nep-exp New Economics Papers
on Experimental Economics
Issue of 2017‒04‒23
twenty-one papers chosen by
Daniel Houser
George Mason University

  1. The Impact of Cash Mobs in the Vote with the Wallet Game: Experimental Results. By Leonardo Becchetti; Maurizio Fiaschetti; Francesco Salustri
  2. Business is Tough, but Family is Worse: Household Bargaining and Investment in Microenterprises in Uganda By Nathan Fiala
  3. Cooperation in a risky world By Vincent Théroude; Adam Zylbersztejn
  4. Speculation rather than enterprise? Keynes' beauty contest revisited in theory and experiment By Kene Boun My; Camille Cornand; Rodolphe Dos Santos Ferreira
  5. Risk Aversion and Son Preference: Experimental Evidence from Chinese Twin Parents By Soo Hong Chew; Junjian Yi; Junsen Zhang; Songfa Zhong
  6. Gender Differences in Competitive Positions: Experimental Evidence on Job Promotion By Emmanuel Peterle; Holger Rau
  7. Facing Yourself: A Note on Self-Image By Falk, Armin
  8. Honesty toward the Holy Day By Bar-El, Ronen; Tobol, Yossi
  9. Driving a Hard Bargain is a Balancing Act: How social preferences constrain the negotiation process By Yola Engler; Lionel Page
  10. Risk Aversion as a Perceptual Bias By Mel Win Khaw; Ziang Li; Michael Woodford
  11. Gender Differences in Interpersonal and Intrapersonal Competitive Behavior By Carpenter, Jeffrey P.; Frank, Rachel; Huet-Vaughn, Emiliano
  12. Condorcet Jury Theorem and Cognitive Hierarchies: Theory and Experiments By Yukio Koriyama; Ali Ihsan Ozkes
  13. Measuring Trust: A Reinvestigation By Billur Aksoy; Haley Harwell; Ada Kovaliukaite; Catherine Eckel
  14. One-off subsidies and long-run adoption: Experimental evidence on improved cooking stoves in Senegal By Bensch, Gunther; Peters, Jörg
  15. Information Aversion By Andries, Marianne; Haddad, Valentin
  16. The Digital Privacy Paradox: Small Money, Small Costs, Small Talk By Athey, Susan; Catalini, Christian; Tucker, Catherin E.
  17. Impacts of Low-Cost-Connection Offers in Tanzania: Evidence from a Randomized Controlled Trial (In Focus Brief) By Duncan Chaplin; Arif Mamun; Ali Protik; John Schurrer; Divya Vohra; Kristine Bos
  18. An empirical behavioural order-driven model with price limit rules By Gao-Feng Gu; Xiong Xiong; Hai-Chuan Xu; Wei Zhang; Yong-Jie Zhang; Wei Chen; Wei-Xing Zhou
  19. How Is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing? : Theory and Experiment By Bardey, David; De Donder, Philippe; Mantilla, Cesar
  20. Scaling Up Sanitation: Evidence from an RCT in Indonesia By Cameron, Lisa A.; Shah, Manisha
  21. More Money vs More Certainty? Behaviour in Stochastic Alternating-Offer Experiments By Anna Conte; Werner Güth; Paul Pezanis-Christou

  1. By: Leonardo Becchetti (DEF & CEIS University of Rome Tor Vergata); Maurizio Fiaschetti (SOAS University of London); Francesco Salustri (DEF University of Rome Tor Vergata)
    Abstract: We simulate in a randomised lab experiment the effect of Cash Mobs on consumers’ behaviour in an original variant of the multiplayer Prisoner’s dilemma called Vote-with-the-Wallet Game (VWG). The effect is modelled in a sequential game with/without an environmental frame in which a subset of players (cash-mobbers) is given the opportunity to reveal publicly (in aggregate without disclosing individual identities) their cooperation decision. We find that the treatment has a positive gross effect, that is, the share of cooperators is significantly higher in treated sessions and this is mainly due to the higher share of cooperators among cash-mobbers. Our results suggest that cash mobs-like mechanisms can help to solve social dilemmas with entirely private solutions (not based on punishment but on positive action) without costs for government budgets.
