nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒05‒21
29 papers chosen by

  1. Social Norms, Endogenous Sorting and the Culture of Cooperation By Ernst Fehr; Tony Williams
  2. Group Trust in Youth Business Groups: Influenced by Risk Tolerance and Expected Trustworthiness By Holden, Stein T.; Tilahun , Mesfin
  3. How Do Sellers Benefit From Buy-It-Now Prices in Ebay Auctions? -- an Experimental Investigation By Grebe, Tim; Ivanova-Stenzel, Radosveta; Kröger, Sabine
  4. How does Altruism Enlarge a Climate Coalition? By Lin, Yu-Hsuan
  5. Promises undone: How committed pledges impact donations to charity By Toke R. Fosgaard; Adriaan R. Soetevent
  6. Doctor–patient differences in risk and time preferences: a field experiment By Galizzi, Matteo M.; Miraldo, Marisa; Stavropoulou, Charitini; van der Pol, Marjon
  7. God Does Not Play Dice, but Do We? By Backhaus, Teresa; Breitmoser, Yves
  8. Honesty in the Digital Age By Alain Cohn; Tobias Gesche; Michel André Maréchal
  9. Can we nudge farmers into saving water? Evidence from a randomized experiment By Sylvain Chabé-Ferret; Philippe Le Coent; Arnaud Reynaud; Julie Subervie; Daniel Lepercq
  10. Affirmative Action and Retaliation in Experimental Contests By Francesco Fallucchi; Simone Quercia
  11. Delegated decision making and social competition in the finance industry By Michael Kirchler; Florian Lindner; Utz Weitzel
  12. Experimental investigations of coordination games: high success rates, invariant behavior, and surprising dynamics By Jörg Spiller; Friedel Bolle
  13. Does Ignorance of Economic Returns and Costs Explain the Educational Aspiration Gap? Evidence from Representative Survey Experiments By Philipp Lergetporer; Katharina Werner; Ludger Wößmann
  14. Negotiating a Better Future: How Interpersonal Skills Facilitate Inter-Generational Investment By Nava Ashraf; Natalie Bau; Corinne Low; Kathleen McGinn
  15. Why factors facilitating collusion may not predict cartel occurrence: Experimental evidence By Fonseca, Miguel A.; Li, Yan; Normann, Hans-Theo
  16. Skewed logistic distribution for statistical temperature post-processing in mountainous areas By Michael Kirchler; Florian Lindner; Utz Weitzel
  17. I might be a liar, but not a thief: An experimental distinction between the moral costs of lying and stealing By Hermann, Daniel; Mußhoff, Oliver
  18. A Two-Party System under the Proportional Rule is Possible: Strategic Voting in the Lab By Francesco, De Sinopoli; Giovanna, Iannantuoni; Valeria, Maggian; Stefania, Ottone;
  19. Cognitive performance in competitive environments: evidence from a natural experiment By González-Díaz, Julio; Palacios-Huerta, Ignacio
  20. Multiple micronutrient supplementation using spirulina platensis and infant growth, morbidity and motor development: Evidence from a randomized trial in Zambia By Masuda, Kazuya; Chitundu, Maureen
  21. Who’s Holding Out? An Experimental Study of the Benefits and Burdens of Eminent Domain By Abel M. Winn; Matthew W. McCarter
  22. Gender Differences in Risk Tolerance, Trust and Trustworthiness: Are They Related? By Holden , Stein T.; Tilahun , Mesfin
  23. Measuring Trust in Institutions By Carlsson, Fredrik; Demeke, Eyoual; Martinsson, Peter; Tesemma, Tewodros
  24. Ambiguity Attitudes in the Loss Domain: Decisions for Self versus Others By Yilong Xu; Xiaogeng Xu; Steven Tucker
  25. Political disagreement and information in elections By Alonso, Ricardo; Câmara, Odilon
  26. The flip side of power By Friedel Bolle; Philipp E. Otto
  27. The (un)compromise effect By Ekström, Mathias
  28. Norms and Guilt By Anastasia Danilov; Kiryl Khalmetski; Dirk Sliwka
  29. Convective dissolution of CO2 in water and salt solutions By Cienna Thomas; Sam Dehaeck; Anne De Wit

  1. By: Ernst Fehr; Tony Williams
