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on Experimental Economics |
| By: | Noemí Herranz-Zarzoso (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Gerardo Sabater-Grande (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | This paper analyzes the effect of financial incentives on academic performance by means of a randomized field experiment. Using two alternative payment mechanisms we implement two experimental treatments designed to motivate students depending on their absolute or relative academic performance. Subjects, recruited among students from Microeconomics, were split in two groups depending on whether they had a failed background in the aforementioned subject (returning students) or not (new students). New students were informed that they would receive a reward depending on their bet (the grade they thought would achieve) and the real grade obtained. In the case of the returning students, the reward was calculated taking into account the bet, the obtained real grade and their improvement with respect to previous semesters. In the first treatment students were rewarded according to a piece rate system whereas in the second one we established two rankings (one for new students and another one for returning students) classifying them depending on their academic performance. In both treatments we find that the implemented incentives are effective to increase the average of grades for both types of students (new and returning), but the piece rate mechanism is more powerful to motivate a higher number of students. |
| Keywords: | Betting for grades, incentives, academic performance, piece rate mechanism, rank-order tournament |
| JEL: | C93 D03 I21 J24 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2016/18&r=exp |
| By: | V. Rattini |
| Abstract: | The present research investigates individual decision making regarding jobs scheduling, by means of a laboratory experiment based on the “Admission Test” of the University of Bologna, in which students have to allocate effort among several tasks in a limited timespan. The experiment includes three treatments that differ in the way the test is administered to participants: either with a fixed sequence of questions, or with a fixed time per task, or with no constraints. Results show large and significant heterogeneity in treatment effects. Constraints on the answering sequence or on the time allocation for each task improved the performance of those subjects who failed to efficiently allocate their effort among the tasks, whereas negative effects were found for students who were already good in self-organizing. The study has relevant policy implications for the organization of the workload in the labor force, when different types of workers are employed. Furthermore, important intuitions on the design of the university student-selection mechanisms are also discussed. |
| JEL: | J20 C91 I20 D80 C80 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1080&r=exp |
| By: | Shakun D. Mago (Department of Economics, Robins School of Business, University of Richmond); Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University) |
| Abstract: | We examine behavior of subjects in simultaneous and sequential multi-battle contests, where each individual battle is modeled as an all-pay auction with complete information. In simultaneous bestof-three contests, subjects are predicted to make positive bids in all three battles, but we find that subjects often make positive bids in only two battles. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contests often proceeds to the third battle. Finally, although the aggregate bid in simultaneous contests is similar to that in sequential contests, in both settings, subjects make higher aggregate bids than predicted. The observed behavior of subjects can be rationalized by a combination of multi-dimensional iterative reasoning and a non-monetary utility of winning. |
| Keywords: | multi-battle contest, experiments, iterative reasoning, overdissipation |
| JEL: | C72 C91 D72 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:16-25&r=exp |
| By: | Lukasz Wozny; Michal Krawczyk |
| Abstract: | In this project we investigate experimentally the link between self-control and attitude towards paternalism in a principal-agent framework. We invite our subjects for a free lunch: a burger or a turkey. We verify in a pre-test that the burger is considered (much) more tasty and tempting, while the turkey is seen as healthier. In the experiment proper we observe incentivized choices of four types: what menus (must eat burger; must eat turkey; your choice: burger or turkey) subjects assign to another; how they reward each of these menu choices yet another participant made for them; which of the two dishes they pick on the spot (if given the choice); whether they want to pre-commit to a choice of dish for a future session. Similarly to some recent experimental results we find a significant fraction of subjects willing to self-commit. We also observe non-trivial sets of individuals who reward highly a restricted choice and paternalistically restrict other's choice. Moreover, there is a strong link between these three tendencies, suggesting a common thread underlying the use of commitment devices and paternalistic behavior as well as approval thereof in environments involving temptations. We propose a simple theoretical framework organizing the results. |
| Keywords: | temptation, time consistency, self control, paternalism, experiment |
| JEL: | C91 D03 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:sgh:kaewps:2016018&r=exp |
