nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒11‒05
twenty-one papers chosen by
Daniel Houser
George Mason University

  1. Social Image or Social Norm?: Re-examining the Audience Effect in Dictator Game Experiments By Chulyoung Kim; Sang-Hyun Kim
  2. Pre-planning and the Continuation of Dishonest Behavior: An Experiment By Subhasish M. Chowdhury; Chulyoung Kim; Sang-Hyun Kim
  3. Signalling in Auctions: Experimental Evidence By Olivier Bos; Francisco Gomez-Martinez; Sander Onderstal; Tom Truyts
  4. Democracy and compliance in public goods games By Gallier, Carlo
  5. A Test of Dynamic Consistency and Consequentialism in the Presence of Ambiguity By Han Bleichrodt; Jurgen Eichberger; Simon Grant; David Kelsey; Chen Li
  6. Audit State Dependent Taxpayer Compliance: Theory and Evidence from Colombia By James Alm; James C. Cox; Vjollca Sadiraj
  7. Strategic Inattention in Product Search By Hippel, Svenja; Hillenbrand, Adrian
  8. Where to look for the morals in markets? By Matthias Sutter; Juergen Huber; Michael Kirchler; Matthias Stefan; Markus Walzl
  9. Agglomeration and the Extent of the Market: An Experimental Investigation into Spatially Coordinated Exchange By Jordan Adamson
  10. Fair Cake-Cutting in Practice By Maria Kyropoulou; Josu\'e Ortega; Erel Segal-Halevi
  11. A Method to Estimate Mean Lying Rates and Their Full Distribution By Garbarino, Ellen; Slonim, Robert; Villeval, Marie Claire
  12. Experiments on macroeconomics: methods and applications By Camille Cornand; Frank Heinemann
  13. Can Online Surveys Represent the Entire Population? By Grewenig, Elisabeth; Lergetporer, Philipp; Simon, Lisa; Werner, Katharina; Woessmann, Ludger
  14. Belief Elicitation with Multiple Point Predictions By Markus Eyting; Patrick Schmidt
  15. Multiple Testing and the Distributional Effects of Accountability Incentives in Education By Lehrer, Steven F.; Pohl, R. Vincent; Song, Kyungchul
  16. On Booms That Never Bust: Ambiguity in Experimental Asset Markets with Bubbles By Brice Corgnet; Roberto Hernán-Gonzalez; Praveen Kujal
  17. The causal effect of trust By Björn Bartling; Ernst Fehr; David Huffman; Nick Netzer
  18. Payment Technology Adoption and Finance : A Randomized-Controlled-Trial with SMEs By Dalton, Patricio; Pamuk, Haki; Ramrattan, R.; van Soest, Daan; Uras, Burak
  19. Competitiveness, Risk Attitudes, and the Gender Gap in Math Achievement By YAGASAKI Masayuki; NAKAMURO Makiko
  20. The Effects of a Parenting Program on Maternal Well-Being: Evidence from a Randomized Controlled Trial By Camehl, Georg; Hahlweg, Kurt; Spieß, C. Katharina
  21. Betrayal Aversion and the Effectiveness of Incentive Contracts By Rau, Holger; Müller, Stephan

  1. By: Chulyoung Kim (Yonsei University); Sang-Hyun Kim (Yonsei University)
    Abstract: Andreoni and Bernheim (2009) considers a variant of the dictator game in which an exogenous force, called "nature", overturns the dictator's decision with some known probability. They find that as the likelihood of nature's intervention increased, more subjects mimicked the nature's move. We replicate their experiment, and examine a new treatment in which the dictator's decision is revealed to the recipient even when the dictator mimics nature's move. We find that (i) many dictators' decisions were affected by nature's intervention even when their choice was observed by the recipient, which suggests that the intervention altered not only the incentive to signal one's fair-mindedness but also the perception of appropriate action, but (ii) still dictators' behavior under the two treatments differed significantly, which suggests that the audience effect also matters greatly in AB's and our experiments.
