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on Experimental Economics |
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Issue of 2017‒07‒23
eighteen papers chosen by |
| By: | Dey, Oindrila; Das, Abhishek; Gupta, Gautam; Banerjee, Swapnendu |
| Abstract: | This paper provides laboratory experimental evidence for prevalence of organizational favouritism. It is significantly found that when subjects where put into a situation where they can offer a job to someone then the choice criteria is based on social ties rather than efficiency. Interestingly, even when subjects had the choice of giving the job to her favourite person, she prefers to give it randomly to anyone from her favoured pool, when her group size is large. Also, socio-economic factors like family structure, family occupation, social connection, caste and political connections are among the important factors in explaining the emergence of favouritism. |
| Keywords: | Favouritism, group size, status, efficiency, lab experiment |
| JEL: | C91 C92 D03 J7 M51 |
| Date: | 2017–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80214&r=exp |
| By: | Mariana Carrera; Heather Royer; Mark Stehr; Justin Sydnor |
| Abstract: | We conducted a randomized controlled trial testing the effect of modest incentives to attend the gym among new members of a fitness facility, a population that is already engaged in trying to change a health behavior. Our experiment randomized 836 new members of a private gym into a control group, receiving a $30 payment unconditionally, or one of 3 incentive groups, receiving a payment if they attended the gym at least 9 times over their first 6 weeks as members. The incentives were a $30 payment, a $60 payment, and an item costing $30 that leveraged the endowment effect. These incentives had only moderate impacts on attendance during members’ first 6 weeks and no effect on their subsequent visit trajectories. We document substantial overconfidence among new members about their likely visit rates and discuss how overconfidence may undermine the effectiveness of a modest incentive program. |
| JEL: | C93 D03 I12 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23567&r=exp |
| By: | Renate Strobl; Conny Wunsch (University of Basel) |
| Abstract: | In this study we experimentally investigate whether solidarity, which is a crucial base for informal insurance arrangements in developing countries, is sensitive to the extent to which individuals can influence their risk exposure. With slum dwellers of Nairobi our design measures subjects' willingness to share income with a worse-o ff partner both in a setting where participants could either deliberately choose or were randomly assigned to a safe or a risky project. We find that when risk exposure is a choice, willingness to give is roughly 9 percentage points lower compared to when it is exogenously assigned to subjects. The reduction of solidarity is driven by a change in giving behaviour of persons with the risky project. Compared to their counterparts in the random treatment, voluntary risk takers are seemingly less motivated to share their high payoff with their partner, especially if this person failed after choosing the risky project. This suggests that the willingness to show solidarity is influenced by both the desire for own compensation and attributions of responsibility. Our findings have important implications for policies that interact with existing informal insurance arrangements. |
| Keywords: | Solidarity; Risk taking; Kenya |
| JEL: | D81 C91 O12 D63 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2017/12&r=exp |
| By: | Glen W. Harrison (Georgia State University); Morten I. Lau (Copenhagen Business School); Hong Il Yoo (Durham Business School) |
| Abstract: | Abstract. Longitudinal experiments allow one to evaluate the temporal stability of latent preferences, but raise concerns about sample selection and attrition that may confound inferences about temporal stability. We evaluate the hypothesis of temporal stability in risk preferences using a remarkable data set that combines socio-demographic information from the Danish Civil Registry with information on risk attitudes from a longitudinal field experiment. Our experimental design builds in explicit randomization on the incentives for participation. The results show that the use of different participation incentives can affect sample response rates and help one identify the effects of selection. Correcting for endogenous sample selection and panel attrition changes inferences about risk preferences in an economically and statistically significant manner. We draw mixed conclusions on temporal stability of risk preferences that depend on which aspect of temporal stability one is interested in. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2017_07&r=exp |
| By: | Rietz, Thomas; Schniter, Eric; Sheremeta, Roman; Shields, Timothy |
