nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒09‒17
29 papers chosen by

  1. Gender, risk preference and willingness to compete in a random sample of the Swedish population By Boschini, Anne; Dreber, Anna; von Essen, Emma; Muren, Astri; Ranehill, Eva
  2. The Entitlement Effect in the Ultimatum Game - Does It Even Exist? By Elif E. Demiral; Johanna Mollerstrom
  3. Do Equal Employment Opportunity Statements Backfire? Evidence From a Natural Field Experiment on Job-Entry Decisions By Andreas Leibbrandt; John List
  4. Do Financial Incentives Crowd Out Intrinsic Motivation to Perform on Standardized Tests? By John List; Jeffrey Livingston; Susanne Neckermann
  5. Tax Morale and the Role of Social Norms and Reciprocity: Evidence from a Randomized Survey Experiment By Doerrenberg, Philipp; Peichl, Andreas
  6. Toward an understanding of the economics of apologies: evidence from a large-scale natural field experiment By Basil Halperin; Benjamin Ho; John List; Ian Muir
  7. A non-game-theoretic approach to bidding in first-price and all-pay auctions By Paul Pezanis-Christou; Hang Wu
  8. Should I wait or should I lie? Path dependency and timing in repeated honesty decisions under frames By Christian Schitter; Stefan Palan
  9. Committees of Experts in the Lab By Sander Renes; Bauke (B.) Visser
  10. Learned Generosity? An Artefactual Field Experiment with Parents and their Children By Avner Ben-Ner; John List; Louis Putterman; Anya Samek
  11. More than the Money: Payoff-Irrelevant Terms in Relational Contracts By Cromwell, Erich; Goerg, Sebastian J.; Leszczynska, Monika
  12. Testing for crowd out in social nudges: Evidence from a natural field experiment in the market for electricity By Alec Brandon; John List; Robert Metcalfe; Michael Price; Florian Rundhammer
  13. Copy trading By Jose Apesteguia; Jörg Oechssler; Simon Weidenholzer
  14. Save the planet or close your eyes? Testing strategic ignorance in a charity context By Lind, Jo Thori; Nyborg, Karine; Pauls, Anna
  15. Corrupt police By Klaus Abbink; Dmitry Ryvkin; Danila Serra
  16. Pricing behavior in partial cartels By Odenkirchen, Johannes
  17. Drip pricing and its regulation: Experimental evidence By Rasch, Alexander; Thöne, Miriam; Wenzel, Tobias
  18. Estimating the production function for human capital: results from a randomized controlled trial in Colombia By Orazio Attanasio; Sarah Cattan; Emla Fitzsimons; Costas Meghir; Marta Rubio Codina
  19. Smokers’ Rational Lexicographic Preferences for Cigarette Package Warnings: A Discrete Choice Experiment with Eye Tracking By Jeffrey E. Harris; Mariana Gerstenblüth; Patricia Triunfo
  20. Second-best fairness under Limited information: The trade-off between false positives and false negatives By Cappelen, Alexander W.; Cappelen, Cornelius; Tungodden, Bertil
  21. To Replicate or Not To Replicate? Exploring Reproducibility in Economics through the Lens of a Model and a Pilot Study By John List; Zacharias Maniadis; Fabio Tufano
  22. Augmenting Markets with Mechanisms By Duffie, Darrell; Antill, Samuel
  23. Market incentives for technology adoption: Experimental evidence from Kenyan maize farmers By Hoffman, V.
  24. Not all Group Members are created Equal: Heterogeneous Abilities in Inter-group Contests By FALLUCCHI Francesco; FATAS Enrique; KÖLLE Felix; WEISEL Ori
  25. Designed to Fail: Effects of the Default Option and Information Complexity on Student Loan Repayment By James C. Cox; Daniel Kreisman; Susan Dynarski
  26. Assessing the benefits of horizontal cooperation using a location-inventory model By HACARDIAUX Thomas,; TANCREZ Jean-Sebastien,
  27. Align your Job with You: The Effects of a Job Crafting Intervention on Work Engagement By Evy Kuijpers; Dorien de Kooij; Marianne van Woerkom
  28. The effect of attribute non-attendance on choice experiments investigating agri-environmental scheme design By Rodríguez-Entrena, Macario; Villanueva, Anastasio J.; Gómez-Limón, José A.
