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on Experimental Economics |
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Issue of 2018‒11‒12
25 papers chosen by |
| By: | Yun Wang (Xiamen University); Hu Sun (University of Michigan) |
| Abstract: | Do lookers-on make better economic decisions and form more objective beliefs than individuals who are in the situation? We design a laboratory experiment studying the dynamic pattern of job applications and individuals' belief updating process in a labor market problem. Our experimental treatments feature decision-making for oneself versus for others. In both treatments, the probability of being accepted for a job position depends on external shocks as well as the individuals' ability ranking, which is unknown to the subjects. We elicit subjects' beliefs about their own and about others' ability ranking after the realization of each application outcome. We find that, when making decisions for themselves, subjects are more inclined to attribute failure to external shocks, while attributing success to their own ability being higher than others'. Estimation results from a reinforcement learning model show that, compared to decision-making for others, subjects tend to have a higher tolerance for failure and remain in applying for unsuitable jobs for longer periods when making decisions for themselves. Our findings provide supportive evidence for the presence of self-serving attributional bias when individuals' self-image affects their economic decisions. We show that decision-making for others could be used as a good benchmark to measure the degree of individuals' attributional bias. |
| Keywords: | Decision-making for others; Self-serving attribution bias; Belief updating; Bayesian posterior; Belief elicitation |
| JEL: | C91 D83 D91 |
| Date: | 2018–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002383&r=exp |
| By: | Annarita Colasante (LEE & Economics Department, Universitat Jaume I, Castellón-Spain); Matteo M. Marini (LEE & Economics Department, Universitat Jaume I, Castellón-Spain; Università degli Studi dell’Insubria, Italy); Alberto Russo (Dept. de Teoría e Historia Económica, University of Granada, Spain) |
| Abstract: | In this paper we conduct a laboratory experiment in order to investigate the effect of incidental sadness and happiness on risky decision making. An emotion induction procedure is the treatment variable of a between-subjects design where two sessions aim at eliciting either sadness or happiness, respectively. Two further groups are characterized by neutral conditions and serve as baseline. After a manipulation check verifies the validity of the induction procedure, we use a multiple price list à la Holt and Laury (2002) to elicit individual risk preferences in the context of a lottery-choice task. The analysis reveals that both sadness and happiness promote greater risk aversion with respect to neutral conditions, a result which might be moderated by the risk elicitation task. Therefore, as compelling explanation we propose the theory of ego depletion, whereby regulating emotions so as to subsequently process information consumers a limited self-control resource, which is needed to take risks as well. |
| Keywords: | laboratory experiment, emotions, preference elicitation, risk aversion, ego depletion |
| JEL: | C91 D81 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2018/13&r=exp |
| By: | Maurizio Canavari (Associate Professor, Department of Agricultural and Food Science and Technology, Alma Mater Mater-Studiorum-University of Bologna, Viale Fanin 50, 40126, Bologna, Italy); Andreas C. Drichoutis (Assistant Professor, Department of Agricultural Economics & Rural Development, Agricultural University of Athens, Iera Odos 75, 11855, Greece,); Jayson L. Lusk (Distinguished Professor and Head, Department of Agricultural Economics, Purdue University, 403 W. State St, West Lafayette, IN 47907-2056, USA,); Rodolfo M. Nayga, Jr. ({Distinguished Professor and Tyson Endowed Chair, Department of Agricultural Economics & Agribusiness, University of Arkansas, Fayetteville, AR 72701, USA,) |
| Abstract: | In this paper, we review the recent advances in the literature of experimental auctions and provide practical advice and guidelines for researchers. We focus on issues related to randomization to treatment and causal identiffιcation of treatment effects, on design issues such as selection between different elicitation formats, multiple auction groups in a single session, and house money effects. We also discuss sample size issues related to recent trends about preregistration and pre-analysis plans. We then present the pros and cons of moving auction studies from the lab to the field and review the recent literature on behavioral factors that have been identified as important for auction outcomes. |
| Keywords: | auctions, randomization, sample size, pre-registration, field experiments, behavioral factors |
| JEL: | C90 D44 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:aua:wpaper:2018-5&r=exp |
| By: | Amirova, I.; Petrick, M.; Djanibekov, N. |
