nep-exp New Economics Papers
on Experimental Economics
Issue of 2016‒05‒21
thirty-one papers chosen by

  1. Experimenting with Contests for Experimentation By Cary Deck; Erik O. Kimbrough
  2. The Impact of Taxes and Wasteful Government Spending on Giving By Sheremeta, Roman; Uler, Neslihan
  3. Blindfolded vs. informed ultimatum bargaining: A theoretical and experimental analysis By Güth, Werner; Pull, Kerstin; Stadler, Manfred; Zaby, Alexandra
  4. What You Don’t Know... Can’t Hurt You? A Field Experiment on Relative Performance Feedback in Higher Education By Ghazala Azmat; Manuel Bagues; Antonio Cabrales; Nagore Iriberri
  5. Extrinsic and intrinsic motivations for tax compliance: evidence from a field experiment in Germany By Nadja Dwenger; Henrik Kleven; Imran Rasul; Johannes Rincke
  6. Can transparency of information reduce embezzlement? Experimental Evidence from Tanzania By Salvatore Di Falco; Brice Magdalou; David Masclet; Marie Claire Villeval; Marc Willinger
  7. Money Illusion Matters for Consumption-Saving Decision-Making: An Experimental Investigation By Yasufumi Gemma
  8. Does physician gender influence the provision of medical care? An experimental study. By Li, JingJing; Godager, Geir; Wang, Jian
  9. Cooperating, fast and slow: Testing the social heuristic hypothesis By Strømland, Eirik; Tjøtta, Sigve; Torsvik, Gaute
  10. Does the absence of human sellers bias bidding behavior in auction experiments? By Björn Bartling; Tobias Gesche; Nick Netzer
  11. Can Business Owners Form Accurate Counterfactuals? Eliciting Treatment and Control Beliefs about Their Outcomes in the Alternative Treatment Status By McKenzie, David J.
  12. Lottery- and survey-based risk attitudes linked through a multichoice elicitation task. By Giuseppe Attanasi; Nikolaos Georgantzís; Valentina Rotondi; Daria Vigani
  13. The social pay gap across occupations: Survey and experimental evidence By Bublitz, Elisabeth; Regner, Tobias
  14. Gender differences and stereotypes in strategic thinking By Maria Cubel; Santiago Sanchez-Pages
  15. Boosting cooperation between agents in diverse groups: a dynamical model of prosocial behavior, free-riding and coercive solutions. By Solferino, Nazaria; Taurino, SerenaFiona; Tessitore, M.Elisabetta
  16. Reputational Concerns in Repeated Rent-Seeking Contests By Francesco Fallucchi; Elke Renner
  17. Status Goods: Experimental Evidence from Platinum Credit Cards By Gautam Rao; Leonardo Bursztyn; Stefano Fiorin; Bruno Ferman; Martin Kanz
  18. Identification of Biased Beliefs in Games of Incomplete Information Using Experimental Data By Victor Aguirregabiria; Erhao Xie
  19. (Non-)Insurance Markets, Loss Size Manipulation and Competition - Experimental Evidence By Jeroen Hinloopen; Adriaan R. Soetevent
  20. Designing Contests Between Heterogeneous Contestants: An Experimental Study of Tie-Breaks and Bid-Caps in All-Pay Auctions By Llorente-Saguer, Aniol; Sheremeta, Roman; Szech, Nora
  21. Behavior Under Vague Standards: Evidence from the Laboratory By Sven Hoeppner; Laura Lyhs
  22. Recent developments in the experimental elicitation of time preference By Stephen L. Cheung
  23. Integrating sensory evaluations in incentivized discrete choice experiments to assess consumer demand for cricket flour buns in Kenya By Mohammed H. Alemu; Søren Bøye Olsen; Suzanne E. Vedel; John Kinyuru; Kennedy O. Pambo
  24. Can transparency of information reduce embezzlement? Experimental Evidence from Tanzania By Salvatore Di Falco; Brice Magdalou; David Masclet; Marie-Claire Villeval; Marc Willnger
  25. A note on charitable giving by corporates and aristocrats: Evidence from a field experiment By Bassi, Vittorio; Huck, Steffen; Rasul, Imran
  26. Experimental Criminal Law. A Survey of Contributions from Law, Economics and Criminology By Christoph Engel
  27. Extortion Can Outperform Generosity in the Iterated Prisoners' Dilemma By Zhijian Wang; Yanran Zhou; Jaimie W. Lien; Jie Zheng; Bin Xu
  28. Trust in trade: The causal role of social trust on individual trade preferences By Daniel Rais
  29. The influences of social context on the measurement of distributional preferences By Matthias Greiff; Kurt A. Ackermann; Ryan O. Murphy
  30. Bribery: Greed versus reciprocity By Gneezy, Uri; Saccardo, Silvia; van Veldhuizen, Roel
  31. Affirmative action or just discrimination? A study on the endogenous emergence of quotas By Loukas Balafoutas; Brent J. Davis; Matthias Sutter

