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on Experimental Economics |
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Issue of 2017‒02‒26
twenty papers chosen by |
| By: | Drew Gerkey; E. Lance Howe; James Murphy; Colin West |
| Abstract: | Integrating information from existing research, qualitative ethnographic interviews, and participant observation, we designed a field experiment that introduces idiosyncratic environmental risk and a voluntary sharing decision into a standard public goods game. Conducted with subsistence resource users in rural villages on the Kamchatka Peninsula in Northeast Siberia, we find evidence consistent with a model of indirect reciprocity and local social norms of helping the needy. When participants are allowed to develop reputations in the experiments, as is the case in most small-scale societies, we find that sharing is increasingly directed toward individuals experiencing hardship, good reputations increase aid, and the pooling of resources through voluntary sharing becomes more effective. We also find high levels of voluntary sharing without a strong commitment device; however, this form of cooperation does not increase contributions to the public good. Our results are consistent with previous experiments and theoretical models, suggesting strategic risks tied to rewards, punishments, and reputations are important. However, unlike studies that focus solely on strategic risks, we find the effects of rewards, punishments, and reputations are altered by the presence of environmental factors. Unexpected changes in resource abundance increase interdependence and may alter the costs and benefits of cooperation, relative to defection. We suggest environmental factors that increase interdependence are critically important to consider when developing and testing theories of cooperation. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:feb:framed:00596&r=exp |
| By: | Korenok Oleg (Department of Economics, VCU School of Business); Edward L. Millner (Department of Economics, VCU School of Business); Laura Razzolini (Department of Economics, VCU School of Business) |
| Abstract: | We determine whether the moral cost of taking exceeds the moral cost of not giving. We design and conduct an experiment to determine whether a dictator prefers a giving game over a taking game when the payoff possibilities are identical and to measure the strength of the preference. We find that aversion to taking is prevalent and strong. Over 85% of the dictators in our experiment choose to play a giving game over a taking game when the payoff possibilities are identical and, on average, dictators are willing to sacrifice over 31% of their endowment to avoid taking. |
| Keywords: | Taking; Dictator Game; Impure Altruism; Equivalent Variation |
| JEL: | C91 D01 D64 H30 H41 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:vcu:wpaper:1702&r=exp |
| By: | Colasante, Annarita; Marini, Matteo M.; Russo, Alberto |
| Abstract: | In this paper we test in a controlled environment the impact of incidental emotions induced through musical stimuli on individual risk-taking behavior. A modified version of the Multiple Price List method is used to elicit risk preference. We find that both positive and negative stimuli make experimental subjects more risk averse than subjects in the neutral treatment. This result is obtained with respect to the first lottery, while the impact of music on risk-taking is not statistically significant in the subsequent lottery, meaning that its effect vanishes as time elapses. |
| Keywords: | laboratory experiment, music, mood induction, preference elicitation, risk aversion. |
| JEL: | C91 D81 |
| Date: | 2017–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76992&r=exp |
| By: | Korenok Oleg (Department of Economics, VCU School of Business); Edward L. Millner (Department of Economics, VCU School of Business); Laura Razzolini (Department of Economics, VCU School of Business) |
| Abstract: | This paper determines if differences in feelings of ownership mediate the effect of changing who earns the endowment and the frame of actions on dictatorsÕ generosity. We conduct an experiment with two treatments. The Dictator Earns-Give treatment is designed to induce strong feelings of ownership, while the Recipient Earns-Take treatment induces weak feelings of ownership. We measure feelings of ownership in the two treatments. As expected, dictators report stronger feelings of ownership in the first treatment and these feelings mediate the dictatorÕs generosity. Moving from the Recipient Earns-Take treatment to the Dictator Earns-Give treatment indirectly reduces the payoff to the recipient by increasing the dictatorsÕ feelings of ownership. |
| Keywords: | dictator game; feelings of ownership; altruism |
| JEL: | C72 C91 D03 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:vcu:wpaper:1704&r=exp |
| By: | Stadler, Manfred; Güth, Werner; Zaby, Alexandra |
| Abstract: | Price transparency in the sense of ‘more information for customers’ is known to increase efficiency. However, the introduction of price transparency platforms does not only providemore information for customers but also for rival firms—who may (mis)use the legal information channel to collude. We experimentally investigate transparency platforms in the context of a capacity-then-price setting game. Price transparency is implemented by allowing firms to send non-binding price messages after capacity but before price choices. As such messages are cheap talk they do not affect the subgame perfect equilibrium of the game. In our experiment, however, we find collusive price choices when price messages are possible, especially when they are truthful. While we find strong support for the theoretically predicted negative relation between capacities and prices, participants frequently install excessive capacities, which, in turn, induce collusive pricing behavior. |