    Keywords: Social image, Social norm, Dictator game, Altruism
    Date: 2018–10
  2. By: Subhasish M. Chowdhury (University of Bath); Chulyoung Kim (Yonsei University); Sang-Hyun Kim (Yonsei University)
    Abstract: We examine experimentally whether the ability to pre-plan one's action may reduce the possible inter-temporal spillover effect. We implemented two treatments where either the subjects were informed ex-ante that they would have two subsequent opportunities to tell a lie for some monetary gain, or they were informed about the decision making in each stage just before the stage started. We find that when it was not possible to pre-plan, repeated opportunities to tell a lie resulted in subjects telling a lie even for a smaller monetary gain, i.e., getting more vulnerable to a temptation to behave dishonestly for profit. However, when preplanning was feasible, the proportion of subjects telling a lie was relatively high in the first stage, and then it went down in the subsequent opportunity. We argue that the feasibility of preplanning invites a compensatory, instead of consistent, action, and thus induces more dishonest responses in the first stage and fewer in the second. Overall - considering both stages - more subjects told lies when they had had a chance to pre-plan.
    Keywords: Dishonesty; Lying; Pre-planning; Moral licensing; Conscience accounting
    JEL: C91 D01 D91
    Date: 2018–10
  3. By: Olivier Bos; Francisco Gomez-Martinez; Sander Onderstal; Tom Truyts
    Abstract: We study the relative performance of the first‐price sealed‐bid auction and the second-price sealed‐bid auction in a laboratory experiment where bidders can signal information through their bidding behaviour to an outside observer. We consider two different information settings: the auctioneer reveals either the identity of the winning bidder only, or she also reveals the winner’s payment to an outside observer. We find that the first‐price sealed‐bid auction in which the winner’s payment is revealed outperforms the other mechanisms in terms of revenue and efficiency. Our findings may have implications for the design of charity auctions, art auctions, and spectrum auctions.
    Keywords: auctions, signalling, experiments
    JEL: C92 D44 D92
    Date: 2018
  4. By: Gallier, Carlo
    Abstract: I investigate if, how, and why the effect of a contribution rule in a public goods game depends on how it is implemented: endogenously chosen or externally imposed. The rule prescribes full contributions to the public good backed by a nondeterrent sanction for those who do not comply. My experimental design allows me to disentangle to what extent the effect of the contribution rule under democracy is driven by self-selection of treatments, information transmitted via the outcome of the referendum, and democracy per se. In case treatments are endogenously chosen via a democratic decision-making process, the contribution rule significantly increases contributions to the public good. However, democratic participation does not affect participants’ contribution behavior directly, after controlling for self-selection of treatments and the information transmitted by voting.
    Keywords: Laboratory experiment,public good,democracy,endogenous institutions,voting,contribution rule,compliance
    JEL: C91 D02 D72 K42
    Date: 2018
  5. By: Han Bleichrodt; Jurgen Eichberger; Simon Grant; David Kelsey (Department of Economics, University of Exeter); Chen Li
    Abstract: We test dynamic consistency and consequentialism, two key principles of dynamic decision making under ambiguity and relate violations of these principles to subjectsÕ ambiguity at- titudes. In our experiment, subjects received a signal which made it attractive for ambiguity averse subjects to deviate from their ex- ante contingent plan and violate dynamic consistency. We found that ambiguity averse subjects were indeed more likely to violate dynamic consistency than ambiguity neutral subjects, but not consequentialism.
    Keywords: ambiguity, three-color Ellsberg paradox, consequentialism, dynamic consistency.
    JEL: D72 D81
    Date: 2018
  6. By: James Alm; James C. Cox; Vjollca Sadiraj
    Abstract: Colombian tax reforms have been enacted with no estimates of taxpayer compliance responses to policy innovations. We report the results from the first tax compliance experiment run in Colombia. Our data analysis follows from an original dynamic theoretical model of individual compliance choice that is fully consistent with our experimental design and that should have useful applications to other tax compliance experiments. The model distinguishes between compliance conditional on no previous audits and compliance conditional on previous audits one and two periods earlier, which allows us to discriminate between the implications of naïve and static behavior versus sophisticated and forward-looking behavior in our subsequent empirical analysis. Our estimation results indicate that taxpayer reporting increases with an increase in the audit rate and an increase in the fine rate; we find no significant effects of the tax rate on compliance. We also find that compliance depends upon the use of tax payments; that is, taxpayer reporting is greater when aggregate tax payments are donated to a charity.