    Abstract: Throughout human history, informal sanctions by peers were ubiquitous and played a key role in the enforcement of social norms and the provision of public goods. However, a considerable body of experimental evidence suggests that informal peer sanctions cause large collateral damage and efficiency costs. This raises the question whether peer sanctioning systems exist that avoid these costs and whether other, more centralized, punishment systems are superior and will be preferred by the people. Here, we show that welfare-enhancing peer sanctioning without much need for costly punishment emerges quickly if we introduce two relevant features of social life into the experiment: (i) subjects can migrate across groups with different sanctioning institutions and (ii) they have the chance to achieve consensus about normatively appropriate behavior. The exogenous removal of the norm consensus opportunity reduces the efficiency of peer punishment and renders centralized sanctioning by an elected judge the dominant institution. However, if given the choice, subjects universally reject peer sanctioning without a norm consensus opportunity – an institution that has hitherto dominated research in this field – in favor of peer sanctioning with a norm consensus opportunity or an equally efficient institution with centralized punishment by an elected judge. Migration opportunities and normative consensus building are key to the quick emergence of an efficient culture of universal cooperation because the more prosocial subjects populate the two efficient institutions first, elect prosocial judges (if institutionally possible), and immediately establish a social norm of high cooperation. This norm appears to guide subjects’ cooperation and punishment choices, including the virtually complete removal of antisocial punishment when judges make the sanctioning decision.
    Keywords: cooperation, punishment ,endogenous institutions, public goods
    JEL: D02 D03 D72 H41
    Date: 2018
  2. By: Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun , Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: We analyzed lab-in-the-field trust and risk experiment with 1125 youth in 119 youth groups established as primary cooperatives to develop a joint business. The experiments were implemented using classrooms in local schools as field labs. The standard trust game was used with all youth participants playing the roles as trustors as well as trustees. As trustors, they knew that the trustee would be an anonymous member of their own youth group. We hypothesize that this allows trustors to transform uncertainty about trustworthiness into risk such that risk tolerance will influence trusting behavior. The strategy method was used to elicit more detailed information about stated trustworthiness given different amounts received. A proxy measure for risk tolerance was obtained with a separate simple incentivized risk game. Expected trustworthiness in groups was modeled by the first two moments of the average stated and actual within-group trustworthiness. The group level analysis reveals that higher average risk tolerance increases trust and so does expected trustworthiness measured as average stated trustworthiness. Higher expected risk in the trust game, modeled as within-group variability in actual trustworthiness, is associated with lower average trust. More risk tolerant groups are also significantly more trustworthy.
    Keywords: Trust; trustworthiness; risk tolerance; youth groups; primary cooperative; Ethiopia
    JEL: C93 D80 D81 D84 D90
    Date: 2017–10–16
  3. By: Grebe, Tim; Ivanova-Stenzel, Radosveta (TU Berlin); Kröger, Sabine (Laval University)
    Abstract: In Buy-It-Now (BIN, hereafter) auctions, sellers can make a \"take-it-or-leave-it\" price offer (BIN price) prior to an auction. We analyse experimentally how eBay sellers set BIN prices and whether they benefit from offering them. Using the real eBay environment in the laboratory, we find that the eBay auction format supports deviations from truthful bidding leading to auction prices substantially below those expected in second-price auctions. Our results reveal that the observed price deviations are not an artefact due to the existence of the BIN price, rather a consequence of the specific features of the eBay-auction format - a mixture between sealed-bid and open second-price auction with a fixed end-time. Moreover, we find that information available on eBay can be used as indicator for the price deviation and that sellers respond strategically to this information. Seller risk aversion does not affect BIN prices and more experienced sellers ask for higher BIN prices. The introduction of BIN prices to eBay auctions has an enhancing effect: the eBay BIN auction is more efficient and generates significantly higher revenue compared to a standard eBay auction without a BIN price.
