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on Experimental Economics |
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Issue of 2018‒03‒19
twenty-one papers chosen by |
| By: | Nikoloz Kudashvili |
| Abstract: | While discrimination in the marketplace is well documented in empirical studies, field experiments have been less successful in identifying the sources of discrimination. This paper documents experimental evidence of the extent and nature of discrimination in the Georgian land market. The experiment is designed to uncover sources of statistical discrimination due to different beliefs about foreign investors. Discrimination is measured by the difference in price offers to foreign and Georgian investors. We find that the magnitude of discrimination shrinks significantly once foreign investors signal their willingness to search and pay the lease price in advance. This suggests that discrimination is largely driven by stereotypes about search costs and payment reliability of foreign investors - leaving no or very little preference-based discrimination. Knowing the source of discrimination can be helpful for policy makers to frame anti-discriminatory legislation.Creation-Date: 2018-02 |
| Keywords: | preference based discrimination; statistical discrimination; |
| JEL: | C93 J15 Q15 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp612&r=exp |
| By: | Leonie Kühl; Nora Szech |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6825&r=exp |
| By: | Beekman, Gonne (Wageningen University); Nillesen, Eleonora (UNU-MERIT); Voors, Maarten (Wageningen University) |
| Abstract: | We investigate how different sanctioning regimes and the quality of local leaders affects public goods provision in Liberian villages. We conduct a public goods experiment where leaders act as third-party punishers under one of two exogenously imposed sanctioning regimes. Under the first "flat fee" regime leaders receive a flat fee as compensation but do not receive any monetary gains from punishment. Under the second, "incentivised" regime leaders receive the punishment (tokens taken from the game participants) as compensation. We use villagers' perceived measures of corruption of their leader as our preferred measure for leadership quality. To empirically distinguish between sanctioning itself and the identity of the person sanctioning we have a treatment variation where a random villager acts as the third party punisher. We find that real village leaders elicit higher contributions than random villagers or groups without sanctioning. We also report that the effectiveness of sanctioning is attenuated by chiefs that are perceived to be of low-quality, especially when the sanctioner has no material incentive to punish. This suggests that low-quality chiefs are less likely to exert effort for public goods if they do not also privately benefit from it. Finally we find that people's preferred regime choice seems to depend on their real-life experiences in the village rather than their individual characteristics. Current development programmes heavily rely on community self-management and local institutions. Our paper supports the idea that a programme's success is likely to depend on whether villagers deem their leader to be credible norm enforcers. |
| Keywords: | Corruption, Public goods, Monitoring, Sanctioning, Field Experiment |
| JEL: | C93 K42 O17 O12 |
| Date: | 2018–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018011&r=exp |
| By: | Nan Zhou; Li Zhang; Shijian Li; Zhijian Wang |
| Abstract: | Algorithmic collusion is an emerging concept in current artificial intelligence age. Whether algorithmic collusion is a creditable threat remains as an argument. In this paper, we propose an algorithm which can extort its human rival to collude in a Cournot duopoly competing market. In experiments, we show that, the algorithm can successfully extorted its human rival and gets higher profit in long run, meanwhile the human rival will fully collude with the algorithm. As a result, the social welfare declines rapidly and stably. Both in theory and in experiment, our work confirms that, algorithmic collusion can be a creditable threat. In application, we hope, the frameworks, the algorithm design as well as the experiment environment illustrated in this work, can be an incubator or a test bed for researchers and policymakers to handle the emerging algorithmic collusion. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1802.08061&r=exp |
| By: | Eva O. Arceo Gómez (Centro de Investigación y Docencia Económicas); Raymundo M. Campos Vázquez (El Colegio de México); Eduardo M. Medina Cortina (El Colegio de México); Roberto Vélez Grajales (Centro de Estudios Espinosa Yglesias) |
| Abstract: | In Mexico, women obtain a lower wage than men on average. A potential cause of this gender pay gap is discrimination, but, in this paper, we show there are other channels that contribute to such gap. We implement a laboratory experiment with 404 individuals in which they play the ultimatum game and a wage bargaining game. The experiment contains three stages: an anonymous stage, a stage where we reveal the opponent’s photograph, and a final face-to-face phase. We estimate gender differences in bargaining preferences. First, we find no gender differences in the amount proposers send to respondents in both types of games. Second, gender matters in the bargaining process. When participants know their opponent’s gender, women show “solidarity” to other women in terms of higher wage proposals. Third, women reject less offers than men, especially in the ultimatum game. Lastly, in the wage bargaining game, women counteroffer less than men, and men are more aggressive in terms of counteroffers against firms headed by women. Gender stereotyping can explain our results. Such stereotypes may define how each gender should behave in different social situations, or, for instance, how we perceive women in positions of power. Hence, results are relevant for public policies that enhance social norms related to gender equity. |