    Keywords: Tax evasion, experimental economics
    JEL: H26 C91
    Date: 2018–10
  7. By: Hippel, Svenja; Hillenbrand, Adrian
    Abstract: Online platforms provide search tools that help consumers to get better-fitting product offers. But this technology makes consumer search behavior also easily traceable and allows for real-time price discrimination. Consumers face a trade-off: Search intensely and receive a better fit at a potentially higher price or restrict search behavior – be strategically inattentive – and receive a worse fit, but maybe a better deal. We study the resulting strategic buyer-seller interaction theoretically as well as experimentally. Our experimental results show that it is the sellers and not the buyers who profit from these search tools.
    Keywords: strategic inattention,price discrimination,information transmission,consumer choice,experiment
    JEL: D11 D42 D82 D83 L11
    Date: 2018
  8. By: Matthias Sutter; Juergen Huber; Michael Kirchler; Matthias Stefan; Markus Walzl
    Abstract: There is a heated debate on whether markets erode social responsibility and moral behavior. However, it is a challenging task to identify and measure moral behavior in markets. Based on a theoretical model, we examine in an experiment the relation between trading volume, prices and moral behavior by setting up markets that either impose a negative externality on third parties or not. We find that moral behavior reveals itself in lower trading volume in markets with an externality, and in prices depending on the market structure. We further investigate individual characteristics that explain trading behavior in markets with externalities.
    Keywords: Morals, Markets, Competition, Experiment
    JEL: C92 D03 D62
    Date: 2018–10
  9. By: Jordan Adamson (Smith Institute for Political Economy and Philosophy, Chapman University)
    Abstract: How and why do agglomerations emerge? While economic historians emphasize trade and economic geographers emphasize variety, we still don’t understand the role of coordination. I ?ll this gap by extending the model of Fudenberg and Ellison (2003) to formalize Smith’s (1776) theory of agglomeration. I then test the model in a laboratory experiment and ?nd individuals tend to coalesce purely to coordinate exchange, with more agglomeration when there is a larger variety of goods in the economy. I also ?nd that tying individuals to the land reduces agglomeration, but magni?es the effect of variety.
    Keywords: Spatial Coordination, Agglomeration, Pure-Exchange
    JEL: R12 C92 F19
    Date: 2018
  10. By: Maria Kyropoulou; Josu\'e Ortega; Erel Segal-Halevi
    Abstract: Using a lab experiment, we investigate the real-life performance of envy-free and proportional cake-cutting procedures with respect to fairness and preference manipulation. We find that envy-free procedures, in particular Selfridge-Conway and the symmetric and asymmetric versions of cut-and-choose, are fairer and also are perceived as fairer than their proportional counterparts, despite the fact that agents very often manipulate them. Our results support the practical use of these procedures, and more generally, of envy-free cake-cutting mechanisms. We also find that subjects learn their opponents' preferences after repeated interaction and use this knowledge to improve their allocated share of the cake. Learning reduces truth-telling behavior and envy.
    Date: 2018–10
  11. By: Garbarino, Ellen (University of Sydney); Slonim, Robert (University of Sydney); Villeval, Marie Claire (CNRS, GATE)
    Abstract: Studying the likelihood that individuals cheat requires a valid statistical measure of dishonesty. We develop an easy empirical method to measure and compare lying behavior within and across studies to correct for sampling errors. This method estimates the full distribution of lying when agents privately observe the outcome of a random process (e.g., die roll) and can misreport what they observed. It provides a precise estimate of the mean and confidence interval (offering lower and upper bounds on the proportion of people lying) over the full distribution, allowing for a vast range of statistical inferences not generally available with existing methods.
    Keywords: dishonesty, lying, econometric estimation, sampling errors, experimental economics
    JEL: C91 C81 D03
    Date: 2018–09
  12. By: Camille Cornand (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); Frank Heinemann (TUB - Technische Universität Berlin)
    Abstract: This chapter lays out in which respects laboratory experiments can be useful for macroeconomics and discusses some of the methods used in such experiments.
