nep-exp New Economics Papers
on Experimental Economics
Issue of 2017‒04‒09
thirty-two papers chosen by

  1. Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market By David L. Dickinson; David Masclet; Emmanuel Perterle
  2. Gift Ratios in Laboratory Experiments By Tagiew, Rustam; Ignatov, Dmitry
  3. Women form social networks more selectively and less opportunistically than men By Friebel, Guido; Lalanne, Marie; Richter, Bernard; Schwardmann, Peter; Seabright, Paul
  4. Electing a parliament: an experimental study By Francesco De Sinopoli; Giovanna Iannantuoni; Maria Vittoria Levati; Ivan Soraperra
  5. Speculation rather than enterprise? Keynes’ beauty contest revisited in theory and experiment. By Kene Boun My; Camille Cornand; Rodolphe Dos Santos Ferreira
  6. Pay Attention or Be Paid for Attention? Impact of Incentives on Allocation of Attention By Ismaël Rafaï; Mira Toumi
  7. Friends or Strangers? Strategic Uncertainty and Cooperation across Experimental Games of Strategic Complements and Substitutes By Gabriele Chierchia; Fabio Tufano; Giorgio Coricelli
  8. Am I my peer's keeper? Social Responsibility in Financial Decision Making By Sascha Fullbrunn; Wolfgang J. Luhan; ;
  9. Short-term impacts of solar lanterns on child health : experimental evidence from Bangladesh By Kudo, Yuya; Shonchoy, Abu S.; Takahashi, Kazushi
  10. Using Personality Questionnaires in Experiments -- Limits and Potentials By Müller, Julia; Schwieren, Christiane
  11. Long-run expectations in a Learning-to-Forecast-Experiment: a simulation approach By Colasante, Annarita; Alfarano, Simone; Camacho Cuena, Eva; Gallegati, Mauro
  12. Are the Rich More Selfish than the Poor, or Do They Just Have More Money? A Natural Field Experiment By James Andreoni; Nikos Nikiforakis; Jan Stoop
  13. An experimental investigation of rating-market regulation By Claudia Keser; Asri Özgümüs; Emmanuel Peterle; Martin Schmidt
  14. Do I care if you are paid? A field experiment on charitable donations By Gneezy, Uri; Rau, Holger; Samek, Anya; Zhurakhovska, Lilia
  15. Endogenous Tax Audits and Taxpayer Assistance Services: Theory and Experiments By Christian A. Vossler; Scott M. Gilpatric
  16. Gender differences in honesty: The role of social value orientation By Grosch, Kerstin; Rau, Holger
  17. Gender and Peer Effects in Social Networks By Julie Beugnot; Bernard Fortin; Guy Lacroix; Marie-Claire Villeval
  18. Experimental investigations of binary threshold public good games By Spiller, Jörg; Bolle, Friedel
  19. Procrastination and Property Tax Compliance: Evidence from a Field Experiment By Michael Chirico; Robert Inman; Charles Loeffler; John MacDonald; Holger Sieg
  20. Can a Bonus Overcome Moral Hazard? An Experiment on Voluntary Payments, Competition, and Reputation in Markets for Expert Services By Angelova, Vera; Regner, Tobias
  21. Does practicing literacy skills improve academic performance in first-year university students? Results from a randomized experiment By Estelle Bellity; Fabrice Gilles; Yannick L'Horty
  22. Status Quo Bias under Uncertainty: An Experimental Study By Amnon Maltz; Giorgia Romagnoli
  23. Building trust by qualification in a market for expert services By Schneider, Tim; Bizer, Kilian
  24. A behavioral theory of equilibrium selection By Bolle, Friedel
  25. Altruism or Exchange? Experimental Evidence on the Motives behind Private Transfers in Sri Lanka By Aida, Takeshi; Sawada, Yasuyuki
  26. Sophisticated Bidders in Beauty-Contest Auctons By Stefano Galavotti; Luigi Moretti; Paola Valbonesi
  27. Truth and consequences: Bogus pipeline experiment in informal small business lending By Römer, Ulf; Weber, Ron; Mußhoff, Oliver; Turvey, Calcum G.