  29. Let's lock them in: Collusion under consumer switching costs By Fourberg, Niklas

  1. By: Boschini, Anne (SOFI, Stockholm University); Dreber, Anna (Department of Economics, Stockholm School of Economics,); von Essen, Emma (SOFI, Stockholm University,); Muren, Astri (Department of Economics, Stockholm University,); Ranehill, Eva (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Experimental results from student or other non-representative convenience samples often suggest that men, on average, are more risk-taking and competitive than women. Here we explore whether these gender preference gaps also exist in a simple random sample of the Swedish adult population. Our design comprises four different treatments to systematically explore how the experimental context may impact gender gaps; a baseline treatment, a treatment where participants are primed with their own gender, and a treatment where the participants know the gender of their counterpart (man or woman). We look at willingness to compete in two domains: a math task and a verbal task. We find no gender differences in risk preferences or in willingness to compete in the verbal task in this random sample. There is some support for men being more competitive than women in the math task, in particular in the pooled sample. The effect size is however considerably smaller than what is typically found. We further find no consistent impact of treatment on (the absence of) the gender gap in preferences.
    Keywords: Gender differences; competitiveness; risk-taking; experiment; random representative sample
    JEL: C83 C91 D91
    Date: 2018–08–31
  2. By: Elif E. Demiral; Johanna Mollerstrom
    Abstract: Since the seminal paper of Hoffman et al. (1994), an entitlement effect is believed to exist in the Ultimatum Game, in the sense that proposers who have earned their role (as opposed to having it randomly allocated) offer a smaller share of the pie to their matched responder. The entitlement effect is at the core of experimental Public Choice – not just because it concerns the topics of bargaining and negotiations, but also because it relates to the question about under which circumstances actors behave more rational. We conduct three experiments, two in the laboratory and one online, with more than 1,250 participants. Our original motivation was to study gender differences, but ultimately we could not replicate the entitlement effect in the Ultimatum Game in any of our three experiments. Potential reasons for why the replication attempts fail are discussed.
    Keywords: Ultimatum game, public choice, experiment, entitlement, negotiations, bargaining, replications, gender
    JEL: C7 C9 D72 J16
    Date: 2018
  3. By: Andreas Leibbrandt; John List
    Abstract: Labor force composition and the allocation of talent remain of vital import to modern economies. For their part, governments and companies around the globe have implemented equal employment opportunity (EEO) regulations to influence labor market flows. Even though such regulations are pervasive, surprisingly little is known about their impacts. We use a natural field experiment conducted across 10 U.S. cities to investigate if EEO statements in job advertisements affect the first step in the employment process, application rates. Making use of data from nearly 2,500 job seekers, we find considerable policy effects, but in an unexpected direction: the presence of an EEO statement dampens rather than encourages racial minorities willingness to apply for jobs. Importantly, the effects are particularly pronounced for educated job seekers and in cities with white majority populations. Complementary survey evidence suggests the underlying mechanism at work is "tokenism", revealing that EEO statements backfire because racial minorities avoid environments in which they are perceived as regulatory, or symbolic, hires rather than being hired on their own merits. Beyond their practical and theoretical importance, our results highlight how field experiments can significantly improve policy making. In this case, if one goal of EEO regulations is to enhance the pool of minority applicants, then it is not working.