    Keywords: experience; online markets; ebay; bin price; private value; experiment;
    JEL: C72 C91 D44 D82
    Date: 2018–05–16
  4. By: Lin, Yu-Hsuan
    Abstract: This study examines the relationship between individual altruistic attitudes and the incentives of participating in a climate coalition by using a laboratory experiment. A dominant strategy solution design assigns players into two roles in the game: critical and non-critical players. The critical players have a weakly dominant strategy of joining and are essential to an effective coalition. On the other hand, the non-critical players have a dominant strategy of not-joining. The theory suggests that strong altruism would lead non-critical players to join a coalition. The experimental evidence supports that coalitions are therefore enlarged from the self-interest prediction. However, the result indicates that the individual incentives for participation seem to be negatively correlated with altruistic attitudes. It implies the stronger the altruistic tendencies the less likely individuals are to join a coalition. In other words, coalition formation may be expanded by egoistic players.
    Keywords: International environmental agreement, social preference, altruism, experimental design
    JEL: C91 D64 H41 Q54
    Date: 2018–05
  5. By: Toke R. Fosgaard (Department of Food and Resource Economics, University of Copenhagen); Adriaan R. Soetevent (Tinbergen Institute, University of Groningen)
    Abstract: The declining use of cash in society urges charities to experiment with digital payment instruments in their o -line fund raising activities. Cash and card payments di er in that the latter do not require individuals to donate at the time of the ask, disconnecting the decision to give from the act of giving. Evidence shows that people who say they will give mostly do not follow through. Our theory shows that having people to formally state the intended amount may alleviate this problem. We report on a field experiment the results of which show that donors who have pledged an amount are indeed more likely to follow through. The firmer the pledge, the more closely the amount donated matches the amount that was pledged. 45% of all participants however refuses to pledge. This proves that donors value exibility over commitment in intertemporal charitable giving.
    Keywords: Charitable fundraising, Field experiment, Image motivation
    JEL: C93 D64 D91 H41
    Date: 2018–05
  6. By: Galizzi, Matteo M.; Miraldo, Marisa; Stavropoulou, Charitini; van der Pol, Marjon
    Abstract: We conduct a framed field experiment among patients and doctors to test whether the two groups have similar risk and time preferences. We elicit risk and time preferences using multiple price list tests and their adaptations to the healthcare context. Risk and time preferences are compared in terms of switching points in the tests and the structurally estimated behavioural parameters. We find that doctors and patients significantly differ in their time preferences: doctors discount future outcomes less heavily than patients. We find no evidence that doctors and patients systematically differ in their risk preferences in the healthcare domain.
    Keywords: field experiment; risk aversion; impatience; doctor-patient relationship; structural estimation
    JEL: C93 D91 I11
    Date: 2016–12–01
  7. By: Backhaus, Teresa (WZB); Breitmoser, Yves (HU Berlin)
    Abstract: When do we cooperate and why? This question concerns one of the most persistent divides between \"theory and practice\", between predictions from game theory and results from experimental studies. For about 15 years, theoretical analyses predict completely-mixed \"behavior\" strategies, i.e. strategic randomization rendering \"when\" and \"why\" questions largely moot, while experimental analyses seem to consistently identify pure strategies, suggesting long-run interactions are deterministic. Reanalyzing 145,000 decisions from infinitely repeated prisoner\'s dilemma experiments, and using data-mining techniques giving pure strategies the best possible chance, we conclude that subjects play semi-grim behavior strategies similar to those predicted by theory.