| Keywords: | bargaining; social preferences; gender; laboratory experiment |
| JEL: | C70 C90 C91 J16 O54 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:emx:ceedoc:2018-02&r=exp |
| By: | Marco Faillo; Luigi Mittone; Costanza Piovanelli |
| Abstract: | Our paper reproduces the cash posters framework à la Homans (1953, 1954) in a laboratory setting with a twofold aim: first of all, it explores the gift-exchange between employers and employees, both in terms of wage- effort and in terms of effort-potential leniency in punishment; secondly, it investigates whether employees’ behavior is driven also by solidarity concerns towards their unlucky peers. We propose a novel experimental design with a modified version of the gift-exchange game with real effort, punishment, and multiple rounds (Fehr et al., 1997): each employer is matched with two employees and she has the possibility to punish each of them if their individual production is lower than that asked. Each employee’s production risks to be reduced by a random intervention and, in our treatment, each employee has the possibility to renounce to a part of his production to give it to his coworker in need. Our data support the well-known relation between wage and effort, but suggest that employers are not willing to overlook employees non-compliance, neither when employees exerted high effort in the past, nor when their coworkers exert high effort. In our treatment, employees not only exploit the possibility to help their needy peers, but they tend also to exert higher effort towards their employers. Consequently, the employers are those who earn more from employees’ solidarity, and the gap in earnings between employers and employees becomes even greater in our treatment. |
| Keywords: | Solidarity, Gift-exchange, Reciprocity, Experiment |
| JEL: | C91 M52 D91 D81 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:1801&r=exp |
| By: | Julia Kramer (University of Paderborn); Silvia Lübbecke (University of Paderborn); Nina Lucia Stephan (University of Paderborn) |
| Abstract: | ”The end justifies the means.” Experimental literature has proven that subjects cheat when costs from being detected are zero and the reward sufficiently positive. People cheat if this generates an increased payoff to them, while they have little reason to cheat if thereby they can only reward someone else. While recently, some studies investigate altruistic cheating behavior of adults, little interest has been granted to children. In this paper, we run a field experiment with children to find out whether the cheating behavior is something that lies in human nature and is thus already present in young children. This would speak against theories claiming that social behavior is only developed over time, as people grow up. Our data show that children are more likely to cheat if the cheating benefits themselves instead of someone else. We find a significant difference of 16 percentage points in cheating behavior depending on who would benefit from cheating. However, many children do not seem to cheat at all, and cheating behavior also differs between genders and different age groups. Surprisingly, whether the child can benefit a friend through cheating, rather than a stranger, does only make a marginally significant difference. |
| Keywords: | cheating, dishonesty, altruism, children, field experiment (keywords) |
| JEL: | C93 D63 D64 Z13 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:33&r=exp |
| By: | Nigus, Halefom (UNU-MERIT); Nillesen, Eleonora (UNU-MERIT); Mohnen, Pierre (UNU-MERIT) |
| Abstract: | In this study, using data from lab-in-the-field experiment, we explore whether the introduction of weather index insurance crowds in or crowds out social capital in northern Ethiopia. We use contributions in the public good game as a measure of social capital. We find that weather index insurance crowds out social capital. The free-riding problem created by the positive externality of weather index insurance and development of self-sufficiency behaviour are found to be the causal mechanisms behind the crowding out phenomenon. Our results indicate that formal insurance mechanisms do not occur in a vacuum and may have unintended effects. Hence, this study suggests that novel insurance product design and marketing strategies should be used to ameliorate such unintended effects. |
| Keywords: | Weather index insurance, social capital, public goods game, Ethiopia |
| JEL: | C93 G22 H41 O17 |
| Date: | 2018–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018007&r=exp |
| By: | Dietrich, Stephan (UNU-MERIT); Beekman, Gonne (Wageningen University); Nillesen, Eleonora (UNU-MERIT) |
