nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒01‒22
sixteen papers chosen by

  1. Peer effects and risk-taking among entrepreneurs: Lab-in-the-field evidence By Maria Adelaida Lopera; Steeve Marchand
  2. "Trust and Cooperation at a Confluence of Worlds: An Experiment in Xinjiang, China" By Zhe Zhang; Louis Putterman; Xu Zhang
  3. Cultural Identities and Resolution of Social Dilemmas By James C. Cox; Vjollca Sadiraj; Urmimala Sen
  4. When Corporate Social Responsibility Backfires: Theory and Evidence from a Natural Field Experiment By John A. List; Fatemeh Momeni
  5. Experiment-inspired comments on John Roemer's theory of cooperation By Antoni Bosch-Domènech; Joaquin Silvestre
  6. Testosterone, personality traits and tax evasion By Marcelo Arbex; Justin M. Carre; Shawn N. Geniole; Enlinson Mattos
  7. It is Not Just Confusion! Strategic Uncertainty in an Experimental Asset Market By Eizo Akiyama; Nobuyuki Hanaki; Ryuichiro Ishikawa
  8. The Contingent Effect of Alliance Design on Alliance Dynamics and Performance: An Experimental Study By Banal-Estanol, Albert; Kretschmer, Tobias; Meloso, Debrah; Seldeslachts, Jo
  9. Who should be treated? Empirical welfare maximization methods for treatment choice By Toru Kitagawa; Aleksey Tetenov
  10. Who Cares About Social Image? By Engelmann, Dirk; Friedrichsen, Jana
  11. Towards firm's value co-creation: Improving gender balance in management with competition to achieve goals By Irene Comeig; Ainhoa Jaramillo-Gutiérrez; Federico Ramírez
  12. Physical Disability and Labor Market Discrimination: Evidence from a Field Experiment By Charles Bellemare; Marion Goussé; Guy Lacroix; Steeve Marchand
  13. Disentangling the effects of policy and payment consequentiality and risk attitudes on stated preferences By Ewa Zawojska; Anna Bartczak; Mikołaj Czajkowski
  14. Doubly Robust Uniform Confidence Band for the Conditional Average Treatment Effect Function By Sokbae Lee; Ryo Okui; Yoon-Jae Whang
  15. Augmenting Markets with Mechanisms By Samuel Antill; Darrell Duffie
  16. Student Loan Nudges: Experimental Evidence on Borrowing and Educational Attainment By Benjamin M. Marx; Lesley J. Turner

  1. By: Maria Adelaida Lopera; Steeve Marchand
    Abstract: We study how social interactions influence entrepreneurs' attitudes toward risk. We conduct two risk-taking experiments within workshops organized for young Ugandan entrepreneurs. Between the two experiments, the entrepreneurs participate in a networking activity where they build relationships and discuss with each other. We collect detailed data on peer network formation and on participants' choices before and after the networking activity. Our design implicitly controls for homophily effects (i.e. the tendency of individuals to develop relationships with people who have similar characteristics). We find that risk aversion is affected by social conformity. Participants tend to become more (less) risk averse in the second experiment if the peers they discuss with are on average more (less) risk averse in the first experiment. This suggests that social interactions play a role in shaping risk preferences.
    Keywords: Preference, Risk aversion, Entrepreneur, Social norms
    JEL: D03 D81 M13 Z13
    Date: 2017
  2. By: Zhe Zhang; Louis Putterman; Xu Zhang
    Abstract: We study trust and willingness to cooperate among and between Uyghur and Han college students in Xinjiang, China, where tensions exist between the two ethnic groups. We conduct an incentivized laboratory-style decision-making experiment in which within and between group interactions occur among identifiable participants without traceability of individual decisions. We find that members of each ethnicity show favoritism towards those of their own ethnicity in both trust and cooperation and that communication enhances inter- ethnic cooperation significantly. We also find that Uyghur and Han subjects behave differently in their willingness to cooperate relative to trust, although both trust and trustworthiness positively correlate with willingness to cooperate on the individual level.
