nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒03‒12
thirty-two papers chosen by

  1. Motivational crowding out effects in charitable giving: Experimental evidence By Müller, Stephan; Rau, Holger A.
  2. Decision-making within the Household: The Role of Autonomy and Differences in Preferences By Alem, Yonas; Hassen, Sied; Köhlin, Gunnar
  3. A Social Heuristics Hypothesis for the Stag Hunt: Fast- and Slow-Thinking Hunters in the Lab By Marianna Belloc; Ennio Bilancini; Leonardo Boncinelli; Simone D'Alessandro
  4. Be close to me and I will be honest: How social distance influences honesty By Hermann, Daniel; Ostermaier, Andreas
  5. The Strength of Sensitivity to Ambiguity By Robin Cubitt; Gijs van de Kuilen
  6. Mindfulness and Stress - a Randomised Experiment By Alem, Yonas; Behrendt, Hannah; Belot, Michele; Bíró, Anikó
  7. Discriminating between Models of Ambiguity Attitude: A Qualitative Test By Robin Cubitt; Gijs van de Kuilen
  8. Risk Aversion, Prudence and Temperance in Gain and Loss: are we all Schizophrenics? By Marielle Brunette; Julien Jacob
  9. Pay-What-You-Want to support independent information - A field experiment on motivation By Alessandra Casarico; Mirco Tonin
  10. The effects of physical activity on social interactions: The case of trust and trustworthiness By Di Bartolomeo Giovanni; Stefano Papa
  11. "Framing Game Theory" By Hitoshi Matsushima
  12. Communication in Context: Interpreting Promises in an Experiment on Competition and Trust By Casella, Alessandra; Kartik, Navin; Sanchez, Luis; Turban, Sébastien
  13. Intuitive Donating: Testing One-Line Solicitations for $1 Donations in a Large Online Experiment By Horn, Samantha; Karlan, Dean S.
  14. Emirati women do not shy away from competition: Evidence from a patriarchal society in transition By Aurelie Dariel; Curtis Kephart; Nikos Nikiforakis; Christina Zenker
  15. Bayesian Estimation of the Complier Average Casual Effect By van Hasselt, Martijn; Ferland, Timothy; Bray, Jeremy; Aldridge, Arnie
  16. Public Goods Provision with Rent-Extracting Administrators By Tobias Cagala; Ulrich Glogowsky; Veronika Grimm; Johannes Rincke
  17. How much information is incorporated in financial asset prices? Experimental Evidence By Lionel Page; Christoph Siemroth
  18. The appropriate response of Spanish Gitanos: Short-run orientation beyond current socio-economic status By Martin, Jesus; Branas, Pablo; Espín, Antonio M.; Gamella, Juan; Herrmann, Benedikt
  19. Do consumers choose to stay ignorant? The role of information in the purchase of ethically certified products By Felgendreher, Simon
  20. Leveled Literacy Intervention for Secondary Students: Results from a Randomized Controlled Trial in Oakland Schools By Naihobe Gonzalez; Sophie MacIntyre; Pilar Beccar-Varela
  21. Doubly robust uniform confidence band for the conditional average treatment effect function By Lee, Sokbae; Okui, Ryo; Whang, Yoon-Jae
  22. Signaling Probabilities in Ambiguity: on the impact of vague news By Dmitri Vinogradov; Yousef Makhlouf
  23. Passive Learning and Incentivized Communication: A Randomized Controlled Trial in India By Alem, Yonas; Dugoua, Eugenie
  24. From conformity to reactance: Contingent role of network centrality in consumer-to-consumer influence By Pabitra Chatterjee; Barthelemy Chollet; Olivier Trendel
  25. The ghost of institutions past: History as an obstacle to fighting tax evasion By Aaron Kamm; Christian Koch; Nikos Nikiforakis
  26. Bargaining and the role of negotiators' competitiveness By Keser, Claudia; Müller, Stephan; Peterlé, Emmanuel; Rau, Holger A.