  28. Individual Dynamic Choice Behaviour and the Common Consequence Effect By Maria J. Ruiz Martos
  29. Design and Analysis of simulation experiments : Tutorial By Kleijnen, J.P.C.
  30. Choice of the Group Increases Intra-Cooperation By Babkina, Tatiana; Myagkov, Mikhail; Lukinova, Evgeniya; Peshkovskaya, Anastasiya; Menshikova, Olga; Berkman, Elliot T.
  31. Personalized Information as a Tool to Improve Pension Savings: Results from a Randomized Control Trial in Chile By Olga Fuentes; Jeanne Lafortune; Julio Riutort; José Tessada; Félix Villatoro
  32. Agent base model in public goods game By Chen Yuyou

  1. By: David L. Dickinson (Appalachian State University, IZA, ESI); David Masclet (Université de Rennes 1, CREM, CNRS); Emmanuel Perterle (Université Bourgogne Franche-Comté, CRESE)
    Abstract: In this paper, we examine labor market favoritism in a unique laboratory experiment design that can shed light on both the private benefits and spillover costs of employer favoritism (or discrimination). Group identity is induced on subjects such that each laboratory « society » consists of eight individuals each belonging to one of two different identity groups. In some treatments randomly assigned employer-subjects give preference rankings of potential worker-subjects who would make effort choices that impact employer payoffs. Though it is common knowledge that group identity in this environment provides no special productivity information and cannot facilitate communication or otherwise lower costs for the employer, employers preferentially rank in-group members. In such instances, the unemployed workers are aware that an intentional preference ranking resulted in their unemployment. Unemployed workers are allowed to destroy resources in a final stage of the game, which is a simple measure of the spillover effects of favoritism in our design. Though we find evidence that favoritism may privately benefit a firm in terms of higher worker effort, the spillover costs that result highlight a reason to combat favoritism/discrimination. This result also identifies one potential micro-foundation of societal unrest that may link back to labor market opportunity.
    Keywords: Discrimination, Experimental Economics, Social identity, Conflicts.
    JEL: C9 J24 J70
    Date: 2017–03
  2. By: Tagiew, Rustam; Ignatov, Dmitry
    Abstract: This paper presents statistics of a controlled laboratory gift-exchange-game experiment. These numbers can be used for assumptions about human behavior in analysis of noisy web data. The experiment was described in ‘The Impact of Social Comparisons on Reciprocity’ by Gächter et al. 2012. As already shown in relevant literature from experimental economics, human decisions deviate from rational payoff maximization. The average gift rate was 31%. Gift rate was under no conditions zero. Further, we derive some additional findings and calculate their significance.
    Keywords: experimental economics, machine learning
    JEL: C10 D03
    Date: 2016–07–18
  3. By: Friebel, Guido; Lalanne, Marie; Richter, Bernard; Schwardmann, Peter; Seabright, Paul
    Abstract: We test two hypotheses, based on sexual selection theory, about gender differences in costly social interactions. Differential selectivity states that women invest less than men in interactions with new individuals. Differential opportunism states that women's investment in social interactions is less responsive to information about the interaction's payoffs. The hypotheses imply that women's social networks are more stable and path dependent and composed of a greater proportion of strong relative to weak links. During their introductory week, we let new university students play an experimental trust game, first with one anonymous partner, then with the same and a new partner. Consistent with our hypotheses, we find that women invest less than men in new partners and that their investments are only half as responsive to information about the likely returns to the investment. Moreover, subsequent formation of students' real social networks is consistent with the experimental results: being randomly assigned to the same introductory group has a much larger positive effect on women's likelihood of reporting a subsequent friendship.
    Keywords: social networks,gender differences,trust game
    JEL: C91 D81 J16
    Date: 2017
  4. By: Francesco De Sinopoli (Department of Economics (University of Verona)); Giovanna Iannantuoni (University of Milano-Bicocca); Maria Vittoria Levati (Department of Economics (University of Verona)); Ivan Soraperra (Department of Economics (University of Verona))
    Abstract: We use laboratory experiments to explore what electoral outcomes emerge and how voters behave in a setting in which the electorate must determine the number of seats that two parties obtain in the parliament. Previous experimental work has mainly focused on winner-take-all elections and voting over fixed agendas, and has not studied elections where participants decide on the composition of a parliament. We consider two electoral systems, multidistrict majoritarian and single district proportional. Relying on De Sinopoli et al.'s (2013) model of a parliamentary election, we obtain a unique perfect equilibrium outcome under both systems and exploit this uniqueness to gauge, and compare, the predictive value of the equilibrium concept in the two systems. The experimental results are broadly supportive of the theory and reveal that electoral outcomes and individual votes are more often in line with the equilibrium in the proportional than in the majoritarian system.
