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on Experimental Economics |
| By: | Douglas D. Davis (Department of Economics, VCU School of Business) |
| Abstract: | I review a series five primary results from experimental economics that impact on the economics profession as a whole. These results regard the relative (un)importance of subject sophistication in laboratory markets, the importance of gender on economic outcomes, the propensity for humans to behave in less than fully rational ways, the importance of trading institutions on economic performance and the behavioral relevance of economic theory. In overview, I find that economics as a profession has benefited from the use of experimental methods by fostering a dialogue between theorists and empiricists, better informing policy and improving data collection techniques. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:vcu:wpaper:1601&r=exp |
| By: | Douglas D. Davis (Department of Economics, VCU School of Business); Robert Reilly (Department of Economics, VCU School of Business) |
| Abstract: | This paper reports an experiment conducted to evaluate the effects of alterations in the terms of repayments to depositors following a liquidity suspension as well as the effect of alterations in the publicity of information about withdrawal behavior on the fragility of distressed banks. Results indicate that a ÒtoughÓ renegotiation stance, e.g. of protecting depositors who maintain their money in the bank, can quite effectively promote stability. Information provided to depositors regarding past withdrawal behavior weakens the effectiveness of a tough renegotiation policy, but reduces fragility somewhat for a more lenient rescheduling condition. |
| Keywords: | liquidity suspension, observability, bank runs, experimental economics |
| JEL: | G21 C9 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:vcu:wpaper:1501&r=exp |
| By: | Jordi Brandts; Arno Riedl |
| Abstract: | We use laboratory experiments to study the causal effects of favorable and unfavorable competitive market experience on cooperation in a subsequent social dilemma game. The issues we study are part of the broader topic of whether there are behavioral spillovers between different spheres of social interactions. Market interaction takes place in a continuous double auction market in which one side of the market obtains the larger part of the surplus. We examine the efficiency of subsequent cooperation for pairs of market-winners, market-losers and mixed pairs and study both the cases where interaction in the social dilemma is with others from the same market, 'market-partners', and where it is with others from another market, 'market-strangers', and compare it with benchmark behavior in a stand-alone social dilemma game. We find that in market-partners, market experience has adverse effects on the efficiently of cooperation on both market-winner and market-loser pairs. In market-strangers, pairs of market-winners manage to cooperate more efficiently. These results indicate that it is not market experience per se that lowers the ability to cooperate. Rather, having competed for scarce resources on the same side of the market makes it difficult to overcome the social dilemma and positive market experience fosters cooperation only for those who did not have to compete with each other. We also show that differences in cooperation cannot be explained by ex-ante income differences and find that market experience also affects subjective well-being and social value orientation. |
| Keywords: | competition, cooperation, experiments |
| JEL: | A13 C92 D30 J50 M50 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:868&r=exp |
| By: | John Hey; Daniela Di Cagno |
| Abstract: | Inspired by Clower’s conjecture that the necessity of trading through money in monetised economies might hinder convergence to competitive equilibrium, and hence, for example, cause unemployment, we experimentally investigate behaviour in markets where trading has to be done through money. In order to evaluate the properties of these markets, we compare their behaviour to behaviour in markets without money, where money cannot intervene. As the trading mechanism might be a compounding factor, we investigate two kinds of market mechanism: the double auction, where bids, asks and trades take place in continuous time throughout a trading period; and the clearing house, where bids and asks are placed once in a trading period, and which are then cleared by an aggregating device. We thus have four treatments, the pairwise combinations of nonmonetised/monetised trading with double auction/clearing house. We find that: convergence is faster under non-monetised trading, implying that the necessity of using money to facilitate trade hinders convergence; that monetised trading is noisier than non-monetised trading; and that the volume of trade and realised surpluses are higher with the double auction than the clearing house. As far as efficiency is concerned, monetised trading lowers both informational and allocational efficiency, and while the double auction outperforms the clearing house in terms of allocational efficiency, the clearing house is marginally better than the double auction in terms of informational efficiency when trade is through money. Crucially we confirm the conjecture that inspired these experiments: that the necessity to use money in trading hinders convergence to competitive equilibrium, lowers realised trades and surpluses, and hence may cause unemployment. |