  27. Beating the Matthew Effect: Head Starts and Catching Up in a Dynamic All-Pay Auction* By Clark, Derek J.; Nilssen, Tore
  28. The term structure of cross-sectional dispersion of expectations in a Learning-to-Forecast Experiment By Colasante, Annarita; Alfarano, Simone; Camacho-Cuena, Eva
  29. A case of evolutionary stable attainable equilibrium in the lab By Christoph Kuzmics; Daniel Rodenburger
  30. Do Natives' Beliefs About Refugees' Education Level Affect Attitudes Toward Refugees? Evidence from Randomized Survey Experiments By Philipp Lergetporer; Marc Piopiunik; Lisa Simon
  31. A ‘threat’ is a ‘Threat’: Incentive Effects of Firing Threats with Varying Degrees of Performance Information By Jordi Brandts; Brice Corgnet; Roberto Hernán-González; José M. Ortiz; Carles Solà
  32. Learning to save tax-efficiently: Tax misperceptions and the effect of informational tax nudges on retirement savings By Blaufus, Kay; Milde, Michael

  1. By: Müller, Stephan; Rau, Holger A.
    Abstract: This paper tests motivational crowding out in the domain of charitable giving. A novelty is that our experiment isolates alternative explanations for the decline of giving such as strategic considerations of decision makers. Moreover, preference elicitation allows us to focus on the reaction of donors characterized by different degrees of intrinsic motivation. In the charitable-giving setting subjects donate money to the German "Red Cross" in two consecutive stages. The first dictator game is modified, i.e., donors face with equal probability an ex post reimbursement or a subsequent pay. The second game is a standard dictator game where we control for the decline of giving. We find that subjects with a high degree of intrinsic motivation, who received a reimbursement, reduce their donations more than four times as much as equally motivated individuals who did not experience a payment.
    Keywords: Altruism,Dictator Game,Experiment,Motivational Crowd Out
    JEL: D02 D03 C91
    Date: 2018
  2. By: Alem, Yonas (Department of Economics, School of Business, Economics and Law, Göteborg University); Hassen, Sied (Environment and Climate Research Center of the Ethiopian Development Research Institute); Köhlin, Gunnar (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We use a field experiment to identify how differences in preferences and autonomy in decision-making result in sub-optimal adoption of technologies that can maximize the welfare of all members of the household. We create income-earning opportunities and elicit willingness- to-pay (WTP) for energy-efficient cookstoves through a real stove purchase experiment with randomly chosen wives, husbands and couples. Experimental results suggest that women, who often are responsible for cooking and for collecting fuelwood, reveal a higher preference than men for the improved stoves. Using an instrumental variables tobit estimator, we show that women who have higher decision-making autonomy reveal higher WTP than those who have lower decision-making autonomy. A follow-up survey conducted 15 months after the stove purchase show that autonomy does not affect stove use. Our findings highlight the importance of considering division of labor, different preferences, and bargaining power differences within the household when promoting adoption of new household technologies.
    Keywords: Preference Difference; Decision-making; Autonomy; Willingness-to-pay
    JEL: C93 D13 O12 Q56
    Date: 2018–03
  3. By: Marianna Belloc; Ennio Bilancini; Leonardo Boncinelli; Simone D'Alessandro
    Abstract: In this paper, we analyze the role of intuitive versus deliberative thinking in stag hunt games. To do so we, first, provide a conceptual framework predicting that, under the assumption that stag is the ruling social convention in real life interactions, players who make their choices fast and intuitively, relying on social heuristics, choose stag more often than other players. Second, we run a lab experiment and use a time pressure treatment to induce fast and intuitive thinking. We find that: (i) players under the time pressure treatment are more likely to choose stag than individuals in the control group; (ii) individual choices under the time pressure treatment are less sensitive to the size of the basin of attraction of stag; (iii) these results are largely driven by less experienced participants. Overall, our findings provide support to the Social Heuristics Hypothesis (Rand et al., 2012) applied to stag hunt interactions.
    Keywords: social heuristics hypothesis, stag hunt, intuition, deliberation, lab experiments
    JEL: C91 D01
    Date: 2017
  4. By: Hermann, Daniel; Ostermaier, Andreas
    Abstract: We conducted a laboratory experiment to examine how honesty depends on social distance. Participants cast dice and reported the outcomes to allocate money between themselves and fellow students or the socially distant experimenter. They could lie about outcomes to earn more money. We found that dishonesty increases with social distance. However, responsiveness to social distance depends on personal preferences about inequity and honesty as a moral value. We observed selfish "black lies" but not altruistic "white lies" (outcomes were not understated to reduce inequality). Our results suggest that the reduction of social distance can promote honesty in social interactions.