    Keywords: Voting, Majority election, Proportional election, Experiment
    JEL: C72 D72
    Date: 2016–07
  5. By: Kene Boun My; Camille Cornand; Rodolphe Dos Santos Ferreira
    Abstract: In Keynes’ beauty contest, agents make evaluations reflecting both an expected fundamental value and the conventional value expected to be set by the market. They thus respond to fundamental and coordination motives, respectively, the prevalence of either being set exogenously. Our contribution is twofold. First, we propose a valuation game in which agents strategically choose how to weight each motive. This game emphasises how public information leads agents to favour the coordination motive. Second, we test the game through a laboratory experiment. Subjects tend to conform to theoretical predictions, except when fundamental uncertainty is low relative to strategic uncertainty.
    Keywords: dispersed information, public information, beauty contest, coordination, experiment.
    JEL: D84 C92 E12
    Date: 2017
  6. By: Ismaël Rafaï (Université Côte d'Azur, France; GREDEG CNRS); Mira Toumi (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: We investigate the impact of monetary incentives on individual attention allocation. We propose a new experimental design where the participants invest costly attention to reduce uncertainty in a two alternatives forced choice task. We compare three different incentivized environments where subjects' decisions do not impact the payoff (T0), impact their own payoff (T1) and impact other subjects' payoff (T2). Our results show that both incentives (T1) and (T2) increase the amount of allocated attention (measured by Response Time), besides the efficiency of the allocation process (measured by Error Rate) and regardless of subjects’ intrinsic motivation. Finally, we find that standard measure of social preferences (Social Value Orientation) do not explain attentional contribution in our Public Good like environment (T2). This latter result contradicts standard ones, providing new insight about social preferences.
    Keywords: Allocation of attention, Incentives, Public Good Game, Social Preferences, Intrinsic Motivation
    JEL: A13 C9 H41 D8
    Date: 2017–03
  7. By: Gabriele Chierchia (Center for Mind/Brain Science, University of Trento; and Planck Institute for Human Cognitive and Brain Sciences, Berlin); Fabio Tufano (School of Economics, University of Nottingham); Giorgio Coricelli (Center for Mind/Brain Science, University of Trento; and Department of Economics, University of Southern California)
    Abstract: It is commonly assumed that friendship should decrease strategic uncertainty in games involving tacit coordination. However, this has never been tested on two “opposite poles†of coordination, namely, games of strategic complements and substitutes. We present an experimental study having participants interacting with either a friend or a stranger in two classic games: (i.) the stag hunt game, which exhibits strategic complementarity; (ii.) the entry game, which exhibits strategic substitutability. Both games capture a frequent trade-off between a potentially high paying but uncertain action and a lower paying but safe alternative. We find that, relative to strangers, friends exhibit a propensity towards uncertainty in the stag hunt game, but an aversion to uncertainty in the entry game. Friends also “trembled†less than strangers in the stag hunt game but this advantage was lost in the entry game. We further investigate the role of interpersonal similarities and friendship qualities on friendship’s differential impact on uncertainty across games of strategic complements and substitutes.
    Keywords: coordination; entry game; friendship; strategic complementarity; strategic substitutability; stag hunt game; strategic uncertainty
    Date: 2017–03
  8. By: Sascha Fullbrunn (Radboud University); Wolfgang J. Luhan (Portsmouth Business School); ;
    Abstract: Risky decisions are often taken on behalf of others rather than for oneself. Competing theoretical models predict both; higher as well as lower levels of risk aversion when taking risk for others. The experimental literature on this topic has found mixed results. In our comprehensive within-subject design, subjects in the role of money managers have substantial social responsibility by taking investment decisions for a group of six anonymous clients, with own payments either fixed or perfectly aligned with their clients payments. We find that money managers invest significantly less for others than for themselves, which is mainly driven by a less risk averse sub-sample. Digging deeper, we find money managers to act in line with what they believe their clients would invest for themselves. We derive a responsibility weighting function to show that with a perfectly aligned payment the money managers' actions are determined by a mix of egoistic and social risk preferences.
