nep-exp New Economics Papers
on Experimental Economics
Issue of 2017‒12‒18
34 papers chosen by

  1. Increasing trust in the bank to enhance savings: Experimental evidence from India By Rahul Mehrotra; Vincent Somville; Lore vandewalle
  2. How Stress Affects Performance and Competitiveness across Gender By Jana Cahlikova; Lubomir Cingl; Ian Levely
  3. Physical Distance and Cooperativeness Towards Strangers By Leonie Kühl; Nora Szech
  4. Tweeting for Peace: Experimental Evidence from the 2016 Colombian Plebiscite By Jorge Gallego; Juan D. Martínez; Kevin Munger; Mateo Vásquez
  5. You Are Not Alone: Experimental Evidence on Risk Taking When Social Comparisons Matter By Harald W. Lang
  6. It's not all fun and games: Feedback, task motivation, and effort By Sheheryar Banuri; Katarina Dankova; Philip Keefer
  7. Instability in the Voluntary Contribution Mechanism with a Quasi-linear Payoff Function: An Experimental Analysis By Jun Feng; Tatsuyoshi Saijo; Junyi Shen; Xiangdong Qin
  8. Competition, Information and Cooperation. By Lotito, Gianna; Migheli, Matteo; Ortona, Guido
  9. Nudging with heterogeneity in terms of environmental sensitivity : a public goods experiment in networks. By Benjamin Ouvrard; Anne Stenger
  10. Replication in experimental economics: A historical and quantitative approach focused on public good game experiments By Nicolas Vallois; Dorian Jullien
  11. Gender differences in the choice of major: The importance of female role models By Catherine Porter; Danila Serra
  12. Competing Currencies in the Laboratory By Janet Hua Jiang; Cathy Zhang
  13. How do voters respond to information on self-serving elite behaviour? Evidence from a randomized survey experiment in Tanzania By Ivar Kolstad; Arne Wiig
  14. Love the job... or the patient? Task vs. mission-based motiviations in healthcare By Sheheryar Banuri; Philip Keefer; Damien de Walque
  15. The Effect of Positive Mood on Cooperation in Repeated Interaction By Proto, Eugenio; Sgroi, Daniel; Nazneen, Mahnaz
  16. Collective Action in Games as in Life: Experimental Evidence from Canal Cleaning in Haiti By Abbie Turiansky
  17. Zum Zusammenhang zwischen Employer Awards und Arbeitgeberattraktivität By Weinert, Stephan
  18. KÖLSCH versus ALT: Erkenntnisse aus konsumentenpsychologischen Experimenten By Quack, Helmut
  19. Learning Intensity Effects in Students' Mental and Physical Health - Evidence from a Large Scale Natural Experiment in Germany By Hofmann, Sarah; Mühlenweg, Andrea
  20. Using Behavioral Science to Improve Survey Response: An Experiment with the National Beneficiary Survey (In Focus Brief) By Amy Johnson; Ryan Callahan; Jesse Chandler; Jason Markesich
  21. Escalation in Dynamic Conflict: On Beliefs and Selection By Kai A. Konrad; Florian Morath
  22. Rational Heuristics? Expectations and Behaviors in Evolving Economies with Heterogeneous Interacting Agents By Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Joseph E. Stiglitz; Tania Treibich
  23. A Stream of Prospects or a Prospect of Streams: On the Evaluation of Intertemporal Risks By James Andreoni; Paul Feldman; Charles Sprenger
  24. Financial Literacy and Financial Behavior: Evidence from the Emerging Asian Middle Class By Antonia Grohmann
  25. Coping with advantageous inequity - Field evidence from professional penalty kicking By Mario Lackner; Hendrik Sonnabend
  26. Online Red Packets: A Large-scale Empirical Study of Gift Giving on WeChat By Yuan Yuan; Tracy Xiao Liu; Chenhao Tan; Jie Tang
  27. The Price Effects of Liquidity Shocks: A Study of SEC's Tick-Size Experiment By Albuquerque, Rui; Song, Shiyun; Yao, Chen
  28. Strategic Philanthropists: Who Are They and Do They Matter? By Vicky Barham; Rose Anne Devlin; Rebekah Owusu
  29. Social Insurance and Occupational Mobility By Cubas, German; Silos, Pedro
  30. Algorithms for cautious reasoning in games* By Asheim, Geir B.; Perea, Andrés
  31. Student awareness of costs and benefits of educational decisions: effects of an information campaign By McGuigan, Martin; McNally, Sandra; Wyness, Gill
  32. Information theory and behavior By Duncan K. Foley
  33. Prize allocation and incentives in team contests By Crutzen, Benoît SY; Flamand, Sabine; Sahuguet, Nicolas
  34. Personality influences hyperbolic discounting By Da Silva, Sergio; De Faveri, Dinorá; Matsushita, Raul

  1. By: Rahul Mehrotra; Vincent Somville; Lore vandewalle