    Keywords: cheating,honesty,social distance,experiment
    JEL: C91 D63 D64
    Date: 2018
  5. By: Robin Cubitt (University of Nottingham); Gijs van de Kuilen (Tilburg University)
    Abstract: We report an experiment where each subject's ambiguity sensitivity is measured by an ambiguity premium, a concept analogous to and comparable with a risk premium. In our design, some tasks feature known objective risks and others uncertainty about which subjects have imperfect, heterogeneous, information (''ambiguous tasks''). We show how the smooth ambiguity model can be used to calculate ambiguity premia. A distinctive feature of our approach is estimation of each subject's subjective beliefs about the uncertainty in ambiguous tasks. We find considerable heterogeneity among subjects in beliefs and ambiguity premia; and that, on average, ambiguity sensitivity is about as strong as risk sensitivity.
    Keywords: Ambiguity sensitivity; ambiguity attitude; measuring strength of ambiguity sensitivity; smooth ambiguity model; ambiguity premium
    JEL: C91 D01 D03 D80 G02
    Date: 2017–09–15
  6. By: Alem, Yonas (Department of Economics, School of Business, Economics and Law, Göteborg University); Behrendt, Hannah (Department of Economics, University of Edinburgh); Belot, Michele (Department of Economics, University of Edinburgh); Bíró, Anikó (Department of Economics, University of Edinburgh, Corvinus University of Budapest and Hungarian Academy of Sciences)
    Abstract: We conduct a randomised controlled trial of an online course in mindfulness. Previous research has found evidence that mindfulness reduces stress; however, few studies have been carried out on non-clinical populations that have not self-selected into or paid for treatment. Our sample consists of 139 students with no pre-existing medical conditions and no prior information on the experiment and treatments. Half of them are asked to follow a four-week mindfulness training, while the other half are asked to watch a four-week series of historical documentaries. We follow participants for five consecutive weeks, with an additional post-intervention session five months later. We evaluate the effects of the mindfulness program on measures of chronic stress, and on the response to stressful situations, measured by cortisol and self-reports. We find strong evidence that mindfulness training reduces perceived stress, as measured by the Perceived Stress Scale. However, the physiological responses to an acutely stressful situation do not differ significantly between the treatment and control groups.
    Keywords: Stress; Mindfulness; Experiment
    JEL: C81 C91 I10
    Date: 2018–03
  7. By: Robin Cubitt (University of Nottingham); Gijs van de Kuilen (Tilburg University)
    Abstract: During recent decades, many new models have emerged in pure and applied economic theory according between Epstein (2010) and Klibanoff et al. (2012) identified a notable behavioral issue that distinguishes sharply between two classes of models of ambiguity sensitivity that are importantly different. The two classes are exemplified by the -MEU model and the smooth ambiguity model, respectively; and the issue is whether or not a desire to hedge independently resolving ambiguities contributes to an ambiguity averse preference for a randomized act. Building on this insight, we implement an experiment whose design provides a qualitative test that discriminates between the two classes of models. Among subjects identified as ambiguity sensitive, we find greater support for the class exemplified by the smooth ambiguity model; the relative support is stronger among subjects identified as ambiguity averse. This finding has implications for applications which rely on specific models of ambiguity preference.
    Keywords: Ambiguity sensitivity; ambiguity attitude; testing models of ambiguity sensitive preference
    JEL: C91 D01 D03 D81 G02
    Date: 2017–08–18
  8. By: Marielle Brunette (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France); Julien Jacob (BETA, University of Lorraine, 13 Place Carnot – CO n°70026. 54035 NANCY Cedex – France)
    Abstract: In this paper, our aims are of three orders: i) to characterize the individuals’ preferences towards risk, prudence and temperance in the gain and loss domain; ii) to analyze potential correlations between domains, for a given feature of preferences, and between features, for a given domain; iii) to identify potential determinants of these individual preferences. For that purpose, we conducted a lab experiment eliciting risk aversion, prudence and temperance in the two domains and collected information about individuals’ characteristics. First, our results indicate that participants are risk averse, prudent and temperate in the gain domain while risk averse, imprudent and temperate in the loss domain. Second, we observed that risk aversion in the gain and loss domains is positively and significantly correlated. The same result applies for prudence and temperance. We also identified that behaviors in terms of risk aversion, prudence and temperance are all bilaterally correlated in the gain and loss domains, except for risk aversion and temperance in the gain domain. Finally, we found that the determinants of the individual’s preferences generally depend on the domain and the feature.