| Abstract: | This study contributes to the understanding of long- and short- term determinants of cooperation among water users. We experimentally investigate the potential of water users self-governance in enhancing their contributions to a common pool as opposed to external regulation. Our focus is on the irrigated areas of Kazakhstan and Uzbekistan. Due to their Soviet past, these countries have a reputation for low bottom-up cooperation potential. Based on the different pre-Soviet irrigation traditions of the two study sites, we assess the effectiveness of short-term incentives compared to long term cultural factors of cooperation. History might matter, but we find it does not predetermine the success of current water decentralization in ancient as compared to relatively recently established irrigation sites. We find that external regulation, in fact, decreases farmers cooperation, whereas face-to-face communication increases it. This finding calls into question the top-down approach prevalent in current water policies of the region. Moreover, it suggests the viability of endogenous cooperation and hence encourages the implementation of truly self-governed water management policies in Central Asia. However, the substantial heterogeneity in individual contributions apparent at the village level also signals a warning that one-size-fits-all approaches to local cooperation are unlikely to succeed. Acknowledgement : This study was conducted in the framework of a research project Institutional change in land and labour relations of Central Asia s irrigated agriculture . The research project is funded by the VolkswagenStiftung within the funding initiative "Between Europe and the Orient A Focus on Research and Higher Education in/on Central Asia and the Caucasus". |
| Keywords: | Resource/Energy Economics and Policy |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277075&r=exp |
| By: | Peth, D.; Mushoff, O.; Funke, K.; Hirschauer, N. |
| Abstract: | Nitrogen runoffs induced by agricultural fertilisation cause serious environmental damage to surface waters. Environmental and consumer protectionists demand government intervention to mitigate these externalities. With this in mind, the present study examines the effects of nudge-based regulatory strategies. We use an incentivised single-player multi-period business management game as an experimental device to study how nudges affect compliance with the minimum-distance-to-water rule in a sample of German farmers. We investigate two different nudge treatments: a nudge with information and pictures showing environmental and health damages that are presumably caused by breaching the minimum-distance-to-water rule, and a nudge with an additional social comparison suggesting that the majority of farmers in the same region comply with the rule. We observe three core experimental outcomes: first, nudging has a preventive effect and reduces the share of non-compliant participants. Second, against all expectations, the preventive effect of the nudge with an additional social comparison is weaker than that of the nudge with information and pictures alone. Third, despite the overall positive effects of nudging, the nudge with social comparison even increased the severity of non-complying behaviour in the deviant subpopulation. Acknowledgement : The authors gratefully acknowledge ?nancial support from the German Research Foundation (DFG). We thank Dr. Matthias Buchholz, Dr. Daniel Hermann and the Centre for Statistics of the University of G ttingen for helpful comments and statistical advice. We also thank Manfred Tietze for support by programming of the experiment. |
| Keywords: | Resource/Energy Economics and Policy |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277062&r=exp |
| By: | Paolo Crosetto (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Marco Mantovani (Università degli Studi di Milano-Bicocca [Milano]) |
| Abstract: | We explore the effects on strategic behavior of alternative representations of a centipede game that differ in terms of complexity. In a laboratory experiment, we manipulate the way in which payoffs are presented to subjects in two different ways. In both cases, information is made less accessible relative to the standard representation of the game. Results show that these manipulations shift the distribution of take nodes further away from the equilibrium prediction. The evidence is consistent with the view that failures of game-form recognition and the resulting limits to strategic reasoning are crucial for explaining non-equilibrium behavior in the centipede game. |
| Keywords: | representation effect,experiment,centipede game,backward induction |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01885390&r=exp |
| By: | Martijn (M.J.) Burger (Erasmus School of Economics); Martijn Hendriks (Erasmus School of Economics); Emma Pleeging (Erasmus School of Economics); Jan (J.C.) van Ours (Erasmus School of Economics) |
