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on Experimental Economics |
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Issue of 2016‒04‒16
nineteen papers chosen by |
| By: | Ruffle, Bradley (Wilfrid Laurier University); Tobol, Yossi (Jerusalem College of Technology (JTC)) |
| Abstract: | We conduct a field experiment on 427 Israeli soldiers who each rolled a six-sided die in private and reported the outcome. For every point reported, the soldier received an additional half-hour early release from the army base on Thursday afternoon. We find that the higher a soldier's military entrance score, the more honest he is on average. We replicate this finding on a sample of 156 civilians paid in cash for their die reports. Furthermore, the civilian experiments reveal that two measures of cognitive ability predict honesty, whereas general self-report honesty questions and a consistency check among them are of no value. We provide a rationale for the relationship between cognitive ability and honesty and discuss its generalizability. |
| Keywords: | honesty, cognitive ability, soldiers, high non-monetary stakes |
| JEL: | C93 M51 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9860&r=exp |
| By: | Neyse, Levent; Bosworth, Steven; Ring, Patrick; Schmidt, Ulrich |
| Abstract: | This paper contributes to a better understanding of the biological underpinnings of overconfidence by analyzing performance predictions in the Cognitive Reflection Test with and without monetary incentives. In line with the existing literature we find that the participants are too optimistic about their performance on average; incentives lead to higher performance; and males score higher than females on this particular task. The novelty of this paper is an analysis of the relation between participants’ performance prediction accuracy and their second to fourth digit ratio. It has been reported that the digit ratio is a negatively correlated bio-marker of prenatal testosterone exposure. In the unincentivized treatment, we find that males with low digit ratios, on average, are significantly more overconfident about their performance. In the incentivized treatment, however, we observe that males with low digit ratios, on average, are less overconfident about their performance. These effects are not observed in females. We discuss how these findings fit into the literature on testosterone and decision making and how they might help to explain seemingly opposing evidence. |
| Keywords: | Behavioural genetics,Personality,Sexual dimorphism |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkie:130145&r=exp |
| By: | Bauer, Michal (CERGE-EI); Fiala, Nathan (University of Connecticut); Levely, Ian (Charles University in Prague) |
| Abstract: | We use a set of experiments to study the effects of forced military service for a rebel group on social capital. We examine the case of Northern Uganda, where recruits did not selfselect nor were systematically screened by rebels. We find that individual cooperativeness robustly increases with length of soldiering, especially among those who soldiered during early age. Parents of ex-soldiers are aware of the behavioral difference: they trust exsoldiers more and expect them to be more trustworthy. These results suggest that the impact of child soldiering on social capital, in contrast to human capital, is not necessarily detrimental. |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:zwi:wpaper:31&r=exp |
| By: | Roland G. Fryer, Jr |
| Abstract: | Randomized field experiments designed to better understand the production of human capital have increased exponentially over the past several decades. This chapter summarizes what we have learned about various partial derivatives of the human capital production function, what important partial derivatives are left to be estimated, and what – together – our collective efforts have taught us about how to produce human capital in developed countries. The chapter concludes with a back of the envelope simulation of how much of the racial wage gap in America might be accounted for if human capital policy focused on best practices gleaned from randomized field experiments. |
| JEL: | I0 J0 J38 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22130&r=exp |
| By: | Mario Capizzani; Luigi Mittone; Andrew Musau; Antonino Vaccaro |
| Abstract: | Anticipated verbal feedback in a dictator game has been shown to induce altruistic behavior. Xiao and Houser (2009), and Ellingsen and Johannesson (2007), find that when the allocator donates an amount to a recipient, and the recipient sends an anonymous written message after learning of the amount, donations are higher in relation to the standard (no-communication) condition. We experimentally investigate whether strategic considerations crowd out anticipatory effects of communication in an ultimatum game, and find that such effects still persist in the pres- ence of two-sided communication. |
| Keywords: | ultimatum game; anticipated communication; experiment |
| JEL: | C78 C91 D03 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:1602&r=exp |
| By: | Syngjoo Choi; Andrea Galeotti; Sanjeev Goyal; |
