nep-exp New Economics Papers
on Experimental Economics
Issue of 2016‒03‒17
twelve papers chosen by
Daniel Houser
George Mason University

  1. DO SELF-THEORIES ON INTELLIGENCE EXPLAIN OVERCONFIDENCE AND RISK TAKING? A Field Experiment. By Bertrand Koebel; André Schmitt; Sandrine Spaeter
  2. Fairness Versus Efficiency: How Procedural Fairness Concerns Affect Coordination By Kurz, Verena; Orland, Andreas; Posadzy, Kinga
  3. Doing Your Best When Stakes Are High? Theory and Experimental Evidence By Houy, Nicolas; Nicolaï, Jean-Philippe; Villeval, Marie Claire
  4. The Making of Homo Honoratus: From Omission to Commission By Ivo Vlaev; John List; Michael Hallsworth; Robert Metcalfe
  5. Online Ad Auctions: An Experiment By Kevin McLaughlin; Daniel Friedman
  6. Referrals: peer screening and enforcement in a consumer credit field experiment By Gharad Bryan; Dean Karlan; Jonathan Zinman
  7. Payment Scheme Self-Selection in the Credence Goods Market: An Experimental Study By Hernan Bejarano; Ellen P. Green; Lindsay Ham; Stephen Rassenti
  8. The Labor Supply of Fixed-Wage Workers: Estimates from a Real Effort Experiment By Carpenter, Jeffrey P.
  9. Impact Evaluation of Community-led Total Sanitation (CLTS) in Rural Mali By Maria Laura Alzua; Amy Janel Pickering; Habiba Djebbari; Carolina Lopez; Juan Camilo Cardenas; Maria Adelaida Lopera; Nicolas Osbert; Massa Coulibaly
  10. Field Experiments on Discrimination By Bertrand, Marianne; Duflo, Esther
  11. Homo Moralis: Personal Characteristics, Institutions, and Moral Decision-Making By Deckers, Thomas; Falk, Armin; Kosse, Fabian; Szech, Nora
  12. Extortion Can Outperform Generosity in the Iterated Prisoners' Dilemma By Bin Xu; Yanran Zhou; Jaimie W. Lien; Jie Zheng; Zhijian Wang

  1. By: Bertrand Koebel; André Schmitt; Sandrine Spaeter
    Abstract: Self-theories deal with how an individual perceives some of her attributes such as intelligence. People endorse basically one of two theories: growth mindset people think that intelligence can be developed (incremental theory) whereas fixed mindset people believe that intelligence is a fixed trait (entity theory). These theories play an important role on motivation and achievement as shown by Carol Dweck’s life-long research. They also impact self-assessment accuracy since fixed mindsets are much more imprecise in estimating their own ability. In behavioral economics, overconfidence is shown to play an important role in individual’s preferences and choices. In this paper, we conducted a field experiment to investigate whether self-theories impact overconfidence. Early career Vietnamese executives pursuing an MBA were incentivized. Our sample of managers and professionals controls for a wide range of corporate and demographic variables. The main result of our paper is that self-theories impact overconfidence when taking into account income. As in previous studies, we also find that subjects exhibit significant absolute overconfidence. Gender does not have any impact on overconfidence. We also tested the relationships between self-theories and risk taking.
    Keywords: self-theories; overconfidence; experiment; mindset; risk-taking.
    JEL: C93 D81
    Date: 2016
  2. By: Kurz, Verena (University of Gothenburg, Department of Economics, Sweden); Orland, Andreas (University of Potsdam, Department of Economics, Germany); Posadzy, Kinga (Division of Economics, Department of Management and Engineering, Linköping University)
    Abstract: What happens if a mechanism that aims at improving coordination treats some individuals unfairly? We investigate in a laboratory experiment whether procedural fairness concerns affect how well individuals are able to solve a coordination problem in a two-player Volunteer’s Dilemma. Subjects receive external action recommendations that can help them avoid miscoordination if followed by both players. One of the players receives a disadvantageous recommendation to volunteer while the other player receives a recommendation not to volunteer that gives her a payoff advantage if both players follow the recommendations they have received. We manipulate the fairness of the recommendation procedure by varying the probabilities of receiving a disadvantageous recommendation between players. We find that the recommendations improve overall efficiency regardless of their consequences for payoff division. However, there are behavioral asymmetries depending on the recommendation received by a player: advantageous recommendations are followed less frequently than disadvantageous recommendations in case of actions that guarantee a low payoff. While there is no difference in acceptance of different recommendation procedures, beliefs about others’ actions are more pessimistic in the treatment with a procedure inducing unequal expected payoffs. Our data shows that beliefs about others’ behavior are correlated with one’s own behavior, however this is the case only when following recommendations is a strategy that involves payoff-uncertainty.