| By: | Mago, Shakun; Sheremeta, Roman |
| Abstract: | We examine behavior of subjects in simultaneous and sequential multi-battle contests, where each individual battle is modeled as an all-pay auction with complete information. In simultaneous best-of-three contests, subjects are predicted to make positive bids in all three battles, but we find that subjects often make positive bids in only two battles. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contests often proceeds to the third battle. Finally, although the aggregate bid in simultaneous contests is similar to that in sequential contests, in both settings, subjects make higher aggregate bids than predicted. The observed behavior of subjects can be rationalized by a combination of multi-dimensional iterative reasoning and a non-monetary utility of winning. |
| Keywords: | multi-battle contest, experiments, iterative reasoning, overdissipation |
| JEL: | C72 C91 D72 |
| Date: | 2016–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74524&r=exp |
| By: | Wagner, Valentin |
| Abstract: | This paper investigates how framing manipulations affect the quantity and quality of decisions. In a field experiment in elementary schools, 1.377 pupils are randomly assigned to one of three conditions in a multiple-choice test: (i) gain frame (Control), (ii) loss frame (Loss) and (iii) gain frame with a downward shift of the point scale (Negative). On average, pupils in both treatment groups answer significantly more questions correctly compared to the "traditional grading". This increase is driven by two different mechanisms. While pupils in the Loss Treatment increase significantly the quantity of answered questions - seek more risk - pupils in the Negative Treatment seem to increase the quality of answers - answer more accurately. Moreover, differentiating pupils by their initial ability shows that a downward shift of the point scale is superior to loss framing. High-performers increase performance in both treatment groups but motivation is significantly crowded out for low-performers only in the Loss Treatment. |
| Keywords: | behavioral decision making,quantity and quality of decisions,framing,loss aversion,field experiment,motivation,education |
| JEL: | D03 I20 D80 C93 M54 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:227&r=exp |
| By: | William Neilson (University of Tennessee, Knoxville); Michael Price (Georgia State University); Mikhael Shor (University of Connecticut) |
| Abstract: | A growing literature shows that interim incentives can help people achieve favorable long-term outcomes. We design a laboratory experiment to explore how interim incentives impact learning backward induction using a race game: Subjects play a simple game against a computer in which winning requires a sequence of correct moves. Our data highlight a perverse effect of incentives. Interim rewards inserted along the optimal path—nudges—help subjects learn patterns but crowd-out the skills required to solve a related game. Interim payments off the optimal path—teasers —can either help or hurt learning. JEL Classification: C91, D03, D60 Key words: |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2016-31&r=exp |
| By: | Woods, Daniel; Servátka, Maroš |
| Abstract: | We propose a conjecture that self-serving but generous actions diminish the positively reciprocal response, compared to selfless generous actions. We embed our conjecture in Cox, Friedman & Sadiraj’s (2008) model of Revealed Altruism. According to Revealed Altruism reciprocal responses are influenced by a ‘more generous than’ (MGT) ordering. The MGT ordering is defined by two conditions. Condition A states that an action that increases one’s opportunity set is MGT an action that decreases, does not change, or increases the opportunity set by less. Condition B states that the action cannot increase the ‘giver’s’ opportunity set by more than the ‘recipient’s’ opportunity set. We focus on Condition B, and classify actions that satisfy Condition B as selfless generous actions, and actions that violate Condition B as self-serving generous actions. We hypothesize that selfless generous actions are MGT self-serving generous actions, and that self-serving generous actions will result in a diminished reciprocal response. We test this conjecture using two novel experimental designs and find evidence that subjects perceive self-serving generous actions as being less generous than selfless generous actions, but no empirical support for our conjecture on the diminished reciprocal response, suggesting a refinement for the MGT ordering that does not include Condition B. |
| Keywords: | Reciprocity, generosity, self-serving, experiment, Revealed Altruism, lost wallet game, investment game |
| JEL: | C7 C72 C9 C91 |
| Date: | 2016–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74565&r=exp |
| By: | Juergen Bracht (University of Aberdeen Business School, Department of Economics, Edward Wright Building, Dunbar Street, Aberdeen, AB24 3QY, Scotland); Adam Zylbersztejn (Univ Lyon, Université Lyon 2, GATE L-SE UMR 5824, F-69342 Lyon, France) |