    Keywords: repeated game; behavior; tit-for-tat mixed strategy; memory; belief-free equilibrium; laboratory experiment;
    JEL: C72 C73 C92 D12
    Date: 2018–05–11
  8. By: Alain Cohn; Tobias Gesche; Michel André Maréchal
    Abstract: Modern communication technologies enable efficient exchange of information, but often sacrifice direct human interaction inherent in more traditional forms of communication. This raises the question of whether the lack of personal interaction induces individuals to exploit informational asymmetries. We conducted two experiments with 866 subjects to examine how human versus machine interaction influences cheating for financial gain. We find that individuals cheat significantly more when they interact with a machine rather than a person, regardless of whether the machine is equipped with human features. When interacting with a human, individuals are particularly reluctant to report unlikely favorable outcomes, which is consistent with social image concerns. The second experiment shows that dishonest individuals prefer to interact with a machine when facing an opportunity to cheat. Our results suggest that human interaction is key to mitigating dishonest behavior and that self-selection into communication channels can be used to screen for dishonest people.
    Keywords: cheating, honesty, private information, communication, digitization, lying costs
    JEL: C99 D82 D83
    Date: 2018
  9. By: Sylvain Chabé-Ferret; Philippe Le Coent; Arnaud Reynaud; Julie Subervie; Daniel Lepercq
    Abstract: Improving water efficiency is a growing challenge for the Common Agricultural Policy. In this article, we test whether social comparison nudges can promote water-saving behavior among farmers. We report on a pilot Randomized Controlled Trial, in which information on individual and group water consumption were sent every week to farmers equipped with smartmeters. We do not detect an effect of nudges on average water consumption. We however find that the nudge decreases water consumption at the top of the distribution while it increases consumption at the bottom. This study highlights the potential of nudges as an agricultural policy tool.
    Keywords: nudges, behavioral economics, irrigation water use, government policy
    JEL: D90 Q25 Q58
    Date: 2018–05
  10. By: Francesco Fallucchi; Simone Quercia
    Abstract: We conduct a real-effort experiment to test the effects of an affirmative action policy that reserves a share of the prize to subjects of a disadvantaged category in rent-seeking contests. We test three potential pitfalls of the affirmative action policy: (i) whether the introduction of the policy distorts effort and selection in the contest, (ii) whether it leads to reverse discrimination, that is, discourages entry from the advantaged category and (iii) whether the possibility of ex-post retaliatory actions undermines the effectiveness of the policy. We find that the affirmative action contest increases entry of players from the disadvantaged category without affecting entry of advantaged players. This increases overall effort in the contest. However, we find that the possibility of retaliation can undermine the benefits of the affirmative action policy reducing contest participation. This suggests that retaliation is an important aspect to consider when implementing affirmative action policies.
    Keywords: rent-seeking, contest design, affirmative action, retaliation
    JEL: C72 D72 J78
    Date: 2018–05
  11. By: Michael Kirchler; Florian Lindner; Utz Weitzel
    Abstract: Two aspects of social context are central to the finance industry: (i) financial professionals make investment decisions for customers and (ii) social competition/rankings are a pervasive feature. We link both lines of literature to investigate professionals' risk-taking behavior when investing funds for clients. We run online and lab-in-the-field experiments with 965 financial professionals and collect survey evidence from 1,349 respondents. We find that rankings drive professionals' investment behavior: those lagging behind increase risk-taking, but this effect disappears as soon as professionals' incentives are flat. Moreover, we show that professionals' preferences for high rank are stronger than for the general population.
    Keywords: Experimental finance, behavioral finance, social competition, rank incentives, financial professionals, delegated decision making, investment game, lab-in-the-field experiment
    JEL: G02 G11 D03 C93
    Date: 2018–07
  12. By: Jörg Spiller (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Friedel Bolle (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))
    Abstract: Binary Threshold Public Good (BTPG) games are central for understanding cooperation and coordination. In the face of their tremendous number of completely different equilibria theoretical predictions about behavior in these games are extremely difficult. In our experiments, four players contribute or not to the production of a public good which is produced if at least k players contribute. The game with k=4 is the Stag Hunt game, k=1 is the Volunteer’s Dilemma. We investigate 16 different games with k=1,2,3,4. The regularities derived from these extensive variations (e.g. invariance concerning positive vs. negative frames and scaling of players; monotonicity concerning k and costs of contribution) can serve as the basis of a behavioral theory for BTPG games and beyond.