    Abstract: Recent evidence highlights the importance of trust in explaining bank account savings. According to economic theory, repeated interactions can play a crucial role in shaping trust. We designed the first field experiment that tests whether increased interactions between clients and bankers influence a client's trust in bankers. We promoted interactions by randomly (i) opening accounts for the unbanked and (ii) making weekly payments on their accounts. At the end of these interventions, we measured trust by playing trust games between clients on the one hand, and their own local banker as well as an anonymous other banker on the other hand. The only intervention that has a signicant impact on the number of interactions is opening a bank account. It also greatly increases trust in the anonymous banker, but not in their own banker. Next, we investigate the importance of trust for account savings. We find a strong positive correlation between the clients' trust in their own banker and savings in the account, but their trust in another banker does not correlate with savings. From the decomposition of trust in its different determinants, we learn that expected trustworthiness matters most in explaining savings, while there is a minor role for social preferences and no role for risk attitudes. We conclude that the personalized client-banker relationships are crucial, but not malleable. Strategies which can deal with the expected trustworthiness - such as providing access to an ATM, or to a denser network of local bankers - might promote bank account savings.
    Keywords: India finance trust savings banking experiment rct
    Date: 2016
  2. By: Jana Cahlikova; Lubomir Cingl; Ian Levely
    Abstract: Since many key career events, such as exams and interviews, involve competition and stress, gender differences in response to these factors could help to explain the labor-market gender gaps. In a laboratory experiment, we manipulate psychosocial stress using the Trier Social Stress Test, and conï¬ rm that this is effective by measuring salivary cortisol. Subjects perform a realeffort task under both tournament and piece-rate incentives and we elicit willingness to compete. We ï¬ nd that women under heightened stress do worse than women in the control group when compensated with tournament incentives, while there is no treatment difference for performance under piece-rate incentives. For males, stress does not affect output under competition. We also ï¬ nd that stress decreases willingness to compete overall, and for women, this is related to performance. These results help to explain previous ï¬ ndings on gender differences in performance under competition both in and out of the lab.
    Keywords: competitiveness, performance in tournaments, psychosocial stress, gender gap
    JEL: C91 D03 J16 J33
    Date: 2017–03
  3. By: Leonie Kühl (Karlsruhe Institute of Technology); Nora Szech (Karlsruher Institut für Technologie)
    Abstract: Cooperativeness among genetically unrelated humans remains a major puzzle in the social sciences. We explore the causal impact of physical distance on willingness to help. In a field setting, participants decide about supporting local refugees at the dispense of money to themselves. We vary physical distance only, and keep other factors such as cultural distance fixed. The data shows that an increase in local physical distance decreases willingness to donate. A laboratory experiment confirms this finding. We further explore the causal roles of exposure (in the field) and of larger distances (in the lab) with a total of 475 participants.
    Keywords: cooperativeness, physical distance, strangers, morally relevant behavior, local neighborhoods
    JEL: C91 C93 D64
    Date: 2017–12
  4. By: Jorge Gallego; Juan D. Martínez; Kevin Munger; Mateo Vásquez
    Abstract: The decades-long Colombian civil war nearly came to an official end with the 2016 Peace Plebiscite, which was ultimately defeated in a narrow vote. This conflict has deeply divided Colombian civil society, and non-political public figures have played a crucial role in structuring debate on the topic. To understand the mechanisms underlying the influence of members of civil society on political discussion, we performed a randomized experiment on Colombian Twitter users shortly before this election. Sampling from a pool of subjects who had been frequently tweeting about the Plebiscite, we tweeted messages that encouraged subjects to consider different aspects of the decision. We varied the identity (a general, a scientist, and a priest) of the accounts we used and the content of the messages we sent. We found little evidence that any of our interventions were successful in persuading subjects to change their attitudes. However, we show that our pro-Peace messages encouraged liberal Colombians to engage in significantly more public deliberation on the subject.
    Date: 2017–11–30
  5. By: Harald W. Lang
    Abstract: We provide experimental evidence that social comparisons affect individual risk taking. In particular, we focus on the case when individuals care about their income-rank. Our model predicts that compared to standard expected utility theory income-rank comparisons lead to less (more) risk taking in case of lotteries with more probability mass on the downside (upside) of the distribution. Evidence shows in line with our predictions that individuals take less risk when lotteries have more probability weight on the downside. However, we do not find an effect for lotteries with more upside probability mass. The effect of social comparisons on risk taking is strongest when the deciding subject and the reference subject are of the same gender.