    Date: 2018
  3. By: James C. Cox; Vjollca Sadiraj; Urmimala Sen
    Abstract: An experiment is reported for payoff-equivalent public good and common pool games with high caste and low caste West Bengali villagers. Tests are reported for models of unconditional social preferences, models of reciprocity, and cultural identity. Results from the artefactual field experiment indicate that when information about caste is withheld no significant difference is observed in the efficiency of play between the villagers and student subjects at American universities in games with positive and negative externalities. In contrast, making the hereditary class structure salient induces different behavior among villagers. Providing caste information leads to: (i) the lowest level of efficiency when low caste first movers interact with a low caste second mover, and (ii) the highest level of efficiency when high caste first movers interact with a high caste second mover. Cross-caste play generates intermediate levels of efficiency.
    JEL: C93 C70 H41
    Date: 2017–12
  4. By: John A. List; Fatemeh Momeni
    Abstract: Corporate Social Responsibility (CSR) has become a cornerstone of modern business practice, developing from a “why” in the 1960s to a “must” today. Early empirical evidence on both the demand and supply sides has largely confirmed CSR's efficacy. This paper combines theory with a large-scale natural field experiment to connect CSR to an important but often neglected behavior: employee misconduct and shirking. Through employing more than 3000 workers, we find that our usage of CSR increases employee misbehavior - 20% more employees act detrimentally toward our firm by shirking on their primary job duty when we introduce CSR. Complementary treatments suggest that “moral licensing” is at work, in that the “doing good” nature of CSR induces workers to misbehave on another dimension that hurts the firm. In this way, our data highlight a potential dark cloud of CSR, and serve to forewarn that such business practices should not be blindly applied.
    JEL: C93 D03
    Date: 2017–12
  5. By: Antoni Bosch-Domènech; Joaquin Silvestre
    Abstract: Motivated by Roemer’s Kantian equilibrium (John Roemer, 2010, 2015, In Press) we performed some experiments on cooperation in extremely simple treatments (Bosch-Domènech and Silvestre, 2017, and Appendix below). Here we comment on some lessons that we have learned from them, and offer some thoughts on Roemer’s theory of cooperation based on social situations that can be easily compared to those in our experiments.
    Date: 2017–12
  6. By: Marcelo Arbex (Department of Economics, University of Windsor); Justin M. Carre (Psychology Department, Nipissing University); Shawn N. Geniole (Social Neuroendocrinology Lab, Psychology Department, Nipissing University); Enlinson Mattos (São Paulo School of Economics, Getulio Vargas Foundation)
    Abstract: High testosterone levels in men may inhibit tax evasion. From a laboratory experiment with 121 young men, we present suggestive evidence of a weakly significant (at 10%) treatment effect, controlling for individual characteristics, prenatal and pubertal testosterone exposure, personality traits, medication and drugs use. Putative markers of prenatal and pubertal testosterone exposure and some personality traits might predict the decision of evading taxes. Reinforced by permutation tests for the treatment variable, a lower prevalence of tax evasion in the treated group is in line with recent results that suggest testosterone may increase prosocial or less selfish behavior.
    Keywords: Tax Compliance; Testosterone; Personality Traits; Experiment.
    JEL: H26 K42 C91 D91
    Date: 2018–01
  7. By: Eizo Akiyama (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba); Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Ryuichiro Ishikawa (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba)
    Abstract: To what extent is the observed mispricing in experimental asset markets caused by strategic uncertainty and by confusion? We address this question by comparing subjects' initial price forecasts in two market environments: one with six human traders, and the other with one human and five computer traders. We find that both strategic uncertainty and confusion contribute equally to the median initial forecast deviation from the fundamental value. The effect of strategic uncertainty is greater for subjects with a perfect score in the Cognitive Reflection Test, and it is not significant for those with low scores.
    Keywords: Experiment, Strategic uncertainty,Bounded rationality, Asset markets, Computer traders, Cognitive Reflection Test
    Date: 2017–10–24
  8. By: Banal-Estanol, Albert; Kretschmer, Tobias; Meloso, Debrah; Seldeslachts, Jo
    Abstract: A core question in alliance research is how alliance design influences alliance success. Two underexplored aspects of this question are whether the effect of alliance design is contingent on the external competitive environment and how alliance design affects the behavioral dynamics in an alliance. We address these aspects by studying two core dimensions of alliance design, the level of commitment in an alliance and the number of alliance partners. We match two competitive environments, high and low competition, with different alliance designs and vary the number of alliance partners and the level of commitment and experimentally study the aggregate performance and behavioral dynamics of the different alliance designs. We find that with low competition, alliance design does not affect performance much, while with high competition, alliance performance depends heavily on alliance design. Regarding dynamics, we find that aggregate performance is most strongly affected by first-period behavior, while the willingness to forgive a partner's non-cooperative behavior has a more muted effect on alliance performance.