    Keywords: financial decision making, social responsibility, decision making for others, risk preferences, experiment
    JEL: C91 D03 D81 G11
    Date: 2017–03–31
  9. By: Kudo, Yuya; Shonchoy, Abu S.; Takahashi, Kazushi
    Abstract: We implemented a 16-month randomized field experiment in unelectrified areas of Bangladesh to identify health impacts of solar lanterns among school-aged children. Our analysis of various health-related indicators?self-reporting, spirometers, and professional medical checkups?showed modest improvements in eye redness and irritation but no noticeable improvement in respiratory symptoms among treated students. Varying the number of solar products received within treatment households did not alter these results. This limited health benefit was not caused by nonutilization of the products by treated children, spillover effects from treated to control students, or treatment heterogeneity resulting from unfavorable family cooking environments.
    Keywords: Health and hygiene, Children, Energy, Clean energy, Indoor air pollution, Randomized control trials, Solar light
    JEL: O13 Q42 I15
    Date: 2017–03
  10. By: Müller, Julia; Schwieren, Christiane
    Abstract: Growing interest in using personality variables in economic research has led to the question whether personality as measured by psychology is useful to predict economic behavior. It is undoubted that personality can influence large-scale economic outcomes. Whether personality variables can also be used to understand micro-behavior in economic games is, however, less clear. We discuss the reasons for and against this assumption. In the framework of our own experiment, we test whether and which personality factors are useful in predicting behavior in the Trust Game. We can also use the Trust Game to understand how personality measures fare relatively in predicting behavior when situational constraints are strong or weak. This approach can help economists to better understand what to expect from the inclusion of personality variables in their models and experiments, and where further research might be useful and needed.
    Keywords: Personality, Big Five, Five Factor Model, Incentives, Experiment, Trust Game
    JEL: C72 C91 D03
    Date: 2017–04–05
  11. By: Colasante, Annarita; Alfarano, Simone; Camacho Cuena, Eva; Gallegati, Mauro
    Abstract: In this paper, we elicit both short and long-run expectations about the evolution of the price of a financial asset by conducting a Learning-to-Forecast Experiment (LtFE) in which subjects, in each period, forecast the the asset price for each one of the remaining periods. The aim of this paper is twofold: on the one hand, we try to fill the gap in the experimental literature of LtFEs where great effort has been made in investigating short-run expectations, i.e. one step-ahead predictions, while there are no contributions that elicit long-run expectations. On the other hand, we propose an alternative computational approach with respect to the Heuristic Switching Model (HSM), to replicate the main experimental results. The alternative learning algorithm, called Exploration-Exploitation Algorithm (EEA), is based on the idea that agents anchor their expectations around the past market price, rather than on the fundamental value, with a range proportional to the recent past observed price volatility. Both algorithms perform well in describing the dynamics of short-run expectations and the market price. EEA, additionally, provides a fairly good description of long-run expectations.
    Keywords: Expectations, Experiment, Evolutionary Learning
    JEL: C91 D03 G12
    Date: 2017
  12. By: James Andreoni; Nikos Nikiforakis; Jan Stoop
    Abstract: The growing concentration of resources among the rich has re-ignited a discussion about whether the rich are more selfish than others. While many recent studies show the rich behaving less pro-socially, endogeneity and selection problems prevent safe inferences about differences in social preferences. We present new evidence from a natural field experiment in which we “misdeliver” envelopes to rich and poor households in a Dutch city, varying their contents to identify motives for returning them. Our raw data indicate the rich behave more pro-socially. Controlling for pressures associated with poverty and the marginal utility of money, however, we find no difference in social preferences. The primary distinction between rich and poor is simply that the rich have more money.
    JEL: C93 D63 D64
    Date: 2017–03
  13. By: Claudia Keser (University of Göttingen); Asri Özgümüs (University of Göttingen); Emmanuel Peterle (Université Bourgogne Franche-Comté, CRESE); Martin Schmidt (Karlsruhe Institute of Technology (KIT))
    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. It involves up-front payments of issuer fees and direct publication of requested ratings. Due to pecuniary injuries for untruthful ratings, the credit-rating agency should always report truthfully in the subgame perfect equilibrium. Knowing this, the issuer should never request a rating. Conducting laboratory experiments, we find that behavior significantly deviates from the equilibrium prediction in favor of a cooperative solution: issuers frequently do request ratings, which is often reciprocated with untruthful good ratings.