    Keywords: Social comparisons, individual risk taking, status, portfolio choice, relative income concerns, experiment
    JEL: C91 D03 D81 G11
    Date: 2016–11
  6. By: Sheheryar Banuri (University of East Anglia); Katarina Dankova (University of East Anglia); Philip Keefer (Inter-American Development Bank)
    Abstract: Performance feedback is a pervasive element of education, management, marketing, and the entire gaming industry. Prior research on feedback focuses on what information individuals receive, and how frequently. The gaming industry, though, is built upon the premise that how feedback is delivered matters and, in particular, that "context" – narrative and story – are key. However, even as organizations increasingly adopt gaming elements into their feedback systems, prior research offers little guidance about whether standard performance feedback, combined with gaming elements, yields greater effort. We report the results of experiments that identify the impact of feedback through gamification, through a novel experimental design that introduces narratives into the task. Compared to standard performance feedback, gamification significantly increases effort in a "real effort" task. However, consistent with past research showing that intrinsic and extrinsic incentives interact, gamification has a positive impact on effort when extrinsic incentives are low, but no impact when they are high. The introduction of narrative – storyline development – induces the greatest effort, even compared to Leaderboards, a gaming element that often features in performance feedback systems.
    Keywords: intrinsic motivation, extrinsic motivation, performance, feedback, gamification, effort
    JEL: J24 M12 C91
    Date: 2017–11
  7. By: Jun Feng; Tatsuyoshi Saijo (Research Institute for Humanity and Nature); Junyi Shen (Research Institute for Economics and Business Administration, Kobe University); Xiangdong Qin (Antai College of Economics and Management,Shanghai Jiaotong University)
    Abstract: We conduct experiments to investigate the convergence of contributions in the voluntary contribution mechanism (VCM) with two quasi-linear payoff functions. One is linear with respect to private goods and nonlinear with respect to public goods; we call it “QL1.†The other is linear with respect to public goods and nonlinear with respect to private goods; we call it “QL2.†The system with QL1, built on the assumption of self-interested players and myopic Cournot best response dynamics, is not stable, but the system with QL2 has a dominant Nash equilibrium. This theoretical result predicts a “pulsing†of contributions in the VCM with QL1. Our experimental observations demonstrate that individual contributions are certainly converging to the dominant Nash equilibrium in the experiment with QL2. In the experiments with QL1, however, the dispersion of individual contributions increases progressively with repeated trials, and the contributions are still volatile in the experiments’ last periods, although we do not find a clearly unstable pulsing in the group’s total contribution.
    Keywords: Instability, public goods game, lab experiment, voluntary contribution mechanism, conditional cooperator
    JEL: H41
    Date: 2017–12
  8. By: Lotito, Gianna; Migheli, Matteo; Ortona, Guido (University of Turin)
    Abstract: We inquire experimentally whether rivalry induced by competition has any impact on the individual voluntary contribution to a public good. Participants perform a task and are remunerated according to two schemes, a noncompetitive and a competitive one, then they play a standard public goods game. In the first scheme participants earn a flat remuneration, in the latter they are ranked according to their performance and remunerated accordingly. Information about ranking and income, before the game is played, varies across three different treatments. We find that competition per se does not affect the amount of contribution. The time spent to choose how much to contribute is negatively correlated with the decision of cooperating fully. The main result is that full information about the relative performance in the competitive environment enhances cooperation, while partial information reduces it.
    Date: 2017–09
  9. By: Benjamin Ouvrard; Anne Stenger
    Abstract: We propose an experiment to test whether the reaction to a nudge implemented in a network depends on the network structure and on the sensitivity of individuals to the environment. After having elicited the sensitivity of subjects to environmental matters, the subjects played a public goods game in a network. The first ten periods served as a baseline. A nudge (announcement of the socially optimal level of investment) was then implemented both under complete information (the content of the nudge takes individuals’ position into account) and under incomplete information (the nudge cannot rely on individuals’ positions). Nudge implementation induces a higher coordination on the social optimum in the circle network for the most sensitive subjects. In the star network, the targeted nudge induces a decrease in the level of investments for the least sensitive subjects. Thus, nudge implementation should target specific individuals in specific network structures.
    Keywords: environmental sensitivity; inequity aversion; networks; nudge; public goods experiment.
