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on Experimental Economics |
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Issue of 2018‒01‒29
eighteen papers chosen by |
| By: | Brice Corgnet (Univ Lyon, GATE L-SE UMR 5824, F-69130 Ecully, France; EM Lyon Business School, 23 Avenue Guy de Collongue, F-69130 Écully); Cary Deck (University of Alabama, 261 Stadium Drive, Tuscaloosa, AL 35487; Chapman University, One University Drive, Orange, CA 92866); Mark DeSantis (Chapman University, One University Drive, Orange, CA 92866); David Porter (Chapman University, One University Drive, Orange, CA 92866) |
| Abstract: | Markets are often viewed as a tool for aggregating disparate private knowledge, a stance supported by past laboratory experiments. However, traders’ acquisition cost of information has typically been ignored. Results from a laboratory experiment involving six treatments varying the cost of acquiring signals of an asset’s value suggest that when information is costly, markets do not succeed in aggregating it. At an individual level, having information improves trading performance, but not enough to offset the cost of obtaining the information. Although males earn more through trading than females, this differential is offset by the greater propensity of males to buy information such that total profit is similar for males and females. Looking at individual skills, we find that higher theory of mind is associated with greater trading profit, greater overall profit, and an increased likelihood of acquiring information while cognitive reflection is associated with greater profit but not a greater propensity to acquire information. |
| Keywords: | Prediction Markets, Information Acquisition, Laboratory Experiments, Behavioral Finance |
| JEL: | C9 D8 G1 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1735&r=exp |
| By: | Michał Wiktor Krawczyk (Faculty of Economic Sciences, University of Warsaw); Joanna Rachubik (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | Despite having the same probability of being drawn, certain number combinations are more popular than others among the lottery players. One explanation of such a preference is the representativeness heuristic (RH). Unlike previous hypothetical experiments, in the present experiment we used real-life lottery tickets, involving a high payout in case of winning to elicit true preferences. To verify if people prefer randomly-looking number combinations, participants were to choose a preferred ticket. To validate if it is likely to be caused by RH, we correlated preference for “random” sequences with the belief in dependence between subsequent coin tosses. We confirm that people strongly prefer random sequences and that a non-trivial fraction believes in dependence between coin tosses. However, there is no correlation between these two tendencies, questioning the RH explanation. By contrast, participants who have an (irrationally) strong preference for number combinations also tend to make (irrationally) specific predictions in the coin task. Unexpectedly, we find that females are considerably more likely to belong to this group than males. |
| Keywords: | decision bias, gambler’s fallacy, gender difference, hot hand fallacy, lottery choice, misperception of randomness, number preference in lotteries, representativeness heuristic |
| JEL: | C93 D01 D81 D91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2018-03&r=exp |
| By: | Julie Beugnot (Université Bourgogne Franche-Comté, CRESE); Bernard Fortin (Université Laval, CRREP, CIRANO); Guy Lacroix (Université Laval, CRREP, CIRANO); Marie-Claire Villeval (Université de Lyon, CNRS, GATE, IZA) |
| Abstract: | We investigate whether peer effects at work differ by gender and whether the gender difference in peer effects –if any- depends on work organization, precisely the structure of social networks. We develop a social network model with gender heterogeneity that we test by means of a real effort laboratory experiment. We compare sequential networks in which information on peers flows exclusively downward (from peers to the worker) and simultaneous networks where it disseminates bi-directionally along an undirected line (from peers to the worker and from the worker to peers). We identify strong gender differences in peer effects, as males’ effort increases with peers’ performance in both types of network, whereas females behave conditionally. While they are influenced by peers in sequential networks, females disregard their peers’ performance when information flows in both directions. We reject that the difference between networks is driven by having one’s performance observed by others or by the presence of peers in the same session in simultaneous networks. We interpret the gender difference in terms of perception of a higher competitiveness of the environment in simultaneous than in sequential networks because of the bi-directional flow of information. |
| Keywords: | Gender, peer effects, social networks, work effort, experiment |
| JEL: | C91 J16 J24 J31 M52 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2017-03&r=exp |
| By: | Hong, Jieying; Moinas, Sophie; Pouget, Sébastien |