    Keywords: Game theory, laboratory experiments, rating agencies, regulation
    JEL: C70 C9 G01
    Date: 2017–03
  14. By: Gneezy, Uri; Rau, Holger; Samek, Anya; Zhurakhovska, Lilia
    Abstract: This study investigates how information on solicitors' compensation affects charitable giving in a door-to-door field experiment with more than 2,800 households. We vary whether solicitors are paid or not and the information about this compensation that potential donors receive. Relative to the treatment in which potential donors are not informed about the solicitor's compensation, donations increase by 16% when potential donors are informed that solicitors are paid, but are not effected when donors are informed that solicitors are unpaid. The effect is driven by female donors, who increase their donations by 88%. Our findings suggest that if charities pay their solicitors, it could be beneficial to communicate this information to donors.
    Keywords: charitable giving,field experiment,information
    Date: 2017
  15. By: Christian A. Vossler (Department of Economics, University of Tennessee); Scott M. Gilpatric (Department of Economics, University of Tennessee)
    Abstract: In recent years there has been a sharp rise in the information available to individual income taxpayers, such as through tax preparation software provided by third parties and support available by tax agencies, although the effects of this information on tax reporting is not well understood. Within a setting characterized by an endogenous audit process and taxpayer uncertainty, this study uses theory and laboratory experiments to investigate the effects of taxpayer assistance services that better inform taxpayers about their tax liability and the audit process. The endogenous audit rule we study is simple, yet relative to existing work is more likely to characterize the actual incentives facing taxpayers. Among our findings, and in contrast to the case of purely random audits, in theory the effect of information services on tax underreporting is ambiguous, and we find support empirically for increased tax underreporting even in a setting where theory predicts the opposite. When services provide better information on both liability and the audit process, audit information is more salient to participants, negating the strong effects observed when only liability information is provided.
    Keywords: individual income tax; taxpayer assistance services; endogenous audits; tax reporting and enforcement; experimental methods
    JEL: C91 D8 H24 H26 H83
    Date: 2017–03
  16. By: Grosch, Kerstin; Rau, Holger
    Abstract: This paper experimentally analyzes the determinants of the honesty norm in a lying game. The findings confirm common gender differences, i.e., men cheat significantly more than women. We detect a novel correlation between subjects' magnitude of concern they have for others (social value orientation) and their moral valuation of the norm honesty. The data suggest that individualistic subjects are less honest than prosocial ones. Interestingly, this difference can explain the gender differences we observe. First, we find that the distribution of social value orientation differs between gender, i.e., significantly more male subjects are characterized as individualistic subjects. Second, once we control for social value orientation the gender differential disappears.
    Keywords: experiment,gender differences,honesty,social value orientation
    JEL: C91 H26 J16
    Date: 2017
  17. By: Julie Beugnot (UBFC - Université Bourgogne Franche-Comté, CRESE - Centre de REcherches sur les Stratégies Economiques - UFC - UFC - Université de Franche-Comté); Bernard Fortin (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal); Guy Lacroix (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal); Marie-Claire Villeval (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 - UJM - Université Jean Monnet [Saint-Etienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We investigate whether peer effects at work differ by gender and whether the gender difference in peer effects –if any- depends on work organization, precisely the structure of social networks. We develop a social network model with gender heterogeneity that we test by means of a realeffort laboratory experiment. We compare sequential networks in which information on peers flows exclusively downward (from peers to the worker) and simultaneous networks where it disseminates bi-directionally along an undirected line (from peers to the worker and from the worker to peers). We identify strong gender differences in peer effects, as males’ effort increases with peers’ performance in both types of network, whereas females behave conditionally. While they are influenced by peers in sequential networks, females disregard their peers’ performance when information flows in both directions. We reject that the difference between networks is driven by having one’s performance observed by others or by the presence of peers in the same session in simultaneous networks. We interpret the gender difference in terms of perception of a higher competitiveness of the environment in simultaneous than in sequential networks because of the bi-directional flow of information.