    JEL: C72 C91 H41 Q50
    Date: 2017
  10. By: Nicolas Vallois (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Dorian Jullien (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - Centre National de la Recherche Scientifique - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - UCA - Université Côte d'Azur)
    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
    Date: 2017–11–28
  11. By: Catherine Porter (Heriot-Watt University); Danila Serra (Southern Methodist University)
    Abstract: Women have been traditionally underrepresented in several fields of study, notably those with the highest returns. While in the last two decades many disciplines, including mathematics and physical sciences, have made significant progress in attracting and retaining women, there has been little improvement in the field of economics, which remains heavily male-dominated. We report results from a field experiment aimed at increasing the percentage of women majoring in economics through exposure to carefully chosen female role models. We randomly selected a subset of Principles of Economics classes to be assigned to our role model treatment. Since the same classes were also offered and taught by the same instructors the previous year, we are able to employ a difference-in-differences estimation strategy to test whether the role model intervention increased the percentage of women planning to major in economics (survey-based) and enrolling in intermediate economics classes (administrative data) the semester and year following the intervention. Our results suggest that, while the role model intervention had no impact on male students, it significantly increased female students' likelihood of expressing interest in the economics major and enrolling in further economics classes.
    Keywords: education gender gap, role models, field experiment, economics.
    JEL: A22 I23 I24 J16 C93
    Date: 2017–12
  12. By: Janet Hua Jiang; Cathy Zhang
    Abstract: We investigate competition between two intrinsically worthless currencies as a result of decentralized interactions between human subjects. We design a laboratory experiment based on a simple two-country, two-currency search model to study factors that affect circulation patterns and equilibrium selection. Experimental results indicate foreign currency acceptance rates decrease with relative country size but are not significantly affected by the degree of integration. The laboratory economies tend to converge to a unified currency regime where both currencies circulate at home and abroad, even if other regimes are theoretical possibilities. Introducing government transaction policies biased towards domestic currency significantly reduces the acceptability of foreign currency. These findings suggest government policies can serve as a coordination device when multiple currencies are available.
    Keywords: Central bank research, Digital Currencies
    JEL: C92 D83 E40
    Date: 2017
  13. By: Ivar Kolstad; Arne Wiig
    Abstract: Does self-serving elite behaviour make citizens more politically active? This paper presents the results of a randomized field experiment where voters in Tanzania were given information about elite use of tax havens. Information provided in a neutral form had no effect on voting intentions. Information phrased in more morally charged terms led to a reduction in voting intentions. Additional evidence suggests that rather than increase the perceived importance of voting, charged information tends to undermine confidence in political institutions and the social contract. The effects are particularly pronounced among the less well off, indicating that increased transparency in the absence of perceived agency may not improve democratic accountability.
    Date: 2016
  14. By: Sheheryar Banuri (University of East Anglia); Philip Keefer (Inter-American Development Bank); Damien de Walque (The World Bank)
    Abstract: A booming literature has argued that mission-based motives are a central feature of mission-oriented labor markets. We shift the focus to task-based motivation and find that it yields significantly more effort than mission-based. Moreover, in the presence of significant task motivation, mission motivation has no additional effect on effort. The evidence emerges from experiments with nearly 250 medical and nursing students in Burkina Faso. The students exert effort in three tasks, from boring to interesting. In addition, for half of the students, mission motivation is present: their effort on the task generates benefits for a charity. Two strong results emerge. First, task motivation has an economically important effect on effort, more than doubling effort. Second, mission motivation increases effort, but only for mundane tasks and not when the task is interesting. Even for mundane tasks, moreover, the effects of mission motivation appear to be less than those of task motivation.
    Keywords: public sector reform, civil service, intrinsic motivation, extrinsic motivation, performance
    JEL: C91 H83 J45
    Date: 2017–11
  15. By: Proto, Eugenio (University of Warwick, CAGE and IZA); Sgroi, Daniel (University of Warwick, CAGE and Nuffield College, University of Oxford); Nazneen, Mahnaz (University of Warwick)
    Abstract: Existing research supports two opposing mechanisms through which positive mood might affect cooperation. Some studies have suggested that positive mood produces more altruistic, open and helpful behavior, fostering cooperation. However, there is contrasting research supporting the idea that positive mood produces more assertiveness and inward-orientation and reduced use of information, hampering cooperation. We find evidence that suggests the second hypothesis dominates when playing the repeated Prisoner’s Dilemma. Players in an induced positive mood tend to cooperate less than players in a neutral mood setting. This holds regardless of uncertainty surrounding the number of repetitions or whether pre-play communication has taken place. This finding is consistent with a text analysis of the pre-play communication between players indicating that subjects in a more positive mood use more inward-oriented, more negative and less positive language. To the best of our knowledge we are the first to use text analysis in pre-play communication.
