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on Experimental Economics |
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Issue of 2017‒07‒02
seventeen papers chosen by |
| By: | Will Dobbie; Jae Song |
| Abstract: | We study the drivers of financial distress using a large-scale field experiment that offered randomly selected borrowers a combination of (i) immediate payment reductions to target short-run liquidity constraints and (ii) delayed debt write-downs to target long-run debt constraints. We identify the separate effects of the payment reductions and debt write-downs using variation from both the experiment and cross-sectional differences in treatment intensity. We find that the debt write-downs significantly improved both financial and labor market outcomes despite not taking effect for three to five years. In sharp contrast, there were no positive effects of the more immediate payment reductions. These results run counter to the widespread view that financial distress is largely the result of short-run constraints. |
| JEL: | D14 J22 J31 K35 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23545&r=exp |
| By: | Sonja Brangewitz (Paderborn University); Behnud Mir Djawadi (Paderborn University); Angelika Endres (Paderborn University); Britta Hoyer (Paderborn University) |
| Abstract: | We experimentally study the emergence of networks under a known external threat. To be more specific, we deal with the question if subjects in the role of a strategic Designer are able to form safe and efficient networks while facing a strategic Adversary who is going to attack their networks. This investigation relates theoretical predictions by Dziubinski and Goyal (2013) to actual observed behaviour. Varying the costs for protecting nodes, we designed and tested two treatments with different predictions for the equilibrium network. Furthermore, the influence of the subjects' farsightedness on their decision-making process was elicited and analysed. We find that while subjects are able to build safe networks in both treatments, equilibrium networks are only built in one of the two treatments. In the other treatment, predominantly safe networks are built but they are not efficient. Additionally, we find that farsightedness -as measured in our experiment- has no influence on whether subjects are able to build safe or efficient networks. |
| Keywords: | Networks Experiment, Network Design, Network Defence, Network Disruption |
| JEL: | D03 D85 C91 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2017.30&r=exp |
| By: | Yang, Guanzhong |
| Abstract: | Economists believe in (monetary) incentives. However, in the specialized area of prosocial behaviours, (monetary) incentives could backfire because extrinsic motivation might crowd out intrinsic motivation. Moreover, national differences in the perception of incentives should also be considered, taking the cultural background of individuals into account. In this project, we ran a real effort experiment in Germany and in China. In addition to an extrinsic monetary incentive (personal payment) to the subjects, we made a donation to UNICEF, and the amount of the donation depended on the effort of the subjects, which served as an intrinsic motivation. The results indicate that with respect to activities with a prosocial element, Germans tended to exert a high level of effort, regardless of the alternation of the art and the level of their payoff; in contrast, the Chinese did react to extrinsic monetary incentives and exerted more effort with a linear payment or if the level of payment was high. Females exerted significantly more effort than males, and this was true for both the German and Chinese subjects. The last finding is that the Chinese were more motivated by a fixed non-monetary payment than a fixed monetary payment, if the level of payment was relatively low. |
| Keywords: | monetary incentives,prosocial behaviour,intrinsic and extrinsic motivation |
| JEL: | C91 D64 L31 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:udedao:1132017&r=exp |
| By: | David Neumark (University of California-Irvine); Ian Burn (University of California-Irvine); Patrick Button (Tulane University); Nanneh Chehras (University of California-Irvine) |
| Abstract: | We provide evidence from a field experiment — a correspondence study — on age discrimination in hiring for retail sales jobs. We collect experimental data in all 50 states and then relate measured age discrimination — the difference in callback rates between old and young applicants — to variation across states in antidiscrimination laws offering protections to older workers that are stronger than the federal age and disability discrimination laws. We do a similar analysis for nonexperimental data on differences across states in hiring rates of older versus younger workers. The experimental evidence points consistently to evidence of hiring discrimination against older men and, more so, against older women. However, the evidence on the relationship between hiring discrimination against older workers and state variation in age and disability discrimination laws is not so clear; at a minimum, there is not a compelling case that stronger state protections reduce hiring discrimination against older workers. In contrast, the non-experimental evidence suggests that stronger disability discrimination protections increase the relative hiring of older workers. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp360&r=exp |
