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on Experimental Economics |
| By: | Ambec, Stefan; Garapin, Alexis; Muller, Laurent; Rahali, Bilel |
| Abstract: | We investigate how people trade off between equity and efficiency, using variations of tripled dictator and trust games in a lab experiment. Equalizing payoffs reduces the return from the tripled investment in the dictator game. In contrast, in the trust game both equal and maximized payoffs can be achieved, provided that receiver transfers back half of the return from investment. We find that subjects sacrifice efficiency for equity in the dictator game but manage to achieve both in the trust game. Most subjects equalize payoffs when they are placed behind a veil of ignorance about their position in the trust game, regardless of their aversion to risk. They invest less when they pay to obtain their position as investor but do not send back less if they pay to be the receiver. Subjects who modify their investment decision after receiving information about the average investment in their group tend to move closer to the average. |
| Keywords: | Trust game, triple dictator game, fairness, efficiency, equity, experiment. |
| JEL: | C72 C90 D03 D63 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:31118&r=exp |
| By: | Oparinde, Adewale; Banerji, Abhijit; Birol, Ekin; Perez, Salomon |
| Abstract: | Experimental auctions conducted in the field lose some controls of laboratory experiments as a tradeoff for market realities, which could distort their demand revealing properties both in theory and practice. Ethical reasons have been widely cited for not asking the poor to pay out of pocket in experimental auctions conducted in field settings in developing countries and the allocation of participatory fees is thus common. This endowment creates distortions in an optimal bidding behavior, though evidence is mixed. In this paper, we investigated whether consumers in developing countries will be willing to pay out of pocket when the unit sale price of the auctioned good is an insignificant share of the household food budget. Becker-DeGroot-Marschak (BDM) mechanism was used to collect auction data for biofortified crops in Nigeria, Rwanda, India and Guatemala. We show that an out of pocket payment experimental setting is an alternative practical approach of identifying hypothetical bias in auction bids elicited in the field which could be masked by the windfall income effect created by the participatory fees. This approach shows that auction bids could be inflated by 7 to 24 percent due to hypothetical bias as a result of participants’ ex ante nonpayment decisions. Nonpayment is higher in African countries than in non-African countries, which is a reflection of the underlining heterogeneity in economic background. Conducting experimental auctions in an out-of-pocket payment context can assist in mimicking market realities as close as possible in the field setting in developing countries. |
| Keywords: | Consumer acceptance, willingness to pay, hypothetical bias in experimental auction, biofortification, out of pocket payment, participatory fees, Consumer/Household Economics, Financial Economics, Research Methods/ Statistical Methods, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:246284&r=exp |
| By: | Diro, Samuel; De Groote, Hugo; Gunarata, Nilupa |
| Abstract: | Quality Protein Maize (QPM) has been fortified with lysine and tryptophan to improve the poor protein quality of conventional maize. For farmers to adopt QPM, there needs to be a market for it. This paper studies how nutritional information and sensory quality affects WTP for QPM grain, white and yellow, among rural consumers farmers in Jimma zone, Ethiopia. The study used affective tests, both central location test (CLT) and modified home-use (MHUT), and the Becker-DeGroot-Marschak (BDM) experimental auction mechanism to estimate WTP. The CLT was conducted with 192 participants, while 210 mothers with children aged 6-23 months participated in the MHUT. To analyze the effect of information on WTP, the participants were randomly assigned to two treatment groups; first group was also provided with information after the BDM, and the BDM was repeated after information was provided. The results of the affective tests preparations of white and yellow QPM were significantly more appreciated than those of their white and yellow conventional maize counterparts. The BDM mechanism results revealed that respondents were willing to pay more for QPM grain than for conventional maize. Further, nutritional information boosted bids for white and yellow QPM grain and reduced the bids of white and yellow CM grains. The main factor affecting WTP for QPM was its sensory quality. The study, finally, recommends marketers and food processors to use the QPM’s favorable sensory characteristics to penetrate in to the market and to emphasize on formal and non-formal information dissemination mechanisms for its wider adoption and dissemination. |
| Keywords: | Sensory evaluation, willingness to pay, Becker-DeGroot-Marschak, central location test, modified home-use test, Consumer/Household Economics, Demand and Price Analysis, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:246979&r=exp |