    Keywords: Binary Threshold Public Goods, framing, equilibrium selection, payoff dominance, risk dominance, efficiency, experiment
    JEL: C72 D72 H41
    Date: 2017–11
  13. By: Philipp Lergetporer; Katharina Werner; Ludger Wößmann
    Abstract: The gap in university enrollment by parental education is large and persistent in many countries. In our representative survey, 74 percent of German university graduates, but only 36 percent of those without a university degree favor a university education for their children. The latter are more likely to underestimate returns and overestimate costs of university. Experimental provision of return and cost information significantly increases educational aspirations. However, it does not close the aspiration gap as university graduates respond even more strongly to the information treatment. Persistent effects in a follow-up survey indicate that participants indeed process and remember the information. Differences in economic preference parameters also cannot account for the educational aspiration gap. Our results cast doubt that ignorance of economic returns and costs explains educational inequality in Germany.
    Keywords: inequality, higher education, university, aspiration, information, returns to education, survey experiment
    JEL: D83 I24 J24 H75
    Date: 2018
  14. By: Nava Ashraf (Harvard University); Natalie Bau (University of Toronto); Corinne Low (University of Pennsylvania); Kathleen McGinn (Harvard Business School)
    Abstract: Using a randomized control trial, we examine whether offering adolescent girls non-material resources – specifically, negotiation skills – can improve educational outcomes in a low-income country. In so doing, we provide the first evidence on the effects of an intervention that increased non-cognitive, interpersonal skills during adolescence. Long-run administrative data shows that negotiation training significantly improved educational outcomes over the next three years. The training had greater effects than two alternative treatments (offering girls a safe physical space with female mentors and offering girls information about the returns to education), suggesting that negotiation skills themselves drive the effect. Further evidence from a lab-in-the-field experiment, which simulates parents’ educational investment decisions, and a midline survey suggests that negotiation skills improved girls’ outcomes by moving households’ human capital investments closer to the efficient frontier. This is consistent with an incomplete contracting model, where negotiation allows daughters to strategically cooperate with parents.
    Keywords: Zambia, critical periods, non-cognitive skills, educational achievement, adolescence, female education
    JEL: J24 C93 D19
    Date: 2018–05
  15. By: Fonseca, Miguel A.; Li, Yan; Normann, Hans-Theo
    Abstract: Factors facilitating collusion may not successfully predict cartel occurrence: when a factor predicts that collusion (explicit and tacit) becomes easier, firms might be less inclined to set up a cartel simply because tacit coordination already tends to go in hand with supra-competitive profits. We illustrate this issue with laboratory data. We run n-firm Cournot experiments with written cheap-talk communication between players and we compare them to treatments without the possibility to talk. We conduct this comparison for two, four and six firms. We find that two firms indeed find it easier to collude tacitly but that the number of firms does not significantly affect outcomes with communication. As a result, the payoff gain from communication increases with the number of firms, at a decreasing rate.
    Keywords: cartels,collusion,communication,experiments,repeated games
    JEL: L42 C90 C70
    Date: 2018
  16. By: Michael Kirchler; Florian Lindner; Utz Weitzel
    Abstract: Two aspects of social context are central to the finance industry: (i) financial professionals make investment decisions for customers and (ii) social competition/rankings are a pervasive feature. We link both lines of literature to investigate professionals' risk-taking behavior when investing funds for clients. We run online and lab-in-the-field experiments with 965 financial professionals and collect survey evidence from 1,349 respondents. We find that rankings drive professionals' investment behavior: those lagging behind increase risk-taking, but this effect disappears as soon as professionals' incentives are flat. Moreover, we show that professionals' preferences for high rank are stronger than for the general population.