| By: | Keisaku Higashida (School of Economics, Kwansei Gakuin University); Kenta Tanaka (Faculty of Economics, Musashi University) |
| Abstract: | This study experimentally examines whether capacity coordination in depression, which is sometimes allowed under antitrust laws, influences the firm behavior in periods after demand recovers. Following Hampton and Sherstyuk (2012), we conducted a series of laboratory experiment by adopting the two-stage capacity-price decision-making duopoly setting. We adopted three treatments in terms of capacity coordination: no coordination, weak coordination, and strong coordination. Under the strong coordination treatment, the subjects cannot deviate from the coordinated capacity, which they can do so under the weak coordination treatment. The results of the experiment indicate that the experiences of success and failure of coordination influence subjects’ capacity choices during periods after demand recovers even if capacity coordination is not allowed in those post-depression periods. In particular, capacity may be greater in the post-depression periods than in the pre-depression periods under the weak coordination. |
| Keywords: | Capacity coordination, demand shocks, lingering effect, laboratory experiment |
| JEL: | K21 L41 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:160&r=exp |
| By: | Jeremy Clark (University of Canterbury); David L Dickinson |
| Abstract: | We implement a one-week partial sleep restriction protocol to investigate the effect of sleep deprivation on joint production in a standard voluntary contributions mechanism (VCM) experiment. Additionally, the effect of sleep restriction on an individual’s likelihood of sending costly peer punishment is examined. Actigraphy sleep monitoring watches are used to validate that our random assignment to sleep restricted (SR) and well-rested (WR) conditions generates significant differences in both objective nightly sleep duration and subject sleepiness. Using multiple measures of sleep restriction, and non-parametric as well as regression analysis, we find that when punishment is not available, sleep restriction does not affect the contributions made to joint production. When punishment is available, we find weak evidence that SR subjects contribute more than WR subjects, but there is no evidence that SR and WR subjects differ in the amount they punish others. However, we also find that SR subject contributions are significantly more sensitive to the introduction of peer punishment. SR subject punishment decisions may also be more sensitive to the deviation of their contributions from other group members’ contributions and more sensitive to having received punishment themselves. Our results have implications for understanding how the norm enforcement availability may differentially impact individual depending on their current sleep state. |
| Keywords: | sleep restriction; sleep deprivation; social dilemma; VCM; punishment; experiment |
| JEL: | C92 D03 H40 I12 J24 |
| Date: | 2017–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:17/02&r=exp |
| By: | Takahiro Miura (Graduate School of Economics, Osaka University); Keigo Inukai (Osaka University, ISER); Masaru Sasaki (Graduate School of Economics, Osaka University. IZA.) |
| Abstract: | This paper tests the effect of risk preferences on search activities by using a labo- ratory experiment. We used an infinite-horizon sequential search model with no recall in which an individual gains over search. We elicit the risk preferences from observed search activities of participants and from the multiple price list (MPL) method. We found the statistically significant effect of risk preferences elicited from the MPL method on the duration of search. The search duration is on average shorter for a risk averse individual than for risk loving one, which is consistent with the theoretical prediction. The significant effect of risk preferences on search activities has not been observed in the previous literature that used search model with recall in which an individual pays from the initial endowment over search (Schunk 2009, Schunk and Winter 2009). Therefore, the correlation between risk preferences and search activities depends on the type of search models. |
| Keywords: | Risk preference, Sequential search, MPL |
| JEL: | D81 D83 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1717&r=exp |
| By: | Agnes Szabo-Morvai (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and HETFA Institute); Anna Lovasz (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and ELTE University); Ewa Cukrowska-Torzewska (University of Warsaw, Faculty of Economic Sciences); Mariann Rigo (Institute of Gerontology at TU Dortmund University); Andrea Kiss (Duke University, North Carolina) |
