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on Experimental Economics |
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Issue of 2017‒08‒06
fifteen papers chosen by |
| By: | David J. Freeman (Simon Fraser University); Erik O. Kimbrough (Simon Fraser University); Garrett M. Petersen (Simon Fraser University); Hanh T. Tong (Simon Fraser University) |
| Abstract: | A meta-analysis of instruction delivery and reinforcement methods in recent laboratory experiments reveals a wide and inconsistently-reported variety of practices and limited research evaluating their effectiveness. Thus we experimentally compare how methods of delivering and reinforcing experiment instructions impact subjects’ understanding. We report a one-shot individual decision task in which misunderstanding can be unambiguously identified in behavior and find that misunderstanding is prevalent in our control treatment which uses relatively standard experimental instructions. We find combinations of reinforcement methods that can eliminate half of subjects’ misunderstanding. Providing paper instructions is among the most effective of such methods. |
| Keywords: | Attention, Comprehension, Instructions |
| JEL: | C91 |
| Date: | 2017–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp17-12&r=exp |
| By: | Daniel Horn (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Hubert János Kiss (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | We attempt to link laboratory-based measures of preferences with measures of school performance. We measure in an incentivized way risk, time, social and competitive preferences and also cognitive abilities of university students and look for associations between these measures and two important academic outcome measures: exam results and GPA. We find consistently that cognitive abilities (proxied by the Cognitive Reflection Test (Frederick 2005)) are very well correlated with school performance. Regarding non-cognitive skills, we find suggestive evidence for many of our measured preferences. We use two alternative measures of time preference: patience and present bias. Present bias explains exam grades relatively better, while patience is better explaining GPA. Both measures of time preferences have a non-linear relation to school performance. Competitiveness matters, as students, who opt for a more competitive payment scheme in our experiments have a higher average GPA and better exam grades. We observe also that risk-averse students perform a little better than risk-loving students. That makes sense in case of multiple choice exams, because risk-loving students may want to try to pass the exam less prepared, as the possibility of passing as exam just by chance is not zero. Finally, we have also detected that cooperative preferences – the amount of money offered in a public good game – associates strongly with GPA, but in a non-linear way. Students who offered around half of their possible amounts had significantly higher GPAs than those, who offered none or all their money. |
| Keywords: | competititive preferences, experiment, non-cognitive skills, risk preferences, school performance, social preferences, time preferences |
| JEL: | C91 D91 I20 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:has:bworkp:1708&r=exp |
| By: | Damon Clark; David Gill; Victoria Prowse; Mark Rush |
| Abstract: | Will college students who set goals for themselves work harder and achieve better outcomes? In theory, setting goals can help present-biased students to mitigate their self-control problem. In practice, there is little credible evidence on the causal effects of goal setting for college students. We report the results of two field experiments that involved almost four thousand college students in total. One experiment asked treated students to set goals for performance in the course; the other asked treated students to set goals for a particular task (completing online practice exams). Task-based goals had large and robust positive effects on the level of task completion, and task-based goals also increased course performance. Further analysis indicates that the increase in task completion induced by setting task-based goals caused the increase in course performance. We also find that performance-based goals had positive but small effects on course performance. We use theory that builds on present bias and loss aversion to interpret our results. Since task-based goal setting is low-cost, scaleable and logistically simple, we conclude that our findings have important implications for educational practice and future research. |
| JEL: | C93 I23 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23638&r=exp |
| By: | Daniela Di Cagno; Arianna Galliera; Werner Güth; Luca Panaccione |
| Abstract: | Conditional generosity is explored experimentally by confronting two participants with the same allocation task and allowing only one of them to adjust the own generosity level via conditioning on whether the other intends to be more, respectively less generous. Only one of two allocator candidates can actually give conditioning on the other’s intended generosity to the respective responder. We employ the strategy vector method but restrict conditioning to qualitative information only. The focus is on how generosity inclinations, largely responsible for fair(er) allocation results and charitable giving, are affected by information that one anonymous other just intended to be more, respectively less generous. Participants play three successive games in the order ultimatum, yes-no and impunity game or (between subjects) in the reversed order. Although only impunity appeals to intrinsic generosity intentions, we test whether conditioning persists when sanctioning is possible. Based on our data, we distinguish two major types of participants, one yielding to weakest social influence and another immune to it. The latter type offers much less: it is greed which, as expected, weakens social influence. |