| Abstract: | We study questionnaire responses to moral dilemmas hypothetical situations in which sacrificing one life may save many other lives. We demonstrate gender differences in moral judgments: male participants are more supportive of the sacrifice than female participants. We investigate the importance of the previously studied source of the endorsement of the sacrfice: antisocial attitudes. First, we elicit the individual proneness to spiteful behavior using an incentivized experimental game. We demonstrate that spitefulness can be sizable but it is not associated with gender. Second, we find that gender is associated with moral judgments even when we account for individual differences in antisocial attitudes. Our results suggest that the performance of many institutions (related to the distribution of wealth or punishment, for instance) may be affected by the gender of the decision-makers. |
| Keywords: | Gender, moral dilemmas, moral judgments, spite, antisocial attitudes, experiment |
| JEL: | C91 D03 D63 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1630&r=exp |
| By: | Salvatore Di Falco (UNIGE - Université de Genève); Brice Magdalou (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique); David Masclet (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal , CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique); 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); Marc Willinger (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique) |
| 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 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01315697&r=exp |
| By: | Camille Cornand (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Cheick Kader M'Baye (Université de Bamako - Université de Bamako) |
| Abstract: | We conduct laboratory experiments with human subjects to test the rationale of adopting a band versus point inflation targeting regime. Within the standard New Keynesian model, we evaluate the macroeconomic performances of both regimes according to the strength of shocks affecting the economy. We find that when the economy faces small shocks, the average level of inflation as well as its volatility are significantly lower in a band targeting regime, while the output gap and interest rate levels and volatility are significantly lower in a point targeting regime with tolerance bands. However, when the economy faces large shocks, choosing the suitable inflation targeting regime is irrelevant because both regimes lead to comparable performances. These findings stand in contrast to those of the literature and question the relevance of clarifying a mid-point target within the bands, especially in emerging market economies more inclined to large and frequent shocks. |
| Keywords: | Band inflation target, point inflation target, inflation expectations, monetary policy, New Keynesian model, macroeconomic shocks, laboratory experiments |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01313095&r=exp |
| By: | De Paola, Maria (University of Calabria); Gioia, Francesca (University of Edinburgh); Scoppa, Vincenzo (University of Calabria) |
| Abstract: | We investigate whether and how social ties affect performance in teams by implementing a field experiment in which a sample of undergraduate students are randomly assigned to either teams composed by friends or teams composed by individuals not linked by friendship relationships. Students undertake an intermediate exam divided into two parts: one graded on the basis of individual performance and the other graded on the basis of the team performance. We find that students assigned to socially connected teams perform significantly better than control students in both the team part and the individual part of the exam, suggesting that social ties are relevant both for solving free-riding problems and for inducing knowledge spillovers among teammates. The positive effect of friendship persists over time: treated students obtain better grades also in a second individual test after the conclusion of the experiment. |
| Keywords: | team, free-riding, knowledge spillover, social ties, randomized field experiment |
| JEL: | J33 J24 D82 D86 L14 C93 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10257&r=exp |
| By: | Di Bartolomeo Giovanni; Papa Stefano |
| Abstract: | This paper aims to study the effects of free-form messages (cheap talk) in an investment game as Berg et al. (1995). We guess that messages matter, but they may not affect the outcomes on average because different outcomes of communication can be systematically misunderstood generating different effects that offset each other. Considering a non-binary choice game, where misunderstandings are more likely to be observed, we test our intuition in two steps. First, we classify messages by their contents and then we verify their impact on participants’ behavior accordingly to their kind. |
| Keywords: | Trust, reciprocity, promises, requests, empty talk |
| JEL: | D03 C91 D83 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ter:wpaper:00123&r=exp |
| By: | Alessandra Casella (CEPR - Center for Economic Policy Research - CEPR, Columbia University [New York], NBER - National Bureau of Economic Research - National Bureau of Economic Research); Jean-François Laslier (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Antonin Macé (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales) |
| Abstract: | In a polarized committee, majority voting disenfranchises the minority. By allowing voters to spend freely a fixed budget of votes over multiple issues, Storable Votes restores some minority power. We study a model of Storable Votes that highlights the hide-and-seek nature of the strategic game. With communication, the game replicates a classic Colonel Blotto game with asymmetric forces. We call the game without communication a decentralized Blotto game. We characterize theoretical results for this case and test both versions of the game in the laboratory. We find that, despite subjects deviating from equilibrium strategies, the minority wins as frequently as theory predicts. Because subjects understand the logic of the game – minority voters must concentrate votes unpredictably – the exact choices are of secondary importance. The result is an endorsement of the robustness of the voting rule. |