  1. By: Cary Deck (University of Arkansas); Erik O. Kimbrough (Simon Fraser University)
    Abstract: We report an experimental test of alternative rules in multi-stage innovation contests when success may not be feasible and contestants may learn from each other. Following Halac et al. (forthcoming), the planner can vary the prize allocation rule from Winner-Take-All in which the rst successful innovator receives the entire prize to Shared in which all successful innovators during the contest duration share in the prize. The planner can also vary the information disclosure policy from Public in which at each period, all information about contestants' past successes and failures is publicly available, to Private, in which contestants only know their own histories. In our setting, the theoretically optimal contest design depends on the probability of successful innovation, given that innovation is feasible. Under some parameters the designer will prefer a WTA-Public contest; while, under others he will prefer Shared-Private. Our experiments provide evidence that Private disclosure contests behaviorally dominate Public disclosure, regardless of the prize allocation rule, and moreover that Shared-Private contests dominate WTA-Private contests.
    Keywords: research and development, contests, experiments
    JEL: C7 C9 D4 D7
    Date: 2016–04–02
  2. By: Sheremeta, Roman; Uler, Neslihan
    Abstract: We examine the impact of taxes and wasteful government spending on charitable giving. In our model, the government collects a flat-rate tax on income net of donations and wastes part of the tax revenue before redistribution. The model provides theoretical predictions which we test in a framed field experiment. The results of the experiment show that the tax rate has a weak and insignificant effect on giving. The degree of waste, however, has a large, negative and significant effect on giving, with the relationship moderated by the curvature in the utility function.
    Keywords: giving, charity donations, tax, waste, redistribution, experiments
    JEL: C90 D64 H41
    Date: 2016–04–27
  3. By: Güth, Werner; Pull, Kerstin; Stadler, Manfred; Zaby, Alexandra
    Abstract: This paper analyzes blindfolded versus informed ultimatum bargaining where proposer and responder are both either uninformed or informed about the size of the pie. Analyzing the transition from one information setting to the other suggests that more information induces lower (higher) price offers and acceptance thresholds when the pie is small (large). While our experimental data confirm this transition effect, risk aversion leads to diverging results in blindfolded ultimatum bargaining due to task-independent strategies such as 'equal sharing' or the 'golden mean.' The probability of successful bargaining is lower in case of blindfolded than informed ultimatum bargaining.
    Keywords: ultimatum bargaining,information structure,experimental economics
    JEL: C91 D82
    Date: 2016
  4. By: Ghazala Azmat (Queen Mary University of London and Centre for Economic Performance, LSE); Manuel Bagues (Aalto University and IZA); Antonio Cabrales (University College London); Nagore Iriberri (University of the Basque CountryU PV/EHU, IKERBASQUE, Basque Foundation for Science)
    Abstract: This paper studies the effect of providing feedback to college students on their position in the grade distribution by using a randomized control experiment. This information was updated every six months during a three-year period. In the absence of treatment, students' underestimate their position in the grade distribution. The treatment significantly improves the students' self-assessment. We find that treated students experience a significant decrease in their educational performance, as measured by their accumulated GPA and number of exams passed, and a significant improvement in their self-reported satisfaction, as measured by survey responses obtained after information is provided but before students take their exams. Those effects, however, are short lived, as students catch up in subsequent periods. Moreover, the negative effect on performance is driven by those students who underestimate their position in the absence of feedback. Those students who overestimate initially their position, if anything, respond positively.