    Keywords: laboratory experiment; Organization Design; Strategic Alliances
    Date: 2017–12
  9. By: Toru Kitagawa (Institute for Fiscal Studies and cemmap and University College London); Aleksey Tetenov (Institute for Fiscal Studies and University of Bristol)
    Abstract: One of the main objectives of empirical analysis of experiments and quasi-experiments is to inform policy decisions that determine the allocation of treatments to individuals with different observable covariates. We study the properties and implementation of the Empirical Welfare Maximization (EWM) method, which estimates a treatment assignment policy by maximizing the sample analog of average social welfare over a class of candidate treatment policies. The EWM approach is attractive in terms of both statistical performance and practical implementation in realistic settings of policy design. Common features of these settings include: (i) feasible treatment assignment rules are constrained exogenously for ethical, legislative, or political reasons, (ii) a policy maker wants a simple treatment assignment rule based on one or more eligibility scores in order to reduce the dimensionality of individual observable characteristics, and/or (iii) the proportion of individuals who can receive the treatment is a priori limited due to a budget or a capacity constraint. We show that when the propensity score is known, the average social welfare attained by EWM rules converges at least at n^(-1/2) rate to the maximum obtainable welfare uniformly over a minimally constrained class of data distributions, and this uniform convergence rate is minimax optimal. We examine how the uniform convergence rate depends on the richness of the class of candidate decision rules, the distribution of conditional treatment effects, and the lack of knowledge of the propensity score. We offer easily implementable algorithms for computing the EWM rule and an application using experimental data from the National JTPA Study.
    Date: 2017–05–19
  10. By: Engelmann, Dirk (Humboldt University Berlin); Friedrichsen, Jana (Humboldt University Berlin and DIW)
    Abstract: This paper experimentally investigates how concerns for social approval relate to intrinsic motivations to purchase ethically. Participants state their willingness-to-pay for both a fair trade and a conventional chocolate bar in private or publicly. A standard model of social image predicts that all participants increase their fair trade premium when facing an audience. We find that the premium is indeed higher in public than in private. This effect, however, is driven by participants who preferred a conventional chocolate bar over a fair trade one in a pre-lab choice. For those who chose the fair trade chocolate bar, public exposure does not change the fair trade premium. This is captured by a generalized model where intrinsic preferences and the concern for social approval are negatively correlated.
    Keywords: image concerns; ethical consumption; fair trade; social approval; experiments;
    JEL: C91 D12
    Date: 2018–01–08
  11. By: Irene Comeig (Department of Finance, University of Valencia, Spain); Ainhoa Jaramillo-Gutiérrez (LEE-Department of Economics, Universitat Jaume I, Castellón, Spain); Federico Ramírez (Department of Finance, University of Valencia, Spain)
    Abstract: Despite empirical evidence has shown that having women in firm's decisionmaking positions is an important source of value co-creation, those positions are still largely male dominated. Previous research in experimental economics seems to suggest that women tend to shy away from competition. However, most of this research has focused on a particular competition type called “winner takes all” (WTA) competition, which have been found to interrelate to cultural and social variables. We present an economic laboratory experiment that compares the WTA competition to the independent competition to meet goals; the latter one not so interrelated to other influences such as self-confidence and/or fear of failure (risk/ambiguity attitudes). The results show that the number of women entering competitive environments is significantly higher in the independent competition to meet goals than in the WTA competition. Furthermore, this increase comes with no reduction in men’s participation and with no general efficiency reduction. Our findings suggest that firms should change the widespread used WTA competition in favor of the independent competition to meet goals in order to achieve value co-creation and sustainability through a gender neutral promotion mechanism. Additionally, this research contributes to reduce stereotypes towards competition preferences by gender.
    Keywords: Behavior, Competition, Decision-making, Experimental economics, Gender, Sustainability, Value co-creation
    JEL: C9 J16
    Date: 2017
  12. By: Charles Bellemare; Marion Goussé; Guy Lacroix; Steeve Marchand
    Abstract: We investigate the determinants and extent of labor market discrimination toward people with acute physical disabilities (wheelchair users) using data from a large scale field experiment conducted in the province of Québec (Canada). Applications (cover letters and CVs) were randomly sent to 1477 private firms operating in two urban regions (Montréal and Québec City) advertising open positions requiring various skill levels. The applications were randomly generated to cover a broad spectrum of potential determinants of discrimination (gender, skill level, work history, workplace adjustment costs, etc.). We find that average callback rates of disabled and non-disabled applicants is 14.4% and 31%, respectively, yielding a differential callback rate of 46%. We also investigate whether the differential may result from accessibility constraints related to the physical infrastructures where firms are located (floor and access to an elevator, availability of wheelchair, etc.). The latter are found to have no explanatory power. In addition, applications which explicitly mention that the candidate is eligible to a government subsidy to cover the cost of workplace adaptations and assistive technology do not yield higher callback rates.