    Date: 2018
  4. By: John List; Jeffrey Livingston; Susanne Neckermann
    Abstract: In the face of worryingly low performance on standardized test, offering students financial incentives linked to academic performance has been proposed as a potentially cost-effective way to support improvement. However, a large literature across disciplines finds that extrinsic incentives, once removed, may crowd out intrinsic motivation on subsequent, similar tasks. We conduct a field experiment where students, parents, and tutors are offered incentives designed to encourage student preparation for a high-stakes state test. The incentives reward performance on a separate low-stakes assessment designed to measure the same skills as the high-stakes test. Performance on the high-stakes test, however, is not incentivized. We find substantial treatment effects on the incented tests but no effect on the non-incented test; if anything, the incentives result in worse performance on the non-incented test. We also find evidence supporting the conclusion that the incentives crowd out intrinsic motivation to perform well on the non-incented test, but this effect is only temporary. One year later, students who had been in the incentives treatments perform better than those in the control on the same non-incented test.
    Date: 2018
  5. By: Doerrenberg, Philipp (ZEW Mannheim); Peichl, Andreas (Ifo Institute for Economic Research)
    Abstract: We present the first randomized survey experiment in the context of tax compliance to assess the role of social norms and reciprocity for intrinsic tax morale. We find that participants in a social-norm treatment have lower tax morale relative to a control group while participants in a reciprocity treatment have significantly higher tax morale than those in the social-norm group. This suggests that a potential backfire effect of social norms is outweighed if the consequences of violating the social norm are made salient. We further document the anatomy of intrinsic motivations for tax compliance and present first evidence that previously found gender effects in tax morale are not driven by differences in risk preferences.
    Keywords: tax compliance, tax evasion, intrinsic motivations, tax morale, social norms, reciprocity
    JEL: H20 H32 H50 C93
    Date: 2018–07
  6. By: Basil Halperin; Benjamin Ho; John List; Ian Muir
    Abstract: We use a theory of apologies to analyze a nationwide field experiment involving 1.5 million Uber ridesharing consumers who experienced late rides. Several insights emerge. First, apologies are not a panacea: the efficacy of an apology and whether it may backfire depend on how the apology is made. Second, across treatments, money speaks louder than words - the best form of apology is to include a coupon for a future trip. Third, in some cases sending an apology is worse than sending nothing at all, particularly for repeated apologies. For firms, caveat venditor should be the rule when considering apologies.
    Date: 2018
  7. By: Paul Pezanis-Christou (School of Economics, University of Adelaide); Hang Wu (Harbin Institute of Technology)
    Abstract: We propose a novel approach to the modelling of behavior in first-price and all-pay auctions that builds on the presumption that bidders do not engage in game-theoretic reasoning. Our models, AsP (for Aspired-Payoff) and nIBE (for naïve Impulse Balance Equilibrium), exploit the information available to bidders and assume risk neutrality, no best-responding behavior and no profit-maximization. Their parameter-free variants entail either overbidding or Nash equilibrium bidding. We assess their explanatory power with the data of first-price and all-pay auction experiments and find that overall, our models outperform Nash in explaining the data on either format. Assuming probability misperception further improves their goodness-of-fit. Assuming impulse weighting in nIBE may lead to overbidding and organizes the effect of end-of-round information feedback on behavior in repeated auctions.
    Keywords: first-price auctions; all-pay auctions, overbidding, anticipated regret; information-feedback; Symmetric Bayes-Nash Equilibrium; Impulse Balance Equilibrium; nonlinear probability weighting; revenue equivalence; experiments
    JEL: C91 D03 D4 D44 D81
    Date: 2018–08
  8. By: Christian Schitter (Department of Banking and Finance, University of Graz); Stefan Palan (Department of Banking and Finance, University of Graz)
    Abstract: We experimentally investigate time and path dependency in sequences of decisions about whether to be honest under a gain, a lottery and a loss framing. We find only small timing patterns over rounds, but clear evidence for more dishonesty after streaks of unfavorable outcomes. The latter implies a systematic path dependency in repeated honesty decisions. We observe an increase in dishonesty from gain to lottery and from lottery to loss framing. Increased dishonesty generally appears earlier and faster under a loss compared to a gain or a lottery frame. Surprisingly, the most honest participants are also those most clearly exhibiting path dependency in reports, in line with a behavior akin to "moral accounting".