| Abstract: | We propose a model of posted prices in networks. The model maps traditional concepts of market power, competition and double marginalization into networks, allowing for the study of pricing in complex structures of intermediation such as supply chains, transportation and communication networks and financial brokerage. We provide a complete characterization of equilibrium prices. Our experiments complement our theoretical work and point to node criticality as an organizing principle for understanding pricing, efficiency and the division of surplus in networked markets. |
| Keywords: | Intermediation, competition, market power, double marginalization. |
| JEL: | C70 C71 C91 C92 D40 |
| Date: | 2014–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1457&r=exp |
| By: | José Alberto Molina (University of Zaragoza; Boston College); Alfredo Ferrer (University of Zaragoza); José Ignacio Gimenez-Nadal (University of Zaragoza); Carlos Gracia-Lazaro (University of Zaragoza); Yamir Moreno (University of Zaragoza); Angel Sanchez (University of Zaragoza) |
| Abstract: | In this paper, we analyze how kinship among family members affects intergenerational cooperation in a public good game. 165 individuals from 55 families, comprising three generations (youths, parents, and grandparents), play a public good game in three different treatments: one in which three members of the same family play each other (family), a second with the youth and two non-family members but preserving the previous generational structure (intergenerational), and a third in which three randomly-selected players play each other (random). We find that players contribute more to the public good when they play with other family members, than when they play with non-family members. This effect is present in all three generations, and is independent of the gender of the players. We also observe the significant result that older generations contribute more to the public good, relative to their children. |
| Keywords: | Intergenerational cooperation, Evolutionary game theory, Public Goods game, Kinship, Social networks |
| JEL: | D03 D64 D70 |
| Date: | 2016–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:905&r=exp |
| By: | Abe, Naohito; Ueno, Yuko |
| Abstract: | How do we determine our expectations of inflation? Because inflation expectations greatly influence the economy, researchers have long considered this question. Using a survey with randomized experiments among 15,000 consumers, we investigate the mechanism of inflation expectation formation. Learning theory predicts that once people obtain new information on future inflation, they change their expectations. In this regard, such expectations are the weighted average of prior belief and information. We confirm that the weight for prior belief is a decreasing function of the degree of uncertainty. Our results also show that monetary authority information affects consumers to a greater extent when expectations are updated. With such information, consumers change their inflation expectations by 37% from the average. This finding supports improvements to monetary policy publicity. |
| Keywords: | inflation expectations, Bayesian updating, rational expectation, randomized survey experiments |
| JEL: | E31 C81 D80 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:hit:rcesrs:dp16-1&r=exp |
| By: | Kene Boun My; Nicolas Lampach |
| Abstract: | This note highlights in a very simple way the result gained from eliciting a subject’s aversion to inequity when this works to their own advantage, in a modified dictator game related to the domains of gains and losses. Our result demonstrates that individuals experience a stronger reaction to inequity in the domain of losses than in the domain of gains. |
| Keywords: | inequity aversion, modified dictator game, laboratory experiment. |
| JEL: | C70 C91 D63 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2016-21&r=exp |
| By: | Morone, Piergiuseppe; Falcone, Pasquale Marcello; Imbert, Enrica; Morone, Marcello; Morone, Andrea |
| Abstract: | Food security, along with growing population and the associated environmental concerns, make food waste and loss a central topic in economic analysis. While food losses occur mostly at the production, postharvest and processing phases of the supply chain, food waste takes place mainly at the end of the chain and therefore concerns primarily the habits and behaviour patterns of retailers and consumers. Many solutions and practices have been proposed and oftentimes implemented in order to “keep food out of landfills”, thus reducing food waste at the source. However, little attention has been paid to the possible sharing of consumer-side food surplus. In this context, food sharing could represent an effective way to tackle food waste at the consumers’ level, with both environmental and economic potential positive effects. Currently, several initiatives and start-ups are being developed in the US and Europe, involving the collection and use of the excess of food from consumers and retailers and the promotion of collaborative consumption models (e.g. Foodsharing, Growington, Feastly, etc.). Nevertheless, there is still little empirical evidence testing the effectiveness of introducing sharing economy approaches to reduce food waste. This study seeks to fill this gap through a framed field experiment. We run two experimental treatments; in the control treatment students were asked to behave according to their regular food consumption habits, and in the food sharing treatment the same students were instructed to purchase food, cook and consume it collectively. Preliminary results showed that the adoption by households of food sharing practices do not automatically translate into food waste reduction. A number of factors (environmental and economic awareness, domestic skills and collaborative behaviors) might act as ‘enablers’ to make sharing practices effective. |