| Abstract: | There is a long-standing debate on whether access to markets may change pro-social preferences and as a result undermine informal support structures prevalent in many developing country settings. This study presents empirical evidence on the relation between market integration and pro-social behaviour among rural households in Liberia. This is particularly relevant in light of recent emphasis on promoting agricultural development through connecting small-scale farmers to markets and value chains. We use data from two lab-in-the-field experiments to measure preferences for altruism and fairness towards fellow villagers and traders from a provincial market and combine the experiments with household survey data. We define market integration as the share of consumption bought at the market. The regression analysis is based on Tobit and 2SLS Tobit models using chief characteristics and predicted food consumption expenditures as instrumental variables. Our study finds that increased levels of market integration have no robust impact on altruistic behaviour, as represented by amounts send in the dictator game, but are associated with lower offers in the ultimatum game. Our findings support the idea that market integration makes people act more economically rational, especially when matched with traders. The study provides new evidence that contrary to popular belief, markets do not crowd out norms of generosity or fairness, or lead to some sort of negative externality by changing norms and preferences but rather strengthen strategic considerations and behaviour. |
| Keywords: | market integration, altruism, fairness, lab-in the-field experiment, Liberia |
| JEL: | A13 C93 O12 |
| Date: | 2018–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018010&r=exp |
| By: | Joshua S. Graff Zivin; Elizabeth Lyons |
| Abstract: | Existing theories and empirical research on how innovation occurs largely assume that innovativeness is an inherent characteristic of the individual and that people with this innate ability select into jobs that require it. In this paper, we investigate whether people who do not self-select into being innovators can be induced to innovate, and whether they innovate differently than those who do self-select into innovating. To test these questions, we designed and implemented an innovation contest for engineering and computer science students which allowed us to differentiate between those who self-select into innovative activities and those who are willing to undertake them only after receiving an additional incentive for doing so. We also randomly offer encouragement to subsets of both the induced and self-selected contest participants in order to examine the importance of confidence-building interventions on each sample. We find that while induced participants have different observable characteristics than those that were ‘innately’ drawn to the competition, on average, the success of induced participants was statistically indistinguishable from their self-selected counterparts and encouragement does not change this result. Heterogeneity in treatment effects suggests an important role for the use of targeted interventions. |
| JEL: | J24 M54 O32 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24339&r=exp |
| By: | Samantha Horn; Dean Karlan |
| 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. |
| JEL: | C93 D64 H4 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24327&r=exp |
| By: | Silvia Lübbecke (University of Paderborn); Wendelin Schnedler (University of Paderborn) |
| Abstract: | In large companies, supervisors are hired to control their subordinates’ performance and intervene with risky decisions in order to increase productivity. However, their decision to intervene may not always be profit-orientated. This paper studies whether the decision to intervene in a worker’s decision is influenced by psychological factors that are unrelated to the profitability of intervention. In particular, we examine the role of incidental moods and the anticipation of regret triggered by ex-post evaluation of the decision. Intervention behavior is analyzed in a factorial design controlling for two mood conditions (positive, negative) and the presence or absence of feedback on either the efficiency of intervention or on its social (dis)approval by the supervised worker. We observe that supervisors in the negative mood condition intervene less often (approx. 13%) than those in the positive mood condition. Further, when supervisors are later evaluated, they intervene less (approx. 16%). Our observations are consistent with the idea that supervisors’ decision are not only driven by payoff but also by incidental moods and regret anticipation. The effects, however, are not statistically significant. |
| Keywords: | intervention, incidental affects, anticipation of regret, decision under uncertainty, group decision-making |
| JEL: | C91 D81 D82 D83 D91 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:35&r=exp |
| By: | Olympia Bover (Banco de España); Laura Hospido (Banco de España); Ernesto Villanueva (Banco de España) |
| Abstract: | We study how a 10-hour course about personal finance delivered in compulsory secondary education affects a wide range of student’s outcomes over a three months horizon. The contents of the course covered budgeting, banking relationship and saving vehicles, but also awareness about future outcomes. To obtain reliable estimates, we conducted a randomized field experiment where 3,000 9th grade students coming from 78 Spanish high schools received financial education at different points of the academic year. Right after the course, performance in standardized tests of financial knowledge increased by 16% of one standard deviation, and treated youths were more likely to become involved in financial matters at home and showed a higher degree of patience in hypothetical saving choices. An incentivized saving task conducted three months after delivering the course suggests that treated youths displayed more patient choices at various interest rates and maturities than a control group of 10th graders. The results of higher performance in financial test scores and the higher degree of patient choices in the incentivized saving task among the treated are statistically significant in strata with students with a relatively more disadvantaged background. |