    Keywords: Gender, peer effects, social networks, work effort, experiment
    Date: 2017–03–01
  18. By: Spiller, Jörg; Bolle, Friedel
    Abstract: In Binary Threshold Public Good (BTPG) games n players contribute or not to the production of a public good which is produced if and only if there are at least k contributors. The BTPG games with the highest (k=n) and the lowest (k=1) threshold are the Stag Hunt game and the Volunteer's Dilemma. There is a plethora of equilibria in BTPG games. We experimentally investigate 16 different symmetric and asymmetric BTPG games with n=4 and k=1,2,3,4 and test general theoretical attributes of equilibria and whether equilibrium play can apply at all. As theory predicts, neither magnitude effects nor a negative instead of a positive frame affect behavior which is contrary to the bulk of the experimental literature. In the Stag Hunt game, which is often used to discriminate between payoff dominance and risk dominance, risk dominance as a description of behavior is clearly rejected and payoff dominance is moderately supported. We show that no theory with homogeneous players can describe behavior.
    Keywords: Binary Threshold Public Goods,framing,equilibrium selection,payoff dominance,risk dominance,efficiency,experiment
    JEL: C72 D72 H41
    Date: 2017
  19. By: Michael Chirico; Robert Inman; Charles Loeffler; John MacDonald; Holger Sieg
    Abstract: Municipal governments commonly confront problems with property tax collection. We model tardy taxpayers as procrastinators that have a present bias. Late payments arise due to lack of salience, lack of deterrence or lack of tax morale. To test the importance of the different theoretical explanations, we developed and implemented a randomized controlled experiment conducted with the City of Philadelphia. The structure of the experiment allows us to identify the relative importance of the three key sets of parameters of our model. We find that lack of salience and lack of deterrence are key components of non-compliance behavior.
    JEL: H2 H3 H7
    Date: 2017–03
  20. By: Angelova, Vera (TU Berlin); Regner, Tobias (Friedrich Schiller University Jena)
    Abstract: Interactions between players with private information and opposed interests are often prone to bad advice and inefficient outcomes, e.g. markets for financial or health care services. In a deception game we investigate experimentally which factors could improve advice quality. Besides advisor competition and identifiability we add the possibility for clients to make a voluntary payment, a bonus, after observing advice quality. We observe a positive effect on the rate of truthful advice when the bonus creates multiple opportunities to reciprocate, that is, when the bonus is combined with identifiability (leading to several client-advisor interactions over the course of the game) or competition (allowing one advisor to have several clients who may reciprocate within one period).
    Keywords: Asymmetric information; principal-agent; expert services; deception game; sender-receiver game; reciprocity; reputation; experiments; voluntary payment; competition;
    JEL: C91 D03 D82 G20 I11
    Date: 2017–03–29
  21. By: Estelle Bellity; Fabrice Gilles; Yannick L'Horty
    Date: 2017
  22. By: Amnon Maltz (University of Haifa, Department of Economics); Giorgia Romagnoli (University of Amsterdam)
    Abstract: Individuals' tendency to stick to the current state of a airs, known as the status quo bias, has been widely documented over the past 30 years. Yet, the determinants of this phenomenon remain elusive. Following the intuition suggested by Bewley (1986), we conduct a systematic experiment exploring the role played by di erent types of uncertainty on the emergence of the bias. We nd no bias when the status quo option and the alternative are both risky (gambles with known probabilities) or both ambiguous (gambles with unknown probabilities). The bias emerges under asymmetric presence of ambiguity, i.e., when the status quo option is risky and the alternative ambiguous, or vice versa. These ndings are not predicted by existing models based on loss aversion (Kahneman and Tversky, 1979) or incomplete preferences (Bewley, 1986) and suggest a novel determinant of the status quo bias: the dissimilarity between the status quo option and the alternative
    Keywords: Status Quo Bias, Risk, Ambiguity, Reference E ects, Experiment
    JEL: C91 D11 D81
  23. By: Schneider, Tim; Bizer, Kilian
    Abstract: Markets for credence goods are classified by experts alone being able to identify consumers' problems and determine appropriate services for solution. Examining a market where experts have to invest in costly diagnosis to correctly identify problems and consumers being able to visit multiple experts for diagnosis, we introduce heterogeneously qualified experts. We assume that high skilled experts can identify problems with some probability even with low effort, e.g. due to education or experience. In a laboratory experiment we show that, against our theoretical predictions, this does not lead to a drop in experts' willingness for high diagnostic effort. However, consumers generally distrust experts' diagnosis effort as they buy less often after their first recommendation than it would be optimal and show frequently other non-optimal behavior patterns, e.g. receiving recommendations but do not buy service. Our results indicate that, at some level, introducing higher qualified experts increases the quality of diagnosis, as well as consumers' trust resulting in more and quicker service purchases.
