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on Experimental Economics |
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Issue of 2017‒02‒19
23 papers chosen by |
| By: | Stopnitzky, Yaniv |
| Abstract: | Much policy interest in sanitation and hygiene promotion focuses on changing behavior and increasing demand for these goods. Yet the effectiveness of large-scale interventions has been mixed, in large part because of the difficulty of changing attitudes on deeply rooted behaviors. This study tests whether an experiential learning exercise structured around an experimental game can be used to shift preferences around sanitation and hygiene. A minimum coordination game is adapted to the sanitation and hygiene setting by linking game choices to real-world investment decisions and payoffs in terms of health and status. Individuals from 20 villages in rural Tamil Nadu were randomly assigned to one of three groups: one that played a game in which communication between rounds was allowed, another that played a game in which communication was prohibited, and a control group that only completed a survey. Based on a comparison of survey responses across treatment arms, the game improved stated preferences in relation to sanitation and hygiene. This effect was larger when communication was allowed, and men responded on average more strongly than women across both versions of the game. These results suggest that experimental games can be a valuable tool not only for the study of decision making but for improving participants’ knowledge and pro-sanitation preferences. |
| Keywords: | hygiene, sanitation, health, behaviour, behavior, governance, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1587&r=exp |
| By: | Lopera Baena, Maria Adelaida |
| Abstract: | This paper measures the relative importance of "conditional cooperation" and "unconditional cooperation" in a large public goods experiment conducted in Mali. We use expectations about total public goods provision to estimate a structural choice model with heterogeneous preferences. While unconditional cooperation can be captured by common preferences shared by all participants, conditional cooperation is much more heterogeneous and depends on unobserved individual factors. This structural model, in combination with two experimental treatments, suggests that leadership and group communication incentivize public goods provision through different channels. First, We find that participation of local leaders effectively changes individual choices through unconditional cooperation. A simulation exercise predicts that even in the most pessimistic scenario in which all participants expect zero public good provision, 60% would still choose to cooperate. Second, allowing participants to communicate fosters conditional cooperation. The simulations suggest that expectations are responsible for around 24% of the observed public good provision and that group communication does not necessarily ameliorate public good provision. In fact, communication may even worsen the outcome when expectations are low. |
| JEL: | C93 D03 H41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145797&r=exp |
| By: | Wagner, Valentin |
| Abstract: | Losses are painful but how painful are negative outcomes? This paper presents results of a field experiment among 1377 elementary pupils on the effectiveness of loss framing and avoiding negative outcomes on pupils test performance. I compare answers of pupils in a multiple-choice test in math who are endowed with 0 points and earning points is framed as a gain (Control Group) to pupils who are endowed with the maximum number of points but earning points is framed as a loss (Loss Treatment). In a second treatment arm (Negative Treatment) earning points is again framed as a gain but pupils are endowed with a negative amount of points. However, pupils in this treatment could achieve a positive outcome by earning at least half of the points. I find that, on average, the number of correctly solved questions increases significantly in both treatments (Loss and Negative). The multiple-choice testing format allows to identify the underlying channels of improvements. While pupils in the Loss Treatment significantly seem to seek more risk---answer more multiple-choice questions---pupils in the Negative Treatment significantly answer more accurately---increase the share of correctly answered questions. Nevertheless, the Negative Treatment is preferable to the Loss Treatment as both treatments indeed significantly increase performance of high-ability pupils but low-ability pupils significantly perform worse under a loss frame. |
| JEL: | C93 I20 D80 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145678&r=exp |
| By: | Kene Boun My; Benjamin Ouvrard |
| Abstract: | We provide an experimental test of the theoretical predictions obtained in Ouvrard and Spaeter (2016). A public goods experiment is proposed in which the subjects can contribute to reduce the level of pollution, which is stochastic. A nudge (announcement of the socially optimal contribution) and a tax are implemented to improve the level of contributions. The environmental sensitivity and optimism of the subjects are also elicited. Our first result shows that the implementation of the nudge does not perform as well as the implementation of the tax. The reaction to the nudge depends directly on individuals’ environmental sensitivity, contrary to the reaction to the tax. Secondly, the nudge performs well with highly sensitive subjects only during the first half of its implementation. Lastly, the efficiency analysis shows that the implementation of the nudge significantly decreases the groups’ welfare for the least sensitive subjects, in comparison to the baseline. In sum, these results tend to corroborate the predictions obtained in Ouvrard and Spaeter (2016). |