| Abstract: | Many economic interactions rely on trust, which is sometimes violated. The fallout from business fraud and other malfeasance shows serious economic consequences of trust violations. Simple rules mandating minimum standards are attractive because they prevent the most egregious trust violations. However, such rules may undermine more trusting and reciprocal (trustworthy) behavior that otherwise would have occurred and, thus, lead to worse outcomes. We use an experimental trust game to test the efficacy of exogenously imposed minimum standard rules. Rules fail to increase trust and reciprocity, leading to lower economic welfare. Although sufficiently restrictive rules restore welfare, trust and reciprocity never return. The pattern of results is consistent with participants who are not only concerned with payoffs, but also use the game to learn about trust and trustworthiness of others. |
| Keywords: | Trust, Reciprocity, Minimum Standards, Experiment |
| JEL: | C72 C90 D63 D64 L51 |
| Date: | 2017–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80275&r=exp |
| By: | Kenju Kamei (Durham Business School) |
| Abstract: | A large body of theoretical and experimental literature suggests that exogenously imposed infinite repetition can mitigate people’s opportunistic behavior in dilemma situations through personal enforcement. But, do people collectively choose to interact with the same persons, when there is an alternative with random matching? In a framework of an indefinitely-repeated collective action dilemma game, we let subjects collectively choose whether to (i) play with specific others for all rounds or to (ii) play with randomly matched counterparts in every period. The experiment showed that most subjects collectively select the partner matching option. It also indicated that groups achieve a higher level of cooperation when subjects collectively select option (i) by voting, compared with when the same option is exogenously imposed. These findings have an implication that people’s equilibrium selection may be affected by how the basic rules of games are introduced (endogenously or exogenously) to them. |
| Keywords: | experiment, public goods, cooperation, dilemma, social norms, endogenous choices |
| JEL: | C92 H41 C73 D72 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2017_08&r=exp |
| By: | Ben D’Exelle; Christine Gutekunst; Arno Riedl |
| Abstract: | We study gender differences in bilateral bargaining using an artefactual field experiment in rural Uganda, through variation in gender composition of bargaining pairs and in disclosure of identities. Disagreement is common independently of disclosure condition, but less frequent among female-only pairs. When paired with a man who is informed about their identity, women tend to demand less than men in the same situation. The influence of beliefs on demands is stronger for men than for women, and this difference is larger under anonymity than when identities are disclosed. These results identify important mechanisms that induce gender inequality in resource access. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2017-155&r=exp |
| By: | Nüß, Patrick |
| Abstract: | Based on a correspondence experiment covering 3,124 fictitious job applications, the paper identifies and quantifies duration dependence in Germany, with a particular emphasis on company and vacancy characteristics as potential determinants. The experiment reveals that duration dependence manifests itself in a sharp decline of 26% to 35% in callbacks when an individual has been unemployed for 10 months, pointing to the existence of an unemployment stigma for Germany. The results are driven by labor market tightness, companies' access to applicants and screening behavior related to company size, with no evidence for an unemployment stigma determined by the contract type. |
| Keywords: | Field Experiments,Labor Demand,Unemployment,Unemployment Duration,Labor Discrimination |
| JEL: | C93 J23 J60 J64 J71 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:88&r=exp |
| By: | Joshua Blumenstock; Michael Callen; Tarek Ghani |
| Abstract: | We report on an experiment examining why default options impact behavior. Working with one of the largest private firms in Afghanistan, we randomly assigned each of 949 employees to different variants of a new default savings account. Employees assigned a default contribution rate of 5% are 40 percentage points more likely to contribute than employees assigned to a default contribution rate of zero; to achieve this effect through financial incentives alone would require a 50% match from the employer. Our design permits us to rule out several common explanations for default effects, including employer endorsement, employee inattention, and a lack of awareness about how to switch. Instead, we find evidence that the default effect is driven largely by a combination of present-biased preferences and the cognitive cost of calculating alternate savings scenarios. Default assignment also causes employees to develop savings habits that outlive our experiment: they are more likely to believe that savings is important, less likely to report being too financially constrained to save, and more likely to make an active decision to save at the end of our trial. |
| JEL: | D14 D9 O1 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23590&r=exp |