| Keywords: | financial education, impact evaluation |
| JEL: | D14 D91 I22 J24 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1801&r=exp |
| By: | Federico A. Bugni; Joel L. Horowitz |
| Abstract: | Economic data are often generated by stochastic processes that take place in continuous time, though observations may occur only at discrete times. For example, electricity and gas consumption take place in continuous time. Data generated by a continuous time stochastic process are called functional data. This paper is concerned with comparing two or more stochastic processes that generate functional data. The data may be produced by a randomized experiment in which there are multiple treatments. The paper presents a test of the hypothesis that the same stochastic process generates all the functional data. In contrast to existing methods, the test described here applies to both functional data and multiple treatments. The test is presented as a permutation test, which ensures that in a finite sample, the true and nominal probabilities of rejecting a correct null hypothesis are equal. The paper also presents the asymptotic distribution of the test statistic under alternative hypotheses. The results of Monte Carlo experiments and an application to an experiment on billing and pricing of natural gas illustrate the usefulness of the test. |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1803.00798&r=exp |
| By: | Chowdhury, Shyamal (University of Sydney, and IZA Bonn); Sutter, Matthias (Max Planck Institute for Research on Collective Goods Bonn, and University of Cologne); Zimmermann, Klaus F. (UNU-MERIT) |
| Abstract: | Economic preferences - like time, risk and social preferences - have been shown to be very influential for real-life outcomes, such as educational achievements, labour market outcomes, or health status. We contribute to the recent literature that has examined how and when economic preferences are formed, putting particular emphasis on the role of intergenerational transmission of economic preferences within families. Our paper is the first to run incentivized experiments with fathers and mothers and their children by drawing on a unique dataset of 1,999 members of Bangladeshi families, including 911 children, aged 6-17 years, and 544 pairs of mothers and fathers. We find a large degree of intergenerational persistence as the economic preferences of mothers and fathers are significantly positively related to their children's economic preferences. Importantly, we find that socio-economic status of a family has no explanatory power as soon as we control for parents' economic preferences. A series of robustness checks deals with the role of older siblings, the similarity of parental preferences, and the average preferences within a child's village. |
| Keywords: | Intergenerational transmission of preferences, time preferences, risk preferences, social preferences, children, parents, Bangladesh, socio-economic status, experiment |
| JEL: | C90 D90 D81 D64 J13 J24 J62 |
| Date: | 2018–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018008&r=exp |
| By: | Daniel Schwartz; Elizabeth A. Keenan; Alex Imas; Ayelet Gneezy |
| Abstract: | Prior work has demonstrated that prosocial incentives – where individuals’ effort benefits a charitable organization – can be more effective than standard incentives, particularly when the stakes are low. Yet, little is known about the effectiveness of prosocial incentives on people’s decisions to participate or opt-in to the incentivized activity in the first place. We examined the effectiveness of prosocial incentives on people’s participation decisions using two distinct field experiments, one that sought to encourage recycling and the other that incentivized completion of effortful tasks. Across both studies, we found that individuals were more likely to avoid activities that involved prosocial incentives, compared to standard incentives, regardless of incentive size, and even when the donation was optional. Our results identify a significant limit for the scope of prosocial incentives as effective motivation tools. |
| Keywords: | decision making, incentives, prosocial behavior, field experiments |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6840&r=exp |
| By: | Leuveld, Koen (Wageningen University); Nillesen, Eleonora (UNU-MERIT); Pieters, Janneke (Wageningen University); Ross, Martha (Wageningen University); Voors, Maarten (Wageningen University); Wang Sonne, Elise (UNU-MERIT) |
