nep-exp New Economics Papers
on Experimental Economics
Issue of 2017‒08‒20
fourteen papers chosen by

  1. A rationale for unanimity in committees By Breitmoser, Yves; Valasek, Justin
  2. Evolution of Trust and Trustworthiness between Cooperators and Non-Cooperators in Public Goods : Evidence from Field Experiment: Ethiopia By Kitessa, Rahel Jigi
  3. Corruption and cooperation By Justin Buffat; Julien Senn
  4. Minimal Frames and Transparent Frames for Risk, Time, and Uncertainty By Jonathan W. Leland; Mark Schneider; Nathaniel Wilcox
  5. Self-worth versus net worth: Image motivation and the quantity-quality trade-off By Brock, Michelle
  6. Motivational Goal Bracketing: An Experiment By Alexander K. Koch; Julia Nafziger
  7. Reputation and Multilateral Punishment under Uncertainty By Aidin Hajikhameneh; Jared Rubin
  8. Tailored Feedback and Worker Green Behavior: Field Evidence from Bus Drivers By Adriaan (A.R.) Soetevent; Gert-Jan Romensen
  9. "Governing Collective Action in the Face of Observational Error" By Thomas Markussen; Louis Putterman; Liangjun Wang
  10. The effects of punishment in dynamic public-good games By Bettina Rockenbach; Irenaeus Wolff
  11. Loan characteristics, firm preferences and investment: Evidence from a unique experiment By Brutscher, Philipp-Bastian; Heipertz, Jonas; Hols, Christopher
  12. Social Tenants' Health: Evaluating the Effectiveness of Landlord Interventions By Paul Cheshire; Stephen Gibbons; Jemma Mouland
  13. Understanding repugnance: Implications for public policy By Julio Elias; Nicola Lacetera; Mario Macis
  14. Beyond CES: Three Alternative Classes of Flexible Homothetic Demand Systems By Matsuyama, Kiminori; Ushchev, Philip

  1. By: Breitmoser, Yves; Valasek, Justin
    Abstract: Existing theoretical and experimental studies have established that unanimity is a poor decision rule for promoting information aggregation. Despite this, unanimity is frequently used in committees making decisions on behalf of society. This paper shows that when committee members are exposed to "idiosyncratic" payoffs that condition on their individual vote, unanimity can facilitate truthful communication and optimal information aggregation. Theoretically, we show that since agents" votes are not always pivotal, majority rule suffers from a free-rider problem. Unanimity mitigates free-riding since responsibility for the committee's decision is equally distributed across all agents. We test our predictions in a controlled laboratory experiment. As predicted, if unanimity is required, subjects are more truthful, respond more to others' messages, and are ultimately more likely to make the optimal decision. Idiosyncratic payoffs such as a moral bias thus present a rationale for the widespread use of unanimous voting.
    Keywords: committees,incomplete information,decision rules,cheap talk,information aggregation,laboratory experiment
    JEL: D71 D72 C90
    Date: 2017
  2. By: Kitessa, Rahel Jigi (Tilburg University, Center For Economic Research)
    Abstract: The standard economic theory predicts that collective action problem arise because the selfish agents have no incentive to contribute to public goods. However, considerable shares of mankind, conditional cooperators, contribute to public goods as revealed by numerous empirical and experimental findings. Ostrom (2000) revised collective action problems predicts that as time passes with proper social norm institution in place, and information about the types of agent is known, the share of such cooperators will grow in population and the cooperative behavior will be a dominant economic decision. This is because, the conditional cooperators are in general more trusted, whereas, selfish agents are less trusted which enables the cooperators to drive higher payoff. I tested this hypothesis in a setting that let participants who are members of collaborative forest management group (CFM), and non- members (non-CFM) to play a trust game. Using this experiment, the finding in this study support the hypothesis that high trust is placed on the cooperators than non-cooperators. Therefore, the cooperator type receives more money, but send and return less to non-cooperators which allow them to receive consistently higher pay off.
    Keywords: collective action; trust and trustworthiness; field experiment; forestry; public goods
    JEL: C12 C93 D64 D71 H41 O31
    Date: 2017
  3. By: Justin Buffat; Julien Senn
    Abstract: Corruption is a widespread phenomenon. Nevertheless, causal evidence on the effects of corruption is still lacking. In this paper, we assess whether and how corruption affects cooperation using a public good game experiment. Overall, contributions to the public good are reduced by 30% when participants have the possibility to bribe the punishment authority. Two concurrent channels lead to lower levels of cooperation. First, the punishment of low contributors decreases both at the intensive and the extensive margin. Second, bribery discourages initially high contributors, who gradually decrease their contributions down to the level of initially low contributors.