    Keywords: Coordination; Correlated equilibrium; Recommendations; Procedural fairness; Volunteer’s Dilemma; Experiment
    JEL: C72 C91 D63 D83
    Date: 2016–03–01
  3. By: Houy, Nicolas (University of Lyon 2); Nicolaï, Jean-Philippe (ETH Zurich); Villeval, Marie Claire (CNRS, GATE)
    Abstract: Achieving an ambitious goal frequently requires succeeding in a sequence of intermediary tasks, some being critical for the final outcome, and others not. Individuals are not always able to provide a level of effort sufficient to guarantee success in all the intermediary tasks. The ability to manage effort throughout the sequence of tasks is therefore critical. In this paper we propose a criterion that defines the importance of a task and that identifies how an individual should optimally allocate a limited stock of exhaustible efforts over tasks. We test this importance criterion in a laboratory experiment that reproduces the main features of a tennis match. We show that our importance criterion is able to predict the individuals' performance and it outperforms the Morris importance criterion that defines the importance of a point in terms of its impact on the probability to achieve the final outcome. We also find no evidence of choking under pressure and stress, as proxied by electrophysiological measures.
    Keywords: critical ability, choking under pressure, Morris-importance, Skin Conductance Responses, experiment
    JEL: C72 C92 D81
    Date: 2016–02
  4. By: Ivo Vlaev; John List; Michael Hallsworth; Robert Metcalfe
    Abstract: Framing remains one of the pillars of behavioral economics. While framing effects have been found to be quite important in the lab, what is less clear is how well evidence drawn from naturally-occurring settings conforms to received laboratory insights. We use debt obligation to the UK government as a case study to explore the 'omission bias' present in decision making with large stakes. Using a natural field experiment that generates nearly 40,000 observations, we find that repayment rates are roughly doubled when the act is reframed as one of commission rather than omission. We estimate that this reframing of the perceived nature of the action generated over $1.3 million of new yield. We find evidence that this behavior may result from a deliberate 'omission strategy', rather than a behavioral bias, as is often assumed in the literature. Our natural field experiment highlights that behavioral economics is much more than a series of empirical exercises to quench the intellectual curiosity of academics.
    Date: 2015
  5. By: Kevin McLaughlin (Economic Science Institute, Chapman University); Daniel Friedman (Economics Department, University of California Santa Cruz)
    Abstract: A human subject laboratory experiment compares the real-time market performance of the two most popular auction formats for online ad space, Vickrey-ClarkeGroves (VCG) and Generalized Second Price (GSP). Theoretical predictions made in papers by Varian (2007) and Edelman, et al. (2007) seem to organize the data well overall. Efficiency under VCG exceeds that under GSP in nearly all treatments. The difference is economically significant in the more competitive parameter configurations and is statistically significant in most treatments. Revenue capture tends to be similar across auction formats in most treatments.
    Keywords: Laboratory Experiments, Auction, Online Auctions, Advertising
    JEL: C92 D44 L11 L81 M3
    Date: 2016
  6. By: Gharad Bryan; Dean Karlan; Jonathan Zinman
    Abstract: Empirical evidence on peer intermediation lags behind many years of lending practice and a large body of theory in which lenders use peers to mitigate adverse selection and moral hazard. Using a simple referral incentive mechanism under individual liability, we develop and implement a two-stage field experiment that permits separate identification of peer screening and enforcement effects. We allow for borrower heterogeneity in both ex-ante repayment type and ex-post susceptibility to social pressure. Our key contribution is how we deal with the interaction between these two sources of asymmetric information. Our method allows us to identify selection on the likelihood of repayment, selection on the susceptibility to social pressure, and loan enforcement. We estimate peer effects on loan repayment in our setting, and find no evidence of screening (albeit with an imprecisely estimated zero) and large effects on enforcement. We then discuss the potential utility and portability of the methodological innovation, for both science and for practice.
    JEL: C93 D12 D14 D82 O12 O16
    Date: 2015
  7. By: Hernan Bejarano (CIDE and Economic Science Institute, Chapman University); Ellen P. Green (School for the Science of Healthcare Delivery, Arizona State University); Lindsay Ham (University of Arkansas); Stephen Rassenti (Economic Science Institute, Chapman University)
    Abstract: Given heterogeneity in expert behavior across payment schemes in credence goods markets, it becomes important to understand the consequences of payment scheme selection. To study the effect on customer well being of expert self-selection, we recruited subjects to participate in a real-effort credence good laboratory market. Experts were either randomly assigned or faced with the choice of three payment schemes: fee-for-service, salary, and capitation. We found that experts who selected fee-for-service payment resulted in customers with significantly worse outcomes in comparison with experts who had been randomly assigned to fee-for-service. In contrast, experts who selected salary payment did not change customer outcomes relative to those who were randomly assigned.