| Keywords: | clearing house mechanism, double auction mechanism, experimental markets, money, monetised trading, non-monetised trading |
| JEL: | C92 D40 E24 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1501&r=exp |
| By: | Maurice Doyon (Université Laval); Laure Saulais (Institut Paul Bocuse); Bernard Ruffieux (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Institut national de la recherche agronomique (INRA) - Université Grenoble Alpes - Grenoble 2, Institut National Polytechnique de Grenoble); Denise Bweli (Egg Farmers of Canada) |
| Abstract: | Economists and market researchers often need to accurately gauge consumers’ willingness-to-pay for private goods. The experimental literature has identified a problem of hypothetical bias when using stated preferences techniques, such as open-ended questions. It has been suggested that using a cheap talk script has the potential to resolve this bias. Yet, few empirical studies on the efficiency of cheap talk for private goods exist. This study uses a between-subjects experimental design to compare consumers’ willingness-to-pay for DHA-enriched milk using three elicitation methods: 1) Hypothetical open-ended stated preference question, without monetary consequence for the respondent; 2) Idem to the first with the addition of a cheap talk script; and 3) A Vickrey auction with real monetary consequences. In this experiment subjects have the choice to participate, or not, at each period. Our results indicate a significant hypothetical bias. While the use of cheap talk has no impact on this bias, it does however increase the level of participation to the market. |
| Keywords: | experimental economics,willingness to pay,cheap talk,hypothetical bias |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01254936&r=exp |
| By: | Breinlich, Holger; Donaldson, D; Nolen, Patrick J; Wright, Greg C |
| Abstract: | We present novel evidence from the results of a randomized controlled trial on the role that information plays in the perceptions of the benefits and costs of exporting. We first present results from a baseline survey of approximately 1,000 UK manufacturing firms to show that non-exporters hold substantially more negative beliefs about the costs and benefits of exporting relative to exporters. We then explore the extent to which these di¤erences in perceptions are due to a biased understanding of the true costs and benefits of exporting on the part of non-exporters, or are instead a reflection of underlying differences in performance characteristics across firms, the view assumed by most theories of international trade. To do this, we make targeted information available to a randomly selected subset of these firms in the form of information from the UK's export promotion agency about the benefits and costs of exporting. The results of our intervention reveal a surprising, asymmetric response on the part of exporters and non-exporters. Instead of revising their negative perceptions upward, treated non-exporters become more likely to report lower perceived benefits and higher perceived barriers compared to non-treated non-exporters. In contrast, the attitudes of existing exporters improve. We discuss different behavioral and non-behavioral explanations for this result and highlight possible implications for export promotion policies. |
| Keywords: | Exporting, Information, Perceptions, RCTs |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:16005&r=exp |
| By: | Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique); Eizo Akiyama (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba); Ryuichiro Ishikawa (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba) |
| Abstract: | We investigate (a) whether eliciting future price forecasts influences market outcomes , and (b) whether differences in the way subjects are incentivized to submit " accurate " price forecasts influence the market outcomes as well as the forecasts submitted by subjects in an experimental asset market. We consider three treatments: one without forecast elicitation (NF) and two with forecast elicitations. In one of the latter treatments, subjects are paid based on both their performance of forecasting and trading (Bonus), while in the other, they are paid based only on one of the two that is chosen randomly at the end of the experiment (Unique). While we found no statistical differences in terms of mispricing, trading volumes, and trading behavior between NF and Unique treatments, there were some statistically significant differences between NF and Bonus treatments. Thus, if the aim is to avoid influencing the behavior of subjects and the market outcomes by eliciting price forecasts compared to NF treatment, then the Unique treatment seems to be better than the Bonus treatment. |
| Keywords: | Price forecast elicitation, Experimental asset markets |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01263661&r=exp |
| By: | L. Becchetti; V. Pelligra; F. Salustri; A. Vásquez |