| JEL: | C72 C91 L41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145515&r=exp |
| By: | Christoph Bühren (University of Kassel); Philip J. Steinberg (University of Wuppertal) |
| Abstract: | In order to analyze if heterogeneity in psychological traits affects individual performance in sequential tournaments, we conducted a tennis field experiment. In the experiment, we also varied the payment schemes (individual, team, competition) to control for moderating effects of different incentives. Team incentives, risk taking, and self-esteem reduced performance whereas a preference towards competition enhanced it. On average, we observe a second mover advantage. However, individuals’ psychological traits, such as self-esteem or self-efficacy, can turn a second mover into a first mover advantage. Our results shed new light on the discussion of first vs. second mover advantages and performance under pressure. Study findings have implications for psychological requirements of competitive and team tasks in business settings. |
| Keywords: | Performance under pressure; experiment; psychological traits; second mover advantage; tennis; sequential tournaments |
| JEL: | C93 D81 Z20 M52 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201705&r=exp |
| By: | Gerhards, Leonie; Gravert, Christina |
| Abstract: | Various empirical paper have shown that peers affect productivity and behavior in the workplace. However, the mechanisms through which peers influence each other are still largely unknown. In this laboratory experiment we study a situation in which individuals might look at their peers' behavior to motivate themselves to endure in a task that requires perseverance. We test the impact of unidirectional peer effects under individual monetary incentives, controlling for ability and tactics. We find that peers significantly increase their observers' perseverance, while knowing about being observed does not significantly affect behavior. In a second experiment we investigate the motives to self-select into the role of an observing or an observant subject and what kind of peers individuals deliberately choose. Our findings from this treatment provide first insights on the perception of peer situations by individuals and new empirical evidence on how peer groups emerge. |
| JEL: | C91 M50 J24 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145691&r=exp |
| By: | Mascagni, Giulia; Nell, Christopher; Monkam, Nara; Mukama, Denis |
| Abstract: | Large-scale field experiments on tax compliance have been a thriving field of research in many regions of the world. However, Africa is still lagging behind, as administrative data from anonymised returns is available only in a handful of countries. To the best of our knowledge, there is as yet no published evidence of a tax field experiment from Africa. This paper reports the results of a pilot experiment in Rwanda that served as a stepping stone for a larger experimental study on tax compliance. In this pilot, we test the process of messaging taxpayers to encourage them to comply voluntarily, by providing information on sanctions. The results indicate that communication strategies that aim to inform taxpayers may be effective in increasing tax compliance. However, these results are only indicative. They will be complemented by further evidence from the larger field experiment, where we test different types of messages and delivery methods. Nonetheless, this paper provides some initial insight into the use of tax experiments in Africa, both in terms of initial evidence and lessons learned for future efforts in this field. |
| Keywords: | Development Policy, Economic Development, Governance, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:12798&r=exp |
| By: | Lohse, Tim; Dwenger, Nadja |
| Abstract: | We study whether individuals in a face-to-face situation can successfully exert some lying effort to delude others. We exploit data from a laboratory experiment in which participants were asked to assess videotaped statements as being rather truthful or untruthful. The statements are face-to-face tax declarations which were recorded in an incentivised tax compliance experiment. The video clips to be assessed feature each subject twice making the same declaration. But one time the subject is reporting truthfully, the other time willingly untruthfully. This allows us to investigate within-subject differences in trustworthiness. Drawing on more than 18,000 assessments, we find that a subject is perceived as more trustworthy if she deceives than if she reports truthfully. It is particularily individuals with dishonest appearance who manage to increase their perceived trustworthiness by up to 15 percent. This is evidence of individuals successfully exerting lying effort. |
| JEL: | C91 H31 K42 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145616&r=exp |
| By: | Özgümüs, Asri; Keser, Claudia; Peterlé, Emmanuel; Schmidt, Martin |
| Abstract: | We introduce a simple game-theoretical model that captures the main aspects of the repeated interaction between an issuer and a credit rating agency. The scenario is characterized by up-front payments of issuer-fees and regulatory sanctions for false rating. We chose parameters such that in the Bayesian Nash equilibrium the credit rating agency should always provide truthful ratings. Knowing this, the issuer should never request a rating. Conducting laboratory experiments, we find that issuers frequently request ratings, which in turn is reciprocated with a high proportion of untruthful “good” ratings, even though the credit rating agency faces (low or high) financial penalties for being untruthful. Our results are different from the game-theoretical prediction but they are in keeping with a “cooperative solution”, similar to the “deterrence theory” in Reinard Selten’s “chain store paradox” (Selten, 1978). |
