nep-exp New Economics Papers
on Experimental Economics
Issue of 2017‒07‒09
twelve papers chosen by

  1. Monitoring institutions in indefinitely repeated games By Gabriele Camera; Marco Casari
  2. The trust broker game: A three-player trust game with probabilistic returns and information asymmetry By Tagat, Anirudh; Kapoor, Hansika
  3. Gender, Punishment, and Cooperation: Men hurt others to advance their interests By Terence C. Burnham
  4. Default Effects and Follow-On Behavior: Evidence from an Electricity Pricing Program By Meredith Fowlie; Catherine Wolfram; C. Anna Spurlock; Annika Todd; Patrick Baylis; Peter Cappers
  5. Discoordination and miscoordination caused by sunspots in the laboratory By Siebert, Jan; Yang, Guanzhong
  6. Replication in Experimental Economics: A Historical and Quantitative Approach Focused on Public Good Game Experiments By Nicolas Vallois; Dorian Jullien
  7. Hunting Unicorns? Experimental Evidence on Predatory Pricing Policies By Edlin, Aaron; Roux, Catherine; Schmutzler, Armin; Thoeni, Christian
  8. Do discriminatory pay regimes unleash antisocial behavior? By Grosch, Kerstin; Rau, Holger A.
  9. The Use of Identity Primes to Explain Behavioral Differences Between Groups: A Methodological Note By van Hoorn, Andre
  10. How status inequality between ethnic groups affects public goods provision: Experimental evidence on caste and tolerance for teacher absenteeism in India By Prerna Singh; Dean Spears
  11. Split-Sample Strategies for Avoiding False Discoveries By Michael L. Anderson; Jeremy Magruder
  12. The strength of the anchoring effect on Pay What You Want payments: Evidence from a vignette experiment By Anna Kukla-Gryz; Katarzyna Zagórska

  1. By: Gabriele Camera (Chapman University and University of Basel); Marco Casari (University of Bologna)
    Abstract: Does monitoring past conduct facilitate intertemporal cooperation? We designed an experiment characterized by strategic uncertainty and multiple equilibria where coordinating on the efficient outcome is a challenge. Participants, interacting anonymously in a group, could pay a cost either to obtain information about their counterparts, or to create a freely available public record of individual conduct. Both monitoring institutions were actively employed. However, groups were unable to attain higher levels of cooperation compared to a treatment without monitoring. Information about past conduct alone thus appears to be ineffective in overcoming coordination challenges.
    Keywords: coordination, information, equilibrium selection, conventions, social dilemmas
    JEL: C70 C90 D80
    Date: 2017
  2. By: Tagat, Anirudh; Kapoor, Hansika
    Abstract: This paper experimentally investigates trust and trustworthiness in a repeated and sequential three-player trust game with probabilistic returns and information asymmetry. It adds to the existing literature by combining experimental features from recent work in the trust game. The authors use random variations in the multiplier value, a third player without an initial endowment, undisclosed termination rules, and variations in information availability related to transactions. The framework is novel in that the game continues even if the first player transfers no amount to the second player. Using participants from India, the results are broadly consistent with past evidence on the trust game. All players are more trusting when information of their transfers and earnings are made available to other players. The third player (termed the "trust broker") transfers a larger amount when information on transfers is disclosed to other players. The authors find that information availability leads to a significant increase in the trust broker's reciprocity, as defined by the amount that is returned to Player 2. Social desirability, cultural contexts, and learning effects are discussed in terms of scope for future research.
    Keywords: trust game,multi-level games,uncertainty,trustworthiness,selfishness,reciprocity
    JEL: C91 C92 D64 D70
    Date: 2017
  3. By: Terence C. Burnham (Chapman University Argyros School of Business and Economics)
    Abstract: A laboratory experiment that reports on gender, cooperation, and punishment in two repeated public goods game using high-powered punishment. In a repeated public goods game with punishment, no statistically significant differences between men and women are reported. In a modified game that adds an explicit payoff for relative performance, men punish more than women, men obtain higher rank, and punishment by males decreases payoffs for both men and for women. These results contribute to the debate about the origins and maintenance of cooperation.