| Abstract: | We report on a simple experimental study designed to investigate the different gender attitudes towards socially responsible consumption. We use the Vote-with-the-Wallet Game (VWG), a version of a repeated multiplayer prisoner’s dilemma that mimics the characteristics of the choice between a conventional and a socially responsible product. More precisely we test the effect of three factors - two different frames and an ex-post redistribution mechanism that transfers resources from purely self-interested consumers to responsible ones. We find that women remain significantly more cooperative (choosing more often the responsible good) when the redistribution mechanism is interrupted and are significantly less satisfied about the behavior of the other players in that treatment. |
| Keywords: | Responsible Consumption, Gender Differences, social preferences, lab experiment |
| JEL: | C72 C92 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201603&r=exp |
| By: | Daniela Di Cagno; Arianna Galliera; Werner Güth; Luca Panaccione |
| Abstract: | Similar to Fischbacher and Gachter (2010) we try to understand and explain the motivation of participants when contributing to a public good. In the Hybrid Public Good experiment each of two interacting contributors chooses an independent contribution level and three adjusted contribution levels when (s)he, as the only adjusting player, learns that the other’s independent contribution is smaller, equal or larger than the own one. We systematically vary the probability that one player can adjust, based on such qualitative information, but maintain that no adaptation at all and adaptation by only one occurs with positive probability. Adaptation is framed in two ways, once by additively changing the own independent contribution and once by stating new contribution levels. Surprisingly, there is a strong framing effect which increases with experience. Reacting to coinciding independent contributions implies impressive conformity in contributing. Reacting to higher, respectively lower independent contributions implies average upward, and, more strongly, downward adaptation. |
| Keywords: | Public goods, experiments, voluntary contribution mechanism |
| JEL: | C91 C72 H41 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1504&r=exp |
| By: | Alberto Casagrande; Daniela Di Cagno; Alessandro Pandimiglio; Marco Spallone |
| Abstract: | Traditional models of tax enforcement assume that the decision to be tax compliant is the result of an interaction between individual taxpayers and a dedicated tax agency. Evidence shows that tax compliance is the result of a far more complex decision rule, involving both individual and group motivations, along with non-monetary components. In this paper, we consider a game in which the individual decision to be tax compliant is affected both by strategic competition between taxpayers and the psychological cost of being detected (i.e., shame). We ran a laboratory experiment using a sample of 138 students at the Centro di Economia Sperimentale A Roma Est (CESARE), in the experimental lab at the LUISS “Guido Carli†University of Rome, to evaluate the efficiency of random versus targeted audit rules and to verify the interaction between strategic competition and shame. The experimental results show that strategic competition between taxpayers plays a critical role in reducing tax evasion. In addition, shame reinforces this competition, but plays no significant role on its own (i.e., without competition). |
| Keywords: | Tax evasion, Lab Experiment, Shame, Competition |
| JEL: | H26 C91 C72 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1505&r=exp |
| By: | Brocas, Isabelle; Carrillo, Juan D; Giga, Aleksandar; Zapatero, Fernando |
| Abstract: | We conduct a controlled laboratory experiment in which subjects dynamically choose to allocate their portfolio between (i) a safe asset, (ii) a risky asset and (iii) a skewed asset with negative expected value (a “bet”), in an environment where they can sometimes choose to acquire some information about the performance of their peers. We find three distinct groups of individuals: 16% of subjects never buy the bet, 29% of subjects learn not to buy the bet and 55% subjects persist purchasing the bet throughout the experiment. Among the latter group, purchases are most frequent when subjects are rich and when it is their last opportunity. Our subjects are also interested in the wealth of others, especially relative to theirs. Indeed, a subject with low, medium and high wealth has a preference for finding out what is the minimum, average and maximum wealth in the session, respectively. We also find that subjects buy more bets when they are richer and (unexpectedly) learn that their peers outperform them. |
| Keywords: | laboratory experiment; portfolio allocation; relative performance; skewed asset |
| JEL: | C91 D03 D81 G11 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11056&r=exp |
| By: | Giovanni Ponti; Ismael Rodriguez-Lara; Daniela Di Cagno |
| Abstract: | We report experimental evidence on the e§ects of social preferences on intertemporal decisions. To this aim, we set up an intertemporal Dictator Game and investigate whether (and how) subjects change their choices, compared with those they had taken in absence of any payo§ externality in a previous stage of the experiment. We run two treatments -INFO and BELIEF, respectively- depending on whether Dictators know -or are asked to elicit- their assigned Recipients' risk and time preferences. We find that high (own) risk aversion is associated with low (own) discounting. We also Önd that (heterogeneous) social time preferences are signifcant determinants of choices, in that Dictators display a marked propensity to account for the Recipients' intertemporal concerns. |