    Keywords: JEL Classification:
    Date: 2017
  16. By: Abbie Turiansky
    Abstract: This paper explores the impact of farmers’ exposure to a collective action dilemma in a framed public goods game on their real-world contributions to a public good. Farmers who were randomly selected to play the public goods games were 47% more likely than the control group to volunteer to clean shared irrigation canals.
    Keywords: Haiti, public goods, framed field experiments, behavioral economic nudges
    JEL: F Z
  17. By: Weinert, Stephan (Department of Economics of the Duesseldorf University of Applied Sciences)
    Abstract: In der vorliegenden Studie wurde der Forschungsfrage nachgegangen, ob Unternehmen in Employer Awards investieren sollten, um als attraktiver Arbeitgeber wahrgenommen zu werden. Methodisch basiert die Untersuchung auf einem experimentellen einfaktoriellen Zufallsgruppenversuchsplan mit Mehrgruppen-Design. Der zentrale Befund lautet, dass Unternehmen Investitionen in Employer Awards kritisch prüfen sollten, da von ihnen kein positiver Effekt auf die wahrgenommene Arbeitgeberattraktivität auszugehen scheint.
    Abstract: The studys research question was if firms should invest in employer awards in order to be better perceived as attractive employers. The methodology was based on an experimental univariate randomized multi-group design. As a main finding it can be concluded that firms should carefully evaluate if investments in employer awards are necessary, given that they seem not to have any positive effect on perceived employer attractiveness.
    Keywords: Employer Branding, Employer Awards, Recruiting
    JEL: J2 M12 M5
    Date: 2017–03
  18. By: Quack, Helmut (Department of Economics of the Duesseldorf University of Applied Sciences)
    Abstract: In konsumentenpsychologischen Experimenten mit 50 Kölnern und 50 Düsseldorfern im Alter von 35 bis 65 Jahren wurde untersucht, ob man Unterschiede zwischen den beiden Biersorten KÖLSCH und ALT erkennen kann. Dazu wurde zunächst in einem Blindtest der Geschmack von KÖLSCH und ALT beurteilt. Die Bewertungen von KÖLSCH und ALT bzgl. der Merkmale „schmeckt mir“ sowie „schmeckt frisch“, „schmeckt mild“, „schmeckt würzig“ waren nahezu gleich. Weiterhin wurde in einem Blindtest untersucht, ob die Versuchspersonen KÖLSCH und ALT überhaupt identifizieren können. Auch hierbei gab es keine signifikanten Unterschiede. Nur zu 55 % wurde das Bier richtig erkannt, was auf Zufalls- bzw. Rateniveau liegt. Später wurde in einem offenen Test nochmals der Geschmack für KÖLSCH und ALT untersucht. Jetzt zeigt sich, dass den Kölnern das KÖLSCH deutlich besser schmeckt als das ALT. Den Düsseldorfern hingegen schmeckt das ALT signifikant besser als das KÖLSCH. Eine Untersuchung der Präferenzen unterstützt diese Ergebnisse: Während in dem Blindtest die Präferenzen bei annähernd 50:50 lagen, veränderten sich diese im separaten offenen Test mit 78:22 zugunsten des Heimatbieres. Diese Ergebnisse sind schon erstaunlich, da einfach nicht zu glauben ist, dass Männer zwischen KÖLSCH und ALT objektiv nicht unterscheiden können. Die Ergebnisse werden ausführlich psychologisch und wissenschaftstheoretisch interpretiert und daraus Erkenntnisse für das Marketing abgeleitet.
    Abstract: In consumer psychological experiments with 50 men of Cologne and 50 men of Dusseldorf between the age of 35 and 65, we examined whether there are recognizable differences between the two beers, KÖLSCH and ALT. Firstly the taste of KÖLSCH and ALT was judged in a blind test. The results of the evaluation of KÖLSCH and ALT regarding the characteristics “tastes good”, “tastes fresh”, “tastes mild” and “tastes aromatic” were nearly equal. A further blind test examined whether the test subjects could actually recognize KÖLSCH and ALT at all. Again there was no significant difference – only 55 % of the beer was identified correctly which is on a random level. Later, the taste of KÖLSCH and ALT was tested again, but in an open test. This time the men of Cologne clearly prefer the taste of KÖLSCH. The men of Dusseldorf, however, find the taste of the ALT significantly better than the taste of KÖLSCH. A study of the preferences supports these findings: Whereas the preferences in the blind test, were nearly 50:50, the preferences in the separate open test changed to 78:22 in favour of the home beer. These results are quite amazing, because it is unbelievable that men cannot differentiate objectively between KÖLSCH and ALT. The results are psychologically and epistomologically interpreted in detail and thus insights can be derived for marketing.