| By: | Saied Toossi (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244) |
| Abstract: | Although previous studies have established the effectiveness of using small reward-based incentives in inducing the choice and consumption of healthier foods among children, little is known about their impact outside of experimental settings or their effectiveness over time when administered daily. This paper presents the results of a field experiment conducted to provide insight on these matters. The study employs a pretest-posttest within-subject design and was conducted at a summer program catering to low-income children between the ages of 5 and 12. Corroborating existing studies, the introduction of small reward-based incentives was found to induce large increases in the number of children choosing the healthy dessert options after lunch but disaggregating the results by week and days suggests that their impact diminishes over time. Attempts to ascertain their effect outside of experimental settings did not indicate that the introduction of rewards had any adverse effects, but also did not provide definitive results. Consequently, further research is needed in this regard |
| Keywords: | Field Experiment; Food Choice; Child Behavior; Incentives; Temporal Effects; Ripple Effects; Nutrition |
| JEL: | C91 C93 J13 I12 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:193&r=exp |
| By: | Alan, Sule; Ertac, Seda; Kubilay, Elif; Lóránth, Gyöngyi |
| Abstract: | We study the evolution of gender differences in the willingness to assume the decision-maker role in a group, which is a major component of leadership. Using data from a large-scale field experiment, we show that while there is no gender difference in the willingness to make risky decisions on behalf of a group in a sample of children, a large gap emerges in a sample of adolescents. In particular, the proportion of girls who exhibit leadership willingness drops by 39% going from childhood to adolescence. We explore the possible causes of this drop and find that a significant part of it can be explained by a dramatic decline in "social confidence", measured by the willingness to perform a real effort task in public. We show that it is possible to capture the observed link between public performance and leadership by estimating a structural model that incorporates costs related to social concerns. These findings are important in addressing the lower propensity of females to self-select into high-level positions, which are typically subject to greater public scrutiny. |
| Keywords: | leadership; gender; risk taking; social confidence; experiments. |
| JEL: | C91 C93 D03 I28 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11596&r=exp |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods); Lilia Zhurakhovska (University of Duisburg-Essen) |
| Abstract: | Apparently judges’ decisions are not motivated by maximizing their own profit. The literature uses two strategies to explain this observation: judges care about the long-term monetary consequences for themselves, or individuals who are more strongly motivated by the common good self-select into the profession. We suggest that there is an additional explanation, the "office motive". In a lab experiment, we rule out both traditional explanations by design. Nonetheless authorities do a reliable job at overcoming a social dilemma. Calling the authorities "public official" or "judge" increases their sensitivity towards the degree by which individuals are selfish, and it reduces the effect of their social value orientation (making them more neutral). This suggests that the socially desirable effect is not driven by anger or sympathy with the victims, but follows from the desire to fulfill the expectations that come with the assigned task. We test three extensions: When given an opportunity to announce an explicit policy, judges become less sensitive to the objective degree of reproach, and more sensitive to their social value orientation. If judges are elected or experienced, they react more intensely to norm violations. Experienced judges are more affected by their social value orientation. |
| Keywords: | judicial behavior, office motive, public-goods experiment, judicial frame, election, experience |
| JEL: | C91 D03 D63 D73 H11 H41 H83 K41 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2016_15&r=exp |
| By: | Chen, Daniel L.; Schonger, Martin |
| Abstract: | The study of the normative and positive theory of choice under uncertainty has made major advances through thought experiments often referred to as paradoxes: the St. Petersburg paradox, the Allais paradox, the Ellsberg paradox, and the Rabin paradox. Machina proposes a new thought experiment which posits a choice between two acts that have three outcomes. As in the Ellsberg paradox there are three events, but while the Ellsberg paradox has two (monetary) outcomes in Machina there are three. Machina shows that four prominent theories of ambiguity aversion predict indifference between the acts. Introspection, however, suggests that many people might very well strictly prefer one act over the other. This paper makes four contributions: first, to our knowledge, it is the first to experimentally implement the Machina thought experiment. Second, we employ a novel method to simultaneously elicit the certainty equivalent of an embedded lottery. Third, our results—across three experiments—indicate non-indifference, which rejects earlier theories of ambiguity aversion, but is consistent with a newer one, which we apply to explain our results. Fourth, we show that independence is a sufficient condition for indifference in the Machina paradox, and thereby explains why so many models predict indifference. |