| Keywords: | (Conditional) Generosity, Ultimatum Game, Yes-No Game, Impunity Game, Experiments. |
| JEL: | C91 C78 D64 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1701&r=exp |
| By: | FALLUCCHI Francesco; RAMALINGAM Abhijit |
| Abstract: | We study the effects of different sources of inequality in a commonplace economic interaction: competition. We investigate how individuals react to different types of inequality in experimental two-player Tullock contests where contestants expend resources to win a prize. We study three different sources of inequality: resources, abilities and possible outcomes. We find that overall competitive effort is greater in the presence of inequality in abilities than other inequalities. Unlike other forms, inequality in abilities elicits a very aggressive reaction from disadvantaged players relative to their advantaged opponents. The Quantal Response Equilibrium (QRE) suggests that financial incentives are less salient in the presence of a biased contest procedure. |
| Keywords: | rent seeking; contest; experiment; inequality; inequity; Quantal Response Equilibrium |
| JEL: | C91 C92 D31 D63 J78 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2017-12&r=exp |
| By: | Carlos Cueva; Iñigo Iturbe-Ormaetxe; Giovanni Ponti; Josefa Tomás |
| Abstract: | Men trade more than women. This has been attributed to men being more overconfident. However, no study has systematically tested this conjecture. We run an experiment where participants trade in a simulated market and measure ex-ante better-than-average confidence in an incentivized way. We find that men are more confident and trade more than women, but we do not find that our measure of confidence helps to reduce the gender gap in the number of transactions. Finally, risk aversion does not help to explain this gap either. |
| Keywords: | Behavioral Finance, Transaction Costs, Gender, Overtrading, Risk aversion |
| JEL: | C91 D70 D81 D91 |
| URL: | http://d.repec.org/n?u=RePEc:lui:cesare:1703&r=exp |
| By: | Jürgen Huber (Department of Banking and Finance, University of Innsbruck); Stefan Palan (Department of Banking and Finance, University of Graz); Stefan Zeisberger (Institute for Management Research, Radboud University Nijmegen) |
| Abstract: | What people perceive as risk clearly goes beyond variance. Several papers have shown that, e.g., probability of loss plays a more prominent role in perceived risk than does variance. We are the first to explore how individual risk perception influences prices and trading behavior in a market setting by exposing subjects to a number of differently shaped return distributions which they then trade on. We first elicit subjects' individual risk perceptions, finding results in line with earlier papers. We then let subjects trade assets with these return distributions on a continuous double auction market. In the markets we observe active trading and prices strongly driven by average risk perception. While standard finance theory predicts identical prices for most of our assets we find average prices to vary by up to 20 percent, with assets perceived as being less risky trading at significantly higher prices. |
| Date: | 2017–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpsses:2017-05&r=exp |
| By: | Armin Falk |
| Abstract: | This paper studies the causal effect of status differences on moral disengagement and violence. To measure violent behavior, in the experiment, a subject can inflict a painful electric shock on another subject in return for money. We exogenously vary relative status in the realm of sexual attractiveness. In three between-subject conditions, the assigned other subject is either of higher, lower or equal status. The incidence of electric shocks is substantially higher among subjects matched with higher- and lower-status others, relative to subjects matched with equal-status others. This causal evidence on the role of status inequality on violence suggests an important societal cost of economic and social inequalities. |
| Keywords: | Morality, violence, status, inequality, laboratory experiments |
| JEL: | A13 C91 D03 Z13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1676&r=exp |
| By: | Armin Falk (briq) |
| Abstract: | This paper studies the causal effect of status differences on moral disengagement and violence. To measure violent behavior, in the experiment, a subject can inflict a painful electric shock on another subject in return for money. We exogenously vary relative status in the realm of sexual attractiveness. In three between-subject conditions, the assigned other subject is either of higher, lower or equal status. The incidence of electric shocks is substantially higher among subjects matched with higher- and lower-status others, relative to subjects matched with equal-status others. This causal evidence on the role of status inequality on violence suggests an important societal cost of economic and social inequalities. |
| Keywords: | morality, violence, status, Inequality, laboratory experiments |
| JEL: | A13 C91 D03 Z13 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2017-057&r=exp |
| By: | Erik O. Kimbrough (Department of Economics, Simon Fraser University); Kevin Laughren (Department of Economics, Simon Fraser University); Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University) |
| Abstract: | We review the main economic models of war and conflict. These models vary in details, but their implications are qualitatively consistent, highlighting key commonalities across a variety of conflict settings. Recent empirical literature, employing both laboratory and field data, in many cases confirms the basic implications of con- flict theory. However, this literature also presents important challenges to the way economists traditionally model conflict. We finish our review by suggesting ways to address these challenges |
| Keywords: | conflict, war, contest, all-pay auction, war of attrition |