    Keywords: Experimental finance, behavioral finance, social competition, rank incentives, financial professionals, delegated decision making, investment game, lab-in-the-field experiment
    JEL: G02 G11 D03 C93
    Date: 2018–07
  17. By: Hermann, Daniel; Mußhoff, Oliver
    Abstract: In this paper, we shed light on the different moral costs of dishonesty and stealing. To accomplish this, we set up a die-rolling task which allowed participants to increase their own payout through dishonesty or theft. The results show that participants have fewer reservations about dishonesty compared to stealing, which implies higher intrinsic costs for stealing. We found that gender contributes to this effect, as women distinguish significantly between lying and stealing, while men do not.
    Keywords: Lying,Deception,Stealing,Laboratory Experiment,Behavioral Economics
    JEL: C91 D63 D82
    Date: 2018
  18. By: Francesco, De Sinopoli; Giovanna, Iannantuoni; Valeria, Maggian; Stefania, Ottone;
    Abstract: In this study, we implement a series of voting games in the laboratory to test whether a strategic voting behavior in a proportional system would arise and induce a two-party system. In each voting game, a finite number of subjects with single-peaked preferences, uniformly distributed on a 0–20 line, are asked to vote for a number within the interval 0–20. The policy outcome is the average of the chosen numbers—a realistic representation of a compromise between parties in a parliament elected through the proportional rule. Our main result shows that polarization and strategic voting occur in the proposed proportional rule scenario. Moreover, experience and information concerning the electoral outcome of the previous period drive individuals to opt for strategic voting.
    Keywords: Proportional representation, strategic voting, polarization, political compromise, laboratory experiment, information
    JEL: C91 C92 D72
    Date: 2018–05–16
  19. By: González-Díaz, Julio; Palacios-Huerta, Ignacio
    Abstract: Competitive situations that involve cognitive performance are widespread in labor markets, schools, and organizations, including test taking, competition for promotion in firms, and others. This paper studies cognitive performance in a high-stakes competitive environment. The analysis takes advantage of a natural experiment that randomly allocates different emotional states across professional subjects competing in a cognitive task. The setting is a chess match where two players play an even number of chess games against each other alternating the color of the pieces. White pieces confer an advantage for winning a chess game and who starts the match with these pieces is randomly decided. The theoretical analysis shows that in this setting there is no rational reason why winning frequencies should be better than 50-50 in favor of the player drawing the white pieces in the first game. Yet, we find that observed frequencies are about 60-40. Differences in performance are also stronger when the competing subjects are more similar in cognitive skills. We conclude that the evidence is consistent with the hypothesis that psychological elements affect cognitive performance in the face of experience, competition, and high stakes.
    Keywords: cognitive performance; competition; natural experiments
    JEL: J1
    Date: 2016–07–01
  20. By: Masuda, Kazuya; Chitundu, Maureen
    Abstract: Background: In developing countries, micronutrient deficiency in infants is associated with growth faltering, morbidity, and delayed motor development. One of the potentially low-cost and sustainable solutions is to use locally producible food for the home fortification of complementary foods. Objective: The objectives were to test the hypothesis that locally producible spirulina platensis supplementation would achieve the following: 1) increase infant physical growth; 2) reduce morbidity; and 3) improve motor development. Design: We randomly assigned 501 Zambian infants into a control (CON) group or a spirulina (SP) group. Children in the CON group (n=250) received a soya-maize-based porridge for 12 months, whereas those in the SP group (n=251) received the same food but with the addition of spirulina. We assessed the change in infants’ anthropometric status, morbidity, and motor development over 12 months. Results: The baseline characteristics were not significantly different between the two groups. The attrition rate (47/501) was low. The physical growth of infants in the two groups was similar at 12 months of intervention, as measured by height-for-age z-scores (HAZ), and weight-for-age z-scores (WAZ). SP infants were less likely to suffer from cough by 11 percentage point (CI: -0.23, -0.00; P
    Keywords: chronic malnutrition, home-fortification, spirulina, infant growth, motor development, morbidity, Zambia
    Date: 2018–04
  21. By: Abel M. Winn; Matthew W. McCarter (UTSA)
    Abstract: Eminent domain is widely considered a necessary tool to avoid seller holdout and ensure efficient land assembly. We conduct a series of laboratory experiments that challenge this conventional wisdom. We find that when there is no competition and no eminent domain, land assembly suffers from costly delay and failed assembly, resulting in participants losing 18.1% of the available surplus. Much of this delay is due to low offers from the buyers rather than strategic holdout among sellers. Introducing weak competition in the form of a less valuable substitute parcel of land reduces delay by 35.7% and virtually eliminates assembly failure, so that only 11.5% of the surplus is lost. When buyers can exercise eminent domain the participants lose 18.6% of the surplus. This loss comes from spending money to influence the fair market price and forcing sellers to sell even when they value the property more than the buyer.