| Keywords: | intertemporal decisions, time preferences, social preferences |
| JEL: | C91 D70 D81 D91 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1401&r=exp |
| By: | Halevy, Yoram; Zrill, Lanny |
| Abstract: | We propose and implement an experimental methodology for comparing the predictive success of various methods for recovering individual preferences from choice data. We apply the proposed approach to a comparison of two parametric recovery methods: Non Linear Least Squares (NLLS) and the Money Metric Index (MMI). The former is based on minimizing the distance between observed and predicted choices while the latter is based on eliminating incompatibility between the ranking information encoded in choices and the ranking induced by the parametric specification. The experiment, in the context of choice under risk, involves a two-part design where choices made by subjects in the first part are used to construct their choice sets in the second part of the experiment in order to separate the predictions of the two recovery methods. We find that the Money Metric Index predicts better than NLLS in all cases and significantly better when the recovered parameters imply non-convex preferences. |
| Keywords: | Revealed Preference, Recoverability, Identification, Non-Convex Preferences, Pairwise Choice, First-Order Risk Aversion, Portfolio Choice, Laboratory |
| JEL: | C18 C91 D81 G11 |
| Date: | 2016–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:pmicro:yoram_halevy-2016-2&r=exp |
| By: | Chiara Felli; Werner Güth; Esther Mata-Pérez; Giovanni Ponti |
| Abstract: | Unlike letting the Ultimatum Game be played in the strategy mode with monotonic response strategy, both players, the proposer as well as the responder, are allowed to concede. Proposers would concede by increasing second, third, ... binding offers. Similarly, responders concede by decreasing binding acceptance thresholds. Treatments differ in whether to avoid early conflict at least one party must concede. The other condition varies the number of possible concessions, namely, two versus four. Since accepting every positive (last) offer is weakly undominated, the benchmark outcome is the usual one with the smallest positive offer accepted (at least in last attempt). If concessions are necessary, the responder might prefer larger early acceptance thresholds allowing him to concede. Similarly, a proposer might begin by offering much less than what she is finally willing to concede. Our experimental findings confirm the hypothesis of more frequent and larger concessions by responder participants for whom the concessions are hypothetical and essentially mean to rely on weakly dominant behavior. According to our data, the need of concessions weakens the power advantage of the proposer. Surprisingly, the longer horizon does not improve the chances of an agreement, even when no concessions are needed. |
| Keywords: | Bargaining Experiments, Concession Making |
| JEL: | C72 C78 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1507&r=exp |
| By: | Fafchamps, Marcel; Labonne, Julien |
| Abstract: | We discuss a method aimed at reducing the risk that spurious results are published. Researchers send their datasets to an independent third party who randomly generates training and testing samples. Researchers perform their analysis on the former and once the paper is accepted for publication the method is applied to the latter and it is those results that are published. Simulations indicate that, under empirically relevant settings, the proposed method significantly reduces type I error and delivers adequate power. The method – that can be combined with pre-analysis plans – reduces the risk that relevant hypotheses are left untested. |
| Keywords: | Bonferroni correction; data mining; pre-analysis plan; publication bias |
| JEL: | C12 C18 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11077&r=exp |
| By: | Dietmar Fehr; Matthias Sutter |
| Abstract: | Human communication in organizations often involves a large amount of gossiping about others. Here we study in an experiment whether gossip affects the efficiency of human interactions. We let subjects play a trust game. Third parties observe a trustee?s behavior and can gossip about it by sending a message to the trustor with whom the observed trustee will be paired (for the first time) in the next round. While messages are non-verifiable and sometimes also incorrect, the possibility of gossip is highly efficiency-increasing compared to a situation without any gossip. In two further control treatments, we show that the mere fact of being observed by third parties cannot explain the efficiency-increasing effect of gossip, and that noisy gossip (where information transmission from third parties to trustors can fail) still increases efficiency, but less so than if information transmission is undisturbed. |
| Keywords: | gossip, communication, trust game, efficiency |