| Keywords: | incentives, nudge, environmental sensitivity, optimism, tax. |
| JEL: | C91 H41 Q58 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2017-06&r=exp |
| By: | Arechar, Antonio A. (Yale University); Gächter, Simon (University of Nottingham); Molleman, Lucas (Max Planck Institute for Human Development) |
| Abstract: | Online labor markets provide new opportunities for behavioral research, but conducting economic experiments online raises important methodological challenges. This particularly holds for interactive designs. In this paper, we provide a methodological discussion of the similarities and differences between interactive experiments conducted in the laboratory and online. To this end, we conduct a repeated public goods experiment with and without punishment using samples from the laboratory and the online platform Amazon Mechanical Turk. We chose to replicate this experiment because it is long and logistically complex. It therefore provides a good case study for discussing the methodological and practical challenges of online interactive experimentation. We find that basic behavioral patterns of cooperation and punishment in the laboratory are replicable online. The most important challenge of online interactive experiments is participant dropout. We discuss measures for reducing dropout and show that, for our case study, dropouts are exogenous to the experiment. We conclude that data quality for interactive experiments via the Internet is adequate and reliable, making online interactive experimentation a valuable complement to laboratory studies. |
| Keywords: | experimental methodology, behavioral research, punishment, internet experiments, Amazon Mechanical Turk, public goods game |
| JEL: | C71 C88 C90 D71 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10517&r=exp |
| By: | Giesecke, Matthias Nicolas; Yang, Guanzhong |
| Abstract: | We elicit preferences for retirement timing under two schemes of financial incentives and across information treatments. Individuals are repeatedly asked to decide whether to retire immediately or to continue working in the setting of a laboratory experiment. We alternate two treatment parameters: First, we compare two schemes of financial incentives where the expected present value of pension wealth is either a declining or a constant function of the retirement age. Second, we change the amount of information regarding the expected pension wealth. In line with the common finding of the quasi-experimental literature, we find a considerable delay of retirement once benefit reductions make early retirement less attractive. The striking result is, however, that the amount of available information tremendously affects retirement decisions. Poorly informed individuals tend to make retirement decisions on the grounds of perceived reference points. Such decision criteria, e.g. social norms, may reduce the effectiveness of policies that aim at raising the retirement age. |
| JEL: | C91 H55 J26 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145548&r=exp |
| By: | Chew, Soo Hong (National University of Singapore); Yi, Junjian (National University of Singapore); Zhang, Junsen (Chinese University of Hong Kong); Zhong, Songfa (National University of Singapore) |
| Abstract: | We study the role of risk aversion underlying son preference in patriarchal societies, where sons serve as better insurance for old-age support than daughters. The implications of an insurance motive on son preference are two-fold. First, prior to the birth of their children, more risk-averse parents have a stronger preference for sons than for daughters. Second, after the birth of their children, parents with sons are more risk seeking, compared to parents with daughters. We adopt a within-twin-pair fixed-effects estimator with a weak identification assumption, which enables us to jointly identify these two effects. We further conduct an incentivized choice experiment to assess parental risk attitude in a sample of Chinese twins with children, and follow up with a second twin sample to examine the replicability of the findings. In both samples, we find that parents with greater risk aversion before the birth of their children are more likely to have sons through sex selection than parents with less risk aversion. Additionally, having sons significantly decreases parental risk aversion. These results contribute to the literature on the sources of son preference and help shed light on the nature of gender inequality. |
| Keywords: | risk aversion, son preference, twins, experimental economics |
| JEL: | C93 D01 D80 J13 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10519&r=exp |
| By: | Sebastian Goerg (Florida State University); David Rand (Yale University); Gari Walkowitz (University of Cologne) |
| Abstract: | We systematically investigate prisoner’s dilemma games and dictator games with valence framing. We find that give versus take frames influence subjects’ behavior and beliefs in the prisoner’s dilemma game but not in the dictator game. |
| Keywords: | Prisoner’s Dilemma, Dictator Game, Framing, Give, Take, Cooperation, Generosity |
| JEL: | A13 C72 C91 F51 Z13 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2017_02_01&r=exp |
| By: | Grimm, Veronika; Choo, Lawrence; Horvath, Gergely; Nitta, Kohei |