    Keywords: vote with the wallet, prisoner’s dilemma, randomised experiment
    JEL: C72 C73 C91 M14
    Date: 2017–04–18
  2. By: Nathan Fiala (University of Connecticut)
    Abstract: I present evidence that intra-household decision making affects business investment decisions and household welfare. I interact the results from a behavioral experiment that allows spouses to hide money from each other with an experiment that delivered capital to business owners in Uganda. Businesses were randomly selected to receive capital through a loan or grant, or capital paired with training. I find evidence that the grant with training treatment had medium-term economic impacts when given to men, but there are no effects from the other treatments for men or women. I also find that the loan with training treatment had impacts on the income of spouses of women, though women do not know about these effects. The results from the incentivized behavioral game correlate significantly with household economic outcomes: men who do not hide money from their wives show higher economic outcomes from the treatments, while those who hide money show a negative change relative to a control group. The opposite is the case for women: women who hide money from their husbands show increased economic outcomes, while those who do not hide money see a decrease in outcomes. The results are consistent with strong female household constraints where women have little control over resources in the family and so hiding money is the only way to keep control of it. Men have less fear of losing control of money in the household, and so those that hide money likely have serious household issues that lead to significant negative investment behavior. The results help to explain why women with existing enterprises have performed so poorly in previous capital experiments and why researchers have failed to find impacts from microfinance.
    Keywords: Economic development; microenterprises; microfinance; cash grants; entrepreneurship training; credit constraints
    JEL: O12 O16 C93 J16 L26 M53
    Date: 2017–04
  3. By: Vincent Théroude (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); Adam Zylbersztejn (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 study the effect of environmental risk on cooperation in the Voluntary Contribution Mechanism. Our baseline is the standard setting in which the personal return from the public good is deterministic, homogeneous, and publicly known. Our experimental treatments alter this classic design by making the marginal per capita return from the public good probabilistic. In the homogeneous risk treatment, the random draw is made for the whole group, while in the heterogeneous risk treatment this happens independently for each group member. Our main result is that risk does not harm cooperation either in the one-shot or in the finitely repeated version of the game. This suggests that the standard experimental methodology provides a robust and conservative measure of human cooperation.
    Keywords: Cooperation, Voluntary Contribution Mechanism, Environmental Risk
    Date: 2017
  4. By: Kene Boun My (BETA - Bureau d'Economie Théorique et Appliquée - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique); Camille Cornand (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Etienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Rodolphe Dos Santos Ferreira (BETA - Bureau d'Economie Théorique et Appliquée - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)
    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 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. Abstract In Keynes' beauty contest, agents make evaluations reflecting both an expected fun
    Keywords: dispersed information,public information,beauty contest,coordination,experiment
    Date: 2017
  5. By: Soo Hong Chew (National University of Singapore); Junjian Yi (The University of Chicago); Junsen Zhang (Chinese University of Hong Kong); Songfa Zhong (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 higher risk aversion before the birth of their children are more likely to have sons through sex selection than parents with lower 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 D10 D80 J13
    Date: 2017–04
  6. By: Emmanuel Peterle (CRESE - Centre de REcherches sur les Stratégies Economiques - UFC - UFC - Université de Franche-Comté, UBFC - Université Bourgogne Franche-Comté); Holger Rau (Universität Göttingen)
    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: Real Effort, Discrimination, Gender Differences,Experiment
    Date: 2017–01–01
  7. By: Falk, Armin (briq, University of Bonn)
    Abstract: Numerous signaling models in economics assume image concerns. These take two forms, as relating either to social image or self-image. While empirical work has identified the behavioral importance of the former, little is known about the role of self-image concerns. We exogenously vary self-image concerns in manipulating self-directed attention and study the impact on moral behavior. The choice context in the experiment is whether subjects inflict a painful electric shock on another subject to receive a monetary payment. Three between-subjects conditions are studied. In the main treatment, subjects see their own face on the decision screen in a real-time video feed. In the two control conditions, subjects see either no video at all or a neutral video. We find that the exogenous increase in self-image concerns significantly reduces the fraction of subjects inflicting pain.