| JEL: | C70 C90 G01 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145934&r=exp |
| By: | Riccardo Borgoni (DEMS - University of Milan-Bicocca); Giacomo Degli Antoni (University of Parma, Department of Law); Marco Faillo (University of Trento); Alessandra Michelangeli (DEMS - University of Milan-Bicocca) |
| Abstract: | The literature on the hedonic price approach applied to housing highlights the existence of natives’ preferences against living in high-dense immigrant urban areas. At the same time, empirical and experimental evidence show that ethnic fragmentation reduces cooperation at the community level. Mainly because of the difficulty to measure cooperation at the level of neighborhood, the correlation between these two phenomena is still largely unexplored. In this paper, we propose to investigate this issue by combining the hedonic price approach and a framed field experiment that allows us to collect a measure of cooperation at the neighborhood level. We show how this methodology may be implemented by carrying out a pilot study for the city of Milan. The purpose is to pave the way for further research aiming at disentangling between alternative explanations of natives’ preferences for living in homogeneous communities. |
| Keywords: | Cooperative behavior; framed field experiment, revealed preferences |
| JEL: | C93 J15 R10 R21 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp62&r=exp |
| By: | Sander Onderstal (University of Amsterdam, The Netherlands) |
| Abstract: | In a field experiment, we study the revenue-generating properties of premium auctions. In a premium auction, the runner-up obtains a premium for driving up the price paid by the winner. Previous research, both theoretical and in the lab, has shown that the relative performance of premium auctions compared to standard auction formats is context-specific. In the experiment, we compare two types of premium auctions with the standard Vickrey auction selling high-quality, limited-edition posters in an online auction. We observe that neither premium auction raises higher revenue than the Vickrey auction. The variance of the revenue in the Amsterdam auction, one of the premium auctions, is lower than that in the Vickrey auction. |
| Keywords: | Premium auctions; field experiment |
| JEL: | C93 D44 |
| Date: | 2017–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170024&r=exp |
| By: | Andor, Mark; Gerster, Andreas; Sommer, Stephan |
| Abstract: | Energy labels have been introduced in many countries to make consumers more attentive to energy use in purchase decisions of durables. Despite their wide application, however, little is known about the effects of specific label designs. In this paper, we explore how energy labels can help to address inattention of consumers to energy efficiency. Our analysis is based on a (randomized controlled) discrete choice experiment among about 5,000 households in which we implement treatments that vary the label design. We find that supplementing the label with annual cost information increases attention to operating cost and promotes the choice of durables with higher energy efficiency. Moreover, simplifying the label has similar positive effects, most notably for individuals with low education. Finally, we show that a substantial share of individuals employ decision heuristics, focusing primarily on efficiency classes while neglecting more detailed information on energy consumption. |
| JEL: | D12 D83 Q48 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145778&r=exp |
| By: | Mascagni, Giulia |
| Abstract: | Tax experiments have been gaining momentum in recent years, although this literature dates back several decades. With new developments in methods and data availability, tax experiments have gradually moved away from lab settings and towards the field. This movement from the lab to the field has happened against the background of the ‘credibility revolution’ in applied economics, which has seen more rigorous methods applied to policy relevant questions, and of the availability to researchers of administrative data from tax returns. These developments have allowed significant advances in the experimental literature on tax compliance. This paper reviews this literature, giving particular attention to field experiments using administrative data, but putting them in the broader context of the compliance literature. A particular effort is made to take a global perspective, in a literature that is only recently seeing the emergence of evidence from Africa, Latin America and Asia. |
| Keywords: | Governance, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:8967&r=exp |
| By: | Tobias Börger (School of Geography and Sustainable Development, University of St. Andrews); Oliver Frör (Institute of Environmental Sciences, University of Koblenz-Landau, Germany); Sören Weiß (Institute of Environmental Sciences, University of Koblenz-Landau, Germany) |
| Abstract: | Discrete choice experiments to value environmental goods and services constitute a complex and demanding task for survey respondents. This study looks at the effect of perceived difficulty with the choice tasks on choice consistency and preferences. The choice data come from two parallel surveys valuing river management outcomes in Germany. Results show that perceived difficulty decreases response scale, an indicator of the relative weight of the explained over the random component of indirect utility of a choice alternative. The reasons for this effect have more to do with the design of the actual task in the choice experiment than with the content and topic of the valuation exercise. Results also show only a very limited effect on preferences and willingness to pay for aspects of river management. The proposed econometric strategy manages to effectively separate the effect of difficulty on inter-individual differences of preference and scale. Based on these results, we recommend (i) to rigorously test the attribute design to allow only meaningful trade-offs as perceived by respondents and (ii)to put greater emphasis on the explanation of the choice tasks. |