    Keywords: Relative performance feedback, Ranking, Randomized field experiment, School performance
    JEL: J71 J44
    Date: 2016–03
  5. By: Nadja Dwenger; Henrik Kleven; Imran Rasul; Johannes Rincke
    Abstract: We study extrinsic and intrinsic motivations for tax compliance in the context of a local church tax in Germany. This tax system has historically relied on zero deterrence so that any compliance at baseline is intrinsically motivated. Starting from this zero deterrence baseline, we implement a field experiment that incentivized compliance through deterrence or rewards. Using administrative records of taxes paid and true tax liabilities, we use these treatments to document that intrinsically motivated compliance is substantial, that a significant fraction of it may be driven by duty-to-comply preferences, and that there is no crowd-out between extrinsic and intrinsic motivations.
    Keywords: tax compliance; intrinsic motivation; extrinsic motivation; filed experiment
    JEL: C93 H26
    Date: 2016
  6. By: Salvatore Di Falco (University of Geneva, Bd du Pont-d'Arve 40, CH-1211 Genève 4, Suisse); Brice Magdalou (University of Montpellier, LAMETA, avenue Raymond Dugrand - Site Richter C.S. 79606, F-34960 Montpellier Cedex 2, France); David Masclet (CREM, CNRS, University of Rennes, 7 place Hoche, 35000 Rennes, France, and CIRANO, Montreal); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France ; IZA, Bonn; Department of Public Finance, University of Innsbruck); Marc Willinger (University of Montpellier, LAMETA, avenue Raymond Dugrand - Site Richter C.S. 79606, F-34960 Montpellier Cedex 2, France)
    Abstract: Embezzlement is a major concern. By means of a sequential dictator game, we investigate theoretically and experimentally whether making information more transparent and reducing the number of intermediaries in transfer chains can reduce embezzlement. Consistent with reference-dependent preferences in terms of moral ideal, we show that the impact of transparency is conditional on the length of the transfer chain and on the position of the intermediary in the chain. Its direct effect on image encourages honesty. Its indirect effect via expectations plays in the opposite direction, motivating intermediaries to embezzle more when expecting that the following intermediary will embezzle less.
    Keywords: Embezzlement, corruption, dishonesty, transparency, experiment
    JEL: C91 D73
    Date: 2016
  7. By: Yasufumi Gemma (Associate Director, Institute for Monetary and Economic Studies, Bank of Japan (Email:
    Abstract: By means of an economic experiment, this paper examines the effects of money illusion on consumption-saving decision-making. In the experiment, subjects make sequential consumption-saving decisions in economic situations where nominal values of economic variables are displayed differently but there is no difference in their real values in that an optimal real consumption path is the same. Nevertheless, the experimental results show that a nominal difference arising from a higher positive rate of inflation causes subjects to consume more in early periods of the experiment and less in later periods. Moreover, given the utility function assumed in the experiment and the estimated relationship between the slope of the consumption path and the inflation rate, such money illusion results in a higher level of utility for a subject who confronts a higher positive rate of inflation if the level of the inflation rate is modest. In deflationary situations, a nominal difference stemming from a lower negative rate of inflation generates a similar effect to that from a higher positive rate in terms of the consumption path. These findings suggest that in making consumption- saving decisions, subjects react to a rise of the inflation rate differently in inflationary situations and in deflationary situations, regardless of no change in the real interest rate.
    Keywords: Consumption-saving decision-making, Money illusion, Economic experiment
    JEL: C90 D91 E21 E31 E40
    Date: 2016–04
  8. By: Li, JingJing (Shandong University); Godager, Geir (Department of Health Management and Health Economics); Wang, Jian (Shandong University)
    Abstract: The share of female physicians in the medical workforce is increasing in many countries. An important question to consider is whether the changing gender balance in the workforce influences medical practice as a whole. This question, however, relates to whether the observed gender differences in medical practice are a result of male and female physicians having patient groups that differ systematically or whether there is indeed a difference between the providers themselves. In this paper we ask whether gender differences in provider practice are present when providers face an identical group of patients. We tested the presence of a pure gender effect by means of data from a controlled laboratory experiment. Here every provider encountered an identical patient population. We applied data from an experiment based on the design of Hennig-Schmidt, Selten, and Wiesen (2011). Medical students in the role of physicians chose the quantity of medical services to provide to their abstract patients. We tested the null hypothesis that gender does not influence the provision of health care services. In our empirical specification we estimated both the influence of gender on the quantity of medical services and whether gender influences the maximization of patient benefits. We found that we cannot reject the null hypothesis that gender does not influence the provision of medical care.
