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on Experimental Economics |
| By: | Giuseppe Attanasi; Pierpaolo Battigalli; Elena Manzoni; Rosemarie Nagel |
| Abstract: | We study in a theoretical and experimental setting the interaction between belief-dependent preferences and reputation building in a nitely repeated trust game. We focus mainly on the effect of guilt aversion. In a simple two-types model, we analyze the effect of reputation building in presence of guilt-averse players and derive behavioral predictions. In the experiment, we elicit information on trustees belief-dependent preferences and disclose it to the paired trustor before the repeated game. Our ex- perimental results show that disclosing information on the trustees belief-dependent preferences and thus letting players play the repeated trust game in presence of almost complete information leads to higher trust and cooperation than in the corresponding incomplete information game setting. In particular, disclosure of information on preferences of guilt-averse trustees also enhances the trustorscooperation. Disclosure of information on belief-dependent preferences of reciprocity-concerned trustees, instead, does not lead to higher trust and cooperation. We show that this is theoretically consistent with subjects featuring low reciprocity concerns. JEL classifi cation: C72; C73; C91. Keywords: Repeated psychological game; reputation; guilt; reciprocity; almost complete information. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:622&r=exp |
| By: | Koessler, Ann-Kathrin; Torgler, Benno; Feld, Lars P.; Frey, Bruno S. |
| Abstract: | The ability of a tax authority to collect taxes successfully depends on both its relationship with taxpayers and how strongly these taxpayers are committed to contributing to the common good. We present field and laboratory experimental evidence on a new non-intrusive approach aimed at fostering the commitment to pay taxes. Using a between-subject design in a unique field setting, we analyze whether tax compliance changes if taxpayers receive an offer to promise paying their taxes on time. Taxpayers who complied with the promise entered into a lottery with the chance of winning either a financial or a non-financial reward. Rewards were also offered in response to compliance only (i.e., without being asked to make a formal promise) allowing us to disentangle a pure reward effect from the commitment effect. As potential legal obstacles prevented us from developing a treatment that allowed for identifying whether the promise itself changes behavior, we designed and conducted a laboratory experiment to test this proposition. In the field experiment, taxpayers with a history of being compliant are more likely to make a promise. Similarly, the laboratory experiment indicates that individuals with higher tax morale are more compliant and more likely to make the promise. In addition, for all promise schemes, compliance is significantly higher for the promise-makers as compared to subjects in the control group and to those who did not make a promise. The field experiment indicates that commitment can improve payment behavior. This effect, however, is strongly dependent on the type of reward to which the promise is linked. Compliance increases only if the reward is non-financial. A no compliance effect is observed if cash is offered in return for promise fulfilment. A strong compliance effect for pure non-financial rewards was also obtained in the laboratory experiment. |
| Keywords: | tax compliance,field experiment,commitment,promise,supportive incentives,psychological contract |
| JEL: | H26 C93 C91 A13 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:aluord:1806&r=exp |
| By: | Chiara Aina; Pierpaolo Battigalli; Astrid Gamba |
| Abstract: | In social dilemmas, choices may depend on belief-dependent motivations, which enhance the credibility of promises or threats at odds with personal gain maximization. We address this issue theoretically and experimentally in the context of the Ultimatum Minigame, assuming that the choice of accepting or rejecting an unfair proposal is affected by a combination of frustration, due to unfulfilled expectations, and inequity aversion. We increase the responder's payoff from the default allocation (the proposer's outside option) with the purpose of increasing the responder's frustration due to the unfair proposal, and thus his willingness to reject it. In addition, we manipulate the method of play, with the purpose of switching on (direct response method) and off (strategy method) the responder's experience of anger. We found overwhelming evidence in support of belief-dependent preferences: in the direct method, the higher the responders' initial expectations of the default allocation, the more likely they are to reject the unfair proposal. In line with our predictions, the direct method increases the conditional frequency of rejections. Instead, against our predictions, the payoff increase does not have such effect. Interestingly, the distribution of actions of male subjects is in line with the theory, but not that of females. Keywords: Experiments, psychological games, ultimatum minigame, frustration, anger, rationalizability. JEL classification: C72, C91, D03. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:621&r=exp |