| JEL: | C72 C92 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2016-03&r=exp |
| By: | Zhixin Dai (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Fabio Galeotti (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France) |
| Abstract: | We conduct an artefactual field experiment using a diversified sample of passengers of public transportations to study attitudes towards dishonesty. We find that the diversity of behavior in terms of dis/honesty in laboratory tasks and in the field correlate. Moreover, individuals who have just been fined in the field behave more honestly in the lab than the other fare-dodgers, except when context is introduced. Overall, we show that simple tests of dishonesty in the lab can predict moral firmness in life, although frauders who care about social image cheat less when behavior can be verified ex post by the experimenter. |
| Keywords: | Dishonesty, fare-dodging, field experiment, external validity, public transportations |
| JEL: | B41 C91 C93 K42 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1605&r=exp |
| By: | Bouton, Laurent; Llorente-Saguer, Aniol; Malherbe, Frédéric |
| Abstract: | We study the information aggregation properties of unanimous voting rules in the laboratory. In line with theoretical predictions, we find that majority rule with veto power dominates unanimity rule. We also find that the strategic voting model is a fairly good predictor of observed subject behavior. There are, however, cases where organizing the data seems to require a mix of strategic and sincere voting. This pattern of behavior would imply that the way majority rule with veto power is framed may significantly affect the outcome of the vote. Our data strongly supports such an hypothesis. |
| Keywords: | constructive abstention; framing; information aggregation; laboratory experiments; unanimity rule; veto power |
| JEL: | C92 D70 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11087&r=exp |
| By: | Daniela Di Cagno; Werner Güth; Giacomo Sillari |
| Abstract: | In experimental economics one can confront a “don’t!â€, as in “do not deceive your participants!†as well as a “do!â€, as in “incentivize choice making!â€. Neither exist in experimental psychology. Furthermore, controversies exist in both fields regarding data collection methods, e.g. play, strategy (vector) method in strategic game experiments, and concerns for external and internal validity, e.g. field versus lab experiments. In addition to touching on these aspects, we suggest ways to enrich the dimensionality of choice data, if possible, when maintaining the revealed-motive approach. Finally, and most mportantly, we recommend to elicit not only choice data but also to collect supplementary data shedding light on how participants deliberate before deciding. |
| Keywords: | methodology, experiments, game theory |
| JEL: | B41 A12 C91 C70 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1502&r=exp |
| By: | L. Becchetti; V. Pelligra; A. Vásquez |
| Abstract: | We test for the existence of gender effects in a “vote with the wallet” multiplayer prisoner’s dilemma. Statics tests and dynamic econometric estimates find that women cooperate significantly more when we start with the baseline version of the game without introducing institutional legality frames, ex post redistribution schemes and conformity information designs. Women therefore reveal themselves as naturaliter more cooperative. |
| Keywords: | Gender Effects, lab experiment, Redistribution, conformity |
| JEL: | C92 D7 D73 H2 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201602&r=exp |
| By: | Leonardo Becchetti (CEIS, University of Rome Tor Vergata); Vittorio Pelligra (University of Cagliari, CRENoS); Serena F. Taurino (University of Rome Tor Vergata) |
| Abstract: | We measure satisfaction about experimental outcomes, personal and other participants' behaviour after a multiperiod "hybrid contribution" multiplayer prisoner's dilemma called the "vote with the wallet" game. Our work shows that participants who cooperated above median (which we define as strong cooperators) are significantly more satisfied with the game in proportion to their cooperative choice. On the contrary, their satisfaction for the other players' behavior is negatively correlated with the extent of their own cooperative behavior and the non-cooperative behavior of the latter. The satisfaction of strong cooperators for their behavior in the game depends in turn on the share of their own cooperative choices. We document that a broader utility function including heterogeneity in expectations on other players' behavior, other-regarding preferences, and a negative reciprocity argument may account for the combination of the observed experimental and satisfaction findings. |
| Date: | 2016–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:363&r=exp |
| By: | Zhixin Dai (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Fabio Galeotti (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon) |