    Keywords: Credence Goods, Self-Selection, Fee-for-service, Capitation, Payment, Sorting
    Date: 2016
  8. By: Carpenter, Jeffrey P. (Middlebury College)
    Abstract: Fixed-wage workers comprise the bulk of the labor force and yet little is known about how they respond to wage changes. Given recent interest in theories of reciprocity and intrinsic motivation and their implications for effort provision, the neoclassical prediction seems less obvious today. To better understand the motivation of these workers, I estimate their labor supply using a real effort experiment. Two results stand out. First, no one theory seems to fit the pooled data. On average, people work considerably harder than the minimum but they do not respond to changes in the wage. Second, pooling the data is deceptive because there seem to be distinct types with differing responses to the wage. Most workers can be classified as reciprocal or intrinsically motivated and, indeed, these types respond as theory would predict: reciprocators return wage gifts with increased effort and extrinsic incentives crowd out motivation for intrinsic workers.
    Keywords: labor supply, fixed wage, reciprocity, intrinsic motivation, real effort, experiment
    JEL: C91 J22
    Date: 2016–02
  9. By: Maria Laura Alzua (CEDLAS - UNLP); Amy Janel Pickering (Stanford University); Habiba Djebbari (Aix-Marseille University); Carolina Lopez (CEDLAS - UNLP); Juan Camilo Cardenas (University of the Andes); Maria Adelaida Lopera (Université Laval); Nicolas Osbert (UNICEF); Massa Coulibaly (Great Mali)
    Abstract: Community-Led Total Sanitation (CLTS) has been adopted in Mali to scale-up sanitation in rural areas and accelerate progress towards the MDG target on sustainable access to basic sanitation. However, few impact evaluations of community-based sanitation interventions have been conducted so far. This study presents the results of a randomized controlled trial for studying the effect of CLTS in rural Mali. 121 communities were randomly selected out of a sample of 402 villages identified as fit for the CLTS intervention based on high rates of open defecation and an expressed interest to improve the situation. Half of the 121 selected communities were randomly assigned to receive CLTS while the other half would be control villages. Baseline information was collected in all the communities prior to the intervention (March to April 2011). The data collected covered household demographic characteristics, health information, anthropometrics, and sanitation and water quality samples. Follow up information was collected between April and June 2013, 6 to 19 months after the intervention finished (depending on the villages). The study found a very significant increase in access to private latrines (which almost doubled among households in CLTS villages); improved quality of latrines and reduction in open defecation practices (self-reported open defecation rates fell by 70% among adults and by 50% among children under-five). CLTS households were three times more likely to have soap present and five times more likely to have water present at the hand washing facility. But no improvement of water quality was found.
    Date: 2015–11
  10. By: Bertrand, Marianne; Duflo, Esther
    Abstract: This article reviews the existing field experimentation literature on the prevalence of discrimination, the consequences of such discrimination, and possible approaches to undermine it. We highlight key gaps in the literature and ripe opportunities for future field work. Section 1 reviews the various experimental methods that have been employed to measure the prevalence of discrimination, most notably audit and correspondence studies; it also describes several other measurement tools commonly used in lab-based work that deserve greater consideration in field research. Section 2 provides an overview of the literature on the costs of being stereotyped or discriminated against, with a focus on self-expectancy effects and self-fulfilling prophecies; section 2 also discusses the thin field-based literature on the consequences of limited diversity in organizations and groups. The final section of the paper, Section 3, reviews the evidence for policies and interventions aimed at weakening discrimination, covering role model and intergroup contact effects, as well as socio-cognitive and technological de-biasing strategies.
    Date: 2016–02
  11. By: Deckers, Thomas (University of Bonn); Falk, Armin (University of Bonn); Kosse, Fabian (University of Bonn); Szech, Nora (Karlsruhe Institute of Technology)
    Abstract: This paper studies how individual characteristics, institutions, and their interaction influence moral decisions. We validate a moral paradigm focusing on the willingness to accept harming third parties. Consequences of moral decisions are real. We explore how moral behavior varies with individual characteristics and how these characteristics interact with market institutions compared to situations of individual decision-making. Intelligence, female gender, and the existence of siblings positively influence moral decisions, in individual and in market environments. Yet in markets, most personalities tend to follow overall much lower moral standards. Only fluid intelligence specifically counteracts moral-eroding effects of markets.
    Keywords: homo moralis, moral personality, real moral task, markets and personality, trade and morals
    JEL: D02 D03 J10
    Date: 2016–02
  12. By: Bin Xu; Yanran Zhou; Jaimie W. Lien; Jie Zheng; Zhijian Wang
    Date: 2016–02–26

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