    Date: 2018–09–06
  9. By: Sander Renes (Erasmus University Rotterdam); Bauke (B.) Visser (Erasmus University Rotterdam)
    Abstract: Theory predicts that committees of experts may take decisions that look good but are bad and that they show a united front to impress evaluators. Although evaluators see through this behavior, committees persist in it only to avoid worse assessments. We investigate this theory in the lab, using treatments with and without reputation concerns and with and without cheap-talk communication with evaluators. We use the chat among committee members to learn about, e.g., their beliefs about the determinants of evaluators' assessments. We find that a committee's desire to come across as well-informed causes it to garble the information on which evaluators can base their assessments. Evaluators see through this behavior, making their assessments less dependent on actual decisions and statements. With or without reputation concerns, for the majority of committees, words speak louder than costly decisions. Evaluators pick this up. Orthogonality tests show that evaluators use observable clues about ability quite efficiently but struggle to infer ability from infrequent statements. The absence of cheap talk as a means to influence assessments hurts decision making and reduces the overall accuracy of assessments. Evidence that united fronts are consciously formed is limited.
    Keywords: committees; reputation concerns; assessments; cheap talk; united front; information garbling
    JEL: C91 D71 D83 D84 L14
    Date: 2018–09–02
  10. By: Avner Ben-Ner; John List; Louis Putterman; Anya Samek
    Abstract: An active area of research within the social sciences concerns the underlying motivation for sharing resources and engaging in other pro-social actions. In this paper we ask: do parents model social preference behavior to children, and do children emulate this behavior? We develop a theoretical framework to examine this question, and conduct an experiment with 147 3 to 5 year old children and their parents, using dictator games to measure generosity. We find (1) evidence of parental teaching/modeling in the case of fathers and in that of parents of relatively generous children, and (2) an emulation effect such that children who initially share less than half of their endowment subsequently share more the more they see a parent or other adult share. We find little correlation between baseline sharing of children and the parents, with the possible exception of the oldest children.
    Date: 2017
  11. By: Cromwell, Erich (U.S. Equal Employment Opportunity Commission); Goerg, Sebastian J. (Technische Universität München); Leszczynska, Monika (New York University School of Law)
    Abstract: We investigate how payoff-irrelevant terms can negatively impact relational contracts. In a lab experiment we compare two economically equivalent contracts – a fixed-term renewable and an open-ended at-will contract. Each contract provides partners with full flexibility regarding the length and termination of their interaction. When only one contract type is available, principals and agents in our experiment manage to form long-term profitable relationships irrespective of the contract type. However, when both contracts are available offering a fixed-term instead of an open-ended contract is perceived as unkind and results in lower effort provided by the agents. We show that this observed difference is not a matter of sorting, but a direct response to the contract type. Our results demonstrate that a relational contract might be affected by payoff-irrelevant terms and their perceived kindness.
    Keywords: contract design, relational contracts, reciprocity, trust
    JEL: C92 K12
    Date: 2018–07
  12. By: Alec Brandon; John List; Robert Metcalfe; Michael Price; Florian Rundhammer
    Abstract: This study considers the response of household electricity consumption to social nudges during peak load events. Our investigation considers two social nudges. The first targets conservation during peak load events, while the second promotes aggregate conservation. Using data from a natural field experiment with 42,100 households, we find that both social nudges reduce peak load electricity consumption by 2 to 4% when implemented in isolation and by nearly 7% when implemented in combination. These findings suggest an important role for social nudges in the regulation of electricity markets and a limited role for crowd out effects.