    Keywords: self-image, moral behavior
    JEL: D64 C91
    Date: 2017–03
  8. By: Bar-El, Ronen (Open University of Israel); Tobol, Yossi (Jerusalem College of Technology (JTC))
    Abstract: We study the effect of religiosity, gender, and "day of the week", on the level of honesty by conducting under-the-cup experiment among religious and secular, female and male Jewish students. We show that the level of honesty among religious subject, males and females, increases as the day of the experiment is closer to the upcoming Saturday, the Jewish holy day. We also found that the "Saturday effect" does not exist among secular subjects. In addition, we found that the religious females show the highest level of honesty, especially on Thursday. Finally, we derive practical implication from our study.
    Keywords: gender effect, holy day effect, honesty, religiosity
    JEL: C91 D63 Z12
    Date: 2017–03
  9. By: Yola Engler; Lionel Page
    Abstract: We investigate the haggling process in bargaining. Using an experimental bargaining game, we find that a first offer has a significant impact on the bargaining outcome even if it is costless to reject. First offers convey information on the player's reservation value induced by his social preferences and they are most often accepted when they are not above the equal split. However, offers which request much more than the equal split induce punishing counter-offers triggered by the responder's social preferences. The bargaining outcome is therefore critically influenced by the balance of toughness and kindness signalled through the offers made in the haggling phase.
    JEL: C70 C91 D63 D64
    Date: 2017–04–18
  10. By: Mel Win Khaw; Ziang Li; Michael Woodford
    Abstract: The theory of expected utility maximization (EUM) explains risk aversion as due to diminishing marginal utility of wealth. However, observed choices between risky lotteries are difficult to reconcile with EUM: for example, in the laboratory, subjects' responses on individual trials involve a random element, and cannot be predicted purely from the terms offered; and subjects often appear to be too risk averse with regard to small gambles (while still accepting sufficiently favorable large gambles) to be consistent with any utility-of-wealth function. We propose a unified explanation for both anomalies, similar to the explanation given for related phenomena in the case of perceptual judgments: they result from judgments based on imprecise (and noisy) mental representation of the decision situation. In this model, risk aversion is predicted without any need for a nonlinear utility-of-wealth function, and instead results from a sort of perceptual bias — but one that represents an optimal Bayesian decision, given the limitations of the mental representation of the situation. We propose a specific quantitative model of the mental representation of a simple lottery choice problem, based on other evidence regarding numerical cognition, and test its ability to explain the choice frequencies that we observe in a laboratory experiment.
    JEL: C91 D3 D81 D87
    Date: 2017–03
  11. By: Carpenter, Jeffrey P. (Middlebury College); Frank, Rachel (Yale Law School); Huet-Vaughn, Emiliano (Middlebury College)
    Abstract: Gender differences in competitive behavior have been well documented by economists and other social scientists; however, the bulk of the research addresses competition with others and excludes other economically relevant competition that may contribute to the gender pay gap. In this paper, we ask: How does gender affect how individuals react to competition against themselves? In a laboratory experiment in which some subjects compete against others and some compete against themselves, we find women select into intrapersonal competition at significantly higher rates than interpersonal competition, the first such findings. We find perseverance or "grit" to be a poor predictor of interpersonal competition selection, but find familial effects such as parent's education and number of brothers to be correlated with competition selection.
    Keywords: gender, competition, tournament, real effort, labor
    JEL: C92 J16 M52
    Date: 2017–03
  12. By: Yukio Koriyama (CREST, Ecole polytechnique, Université Paris-Saclay); Ali Ihsan Ozkes (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille)
    Abstract: An information aggregation problem of the Condorcet Jury Theorem is considered with cognitive hierarchy models in which players would best respond holding heterogeneous beliefs on cognitive level of the other players. Whether the players are aware of the presence of opponents at their own cognitive level turns out to be a key factor for asymptotic properties of the deviation from the Nash behavior, and thence for asymptotic efficiency of the group decision. Our laboratory experiments provide evidence for the self-awareness condition. We obtain an analytical result showing that the difference from the standard cognitive hierarchy models arises when the best-reply functions are asymptotically expanding.