    Keywords: Cooperation, Reciprocity, Punishment, Public-Goods, Altruism, Gender
    JEL: A13 C72 C91
    Date: 2017
  4. By: Meredith Fowlie; Catherine Wolfram; C. Anna Spurlock; Annika Todd; Patrick Baylis; Peter Cappers
    Abstract: We study default effects in the context of a residential electricity pricing program. We implement a large-scale randomized controlled trial in which one treatment group is given the option to opt-in to time-based pricing while another is defaulted into the program but allowed to opt-out. We provide dramatic evidence of a default effect – a significantly higher fraction of households defaulted onto the time-based pricing plan enroll in the program, even though opting out simply involved making a phone call or clicking through to a website. A distinguishing feature of our empirical setting is that we observe follow-on behavior subsequent to the default manipulation. Specifically, we observe customers’ electricity consumption in light of the pricing plan they face. This, in conjunction with randomization of the default provision, allows us to separately identify the electricity consumption response of “complacent” households (i.e., those who only enroll in time-based pricing if assigned to the opt-out treatment). We find that the complacent households do reduce electricity use during higher priced peak periods, though significantly less on average compared to customers who actively opt in. However, with complacents comprising approximately 75 percent of the population, we observe significantly larger average demand reductions among consumers assigned to the opt-out group. We examine the extent to which the behavioral responses we observe are consistent with a standard model of switching costs, or with alternative mechanisms including inattention, and preferences constructed based on contextual features of the choice setting.
    JEL: D03 L51 L94 Q41
    Date: 2017–06
  5. By: Siebert, Jan; Yang, Guanzhong
    Abstract: This paper combines two strands of the experimental sunspot literature. It extends the rare literature that focuses experimentally on the coordination problems caused by sunspot variables. It also extends the literature that focuses on coordination games that have a payoff-dominant and a divergent risk-dominant equilibrium. To achieve this, we use a repeated three-player stag hunt game with fixed groups. In our experiment, a sunspot variable points randomly at the risk-dominant or the payoff-dominant choice. We find out-of-equilibrium behavior (discoordination) caused by the sunspot variable in the short run. In the long run, the sunspot variable can lead to coordination of the payoff-dominated equilibrium (miscoordination). If the sunspot-generating process points more frequently to the risk-dominant choice, some groups converge to the sunspot equilibrium.
    Keywords: sunspot,coordination
    JEL: C92 C72 D81 E40 J52
    Date: 2017
  6. By: Nicolas Vallois (Université Picardie Jules Verne; CRIISEA); Dorian Jullien (Université Côte d'Azur; GREDEG CNRS)
    Abstract: We propose a historical perspective on replication in experimental economics focused on public good games. Our intended contribution is twofold: in terms of method and in terms of object. Methodologically, we blend traditional qualitative history of economics with a less traditional quantitative approach using basic econometric tools to detect unnoticed historical patterns of replication. In terms of our object, we highlight a type of replication that we call "baseline replication", which is not present in explicit methodological discussions, yet central in the specificity of experimental economics regarding replication in economics.
    Keywords: Experimental Economics, Replication, History of Economic Thought, Methodology, Public Good Experiments
    JEL: B20 C83 A14 C90
    Date: 2017–06
  7. By: Edlin, Aaron; Roux, Catherine; Schmutzler, Armin; Thoeni, Christian
    Abstract: We study the anti-competitive effects of predatory pricing and the efficacy of three policy responses. In a series of experiments where an incumbent and a potential entrant interact, we compare prices, market structures and welfare. Under a laissez-faire regime, the threat of post-entry price cuts discourages entry, and allows incumbents to charge monopoly prices. Current U.S. policy (Brooke Group) does not help. A policy suggested by Baumol (1979) lowers post-exit prices, while Edlin’s (2002) proposal reduces pre-entry prices and encourages entry. While both policies show outcomes after entry that are less competitive than under Laissez-Faire, they nevertheless increase consumer welfare.