    Date: 2018
  13. By: Jose Apesteguia; Jörg Oechssler; Simon Weidenholzer
    Abstract: Copy trading allows traders in social networks to receive information on the success of other agents in financial markets and to directly copy their trades. Internet platforms like eToro, ZuluTrade, and Tradeo have attracted millions of users in recent years. The present paper studies the implications of copy trading for the risk taking of investors. Implementing an experimental financial asset market, we show that providing information on the success of others leads to a significant increase in risk taking of subjects. This increase in risk taking is even larger when subjects are provided with the option to directly copy others. We conclude that copy trading reduces ex-ante welfare, and leads to excessive risk taking.
    Keywords: Copy trading, financial markets, social networks, imitation; experiment.
    JEL: C91 D81 G12 G20
    Date: 2018–07
  14. By: Lind, Jo Thori (Dept. of Economics, University of Oslo); Nyborg, Karine (Dept. of Economics, University of Oslo); Pauls, Anna (Dept. of Economics, University of Oslo)
    Abstract: Our lab experiment tests for strategic ignorance about the environmental consequences of one’s actions. In a binary dictator situation based on the design by Dana, Weber, and Kuang (2007), we test whether the option to remain ignorant about the receiver’s payoffs reduces generosity. Our receiver is a charity that engages in carbon offset. Contrary to previous findings by Dana, Weber, and Kuang (2007) and replications, the option to remain ignorant does not decrease generosity. Only 22% of dictators choose ignorance. We test social interaction by allowing another subject to force the dictator to learn the receiver’s payoff, and by allowing the dictator to sanction that subject. When information can be imposed by another subject, almost all dictators choose information themselves, but this does not increase generosity. The possibility of sanctions does not discourage subjects from providing information to dictators.
    Keywords: strategic ignorance; dictator game; experiment; social sanctions; carbon offset
    JEL: C92 D63 Q50
    Date: 2018–09–04
  15. By: Klaus Abbink (Department of Economics, Monash University); Dmitry Ryvkin (Department of Economics, Florida State University); Danila Serra (Department of Economics, Southern Methodist University)
    Abstract: We employ laboratory experiments to examine the effects of corrupt law enforcement on crime within a society. We embed corruption in a social dilemma setting where citizens simultaneously choose whether to obey the law or to break the law and impose a negative externality on others. Police officers observe citizens' behavior and decide whether to impose fines on law-breakers or, in treatments with corruption, extort bribes from any citizen. In the first study, we find that the presence of police substantially reduces crime, as compared to a baseline setting without police. This is true also when police officers are corrupt. This result is driven by corrupt police officers using bribes in a targeted manner as a substitute for official fines to punish law-breakers. In the second study, we test the effectiveness of two reward mechanisms aimed at reducing police corruption, both of which are based on society-wide police performance measures and not on the observation/monitoring of individual officers. We find that both mechanisms make bribery more targeted toward law-breakers, and one of them leads to a moderate reduction in crime.
    Keywords: corruption, crime, police, experiment
    JEL: D73 K42 C92
    Date: 2018–09
  16. By: Odenkirchen, Johannes
    Abstract: We analyze the pricing behavior of firms when explicit partial cartels have formed in experimental markets through communication. Using a repeated, asymmetric capacity constraint price game, we show that, in line with theory, a partial cartel is sufficient to increase market prices for all firms. Moreover, we find that prices of cartel insiders and outsiders are not necessarily on the same level what contradicts common theoretical predictions. This is because communication allows cartel members to overcome a potential coordination problem and enables an equilibrium in (joint) mixed strategies to emerge. The results therefore underline the importance of communication in explicit cartels and the resulting market outcomes.