| By: | Augurzky, Boris; Bauer, Thomas K.; Reichert, Arndt R.; Schmidt, Christoph M.; Tauchmann, Harald |
| Abstract: | This paper examines weight loss and the formation of healthy habits through cash rewards in the context of a multi-phase randomized controlled trial involving 700 obese individuals. We find effects of monetary incentives for weight loss of up to EUR 300 on body weight during all experimental phases, including a period of a year and a half following the exposure to the financial rewards. We also find effects on healthy behavior during this follow-up phase. After the initial incentive period, we additionally provided participants who had lost a substantial amount of weight with monetary rewards of up to EUR 500. These had only short-term effects on body weight and healthy behavior. We argue that our findings are best explained by monetarily incentivized participants having formed healthy habits by the time the experiment ended and that only the speed of the transition to the new (health) equilibrium was affected by the additional rewards. Contrary to the pessimistic perspective presented in earlier empirical research on habit formation, our results suggest that a simple program relying on weight loss rewards can result in long-term health behavioral change. |
| Keywords: | field experiment,obesity,healthy behavior,habit formation,sustainability,monetary incentives |
| JEL: | I12 I18 D03 C93 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:062018&r=exp |
| By: | Matteo M. Marini (Dept of Economics, Università degli Studi dell'Insubria, Varese-Italy, LEE and Dept of Economics, Universitat Jaume I, Castellón-Spain); Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Luca Corazzini (Department of Economics, University of Venice ‘Cà Foscari’, Venice, Italy) |
| Abstract: | This paper offers evidence on the impact of communication on public good provision within the context of ambiguous public good values and noisy information. We run a laboratory experiment with two treatments, where the control variable is pre-play communication in the form of unrestricted text chat. A binary threshold public goods game with four-person groups, threshold of three and partner matching is at the core of the design. We introduce a novel provision mechanism which, in case the threshold is reached, consists in a binary lottery producing either a stated high value or a stated low value for the whole group with unknown probability. Before the contribution decision, private signals for the actual value of the public good are provided. The results at the group level emphasize that, in accordance with related literature, communication significantly increases public good provision by reducing inefficiency that comes from wasteful under-contribution. Nevertheless, despite the presence of a valid coordination device, the players in the chat treatment seem to neglect the free-rider issue and often end up over-contributing, in contrast with previous scientific findings. After chat analysis, we discover that the agreements on all members contributing are often successful, arguably thanks to pronounced group identity generated by the partner matching. Moreover, we propose the common fate hypothesis as further explanation of the massive over-contribution. Since the players show greater concern for ambiguity than for the free-rider problem, we speculate about a possible crowding out effect of the former on the latter. |
| Keywords: | communication, ambiguity, private signal, threshold public goods game |
| JEL: | C92 D81 D82 D83 H41 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2018/03&r=exp |
| By: | Yusuke Narita (Cowles Foundation, Yale University) |
| Abstract: | Randomized Controlled Trials (RCTs) enroll hundreds of millions of subjects and involve many human lives. To improve subjects’ welfare, I propose an alternative design of RCTs that I call Experiment-as-Market (EXAM). EXAM Pareto optimally randomly assigns each treatment to subjects predicted to experience better treatment effects or to subjects with stronger preferences for the treatment. EXAM is also asymptotically incentive compatible for preference elicitation. Finally, EXAM unbiasedly estimates any causal effect estimable with standard RCTs. I quantify the welfare, incentive, and information properties by applying EXAM to a water cleaning experiment in Kenya (Kremer et al., 2011). Compared to standard RCTs, EXAM substantially improves subjects’ predicted well- being while reaching similar treatment effect estimates with similar precision. |
| Keywords: | Research Ethics, Clinical Trial, Social Experiment, A/B Test, Market Design, Causal Inference, Development Economics, Spring Protection, Discrete Choice |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2127&r=exp |
| By: | Antonio Cabrales; Francesco Feri; Piero Gottardi; Miguel A. Meléndez-Jiménez |
| Abstract: | This paper reports on experiments testing the viability of markets for cheap talk information. We find that the poor quality of the information transmitted leads to a collapse of information markets. The reasons for this are surprising given the previous experimental results on cheap-talk games. Our subjects provide low-quality information even when doing so does not increase their monetary payoff. |