    Keywords: Gender; Physician behavior; Medical care provision; Laboratory experiment
    JEL: C91 I11
    Date: 2016–05–04
  9. By: Strømland, Eirik (Department of Economics, University of Bergen); Tjøtta, Sigve (Department of Economics, University of Bergen); Torsvik, Gaute (Department of Economics, University of Oslo)
    Abstract: Are humans intuitively cooperative, or do we need to deliberate in order to be generous to others? The Social Heuristics Hypothesis (SHH) proposes that fast instinctive decision making promotes cooperation in social dilemmas. In this paper, we conduct a novel time-pressure experiment to shed light on the cognitive underpinnings of cooperation. Although we find no evidence for a time-pressure effect when considering all subjects, our results, together with a re-analysis of independent data, indicate that a single factor – payoff comprehension – accounts for some studies failure to replicate the finding that fast and intuitive decision making promotes cooperation. Given payoff comprehension, the SHH predicts behavior well. We believe this finding provides a unifying interpretation of the conflicting results in the literature.
    Keywords: Cooperation; Intuition; Dual-Process; Public Goods Game
    JEL: C72 C91 C92 D03
    Date: 2016–04–25
  10. By: Björn Bartling; Tobias Gesche; Nick Netzer
    Abstract: This paper studies the impact of the presence of human subjects in the role of a seller on bidding in experimental second-price auctions. Overbidding is a robust finding in second- price auctions, and spite among bidders has been advanced as an explanation. If spite extends to the seller, then the absence of human sellers who receive the auction revenue may bias upwards the bidding behavior in existing experimental auctions. We derive the equilibrium bidding function in a model where bidders have preferences regarding both, the payoffs of other bidders and the seller’s revenue. Overbidding is optimal when buyers are spiteful only towards other buyers. However, optimal bids are lower and potentially even truthful when spite extends to the seller. We experimentally test the model predictions by exogenously varying the presence of human subjects in the roles of the seller and competing bidders. We do not detect a systematic effect of the presence of a human seller on overbidding. We conclude that overbidding is not an artefact of the standard experimental implementation of second-price auctions in which human sellers are absent.
    Keywords: Second-price auction, spite, overbidding, laboratory experiments
    JEL: C91 D03 D44 D82
    Date: 2016–04
  11. By: McKenzie, David J.
    Abstract: A survey of participants in a large-scale business plan competition experiment, in which winners received an average of US$50,000 each, is used to elicit beliefs about what the outcomes would have been in the alternative treatment status. Participants are asked the percent chance they would be operating a firm, and the number of employees and monthly sales they would have, had their treatment status been reversed. The study finds the control group to have reasonably accurate expectations of the large treatment effect they would experience on the likelihood of operating a firm, although this may reflect the treatment effect being close to an upper bound. The control group dramatically overestimates how much winning would help them grow the size of their firm. The treatment group overestimates how much winning helps their chance of running a business, and also overestimates how much winning helps them grow their firms. In addition, these counterfactual expectations appear unable to generate accurate relative rankings of which groups of participants benefit most from treatment.
    Keywords: business growth; counterfactual elicitation; randomized experiment; subjective expectations
    JEL: C31 C80 C93 D22 O12
    Date: 2016–05
  12. By: Giuseppe Attanasi; Nikolaos Georgantzís; Valentina Rotondi; Daria Vigani
    Abstract: In this paper we compare two mutually uncorrelated risk-attitude elicitation tasks. In particular, we test for correlation of the elicited degrees of monetary risk aversion at a within-subject level. We show that sufficiently similar incentivized mechanisms elicit correlated decisions in terms of monetary risk aversion only if other risk-related attitudes are accounted for. Furthermore, we ask subjects to self-report their general willingness to take risks. We find evidence of some external validity of the two tasks as predictors of self-reported risk attitudes in general human domains.
    Keywords: Risk aversion, Elicitation method, Lottery choices.