| Keywords: | Ellsberg paradox, Machina paradox, uncertainty aversion, independence axiom |
| JEL: | D81 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:31142&r=exp |
| By: | Calford, Evan |
| Abstract: | In normal form games, when agents exhibit ambiguity aversion the exclusion of mixed strategies from agents' choice sets can enlarge the set of equilibria. While it is possible, in a game theoretic experiment, to enforce pure strategy reporting it is not possible to prevent subjects from mixing before reporting a pure strategy. This short paper establishes conditions under which the set of equilibrium in a game with ambiguity averse agents and pure strategy reporting is invariant to the existence of pre-play mixing devices. This result is crucial for the interpretation of recent experimental work on the role of ambiguity aversion in normal form games. |
| Keywords: | Ambiguity Aversion, Mixed Strategies, Game Theory, Experimental Economics |
| JEL: | C72 C92 D03 D81 |
| Date: | 2016–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74909&r=exp |
| By: | Möllers, Claudia |
| Abstract: | Building on the seminal paper of Ordover, Saloner and Salop (1990), I study the role of reputation building on foreclosure in laboratory experiments. In one-shot interactions, upstream firms can choose to build a reputation by revealing their price history to the current upstream competitor. In particular, integrated firms can establish a reputation to foreclose the input market.an outcome that would otherwise not be tenable due to a commitment problem. I get three main results: First, withdrawal from the input market is three times more common with reputation building of the integrated firm. Second, the anticompetitive effects are much stronger when the integrated firm builds a reputation. Third, integrated firms choose to build a reputation significantly more often than non-integrated firms. Markets with reputation building of the integrated firm are ten times more often monopolized than without. |
| Keywords: | vertical restraints,commitment,reputation,experiments |
| JEL: | L42 D43 C90 D83 C72 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:232&r=exp |
| By: | Sayantan Ghosal; Smarajit Jana; S Anandi Mani; Sandip Mitra Sanchari Roy; Sanchari Roy |
| Abstract: | This paper empirically examines the role of self-image in determining the behaviour and choices of socially excluded individuals. Using a randomized field experiment with sex workers in Kolkata, India, we study the impact of a psychological training program designed to improve self-image impaired by social exclusion and stigma. We find positive and significant impacts on self-reported measures of self-image, as well as on future-oriented behaviour measured by savings and health choices during and after the program. We also find persistence in related savings outcomes fifteen months after the program. Our experimental design and findings enable us to rule out several alternative explanations. We argue that our findings highlight the need to address psychological constraints in alleviating the effects of poverty and social exclusion. |
| Keywords: | self-image, social exclusion, stigma, future-orientation, savings, sex workers, India JEL Classification: O12, I30, D87 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:302&r=exp |
| By: | Chen, Daniel L.; Schonger, Martin |
| Abstract: | Most papers that employ the strategy method (SM) use many observations per subject to study responses to rare or off-equilibrium behavior that cannot be observed using direct elicitation (DE), but ignore that the strategic equivalence between SM and DE holds for the monetary payoff game but not the game participants actually play, which is in terms of utilities. To illustrate the severity of this issue, we formalize the mapping from the monetary payoff game to this actual game. A theorem provides necessary and sufficient conditions for strategic equivalence to apply. When the domain of preferences includes commonlymodeled motivations, such as intentions or disappointment aversion, or less-common ones, such as self-image or duty, strategic equivalence fails and thus the invariance to the method of elicitation does not apply. We use results from the past literature and our own experiments to investigate how well this theorem explains when results with SM and DE differ. We manipulate the salience of off-equilibrium considerations in our own experiments to demonstrate that SM and DE are not strategically equivalent, contrary to conventional wisdom. Three results emerge. First, not accounting for the bias in the estimation when decisions at one information set can influence the utility at another information set can render significant differences in decision-making. Second, the bias can be large and equivalent to some of the other causal effects being measured. Third, subtle interventions on salience can magnify these differences by a similar amount. |