    Keywords: Eminent Domain
    JEL: M30
    Date: 2016–09–20
  22. By: Holden , Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun , Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: The paper assesses risk tolerance, trust and trustworthiness among male and female youth group members in recently formed primary cooperative businesses in Ethiopia. Male members are found to be more risk tolerant, trusting and trustworthy than females. There is a strong positive correlation between individual risk tolerance and trust for male while this correlation is much weaker for female members. Individual risk tolerance is positively correlated with trustworthiness for males but not for females. Females are more trusting and trustworthy in groups with more risk tolerant members. Females’ trustworthiness is more sensitive to group characteristics and experiences. The findings are consistent with social role theory as males appear more instrumental and females more communal in their responses.
    Keywords: Gender differences; risk tolerance; trust; trustworthiness; youth business group members; social role theory; Ethiopia
    JEL: C93 D80 D81 D84 D90
    Date: 2018–03–19
  23. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Demeke, Eyoual (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Tesemma, Tewodros (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: In empirical studies, survey questions are typically used to measure trust; trust games are also used to measure interpersonal trust. In this paper, we measure trust in different institutions by using both trust games and survey questions. We find that generalized trust is only weakly correlated with trust in specific institutions, when elicited both by using a trust game and by using survey questions. However, the correlation between trust in a specific institution elicited through a trust game and stated trust for the same institution is stronger and statistically significant. Thus, our findings suggest that generalized trust is not an appropriate measure of institutional trust and that more specific institutional trust measures should be used.
    Keywords: experiment; institutional trust; generalized trust
    JEL: C90 D01 D02 O43
    Date: 2018–05
  24. By: Yilong Xu (University of Heidelberg); Xiaogeng Xu (Norwegian School of Economics); Steven Tucker (University of Waikato)
    Abstract: Important ?nancial and medical decisions are often made on behalf of others. We study whether and how people’s ambiguity attitudes differ when deciding for others as compared to deciding for oneself in the loss domain. Our results are consistent with the loss part of the fourfold pattern: ambiguity aversion for low likelihood losses and ambiguity neutrality for moderate likelihood losses. This pattern holds both when deciding for oneself and for others. We ?nd no differences in ambiguity attitudes between self- and other-regarding decision-making.
    Keywords: ambiguity attitudes; decision-making for others; losses and uncertainty
    JEL: D81 C91
    Date: 2018–05–14
  25. By: Alonso, Ricardo; Câmara, Odilon
    Abstract: We study the role of re-election concerns in incumbent parties' incentives to shape the information that reaches voters. In a probabilistic voting model, candidates representing two groups of voters compete for office. In equilibrium, the candidate representing the majority wins with a probability that increases in the degree of political disagreement — the difference in expected payoffs from the candidates' policies. Prior to the election, the office-motivated incumbent party (IP) can influence the degree of disagreement through policy experimentation — a public signal about a payoff-relevant state. We show that if the IP supports the majority candidate, then it strategically designs this experiment to increase disagreement and, hence, the candidate's victory probability. We define conditions such that the IP chooses an upper-censoring experiment and the experiment's informativeness decreases with the majority candidate's competence. The IP uses the experiment to increase disagreement even when political disagreement is due solely to belief disagreement.