| Abstract: | We conducted a field experiment to increase our understanding of lottery participation. Using representative data for the Netherlands, we find that lottery participation increased the happiness of participants before the draw. Winning a small prize had no effect on happiness. Our results indicate that people may not only care about the outcomes of the lottery, but also enjoy the game. Accordingly, we conclude that lottery play has a utility value in itself and part of the lottery ticket is consumed before the draw. |
| Keywords: | lottery play; happiness; field experiment |
| JEL: | C93 I31 |
| Date: | 2018–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180078&r=exp |
| By: | Moser, Johannes |
| Abstract: | There is evidence that bidders fall prey to the winner's curse because they fail to extract information from hypothetical events - like winning an auction. This paper investigates experimentally whether bidders in a common value auction perform better when the requirements for this cognitive issue – also denoted by contingent reasoning - are relaxed, leaving all other parameters unchanged. The overall pattern of the data suggests that the problem of irrational over- and underbidding can be weakened by giving the subjects ex ante feedback about their bid, but unlike related studies I also find negative effects of additional information. |
| Keywords: | Hypothetical thinking,cursed equilibrium,winner's curse |
| JEL: | D03 D44 D82 D83 C91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181506&r=exp |
| By: | Lergetporer, Philipp (ifo Institute at the University of Munich; CESifo); Werner, Katharina (ifo Institute at the University of Munich); Woessmann, Ludger (University of Munich and ifo Institute; CESifo, IZA, and CAGE) |
| Abstract: | To study how information about educational inequality affects public concerns and policy preferences, we devise survey experiments in representative samples of the German population. Providing information about the extent of educational inequality strongly increases concerns about educational inequality but only slightly affects support for equity-oriented education policies, which is generally high. The small treatment effects are not due to respondents’ failure to connect policies with educational inequality or aversion against government interventions. Support for compulsory preschool is the one policy with a strong positive information treatment effect, which is increased further by informing about policy effectiveness. |
| Keywords: | inequality, education, information, survey experiment JEL Classification: D30, H52, I24, H11, D63, D83, D72, P16 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:391&r=exp |
| By: | Zoë B. Cullen; Ricardo Perez-Truglia |
| Abstract: | The diffusion of salary information has important implications for labor markets, such as for wage discrimination policies and collective bargaining. Despite the widespread view that transmission of salary information is imperfect and unequal, there is little direct evidence on the magnitude and sources of these frictions. We conduct a field experiment with 752 employees at a multibillion-dollar corporation to address these questions. We provide evidence of significant frictions in how employees search for and share salary information and suggestive evidence that these frictions are due to privacy norms. We do not find any significant differences in information frictions between female and male employees. |
| JEL: | C93 D83 D91 J3 J71 M5 Z1 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25145&r=exp |
| By: | Herrera, Helios; Llorente-Saguer, Aniol; McMurray, Joseph C. |
| Abstract: | This paper documents a laboratory experiment that analyses voter participation in common interest proportional representation (PR) elections, comparing this with majority rule. Consistent with theoretical predictions, poorly informed voters in either system abstain from voting, thereby shifting weight to those who are better informed. A dilution problem makes mistakes especially costly under PR, so abstention is higher in PR in contrast with private interest environments, and welfare is lower. Deviations from Nash equilibrium predictions can be accommodated by a logit version of quantal response equilibrium (QRE), which allows for voter mistakes. |
| Keywords: | information aggregation; laboratory experiment; Majority Rule; Proportional representation; Turnout |
| JEL: | C92 D70 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13280&r=exp |
| By: | Manthei, Kathrin (University of Cologne); Sliwka, Dirk (University of Cologne); Vogelsang, Timo (University of Cologne) |
| Abstract: | We run two field experiments within a large retail chain showing that the effectiveness of performance pay crucially hinges on prior job experience. Introducing sales-based performance pay for district- and later for store-managers, we find negligible average treatment effects. Based on surveys and interviews, we develop a formal model demonstrating that the effect of performance pay decreases with experience and may even vanish in the limit. We provide empirical evidence in line with this hypothesis, for instance, finding positive treatment effects (only) in stores with low job experience. |