| Keywords: | experiment, cheap talk, auction, information acquisition, information sale |
| JEL: | D83 C72 G14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6975&r=exp |
| By: | Margaretha Buurman (VU Amsterdam, Netherlands); Josse (J.) Delfgaauw (Erasmus University Rotterdam); Robert (A.J.) Dur (Erasmus University Rotterdam, CESifo, IZA); Robin Zoutenbier (Ministry of Finance, The Netherlands) |
| Abstract: | We conducted a field experiment to examine the effects of student feedback to teachers at a large Dutch school for intermediate vocational education. Students evaluated all teachers, but only a randomly selected group of teachers received feedback. Additionally, we asked all teachers before as well as after the experiment to assess their own performance on the same items. We find a precisely estimated zero average treatment effect of receiving feedback on student evaluation scores a year later. Only those teachers whose self-assessment before the experiment is much more positive than their students' evaluations improve significantly in response to receiving feedback. We also find that provision of feedback reduces the gap between teachers' self-assessment and students' assessment, but only to a limited extent. All of these results are driven by the female teachers in our sample; male teachers turn out to be unresponsive to student feedback. |
| Keywords: | field experiment; feedback; teachers; student evaluations; gender differences |
| JEL: | C93 I2 M5 |
| Date: | 2018–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180042&r=exp |
| By: | Chalotte Saucet (Univ. Lyon, ENS de Lyon, GATE UMR5824, 93 Chemin des Mouilles, F-69130, Ecully, France.); Marie Claire Villeval (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69131 Ecully, France; IZA, Bonn, Germany) |
| Abstract: | The memory people have of their past actions is one of the main sources of information about themselves. To study whether people retrieve their memory self-servingly, we designed an experiment in which participants have first to play binary dictator games and, second, recall the amounts allocated to the receiver. We investigate whether dictators (i) exhibit poorer recalls, (ii) over-estimate more often and (iii) to a larger extent the receiver’s amount when they have chosen the selfish option. We find that introducing monetary incentives for memory accuracy increases the dictators’ percentage of correct recalls only when they have chosen the altruistic option. The percentage of correct recalls of the dictators is lower when they have chosen the selfish option, showing that amnesia is more likely to affect selfish than altruistic dictators. However, dictators do not bias strategically the direction and magnitude of their recalls. |
| Keywords: | Motivated memory, selective recalls, self-image, dictator game, experiment |
| JEL: | C91 D91 D63 D64 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1804&r=exp |
| By: | Filomena Garcia; Luca David Opromolla; Andrea Vezzulli; Rafael Marques |
| Abstract: | The administration of tax policy has shifted its focus from enforcement to complementary instru- ments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of the dissemination of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where, for given levels of audit probabilities, fines and tax rates, subjects have to declare their income after receiving either a communication of the official average tax evasion rate or a private message from a group of ran- domly matched peers about their tax behavior. We use the experimental data to estimate a dynamic econometric model of tax evasion. The econometric model extends the Allingham–Sandmo–Yitzhaki tax evasion model to include self-consistency and endogenous social interactions among taxpayers. We find four main results. First, tax compliance is very persistent. Second, the higher the official past tax evasion rate the higher the degree of persistence: evaders are more likely to evade again, and compli- ant individuals are more likely to comply again. Third, when all peers communicate to have evaded (complied) in the past, both evaders and compliant individuals are more likely to evade (comply). Fourth, while both treatments, and especially the unofficial information treatment, are associated, in the context of our experiment, with a significantly larger growth in evasion intensity, the aggregate effect depends on the characteristics of the population. In countries with inherently low levels of tax evasion, official information can have beneficial effects by consolidating the behavior of compliant in- dividuals. However, in countries with inherently high levels of tax evasion, official information can have detrimental effects by intensifying the behavior of evaders. In both cases, the impact of official information is magnified in the presence of strong peer effects. |
| Keywords: | Tax morale, Information, Tax evasion, Experiment, Peer Effects |
| JEL: | H26 D63 C24 C92 Z13 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp0372018&r=exp |