    Keywords: risk aversion, prudence, temperance, experiment, correlations, determinants
    JEL: C91 D81
    Date: 2017–07
  9. By: Alessandra Casarico (Bocconi University, Department of Policy Analysis and Public Management); Mirco Tonin (Free University of Bolzano‐Bozen, Faculty of Economics and Management)
    Abstract: Pay-what-you-want schemes can be a useful tool to finance high quality and independent news media without restricting readership, therefore guaranteeing maximum diffusion. We conduct a field experiment with the Italian information site to explore how to structure a campaign in a way that maximises readers' willingness to contribute. We compare messages stressing two possible motivations to contribute, namely the public good component of the news or the importance of the individual contributions. We also test the effect of including information about the tax allowance associated with donations. While the particular motivation stressed does not have a significant impact, information about tax allowances surprisingly reduces overall donations, due to a reduction in the number of (small) donors. Stable unsubscriptions from the newsletter suggest that the campaign does not have an adverse effect on readers.
    Keywords: Field experiment; Pay-what-you-want; Tax allowances; Media
    JEL: C93 D64 H41
    Date: 2018–03
  10. By: Di Bartolomeo Giovanni; Stefano Papa
    Abstract: There is no doubt that physical activity improves health conditions; however, does it also affect the way people interact? Beyond the obvious effects related to team games or sharing common activities such as attending a gym, we wonder whether physical activity has in itself some effect on social behavior. Our research focuses on the potential effects of physical activity on trust and trustworthiness. Specifically, we compare the choices of subjects playing an investment game who were previously exposed to short-time physical activity to others who are not exposed to it, but involved in different simple tasks. On average, we find that subjects exposed to physical activity exhibit more trust and pro-social behaviors than those who are not exposed. These effects are not temporary.
    Date: 2017–11
  11. By: Hitoshi Matsushima (Faculty of Economics, The University of Tokyo)
    Abstract: A real player sometimes fails to practice hypothetical thinking, which increases the occurrence of anomalies in various situations. This study incorporates psychology into game theory and demonstrates a cognitive method to encourage bounded-rational players to practice correct hypothetical thinking in strategic interactions with imperfect information. We introduce a concept termed “frame†as a description of a synchronized cognitive procedure through which each player decides multiple actions in a step-by-step manner, shaping his (or her) strategy selection. We could regard a frame as the supposedly irrelevant factors from the viewpoint of full rationality. However, this paper theoretically shows that in a multi-unit trading with private values, the ascending proxy auction has a significant advantage over the second-price auction in terms of the bounded-rational players' incentive to practice hypothetical thinking, because of the difference, not in physical rule, but in background frame. By designing a frame appropriately, we generally show that any static game that is solvable in iteratively undominated strategies is also solvable, even if players cannot practice hypothetical thinking without the help of a well-designed frame. We further investigate the possibility that even a detail-free frame design serves to overcome the difficulty of hypothetical thinking. We extend this investigation to the Bayesian environments.
  12. By: Casella, Alessandra; Kartik, Navin; Sanchez, Luis; Turban, Sébastien
    Abstract: How much do people lie, and how much do people trust communication when lying is possible? An important step towards answering these questions is understanding how communication is interpreted. This paper establishes in a canonical experiment that competition can alter the shared communication code: the commonly understood meaning of messages. We study a Sender-Receiver game in which the Sender dictates how to share $10 with the Receiver, if the Receiver participates. The Receiver has an outside option and decides whether to participate after receiving a non-binding offer from the Sender. Competition for play between Senders leads to higher offers but has no effect on actual transfers, expected transfers, or Receivers' willingness to play. The higher offers signal that sharing will be equitable without the expectation that they should be followed literally: under competition "6 is the new 5".
    Keywords: Bargaining; cheap talk; Dictator Game; Guilt-aversion; Lying; trust game
    JEL: C9 D64 D83 D9
    Date: 2018–02
  13. By: Horn, Samantha; Karlan, Dean S.
    Abstract: We partnered with a large online auction website to test differing messages' effects on the decision to donate to charity at checkout. Our setting, where impulsive decisions are likely to be driving donations, allows us to evaluate intuitive responses to messages prompting a donation. We find that shorter messages, matching grants, and descriptions of a charity's mission increase both the likelihood that a user donates, as well as the average amount donated. Conversely, displaying the impact of the donated amount, the popularity of the charity, and that a charity uses scientific evidence do not improve donation rates. These results contribute to our understanding of how framing requests drives the decision to donate and are practically relevant to the many retail sites which promote giving at point of sale.