| Abstract: | Small holder farming in sub-Saharan Africa is plagued by low productivity levels and high malnutrition. Extension services aim to increase knowledge and uptake of new technologies to boost yields. However, despite the potential benefits adoption rates are still low. One explanation may be that providing training and demonstration trials alone is not enough to increase input demand needed to raise productivity. Lifting multiple barriers simultaneously could prove to be more effective. We use a field experiment in eastern DRC to test whether adding input subsidies to an extension programme provides synergistic benefits. Specifically, in a sample of 64 villages that received an agricultural extension programme, a random half was given the opportunity to buy subsidised input packages. We estimate the impact of the subsidy scheme on knowledge, input use, yields and food security indicators. We find robust evidence on input use at the extensive margin: providing subsidies increases fertiliser uptake by 5 percentage points, while uptake of inoculant increases by 3 percentage points, one year after the subsidy scheme was introduced. These effects are substantial given the extremely low baseline use (3% in both cases) of fertiliser and inoculant even after the extension intervention. In addition, villages further away from these markets have lower adoption rates as cost of access increase. Our results caution against overoptimistic views on the downstream effects of productivity enhancing technologies and that investments in structural changes in markets are likely needed to stimulate growth in the agricultural sector. |
| Keywords: | agricultural extension, input subsidies, impact evaluation, food security, DRC |
| JEL: | O13 O33 Q12 |
| Date: | 2018–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018009&r=exp |
| By: | Silvia Lübbecke (University of Paderborn); Wendelin Schnedler (University of Paderborn) |
| Abstract: | Children sometimes reject help that they have not asked for only to do the work themselves. Here, we study whether adults also reject such paternalistic help and distinguish between three possible reasons. The person rejecting help may want to preserve her self-esteem, signal her autonomy or signal her cognitive competence to the interfering party (paternalist). By varying the information available to the paternalist, we can isolate these three effects. If all three effects can operate, a substantial fraction rejects paternalistic help. Excluding the opportunity to signal cognitive competence or autonomy to the paternalist through rejection leads to a sizable (but not statistically significant) reduction of rejections. |
| Keywords: | self-esteem, image concerns, autonomy, cognitive competence, paternalism, self-determination |
| JEL: | C91 D82 D91 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:34&r=exp |
| By: | Géraldine Bocquého (Université de Lorraine, AgroParisTech-INRA, BETA); Marc Deschamps (Université de Bourgogne Franche-Comté, CRESE); Jenny Helstroffer (University of Lorraine, CNRS, BETA); Majlinda Joxhe (CREA, Université du Luxembourg) |
| Abstract: | This paper uses the experimental setup of Tanaka et al. (2010) to measure refugees’ risk preferences. A sample of 206 asylum seekers was interviewed in 2017-18 in Luxembourg. Contrary to studies which focus on risk aversion in general, we analyze its components using a cumulative prospect theory (CPT) framework. We show that refugees exhibit particularly low levels of risk aversion compared to other populations and that CPT provides a better fit for modelling risk attitudes. Moreover, we include randomised temporary treatments provoking emotions and find a small significant impact on probability distortion. Robustness of the Tanaka et al. (2010) experimental framework is confirmed by including treatments regarding the embedding effect. Finally, we propose a theoretical model of refugee migration that integrates the insights from our experimental outcomes regarding the functional form of refugees’ decision under risk and the estimated parameter values. The model is then simulated using the data from our study. |
| Keywords: | "Refugee migration, risk preferences, experimental economics, cumulative prospect theory, psychological priming " |
| JEL: | C93 D74 D81 D91 F22 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:18-08&r=exp |
| By: | Fischer, Christian; Normann, Hans-Theo |
| Abstract: | In asymmetric dilemma games without side payments, players face involved cooperation and bargaining problems. The maximization of joint profits is implausible, players disagree on the collusive action, and the outcome is often inefficient. For the example of a Cournot duopoly with asymmetric cost, we investigate experimentally how players cooperate (collude implicitly and explicitly), if at all, in such games. We find that, without communication, players fail to cooperate and essentially play the static Nash equilibrium, confirming previous results. With communication, inefficient firms gain at the expense of efficient ones. When the role of the efficient firm is earned in a contest, the efficient firm earns higher profits than when this role is randomly allocated. Bargaining solutions do not satisfactorily predict collusive outcomes. Finally, when given the choice to talk, the efficient firms often decline that option. |
| Keywords: | asymmetries,bargaining,cartels,communication,Cournot,earned role,experiments |
| JEL: | C7 C9 L4 L41 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:283&r=exp |
| By: | Laruelle, Annick |
| Abstract: | This paper reports an experiment realised with 850 electors during the 2017 French presidential election. It tested a ballot di¤erent from the official one. Instead of voting for a unique candidate, participants were asked to cast one vote on each candidate. The vote could be "in favor", "neutral" or "against". The theoretical advantages of such a ballot are discussed and tested empirically. |
| Keywords: | voting, experiment, dissatisfaction, electoral, systems |
| JEL: | D72 C93 |
| Date: | 2018–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:ikerla:25736&r=exp |