    Keywords: macroeconomics,laboratory experiments
    Date: 2018
  13. By: Grewenig, Elisabeth (Ifo Institute for Economic Research); Lergetporer, Philipp (Ifo Institute for Economic Research); Simon, Lisa (CESifo); Werner, Katharina (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: A general concern with the representativeness of online surveys is that they exclude the "offline" population that does not use the internet. We run a large-scale opinion survey with (1) onliners in web mode, (2) offliners in face-to-face mode, and (3) onliners in face-to-face mode. We find marked response differences between onliners and offliners in the mixed-mode setting (1 vs. 2). Response differences between onliners and offliners in the same face-to-face mode (2 vs. 3) disappear when controlling for background characteristics, indicating mode effects rather than unobserved population differences. Differences in background characteristics of onliners in the two modes (1 vs. 3) indicate that mode effects partly reflect sampling differences. In our setting, re-weighting online-survey observations appears a pragmatic solution when aiming at representativeness for the entire population.
    Keywords: online survey, representativeness, mode effects, offliner, public opinion
    JEL: C83 D91 I20
    Date: 2018–09
  14. By: Markus Eyting (Johannes Gutenberg-University); Patrick Schmidt (Goethe University Frankfurt)
    Abstract: We provide a general framework for the elicitation of beliefs about real-valued outcomes and propose a novel, incentive compatible elicitation mechanism - Multiple Point Predictions. By simultaneously eliciting a set of quantiles, Multiple Point Predictions provide a simple way to infer subjective probabilities without requiring respondents to understand probabilistic concepts. The elicitation mechanism can be used in surveys, interviews, and expert forecasting and is robust for risk-averse agents. In a laboratory experiment, we compare the proposed mechanism to the standard approach of eliciting discrete probabilities on pre-defined intervals with the Quadratic Scoring Rule. We find that elicitation with point predictions is faster, more convenient, easier to understand, more predictive of subsequent economic behavior, and more conclusive about the subjective probability distribution. A novel set of evaluation tools suggests that elicited distributions are more accurate under heterogeneous information sets and less prone to overconfidence.
    Date: 2018–10–19
  15. By: Lehrer, Steven F.; Pohl, R. Vincent; Song, Kyungchul
    Abstract: Economic theory that underlies many empirical microeconomic applications predicts that treatment responses depend on individuals’ characteristics and location on the outcome distribution. Using data from a large-scale Pakistani school report card experiment, we consider tests for treatment effect heterogeneity that make corrections for multiple testing to avoid an overestimation of positive treatment effects. These tests uncover evidence of policy-relevant heterogeneous effects from information provision on child test scores. Further, our analysis reinforces the importance of preventing the inflation of false positive conclusions since over 65% of the estimated statistically significant quantile treatment effects become insignificant once these corrections are applied.
    Keywords: information, student performance, quantile treatment effects, multiple testing, bootstrap tests
    JEL: C12 C21 I21 L15
    Date: 2018–09–24
  16. By: Brice Corgnet (emlyon business school, 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); Roberto Hernán-Gonzalez (UBFC - Université Bourgogne Franche-Comté [COMUE]); Praveen Kujal (Middlesex University Business School - Middlesex University Business School)
    Abstract: We study the effect of ambiguity on the formation of bubbles and on the occurrence of crashes in experimental asset markets à la Smith, Suchanek, and Williams (1988). We extend their framework to an environment where the fundamental value of the asset is ambiguous. We show that, when the fundamental value is ambiguous, asset prices tend to be lower than when it is risky although bubbles form in both the ambiguous and the risky environments. Additionally, bubbles do not crash in the ambiguous case whereas they do so in the risky one. These findings regarding depressed prices and the absence of crashes in the presence of ambiguity are in line with recent theoretical work stressing the crucial role of ambiguity to account for surprisingly low equity prices (high returns) as well as herding in asset markets.