| Keywords: | performance pay, incentives, learning, experience, insider econometrics, field experiment, randomized control trial (RCT) |
| JEL: | J33 M52 C93 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11859&r=exp |
| By: | Masters, W.A.; Singh, P. |
| Abstract: | We provide results of a randomized trial comparing incentives for improved delivery of public services in India, targeting child nutrition through the work of salaried caregivers in Chandigarh, India. A winner-take-all prize paid to the best performer yielded less improvement than dividing the same award among workers in proportion to their share of measured gains. In our population of about 2,000 children served by 85 workers, using proportional rewards led to weight-for-age malnutrition rates that were 4.3 percentage points lower at 3 months (when rewards were paid) and 5.9 points lower at 6 months (after the contest had ended), with mean weight-for-age z scores that were .071 higher at 3 months, and .095 higher at 6 months. Proportional bonuses led to larger and more sustained gains because of better performance by lower-ranked workers, whose efforts were not rewarded by a winner-take-all prize. Results are consistent with previous laboratory trials and athletic events, demonstrating the value of proportional rewards to improve service delivery for child nutrition and other development outcomes. Acknowledgement : This project was funded by the Bill & Melinda Gates Foundation (OPP1107973), with additional support from Amherst College and the Bharat Prakarsh Foundation. We are especially grateful to the mothers, children and Anganwadis who participated in our trial, to the Chandigarh Social Welfare Department and Child Development Bureau for their support, to our survey staff especially Alka Yadav, Paulin Priscilla and Sam Alpert, and for very helpful comments from Jere Behrman, Sonia Bhalotra, Karthik Muralidharan and Alessandro Tarozzi and other participants at the Conference on Child Development at the UPenn Center for Advanced Studies on India (CASI), 15-16 September 2017. |
| Keywords: | Labor and Human Capital |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277046&r=exp |
| By: | Jose Alejandro Coronado (Department of Economics, New School for Social Research) |
| Abstract: | We argue for the use of the principle of maximum entropy to carry out inference in experimental eco- nomics. In particular we take the ultimatum game as a case study. We derive the Logit equilibrium by maximizing Shannon's informational entropy subject to behavioral constraints. This provides an e ective way to translate behavioral hypotheses into theoretical distributions that are candidates to characterize em- pirical frequencies when performing experiments. Based on this approach we present two maximum entropy models applied to the ultimatum game. The rst one assumes that the payo functions of agents playing the game depend only on the portion of the money prize they obtain at the end of the game. The second one introduces an additional fairness constraint to represent the behavioral hypothesis that players also follow altruistic motivations. Each model suggests a particular distribution of o ers that we can compare to empirical distributions from data gathered from experimental results. We build a database containing observed interactions of simple ultimatum game experiments conducted by Henrich et al. (2004), Ensminger & Henrich (2014), and Andreoni & Blanchard (2006).The data consists of 1,016 observations of demands made by proposers in the standard ultimatum game interaction. Out of these demands, a total of 636 report whether the demand was accepted or rejected, allowing us to derive the joint probability distribution of demands and acceptance/rejection. The experiments conducted by by Henrich et al., and Ensminger & Henrich consists on ultimatum experiments performed around the world on small scale societies. On the other hand, the experiments conducted by Andreoni & Blanchard were implemented to individuals from the University of Wisconsin-Milwaukee. The information distinguishability index shows that the fairness constrained model recovers 90% of the information in the marginal distribution of demands, in contrast with the 60% recovered by the non-fairness constrained model. We also estimate the fairness constrained model on the joint distribution of demands and quantal responses, recovering 87% of the information contained in the data, in contrast with the 52% recovered by the non-fairness constrained model. |
| Keywords: | Statistical equilibrium; bounded rationality; quantal response; ultimatum bargaining game |
| JEL: | C10 C72 C73 C78 D80 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1815&r=exp |
| By: | Zeev Shtudiner (Ariel University) |