| Abstract: | Does traders' experience reduce their propensity to participate in speculate bubbles? This paper studies this issue from a theoretical and an experimental viewpoint. We focus on a game in which bubbles, if they arise, are irrational, as in the Smith, Suchanek, and Williams (1988)'s set up. Our theoretical results are based on Camerer and Ho (1999)'s Experience-Weighted Attraction learning model. Adaptive traders are assumed to adjust their behavior according to actions' past performance. In the long run, learning induces the market to converge to the unique no bubble equilibrium. However, learning initially increases traders' propensity to speculate. In the short run, more experienced traders thus create more bubbles. An experiment shows that bubbles are very pervasive despite the fact that subjects have become experienced. Our estimation of the EWA model also indicates that learning is at work. |
| Keywords: | financial markets ; adaptive learning; speculation; bubbles |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32373&r=exp |
| By: | Eric Guerci (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); 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); Naoki Watanabe (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba) |
| Abstract: | By employing binary committee choice problems, this paper investigates how varying or eliminating feedback about payoffs affects: (1) subjects' learning about the underlying relationship between their nominal voting weights and their expected payoffs in weighted voting games; and (2) the transfer of acquired learning from one committee choice problem to a similar but different problem. In the experiment, subjects choose to join one of two committees (weighted voting games) and obtain a payoff stochastically determined by a voting theory. We found that: (i) subjects learned to choose the committee that generates a higher expected payoff even without feedback about the payoffs they received; and (ii) there was statistically significant evidence of ``meaningful learning'' (transfer of learning) only for the treatment with no payoff-related feedback. This finding calls for re-thinking existing models of learning to incorporate some type of introspection. |
| Keywords: | experiment,voting game,learning,two-armed bandit problem |
| Date: | 2017–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01216244&r=exp |
| By: | Ronayne, David (Economics Dept.and Nuffield College, University of Oxford,); Sgroi, Daniel (Economics Dept. and CAGE, University of Warwick and Nuffield College, University of Oxford,) |
| Abstract: | We present results from an experiment involving 1,500 participants on whether, when and why good advice is ignored, focusing on envy and stubbornness. Participants performance in skill-based and luck-based tasks generated a probability of winning a bonus. About a quarter ignored advice that would have increased their chance of winning. Good advice was followed less often when the adviser was relatively highly remunerated or the task was skill-based. More envious advisees took good advice more often in the skill-based task, but higher adviser remuneration significantly reduced this effect. Susceptibility to the sunk cost fallacy reduced the uptake of good advice. |
| Keywords: | advice ; skill ; remuneration ; envy ; sunk cost fallacy |
| JEL: | C91 C99 D91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1150&r=exp |
| By: | Nicolas Houy (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69130 Ecully, France); Jean-Philippe Nicolaï (ETH Zürich, Chair of Integrative Risk Management and Economics, Zurichbergstrasse 18, 8032 Zürich); Marie Claire Villeval (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69130 Ecully, France) |
| Abstract: | Achieving an ambitious goal frequently requires succeeding in a sequence of intermediate tasks, some being critical for the final outcome, and others not. However, individuals are not always able to provide a level of effort sufficient to guarantee success in all such intermediate tasks. The ability to manage effort throughout the sequence of tasks is therefore critical when resources are limited. In this paper we propose a criterion that defines the importance of a task and identifies how an individual should optimally allocate a limited stock of exhaustible efforts over tasks. We test this importance criterion in a laboratory experiment that reproduces the main features of a tennis match. We show that our importance criterion is able to predict the individuals’ performance and it outperforms the Morris importance criterion that defines the importance of a point in terms of its impact on the probability of achieving the final outcome. We also find no evidence of choking under pressure and stress, as proxied by electrophysiological measures. |
| Keywords: | Critical ability, choking under pressure, Morris-importance, Skin Conductance Responses, experiment |
| JEL: | C72 C92 D81 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1736&r=exp |