| By: | SeEun Jung (Department of Economics, Inha University); Chung Choe (Hanyang University); Ronald L. Oaxaca (University of Arizona) |
| Abstract: | In addition to discrimination, market power, and human capital, gender differences in risk preferences might also contribute to observed gender wage gaps. We conduct laboratory experiments in which subjects choose between a risky (in terms of exposure to unemployment) and a secure job after being assigned in early rounds to both types of jobs. Both jobs involve the same typing task. The risky job adds the element of a known probability that the typing opportunity will not be available in any given period. Subjects were informed of the exogenous risk premium being offered for the risky job. Women were more likely than men to select the secure job, and these job choices accounted for between 40% and 77% of the gender wage gap in the experiments. That women were more risk averse than men was also manifest in the Pratt-Arrow Constant Absolute Risk Aversion parameters estimated from a random utility model adaptation of the mean-variance portfolio model. |
| Keywords: | Occupational Choice, Gender Wage Differentials, Risk Aversion, Lab Experiment |
| JEL: | J16 J24 J31 C91 D81 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:inh:wpaper:2017-7&r=exp |
| By: | Sule Alan (University of Essex); Seda Ertac (Koc University) |
| Abstract: | We show that optimistic beliefs regarding the role of effort in success, while leading to success, diminish the individual’s sympathy toward the unsuccessful. We generate random variation in the degree of optimism about the productivity of effort via an effective educational intervention. We find that treated children, holding significantly more optimistic beliefs, are no less likely than control to give to unlucky recipients, but significantly less likely to give to those who failed at a real effort task despite an opportunity to build skill. The results highlight possible unintended social effects of effort-focused optimism and have implications for political economy. |
| Keywords: | redistributive preferences, prosocial behavior, altruism, beliefs, fairness, field experiments |
| JEL: | D31 D64 I24 I28 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2017-053&r=exp |
| By: | Blumenstock, Joshua; Callen, Michael; Ghani, Tarek |
| Abstract: | We report on an experiment examining why default options impact behavior. Working with one of the largest private firms in Afghanistan, we randomly assigned each of 949 employees to different variants of a new default savings account. Employees assigned a default contribution rate of 5% are 40 percentage points more likely to contribute than employees assigned to a default contribution rate of zero; to achieve this effect through financial incentives alone would require a 50% match from the employer. Our design permits us to rule out several common explanations for default effects, including employer endorsement, employee inattention, and a lack of awareness about how to switch. Instead, we find evidence that the default effect is driven largely by a combination of present-biased preferences and the cognitive cost of calculating alternate savings scenarios. Default assignment also causes employees to develop savings habits that outlive our experiment: they are more likely to believe that savings is important, less likely to report being too financially constrained to save, and more likely to make an active decision to save at the end of our trial. |
| Keywords: | Behavioral Models; Defaults savings; Digital Finance; Mobile Money; peer effects |
| JEL: | D14 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12142&r=exp |
| By: | SeEun Jung (Department of Economics, Inha University); Radu Vranceanu (ESSEC Business School) |
| Abstract: | In a classical experiment, Niederle and Vesterlund (2007) used the dichotomous choice of individuals between a piece rate and a tournament payment scheme as an indication of their propensity to compete. This paper reports results from a two person interaction of a similar type to analyze whether the preference for competition is dependent on the gender of the partner. It introduces a Becker-DeGroot-Marschak mechanism to elicit individual willingness to compete (WTC), defined as the amount of money that makes an individual indifferent between the two compensation schemes. Even when controlling for risk aversion, past performance and over-confidence, the male WTC is e3.30 larger than the female WTC. The WTC instrument allows for a more precise analysis of the impact of the partner's gender on the taste for competition. WTC data confirm that in this experiment the partner's gender has not a significant impact on the propensity to compete. |
| Keywords: | Willingness to Compete, Gender, BDM mechanism |
| JEL: | C91 D03 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:inh:wpaper:2017-5&r=exp |
| By: | Orla Doyle (University College Dublin) |