| By: | Valeria Faralla; Guido Borà; Alessandro Innocenti; Marco Novarese |
| Abstract: | We assess in the laboratory the impact of promises on group decision-making. The gift-exchange game provides the testing ground for our experiment. When played between groups, inter-group cooperation and reciprocity represent a condition for efficiency in overall decision making. We find that promises have a significant positive effect on aggregate profits. We interpret these findings as if promises act as a trigger of social conformity, according to which groups adopt socially more desirable behavior even without face-to-face communication or discussion. |
| Keywords: | group decision, promise, gift-exchange game, efficiency, social conformity. |
| JEL: | D81 D83 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:usi:labsit:051&r=exp |
| By: | Giuseppe Attanasi (University of Lille, Lille Economics Management, Faculté des Sciences Economiques et Sociales, Cité Scientifique, 59655 Villeneuve d'Ascq Cedex, France); Claire Rimbaud (Univ Lyon, University Lyon 2, GATE UMR 5824, F-69131 Ecully, France); Marie Claire Villeval (Univ Lyon, CNRS, GATE UMR 5824, F-69131 Ecully, France; IZA, Bonn, Germany) |
| Abstract: | Donors usually need intermediaries to transfer their donations to recipients. A risk is that donations can be embezzled before they reach the recipients. Using psychological game theory, we design a novel three-player Embezzlement Mini-Game to study whether intermediaries suffer from guilt aversion and whether guilt aversion toward the recipient is stronger than toward the donor. Testing the predictions of the model in a laboratory experiment, we show that the proportion of guilt-averse intermediaries is the same irrespective of the direction of the guilt. However, structural estimates indicate that the effect of guilt on behaviour is higher when the guilt is directed toward the recipient. |
| Keywords: | Embezzlement, Dishonesty, Guilt Aversion, Psychological Game Theory, Experiment |
| JEL: | C91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1807&r=exp |
| By: | Philippos Louis; Matias Núñez; Dimitrios Xefteris |
| Abstract: | Does an individual assign a higher value to a group decision she has explicitly agreed with? Or does she only care about the intrinsic features of the outcome? Since it is difficult to address this question in natural settings, we employ a laboratory experiment where, after the group collectively decides on an issue, each individual may propose a revision to the group decision. We find that outcomes generated by congruent mechanisms i.e. procedures that incentivize subjects to agree with the winning alternative- are revised to a far lesser extent compared to outcomes generated by outcome-wise identical mechanisms that encourage disagreement. |
| Keywords: | implementation; mechanism design; consensus; agreement; congruence; experiment; endorsements |
| JEL: | D71 D72 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:05-2018&r=exp |
| By: | Joachim Weimann; Jeannette Brosig-Koch; Timo Heinrich; Heike Hennig-Schmidt; Claudia Keser |
| Abstract: | Since Mancur Olson’s “Logic of collective action” it is common conviction in social sciences that in large groups the prospects of a successful organization of collective actions are rather bad. Following Olson’s logic, the impact of an individual’s costly contribution becomes smaller if the group gets larger and, consequently, the incentive to cooperate decreases with group size. Conducting a series of laboratory experiments with large groups of up to 100 subjects, we demonstrate that Olson’s logic does not generally account for observed behavior. Large groups in which the impact of an individual contribution is almost negligible are still able to provide a public good in the same way as small groups in which the impact of an individual contribution is much higher. Nevertheless, we find that small variations of the MPCR in large groups have a strong effect on contributions. We develop a hypothesis concerning the interplay of MPCR and group size, which is based on the assumption that the salience of the advantages of mutual cooperation plays a decisive role. This hypothesis is successfully tested in a second series of experiments. Our result raises hopes that the chance to organize collective action of large groups is much higher than expected so far. |
| Keywords: | public goods, large groups |
| JEL: | C90 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6962&r=exp |
| By: | Shubhayan Sarkar; Colin Benjamin |
| Abstract: | In this work, we aim to answer the question- what triggers cooperative behaviour in the thermodynamic limit by taking recourse to the Public goods game. Using the idea of mapping the Ising model Hamiltonian to payoffs in game theory we calculate the Magnetisation of a game in the thermodynamic limit. We see a phase transition in the thermodynamic limit of the two player Public goods game. We observe that punishment acts as an external field for the two player Public goods game triggering cooperation, while cost can be a trigger for defection or suppressing cooperation. Finally, reward also acts as a trigger for cooperation while the role of inverse temperature (fluctuations in choices) remains ambiguous. |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1804.06465&r=exp |