    Keywords: credence goods,expert market,second opinions,diagnostic effort,qualification,laboratory experiment
    JEL: C70 C91 D40
    Date: 2017
  24. By: Bolle, Friedel
    Abstract: Theories about unique equilibrium selection are often rejected in experimental investigations. We drop the idea of selecting a single prominent equilibrium but suggest the coexistence of different beliefs about "appropriate" equilibrium or non-equilibrium play. Our main selection criterion is efficiency applied to all or only to "fair" equilibria. This assumption is applied to 16 Binary Threshold Public Good games where at least k of four homogeneous or heterogeneous players have to incur fixed costs in order to produce a public good. The case k=4 is the Stag Hunt game which is most often used to test equilibrium selection. Our finite mixture model applies with the same parameters (shares of populations, altruism parameters) to the four thresholds k=1,2,3,4. The estimated shares of populations are similar in four treatments with identical or different cost/benefit ratios of the players. Our results for k=4 clearly contradict selection by Risk Dominance and Global Games. In the two (almost) symmetric treatments the Harsanyi/Selten selection explains 40% of the decisions.
    Keywords: equilibrium selection,Binary Threshold Public Goods,payoff dominance,risk dominance,Global Games,efficiency,experiment
    JEL: C51 C57 C72 D72 H41
    Date: 2017
  25. By: Aida, Takeshi; Sawada, Yasuyuki
    Abstract: This study develops a new approach to the classical question of whether private transfers are motivated by altruism or exchange. We combine artefactual field experiments and standard household survey data, to directly measure the degree of altruism and trust (i.e., exchange) and to analyze their impact on the co-movement of consumption between dyadic pairs of respondents. We find that higher altruism toward lower income partners and their income differentials reduces observed differences in consumption, which supports the altruism hypothesis as a motive for private transfers.
    Keywords: Private transfer,altruism, exchange,artefactual field experiment,dyadic data
    Date: 2016–07
  26. By: Stefano Galavotti (University of Padova); Luigi Moretti (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Paola Valbonesi (University of Padova)
    Abstract: We study bidding behavior by firms in beauty-contest auctions, i.e. auctions in which the winning bid is the one which gets closet to some function (average) of all submitted bids. Using a dataset on public procurement beauty-contest auctions, we show that firms' observed bidding behavior departs from equilibrium and can be predicted by a sophistication index, which captures the firms' accumulated capacity of bidding close to optimality in the past. We show that our empirical evidence is consistent with a Cognitive Hierarchy model of bidders' behavior. We also investigate whether and how firms learn to bid strategically through experience.
    Keywords: cognitive hierarchy,auctions,beauty-contest,public procurement
    Date: 2017–01
  27. By: Römer, Ulf; Weber, Ron; Mußhoff, Oliver; Turvey, Calcum G.
    Abstract: The prevention of asymmetric information plays a major role in successful small business lending. The purpose of this research is to determine if small business applicants report their income information correctly when requesting a loan. Therefore, a randomized controlled trial bogus pipeline experiment was set up during a typical cash-flow analysis of a bank for small businesses in the Philippines. Results indicate that loan applicants of the treatment group reported a lower income, an effect which is most pronounced in the lowest income percentile. Moreover, our analyses reveal higher loan delinquencies in the control group.