    Keywords: collective decision-making, bounded rationality, cognitive hierarchy, Condorcet Jury Theorem
    JEL: C9 D72 D82
    Date: 2017–02
  13. By: Billur Aksoy (Texas A&M University, Department of Economics); Haley Harwell (University of Richmond, Jepson School of Leadership Studies); Ada Kovaliukaite (Texas A&M University, Department of Economics); Catherine Eckel (Texas A&M University, Department of Economics)
    Abstract: We reinvestigate the question first posed by Glaeser, Laibson, Scheinkman and Soutter (2000, GLSS hereafter): What is the best measure of trust for predicting trusting behavior? This important study, cited over 2,100 times, established that the behavior in the investment game, an incentivized measure of trust, is not correlated with the responses to the most widely used survey questions about trust, employed in the General Social Survey (GSS) and the World Values Survey (WVS). We use the GLSS protocol with one major change: we employ the original Berg et al. (1995) investment game instead of the modified version used in GLSS. The standard game endows both players, while the latter endows only the first mover, potentially changing the incentives that influence subjects’ behavior. In particular, the utility from trusting behavior for inequality averse individuals may be higher, if the second movers are not endowed. Thus, such players may appear to be more trusting even though they are simply inequality averse. This causes a distortion in the laboratory measure of trust and reduces its correlation with the survey measure of trust. In support of this concern, GLSS demonstrates that the survey measure of trust is not correlated with trusting behavior in their investment game, where the second mover is not endowed. After endowing the second mover, we find the opposite. Our finding suggests that trust is a single construct, whether measured by the survey questions or by an incentivized game. This can be masked if the incentivized measure of trust is confounded with other motives.
    Keywords: Investment game, replication, lab experiment, trust, trustworthiness, inequality aversion
    JEL: C91 D64
    Date: 2017–01–19
  14. By: Bensch, Gunther; Peters, Jörg
    Abstract: Free distribution of a technology can be an effective development policy instrument if its adoption is socially inefficient and hampered by affordability constraints. Improved cookstoves may be such a case: they generate high environmental and public health returns, but adoption is generally low. Based on a randomized controlled trial in rural Senegal, this paper studies whether one-time free cookstove distribution affects households' willingness to pay (WTP) in the long run. Effects might be negative because people anchor their WTP on the earlier zero price (reference dependence) or positive because information deficits about potential benefits are overcome. We find that households who received a free stove six years back exhibit a higher WTP today compared to control households. Potential reference dependence effects are thus at least compensated by learning effects. Our findings suggest that one-time free distribution does not spoil future prices and might even be a stepping stone for future market establishment.
    Keywords: Technology adoption,cookstoves,willingness to pay,real-purchase offer,energy access
    JEL: D03 D12 O12 O13 Q41
    Date: 2017
  15. By: Andries, Marianne; Haddad, Valentin
    Abstract: We propose a theory of inattention solely based on preferences, absent cognitive limitations or external costs of information. Under disappointment aversion, agents are intrinsically information averse. In a consumption-savings problem, we study how information averse agents cope with their fear of information, to make better decisions: they acquire information at infrequent intervals only, and inattention increases when volatility is high, consistent with the empirical evidence. Adding state-dependent alerts following sharp downturns improves welfare, despite the additional endogenous information costs. Our framework accommodates a broad range of applications, suggesting our approach can explain many observed features of decision under uncertainty.
    Date: 2017–03
  16. By: Athey, Susan (Stanford University); Catalini, Christian (MIT); Tucker, Catherin E. (MIT)
    Abstract: This paper uses data from the MIT digital currency experiment to shed light on consumer behavior regarding commercial, public and government surveillance. The setting allows us to explore the apparent contradiction that many cryptocurrencies offer people the chance to escape government surveillance, but do so by making transactions themselves public on a distributed ledger (a 'blockchain'). We find three main things. First, the effect of small incentives may explain the privacy paradox, where people say they care about privacy but are willing to relinquish private data quite easily. Second, small costs introduced during the selection of digital wallets by the random ordering of featured options, have a tangible effect on the technology ultimately adopted, often in sharp contrast with individual stated preferences about privacy. Third, the introduction of irrelevant, but reassuring information about privacy protection makes consumers less likely to avoid surveillance at large.