| By: | Carole Treibich (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique - ECM - Ecole Centrale de Marseille); Sabine Lescher (SESSTIM - Sciences Economiques et Sociales de la Santé & Traitement de l'Information Médicale - IRD - Institut de Recherche pour le Développement - AMU - Aix Marseille Université - ORS PACA - INSERM - Institut National de la Santé et de la Recherche Médicale); Luis Sagaon-Teyssier (SESSTIM - Sciences Economiques et Sociales de la Santé & Traitement de l'Information Médicale - IRD - Institut de Recherche pour le Développement - AMU - Aix Marseille Université - ORS PACA - INSERM - Institut National de la Santé et de la Recherche Médicale); Bruno Ventelou (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique - ECM - Ecole Centrale de Marseille, ORS PACA) |
| Abstract: | BACKGROUND: From November 2014 to November 2015, an experiment in French community pharmacies replaced traditional pre-packed boxes by per-unit dispensing of pills in the exact numbers prescribed, for 14 antibiotics. METHODS: A cluster randomised control trial was carried out in 100 pharmacies. 75 pharmacies counted out the medication by units (experimental group), the other 25 providing the treatment in the existing pharmaceutical company boxes (control group). Data on patients under the two arms were compared to assess the environmental, economic and health effects of this change in drug dispensing. In particular, adherence was measured indirectly by comparing the number of pills left at the end of the prescribed treatment. RESULTS: Out of the 1185 patients included during 3 sessions of 4 consecutive weeks each, 907 patients experimented the personalized delivery and 278 were assigned to the control group, consistent with a 1/3 randomization-rate at the pharmacy level. 80% of eligible patients approved of the per-unit dispensing of their treatment. The initial packaging of the drugs did not match with the prescription in 60% of cases and per-unit dispensing reduced by 10% the number of pills supplied. 13.1% of patients declared that they threw away pills residuals instead of recycling-no differences between groups. Finally, per-unit dispensing appeared to improve adherence to antibiotic treatment (marginal effect 0.21, IC 95, 0.14-0.28). CONCLUSIONS: Supplying antibiotics per unit is not only beneficial in terms of a reduced number of pills to reimburse or for the environment (less pills wasted and non-recycled), but also has a positive and unexpected impact on adherence to treatment, and thus on both individual and public health |
| Date: | 2017–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01611059&r=exp |
| By: | Ronayne, David (Economics Dept.and Nuffield College, University of Oxford,); Sgroi, Daniel (Economics Dept. and CAGE, University of Warwick and Nuffield College,) |
| Abstract: | We present results from an experiment involving 1,500 participants on whether, when and why good advice is ignored, focusing on envy and stubbornness. Participants performance in skill-based and luck-based tasks generated a probability of winning a bonus. About a quarter ignored advice that would have increased their chance of winning. Good advice was followed less often when the adviser was relatively highly remunerated or the task was skill-based. More envious advisees took good advice more often in the skill-based task, but higher adviser remuneration significantly reduced this effect. Susceptibility to the sunk cost fallacy reduced the uptake of good advice. |
| Keywords: | advice, skill ; remuneration ; envy ; sunk cost fallacy JEL classification numbers: C91 ; C99 ; D91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:wcreta:38&r=exp |
| By: | Christoph Koenig; David Schindler |
| Abstract: | Gun rights activists in the United States frequently argue that the right to bear arms, as guaranteed by the Second Amendment, can help deter crime. Advocates of gun control usually respond that firearm prevalence contributes positively to violent crime rates. In this paper, we provide quasi-experimental evidence that a positive and unexpected gun demand shock led to an increase in murder rates after the mass shooting at Sandy Hook Elementary School and the resulting gun control debate in December 2012. In states where purchases were delayed due to mandatory waiting periods and bureaucratic hurdles in issuing a gun permit, firearm sales exhibited weaker increases than in states without any such delays. We show that this finding is hard to reconcile with standard economic theory, but is in line with findings from behavioral economics. States that saw more gun sales then experienced significantly higher murder rates in the months following the demand shock, as murders increased by 6-15% over the course of a year. |
| Keywords: | Guns, crime, deterrence, demand shock, murder. |
| JEL: | K42 H76 H10 K14 |
| Date: | 2018–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:bri:uobdis:18/694&r=exp |
| By: | Heine, Florian (Tilburg University, School of Economics and Management) |
| Abstract: | In this dissertation I examine group contests for both endogenous and exogenous public goods. Three studies jointly illustrate that participants accede to a pernicious one-upping in order to outdo the competing party. This tendency to over-contribute in (group) contest games complements earlier studies. Taking extant contributions in that field into account I investigate the role of fundamental institutions, which have been characterised as vehicles to promote cooperation towards a more efficient strategy in cooperative games. The results of my studies, however, paint a grim picture of the role of these simple institutions – such as rewarding and punishment, free form text communication or wealth redistribution – in group contest games. Unequivocally, players use them to push groupmates to intensify the between-group contest and add insult to injury. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:aa1ff79c-5412-4630-87a0-38ed70bb43e7&r=exp |