| Abstract: | We conduct an artefactual field experiment using a diversified sample of passengers of public transportations to study attitudes towards dishonesty. We find that the diversity of behavior in terms of dis/honesty in laboratory tasks and in the field correlate. Moreover, individuals who have just been fined in the field behave more honestly in the lab than the other fare-dodgers, except when context is introduced. Overall, we show that simple tests of dishonesty in the lab can predict moral firmness in life, although frauders who care about social image cheat less when behavior can be verified ex post by the experimenter. |
| Keywords: | Dishonesty, fare-dodging, field experiment, external validity, public transportations |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01265696&r=exp |
| By: | Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique); Nicolas Jacquemet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université Paul Cézanne - Aix-Marseille 3 - Université de la Méditerranée - Aix-Marseille 2 - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - AMU - Aix-Marseille Université); Adam Zylbersztejn (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | How is one's cognitive ability related to the way one responds to strategic uncertainty? We address this question by conducting a set of experiments in simple 2 × 2 dominance solvable coordination games. Our experiments involve two main treatments: one in which two human subjects interact, and another in which one human subject interacts with a computer program whose behavior is known. By making the behavior of the computer perfectly predictable, the latter treatment eliminates strategic uncertainty. We find that subjects with higher cognitive ability are more sensitive to strategic uncertainty than those with lower cognitive ability. |
| Keywords: | Strategic uncertainty,Bounded rationality,Robot,Experiment |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01261036&r=exp |
| By: | Fadong Chen; Urs Fischbacher |
| Abstract: | There is ample evidence that people differ considerably in the strength of their social preferences. We identify individual heterogeneity in social motives and selfishness in a series of binary three-person dictator games. Based on this identification, we analyze response time to investigate the cognitive processes of distributional preferences. We find that response time increases with the number of conflicts between individually relevant motives and the difficulty of the decisions. The selfish motive is more intuitive for subjects who are more selfish. This is evidence for both, evidence accumulation models and dual-process theory, and we can show that heterogeneity in preferences is reflected in heterogeneity in the underlying cognitive processes. This shows that it is important to take heterogeneity of preferences into account when investigating the cognitive processes of social decision making. |
| Keywords: | distributional preferences, cognitive process, response time, heterogeneity |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0101&r=exp |
| By: | Helia Marreiros (University of Southampton, Economics Department, School of Social Sciences); Mirco Tonin (Free University of Bolzano‐Bozen, Faculty of Economics and Management); Michael Vlassopoulos (University of Southampton, Economics Department, School of Social Sciences); M.C. Schraefel (University of Southampton, Electronics and Computer Sciences Department) |
| Abstract: | Personal data lie at the forefront of different business models and constitute the main source of revenue of several online companies. In many cases, consumers have incomplete information about the digital transactions of their data. This paper investigates whether highlighting positive or negative aspects of online privacy, thereby mitigating the informational problem, can affect consumers’ privacy actions and attitudes. Results of two online survey experiments indicate that participants adopt a more conservative stance on disclosing identifiable information, such as name and email, even when they are informed about positive attitudes of companies towards their privacy. On the other hand, they do not change their attitudes and social actions towards privacy. These findings suggest that privacy concerns are dormant and may manifest when consumers are asked to think about privacy; and that privacy behavior is not necessarily sensitive to exposure to objective threats or benefits of disclosing personal information. |
| Keywords: | survey experiment, information economics, privacy policies, salience, self-disclosure |
| JEL: | C83 L38 M38 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps34&r=exp |
| By: | Iñigo Iturbe-Ormaetxe; Giovanni Ponti; Josefa Tomás |
| Abstract: | Gneezy and Potters (1997) run an experiment to test the empirical content of Myopic Loss Aversion (MLA). They find that the attractiveness of a risky asset depends upon the investors’ time horizon: consistently with MLA, individuals are more willing to take risks when they evaluate their investments less frequently. This paper shows that these experimental findings can be easily accommodated by the most standard version of Expected Utility Theory, namely a CRRA specification. Additionally, we use four different datasets to estimate a CRRA model and two alternative MLA versions, together with various mixture specifications of the two competing models. Our econometric exercise finds little evidence of subjects’ loss aversion, which provides empirical ground for our theoretical claim. |
| Keywords: | Expected Utility Theory, Myopic Loss Aversion, Evaluation Period |
