and IZA); Marco Mariotti (Queen Mary University of London); Luigi Mittone (University of Trento)
    Abstract: We study three procedures to elicit attitudes towards delayed payments: the Becker-DeGroot-Marschak procedure; the second price auction; and the multiple price list. The payment mechanisms associated with these methods are widely considered as incentive compatible, thus if preferences satisfy Procedure Invariance, which is also widely (and often implicitly) assumed, they should yield identical time preference distributions. We find instead that the monetary discount rates elicited using the Becker-DeGroot-Marschak procedure are significantly lower than those elicited with a multiple price list. We show that the behavior we observe is consistent with an existing psychological explanation of preference reversals.
    Keywords: time preferences, elicitation methods, Becker-DeGroot-Marschak pro- cedure, auctions, multiple price list
    JEL: C91 D9
    Date: 2015–10–20
  11. By: Rafael Hortala-Vallve (London School of Economics); Aniol Llorente-Saguer (Queen Mary University of London)
    Abstract: We study a version of the Colonel Blotto game where valuations across battlefields are heterogeneous and asymmetric. These games can exhibit unique pure strategy equilibria, some of which are non-monotonic with respect to the battlefield valuations. We test our theoretical predictions in the laboratory and find low initial levels of equilibrium play but substantial learning throughout the experiment. Learning is higher for games with monotonic equilibria. Finally, we find that deviations from equilibrium predictions benefit aggregate welfare.
    Keywords: Colonel Blotto, Non-zero sum, Experiments
    JEL: C92 D70
    Date: 2015–12
  12. By: Greiff, Matthias; Egbert, Henrik
    Abstract: We review a large number of empirical studies on Pay-What-You-Want (PWYW) pricing. We distinguish between laboratory experiments, field experiments, survey experiments and case studies. Based on this survey we identify the following two gaps in the recently flourishing literature on PWYW pricing: (1) studies on PWYW pricing for goods with high cost, and (2) studies on the long-term effects of PWYW pricing.
    Keywords: Pay-What-You-Want, PWYW, pricing mechanism, survey, empirical studies
    JEL: C90 D12 D49 M21 M30
    Date: 2016–01–05
  13. By: Proeger, Till; Meub, Lukas; Bizer, Kilian
    Abstract: Tradable development rights (TDR) are discussed as a means of containing urban sprawl in numerous countries. Despite its theoretical superiority in ensuring an efficient redistribution of planning rights, its applicability is concerned with several open questions and potential problems. Introducing a novel experimental setting, we simulate a cap & trade TDR scheme and investigate the effects of communication, an aspect typically assumed to be irrelevant by theory. We consider communication among individual participants competing in a TDR system and team decision-making facilitated by face-to-face communication. We find the system to be quite efficient, despite overshooting certificate prices particularly in the beginning for both initial issuance in auctions and the secondary market. Communication significantly reduces auction prices, leading to substantially less income redistribution from participants to the auctioneer. This effect is explained by participants' improved understanding of the cap & trade system when communicating; despite participants' attempts, they fail to establish collusion. Team decision-making is not only shown to reduce overshooting prices; moreover, it also improves the system's efficiency. These results are interpreted as emphasizing the efficiency and political feasibility of TDR schemes when including communication among its participants.
    Keywords: cap & trade,collusion,communication,economic experiment,land consumption,tradable planning permits
    JEL: C91 C92 D8
    Date: 2016
  14. By: Dipali Gandhi; Bhumika Mangrola
    Abstract: The classroom is a laboratory for the teachers to experiment on behaviors of an individual and mould their personality. Some individuals find it harder to learn with other individuals of the same age needs to get support from their teachers, or some extra help in the schools. A few individuals have more complicated learning difficulties, and may need extra help or equipment in school to help them access an appropriate education. Owing to lack of knowledge, educational access and technology, such individuals are initially treated as unwanted and segregated from other individuals and their education is carried out in special schools. The concept of Inclusive Education has changed the outlook for the children having all those deformities and differences. To touch the emotional domain of pre service teachers, an experiment was carried out with special children. The present paper reflects the views of pre service teachers towards special children. Key words: Inclusive Education, Pre service Teachers, Special Children
    Date: 2015–12
  15. By: Alexander K. Koch (Department of Economics and Business Economics, Aarhus University, Denmark); Julia Nafziger (Department of Economics and Business Economics, Aarhus University, Denmark)
    Abstract: We examine whether different phenomena of narrow bracketing can be traced back to some common characteristic and whether and how different phenomena are related. We find that making dominated lottery choices or ignoring the endowment when making risky choices are related phenomena and are both associated with low levels of cognitive reflection. In contrast, the phenomena of setting narrow goals or narrow mental budgets seem not to reflect choice errors due to low cognitive reflection, but are tools to overcome self-control problems. Buying small scale insurance is associated with having narrow mental budgets - suggesting that people buy such insurance to insure themselves against the consequences of their own self-control strategy.
    Keywords: Narrow bracketing, mental accounting, risky choices, cognitive skills, selfcontrol
    JEL: D03 C91 D81 D91
    Date: 2016–04–01
  16. By: Maria Bigoni (University of Bologna); Gabriele Camera (Chapman University & University of Basel); Marco Casari (University of Bologna & IZA)
    Keywords: Endogenous institutions, experiments, repeated games, strategic uncertainty
    JEL: C70 C90 D03 E02
    Date: 2015

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