    Keywords: Kölsch, Alt, Bier, Geschmack, Experiment, Biermarketing, beer, taste, beer marketing
    JEL: M31 C83 L66
    Date: 2016–07
  19. By: Hofmann, Sarah; Mühlenweg, Andrea
    Abstract: In this study, we analyze health effects of a recent education reform in Germany exposing students to increased schooling intensity. The reform shortened the higher secondary education track by one year. As the overall curriculum required for graduation was held constant, this led to an increase in instruction hours in the remaining school years. The reform has been introduced at different points in time across federal states, providing us with a difference-in-difference setup for analysis. Based on data from the German Socio-Economic Panel Study (SOEP), our results imply that the reform significantly reduced adolescents' self-rated mental health status. The overall effect on the mental component summary score (MCS) is about a quarter of a standard deviation. Examining MCS sub-dimensions, we find detrimental effects of the reform on vitality and on emotional balance. We also observe significant impacts on self-assessed general physical health.
    Keywords: Adolescent health; schooling intensity; school reform; natural experiment
    JEL: J24 I14
    Date: 2017–12
  20. By: Amy Johnson; Ryan Callahan; Jesse Chandler; Jason Markesich
    Abstract: This brief showcases how behavioral science can be used to boost call-in rates for surveys and increase our understanding of characteristics, experiences, and behaviors when administrative data sources don’t provide the kind of rich data we need.
    Keywords: behavioral science, survey response rates, survey research
    JEL: I J
  21. By: Kai A. Konrad; Florian Morath
    Abstract: We study a dynamic multi-stage contest that resolves in each stage only with a given probability. Assuming that there is unobservable heterogeneity in intrinsic motivations we derive properties of the equilibrium efforts across the different stages. Whereas in the corresponding complete information benchmark equilibrium efforts are stable across the stages, uncertainty about the type distribution of possible opponents generates learning. We identify reasons for dynamic adjustments of efforts caused by belief formation and updating and by selection of certain types into continuing conflict. A corresponding experimental setup provides evidence for escalation of efforts in later stages, for type heterogeneity, for belief formation and belief updating, and for selfselection. Overall, our results suggest the importance of an appropriate benchmark model when testing predictions on behavior in conflict or related strategic interactions.
    Keywords: Dynamic conflict, lottery contest, heterogeneity, incomplete information, uncertainty, escalation, beliefs, selection, learning, experiment
    JEL: C90 D72 D74 D83
    Date: 2017–08
  22. By: Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Joseph E. Stiglitz; Tania Treibich
    Abstract: We analyze the individual and macroeconomic impacts of heterogeneous expectations and action rules within an agent-based model populated by heterogeneous, interacting firms. Agents have to cope with a complex evolving economy characterized by deep uncertainty resulting from technical change, imperfect information and coordination hurdles. In these circumstances, we find that neither individual nor macroeconomic dynamics improve when agents replace myopic expectations with less naie learning rules. In fact, more sophisticated, e.g. recursive least squares (RLS) expectations produce less accurate individual forecasts and also considerably worsen the performance of the economy. Finally, we experiment with agents that adjust simply to technological shocks, and we show that individual and aggregate performances dramatically degrade. Our results suggest that fast and frugal robust heuristics are not a second-best option: rather they are "rational" in macroeconomic environments with heterogeneous, interacting agents and changing "fundamentals".
    Keywords: complexity, expectations, heterogeneity, heuristics, learning, agent-based model, computational economics
    Date: 2017–12–07
  23. By: James Andreoni; Paul Feldman; Charles Sprenger
    Abstract: Recent debate has identified important gaps in the understanding of intertemporal risks. Critical to closing these gaps is evidence on which dimension of intertemporal risk – the risk or the time – is evaluated first. Though under discounted expected utility this ordering is of no consequence, under discounted non-expected utility models the order of evaluation is critical. We provide experimental tests in which different orderings of evaluation generate different predictions for behavior. We find more support for the notion that the risk dimension is evaluated first.