    Keywords: partial cartels,explicit collusion,umbrella effects,experiments
    JEL: C92 D03 L13 L41
    Date: 2018
  17. By: Rasch, Alexander; Thöne, Miriam; Wenzel, Tobias
    Abstract: We experimentally examine the effects of drip pricing on seller strategies and buyer behavior as well as the implications for regulation. Sellers set two prices: a base price and a drip price. At first, buyers only observe the base prices and make a tentative purchase decision. Revealing the sellers' drip prices, however, comes at a cost. We find that sellers only compete in base prices and set the highest possible drip price. This makes the base price a reliable indicator for the lowest total price, and few consumers invest in drip-price search. A comparison with Bertrand competition reveals significant effects: With drip pricing, consumer surplus is lower, and seller profits are higher. When there is uncertainty over possible drip sizes, sellers also compete over drips, and consumers more frequently fail to identify the cheapest offer. Bertrand competition also leads to higher consumer surplus and lower firm profits in this case. Hence, our results point to positive effects of drip-price regulation.
    Keywords: Drip pricing,Search,Regulation
    JEL: L13 M3 C9
    Date: 2018
  18. By: Orazio Attanasio (Institute for Fiscal Studies and University College London); Sarah Cattan (Institute for Fiscal Studies and Institute for Fiscal Studies); Emla Fitzsimons (Institute for Fiscal Studies and Institute of Education, University of London); Costas Meghir (Institute for Fiscal Studies and Yale University); Marta Rubio Codina (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: We examine the channels through which a randomized early childhood intervention in Colombia led to signi cant gains in cognitive and socio-emotional skills among a sample of disadvantaged children aged 12 to 24 months at baseline. We estimate the determinants of parents' material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The effects of the program can be explained by increases in parental investments, emphasizing the importance of parenting interventions at an early age. An earlier version of this working paper is available here.
    Date: 2018–07–11
  19. By: Jeffrey E. Harris; Mariana Gerstenblüth; Patricia Triunfo
    Abstract: We asked 97 cigarette smokers to make a series of 12 binary choices between experimental cigarette packages with varying warnings and background colors. Each smoker had to decide which of the two packages contained cigarettes less risky for his health. We tested whether the smokers, confronted with warnings that were repugnant and threatening to many of them, could still make choices that adhered to the standard axioms of rational choice. We supplemented our observations on smokers’ choices with data on their eye movements. We find that participants universally made choices consistent with a complete, transitive preference ordering. We find little evidence of inconsistent choices violating the weak axiom of revealed preference. In a majority of smokers, we find strong evidence of the use of a lexicographic decision rule to assess the riskiness of a cigarette package. These smokers first ranked the two packages solely on the basis of their warnings. Only when the two packages had the same warning did they rank the packages on the basis of their color. The data on eye tracking strongly confirmed the lexicographic nature of the underlying decision rule. Our study represents an entirely different angle of inquiry into the question of rational addiction.
    JEL: D12 D83 D87 D91 I12 M31
    Date: 2018–08
  20. By: Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Cappelen, Cornelius (University of Bergen); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: In many important economic settings, limited information makes it impossible for decision makers to ensure that each individual gets what he or she deserves. Decision makers are then faced with the trade-off between giving some individuals more than they deserve, false positives, and giving some individuals less than they deserve, false negatives. We present the results from a large-scale experimental study of how people trade off these two mistakes in distributive choices. We find that a majority are more concerned with avoiding false negatives than With avoiding false positives, but we also document heterogeneity with respect to how people make this trade-off. The findings shed important light on people’s attitudes to a wide range of policies by providing novel evidence on an important dimension of people’s social preference.
    Keywords: Justice; false positives; false negatives; peoples social preference
    JEL: D63
    Date: 2018–08–28
  21. By: John List; Zacharias Maniadis; Fabio Tufano
    Abstract: The sciences are in an era o fan alleged "credibility crisis'. In this study, we discuss the reproducibility of empirical results, focusing on economics research. By combining theory and empirical evidence, we discuss the import of replication studies, and whether they improve our confidence in novel findings. The theory sheds light on the importance of replications, even when replications are subject to bias. We then present a pilot meta-study of replication in experimental economics, a subfield serving as a positive benchmark for investigating the credibility of economics. Our meta-study highlights certain difficulties when applying meta-research (Ioannidis et al., 2015) and systematizing the economics literature.