| Keywords: | Theory of experiments, strategy method, social preferences, intentions, deontological motivations |
| JEL: | A13 C90 D03 D64 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:31131&r=exp |
| By: | Möllers, Claudia; Stühmeier, Torben; Wenzel, Tobias |
| Abstract: | This paper experimentally studies the role of search cost in duopoly markets where sellers may be able to coordinate pricing decisions. We vary the level of search cost and whether sellers can communicate. While we find that consumers are more likely to invest in search when cost is reduced, we find that a reduction of search cost does not influence prices. This effect is not influenced by the availability of seller communication. Our results suggest that policy interventions that aim to increase the competitiveness of markets via reducing search cost may not be effective in concentrated markets. |
| Keywords: | Search,Collusion,Regulation |
| JEL: | K23 L13 L51 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:233&r=exp |
| By: | Abhijit Banerjee; Esther Duflo; Clement Imbert; Santhosh Mathew; Rohini Pande |
| Abstract: | In collaboration with the Government of Bihar, India, we conducted a large-scale experiment to evaluate whether transparency in fiscal transfer systems can increase accountability and reduce corruption in the implementation of a workfare program. The reforms introduced electronic fund-flow, cut out administrative tiers, and switched the basis of transfer amounts from forecasts to documented expenditures. Treatment reduced leakages along three measures: expenditures and hours claimed dropped while an independent household survey found no impact on actual employment and wages received; a matching exercise reveals a reduction in fake households on payrolls; and local program officials’ self-reported median personal assets fell. |
| JEL: | H11 O2 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22803&r=exp |
| By: | Gagnon, Nickolas (General Economics 1 (Micro)); Noussair, C. |
| Abstract: | We report the results from three distinct experiments, conducted in the Netherlands and in the United States, which extend the Gift-Exchange paradigm (Fehr et al., 1993; Fehr et al., 1997) for the study of worker-employer relationships. We focus on the effect of long time delays between the time at which workers learn their wage and when they choose their effort level, on the relationship between wage and effort. We compare effort choices made on the same day workers learn their wage, with those made several weeks afterward. While the average effort chosen is the same under the two time lags, a positive and significant relationship between wage and effort appears consistently only in the short-run, while in the long-run, the relationship is weaker and less consistent. We also find that only workers who receive a wage equal to or below their self-reported fair wage exhibit significant reciprocal behavior, a pattern that we interpret as revealing negative rather than positive reciprocity in worker decisions. Using a new technology that tracks facial expressions called NoldusTM FaceReader, we find that the emotion of anger is associated with reciprocal responses in the short-run, but this association is weaker in the long-run. |
| Keywords: | Economics, labour economics |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2016033&r=exp |
| By: | Enni Ruokamo (Finnish Environment Institute (SYKE); Department of Economics); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Nick Hanley (Department of Geography and Sustainable Development, University of St Andrews); Artti Juutinen (Department of Economics, Oulu Business School; Natural Resources Institute Finland (Luke)); Rauli Svento (Department of Economics, Oulu Business School) |
| Abstract: | Choosing a specific heating system is a complex and difficult decision for homeowners as there exists a wide array of heating technologies with different characteristics that one can consider before purchasing. We include multiple heating technologies and attributes in our Choice Experiment design and explore the effect of perceived choice complexity on the randomness of choices. In particular, we investigate how different self-evaluated factors of choice complexity affect mean scale and scale variance. Our findings suggest that perceived choice complexity has a systematic impact on the parameters of econometric models of choice. However, there are differences between alternative self-evaluated complexity-related covariates. Results indicate that individuals who report that answering the choice tasks was difficult have less deterministic choices. Perceptions of the realism of home heating choice options also affect scale and scale variance. |
| Keywords: | Home heating, Choice experiment, Choice modelling, Scale heterogeneity, Generalized mixed logit, Complexity |
| JEL: | D12 Q40 Q48 Q51 Q55 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2016-30&r=exp |