    Keywords: Charitable Giving
    JEL: C93 D64 H4
    Date: 2018–02
  14. By: Aurelie Dariel; Curtis Kephart; Nikos Nikiforakis; Christina Zenker (Division of Social Science)
    Abstract: We explore gender attitudes towards competition in the United Arab Emirates – a traditionally patriarchal society which in recent times has adopted numerous policies to empower women and promote their role in the labor force. The experimental treatments vary whether individuals compete in single-sex or mixed-sex groups. In contrast to previous studies, women in our sample are not less willing to compete than men. In fact, once we control for individual performance, Emirati women are more likely to select into competition. Our analysis shows that neither women nor men shy away from competition, and both compete more than what would be optimal in monetary terms as the fraction of men in their group increases. We offer a detailed survey of the literature and discuss possible reasons for the lack of gender differences in our experiment.
    Date: 2017–11
  15. By: van Hasselt, Martijn (University of North Carolina at Greensboro, Department of Economics); Ferland, Timothy (University of North Carolina at Greensboro, Department of Economics); Bray, Jeremy (University of North Carolina at Greensboro, Department of Economics); Aldridge, Arnie (RTI International)
    Abstract: We analyze two cases of randomized experiments with noncompliance. In the first case, individuals in the control group do not have access to the treatment and non- compliance only occurs in the treatment group. In the second case, which is com- mon in clinical studies, individuals in the control group are given a placebo. In this case, noncompliance occurs in both the treatment and control group. We present a Bayesian method-of-moments approach for estimating the complier average causal ef- fect (CACE). This procedure is valid under weak exclusion restrictions. This approach is contrasted with Gibbs sampling and data augmentation in a parametric model. The various procedures are evaluated in a simulation experiment and applied to clinical trial data from the COMBINE study.
    Keywords: Noncompliance; casual effects; methods of moments; principal stratification
    JEL: C11 C14 C21 C26
    Date: 2017–12–21
  16. By: Tobias Cagala; Ulrich Glogowsky; Veronika Grimm; Johannes Rincke
    Abstract: This paper studies public goods provision in an experiment in which contributors repeatedly interact with rent-extracting administrators. Our main result is that the presence of an administrator reduces contributions but only because rent extraction lowers the MPCR. Analysing the dynamic interactions between the contributors and the administrator, we demonstrate that rent-extraction and cooperation shocks trigger short-run adjustments in the agents’ behaviour. However, shocks do not have permanent effects. This explains the long-run resilience of cooperation to rent extraction. We also show that cooperative attitudes and trust are traits that explain permanent differences in the short-run volatility of public goods provision.
    Keywords: cooperation, rent extraction, corruption, trustworthiness, public goods, public trust game, panel vector autoregressive model
    JEL: C32 C91 C92 H41
    Date: 2017
  17. By: Lionel Page; Christoph Siemroth
    Abstract: We propose a new estimation method and use experimental data from multiple double auction experiments in the literature to directly estimate how much information is incorporated in financial market prices. We find that public information is almost completely reflected in prices, but that surprisingly little private information—less than 50%—is incorporated in prices. Our estimates therefore suggest that while semi-strong informational efficiency is consistent with the data, financial market prices may be very far from strong-form efficiency. We compare our estimates with beliefs of economists surveyed at the Econometric Society Meetings, and find that economists and finance researchers alike expect market prices to reflect considerably more private information than what we estimated.