| Abstract: | Societies today are increasingly reliant on whistleblowing to uncover unfair practices. For policy design it is therefore essential to better understand the impact of socio-psychological factors on whistleblowing propensity. We use an experimental setup to explore the role of “Diffusion of Responsibility” (DOR), which posits that individuals are less likely to whistleblow when others could similarly do so. We find that individuals do not shift responsibility to others if they expect an own monetary benefit from the consequences of whistleblowing, even if they could gain even more by freeriding on others who take action. In contrast, DOR affects whistleblowing propensities severely if whistleblowing is motivated solely by altruistic concerns. Our results highlight the fragility of purely altruistic behaviour and suggest that whistleblowing policies should ensure that potential whistleblowers perceive a gain to their in-group, but need not address the free riding problem among the insiders. |
| JEL: | C91 C92 D02 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145781&r=exp |
| By: | David Freeman (Simon Fraser University); Erik O. Kimbrough (Simon Fraser University); J. Philipp Reiss (Karlsruhe Institution of Technology) |
| Abstract: | Recent research suggests that auction winners sometimes fall prey to a “bidder's curse", paying more for an item at auction than they would have paid at a posted price. One explanation for this phenomenon is that bidders are inattentive to posted prices. We develop a model in which bidders' inattention, and subsequent overbidding, is driven by a rational response to the opportunity cost of acquiring information about the posted price. We test our model in a laboratory experiment in which subjects bid in an auction while facing an opportunity cost of looking up the posted price. We vary the opportunity cost, and we show that information acquisition decreases and consequently overbidding increases with opportunity cost as predicted |
| Keywords: | Auctions, Bidder's Curse, Limited Attention, Experiments, Rational Ignorance |
| JEL: | C72 C92 D44 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp17-04&r=exp |
| By: | Peterlé, Emmanuel; Rau, Holger A. |
| Abstract: | This paper analyzes gender differences in access to competitive positions. We implement an experiment where workers can apply for a job promotion by sending a signal to their employer. We control for gender differences in anticipation of discrimination in a treatment where a computer randomly recruits. Discriminatory behavior by the employer is isolated in a treatment where workers cannot send signals. We find that gender disparity among promoted workers is highest when workers can apply for promotion and employers recruit. Strikingly, the gender composition in competitive position is balanced in the absence of a signaling institution. When signaling is possible, we observe that female workers who do not request a promotion are discriminated against. |
| Keywords: | experiment,discrimination,gender differences,real effort |
| JEL: | C9 J24 J70 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:303&r=exp |
| By: | Davies, Elwyn (University of Oxford); Fafchamps, Marcel (Stanford University) |
| Abstract: | Firm surveys have shown that labour management in developing countries is often problematic. Earlier experimental research (Davies & Fafchamps, 2017) has shown that managers in Ghana are reluctant to use monetary incentives to motivate workers. This paper presents the results from a gift-exchange game experiment in Ghana in which the worker can make a promise to the employer before a contract is offered (ex ante communication) and in which the employer can send negative or positive feedback to the worker after the worker has chosen effort (ex post communication). The results indicate that feedback can help sustain cooperate behaviour (high effort provision), but only if the wage offered is high enough. Feedback reinforces reciprocity concerns on the behalf of the worker. In particular positive messages (praising) leads to higher effort provision, no significant relation between negative feedback and effort can be found. Promises are related to higher effort, but do not necessarily lead to higher wages. |
| Keywords: | worker incentives, gift exchange, effort, worker criticism, communication |
| JEL: | C71 D2 D86 E24 O16 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10520&r=exp |
| By: | Barreda Tarrazona, Iván J.; Grimalda, Gianluca; Morone, Andrea; Nuzzo, Simone; Teglio, Andrea |
| Abstract: | We study the relationship between market efficiency and the distribution of private information in experimental financial asset markets. Traders receive imperfect signals over the real value of an asset. Agents can share their information within a relatively small - compared to market size - group of agents. Both the number of signals and the way these are allocated among agents are manipulated in four experimental treatments. In two treatments signals are evenly distributed among agents. In two other treatments one group of 'quasi-insider' agents receives more signals than all other groups. In the baseline condition no signal is distributed. We show that centralizing information unambiguously achieves higher market efficiency than spreading information evenly. Furthermore, increasing the amount of information has no effect on efficiency either when information is symmetric or when it is asymmetric. We argue that two complementary mechanisms drive these results. First, having more private information ex ante induces traders to rely on their own signals, reducing the expected benefits of sharing information. Second, the presence of quasi-insider being common knowledge prompts agents to extract more information from market prices rather than their own private signals. This leads to swift information aggregation. |
| Keywords: | Experimental Markets,Information Aggregation,Market Cooperation |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2072&r=exp |
| By: | Benndorf, Volker; Rau, Holger A.; Sölch, Christian |