| JEL: | D72 D74 F51 F52 F54 H56 N4 Q34 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:17-13&r=exp |
| By: | Marcelo L. Bérgolo; Rodrigo Ceni; Guillermo Cruces; Matias Giaccobasso; Ricardo Perez-Truglia |
| Abstract: | According to the canonical model of Allingham and Sandmo (1972), firms evade taxes by making a trade-off between a lower tax burden and higher expected penalties. However, there is still no consensus about whether real-world firms operate in this rational way. We conducted a large-scale field experiment, sending letters to over 20,000 firms that collectively pay over 200 million dollars in taxes per year. In our letters, we provided firms with exogenous but nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measure the effect of these signals on their subsequent perceptions about the auditing process, based on survey data, as well as on the actual taxes paid, according to administrative data. We find that firms do increase their tax compliance in response to information about audits. However, the patterns in these responses are inconsistent with utility maximization. The evidence suggests that, much like scarecrows frighten off birds, audits can be a significant deterrent for tax evaders even though they would be perceived as harmless by a rational optimizer. |
| JEL: | C93 H26 K42 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23631&r=exp |
| By: | Victor Stango; Joanne Yoong; Jonathan Zinman |
| Abstract: | Behavioral economics lacks empirical evidence on some foundational empirical questions. We adapt standard elicitation methods to measure multiple behavioral factors per person in a representative U.S. sample, along with financial condition, cognitive skills, financial literacy, classical preferences and demographics. Individually, B-factors are prevalent, distinct from other decision inputs, and correlate negatively with financial outcomes in richly-conditioned regressions. Conditioning further on other B-factors does not change the results, validating common practice of modeling B-factors separately. Corrections for low task/survey effort modestly strengthen the results. Our findings provide bedrock empirical foundations for behavioral economics, and offer methodological guidance for research designs. |
| JEL: | D03 D14 D8 D9 G02 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23625&r=exp |
| By: | Claudius Graebner (Institute for Institutional and Innovation Economics (iino), University of Bremen, Germany); Wolfram Elsner (Institute for Institutional and Innovation Economics, University of Bremen, Germany); Alexander Lascaux (Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia) |
| Abstract: | We study the functioning of informal value transfer systems (IVTS) with the example of Hawala. More precisely, we use computational experiments to study the roles of generalized trust and social control for the stability and efficiency of IVTS. Previous literature was ambiguous with regard to: (i) how trust and control should be operationalized formally, (ii) which, if any of the two, carries a larger relevance for the functioning of IVTS, (iii) whether (and when) they relate to each other as substitutes or complements, and (iv) how they interact with a number of other environmental conditions. Our experiments suggest answers to all these questions. We show that both trust and control are necessary, but not sufficient to guarantee the functioning of Hawala, and that other relevant conditions, such as population size, interaction density, and forgiveness of the agents, provide important contexts. Aside from clarifying these questions, we provide a theoretically grounded operationalization of generalized trust and social control that is applicable to informal exchange systems in general. |
| Keywords: | Hawala, Computational experiment, Informal Value Transfer Systems, Institution, Social Control, Trust |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ico:wpaper:62&r=exp |
| By: | Juan Beccuti; Christian Jaag |
| Abstract: | We consider a game in which Bitcoin miners compete for a reward of each solved puzzle in a sequence of them. We model it as a sequential game with imperfect information, in which miners have to choose whether or not to report their success. We show that the game has a multiplicity of equilibria and we analyze the parameter constellations for each of them. In particular, the minimum requirement to find it optimal not to report is decreasing with the number of miners who are not reporting, and increasing the heterogeneity among players reduces the likelihood that they choose not to report. |
| Keywords: | Bitcoin, Mining, Proof of work, Game theory |
| JEL: | C72 D84 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:chc:wpaper:0060&r=exp |
| By: | Francisco Gallego; Emma Näslund-Hadley; Mariana Alfonso |
| Abstract: | Previous research suggests that tailoring instruction to each student needs can produce significant learning gains. However, few programs have successfully implemented this approach in practice. In this paper, we present the results of a randomized evaluation of a program that uses an individualized scaffolding approach during regular school hours to teach the basic elements of numbers and shapes to preschoolers using a sample of 107 preschool centers and almost 3,000 children in Peru. The program improves Math outcomes among all children (by 0.10 standard deviations) and has stronger impacts for students in the lower quintiles of the distribution of outcomes and for students with teachers with university degrees. The effect in the areas that were implemented in a more intense way persists even one year after the program ended. Interestingly, we find no evidence of effects that are different across gender, language-spoken at home, and proxies for SES, contrasting with results from previous research that suggest that effects of Math programs are biased along gender and socioeconomic lines. |
| JEL: | I21 I28 O15 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:doctra:487&r=exp |