| Keywords: | Food waste; sharing economy; food sharing; framed field experiment |
| JEL: | C93 Q5 |
| Date: | 2016–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70626&r=exp |
| By: | Steven D. Levitt; John A. List; Sally Sadoff |
| Abstract: | We test the effect of performance-based incentives on educational achievement in a low-performing school district using a randomized field experiment. High school freshmen were provided monthly financial incentives for meeting an achievement standard based on multiple measures of performance including attendance, behavior, grades and standardized test scores. Within the design, we compare the effectiveness of varying the recipient of the reward (students or parents) and the incentive structure (fixed rate or lottery). While the overall effects of the incentives are modest, the program has a large and significant impact among students on the threshold of meeting the achievement standard. These students continue to outperform their control group peers a year after the financial incentives end. However, the program effects fade in longer term follow up, highlighting the importance of longer term tracking of incentive programs. |
| JEL: | C93 I24 I25 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22107&r=exp |
| By: | Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Medhin, Haileselassie (Department of Economics, School of Business, Economics and Law, Göteborg University); Persson, Emil (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Using a laboratory experiment in the field, we examine how the choice architecture of framing a social dilemma – give to or take from a public good – interacts with a policy intervention that enforces a minimum contribution level to the public good. We find that cooperation is significantly higher in the give frame than in the take frame in our standard public goods experiment. When a minimum contribution level is introduced, contributions are significantly higher in the take frame since contributions are crowded out in the give frame but crowded in in the take frame. Our results therefore stress the importance of choosing the frame when making policy recommendations. |
| Keywords: | Choice architecture; Framing; Public goods; Minimum level; Experiment; Ethiopia. |
| JEL: | C91 H41 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0656&r=exp |
| By: | Sandro Casal (University of Milan); Francesco Fallucchi (University of East Anglia); Simone Quercia (University of Bonn) |
| Abstract: | We conduct an experiment to investigate the acceptable boundaries of immoral behavior in barganing situations. We find that subjects are willing to punish at their own cost only an extremely immoral action of their counterpart that affects a third party. However, the possibility to nullify the negative effects of the immoral action and to restore the ex-ante situation for the third party increases the willingness to punish. |
| Keywords: | mini ultimatum game, morals |
| JEL: | C72 C91 D6 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:16-05&r=exp |
| By: | Morone, Andrea; Nuzzo, Simone |
| Abstract: | This paper aims at providing both non-specialist and specialist readers with an overview of the several topics that have been addressed in the field of experimental asset markets. Rather than being exhaustive in any single topic, this review is meant to gather the several research strands and to provide a powerful picture of the main advances on the use of experimental techniques for the study of financial markets. |
| Keywords: | Experimental Asset Markets |
| JEL: | C9 G10 |
| Date: | 2016–04–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70461&r=exp |
| By: | Natalia BORZINO (University of East Anglia); Enrique FATAS (University of East Anglia); Emmanuel PETERLE (CRESE EA3190 Univ. Bourgogne Franche-Comté) |
| 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. |
| Keywords: | Experimental economics, Taxation, Trust, Information, Investment game. |
| JEL: | C72 C91 D03 H26 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2016-04&r=exp |