| Keywords: | committees,Storable Votes,polarization,Colonel Blotto,tyranny of the majority |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01287795&r=exp |
| By: | Marup Hossain (Food and Resource Economics Department, University of Florida); Mohammad Abdul Malek (Faculty of Economics, The University of Tokyo, and Research and Evaluation Division (RED), BRAC); Md. Amzad Hossain (Department of Economics, University of Dhaka); Md. Hasib Reza (Research and Evaluation Division (RED), BRAC); Md. Shakil Ahmed (Research and Evaluation Division (RED), BRAC) |
| Abstract: | We study the role of agricultural credit on productivity and livelihoods of small, marginal, and landless tenant farmers based on a randomized control trial (RCT) field experiment in Bangladesh. Twenty percent of the eligible households from the treatment group participate in the credit program and utilize sixty percent of their loans for agricultural purposes. Results show that access to credit increases adoption of modern seed varieties, productivity, and farming income in the treatment group. We find that impacts are heterogeneous over households0 headship, tenancy status, and farm size. We also examine distributional impacts using quantile regressions and find that impacts of the credit are mostly concentrated in the upper tail of the distributions. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2016cf1025&r=exp |
| By: | Inga Jonaityte (Dept. of Management, Università Ca' Foscari Venice) |
| Abstract: | A fundamental question is how firms adapt to environments that present multiple dimensions. Generally, the number of dimensions may exceed the limits of human attention. Subsequently, as organizations try to adapt to such environments they may be constrained to consider only a few dimensions. In fact, selection of dimensions is a process that may be driven by multiple factors. Especially relevant are the validity, the predictive weight of dimensions, and the perceptual salience of features through which the competing dimensions are perceived. When these aspects diverge, their conflict will affect the learning process. In this paper, we explore how salience and validity interact in the process where agents have to learn to evaluate a stream of task inputs with the number of dimensions that overloads the average short-term memory capacity. We hypothesize that the interplay between the cue salience and the validity affects the ability to assess accurately the cue-outcome relationship, detect changes in task environments, and adapt decision-making strategies accordingly. To test our hypothesis, we conducted three behavioral experiments and then proposed a classification model that accounts for the observed behavioral outcome. We consider a set of sequential binary classification decision tasks to be completed by a participant. We vary whether the difficulty of the task, also vary whether the performance of another is observable to the participants in the experiment. The behavioral data analysis highlight that cue salience is instrumental in driving learning. The simulation results illustrate that our classification model can indeed replicate the human participant data. The best fit was obtained when the single-cue salience bias was present. This suggests that humans tend to favor decision-making strategies that arise from focusing on a single, yet the most salient, cue when assessing cue-outcome relationship in multi-cue environments. Ours is perhaps the first study to demonstrate the effect of salience and validity interaction on choice and learning in multi-dimensional and changing environments in the context of organizational adaptation. Finally, we discuss variations in our linear classification model and suggest extensions of our experiment.. |
| Keywords: | bounded rationality, learning, decision making, information processing, salience bias, complex environments, confidence, competitive incentives, experiment. |
| JEL: | D81 D83 C91 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpdman:125&r=exp |
| By: | Armona, Luis (Stanford University); Fuster, Andreas (Federal Reserve Bank of New York); Zafar, Basit (Federal Reserve Bank of New York) |
| Abstract: | Home price expectations are believed to play an important role in housing dynamics, yet we have limited understanding of how they are formed and how they affect behavior. Using a unique “information experiment” embedded in an online survey, this paper investigates how consumers’ home price expectations respond to past home price growth and how they impact investment decisions. After eliciting respondents’ initial beliefs about past and future local home price changes, we present a random subset of the respondents with factual information about past (one- or five-year) changes and then re-elicit expectations. This unique “panel” data allows us to identify causal effects of the information and provides insights on the expectation formation process. We find that, on average, year-ahead home price expectations are revised in a way consistent with short-term momentum in home price growth, though respondents tend to underpredict the strength of momentum. Revisions of longer-term expectations show that respondents do not expect the empirically occurring mean reversion in home price growth. These results are consistent with recent behavioral models of housing cycles. Finally, we present robust evidence of home price expectations impacting (actual and intended) housing-related behaviors, both in the cross section and within-individual. |