    Keywords: Experimental asset markets,bubbles,ambiguity
    Date: 2018
  17. By: Björn Bartling; Ernst Fehr; David Huffman; Nick Netzer
    Abstract: Trust affects almost all human relationships – in families, organizations, markets and politics. However, identifying the conditions under which trust, defined as people's beliefs in the trustworthiness of others, has a causal effect on the efficiency of human interactions has proven to be difficult. We show experimentally and theoretically that trust indeed has a causal effect. The duration of the effect depends, however, on whether initial trust variations are supported by multiple equilibria. We study a repeated principal-agent game with multiple equilibria and document empirically that an efficient equilibrium is selected if principals believe that agents are trustworthy, while players coordinate on an inefficient equilibrium if principals believe that agents are untrustworthy. Yet, if we change the institutional environment such that there is a unique equilibrium, initial variations in trust have short-run effects only. Moreover, if we weaken contract enforcement in the latter environment, exogenous variations in trust do not even have a short-run effect. The institutional environment thus appears to be key for whether trust has causal effects and whether the effects are transient or persistent.
    Keywords: Trust, causality, equilibrium selection, belief distortions, incomplete contracts, screening, institutions
    JEL: C91 D02 D91 E02
    Date: 2018–10
  18. By: Dalton, Patricio (Tilburg University, Center For Economic Research); Pamuk, Haki (Tilburg University, Center For Economic Research); Ramrattan, R.; van Soest, Daan (Tilburg University, Center For Economic Research); Uras, Burak (Tilburg University, Center For Economic Research)
    Abstract: What determines the adoption of electronic-payment instruments? Do these instruments impact business outcomes, in particular access to finance? To shed light on these questions, we conducted a Randomized-Controlled-Trial with Kenyan SMEs. Our experiment released barriers to adopt a novel payment instrument. We uncover that the adoption barriers were binding for a large portion of the firms and that firms' financial transparency interacted with the decision to adopt. After sixteen months, treated businesses were more likely to feel safe and had more loans. The impact on loans was especially pronounced for smaller size establishments, which also experienced a reduction in sales-volatility.
    Keywords: SME Finance; Transparency; Technology adoption; Lipa Na M-Pesa
    JEL: D22 G00 G21 O33
    Date: 2018
  19. By: YAGASAKI Masayuki; NAKAMURO Makiko
    Abstract: In this paper, we investigate how competitiveness and risk attitudes are related to math achievement among middle school students. We conduct an experiment at six public middle schools in Japan to collect incentivized measures of competitiveness and risk attitudes and merge them with an administrative dataset containing information on students' cognitive achievements. The results from the experiment show that girls are less competitive and exhibit greater risk aversion compared to boys, which are in line with the previous literature. We find that competitiveness is positively correlated with math achievement conditional on students' prior achievements and demographics, while greater risk aversion is associated with higher math achievement (but not with reading and English). Taken together, the results indicate that the gender differences in competitiveness are widening the gender gap in math achievement, but that the gender differences in risk attitudes contribute to narrowing it.
    Date: 2018–10
  20. By: Camehl, Georg; Hahlweg, Kurt; Spieß, C. Katharina
    Abstract: This paper evaluates how the Triple P parenting program affects maternal well-being. We analyze data from a randomized controlled trial and a separate sample of mothers from a deprived neighborhood without a control group. For the latter, we generate a control group using SOEP survey data and evaluate the validity of this procedure. Overall, our results show a positive effect of Triple P on maternal well-being – with the largest effects appearing three years after treatment. Thus, we illustrate that maternal well-being is an additional channel through which parenting programs, as examples of early childhood interventions, benefit families.
    Keywords: parenting program,family well-being,instrumental variables estimation,Triple P
    JEL: I31 J13 C21 C26
    Date: 2018
  21. By: Rau, Holger; Müller, Stephan
    Abstract: In this paper we study the impact of betrayal aversion on agents' effort provision, when principals have discretion regarding agents' remuneration. We show theoretically that agents who work under a nonbinding bonus contract face a trade off in their effort choice between the likelihood and the level of betrayal. Thus, depending on which effect predominates, betrayal aversion may either undermine or underpin the effectiveness of bonus contracts to induce effort. The data of our experiment reveal a strong detrimental effect of betrayal aversion. If the principal promises to pay a bonus for sufficiently high effort, the message is ineffective when agents are characterized by a high degree of betrayal aversion. In strong contrast, employees with a low degree of betrayal aversion increase their performance by more than 50%, if they received this message. The findings in this article identify an additional hidden cost of economic incentives.
    Keywords: Betrayal Aversion,Principal Agent Problem,Experiment
    JEL: C91 D03 D81
    Date: 2018

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