    Date: 2017
  22. By: Duffie, Darrell (Stanford University); Antill, Samuel (Stanford University)
    Abstract: We compute optimal mechanism designs for each of a sequence of size-discovery sessions, at which traders submit reports of their excess inventories of an asset to a session operator, which allocates transfers of cash and the asset. The mechanism design induces truthful reports of desired trades and efficiently reallocates the asset across traders. Between sessions, in a dynamic exchange double-auction market, traders strategically lower their price impacts by shading their bids, causing socially costly delays in rebalancing the asset across traders. As the expected frequency of size-discovery sessions is increased, market depth is further lowered, offsetting the efficiency gains of the size-discovery sessions. Adding size-discovery sessions to the exchange market has no social value, beyond that of a potential initializing session. If, as in practice, size-discovery sessions rely on price information from the exchange to set the terms of trade, then bidding incentives are further weakened, strictly reducing overall market efficiency. Keywords: mechanism design, price impact, size discovery, allocative efficiency, workup, dark pool, market design.
    Date: 2018–05
  23. By: Hoffman, V.
    Abstract: When aspects of quality are unobservable in the market, returns to quality will be low and producers will lack incentives to invest in quality. In the case of food safety, this can have significant implications for health, as with the example of aflatoxin, a toxin produced by a fungus commonly found on maize and groundnut. We show that Kenyan farmers who produce maize for sale are less likely to undertake postharvest practices that increase the unobservable quality of aflatoxin safety, as compared to farmers who produce maize only for their own family’s consumption. Employing randomized discount vouchers, we find that willingness to pay for a new post-harvest technology to prevent aflatoxin contamination in maize is significantly lower among market producers than subsistence farmers. However, we find that take-up of the technology among market producers is increased by an opportunity to sell aflatoxin-safe maize at a premium a few months after harvest. This suggests that testing-based market incentives could address the underinvestment in unobservable quality in agriculture. However, widespread testing, if not accompanied by technologies to significantly reduce aflatoxin prevalence, could result in increased consumption of aflatoxin-contaminated maize by the poorest members of society.
    Keywords: Crop Production/Industries, Farm Management, International Development
    Date: 2018–07
  24. By: FALLUCCHI Francesco; FATAS Enrique; KÖLLE Felix; WEISEL Ori
    Abstract: Competition between groups is ubiquitous in social and economic life, and groups are typically not created equal. Here we experimentally investigate the implications of this general observation on the unfolding of symmetric and asymmetric competition between groups that are either homogeneous or heterogeneous in the ability of their members to contribute to the success of the group. Our main finding is that, in contrast with a number of theoretical predictions, efforts in contests involving heterogeneous groups are higher than in contests involving only homogeneous groups, leading to reduced earnings (to contest participants) and increased inequality. This effect is particularly pronounced in asymmetric contests, where both homogeneous and heterogeneous groups increase their efforts. We find that asymmetry between groups changes the way group members condition their efforts on those of their peers. Implications for contest designers are discussed.
    Keywords: Contests; groups; abilities; heterogeneity; experiments
    JEL: C72 C92 D72 H40
    Date: 2018–09
  25. By: James C. Cox; Daniel Kreisman; Susan Dynarski
    Abstract: We ask why so few student loan borrowers enroll in Income Driven Repayment when the majority would benefit from doing so. To do so we run an incentivized laboratory experiment using a facsimile of the government’s Student Loan Exit Counseling website. We test the role information complexity, uncertainty about earnings, and the default option play. We show that despite an ex ante optimal choice, the majority choose, or are defaulted into, a sub-optimal plan. We find the default option is a driver of this phenomenon, suggesting the government has an easy policy lever to lower default rates - change the default plan.