    JEL: D81 C91
    Date: 2016
  13. By: Bublitz, Elisabeth; Regner, Tobias
    Abstract: Receiving equal wages for work of equal value is a legal right in many countries. However, it remains unknown to what degree the neglect of this principle yields differences in pay between social and other occupations. The results of a task-based analysis with survey data confirm a notable wage penalty of 0.5 standard deviations for social occupations (e.g., health care, education). Based on these results, we design a laboratory experiment that mimics actual income distributions (Germany, USA), incorporates social occupations in the lab society, and allows for (voluntary) redistribution among subjects. The results show that, regardless of (non-)random assignment to social jobs and the level of income inequality, individuals in social jobs are only partly compensated for their social effort. A downward spiral, induced by emotional reactions, results as social effort and donations converge to a 'low' equilibrium. This suggests that a market approach fails to eliminate the social pay gap.
    Keywords: inequality,tasks data,redistribution,experiment,voluntary payments,social returns,externality
    JEL: C90 D62 D63 H23 J31
    Date: 2016
  14. By: Maria Cubel (Universitat de Barcelona); Santiago Sanchez-Pages (Universitat de Barcelona)
    Abstract: Recent literature has emphasized that individuals display varying levels of strategic reasoning. This paper presents ten years worth of experimental data from two countries exploring the existence and endogeneity of gender differences in strategic sophistication. We report results from two experimental studies employing the beauty contest game, one from the classroom and one from the laboratory. We observe robust and signi?cant gender differences in strategic sophistication in favour of men in zero-stake situations. These differences disappear when a monetary prize is awarded. We also ?find that depth of strategic reasoning varies with gender priming. Females display signi?cantly higher levels of strategic sophistication than males when gender is made salient. This effect of gender priming is driven by females who believe women are superior in the game.
    Keywords: guessing game, strategic sophistication, gender, stereotype threat,beliefs.
    JEL: C72 C91 D81 J16
    Date: 2016
  15. By: Solferino, Nazaria; Taurino, SerenaFiona; Tessitore, M.Elisabetta
    Abstract: Cooperation is usually stronger towards in-group members, because giving an upright signal about themselves implies higher possibilities of reciprocity among members with the same social identity. We examine the case where collaboration between two groups is a mandatory condition to achieve success in a particular project, but in the first one, the social identity is quite strong. We show that the existence of a small share of prosocial players in the first group can create a sort of "imitation effect" so that each new member puts more effort in cooperating with the outsiders. On the other side, to avoid free-riding effort should be conditional to the other's commitment. This way to boost cooperation is usually more efficient than a coercive strategy in the presence of significant sized majorities or feelings of resentments. Our analysis suggests that it is appropriate, under some circumstances, to stimulate a multicultural paradigm devoted to value and manage diversity through an acculturation process emphasizing adaptation, interdependence, and mutual appreciation of different cultures.
    Keywords: Cooperation, Dynamical Analysis, Groups, Identity.
    JEL: C61 C71 D71
    Date: 2016–05–13
  16. By: Francesco Fallucchi (School of Economics, University of East Anglia); Elke Renner (School of Economics, University of Nottingham)
    Abstract: We experimentally investigate how reputational concerns affect behavior in repeated Tullock contests by comparing expenditures of participants interacting in fixed groups with the expenditures of participants interacting with randomly changing opponents. When participants receive full information about the choices and earnings of all contestants at the end of each contest we find no difference between contest expenditures in fixed and randomly changing groups. However, when participants only observe their own earnings at the end of each contest they are significantly more aggressive when they interact in fixed groups. This result can be explained by a dominance or status seeking motive.
    Keywords: Contests, experiments, matching protocol, information feedback
    Date: 2016–05
  17. By: Gautam Rao; Leonardo Bursztyn; Stefano Fiorin; Bruno Ferman; Martin Kanz
    Abstract: Economists have long hypothesized that social status considerations are a powerful driver of consumption choices (Veblen 1899). But empirically identifying status goods is difficult, since status components of consumption are confounded by unobserved instrumental utility. We work with a large bank in Indonesia to market their widely-recognized platinum credit cards, typically restricted to high-income customers, to a marginally eligible population of customers. In a control group, customers are offered all the financial services and benefits of the platinum card, but as an included upgrade on their existing nondescript credit card. In two treatment groups, customers are instead offered the platinum card itself. We find that demand for the platinum card is substantially higher than demand for the instrumental benefits, providing evidence of the importance of image considerations. We provide evidence that the demand for the platinum card appears to be driven substantially by social image concerns, rather than self image or identity. We find that it is the less-rich (middle-class) individuals in the sample who show a demand for the social image aspect of the platinum card, rather than the very rich. An analysis of the utilization of the credit cards reveals that platinum card holders are causally more likely to use the card in social situations such as restaurants, bars and clubs, where the card may be visible to others. In contrast, there are no effects on more private uses of the card, such as online purchases. Finally, we provide evidence of "fashion cycles" in the marketing of elite credit cards, consistent with models of status goods (Pesendorfer 1995).