| Abstract: | This paper studies motivational crowding-out effects after financial incentives are lowered. In a real-effort setting, workers receive a piece rate before financial incentives are substituted by a one-time payment. Under the fixed payment, effort is significantly lower only when preceded by piece-rate incentives. The decrease is driven by a fraction of men who reduce their effort by 12%, whereas women constantly perform well. We find that this motivational crowding-out effect disappears when men do not have prior experience of a piece rate. In a series of control treatments, we discard all alternative explanations besides from motivational crowding out. |
| Keywords: | gender differences,incentives,motivational crowding out,real-effort task |
| JEL: | C91 J16 M54 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:304&r=exp |
| By: | Melo, Grace; Zhen, Chen |
| Abstract: | Research examining the effect of summary shelf nutrition labels on consumers’ behavior in real market settings is scarce. Using a supermarket’s voluntary adoption of NuVal―a 1 to 100 numeric summary shelf label system―as a natural experiment, we estimate a Two-Part Model (TPM) to identify the effect of the NuVal label on consumer purchasing decisions for cold cereal. Our results show that posting the NuVal score not only increases the purchase volume of healthier cold cereal products but also increases households’ likelihood to purchase cold cereal products with higher nutrition scores. Tests for heterogeneous treatment effects reveal that lower-income households experience a large improvement in their food choices when the NuVal scores are posted. |
| Keywords: | Shelf Nutrition Labels, NuVal, Two-Part Model, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Marketing, Q18, D12, |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea17:253080&r=exp |
| By: | Elwyn Davies; Marcel Fafchamps |
| Abstract: | In relational contracting the threat of punishment in future periods provides an incentive not to cheat. But to what extent do people actually carry out this punishment? We compare relational contracting patterns in Ghana and the United Kingdom by conducting a repeated principal agent lab experiment, framed in a labour market setting. Each period, employers make offers to workers, who can choose to accept or reject this offer and, after accepting and being paid, what effort to exert. The employers and workers interact repeatedly over several periods. In the UK, subjects behave in line with theoretical predictions and previous experiments: high effort is rewarded and low effort punished. However, we do not find evidence for the use of such incentives in Ghana. As a result, employers fail to discipline a subgroup of “selfish” workers, resulting in a low average effort and low employers’ earnings. Set identification of Fehr-Schmidt preferences of the Ghanaian and British workers also shows that the share of “selfish” workers in our experiment in Ghana is not substantially different from the UK. Introducing competition for workers or a reputation mechanism do not significantly improve workers’ effort. |
| JEL: | D2 J41 O12 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23123&r=exp |
| By: | Fatemeh Mokhtarzadeh (University of Victoria); Luba Petersen (Simon Fraser University) |
| Abstract: | This paper explores how expectations are influenced by central bank projections within a learning-to-forecast laboratory macroeconomy. Subjects are incentivized to forecast output and inflation in a laboratory macroeconomy where their aggregated expectations directly influence macroeconomic dynamics. Using a between-subject design, we systematically vary whether the central bank communicates no information, ex-ante rational nominal interest rate projections, or rational or adaptive dual projections of output and inflation. Our experimental findings suggest that interest rate projections and adaptive dual projections can encourage backward-looking forecasting behavior. Expectations are best coordinated and stabilized by communicating rational output and inflation forecasts. |
| Keywords: | expectations, monetary policy, projections, communication, credibility, laboratory experiment, experimental macroeconomics |
| JEL: | C9 D84 E52 E58 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp17-03&r=exp |
| By: | Gill, David (Purdue University); Prowse, Victoria L. (Purdue University) |
| Abstract: | Response times are a simple low-cost indicator of the process of reasoning in strategic games (Rubinstein, 2007; Rubinstein, 2016). We leverage the dynamic nature of response-time data from repeated strategic interactions to measure the strategic complexity of a situation by how long people think on average when they face that situation (where we define situations according to the characteristics of play in the previous round). We find that strategic complexity varies significantly across situations, and we find considerable heterogeneity in how responsive subjects' thinking times are to complexity. We also study how variation in response times at the individual level across rounds affects strategic behavior and success. We find that 'overthinking' is detrimental to performance: when a subject thinks for longer than she would normally do in a particular situation, she wins less frequently and earns less. The behavioral mechanism that drives the reduction in performance is a tendency to move away from Nash equilibrium behavior. |
| Keywords: | response time, decision time, thinking time, strategic complexity, game theory, strategic games, repeated games, beauty contest, cognitive ability, personality |
| JEL: | C72 C91 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10518&r=exp |
| By: | Kiryl Khalmetski; Bettina Rockenbach; Peter Werner |