    Keywords: Corruption, bribery, cooperation, public good, institutions
    JEL: C91 D73 K42
    Date: 2017–08
  4. By: Jonathan W. Leland; Mark Schneider; Nathaniel Wilcox
    Abstract: It has been argued that behavior differs between transparent and nontransparent representations of a decision. However, the notion of a ‘transparent representation’ has not been precisely defined. We address this gap by providing formal definitions of ‘transparent frames’ for risk and time, establishing their uniqueness, presenting an approach to construct such frames, and comparing these frames to the ‘standard’ presentation format. Our typology of frames provides a logic for predicting systematic shifts in risk and time preferences as well as changes in the violation rates of rational choice theory. We conduct an experiment for choice under risk to investigate the framing effect between transparent and ‘standard’ frames and find such framing to be an important source of non-random variation in observed risk preferences. We also extend our approach to choice under uncertainty and derive the novel prediction that ambiguity aversion is frame dependent, a result supported by recent experimental evidence.
    Keywords: Risk, Time, Salience, Behavioral Biases
    JEL: D81 D91
    Date: 2017
  5. By: Brock, Michelle
    Abstract: Self-image concerns can motivate behaviour over which it is difficult to contract. We investigate how self-image concerns impact the quantity-quality trade-off of professionals, independent of external reputation. To do so, we use a framed field experiment with judges. The experiment measures the effect of self-image concerns compared to that of a bonus and to that of combing both incentives. We find that while both incentives increase the quantity of work, bonuses generate much worse quality. Subjects are less willing to engage in opportunistic behaviour to earn the bonus, however, if a peer might see their work, albeit anonymously.
    Keywords: intrinsic incentives; judges; professionalism; real-effort task; Self-image; Tajikistan
    JEL: D91 J33 M52
    Date: 2017–08
  6. By: Alexander K. Koch (Department of Economics and Business Economics, Aarhus University, Denmark); Julia Nafziger (Department of Economics and Business Economics, Aarhus University, Denmark)
    Abstract: We study in an online, real-effort experiment how the bracketing of non-binding goals affects performance in a work-leisure self-control problem. We externally induce the goal bracket - daily goals or a weekly goal - and within that bracket let subjects set goals for how much they want to work over a one-week period. Our theoretical model predicts (i) that weekly goals create incentives to compensate for a lower than desired performance today with the promise to work harder tomorrow, whereas daily goals exclude such excuses; (ii) that subjects with daily goals set higher goals in aggregate and work harder than those with weekly goals. Our data support these predictions. Surprisingly, however, when goals are combined with an externally enforced commitment that requires subjects to spend less than a minute each day on the task to get started working, performance deteriorates because of high dropout rates from the task.
    Keywords: Self-control, goals, narrow bracketing, commitment devices, real effort, online experiment
    JEL: D03 D81 D91
    Date: 2017–08–25
  7. By: Aidin Hajikhameneh (Institute for the Study of Religion, Economics and Society, Chapman University); Jared Rubin (Institute for the Study of Religion, Economics and Society, Chapman University and Argyros School of Business and Economics, Chapman University)
    Abstract: Prinicpal-agent problems can reduce gains from exchange available in long distance trade. One solution to mitigate this problem is multilateral punishment, whereby groups of principals jointly punish cheating agents by giving them bad reputations. But how does such punishment work when there is uncertainty regarding whether an agent actually cheated or was just the victim of bad luck? And how might such uncertainty be mitigated—or exacerbated—by nonobservable, pro-social behavioral characteristics? We address these questions by designing a simple modified trust game with uncertainty and the capacity for principals to employ multilateral punishment. We find that a modest amount of uncertainty increases overall welfare because principals are more willing to trust agents with bad reputations.
    Keywords: Multilateral punishment, reputation, uncertainty, exchange, lab experiment, trust game
    JEL: C91 C92 D02 D83 F10 N70
    Date: 2017
  8. By: Adriaan (A.R.) Soetevent (University of Groningen, The Netherlands; Tinbergen Institute, The Netherlands); Gert-Jan Romensen (University of Groningen, The Netherlands;)
    Abstract: How to engage workers in conservation efforts when the company pays the bill? In a field experiment with 409 bus drivers, we investigate the potential of targeted peer-comparison feedback and on-the-road coaching. Drivers receive individualized reports with peer-comparison messages on multiple driving dimensions. In addition, coaches quasi randomly provide drivers with in person coaching moments on the bus. Based on 800,000 trip-level observations, we find that the targeted peer-comparison treatments do not improve driving. On-the-road coaching significantly improves driving on multiple dimensions but only temporarily. Further analysis reveals negative interaction effects between the two programs.
    Keywords: peer comparisons; coaching; worker motivation; fuel conservation
    JEL: D2 M5 Q5
    Date: 2017–08–03
  9. By: Thomas Markussen; Louis Putterman; Liangjun Wang
    Abstract: We present results from a repeated public goods experiment where subjects choose by vote one of two sanctioning schemes peer-to-peer (informal) or centralized (formal). We introduce, in some treatments, a moderate amount of noise (a 10 percent probability that a contribution is reported incorrectly) affecting either one or both sanctioning environments. We find that the institution with more accurate information is always by far the most popular, but noisy information undermines the popularity of peer-to-peer sanctions more strongly than that of centralized sanctions. This may contribute to explaining the greater reliance on centralized sanctioning institutions in complex environments.