    Date: 2016–05
  18. By: Victor Aguirregabiria; Erhao Xie
    Abstract: This paper studies the identification of players' preferences and beliefs in empirical applications of discrete choice games using experimental data. The experiment comprises a set of games with similar features (e.g., two-player coordination games) where each game has different values for the players' monetary payoffs. Each game can be interpreted as an experimental treatment group. The researcher assigns randomly subjects to play these games and observes the outcome of the game as described by the vector of players' actions. Data from this experiment can be described in terms of the empirical distribution of players' actions conditional on the treatment group. The researcher is interested in the nonparametric identification of players' preferences (utility function of money) and players' beliefs about the expected behavior of other players, without imposing restrictions such as unbiased or rational beliefs or a particular functional form for the utility of money. We show that the hypothesis of unbiased/rational beliefs is testable and propose a test of this null hypothesis. We apply our method to two sets of experiments conducted by Goeree and Holt (2001) and Heinemann, Nagel and Ockenfels (2009). Our empirical results suggest that in the matching pennies game, a player is able to correctly predict other player's behavior. In the public good coordination game, our test can reject the null hypothesis of unbiased beliefs when the payoff of the non-cooperative action is relatively low.
    Keywords: Testing biased beliefs; Multiple equilibria; Strategic uncertainty; Coordination game
    JEL: C57 C72
    Date: 2016–05–12
  19. By: Jeroen Hinloopen (Utrecht University, the Netherlands); Adriaan R. Soetevent (University of Groningen, the Netherlands)
    Abstract: The common view that buyer power of insurers may effectively counteract provider market power critically rests on the idea that consumers and insurers have a joint interest in extracting price concessions. However, in markets where the buyer is an insurer, the interests of insurers and consumers to reduce prices may be importantly misaligned. The positive dependence between loss size and the insurer's expected profits limits the insurer's incentives to reign in loss sizes; in markets with small initial loss sizes, insurers may try to raise these in order to create demand for insurance. After having defined insurance and non-insurance markets based on the initial loss size, we develop theory to show that insurers with buyer power have incentives to create insurance markets. Insurer competition will push their profits to zero but markets do not return to the initial non-insurance state. This constitutes a welfare loss. We design experimental insurance markets to test our theory and find support. Monopolistic insurer-subjects in non-insurance markets increase loss sizes to establish insurance markets. Insurer competition eliminates profits but not the loss size to uninsured consumers. This provides an additional reason to be careful in granting insurers buyer power.
    Keywords: insurance markets; risk elicitation; experiment; buyer power
    JEL: C92 D81 G22 I11 L13
    Date: 2016–04–26
  20. By: Llorente-Saguer, Aniol; Sheremeta, Roman; Szech, Nora
    Abstract: A well-known theoretical result in the contest literature is that greater heterogeneity decreases performance of contestants because of the “discouragement effect.” Leveling the playing field by favoring weaker contestants through bid-caps and favorable tie-breaking rules can reduce the discouragement effect and increase the designer’s revenue. We test these predictions in an experiment. Our data show that indeed, strengthening weaker contestants through tie-breaks and bid-caps significantly diminishes the discouragement effect. Bid-caps can also improve revenue. Most deviations from Nash equilibrium can be explained by the level-k model of reasoning.