| Keywords: | Discrete choice experiment, scale heterogeneity, perceived difficulty, river management |
| JEL: | H4 Q25 Q51 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:sss:wpaper:2017-03&r=exp |
| By: | Adena, Maja; Huck, Steffen |
| Abstract: | We study an online fundraising campaign run on an opera ticket booking platform. After establishing a baseline, a first change doubled the donation grid. A second change altered the navigation of the website rendering the act of declining to donate more salient. The contribution of our paper is fourfold. First, we add to the literature on defaults by showing how donation grids can have dramatic impacts on giving. Second, we demonstrate that small, apparently superficial changes in the design of a campaign can have unexpectedly large consequences (offsetting the effects of changes in the choice architecture). Third, we provide the first field evidence for the role of self-image in charitable giving. Finally, we provide stark evidence on possible adverse long-run effects of fundraising campaigns for ticket selling entities. “Avoiding the ask,” non-frequent customers buy fewer tickets in the following opera season. Ticket sales per person fall by €35, while average charitable income from the same group during the campaign had been just under €0.12. |
| JEL: | D64 D03 D12 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145535&r=exp |
| By: | Chlaß, Nadine; Perea, Andrés |
| Abstract: | Do individuals choose how to a solve a dynamic game or is their mode of reasoning a type-like predisposition? We show experimentally that an individual’s propensity to forwardly or backwardly induct is a function of (i) her belief whether an opponent’s previous action was a trembling hand mistake or a rational choice, and (ii) her personality. In a two-stage game, the individual observes an action of a computerized opponent (stage 1) before both interact (stage 2). The opponent chooses rationally most of the time and makes random choices with a small commonly known likelihood. Hence, the opponent’s action in stage 1 discloses with some probability the opponent’s type (choice) in stage 2. The individual can either believe that (i) the opponent chose randomly in stage 1, or that (ii) the opponent made a rational choice. An individual rationally responds to this belief if she solves stage 2 by backwards induction in the first, and by forward induction in the second case. |
| JEL: | C73 C91 D82 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145881&r=exp |
| By: | Stracke, Rudi; Hörtnagl, Tanja; Kerschbamer, Rudolf |
| Abstract: | This paper analyzes a contest for market shares where two homogeneous firms compete by investing either simultaneously or sequentially. Standard theory predicts that equilibrium investments and payoffs are independent of the order of moves. To test this prediction, we implement two treatments in the lab, one where firms chose investments simultaneously, and one where they invest sequentially. Our results suggest that it is an inherent advantage to move second rather than first even in the absence of strategic concerns. This is so because first movers face strategic uncertainty, while second movers have the power to ultimately determine relative payoffs through their investment choices. This power is particularly valuable in our experiments, since many first movers try to establish a collusive outcome and second movers not only care about own monetary earnings, but also about relative standing vis-\`a-vis the first mover. |
| JEL: | D47 L13 L22 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145532&r=exp |
| By: | Englmaier, Florian; Segal, Carmit |
| Abstract: | Many labor relations are characterized by the possibility of repeated interaction without long term contracts and with discretionary pay components. We implement such a structure in the lab by allowing workers and firms to interact repeatedly for many periods absent a pre-announced final period. In this setting persistent and different human resource practices emerge endogenously: we find (long-term) relationships characterized by generous surplus sharing and spot-interactions with little to no rent for the workers. Efficiency, i.e. exerted effort, is comparable across these two institutions. Hence, spot-interactions are at least as profitable for firms engaging in such relationships. In control treatments, we show that neither limited firm commitment nor structural unemployment alone is sufficient to generate these patterns. Analyzing individual level data, we document that firm and worker behavior are individually rational and that individual histories play a significant role in explaining the observed behavior. |
| JEL: | C91 D21 M50 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145662&r=exp |
| By: | McCluskey, Rhiannon |
| Abstract: | This brief summarises the findings from five ICTD working papers produced from a research project conducted by the ICTD in partnership with the African Tax Administration Forum and in collaboration with the Rwanda Revenue Authority. It includes information about the value of administrative data and tax experiments for research and policy, as well as the results of two field experiments on tax compliance, which tested the effectiveness of different types of communications with taxpayers. |
| Keywords: | Development Policy, Economic Development, Governance, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:12782&r=exp |