| Keywords: | housing; expectation formation; information; updating |
| JEL: | D84 G11 R21 |
| Date: | 2016–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:798&r=exp |
| By: | Andrés Salamanca Lugo (TSE - Toulouse School of Economics - Toulouse School of Economics); Olga Manrique Chaparro (Universidad Nacional de Colombia [Bogotá]) |
| Abstract: | In this paper we experimentally analyze the use of private information in a class of zero-sum repeated games with incomplete information on one side and perfect monitoring. We analyze whether the information disclosure by the informed players, and its use by the uninformed players, matches the theoretical predictions. We consider two games that differ according to the amount of information that the informed player should optimally disclose: in the first game, the informed player should entirely conceal his information. In contrast, in the second game the informed player should fully disclose his information. We find that the flow of information is higher than predicted in the first game and lower than predicted in the second game. However, the use of information is strictly higher in the second game than in the first one. Uninformed subjects tend not to use the revealed information in the first game, and seem to misinterpret the revealed information in the second game. |
| Keywords: | Repeated games,incomplete information,experiments |
| Date: | 2016–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01305213&r=exp |
| By: | Brice Corgnet (EMLYON Business school - EMLYON Business School, 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); Mark Desantis (Chapman University - Chapman University, Argyros School of Business and Economics); David Porter (Argyros School of Business and Economics, Chapman University - Chapman University) |
| Abstract: | Using simulations and experiments, we pinpoint two main drivers of trader performance: cognitive reflection and theory of mind. Both dimensions facilitate traders' learning about asset valuation. Cognitive reflection helps traders use market signals to update their beliefs whereas theory of mind offers traders crucial hints on the quality of those signals. We show these skills to be complementary because traders benefit from understanding the quality of market signals only if they are capable of processing them. Cognitive reflection relates to previous Behavioral Finance research as it is the best predictor of a trader's ability to avoid commonly-observed behavioral biases. |
| Keywords: | Experimental asset markets, behavioral finance, cognitive reflection, theory of mind, financial education |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01364432&r=exp |
| By: | Jérôme Hergueux (ETH Zurich); Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales - Université Paul Cézanne - Aix-Marseille 3 - Université de la Méditerranée - Aix-Marseille 2 - CNRS - Centre National de la Recherche Scientifique); Jason Shogren (Departement of Economics and Finance, University of Wyoming - UW - University of Wyoming) |
| Abstract: | Real economic commitment (or the lack of it) of others affects a person's preferences to cooperate. But what if the commitment of others cannot be observed ex ante? Herein we examine how a classic non-monetary institution– a solemn oath of honesty –creates economic commitment within the public goods game. Commitment-through-the-oath asks people to hold themselves to a higher standard of integrity. Our results suggest the oath can increase cooperation (by 33%)– but the oath does not change preferences for cooperation. Rather people react quicker and cooperate, taking less time to ponder on the strategic free riding behavior. |
| Keywords: | WorkingPublic good game,Social Preference,Truth Keywords: Public good game |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01379060&r=exp |
| By: | Mark Schneider (Chapman University); Mikhael Shor (University of Connecticut) |
| Abstract: | The Allais common ratio effect is one of the most robust violations of rational decision making under risk. In this paper, we conduct a novel test of the common ratio effect in which we elicit preferences for the common ratio choice alternatives in choice, pricing, and happiness rating tasks. We find that both the consistency and distribution of responses differs systematically across tasks, with modal choices replicating the Allais preference pattern, modal happiness ratings exhibiting consistent risk aversion, and modal prices maximizing expected value. We discuss the predictions of various cognitive explanations of the common ratio effect in the context of our experiment. We find that a dual process framework provides the most complete account of our results. Surprisingly, we also find that although the Allais pattern was the modal behavior in the choice task, none of the 158 respondents in our experiment exhibited the Allais pattern simultaneously in choice, happiness, and pricing tasks. Our results constitute a new paradox for the leading theories of choice under risk. JEL Classification: Key words: Common Ratio Effect; Preference Reversals; Dual Processes; Happiness Ratings |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2016-29&r=exp |