    Keywords: all-pay auction, rent-seeking, bid-caps, tie-breaks, contest design
    JEL: C72 C91 D72
    Date: 2016–05–08
  21. By: Sven Hoeppner (Center for Advanced Studies in Law and Economics, Ghent University Law School, Ghent); Laura Lyhs (Friedrich Schiller University Jena)
    Abstract: Doctrinal lawyers strive to reduce legal uncertainty based on the premise that difficult to predict legal consequences discourage socially desirable activities. Contributions from the economic theory of law suggest that increasing legal uncertainty can be socially beneficial. We test in an innovative laboratory experiment whether increasing the variability of an exogenous choice threshold (legal standard) increases or reduces socially desirable behavior. The results indicate a U-shaped relationship between increases in variability and activity choices: increases in variability first induce lower than optimal choices under an efficient standard (overcompliance), but eventually lead to greater than optimal choices under an efficient standard (undercompliance). We also find that overcompliance arises only under low degrees of standard variability. Moreover, increasing variability gradually crowds-out compliant choices. Finally, in the experiment minimal variability of the legal standard induces erratic individual behavior beyond socially satisfactory levels such that the standard loses its coordination function.
    Keywords: legal uncertainty, vague legal standard, overcompliance and undercompliance, experimental law and economics, compliance crowding-out
    JEL: C91 D02 K10
    Date: 2016–05–11
  22. By: Stephen L. Cheung
    Abstract: This methodological survey reviews recent developments in the design of experiments to elicit individuals' time preferences, with a focus on the measurement or control for potentially non-linear utility. While the objective of a time preference experiment is usually to estimate parameters of a discount function, assumptions concerning the nature of utility may have an important influence upon these estimates. The survey classifies experiment designs on two dimensions: whether they assume an equivalence between utility under risk and over time, and whether they result in an estimate of the curvature of utility.
    Keywords: time preference, discounted utility, instantaneous utility, choice list
    JEL: C91 D03 D90
    Date: 2015–11–25
  23. By: Mohammed H. Alemu (Department of Food and Resource Economics, University of Copenhagen); Søren Bøye Olsen (Department of Food and Resource Economics, University of Copenhagen); Suzanne E. Vedel (Department of Food and Resource Economics, University of Copenhagen); John Kinyuru (Department of Food Science and Technology, Jomo Kenyatta University of Agriculture and Technology, Kenya); Kennedy O. Pambo (Department of Agricultural and Resource Economics, Jomo Kenyatta University of Agriculture and Technology, Kenya)
    Abstract: In this study, we present one of the first thorough assessments of potential consumer demand for an insect based food product. We assess the demand in terms of Kenyan consumer preferences and willingness to pay for buns containing varying amounts of cricket flour. The novel feature of the study is that it uses an incentivized discrete choice experiment method integrated with sensory experiments intended to reduce any hypothetical bias and to allow participants to acquire experience in terms of tasting the different buns before they make their choices in the choice tasks. We find significant and positive preferences for the buns which contain cricket flour. Interestingly, the bun products with medium amounts of cricket flour are preferred to no or high amount of cricket flour. Finally, we show in a simulated market that the cricket flour based buns are likely to obtain a greater market shares than that of standard buns today.
    Keywords: cricket flour, insect, incentivized discrete choice experiment, taste, willingness to pay
    JEL: C13 C25 C93 D12 Q01 Q11 Q13 Q18
    Date: 2016–05
  24. By: Salvatore Di Falco; Brice Magdalou; David Masclet; Marie-Claire Villeval; Marc Willnger
    Abstract: Embezzlement is a major concern in various settings. By means of a sequential modified dictator game, we investigate theoretically and experimentally whether making information more transparent and reducing the number of intermediaries in transfer chains can reduce embezzlement and improve the recipients’ welfare. Consistent with referencedependent preferences in terms of moral ideal, we show that the impact of transparency is conditional on the length of the transfer chain and on the position of the intermediaries in the chain. Its direct effect on image encourages honesty. Its indirect effect via expectations plays in the opposite direction, motivating individuals to embezzle more when they expect that the following intermediary will embezzle less. Senders react positively to a reduction of the length of the chain but negatively to transparency.
    Date: 2016–04
  25. By: Bassi, Vittorio; Huck, Steffen; Rasul, Imran
    Abstract: Multiple sources of funding are becoming increasingly important for charitable organizations. Donations from corporate donors for example account for 25-35% of charitable income for the largest US charities, across charitable sectors. This note presents some tentative first evidence from a natural field experiment to shed light on how different types of potential donors: individuals, corporates and aristocratically titled individuals, respond to the same fundraising drive. Each donor type was randomly assigned to treatments varying in two dimensions: (i) whether information was conveyed about the existence of an anonymous lead donor; (ii) how individual donations would be matched by the anonymous lead donor. We find that aristocrats are significantly more likely to respond and that corporates give significantly more than individuals. Treatment effects moreover suggest that (proportional) matching is to be avoided for corporate donors.