| Abstract: | Using a randomized experiment, this study investigates the impact of sustained investment in parenting, from pregnancy until age five, in the context of extensive welfare provision. Providing the Preparing for Life program, incorporating home visiting, group parenting, and baby massage, to disadvantaged Irish families raises children’s cognitive and socio-emotional/behavioral scores by two-thirds and one-quarter of a standard deviation respectively by school entry. There are few differential effects by gender and stronger gains for firstborns. The results also suggest that socioeconomic gaps in children’s skills are narrowed. Analyses account for small sample size, differential attrition, multiple testing, contamination, and performance bias. |
| Keywords: | early childhood intervention, cognitive skills, socio-emotional skills, behavioral skills, randomized controlled trial, multiple-hypothesis testing, permutation testing, inverse probability weighting |
| JEL: | C93 D13 I26 J13 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2017-054&r=exp |
| By: | Yutaka Kayaba (University of Tokyo); Hitoshi Matsushima (University of Tokyo); Tomohisa Toyama (Kogakuin University) |
| Abstract: | We experimentally examine repeated prisoner’s dilemma with random termination, in which monitoring is imperfect and private. Our estimation indicates that a significant proportion of subjects follow generous tit-for-tat strategies, straightforward extensions of tit-for-tat. However, the observed retaliating policies are inconsistent with the generous tit-for-tat equilibria. Contrary to the theory, subjects tend to retaliate more with high accuracy than with low accuracy. Specifically, they tend to retaliate more than the theory predicts with high accuracy, while they tend to retaliate lesser with low accuracy. In order to describe these results as unique equilibrium, we demonstrate an alternative theory that incorporates naïveté and reciprocity. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cfi:fseres:cf414&r=exp |
| By: | Elisabeth Bublitz |
| Abstract: | This paper investigates whether the individual misperception of income distributions helps explain why, opposite to Meltzer and Richard (1981), higher initial inequality levels do not correlate positively with redistribution. I conduct a representative survey experiment in Brazil, France, Germany, Russia, Spain, and the United States, providing a personalized information treatment on the income distribution to a randomly chosen subsample. Most respondents misperceive their own position in the income distribution. These biases di_er by country and the true income position. Misperceptions of the median income relate negatively to misperceived income positions, showing evidence for biased reference points. Correcting misperceptions slightly shifts the demand towards less redistribution in Germany and Russia which appears to be driven by respondents with a negative position bias. Apart from Spain and the US, treatment reactions lead to a convergence of the demand for redistribution across countries. The treatment also alters trust levels in government and beliefs about the importance of luck but not equally across bias types. |
| Keywords: | Income distribution, biased perceptions, inequality, survey experiment |
| JEL: | D31 D63 H20 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:lis:liswps:694&r=exp |
| By: | Bryan, Gharad; de Quidt, Jonathan; Wilkening, Tom; Yadav, Nitin |
| Abstract: | Small farms and fragmented plots are hallmarks of agriculture in less-developed coun- tries, and there is evidence of high returns to land consolidation and reallocation. Complementarities, holdout and asymmetric information mean that private trade will be slow to reallocate land, and imply that market design has the potential to contribute to the development process. Complexity concerns are, however, paramount. We present results from a framed field experiment with Kenyan farmers, comparing the performance of several continuous-time land exchanges. Farmers are able to achieve high degrees of efficiency, and to comprehend and gain from a relatively com- plicated package exchange. |
| JEL: | C93 D47 O13 Q15 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12136&r=exp |
| By: | Daniele Nosenzo (School of Economics, University of Nottingham); Fabio Tufano (School of Economics, University of Nottingham) |
| Abstract: | We study the effects of voluntary participation on cooperation in collective action problems. Voluntary participation may foster cooperation through a mechanism of assortative selection of interaction partners based on false consensus bias, or through a mechanism whereby the decision to not participate can be used as a threat against free-riders. We examine the effectiveness of these mechanisms in a one-shot public goods experiment. Voluntary participation has a positive effect on provision only through the threat of non-participation. Assortative selection of interaction partners seems to play a minor role in our setting, whereas the threat of non-participation is a powerful force to discipline free-riding. |
| Keywords: | collective action; cooperation; voluntary participation; experiment |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2017-12&r=exp |