| By: | Heczko, Alexander; Kittsteiner, Thomas; Ott, Marion |
| Abstract: | Combinatorial auctions, in particular core-selecting auctions, have increasingly attracted the attention of academics and practitioners. We experimentally analyze core-selecting auctions under incomplete information and find that they perform better than the Vickrey auction. The proportions of efficient allocations are similar in both types of auctions, but the proportions of stable (core) allocations and the revenue are higher in the core-selecting auctions. This is in particular true for an independent private values setting in which theory does not predict this better performance of the core-selecting auction. We trace the causes of the performance differences back to patterns in bids. The core-selecting auctions provide incentives for overbidding the own valuation and - under certain conditions - also for bid-shading, which can hamper performance. In the experiment, bidders react in the predicted direction to these incentives, though less pronouncedly than predicted. |
| Keywords: | Combinatorial auction,VCG mechanism,core-selecting auction,experiment |
| JEL: | D44 C72 D82 C92 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:176842&r=exp |
| By: | Björn Bartling; Alexander W. Cappelen; Mathias Ekström; Erik Ø. Sørensen; Bertil Tungodden |
| Abstract: | The paper reports the first experimental study on people’s fairness views on extreme income inequalities arising from winner-take-all reward structures. We find that the majority of participants consider extreme income inequality generated in winner-take-all situations as fair, independent of the winning margin. Spectators appear to endorse a “factual merit” fairness argument for no redistribution: the winner deserves all the earnings because these earnings were determined by his or her performance. Our findings shed light on the present political debate on redistribution, by suggesting that people may object less to certain types of extreme income inequality than commonly assumed. |
| Keywords: | Winner-take-all reward structures, fairness, income inequality |
| JEL: | C91 D63 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:287&r=exp |
| By: | Giuseppe Attanasi (Université de Lille, Sciences Humaines et Sociales); Claire Rimbaud (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Marie Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Donors usually need intermediaries to transfer their donations to recipients. A risk is that donations can be embezzled before they reach the recipients. Using psychological game theory, we design a novel three-player Embezzlement Mini-Game to study whether intermediaries suffer from guilt aversion and whether guilt aversion toward the recipient is stronger than toward the donor. Testing the predictions of the model in a laboratory experiment, we show that the proportion of guilt-averse intermediaries is the same irrespective of the direction of the guilt. However, structural estimates indicate that the effect of guilt on behaviour is higher when the guilt is directed toward the recipient. |
| Keywords: | Embezzlement, Dishonesty, Guilt Aversion, Psychological Game Theory, Experiment |
| Date: | 2018–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01779145&r=exp |
| By: | Géraldine Bocqueho (Université de Lorraine (UL)); Marc Deschamps (Université de Bourgogne); Jenny Helstroffer (Université de Lorraine (UL)); Julien Jacob (Université de Lorraine (UL)); Majlinda Joxhe (Université du Luxembourg (Uni.lu)) |
| 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) frame-work. 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: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/6mekga2ph18vda5qbuop2ckgkn&r=exp |
| By: | López Pérez, Raúl (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Ramírez Zamudio, Aldo. (Center for Economics, Banking and Finance Studies, Department of Economics, Universidad de Lima.) |
| Abstract: | We report data from an experiment in Peru where subjects anonymously decide how much of their endowment they donate to the Peruvian Government. The standard rational choice model and several well-known models of non-selfish preferences predict zero giving. Yet we observe that around 75% of the subjects give something (N = 164), with substantial heterogeneity. Our data is consistent with an account based on social norms: If compliance is not too costly, people comply with norms if (i) they perceive that such behavior sufficiently promotes social welfare and (ii) others are expected to respect norms as well (peer effects). Our paper contributes to a recent literature on tax morale emphasizing the importance of non-standard motivations on tax compliance and suggests that taxpayers are willing to give money to the government (e.g., paying taxes) if they believe that enough others give as well and that taxes are not wasted or ‘stolen’ by the government, but used to promote social welfare. |
| Keywords: | corruption, evasion, peer effects, social norms, tax compliance, tax morale |