    Date: 2017–02
  17. By: Duncan Chaplin; Arif Mamun; Ali Protik; John Schurrer; Divya Vohra; Kristine Bos
    Abstract: This brief summarizes the impacts of low-cost-connection offers in Tanzania.
    Keywords: Tanzania, Africa, electricity, energy, rigorous evaluation, Millennium Challenge Corporation, MCC
    JEL: F Z
  18. By: Gao-Feng Gu; Xiong Xiong; Hai-Chuan Xu; Wei Zhang; Yong-Jie Zhang; Wei Chen; Wei-Xing Zhou
    Abstract: We develop an empirical behavioural order-driven (EBOD) model, which consists of an order placement process and an order cancellation process. Price limit rules are introduced in the definition of relative price. The order placement process is determined by several empirical regularities: the long memory in order directions, the long memory in relative prices, the asymmetric distribution of relative prices, and the nonlinear dependence of the average order size and its standard deviation on the relative price. Order cancellation follows a Poisson process with the arrival rate determined from real data and the cancelled order is determined according to the empirical distributions of relative price level and relative position at the same price level. All these ingredients of the model are derived based on the empirical microscopic regularities in the order flows of stocks on the Shenzhen Stock Exchange. The model is able to produce the main stylized facts in real markets. Computational experiments uncover that asymmetric setting of price limits will cause the stock price diverging exponentially when the up price limit is higher than the down price limit and vanishing vice versus. We also find that asymmetric price limits have influences on stylized facts. Our EBOD model provides a suitable computational experiment platform for academics, market participants and policy makers.
    Date: 2017–04
  19. By: Bardey, David; De Donder, Philippe; Mantilla, Cesar
    Abstract: We compare two genetic testing regulations, Disclosure Duty (DD) and Consent Law (CL), in an environment where individuals choose to take a genetic test or not. DD forces agents to reveal the test results to their insurers, resulting in a discrimination risk. CL allows agents to withhold that information, generating adverse selection. We complement our model with an experiment. We obtain that a larger fraction of agents test under CL than under DD, and that the proportion of individuals preferring CL to DD is non-monotone in the test cost when adverse selection is set endogenously at its steady state level.
    Keywords: Consent Law, Disclosure Duty, Personalised Medicine, Test take up rate, pooling health insurance contracts
    JEL: C91 D82 I18
    Date: 2017–03
  20. By: Cameron, Lisa A. (Monash University); Shah, Manisha (University of California, Los Angeles)
    Abstract: This paper evaluates the effectiveness of a widely used sanitation intervention, Community-Led Total Sanitation (CLTS), using a randomized controlled trial. The intervention was implemented at scale across rural East Java in Indonesia. CLTS increases toilet construction, reduces roundworm infestations, and decreases community tolerance of open defecation. Financial constraints faced by poorer households limit their ability to improve sanitation. We also examine the program's scale up process which included local governments taking over implementation of CLTS from professional resource agencies. The results suggest that all of the sanitation and health benefits accrue from villages where resource agencies implemented the program, while local government implementation produced no discernible benefits.
    Keywords: impact evaluation, sanitation, scale up, development, health
    JEL: O12 I15
    Date: 2017–03
  21. By: Anna Conte (Department of Statistical Sciences, Sapienza, University of Rome); Werner Güth (Max Planck Institute for Collective Goods (Bonn) and LUISS (Rome)); Paul Pezanis-Christou (School of Economics, University of Adelaide)
    Abstract: We experimentally study behaviour in a class of stochastic alternating-offer bargaining games in which the final stage of interaction follows the rules of a (private) impunity game. We assess the symmetric dependence of proposers' and responders' behaviour to the stakes at play and to the likelihood of future play, and other behavioural conjectures related to bounded-rationality, conflict rates, probability misperception and emotional commitment. Besides a non-symmetric behaviour, our structural econometric analysis reveals a remarkable similarity of proposers' and responders' behaviour which is predominantly driven by probability misperceptions and emotional commitments.
    Keywords: game theory, alternating-offer (ultimatum) bargaining, impunity, probability distortion, behavioural economics, simultaneous equation model.
    Date: 2017–04

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