| By: | Jack, Kelsey; Jayachandran, Seema; Rao, Sarojini |
| Abstract: | Water use and electricity use, which generate negative environmental externalities, are susceptible to a second externality problem: with household-level billing, each person enjoys private benefits of consumption but shares the cost with other household members. If individual usage is imperfectly observed (as is typical for water and electricity) and family members are imperfectly altruistic toward one another, households overconsume even from their own perspective. We develop this argument and test its prediction that intrahousehold free-riding dampens price sensitivity. We do so in the context of water use in urban Zambia by combining billing records, randomized price variation, and a lab-experimental measure of intrahousehold altruism. We find that more altruistic households are considerably more price sensitive than are less altruistic households. Our results imply that the socially optimal price needs to be set to correct both the environmental externality and also the intrahousehold externality. |
| Keywords: | environmental externalities; intrahousehold decision-making; moral hazard; Pigouvian pricing; water use |
| JEL: | O10 Q5 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12558&r=exp |
| By: | Anaëlle Camarda (LaPsyDE - UMR 8240 - Laboratoire de psychologie du développement et de l'éducation de l'enfant - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UPD5 - Université Paris Descartes - Paris 5 - CNRS - Centre National de la Recherche Scientifique); Hicham Ezzat (MINES ParisTech - École nationale supérieure des mines de Paris); Mathieu Cassotti (LaPsyDE - UMR 8240 - Laboratoire de psychologie du développement et de l'éducation de l'enfant - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UPD5 - Université Paris Descartes - Paris 5 - CNRS - Centre National de la Recherche Scientifique); Marine Agogué (HEC Montréal - HEC Montréal); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | There are today large expectations towards creative thinking and innovation in both educational and industrial contexts. Creativity defined as the ability to think of something truly new (i.e., original, unexpected), and appropriate (i.e., useful, adaptive concerning task constraints) is considered as a crucial skill required in numerous organizations and is largely viewed as fundamental process for any innovation. Nevertheless, generating, evaluating and developing new ideas might not be as easy as it seems, and individuals often failed to propose creative solutions to a specific problem, focusing on a narrow scope of existing solutions. Decades of cognitive psychology studies has demonstrated that previously acquired and existing knowledge or ideas can limit creative ideation, leading a phenomena named " mental fixation " or " fixation effect ". Experimental studies with students converged in showing that the fixation effect is reinforced when adults are exposed to uncreative examples of solutions before being asked to generate new ideas. Although, considerable efforts have been devoted at identifying the negative influence of examples on creative ideas generation in experiments made on thousands of engineers' students, as well as novices from different disciplines, surprisingly there are to date few study that have examined whether examples may constrain (or facilitate) creative ideation in expert engineers or designers. Therefore, the present study aimed to clarify the potential role of expertise in creative idea generation. In this study, 64 expert engineers from a prestigious French Aerospatiale multinational were asked to design solutions to ensure that a hen's egg dropped from a height of ten meters does not break (the egg task). The participants were randomly assigned to one of two experimental conditions (a control condition without an example or a test condition with an uncreative example) and were given ten minutes to solve the egg task. The problems were identical across conditions, except that the group with an example read the following: " One solution classically given is to slow the fall with a parachute ". Our results show that expert engineers were able to overcome design fixation, and interestingly they provided more solutions within the expansion path and fewer solution within the fixation path when they were given an uncreative example. As such, our results expand the understandings of the critical characteristics of expertise for overcoming cognitive biases to creativity, and give new sights to managerial implications for the role of creative leaders in this concern, more specifically when managing innovative processes with team members having varying levels of expertise. |
| Keywords: | creativity, ideation, design fixation, expertise, leadership |
| Date: | 2017–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01626164&r=exp |