| JEL: | C92 D91 H21 H26 H3 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:201802&r=exp |
| By: | Roman Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University) |
| Abstract: | Contests are commonly used in the workplace to motivate workers, determine promotion, and assign bonuses. Although contests can be very effective at eliciting high effort, they can also lead to inefficient effort expenditure (overbidding). Researchers have proposed various theories to explain overbidding in contents, including mistakes, systematic biases, the utility of winning, and relative payoff maximization. Using an eight-part experiment, we test and find significant support for the existing theories. Also, we discover some new explanations based on cognitive ability and impulsive behavior. Out of all explanations examined, we find that impulsivity is the most important factor explaining overbidding in contests. |
| Keywords: | contest, overbidding, impulsive behavior, experiments |
| JEL: | C72 C91 D01 D72 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:18-03&r=exp |
| By: | Duffy, Sean; Smith, John |
| Abstract: | Huttenlocher, Hedges, and Vevea (2000) (Why do categories affect stimulus judgment? Journal of Experimental Psychology: General, 129, 220-241) introduce the category adjustment model (CAM). Given that participants imperfectly remember stimuli (which we refer to as “targets”), CAM holds that participants maximize accuracy by using information about the distribution of the targets to improve their judgments. CAM predicts that judgments will be a weighted average of the imperfect memory of the target and the mean of the distribution of targets. Huttenlocher, Hedges, and Vevea (2000) report on three experiments and conclude that CAM is “verified.” We attempt to replicate Experiment 3 from Huttenlocher et al. (2000). We analyze judgment-level data rather than averaged data. We find evidence of a bias toward a set of recent targets rather than a bias toward the running mean. We also do not find evidence of the joint hypothesis that participants learned the distribution of targets and employed this information in their judgments. The judgments in our dataset are not consistent with CAM. We discuss how the apparent defects in HHV – including dividing by zero – went unnoticed and how such mistakes can be avoided in future research. Finally, we hope that the techniques that we employ will be used to test other datasets that are currently regarded as consistent with CAM or any Bayesian model of judgment. |
| Keywords: | judgment; memory; category adjustment model; central tendency bias; recency effects; Bayesian judgments |
| JEL: | C9 C91 |
| Date: | 2018–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86287&r=exp |
| By: | Majerczyk, Michael; Sheremeta, Roman; Tian, Yu |
| Abstract: | We examine theoretically and experimentally how combining between-team and within-team incentives affects behavior in team tournaments. Theory predicts that free-riding is likely to occur when there are only between-team incentives, and offering within-team incentives may solve this problem. However, if individuals collude, then within-team incentives may not be as effective at reducing free-riding. Consistent with the theoretical predictions, the results of our experiment indicate that although between-team incentives are effective at increasing individual effort, there is substantial free-riding and declining effort over time. Importantly, a combination of between-team and within-team incentives is effective not only at generating effort but also at sustaining effort over time, mitigating free-riding problem, increasing cooperation and decreasing collusion within teams. |
| Keywords: | individual incentive, team incentive, tournament, free-riding, collusion |
| JEL: | C72 D72 H41 |
| Date: | 2018–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86280&r=exp |
| By: | Eiji Koazuka |
| Abstract: | Providing local communities with authority to manage school resources is a popular education policy in the developing world. However, recent studies suggest that this type of intervention has limited impact on student learning outcomes. To investigate how communities can effectively utilize school resources, we conducted a randomized experiment in Niger by providing school grants and training for school committees to increase communities’ awareness of student learning and improve resource management. The result shows that, when the training was conducted with grant provision, communities increased activities that enhanced student effort, and student test scores in math and French remarkably improved, particularly for low-performing children. As a secondary effect of the training, parents, who have realized their children are not learning the basics at school, increased their contribution to school committees and their support for children’s home study. These results suggest that sharing information and knowledge with communities and raising their awareness is a key to enhancing effectiveness of community participation and school grants policy. |
| Keywords: | Education, Decentralization, Accountability, Field experiments |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:jic:wpaper:166&r=exp |