| Abstract: | One of the most challenging areas for employees and managers is dealing with shades of gray related to ethical behaviors. The ability to evaluate unethical behavior can differ from person to person and is vulnerable to the influences of unrelated attributions. In the current study, we investigated the role of physical attractiveness and gender in judging severity of unethical workplace behavior. Scenarios with unethical behavioral dilemmas were displayed to 4,602 subjects in different versions accompanied with images. Our findings show that "gray area" behavior was evaluated with more severity if conducted by a plain-looking employee than an attractive one. When comparing genders, the same action was perceived as more ethical if performed by male employees. We explore a number of explanations for this discrimination based on the psychological literature. |
| Keywords: | business ethics, experiment, gender, beauty |
| JEL: | C91 M10 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:6508342&r=exp |
| By: | Sadka, Joyce; Seira, Enrique; Woodruff, Christopher |
| Abstract: | While observers agree that courts function poorly in developing countries, a lack of data has limited our understanding of the causes of malfunction. We combine data from admin- istrative records on severance cases filed in the Mexico City Labor Court with interventions that provide information to parties in randomly selected cases on predicted case outcomes and conciliation services. We first use the data to document a set of stylized facts about the func- tioning of the court. The interventions nearly double the overall settlement rate, but only when the plaintiff herself is present to receive the information directly. Administrative records from six months after the treatment indicate that the treatment effects remain unchanged over that period, even though an additional one in three cases in the control group settle in that period. The post-treatment results indicate that lawyers do not convey the information provided in the intervention to their clients. A simple analytic framework rationalizes the experimental results. Analysis of settlements induced by the interventions suggests that the provision of information is welfare-improving for the plaintiffs. The experimental results replicate over two phases conducted in different sub-courts, showing robustness. |
| Keywords: | firingdisputes; laborcourts; overconfidence; Settlement; statisticalinformation |
| JEL: | J52 J83 K31 K41 K42 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13261&r=exp |
| By: | Bedoya, Guadalupe (World Bank); Bitarello, Luca (Northwestern University); Davis, Jonathan (University of Chicago); Mittag, Nikolas (CERGE-EI) |
| Abstract: | Program evaluations often focus on average treatment effects. However, average treatment effects miss important aspects of policy evaluation, such as the impact on inequality and whether treatment harms some individuals. A growing literature develops methods to evaluate such issues by examining the distributional impacts of programs and policies. This toolkit reviews methods to do so, focusing on their application to randomized control trials. The paper emphasizes two strands of the literature: estimation of impacts on outcome distributions and estimation of the distribution of treatment impacts. The article then discusses extensions to conditional treatment effect heterogeneity, that is, to analyses of how treatment impacts vary with observed characteristics. The paper offers advice on inference, testing, and power calculations, which are important when implementing distributional analyses in practice. Finally, the paper illustrates select methods using data from two randomized evaluations. |
| Keywords: | policy evaluation, distributional impact analysis, heterogeneous treatment effects, impacts on outcome distributions, distribution of treatment effects, random control trials |
| JEL: | C18 C21 C54 C93 D39 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11863&r=exp |
| By: | Ogutu, S.; Fongar, A.; Godecke, T.; Jackering, L.; Mwololo, H.; Njuguna, M.; Wollni, M.; Qaim, M. |
| Abstract: | We analyze how agricultural extension can be made more effective in terms of increasing smallholder farmers adoption of pro-nutrition technologies, such as biofortified crops. In a randomized controlled trial with farmers in Western Kenya, we implemented several extension treatments and evaluated their effects on the adoption of beans that were biofortified with iron and zinc. Difference-in-difference estimates show that intensive agricultural training tailored to local conditions can increase technology adoption considerably. Within less than one year, adoption of biofortified beans increased from almost zero to more than 20%. Providing additional nutrition training further increased adoption by another 10-12 percentage points, as this has helped farmers to better appreciate the technology s nutritional benefits. These results suggest that effective nutrition training through agricultural extension services is possible. Providing marketing training did not lead to additional adoption effects, although the study period may have been too short to measure these effects properly. This study is a first attempt to analyze how improved designs of agricultural extension can help to make smallholder farming more nutrition-sensitive. More research in this direction is needed. Key words: agricultural extension, technology adoption, biofortification, nutrition-sensitive agriculture, Kenya JEL codes: C93, O33, Q12, Q16, Q18 Acknowledgement : This research was financially supported by the German Federal Ministry of Food and Agriculture (BMEL) based on a decision of the Parliament of the Federal Republic of Germany (grant number 2813FSNu01). The authors thank Jonathan Nzuma (University of Nairobi) for his research cooperation. |