| Abstract: | Information asymmetries in economic transactions are omnipresent and a regular source of fraudulent behavior. In a theoretical and an experimental analysis of a sender-receiver game we investigate whether sanctions for lying induce more truthtelling. The novel aspect in our model is that senders may not only choose between truth-telling and (explicit) lying, but may also engage in evasive lying by credibly pretending not to know. While we find that sanctions promote truth-telling when senders cannot engage in evasive lying, this is no longer true when evasive lying is possible. Then, explicit lying is largely substituted by evasive lying, which completely eliminates the otherwise positive effect of sanctions on the rate of truthtelling. As outlined in our model, the necessary prerequisite for such an ‘erosion’ effect is that evasive lying is perceived as sufficiently less psychologically costly than direct lying. Our results clearly demonstrate the limitations of sanctioning lying to counteract the exploitation of informational asymmetries and may explain the empirical evidence from the finance industry that sanctions for financial misconduct eventually appear to be not very efficient. |
| Date: | 2017–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0092&r=exp |
| By: | Stephan, Gesine; van den Berg, Gerard; Homrighausen, Pia |
| Abstract: | To address the problem of high reservation wages among older unemployed individuals, a German targeted wage support program aimed at providing incentives to accept lower paid wage offers. We sent out information brochures on this program to randomly selected eligible men. The treatment significantly increased awareness of the program by 20 percentage points. Combining survey and administrative data, we conduct reduced form estimates of the effects of brochure receipt on recipients and estimate local average treatment effects of additional program knowledge. The information treatment significantly increased take-up rates of the program. For unemployed men aged 50--54, we find no positive effects on employment outcomes, thus the additional take-up seems to have been pure windfall. For unemployed men aged 55--59, however, we find some positive effects of additional information on labor market results. The labor market status of unemployed men above age 60 is not affected by brochure receipt. |
| JEL: | J64 J65 J68 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145487&r=exp |
| By: | John List; Anya Samek; Dana Suskind |
| Abstract: | Behavioral economics and field experiments within the social sciences have advanced well beyond academic curiosum. Governments around the globe as well as the most powerful firms in modern economies employ staffs of behavioralists and experimentalists to advance and test best practices. In this study, we combine behavioral economics with field experiments to reimagine a new model of early childhood education. Our approach has three distinct features. First, by focusing public policy dollars on prevention rather than remediation, we call for much earlier educational programs than currently conceived. Second, our approach has parents at the center of the education production function rather than at its periphery. Third, we advocate attacking the macro education problem using a public health methodology, rather than focusing on piecemeal advances. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00595&r=exp |
| By: | Müller, Julia; Li, Zhihua; Wakker, Peter P.; Wang, Tong V. |
| Abstract: | Ellsberg and others suggested that decision under ambiguity is a rich empirical domain with many phenomena to be investigated beyond the Ellsberg urns. We provide a systematic empirical investigation of this richness by varying both the uncertain events, the outcomes, and combinations of these. Although ambiguity aversion is prevailing, we also find systematic ambiguity seeking, confirming insensitivity. We find that ambiguity attitudes depend on the source of uncertainty (the kind of uncertain event) but not on the outcomes. Ambiguity attitudes are closer to rationality (ambiguity neutrality) for natural uncertainties than for the Ellsberg urns, as appearing from the reductions of monotonicity violations and of insensitivity. Our rich domain serves well to test families of weighting functions for fitting ambiguity attitudes. We find that two-parameter families, capturing not only aversion but also insensitivity, are desirable for ambiguity even more than for risk. The Goldstein-Einhorn family performs best for ambiguity. |
| JEL: | D81 C91 D80 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145734&r=exp |
| By: | Camille Cornand; Rodolphe Dos Santos Ferreira |
| Abstract: | The paper provides a micra-founded differentiated duopoly illustration of a beauty contest, in which the weight put on the strategic vs. the fundamental motive of the pay offs is not exogenous but may be manipulated by the players. We emphasize the role of the competition component of the strategic motive as a source of conflict with the fun damental motive. This conflict, already present in an oligopolistic setting under perfect information, is only exacerbated when information is imperfect and dispersed. We show how firm owners ease such conflict by opting for sorne cooperation, thus moderating the competitive toughness displayed by their managers. By doing so, they also influence the managers' strategic concern for coordination and consequently the weight put on public relative to private information. |
| Keywords: | beauty contest, competition, cooperation, coordination, differentiated duopoly, dispersed information, public information. |
| JEL: | D43 D82 L13 L21 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2017-05&r=exp |