    JEL: C92 D82 D84 G14
    Date: 2018–02–27
  18. By: Martin, Jesus; Branas, Pablo; Espín, Antonio M.; Gamella, Juan; Herrmann, Benedikt
    Abstract: Humans differ greatly in their tendency to discount future events, but the reasons underlying such inter-individual differences remain poorly understood. The evolutionary framework of Life History Theory predicts that the extent to which individuals discount the future should be influenced by socio-ecological factors such as mortality risk, environmental predictability and resource scarcity. However, little empirical work has been conducted to compare the discounting behavior of human groups facing different socio-ecological conditions. In a lab-in-the-field economic experiment, we compared the delay discounting of a sample of Romani people from Southern Spain (Gitanos) with that of their non-Romani neighbors (i.e., the majority Spanish population). The Romani-Gitano population constitutes the main ethnic minority in all of Europe today and is characterized by lower socio-economic status (SES), lower life expectancy and poorer health than the majority, along with a historical experience of discrimination and persecution. According to Life History Theory, Gitanos will tend to adopt “faster” life history strategies (e.g., earlier marriage and reproduction) as an adaptation to such ecological conditions and, therefore, should discount the future more heavily than the majority. Our results support this prediction, even after controlling for the individuals’ current SES (income and education). Moreover, group-level differences explain a large share of the individual-level differences. Our data suggest that human inter-group discrimination might shape group members’ time preferences through its impact on the environmental harshness and unpredictability conditions they face.
    Keywords: Romani, delay discounting, impatience, adaptation, evolutionary psychology, life history
    JEL: C93 D91 J71
    Date: 2018–02–10
  19. By: Felgendreher, Simon (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The paper analyzes how consumers access information about ethical certificates and how access to this information influences consumers’ purchasing decisions. Using an experimental market game and letting consumers choose between a certified and an uncertified product, this study finds that consumers do not ignore information about the effectiveness of ethical certificates in a systematic manner. Also, as long as the access to information is costless, varying the way it is provided to consumers does not influence the purchasing decision between a certified and an uncertified product. However, consumers are extremely price sensitive: once a small cost for information is introduced, most consumers are not willing to access it, and the share of consumers buying the certified product decreases significantly.
    Keywords: information; strategic ignorance; experiment; market; ethical consumption; Fair Trade; Fairtrade; ethical labels
    JEL: C91 D12 D64 D89
    Date: 2018–01
  20. By: Naihobe Gonzalez; Sophie MacIntyre; Pilar Beccar-Varela
    Abstract: This brief summarizes findings on the implementation and impacts of Leveled Literacy Intervention in Oakland, where the district conducted the nation’s first randomized controlled trial of this intensive reading program in secondary grades.
    Keywords: adolescent literacy, Leveled Literacy Intervention, secondary education, educational interventions
    JEL: I
  21. By: Lee, Sokbae; Okui, Ryo; Whang, Yoon-Jae
    Abstract: In this paper, we propose a doubly robust method to estimate 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.
    JEL: J1
    Date: 2017–11–29
  22. By: Dmitri Vinogradov; Yousef Makhlouf
    Abstract: Vague, or imprecise, news may affect decisions by changing either the funda- mentals, or the associated uncertainty, or both. We show response to vague news is shaped by ambiguity attitudes, yet with qualitative differences for dif- ferent levels of risk, on top of ambiguity, conveyed. The decision functional con- sists of a probabilistic term and an ambiguity premium; the latter depends on both risk and ambiguity, implying differential responses of ambiguity-neutral, -averse and -seeking subjects to probabilistic, as well as non-probabilistic news. In a two-color Ellsberg experiment with signals we obtain ambiguity attitudes matter more for non-probabilistic and less for probabilistic, though still impre- cise news. For vague news conveying a relatively high probability of success, subjects exhibit insensitivity to the ambiguity component, unless explicitly facing similar news of di§erent degrees of precision. Possible explanation is in either flat ambiguity premiums, or the cognitive inability to process the risky and the ambiguous components simultaneously.
    Keywords: ambiguity-aversion, ambiguity premium, Ellsberg experi- ment, vague news.
    JEL: C90 D01 D81
    Date: 2017–12
  23. By: Alem, Yonas (Department of Economics, School of Business, Economics and Law, Göteborg University); Dugoua, Eugenie (Columbia University)
    Abstract: In order to understand the extent of the information barrier to adoption of a household technology, we designed a randomized controlled trial on willingness to pay (WTP) for solar lanterns in India. We gave high quality solar lanterns to randomly selected `seed' households in a non-electrified region of the state of Uttar Pradesh. Three friends of the seed household were randomly assigned to one of the following three groups: control, passive learning and incentivized communication. We elicit WTP from the control group when the seed receives the solar lantern. We elicit WTP from the friends in the passive learning and incentivized communication groups thirty days after the seed receives the solar lantern. We show that passive learning increases WTP by 90% and incentivized communication by 145% relative to the control group. We also show that learning from others is the mechanism that drives the observed WTP by peers.