    JEL: C91 D81 D91
    Date: 2017–11
  24. By: Antonia Grohmann
    Abstract: This paper analyses financial literacy and financial behavior of middle class people living an urban Asian economy. Other than most papers on financial literacy that focus on people in developed countries, we surveyed people living Bangkok. Using standard financial literacy questions, we find that financial literacy levels are largely comparable to industrialized countries, but understanding of more advanced financial concepts is lower. Similarly, savings accounts are held by most people, but more sophisticated products are a lot less common. We further show, in line with the literature, that higher financial literacy leads to improved financial decision making.
    Keywords: Financial literacy, Saving, Borrowing, Household finance
    JEL: D14 G11 D91
    Date: 2017
  25. By: Mario Lackner; Hendrik Sonnabend (Universtity of Hagen)
    Abstract: This contribution examines the effect of advantageous inequity on performance using data from top-level penalty kicking in soccer. Results indicate that, on average, professionals do not perform worse when they experience unfair advantages. However, we find a negative effect of advantageous inequity in situations where success is less important.
    Keywords: advantageous inequity; guilt; self-serving bias; fairness; performance
    JEL: C93 D91
    Date: 2017–12
  26. By: Yuan Yuan; Tracy Xiao Liu; Chenhao Tan; Jie Tang
    Abstract: Gift giving is a ubiquitous social phenomenon, and red packets have been used as monetary gifts in Asian countries for thousands of years. In recent years, online red packets have become widespread in China through the WeChat platform. Exploiting a unique dataset consisting of 61 million group red packets and seven million users, we conduct a large-scale, data-driven study to understand the spread of red packets and the effect of red packets on group activity. We find that the cash flows between provinces are largely consistent with provincial GDP rankings, e.g., red packets are sent from users in the south to those in the north. By distinguishing spontaneous from reciprocal red packets, we reveal the behavioral patterns in sending red packets: males, seniors, and people with more in-group friends are more inclined to spontaneously send red packets, while red packets from females, youths, and people with less in-group friends are more reciprocal. Furthermore, we use propensity score matching to study the external effects of red packets on group dynamics. We show that red packets increase group participation and strengthen in-group relationships, which partly explain the benefits and motivations for sending red packets.
    Date: 2017–12
  27. By: Albuquerque, Rui; Song, Shiyun; Yao, Chen
    Abstract: This paper studies the SEC's pilot program that increased the tick size for approximately 1,200 randomly chosen stocks. We provide causal evidence of a negative impact of a larger tick size on stock prices equivalent to roughly $7 billion investor loss. We investigate direct and indirect effects of the tick size change on stock prices. We find that treated stocks experience a reduction in liquidity, but find no significant change in liquidity risk. Test stocks experience a decline in price efficiency consistent with an increase in information risk. The evidence suggests that trading frictions affect the cost of capital.
    Keywords: information risk; investor horizon; JOBS Act; liquidity; liquidity premium; liquidity risk; news response rate; price efficiency; tick size pilot program
    JEL: G10 G14
    Date: 2017–12
  28. By: Vicky Barham (University of Ottawa, ON, Canada); Rose Anne Devlin (University of Ottawa, ON, Canada); Rebekah Owusu (University of Ottawa, ON, Canada)
    Abstract: Anecdotal evidence suggests that charitable givers – particularly those with the financial means and inclination to make substantial donations – are increasingly strategic in their philanthropic behavior. This study is the first econometric investigation of individual strategic giving, that is giving which is planned, concentrated, and where the donor is also involved as a volunteer. Approximately 3% of the total giver population gives strategically in Canada. We find that the propensity to give strategically is strongly and positively correlated with the level of education and youth experiences, and that strategic givers are substantially more generous than non-strategic givers, particularly after controlling for endogeneity. Strategic giving has a large positive impact on the amount donated to secular organisations, but has no effect whatsoever on the level of religious giving, supporting the view that religious gifts should be modelled differently from non-religious gifts.
    Keywords: Strategic giving; philanthropy; charitable donations.
    Date: 2017
  29. By: Cubas, German; Silos, Pedro
    Abstract: This paper studies how insurance from progressive taxation improves the matching of workers to occupations. We propose an equilibrium dynamic assignment model to illustrate how social insurance encourages mobility. Workers experiment to find their best occupational fit in a process filled with uncertainty. Risk aversion and limited earnings insurance induce workers to remain in unfitting occupations. We estimate the model using microdata from the United States and Germany. Higher earnings uncertainty explains the U.S. higher mobility rate. When workers in the United States enjoy Germany’s higher progressivity, mobility rises. Output and welfare gains are large.