| JEL: | C91 D81 D14 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1506&r=exp |
| By: | Kozuka, Eiji; Sawada, Yasuyuki; Todo, Yasuyuki |
| Abstract: | Promoting community participation in school management is a widely found intervention in the developing world. While this type of program is generally believed to be effective, the actual evidence is not sufficient to inform policy makers on how community participation works in improving educational outcomes. To shed more light on this question, we conducted a randomized evaluation of an education program in Burkina Faso. The program was designed to build trust among community members and teachers, and encourage them to work together in school management. The results show that the intervention increased student enrollment, decreased student repetition, and lowered teacher absence. The results also indicate that it had a strong impact on class repetition by 6th grade boys, presumably reflecting parental priorities. This suggests that community participation can improve educational outcomes through empowering the community and enhancing social capital, but whether idealized results can be gained depends on the perception and the knowledge of the community members. |
| Keywords: | school-based management , community participation , randomized controlled trial (RCT) , education , impact evaluation |
| Date: | 2016–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:jic:wpaper:112&r=exp |
| By: | Daniela Di Cagno; Arianna Galliera; Werner Güth; Noemi Pace; Luca Panaccione |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1503&r=exp |
| By: | Kellner, Christian; Reinstein, David; Riener, Gerhard; Sanders, Michael |
| Abstract: | When and how should a fundraiser ask for a donation from an individual facing an uncertain bonus income? A standard model of expected utility over outcomes predicts that the individual’s before choice – her ex-ante commitment conditional on her income – will be the same as her choice after the income has been revealed. Deciding “if you win, how much will you donate?†involves a commitment (i) over a donation for a state of the world that may not be realized and (ii) over uncertain income. Models involving reference-dependent utility, tangibility, and self-signaling predict more giving before, while theories of affect predict more giving after. In our online field experiment at a UK university, as well as in our laboratory experiments in Germany, charitable giving was significantly larger in the Before treatment than in the After treatment for male subjects, with a significant gender differential. Lab treatments isolated distinct mechanisms: for men, donations were higher in all treatments where the donation’s collection was uncertain, whether or not the income was known. This supports a (self)-signaling explanation: commitments realized with a lower probability must involve larger amounts to have the same signaling power. Our results are directly relevant to fundraising and volunteer-recruitment strategies,and offer further evidence that we need to exercise caution in applying expected-utility theory in the presence of social preferences. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:13794&r=exp |
| By: | Fadong Chen; Urs Fischbacher |
| Abstract: | This paper investigates how process data like response time and click position relates to economic decisions. We use a social value orientation experiment, which can be considered as a prototypical multi-attribute decision problem. We find that in the social value orientation task more individualistic subjects have shorter response times than prosocial subjects. Individualistic subjects click more often on their own payoffs than on the others’ payoffs, and they click more often on their own payoffs than prosocial subjects. These results show that response times and click positions can be used as indicators of people’s preferences. |
| Keywords: | click position, response time, social preferences, experiment |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0102&r=exp |
| By: | Ulrich Berger (Department of Economics, Vienna University of Economics and Business); Hannelore De Silva (Department Finance, Accounting and Statistics , Vienna University of Economics and Business); Gerlinde Fellner-Röhling (Institute of Economics, Ulm University) |
| Abstract: | Experimental tests of choice predictions in one-shot games show only little support for Nash equilibrium (NE). Poisson Cognitive Hierarchy (PCH) and level-k (LK) are behavioral models of the thinking-steps variety where subjects differ in the number of levels of iterated reasoning they perform. Camerer et al. (2004) claim that substituting the Poisson parameter tau = 1.5 yields a parameter-free PCH model (pfPCH) which predicts experimental data considerably better than NE. We design a new multi-person game, the Minimizer Game, as a testbed to compare initial choice predictions of NE, pfPCH and LK. Data obtained from two large-scale online experiments strongly reject NE and LK, but are well in line with the point prediction of pfPCH. |
| Keywords: | behavioral game theory, experimental games, Poisson cognitive hierarchy, level-k model, minimizer game |
| JEL: | C72 C90 D01 D83 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp211&r=exp |