| By: | Morone, Andrea; Temerario, Tiziana |
| Abstract: | In this paper, we first replicated Harrison et al. (2012). Then, we studied if the group’s size has an impact on group’s risk aversion. In line with Harrison et al. (2012), our results confirm that no significant differences occur between individuals and groups risk aversion in three-person group. We also found that group size does not affect the level of risk aversion. |
| Keywords: | Preferences; Risk attitude; Laboratory; Majority Rule; |
| JEL: | C91 C92 D01 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74949&r=exp |
| By: | Suvi Vasama; ; |
| Abstract: | We examine collaboration in a one-arm bandit problem in which the players' actions affect the distribution over future payoffs. The players need to exert costly effort both to enhance the value of a risky technology and to learn about its current state. Both product value and learning are public goods, which gives the players incentives to free-ride on each others' actions. This leads to an inefficiently low aggregate level of effort. When the players' actions affect the distribution over future payoffs, they eventually get trapped in the low action, causing an inefficient unraveling of the game. Moreover, the players' incentives to exert effort depend on the state that in turn depends on the aggregate effort. If the players start restricting effort when the belief decreases in expectation, the two effects play in the same direction. Higher effort encourages higher effort and vice versa. Unraveling leads to multiple symmetric Markov perfect equilibria. |
| JEL: | C73 D83 O31 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2016-048&r=exp |
| By: | Chen, Daniel L.; Schonger, Martin |
| Abstract: | Recent advances in economic theory, largely motivated by experimental findings, have led to the adoption of models of human behavior where a decision-maker not only takes into consideration her own payoff but also others’ payoffs and any potential consequences of these payoffs. Investigations of deontological motivations, where a decision-maker makes her choice not only based on the consequences of a decision but also the decision per se have been rare. We propose an experimental method that can detect an individual’s deontological motivations by varying the probability of the decision-maker’s decision having consequences. It uses two states of the world, one where the decision has consequences and one where it has none. We show that a purely consequentialist decision-maker whose preferences satisfy first-order stochastic dominance will choose the decision that leads to the best consequences regardless of the probability of the consequential state. A purely deontological decision-maker is also invariant to the probability. However, a mixed consequentialist-deontological decision-maker’s choice changes with the probability. The direction of change gives insight into the location of the optimand for one’s duty. We provide a formal interpretation of major moral philosophies and a revealed preference method to detect deontological motivations and discuss the relevance of the theory and method for economics and law. |
| Keywords: | Consequentialism, deontological motivations, normative commitments, social preferences, revealed preference, decision theory, first order stochastic dominance, random lottery incentive method |
| JEL: | D6 K2 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:31140&r=exp |
| By: | Bosch, Christine; Zeller, Manfred; Deffner, Domenica |
| Abstract: | This paper studies access to and adoption of improved seeds and the diffusion of this information in a remote area in central Madagascar. The analysis is based on panel data gathered from 2009 to 2014 for 390 households in three villages. In 2013 a randomized treatment control design was applied in which 50% randomly selected households from the panel received 1.5 kapoaka (0.6 kg) of improved bean seeds (Pois du Cap/Morombe/Phaseolus lunatus). The beans were especially bred for dry regions and purchased at Fofifa (National Center of Applied Research and Rural Development). Of those households receiving, 50% randomly selected households were given information on how to store, plant and cultivate the seeds, as the distributed variety was unknown in the region and not available in the villages. These three groups are compared with respect to baseline characteristics, bean adoption, cultivation, information exchange with other farmers and diet diversity. 55% of the households that received seeds cultivated them, with an average yield of 3 kg. As non-compliance and spillovers exist, next to the average treatment effect on the treated (ATT), intention-to-treat (ITT) and local average treatment effect (LATE) is estimated. Additionally, willingness to pay (WTP) for improved bean seeds is estimated via the contingent valuation method (CVM). In order to ask the WTP, households were explained the benefits of improved bean seeds, which resulted in a WTP of 171% of the price of beans purchased on the local market. |
| Keywords: | Crop Production/Industries, Production Economics, Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:249286&r=exp |