    Keywords: Discrimination, disabilities
    JEL: J71 J68
    Date: 2017
  13. By: Ewa Zawojska (Faculty of Economic Sciences, University of Warsaw); Anna Bartczak (Faculty of Economic Sciences, University of Warsaw); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Incentivising respondents to truthfully reveal their preferences in stated preference surveys requires that they believe their survey responses can influence decisions related to the outcome in question (policy consequentiality) and that they will have to bear their share of coercive cost if the outcome is implemented (payment consequentiality). We investigate the effects of these two aspects of consequentiality on stated preferences in a field survey concerning renewable energy development in Poland. We find that beliefs in policy and payment consequentiality strengthen respondents’ interest in having the project implemented, but policy consequentiality decreases, while payment consequentiality increases their sensitivity to the project cost, thus increasing or decreasing their willingness to pay, respectively. We conclude that the two components of consequentiality should be addressed separately in stated preference studies. Additionally, we inquire the theoretically speculated links between respondents’ perceptions about policy and payment consequentiality and their risk attitudes, finding no significant relationship.
    Keywords: stated preferences, discrete choice experiment, policy consequentiality, payment consequentiality, risk attitudes, renewable energy
    JEL: Q51 Q48 D12 D81 H41
    Date: 2018
  14. By: Sokbae Lee; Ryo Okui; Yoon-Jae Whang
    Abstract: In this paper, we propose a doubly robust method to present the heterogeneity of the average treatment effect with respect to observed covariates of interest. We consider a situation where a large number of covariates are needed for identifying the average treatment effect but the covariates of interest for analyzing heterogeneity are of much lower dimension. Our proposed estimator is doubly robust and avoids the curse of dimensionality. We propose a uniform confidence band that is easy to compute, and we illustrate its usefulness via Monte Carlo experiments and an application to the effects of smoking on birth weights.
    Date: 2016–01
  15. By: Samuel Antill; Darrell Duffie
    Abstract: We compute optimal mechanism designs for each of a sequence of size-discovery sessions, at which traders submit reports of their excess inventories of an asset to a session operator, which allocates transfers of cash and the asset. The mechanism design induces truthful reports of desired trades and perfectly reallocates the asset across traders. Between sessions, in a dynamic auction market, traders strategically lower their price impacts by shading their bids, causing socially costly delays in rebalancing the asset across traders. As the expected frequency of size-discovery sessions is increased, market depth is further lowered, offsetting the efficiency gains of the size-discovery sessions. Adding size-discovery sessions to a double-auction market has no social value, beyond that of an initializing session. If the mechanism design relies on the double-auction market for information from prices, bidding incentives are further weakened, strictly reducing overall market efficiency.
    JEL: D82 G14
    Date: 2017–12
  16. By: Benjamin M. Marx; Lesley J. Turner
    Abstract: We estimate the impact of student loan “nudges” on community college students' borrowing and provide the first experimental evidence of the effect of student loans on educational attainment. Nonbinding loan offers listed in students' financial aid award letters, that do not alter students' choice sets, significantly affect borrowing. Students randomly assigned to receive a nonzero loan offer were 40 percent more likely to borrow than those who received a $0 loan offer. Nudge-induced borrowing increased both GPA and credits earned by roughly 30 percent in the year of the intervention, and in the following year, increased transfers to four-year colleges by 10 percentage points (nearly 200 percent). We predict that the average student would be better off receiving a nonzero loan offer for any discount rate below 12.4 percent. Students' borrowing responses to the nudge are most consistent with a model in which nonzero offers provide information about loan eligibility, suggesting that for most students, nonzero offers are welfare enhancing. Given that over 5 million U.S. college students receive $0 loan offers, our results indicate the potential to achieve large gains in educational attainment through changes to the choice architecture around borrowing.
    JEL: D12 D14 D91 I22
    Date: 2017–11

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