    Keywords: Disagreement; Bayesian persuasion; Strategic experimentation; Voting
    JEL: D72 D83
    Date: 2016–11–02
  26. By: Friedel Bolle (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Philipp E. Otto (European University Viadrina, Frankfurt (Oder))
    Abstract: Based on power indices as well as intuition, the chairman of a committee whose vote decides in the case of a draw has more power than ordinary voters. Even more powerful are members with veto right, who can block a majority vote. We pose the question whether giving one of the players in a majority voting game more power is beneficial for the powerful individual and/or the community. We find that, in our environment, the introduction of a powerful player is efficiency-improving, but that powerful players earn less than their ordinary co-players. Our environment is a Binary Threshold Public Good game which can also be interpreted as a general non- cooperative voting game. We supplement our investigation by successfully explaining behavior as a finite mixture of mostly equilibrium strategies.
    Keywords: veto power; tie-breaking power; binary threshold public goods; experiment
    JEL: D71 D72 H41
    Date: 2017–03
  27. By: Ekström, Mathias (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: The compromise effect—i.e., the preference for the middle option—is an established bias in behavioral economics, but has not been experimentally validated in the field. In the current study I test the compromise effect in a natural context, and whether this bias can be used to stimulate active choice—the (un)compromise effect. In a mail fund raiser for a large US hospital, I evaluate their baseline ask string [$10, $50, $100, $ ] to an extended version [$10, $50, $100, $250, $500, $ ]. In line with the compromise effect, the extended ask string increases the average amount given and the share of donors giving $100, which is now the middle option. Importantly, however, and in line with a model of contextual inference, revealing the middle option is not necessary for the effect to arise. The (un)compromise ask string [$10, $500, $ ] generates the same average amount given and same share giving $100, as the extended ask string—the only difference being that 90 percent of donors, instead of 30 percent, use the open-ask alternative. Hence, by only providing informative end points of a distribution, organizations can benefit from the compromise effect and at the same time promote individuality by stimulating active choice. I discuss theoretical and practical implications of the results.
    Keywords: Compromise effect; Consumer choice; Field experiments; Charitable giving
    JEL: C93 D03 D64
    Date: 2018–05–08
  28. By: Anastasia Danilov; Kiryl Khalmetski; Dirk Sliwka
    Abstract: It has been argued that guilt aversion (the aversion to violate others’ expectations) and the compliance to descriptive social norms (the aversion to act differently than others in the same situation) are important drivers of human behavior. We show in a formal model that both motives are empirically indistinguishable when only one benchmark (another person’s expectation or a norm) is revealed as each of these benchmarks signals information on the other one. To address this problem, we experimentally study how individuals react when both benchmarks are revealed simultaneously. We find that both types of information affect transfers in the dictator game. At the same time, the effect of the recipient’s expectation is non-monotonic as dictators use the disclosed expectation in a self-serving way to decrease transfers.
    Keywords: guilt aversion, social norms, conformity, dictator game
    JEL: C91 D83 D84
    Date: 2018
  29. By: Cienna Thomas; Sam Dehaeck; Anne De Wit
    Abstract: Dissolution of CO2 into saline aquifers can lead to the development of buoyancy-driven convection in the brine which enhances the efficiency of CO2 transfer. We analyze here experimentally the onset, development and dynamic properties of such convective fingering of CO2 into water, Antarctic water and in NaCl salt solutions of various concentrations to study the influence of varying the salt concentration on the buoyancy-driven convective dynamics. The convective dissolution pattern is visualized with the help of a schlieren imaging system sensitive to density gradients in the solution. We quantify the growth of convective fingers by performing, among others, a Fourier analysis of the pattern formation at early times and qualitatively study the nonlinear spatio-temporal dynamics at later times. In agreement with theoretical predictions, we find that increasing the salt concentration hinders the development of the instability as it delays the onset of convection, increases the wavelength of the convective pattern, decreases the growth rate and velocity of fingers as well as their interactions. Our experimental results provide quantitative data that should help the benchmarking of theoretical studies.
    Date: 2018–05

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.