    Keywords: Progressive Taxation, Social Insurance, Occupational Choice
    JEL: E21 H24 J31
    Date: 2017–12
  30. By: Asheim, Geir B. (Dept. of Economics, University of Oslo); Perea, Andrés (Maastricht University)
    Abstract: We provide comparable algorithms for the Dekel-Fudenberg procedure, iterated admissibility, proper rationalizability and full permissibility by means of the concepts of preference restrictions and likelihood orderings. We apply the algorithms for comparing iterated admissibility, proper rationalizability and full permissibility, and provide a sufficient condition under which iterated admissibility does not rule out properly rationalizable strategies. Finally, we use the algorithms to examine an economically relevant strategic situation, namely a bilateral commitment bargaining game.
    Keywords: Non-cooperative games; proper rationalizability; iterated admissibility; bargaining
    JEL: C72 C78
    Date: 2017–10–01
  31. By: McGuigan, Martin; McNally, Sandra; Wyness, Gill
    Abstract: Many students appear to leave full-time education too soon, despite the possibility of high returns from further investment in their education. One contributory factor may be insufficient information about the potential consequences of their choices. We investigate students’ receptiveness to an information campaign about the costs and benefits of pursuing postcompulsory education. Our results show that students with higher expected net benefits from accessing information are more likely to avail themselves of the opportunity presented by our experiment. Their intention to stay on in post-16 education is strongly affected by the experiment, though not their intention to apply to university. Effects are heterogeneous by family background and gender.
    JEL: J1
    Date: 2016–12–01
  32. By: Duncan K. Foley (Department of Economics, New School for Social Research)
    Abstract: The quantal response behavior widely observed in experiments and observations of human and animal behavior can be derived as ex- pected payo maximization subject to a constraint on the entropy of the subject's behavior mixed strategy. The Lagrange multiplier cor- responding to the entropy constraint is an agent's "behavior tempera- ture". Entropy-constrained behavior approximates payo -maximizing behavior, but in many contexts exhibits qualitatively di erent out- comes. The "endowment e ect" and other instances of "loss-aversion", for example, can be seen as a consequence of entropy-constrained be- havior. Identical entropy-constrained agents with the same value for a good or asset will exhibit spontaneous "noise trading". An entropy- constrained agent with a lower behavior temperature will systemati- cally take economic surplus away from an agent with the same valu- ation of a good but a higher behavior temperature in bilateral trans- actions. The equilibrium of a standard supply-demand models with entropy-constrained agents is a non-degenerate frequency distribution of transaction prices rather than a single equilibrium price. Changes in behavior temperature can transorm social interaction games from prisoners' dilemmas to assurance games. Entropy-constrained quan- tal responses allow quantitative inferences about payo changes and distribution stronger than qualitative Pareto comparisons.
    Keywords: Entropy constraints, behavior temperature, statistical equilibrium, noise trading, market equilibrium
    JEL: A1 C0 C50
    Date: 2017–12
  33. By: Crutzen, Benoît SY; Flamand, Sabine; Sahuguet, Nicolas
    Abstract: We study a contest between teams that compete for multiple indivisible prizes. Team output is a CES function of all the team members' efforts. We use a generalized Tullock contest success function to allocate prizes between teams. We study how different intra-team prize allocation rules impact team output. We consider an egalitarian rule that gives all members the same chance of receiving a prize, and a list rule that sets ex-ante the order in which members receive a prize. The convexity of the cost of effort function and the complementarity of individual efforts determine which rule maximizes team output and success. Our results speak to many real world situations, such as elections, contests for the allocation of local public goods and the internal organization of firms.
    Date: 2017–12
  34. By: Da Silva, Sergio; De Faveri, Dinorá; Matsushita, Raul
    Abstract: We gather survey evidence for the influence of the HEXACO personality traits on the phenomenon of hyperbolic discounting. We also consider the demographics of age, sex, income and education, and evaluate how these interact with personality and hyperbolic discounting. Due to a sampling technique of “snowball,” we assembled a sample of well-educated and relatively wealthy adults from both sexes. Most respondents escaped hyperbolic discounting, and for those affected there was no “magnitude effect.” Those participants showing higher conscientiousness were less hyperbolic. Moreover, those more open to experience who were more extroverted at the same time were also less hyperbolic. We also detail how such personality traits influence hyperbolic discounting mediated by the demographics of age, sex, income and educational attainment. Thus, conscientiousness, openness to experience and extraversion are traits that contribute to rational decisions in intertemporal choice in our sample, in that participants with these personality traits are less hyperbolic.
    Keywords: intertemporal choice, hyperbolic discounting, impatience, personality, HEXACO, Big Five
    JEL: D90
    Date: 2017

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.