| Abstract: | The effect of objective feedback on performance is often studied, while subjective feedback is largely neglected in the economics literature. We estimate the impact of positive subjective feedback - encouragement and praise - on effort and performance, and compare the effect by gender. We use a computer game, during which players are randomly chosen to be given either no feedback (control) or positive subjective feedback (treatment), and analyze the treatment effect on effort (clicks) and performance (score). Based on previous economic and psychology theories, we test the pathways through which subjective feedback can have an impact: on (1) effort, due to the updating of expected performance or direct (dis)utility from the feedback, or (2) marginal productivity. The results point to significant differences in the mean effects of subjective feedback by gender. For women, encouragement has a significant positive effect while praise has a significant negative effect on performance, while men are less responsive to subjective feedback in general. Gender differences are mostly explained by different confidence distributions, while there are no gender differences in treatment effects if confidence level is held fixed. The effects are mostly realized through changes in effort. These results suggest that better targeted supervisory communication in schools or workplaces can improve the performance of lower-confidence individuals and thereby decrease the gender gap in performance. |
| Keywords: | gender differences, supervisory feedback, experimental economics |
| JEL: | C90 D03 J16 M54 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:has:bworkp:1705&r=exp |
| By: | Di Liddo, Giuseppe; Morone, Andrea |
| Abstract: | Recent theoretical research suggest that yardstick competition may be biased by the presence of fiscal disparities between local governments and that fiscal equalization may help in correcting this bias. This paper provides an empirical test of these theoretical predictions by means of a laboratory experiment. |
| Keywords: | yardstick competition; fiscal equalization; experiment. |
| JEL: | C91 H71 H76 |
| Date: | 2017–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79853&r=exp |
| By: | Luigi Mittone; Matteo Ploner; Eugenio Verrina |
| Abstract: | We provide a test of the effect of aggressive fiscal policies on tax com- pliance in the lab. Our experimental setup allows tax agents to break a deontological rule concerning the implementation of audits on a group of tax payers. In one incentive condition, tax agents have a direct monetary benefit from higher compliance; in another, they have none. Tax payers, on the other hand, go through a phase of stringent controls under their tax agents and one where audit probabilities are fixed and implemented by a random device. We find that tax agents bend the rules to their advantage. Many either perform very frequent audits or place them in a strategic way, thus enforcing a norm of high compliance. Those following the rules have no success. Surprisingly, this is true for both incentive conditions. Tax payers exposed to these audit strategies display nearly full compliance and con- tinue to do so also when tax agents are inactive. We conclude that cunning fiscal policies can effectively be used by tax authorities, if it is transparent that they lead to higher overall compliance. This establishes a virtuous norm that can have positive spillovers even in domains where the state has less coercive power. |
| Keywords: | Tax evasion, die under the cup, taxpaying strategies, audit strategies, endogenous audits; Tax evasion, die under the cup, taxpaying strategies, audit strategies, endogenous audits |
| JEL: | C91 C92 H24 H26 H83 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:1702&r=exp |
| By: | Dai, Shuanping; Yang, Guanzhong |
| Abstract: | Open innovation has attracted an avalanche of interests from many practitioners and scholars, and is gradually becoming an acceptable scientific and managerial paradigm over the past few decades. Traditionally, however, innovative activities ought to be confidential within certain groups or individuals before the marketing process, and will be protected strictly by the intellectual property rights laws, for the sake of innovators' economic benefits and encouraging further innovation attempts. This paper aims at addressing the question of how to stimulate firms and managers to invest more resources to open innovation, and focuses on social inducement's effectiveness, in the art of a pre-recorded video, using an experimental approach. We established two open innovation investment models in which investors decide to allocate resources to open and traditional innovation projects. In the first model, we introduce the spillover effect and assume that traditional innovation projects may profit from open innovation investment. We then consider uncertainty to make the investment more realistic in the second model. The effect of social inducement on open innovation provision has been investigated in all the three settings, i. e. No Video, Full Video and Half Video. The striking result is that social inducement increases open innovation investment, but only if both induced subjects and non-induced subjects exist; meanwhile, economic uncertainty also matters. |
| Keywords: | open innovation,social inducement,conditional cooperation,economic uncertainty |
| JEL: | C92 H41 O31 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:udedao:1122017&r=exp |
| By: | Drago, Francesco; Galbiati, Roberto; Sobbrio, Francesco |