    Keywords: Small business finance,Income reporting,Asymmetric information,Bogus pipeline,Randomized controlled trial
    Date: 2017
  28. By: Maria J. Ruiz Martos (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: What should you do when confronting a sequence of decisions such that you make some choices and chance makes some others, i.e., a dynamic decision making problem under risk? Standard economic rationality requires you to look at the final choices, determine the preferred options, choose the sequence of decisions that lead to those and follow that sequence through to the end. That behaviour is implied by the conjunction of the principles of separability, dynamic consistency and reduction of compound lotteries. Experimental research on these dynamic choice principles has been developed within the common ratio effect theoretical framework. This paper experimentally investigates what subjects do when confronting such a problem within a new theoretical framework provided by the common consequence effect that manipulates the value of the foregone-consequence in the prior risks.Results suggest that reduction of compound lotteries holds throughout, whilst dynamic consistency and separability do not and theirfailure is related to the foregone-consequence.
    Keywords: reduction of compound lotteries, dynamic consistency, separability, non-expected utility and risk
    JEL: C91 D11 D81
    Date: 2017–03–30
  29. By: Kleijnen, J.P.C. (Tilburg University, Center For Economic Research)
    Abstract: This tutorial reviews the design and analysis of simulation experiments. These experiments may have various goals: validation, prediction, sensitivity analysis, optimization (possibly robust), and risk or uncertainty analysis. These goals may be realized through metamodels. Two types of metamodels are the focus of this tutorial: (i) low-order polynomial regression, and (ii) Kriging or Gaussian processes). The type of metamodel guides the design of the experiment; this design .…xes the input combinations of the simulation model. However, before a regression or Kriging metamodel is applied, the many inputs of the underlying realistic simulation model should be screened; the tutorial focuses on sequential bifurcation. Optimization of the simulated system may use either a sequence of low-order polynomials— known as response surface methodology— or Kriging models .…tted through sequential designs. Finally, "robust" optimization should account for uncertainty in simulation inputs. The tutorial includes references to earlier WSC papers.
    Keywords: regression; Kriging; Gaussian process; factor screening; optimization; risk analysis
    JEL: C0 C1 C9 C15 C44
    Date: 2017
  30. By: Babkina, Tatiana; Myagkov, Mikhail; Lukinova, Evgeniya; Peshkovskaya, Anastasiya; Menshikova, Olga; Berkman, Elliot T.
    Abstract: This research investigates how variation in sociality, or the degree to which one feels belonging to a group, affects the propensity for participation in collective action. By bringing together rich models of social behavior from social psychology with decision modeling techniques from economics, these mechanisms can ultimately foster cooperation in human societies. While variation in the level of sociality surely exists across groups, little is known about whether and how it changes behavior in the context of various economic games. Specifically, we found some socialization task makes minimal group members behavior resemble that of an established group. Consistent with social identity theory, we discovered that inducing this type of minimal sociality among participants who were previously unfamiliar with each other increased social identity, and sustained cooperation rates in the newly formed groups to the point that they were comparable to those in the already established groups. Our results demonstrate that there are relatively simple ways for individuals in a group to agree about appropriate social behavior, delineate new shared norms and identities.
    Keywords: collective action, group formation, cooperation
    JEL: C01 D0 D23 D50
    Date: 2016–07–18
  31. By: Olga Fuentes; Jeanne Lafortune; Julio Riutort; José Tessada; Félix Villatoro
    Abstract: We randomly offer to workers in Chile personalized versus generalized information about their pension savings and forecasted pension income. Personalized information increased the probability and amounts of voluntary contributions after one year without crowding-out other forms of savings. Personalization appears to be very important: individuals who overestimated their pension at the time of the intervention saved more. Thus, a person’s inability to understand how the pension system affects them may partially explain low pension savings. Despite the significant response to the intervention, its temporary nature and size suggest that information should be combined with other elements to increase its efficiency.
    Date: 2017
  32. By: Chen Yuyou
    Abstract: Build some model to describe types of different social preference. Explore all composition of social preference in public game, and find some of them will disobey the dynamics of free riding. Base on the public goods game, we build five types social preference agents, and simulate this agents play public goods game.The dynamics of free riding in public game play key role at the most. And it suggests that selfishness is inevitable. Only in the case that agents in one group are altruism, the contribution will not decline. With the numbers of agents in one group increasing, much more composition can be distinguished as advantageous to improve public welfare. The belief formation mechanism make no sense in repeat game.
    Keywords: China, Agent-based modeling, Agent-based modeling
    Date: 2015–07–01

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