| Keywords: | Food Consumption/Nutrition/Food Safety |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277250&r=exp |
| By: | Magdalena Brzozowicz (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | In the laboratory experiment, I examine two behavioral effects: hypothetical bias and the framing effect. I elicited willingness to pay (WTP) for a cosmetic product, and manipulated framing conditions (positive vs. negative attribute framing) and incentives to reveal the actual valuation (hypothetical vs. real). In this case, I demonstrated that hypothetical bias has a significant impact on WTP values; however, the framing effect has no effect on valuation of the product. Similarly, I found no interaction between the two effects. This observation contributes to claims that hypothetical research methods lead to equally reliable data as those based on consequential choices. |
| Keywords: | framing effect; hypothetical bias; laboratory experiment |
| JEL: | D91 M31 C91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2018-23&r=exp |
| By: | Jackering, L.; Fongar, A.; Godecke, T.; Mbugua, M.; Njuguna, M.; Ogutu, S.; Wollni, M. |
| Abstract: | A growing body of literature focuses on the importance of peer effects for farmers adoption decisions. However, little is known on how interventions affect networks. We are analyzing network changes and the influence of peer effects on the adoption of technologies. Our analysis builds on a unique dataset that combines a randomized controlled trial (RCT) with detailed panel data on communication networks. The RCT was implemented in rural Kenya and consisted of varying combinations of agricultural and nutrition training sessions. The broader purpose of the extension training was the promotion of the black bean variety KK15. Survey data from 48 farmer groups (824 households) was collected before (2015) and after (2016) the intervention. Results suggest that the intervention had a positive impact on the creation of communication links. We find positive effects of adopting peers on individual adoption decisions. Further, peer effects become increasingly important for the adoption decision of farmers attending a higher share of training sessions. Hence, training farmer groups can be very efficient in diffusing new technologies since peer effects can stimulate and drive the adoption process. Acknowledgement : This research was financially supported by the German Federal Ministry of Food and Agriculture (BMEL) based on the decision of the Parliament of the Federal Republic of Germany (grant number 2813FSNu01). The authors thank the University of Nairobi and Africa Harvest for their research cooperation. We would like to express our special gratitude to all respondents and enumerators who were part of this survey. |
| Keywords: | Research and Development/ Tech Change/Emerging Technologies |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277540&r=exp |
| By: | Papatya Duman (Paderborn University) |
| Abstract: | The purpose of the present study is to experimentally test a version of the classical Chain Store Game (CSG) paradox, proposed by Trockel (1986), and determine whether one of the two theories of Induction and Deterrence, which were originally tested competitively by Selten (1978), may better account for the results. With complete and perfect information, the CSG of Selten (1978) was designed to analyze the role of reputation in repeated market interactions. Its results were discussed in two different ways: one is based on backward induction, and the other is intuitively derived from a deterrence argument. As the two explanations are incompatible, alternative models have been proposed to understand them better. The alternative game proposed by Trockel is an imperfect information version of the CSG in which the order of the two players is changed in each round and the ’Out-Aggressive’ equilibrium is used to build reputation. The existence of more than one equilibrium is the basis for the building of reputation. To the best of my knowledge, this study is the first attempt to experimentally test this alternative game with the same purpose. |
| Keywords: | Chain Store Game, reputation building, entry deterrence, Trockel's game |
| JEL: | C7 C9 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:ciepap:117&r=exp |
| By: | Palloni, G.; Aker, J.; Gilligan, D.; Hidrobo, M.; Ledlie, N. |