| Abstract: | We provide evidence about voters' response to crime control policies. We exploit a natural experiment arising from the Italian 2006 collective pardon releasing about one third of the prison population. The pardon created idiosyncratic incentives to recidivate across released individuals and municipalities. We show that municipalities where resident pardoned individuals have a higher incentive to recidivate experienced higher recidivism. Moreover, in these municipalities: i) newspapers were more likely to report crime news involving pardoned individuals; ii) voters held worse beliefs on the incumbent governments ability to control crime and iii) with respect to the previous elections, the incumbent national government experienced a worse electoral performance in the April 2008 national elections relative to the opposition coalition. Overall, our findings indicate that voters keep incumbent politicians accountable by conditioning their vote on the observed effects of their policies. |
| Keywords: | accountability; crime; Natural Experiment; Recidivism.; voting |
| JEL: | D72 K42 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12097&r=exp |
| By: | Robin Nicole; Peter Sollich |
| Abstract: | We study the distribution of strategies in a large game that models how agents choose among different double auction markets. We classify the possible mean field Nash equilibria, which include potentially segregated states where an agent population can split into subpopulations adopting different strategies. As the game is aggregative, the actual equilibrium strategy distributions remain undetermined, however. We therefore compare with the results of Experience-Weighted Attraction (EWA) learning, which at long times leads to Nash equilibria in the appropriate limits of large intensity of choice, low noise (long agent memory) and perfect imputation of missing scores (fictitious play). The learning dynamics breaks the indeterminacy of the Nash equilibria. Non-trivially, depending on how the relevant limits are taken, more than one type of equilibrium can be selected. These include the standard homogeneous mixed and heterogeneous pure states, but also \emph{heterogeneous mixed} states where different agents play different strategies that are not all pure. The analysis of the EWA learning involves Fokker-Planck modeling combined with large deviation methods. The theoretical results are confirmed by multi-agent simulations. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1706.09763&r=exp |
| By: | Albrecht, Konstanze; Krämer, Florentin; Szech, Nora |
| Abstract: | We elicit concern for animal welfare in an incentivized, direct and real setup that allows us to separate genuine interest in animal welfare from confounding factors like advertisement, replacement arguments or image concerns. Subjects choose between intensive farming and organic living conditions for a laying hen. Opting for better living conditions is costly, but guarantees better food, daylight, and more space to the hen. Hence subjects have to trade off a selfish benefit (money) against the welfare of a hen. Our data shed light on a long-standing philosophical debate about the relationship between animal welfare and human ethics. We confirm that subjects with higher interests in the hen's well-being exhibit higher moral standards towards humans. Supporters of intensive farming are significantly less prosocial and open-minded, and more Machiavellian than others. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitwps:103&r=exp |
| By: | Sareh Vosooghi (University of Oxford) |
| Abstract: | I examine a setting, where an information sender conducts research into a payoff-relevant state variable, and releases information to agents, who consider joining a coalition. The agents' actions can cause harm by contributing to a public bad. The sender, who has commitment power, by designing an information mechanism (a set of signals and a probability distribution over them), maximises his payoff, which depends on the action taken by the agents, and the state variable. I show that the coalition size, as a function of beliefs of agents, is an endogenous variable, induced by the information sender. The optimal information mechanism from the general set of public information mechanisms, in coalition formation games is derived. I also apply the results to International Environmental Agreements (IEAs), where a central authority, as an information sender, attempts to reduce the global level of greenhouse gases (GHG) by communication of information on social cost of GHG. |
| Keywords: | Coalition Formation, Learning, Information Persuasion, International Environmental Agreements |
| JEL: | D83 D70 C72 Q54 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2017.28&r=exp |
| By: | Hoggatt, Austin C. (Center for Mathematical Economics, Bielefeld University); Selten, Reinhard (Center for Mathematical Economics, Bielefeld University); Crockett, David (Center for Mathematical Economics, Bielefeld University); Gill, Shlomo (Center for Mathematical Economics, Bielefeld University); Moore, Jeff (Center for Mathematical Economics, Bielefeld University) |
| Keywords: | Verhandlungstheorie, Unvollkommene Information |
| Date: | 2017–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:39&r=exp |
| By: | Selten, Reinhard (Center for Mathematical Economics, Bielefeld University) |
| Date: | 2017–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:119&r=exp |