| By: | Matteo Coronese; Isabelle Salle |
| Abstract: | We integrate a centralized wage bargaining process into an otherwise standard DSGE model with a financial accelerator to simulate distributional shocks in the presence of financial instability. Our framework provides a counterfactual analysis of the effects of the observed decrease in the labor share when no concomitant rise in households' credit offsets the adverse effect on consumption. The result is a prolonged under-consumption recession that outweighs the initial boost in investment. |
| Keywords: | Income inequality; Distributional shocks; Under-consumption |
| Date: | 2018–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2018/03&r=exp |
| By: | Yang, Yingrui |
| Abstract: | The word “sub-economics” follows the sense of “sub-atomic” (Yang, 2012). The latter is about the smallest in matter while the former is about the deepest in mind. Both are difficult to observe, but science must zoom in to understand them. Sub-economic dynamics studies the underlying human impulse and consciousness that may affect individual behavior in the market. It touches on the elementary mental structure of the sub-economic world. However, coding such an elementary structure or modeling its dynamics is not only a necessity, but also a challenge. Quantum chromodynamics (QCD; Zee, 2010) is about strong interactions of quarks and gluons. It touches on the elementary material structure of the physical world. QCD is applied as a conceptual and instrumental tool in the development of sub-economic modeling. The results show a nearly perfect isomorphism between the two elementary structures. By utilizing gauge field theory, sub-economic dynamics shares the same gauge symmetric group, SU(3), with QCD. |
| Keywords: | Behavioral economics, consciousness, impulse, gauge symmetry group, quantum chromodynamic modeling, sub-economics |
| JEL: | C00 C02 D01 D03 |
| Date: | 2017–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82921&r=exp |
| By: | Mario Le Glatin (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Organisations trying to innovate, despite being naturally encouraged to use project management and associated rational theories of choice, will necessarily experiment in some way or another due to the high levels of uncertainty and the unknown to be discovered. Exploratory project management may face situations requiring a constant reconfiguration of beliefs and hypotheses as a reaction to external factors. In this paper, we propose to discuss the existence of a generative rationality breaking away from classical decision theory by deliberately reversing preferences and designing decisions. |
| Keywords: | decision,design,project,innovation,preferences reversal,rationality,generative |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01674309&r=exp |
| By: | Laetitia Renier; Emmanuelle P. Kleinlogel; Claudia Toma; Marianne Schmid Mast; Nora A. Murphy |
| Abstract: | People may or not know the impression they convey to others (meta-accuracy). However, little research has addressed to what extent meta-accuracy affects social outcomes such as hireability (recruiter’s intention to hire). Three studies were conducted to test whether people who knew the impression they conveyed are the ones who are more likely to get hired. Results of polynomial regression and responses surface analyses showed that meta-accuracy was related to hireability, whether meta-accuracy concerns skills during an interview (Study 1, N = 49, and Study 2, N = 127) or traits and skills on a résumé (Study 3, N = 135). The pattern of results takes three forms. First, the lack of meta-accuracy, as the simple gap between metaperception and other’s perception, reduces hireability. Second, hireability is higher when meta- and other’s perception are favorable rather than unfavorable, while staying in agreement. Third, hireability is higher for applicants underestimating the extent to which a recruiter would perceive favorably their traits and/or skills than for overestimators. These results suggest that the best chance to get hired does not rely only on good impressions but also on knowing, or at least on underestimating, the impressions made upon others. |
| Keywords: | Meta-accuracy; hireability; metaperception; job interview; résumé |
| JEL: | C91 D23 D91 D83 D84 |
| Date: | 2018–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/264417&r=exp |
| By: | Aaron Arndt; David M Harrison; Mark A. Lane; Vicky L Seiler; Michael J. Seiler |
| Abstract: | We investigate whether customers' overall impression of online property listings can be influenced by the real estate agent, and whether this influence depends on the customer's demographic characteristics. A sample of 1,594 potential homebuyers took an online audio/visual tour of a typically priced home in their area. Subjects were shown one of eight conditions in which we varied agent gender (male/female), agent attractiveness (attractive/less attractive), and pathos (used/not used). The results show that segments of customers are drawn to different real estate agents, but contrary to our expectations, customers were not necessarily drawn to similar agents or more attractive ones. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:feb:framed:00629&r=exp |