    Keywords: Social Networks; Passive Learning; Active Communication; Solar Lantern
    JEL: D83 O33 Q21 Q42
    Date: 2018–03
  24. By: Pabitra Chatterjee; Barthelemy Chollet (GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM), IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Olivier Trendel (MKT - Marketing - Grenoble École de Management (GEM))
    Abstract: Central consumers in a group often are influential, because their social prominence commands conformity from other members. Yet, there can be another contradictory effect of centrality, such that other members regard it as a threat to their attitudinal freedom and express reactance instead of conformity. Whether a group member conforms or reacts to the evaluation of a more central member might depend on the strength of their relationship, which determines the social cost of disagreeing. We provide evidence of such an interaction between centrality and relational strength with an experiment where participants with preexisting affective ties of varying strengths taste a snack in groups (Study 1) and a field study where participants connected by instrumental ties consume a complex service (Study 2). A scenario-based experiment manipulating centrality and strength of ties provides further evidence that reactance underlies the observed effects (Study 3).
    Keywords: Consumer-to-consumer influence, Centrality, Shared consumption, Tie strength
    Date: 2017
  25. By: Aaron Kamm; Christian Koch; Nikos Nikiforakis (Division of Social Science)
    Abstract: If taxpayers believe past rates of compliance are indicative of the future, traditional measures for combating tax evasion can be compromised. We present evidence from a novel laboratory experiment with strategic complementarities showing that a history of low compliance can render a major institutional reform ineffective at reducing tax evasion. The experimental treatments manipulate the history of tax compliance by varying the percentage of tax revenue embezzled by a ‘politician’ – our measure of ‘institutional quality’. We show that tax compliance is substantially higher in good-quality than bad-quality institutions when there is no history of tax evasion. When a bad-quality institution is replaced with a good-quality one, however, tax compliance remains low, as if the institutional change had not occurred. The reason is that the institutional change leaves expectations about future compliance largely unaffected. A history of high-quality institutions, on the other hand, shields tax compliance only partly from institutional deterioration. We discuss reasons for this, policy implications of our findings and evidence that a society-wide poll can assist in overcoming the ‘ghost of institutions past’.
    Date: 2017–10
  26. By: Keser, Claudia; Müller, Stephan; Peterlé, Emmanuel; Rau, Holger A.
    Abstract: This paper experimentally tests the relation between subjects' competitiveness and bargaining behavior. Bargaining is investigated in a demand-ultimatum game, where the responder can request a share of the pie from the proposer. The results show that highly competitive proposers earn less, since they make lower offers, which are more often rejected. Similarly, highly competitive responders achieve lower payoffs, since they request excessive amounts which induces lower proposals. These findings establish a link between competitiveness and bargaining as suggested by social and evolutionary psychology. Thus, we identify one driver of the empirical heterogeneity of bargaining behavior and outcomes. From a management perspective our findings highlight that giving thought to employees' competitiveness before delegating them to participate in negotiations may pay off.
    Keywords: Bargaining,Competitiveness,Experiment
    JEL: C91 M54
    Date: 2018
  27. By: Clark, Derek J. (School of Business and Economics, University of Tromsø); Nilssen, Tore (Dept. of Economics, University of Oslo)
    Abstract: We consider an effort-maximizing principal distributing a prize fund over two consecutive all-pay auctions. The two contestants are doubly heterogeneous: one of them has a head start in the fi rst contest; and winning contest one gives an advantage in contest two that varies between players. We show that, with a large head start, the principal chooses a zero prize in contest two, i.e., runs a single contest. Otherwise, the laggard winning contest one may overturn the leaders head start, possibly inciting expected efforts equal to the prize value, avoiding the laggard giving up, and this way mitigating the Matthew effect.