    Keywords: Student Loans, Default Option, Income Driven Repayment, Experiment
    JEL: I22 I28 C91
    Date: 2018–09
  26. By: HACARDIAUX Thomas, (Université catholique de louvain); TANCREZ Jean-Sebastien, (Université catholique de Louvain, CORE, Belgium)
    Abstract: Horizontal cooperation consists in the collaboration of companies that work at the same level of the supply chain. The literature discusses several real-life cases and experimental studies of horizontal cooperation, showing that these partnerships generate savings. In this paper, to evaluate these savings, we present a location-inventory model, formulated as a conic quadratic mixed integer program, which minimizes facility opening, transportation, cycle inventory, ordering and safety stock costs. This model enables us to assess the synergy value and the evolution of the cost components, comparing the costs of stand-alone companies and horizontal partnerships. In order to better understand the impact of markets and partners characteristics on the synergy value, we conduct a large set of numerical experiments, varying several key parameters (vehicles’ capacity, facility opening cost, inventory holding cost, order cost, demand variability and distances), aiming to offer valuable managerial insights for companies wishing to collaborate. We find that indeed horizontal cooperation can lead to significant savings, with an average coalition gain of 22.5%. Moreover, collaboration is particularly profitable for companies with high facility opening costs and low order costs, carrying small (compared to the vehicle capacity) and inexpensive (low unit holding cost) products in a market with a low demand variability.
    Keywords: horizontal cooperation; coalition gain; synergy value; supply chain network design; location-inventory model
    Date: 2018–05–18
  27. By: Evy Kuijpers (Tilburg University); Dorien de Kooij (Tilburg University); Marianne van Woerkom (Tilburg University)
    Abstract: This study offered an experimental design in order to evaluate the effects of a practical hands-on intervention on job crafting. Additionally, we introduced three types of job crafting; crafting towards strengths, crafting towards interest, and developmental crafting. We hypothesized that participating in a job crafting intervention will lead to elevated levels of job crafting, which in turn will promote work engagement. Moreover, we state that the indirect effect of the intervention will be influenced by the workload of the employee. Results showed that all job crafting behaviors significantly enhanced work engagement. Furthermore, participating in the job crafting intervention increased interests crafting for workers with a high workload, which in turn lead to an increase in work engagement. Our findings suggest that the job crafting intervention can indeed be an effective tool for enhancing work engagement.
    Keywords: job crafting, job crafting intervention, work engagement, workload, field experiment.
    JEL: J20 J24 J29
    Date: 2018–06
  28. By: Rodríguez-Entrena, Macario; Villanueva, Anastasio J.; Gómez-Limón, José A.
    Abstract: The objective of this paper is to improve the understanding of attribute non-attendance (ANA) in a choice experiment (CE) investigating farmers’ WTA for participating in agri-environmental schemes in southern Spain. Evidence is found of ANA behaviour for both stated and inferred approaches, with models accounting for ANA clearly outperforming those that do not account for it; however, we produce no conclusive results as to which ANA approach is best. In addition, we investigate sources of observed heterogeneity related to ANA behaviour, our results hinting at a positive relationship between ease of scheme adoption and non-attendance to attributes.
    Keywords: Agricultural and Food Policy
    Date: 2017–08–28
  29. By: Fourberg, Niklas
    Abstract: Consumer switching costs cause the market demand of consumers who already bought a supplier's product to be less elastic while they simultaneously increase competition for new consumers. I study the effect of this twofold pricing incentive on firms' price setting behavior in a 2x2 factorial design experiment with and without communication and under present and absent switching costs. For Bertrand duopolies consumer switching costs reduce the price level vis-à-vis new consumers but do not affect price levels towards old consumers. Markets are overall less tacitly collusive which translates into higher incentives to collude explicitly. Text-mining procedures reveal linguistic characteristics of the communicated content which correlate with market outcomes and communication's effectiveness. The results have implications for antitrust policy, especially for the focus of cartel screening.
    Keywords: Switching Costs,Cartels,Collusion,Experiments
    JEL: C7 C9 L13 L41
    Date: 2018

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