    Keywords: agency problems,charitable giving,corporate donors,aristocratic donors,field experiment
    JEL: C93 D12 D64
    Date: 2016
  26. By: Christoph Engel (Max Planck Institute for Research on Collective Goods)
    Abstract: In three distinct disciplines, crime and punishment are studied experimentally: in empirical legal studies, in experimental economics, and an experimental criminology. These three disciplines have surprisingly little interaction. The current paper surveys the rich evidence, and discusses the methodological reasons for running experiments on these issues, the limitations of the method, and how they can be mitigated.
    Keywords: crime, punishment, experiment, experimental economics, experimental criminology
    JEL: A12 C91 C93 D03 H26 K14
    Date: 2016–04
  27. By: Zhijian Wang; Yanran Zhou; Jaimie W. Lien; Jie Zheng; Bin Xu
    Date: 2016–04–13
  28. By: Daniel Rais
    Abstract: While most explanations of individual trade policy preferences center on the redistributional implications of trade, recent research is particularly interested in the role of non-economic determinants. We join the latter line of research by studying the effect of social trust. Our research breaks new methodological ground by testing the hypothesized causal effect of social trust in a field survey experiment that combines a voluntary contribution game with a survey. The empirical work was carried out in Hanoi, Vietnam. The findings offer robust support for the argument that social trust has a positive causal effect on public support for international trade.
    Date: 2014–07–08
  29. By: Matthias Greiff; Kurt A. Ackermann; Ryan O. Murphy
    Abstract: Different social contexts have been used when measuring distributional preferences. This could be problematic as contextual variance may inadvertently muddle the measurement process. We use a within-subjects design and measure distributional preferences in resource allocation tasks with role certainty, role uncertainty, decomposed games, and matrix games. Results show that, at the aggregate level, role uncertainty and decomposed games lead to higher degrees of prosociality when compared to role certainty. At the individual level, we observe considerable differences in behavior across the social contexts, indicating that the majority of people are sensitive to these different social settings but respond in different ways.
    Keywords: Distributional preferences, social preferences, other regarding preferences, Social Value Orientation (SVO), measurement methods, individual differences
    JEL: C91 D03 D64
    Date: 2016–04
  30. By: Gneezy, Uri; Saccardo, Silvia; van Veldhuizen, Roel
    Abstract: It is estimated that a trillion dollars are annually exchanged in bribes, distorting justice and economic efficiency. In a novel experiment, we investigate the drivers of bribery. Two participants compete for a prize; a referee picks the winner. Participants can bribe the referee. When the referee can keep only the winner's bribe, bribes distort her judgment. When the referee keeps the bribes regardless of the winner, bribes no longer influence her judgment. An extra-laboratory experiment in an Indian market confirms these results. Hence, our participants are influenced by bribes out of greed, and not because of a desire to reciprocate.
    Keywords: Bribery,Reciprocity,Laboratory Experiment,Extra-Laboratory experiment
    JEL: D73 C91 K42
    Date: 2016
  31. By: Loukas Balafoutas; Brent J. Davis; Matthias Sutter
    Abstract: Affirmative action rules are often implemented to promote women on labor markets. Little is known, however, about how and whether such rules emerge endogenously in groups of potentially affected subjects. We experimentally investigate whether subjects vote for affirmative action rules, against, or abstain. If approved by the vote, a quota rule is implemented that favors women in one treatment, but members of an artificially created group based on random color assignment in another treatment. We find that quota rules based on gender are implemented frequently and do not affect the performance of men and women in a contest. Quota rules based on an arbitrary criterion, however, are less often approved and lead to strong individual reactions of advantaged and disadvantaged group members and to efficiency losses. These results show that the effects of affirmative action policies largely depend on whether these policies are viewed favorably within the affected groups.
    Keywords: Affirmative action, competition, discrimination, experiment, voting
    JEL: C91 C92 D03
    Date: 2016–04

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.