    Keywords: Antitrust Law; entry deterrence; Experiment ent; Firm Strategy; Predatory Pricing
    JEL: C91 D21 K21 L12 L13
    Date: 2017–07
  8. By: Grosch, Kerstin; Rau, Holger A.
    Abstract: In this paper, we analyze how pay-regime procedures affect antisocial behavior at the workplace. In a real-effort experiment we vary two determinants of pay regimes: discrimination and justification of payments by performance. In our Discrimination treatment half of the workforce is randomly selected and promoted and participate in a tournament (high-income workers) whereas the other half receives no payment (lowincome workers). Afterwards, antisocial behavior is measured by a Joy-of-Destruction game where participants can destroy canteen vouchers. The data show that low-income workers destroy significantly more vouchers than high-income workers. Destruction behavior is driven by workers who receive payments that are not justified by performance. When all payments are justified, that is in our Competition treatment where all workers participate in a tournament, the difference vanishes. By using a treatment with random payments, we show that unjustifiably-paid workers destroy less when they had equal opportunities to receive a high payment, i.e., when they were not discriminated by the pay regime.
    Keywords: antisocial behavior,discrimination,experiment,joy of destruction
    JEL: C91 D03 J33 J70 M52
    Date: 2017
  9. By: van Hoorn, Andre
    Abstract: Economists are increasingly using primes that make group identity salient to overcome the inferential limitations of behavioral quasi-experiments involving pre-existing groups (e.g., males vs. females). However, while priming group identity provides powerful means for identifying a causal effect of group membership on individuals’ preferences, so far, there has been little methodological reflection on the use of identity primes to identify the causes of group differences in preferences. This note’s main contribution is to offer a framework for thinking systematically about the treatment effects of priming individuals’ group identity and the identification of specific group traits explaining differences in preferences or behavior between pre-existing groups. The framework sets a high bar for studying the causes of group differences in preferences using identity primes but we clarify its usefulness using concrete examples.
    Keywords: Experimentation; random assignment; salience; quasi-experiment; group membership; culture
    JEL: C36 C90 Z10
    Date: 2017–05
  10. By: Prerna Singh; Dean Spears
    Abstract: This article contributes to the growing scholarship on how ethnic inequality can dampen the provision of public goods and services. On the one hand, it pushes beyond purely economic inequality to include status inequality between population groups. On other hand, it moves away from the provision of social services, conceptualized through budgetary allocations, to their effective functioning. We study one of the most serious challenges to the effective functioning of social services: the absenteeism of service providers. We provide experimental evidence that in a situation of status inequality between groups, people are more likely to be tolerant of absenteeism among service providers when the intended beneficiaries are perceived to belong to low-status ethnic groups. In particular, we present results from two complementary randomized survey experiments in India. Both show that respondents are more tolerant of teacher absenteeism when schools serve low- rather than high-caste children.
    Date: 2017
  11. By: Michael L. Anderson; Jeremy Magruder
    Abstract: Preanalysis plans (PAPs) have become an important tool for limiting false discoveries in field experiments. We evaluate the properties of an alternate approach which splits the data into two samples: An exploratory sample and a confirmation sample. When hypotheses are homogeneous, we describe an improved split-sample approach that achieves 90% of the rejections of the optimal PAP without requiring preregistration or constraints on specification search in the exploratory sample. When hypotheses are heterogeneous in priors or intrinsic interest, we find that a hybrid approach which prespecifies hypotheses with high weights and priors and uses a split-sample approach to test additional hypotheses can have power gains over any pure PAP. We assess this approach using the community-driven development (CDD) application from Casey et al. (2012) and find that the use of a hybrid split-sample approach would have generated qualitatively different conclusions.
    JEL: C12 C81 C9 C93 O1
    Date: 2017–06
  12. By: Anna Kukla-Gryz (Faculty of Economic Sciences, University of Warsaw); Katarzyna Zagórska (Faculty of Economic Sciences, University of Warsaw)
    Abstract: The goal of this paper is to empirically investigate, on the example of eBooks, the effects of the expected quality, external and internal reference prices, risk-taking propensity and perceived costs of production on the size of the voluntary payments in pay-what-you-want (PWYW) scheme. Using the results of a vignette experiment, we show that independently from the expected quality of the eBook, when individual internal reference price is higher than external reference price, voluntary payments are significantly higher if external reference price is not provided. When the external reference price is not provided then PWYW payments depend positively on consumers’ individual internal reference price, and the perceived percentage of the price believed to cover the author’s compensation and the publication costs. The originality of the research comes from separating the anchoring effect of external reference prices from the quality signal effect.
    Keywords: Laffer curve, tax evasion, labor market duality
    JEL: D01 D12 Z19 M31
    Date: 2017

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