| By: | Jaime Torres, Mónica Marcela (Department of Economics, School of Business, Economics and Law, Göteborg University); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This paper investigates direct and spillover effects of a social information campaign aimed at encouraging residential water savings in Colombia. The campaign was organized as a randomized field experiment, consisting of monthly delivery of consumption reports, including normative messages, for one year. Results indicate that social information and appeals to normbased behavior reduce water use by up to 6.8% in households directly targeted by the campaign. In addition, we find evidence of spillover effects: households that were not targeted by the campaign reduced water use by 5.8% in the first six months following the intervention. Nevertheless, neither direct nor spillover effects can be attributed to social networks for any of our chosen proxies of social and geographic proximity. |
| Keywords: | Peer effects; social norms; randomized evaluation; water utilities |
| JEL: | C93 D03 L95 O12 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0652&r=exp |
| By: | Fiala, Nathan (University of Connecticut) |
| Abstract: | Microenterprises are a major contributor to income and employment in developing countries. There is growing evidence though that they do not expand beyond their intitial start-up point. I present the results of a randomized experiment with microenterprise owners in Uganda designed to explore the constraints to this growth. Business owners were randomly selected to receive loans, cash grants, business skills training, or a combination of these programs. I find that men with access to loans and training report significantly higher profits. The loan-only intervention had some initial impact, but this does not last. There are no impacts from the grant intervention, and no effects for women from any of the interventions. While recent research has found little effect from microfinance, I argue this is because men are not included in the studies. The results from this experiment suggest that male owned businesses can expand from microfinance. |
| Keywords: | Economic development, microenterprises, microfinance, cash grants, entrepreneurship training, credit constraints |
| JEL: | O12 O16 C93 J16 L26 M53 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:zwi:wpaper:29&r=exp |
| By: | Sawada, Yasuyuki; Aida, Takeshi; Griffen, Andrew S; Kozuka, Eiji; Noguchi, Haruko; Todo, Yasuyuki |
| Abstract: | In this paper, we investigate the role of School Management Committees (COGES) in Burkina Faso. These committees include elected members of each community, and are tasked with setting and implementing annual school plans. The study adopted a hybrid evaluation method incorporating a randomized controlled trial and a large-scale artefactual field experiment a la Levitt and List (2007) on public goods with monetary rewards, to closely examine unexplored issues impacting on the sustainability of community-driven projects, and to identify at least partially the mechanisms of this sustainability. We found that the COGES project significantly increased social capital in the form of voluntary contributions to public goods, especially by linking those that people can be connected to vertically. On average, the direct increase in voluntary contributions to public goods from the implementation of the COGES project was between 8.0 and 10.2%. For groups composed of school principals, teachers, and parents, the average contribution increased by between 12.7 and 24.1% through the democratic election of school management committee members, and by between 11.0 and 17.2% through the implementation of the COGES project. These results suggest that community management projects can improve local cost recovery by increasing local contributions of public goods, potentially leading to better fiscal sustainability in community-driven projects. Moreover, the results based on our hybrid experiments are largely in line with real-world decisions observed in the schools under our investigation. As a byproduct, our findings are supportive of models of other-regarding preferences. |
| Keywords: | school-based management , randomized controlled trials , artefactual field experiments , public goods game , social capital , sustainability of development project |
| Date: | 2016–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:jic:wpaper:120&r=exp |
| By: | Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Persson, Emil (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | We investigate the role of institutional formation on the implementation of a binding minimum contribution level in a linear public goods game. Groups either face the minimum level exogenously imposed by a central authority or are allowed to decide for themselves by means of a group vote whether or not a minimum level should be implemented. We find a binding minimum contribution level to have a positive and substantially significant effect on cooperation. The main impact is on the extensive margin, meaning that it is possible to force free riders to increase their contribution without crowding out others’ voluntary contributions. This result is robust to the mode of implementation and thus when the minimum level is enforceable, it is a simple policy that will increase provision of the public good. |
| Keywords: | Public goods; Minimum level; Voting; Experiment |
| JEL: | C91 D72 H41 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0655&r=exp |