    Keywords: Contest; All-pay auction; Head start; Catching up; Mathhew effect
    JEL: D72 D74
    Date: 2018–02–27
  28. By: Colasante, Annarita; Alfarano, Simone; Camacho-Cuena, Eva
    Abstract: In this paper, we present the results of a Learning-to-Forecast Experiment (LtFE) eliciting short- as well as long-run expectations about the future price dynamics in markets with positive and negative expectations feedback. Comparing our results on short-run expectations to the LtFE literature, we prove that eliciting long-run expectations neither has an impact on the price dynamics nor on short-run expectations formation. In particular, we confirm that the Rational Expectation Equilibrium (REE) is a good benchmark only for the markets with negative feedback. Interestingly, our data show that the term structure of the cross-sectional dispersion of expectations is convex in positive feedback markets and concave in negative feedback markets. Differences in the slope of the term structure stem from diverse degrees of uncertainty on the evolution of prices in the two feedback systems: (i) in the negative feedback system, the convergence of the price to the REE mirrors into a tendency for coordination of long-run expectations around the fundamental value; (ii) conversely, the instability of the REE in the positive feedback system and the resulting oscillatory price dynamics are responsible for the diverging pattern of long-run expectations. Finally, we propose a new measure of heterogeneity of expectations based on the scaling of the dispersion of expectations over the forecasting horizon.
    Keywords: Long-Run Expectations, Heterogeneous Expectations, Experiment, Coordination, Convergence, Learning-to-Forecast Experiment
    JEL: C91 D30 G12
    Date: 2018
  29. By: Christoph Kuzmics (University of Graz, Austria); Daniel Rodenburger (University of Jena, Germany)
    Abstract: We reinvestigate data from a 14-player voting game experiment by Forsythe, Myerson, Rietz, and Weber (1993). Performing a powerful test, we find that the hypothesis of evolutionary stable attainable Nash equilibrium play in this complicated game cannot be rejected if we account for risk aversion, calibrated in another treatment (p-value 0.7799 with a sample size of 384).
    Keywords: Opinion polls; Elections; Voting; Testing; Nash equilibrium; Attainable equilibrium; Symmetries
    JEL: C52 C72 D72
    Date: 2018–02
  30. By: Philipp Lergetporer; Marc Piopiunik; Lisa Simon
    Abstract: In recent years, Europe has experienced an unprecedented influx of refugees. While natives’ attitudes toward refugees are decisive for the political feasibility of asylum policies, little is known about how these attitudes are shaped by refugees’ characteristics. We conducted survey experiments with more than 5,000 university students in Germany in which we exogenously shifted participants’ beliefs about refugees’ education level through information provision. Consistent with economic theory, we find that beliefs about refugees’ education significantly affect concerns about labor market competition. These concerns, however, do not translate into general attitudes because economic aspects are rather unimportant for forming attitudes toward refugees.
    Keywords: refugees, information provision, education, survey experiment, labor market
    JEL: H12 H53 I38 D83 D72 P16
    Date: 2017
  31. By: Jordi Brandts; Brice Corgnet; Roberto Hernán-González; José M. Ortiz; Carles Solà
    Abstract: We study the incentive effect of firing threats when bosses have limited information about workers. We show that a minimal amount of individual information about workers’ effort such as the time spent at their work station is sufficient to ensure strong incentive effects. This supports the use of firing threats based on rudimentary yet uncontroversial measures of work performance such as absenteeism, in organizational settings in which only limited information about workers is available. Our results help understand the limited link between pay and performance observed in compensation contracts calling for an extension of the principal-agent model to take into account how workers (mis-)perceive the intensity of incentives.
    Keywords: firing threats, Incentives, informativeness principle, laboratory experiments
    JEL: C92 D23 D82
    Date: 2018–02
  32. By: Blaufus, Kay; Milde, Michael
    Abstract: Using a series of laboratory experiments, this paper studies the effect of tax misperceptions on retirement savings and examines whether informational tax nudges and changing the form of the tax subsidy promote tax-efficient savings behavior. We find that deferred pension taxation results in after-tax pensions that are approximately 25% lower compared to an economically equivalent immediate pension tax system. This indicates substantial tax misperceptions. For subjects with low tax and financial knowledge, these misperceptions remain stable even if they have gained experience. Only if we provide subjects with recurrent numerical informational nudges on tax refunds, together with numerical informational nudges on future pension taxes, do tax distortions disappear for all subjects. Regarding the form of the tax subsidy, we demonstrate that replacing the tax deductibility of retirement savings with matching contributions increases tax-efficiency without the need to provide informational tax nudges.
    Keywords: Pension Taxation,Tax Misperception,Learning Behavior,Informational Tax Nudges,Matching Contribution
    JEL: D91 H20 H30
    Date: 2018

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.