| Abstract: | With the widespread growth of mobile phone coverage and adoption over the past decade, there has been considerable enthusiasm over the use the ICTs in agricultural initiatives, primarily to disseminate information to farmers. This paper assesses farmers willingness to pay (WTP) for a newly introduced digital nutrition-sensitive agricultural information service in Ghana, called Vodafone Farmers Club (VFC). Using both an experimental game and administrative data, we find that the share of farmers willing-to-pay for VFC service is high at low prices and then decreases rapidly as the price increases; at 1.0 GHC, 85% would register for the service; at 2.0 GHC 50% would register; and at 3.0 GHC, just 19% would still be willing to participate. We experimentally vary both the framing around the introduction of VFC to emphasize either the platform s nutrition and agriculture information or the agriculture information alone and the gender of the household member invited to play the game and find that women have statistically lower WTP than men, but the framing has no impact on WTP. Acknowledgement : We would like to thank all individuals in Upper West and Central Region who agreed to take part in this research. We are particularly grateful to Lucy Billing for managing the project in Ghana, and to the ISSER team in Ghana, led by Simon Bawakyillenuo and Felix Asante. We would also like to extend our gratitude to Groupe Sp ciale Mobile Association (GSMA), Esoko, Vodafone Ghana, and Global Alliance for Improved Nutrition (GAIN) teams for their cooperation and support. We are also extremely grateful for the ongoing collaborative partnership with The Institute of Development Studies (IDS) and the GAMOS team. |
| Keywords: | Research and Development/ Tech Change/Emerging Technologies |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277451&r=exp |
| By: | Han (H.) Bleichrodt (Erasmus School of Economics, Australian National University); Paul van Bruggen (Erasmus School of Economics) |
| Abstract: | Higher order risk preferences are important determinants of economic behaviour. We apply behavioural insights to this topic: we measure higher order risk preferences for pure gains and pure losses by controlling the reference point. We find a reflection effect not only for second order risk preferences, as in Kahneman and Tversky 1979, but also for higher order risk preferences: we find risk aversion, prudence and intemperance for gains, but risk loving preferences, imprudence and temperance for losses. The risk aversion and intemperance for gains and the imprudence for losses is evidence against a preference for combining good with bad or good with good, which previous theoretical and empirical results suggest may underlie higher order risk preferences. |
| Keywords: | Risk Apportionment; Higher Order Risk Preferences; Risk Aversion; Prudence; Temperance; Reference Dependence |
| JEL: | C91 D81 D91 |
| Date: | 2018–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180079&r=exp |
| By: | Cristina Bicchieri; Eugen Dimant (Philosophy, Politics and Economics, University of Pennsylvania); Erte Xiao; |
| Abstract: | A stream of research examining the effect of punishment on conformity indicates that punishment can backfire and lead to suboptimal social outcomes. We examine whether this effect originates from a lack of perceived legitimacy of rule enforcement, enabling agents to justify selfish behavior to themselves. We address the question of punishment legitimacy by shedding light upon the importance of social norms and their interplay with punishment. Often people are presented with incomplete norm information: either about what most others do (empirical) or what most others deem appropriate (normative). We show that neither punishment nor empirical/normative information in isolation result in prosocial behavior. In turn, we find that prosociality is significantly increased when normative information and punishment are combined, but only when compliance is relatively cheap. When compliance is more expensive, we find that the combination of punishment and empirical information about others’ conformity can have detrimental effects on prosocial behavior. We attribute this outcome to the differential ability to distort one’s own beliefs about applicable norms. Our results have important implications for researchers and practitioners alike. |
| Keywords: | Conformity, Experiments, Punishment, Social Norms, Trust Game |
| JEL: | C91 D03 D73 H26 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:ppc:wpaper:0016&r=exp |
| By: | Hestermann, Nina (Toulouse School of Economics); Le Yaouanq, Yves (LMU Munich) |
| Abstract: | We study the inference and experimentation problem of an agent in a situation where the outcomes depend on the individual\'s intrinsic ability and on an external variable. We analyze the mistakes made by decision-makers who hold inaccurate prior beliefs about their ability. Overconfident individuals take too much credit for their successes and excessively blame external factors if they fail. They are too easily dissatisfied with their environment, which leads them to experiment in variable environments and revise their self-confidence over time. In contrast, underconfident decision-makers might be trapped in low-quality environments and incur perpetual utility losses. |
| Keywords: | overconfidence; attribution bias; experimentation; learning.; |
| JEL: | D83 |
| Date: | 2018–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:124&r=exp |