    Date: 2017
  10. By: Bettina Rockenbach; Irenaeus Wolff
    Abstract: In the evolution of human cooperation, the enforcement of social norms was of vital importance. The punishment of norm violators has two aspects: to immediately harm the violator and to increase the violator’s future cooperativeness. Abundant experimental evidence has demonstrated the success of peer-to-peer punishment for the establishment of stable cooperation. Yet, these studies largely ignore the dynamic aspect: punishment not only destroys today’s resources or abilities, but also reduces the potential for future cooperativeness. If, for example, a hunter who stayed away from today’s hunt is punished physically, this is harmful not only today, but may also limit the physical strength available for tomorrow’s hunt. Thus, although the hunter may be more willing to cooperate in the future, his future potential for cooperation is reduced through the punishment. Here, we experimentally study the role of punishment for cooperation in dynamic public goods games, where past payoffs determine present contribution capabilities. We show that the beneficial role of punishment possibilities for cooperation success is highly fragile. Successful cooperation seems to hinge on the presence of a common understanding on how punishment should be used. If high-contributors punish too readily, the group likely gets on a wasteful path of punishment and retaliation. On the other hand, if punishment is administered more patiently, even initially uncooperative groups thrive. Hence, in dynamic contexts when today’s punishment also determines tomorrow’s cooperation abilities, it seems of crucial importance that groups agree on the right “dose†of sanctions for punishment to successfully support sustainable cooperation, e.g. by establishing a social norm of when and how to use punishment against free-riders .
    Keywords: Cooperation, Dynamic game, Punishment, Retaliation, Endowment endogeneity, Experiment
    Date: 2017
  11. By: Brutscher, Philipp-Bastian; Heipertz, Jonas; Hols, Christopher
    Abstract: This paper uses a unique experiment conducted as part of the Investment Survey of the European Investment Bank (EIB) to provide novel evidence on firms' preferences over loan characteristics and the relation between terms of credit and investment decisions. The design of the experiment allows revealing firm's financing preferences and willingness-to-pay in a clean and straightforward manner. The results show that firms are especially sensitive to the loan amount, the collateral requirement and the interest rate. Results are heterogeneous between sectors, size classes and types of projects.
    Keywords: firm preferences,investment decision,corporate finance
    JEL: D22 D24 G11 G21 G30
    Date: 2017
  12. By: Paul Cheshire; Stephen Gibbons; Jemma Mouland
    Abstract: Objectives: To test whether a social landlord can improve health outcomes for older tenants and reduce their NHS usage by simple interventions. Design: Randomised controlled trial. Setting: Social housing in five London Boroughs. Participants: 547 individuals over 50 years of age. Intervention: Baseline and two follow-up assessments of individual's health and use of medical services undertaken by health professionals. In the treated groups, individuals were given health care and support at two different levels. 25 individuals had to be removed from the trial because early assessments revealed critical and untreated health issues. Main outcome measures: Self-reported health and wellbeing ratings and NHS usage. Conclusions: Even simple interventions to a targeted group (older and poorer people), can produce significant reductions in NHS usage. Significant reductions were found for 1) planned hospital usage; 2) nights in hospital; and 3) for emergency GP usage. Well-being scores improved in the most strongly treated group but these were not statistically significant. Perhaps the single most important finding was that the early health evaluations revealed that 4.5% of the total sample - not in the most deprived section of the population - had such severe health problems that significant and immediate intervention was required.
    Keywords: randomised control trial, social housing, health interventions
    JEL: I18 C93 R29
    Date: 2017–08
  13. By: Julio Elias; Nicola Lacetera; Mario Macis
    Abstract: Understanding the influence of moral repugnance on social decisions is challenging, particularly because in several cases not all of the relevant policy options can be observed. In a series of recent studies, we designed survey experiments to identify individual preferences in morally controversial transactions, with focus on the provision of payments to kidney donors in the United States (Elias, Lacetera and Macis 2015a-b, 2016a). We found that providing information on how a price mechanism can help alleviate the organ shortage significantly reduces opposition toward payments for organs. Moreover, we quantified the trade-off that people make between the repugnance and the efficiency of alternative kidney procurement systems. In Elias, Lacetera, Macis and Salardi (2017), finally, we analyzed how the regulation of controversial activities is related to economic development. This paper summarizes these findings and analyzes their main implications for public policy and market design.
    Date: 2017–08
  14. By: Matsuyama, Kiminori; Ushchev, Philip
    Abstract: We characterize three classes of demand systems, all of which are defined non-parametrically: homothetic demand systems with a single aggregator (HSA), those with direct implicit additivity (HDIA), and those with indirect implicit additivity (HIIA). In HSA, all the cross-price effects are captured by one price aggregator, while in HDIA and in HIIA, they are captured by two price aggregators. Each of these three classes contains CES as a special case. Yet, they are pairwise disjoint with the sole exception of CES. Thus, these classes of homothetic demand systems offer us three alternative ways of departing from CES.
    Keywords: CES; CRS production functions; Demand systems with a single aggregator; direct implicit additivity; gross complements and gross substitutes.; homothetic preferences; indirect implicit additivity; translog
    JEL: D11 D21
    Date: 2017–08

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