|
on Experimental Economics |
| By: | Jan Hausfeld; Sven Resnjanskij |
| Abstract: | We investigate the trade-off between the opportunity costs of decisions and their quality in a simple model. In a lab experiment, we introduce exogenous variation in the opportunity costs of time. Contrary to claims in the previous literature, we show that using more time when making small-stake decisions does not indicate irrational behavior, and neither does a positive correlation between decision time and the probability of making mistakes. Such behavior is compatible with rational decisionmaking and our causal experimental evidence and, hence, does not imply that people behave fundamentally irrational when making observable decision errors under risk. |
| Keywords: | decision under risk, time constraints, opportunity costs, rational behavior, lab experiment, structural estimation, drift diffusion model |
| JEL: | C91 D01 D81 D83 D91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_269&r=exp |
| By: | Nobuyuki Hanaki; Yukio Koriyama; Angela Sutan; Marc Willinger |
| Abstract: | Recent experimental studies have shown that observed outcomes deviate significantly morefrom the Nash equilibrium when actions are strategic complements than when they are strategic substitutes. This "strategic environment effect" offers promising insights into the aggregate consequences of interactions among heterogeneous boundedly rational agents, but its macroeconomic implications have been questioned because the underlying experiments involve a small number of agents. We studied beauty contest games with a unique interior Nash equilibrium to determine the critical group size for triggering the strategic environment effect, and we use both theory and experiments to shed light on its effectiveness. Based on cognitive hierarchy and level-K models, we show theoretically that the effect is operative for interactions among three or more agents. Our experimental results show a statistically significant strategic environment effect for groups of five or more agents, establishing its robustness against the increase in the population size. Our results bolster other experimental ndings on the strategic environment effects that are relevant for macroeconomic issues such as price fluctuations and nominal rigidity. |
| Keywords: | beauty contest games, iterative reasoning, strategic substitutability, strategic complementarity |
| JEL: | C72 C91 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpceem:18-22&r=exp |
| By: | Kusterer, David J.; Schmitz, Patrick W. |
| Abstract: | Who should own public projects? We report data from a laboratory experiment with 480 participants that was designed to test Besley and Ghatak's (2001) public-good version of the Grossman-Hart-Moore property rights theory. Consider two parties, one of whom can invest in the provision of a public good. The parties value the public good differently. Besley and Ghatak (2001) argue that more investments will be made if the high-valuation party is the owner, regardless of whether or not this party is the investor. While our experimental results provide support for the Grossman-Hart-Moore theory, they cast some doubts on the robustness of Besley and Ghatak's (2001) conclusion. |
| Keywords: | Incomplete Contracts; Investment incentives; Laboratory experiments; Property rights; Public Goods |
| JEL: | C92 D23 D86 H41 L33 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13204&r=exp |
| By: | Fatas, E; Miguel A. Meléndez-Jiménez; Hector Solaz |
| Abstract: | We experimentally study punishment patterns across network structures, and their effect on cooperation. In a repeated public goods setting, subjects can only observe and punish their neighbors. Centralized structures (like the star network) outperform other incomplete networks and reach contribution levels like the ones observed in a complete network. Our results suggest that hierarchical network structures with a commonly observed player benefit more from sanctions not because central players punish more, but because they follow, and promote, different punishment patterns. While quasi-central players in other incomplete architectures (like the line network) retaliate, and get trapped in the vicious circle of antisocial punishment, central players in the star network do not punish back, increase their contributions when sanctioned by peripheral players, and sanction other participants in a prosocial manner. Our results illustrate recent field studies on the evolutionary prevalence of hierarchical networks. We document a network-based rationale for this positive effect in an identity-free, fully anonymous environment. |
| Keywords: | Public good experiments, networks, monitoring, punishment |
| Date: | 2018–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:016946&r=exp |
| By: | Sandrine Jacob Leal (ICN Business School, France; Université de Lorraine; CEREFIGE); Nobuyuki Hanaki (Université Côte d'Azur; CNRS, GREDEG; IUF) |
| Abstract: | This work investigates whether the perception of algorithmic trading (AT) and their potential presence in financial markets by human traders change their price forecasts, trading activities, and ultimately market dynamics. We consider two different types of trading strategies commonly employed by high-frequency traders, layering/spoofing and market making. The former has been associated with market manipulation, and the latter is often seen as providing liquidity to markets. We run artificial trading experiments to examine the effect of their potential presence. From these experiments, we find that (1) the potential presence of AT induces larger initial price forecasts deviations from the fundamental value, (2) the differences in perception of AT have an impact on subjects' initial bids, and (3) the potential presence of AT seems to slow down the convergence of market prices to fundamental value. |
| Keywords: | Market volatility, Market efficiency, Computer traders, Experiments, Asset markets |
| JEL: | C90 G14 D84 G01 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2018-31&r=exp |
| By: | Drew Fudenberg (Department of Economics, MIT); Annie Liang (Department of Economics, University of Pennsylvania) |
| Abstract: | We take a machine learning approach to the problem of predicting initial play in strategic-form games, with the goal of uncovering new regularities in play and improving the predictions of existing theories. The analysis is implemented on data from previous laboratory experiments, and also a new data set of 200 games played on Mechanical Turk. We use two approaches to uncover new regularities in play and improve the predictions of existing theories. First, we use machine learning algorithms to train prediction rules based on a large set of game features. Examination of the games where our algorithm predicts play correctly, but the existing models do not, leads us to introduce a risk aversion parameter that we find significantly improves predictive accuracy. Second, we augment existing empirical models by using play in a set of training games to predict how the models' parameters vary across new games. This modified approach generates better out-of-sample predictions, and provides insight into how and why the parameters vary. These methodologies are not special to the problem of predicting play in games, and may be useful in other contexts. |
| Date: | 2017–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:17-026&r=exp |
| By: | Drew Fudenberg (Department of Economics, MIT); Annie Liang (Department of Economics, University of Pennsylvania) |
| Abstract: | We take a machine learning approach to the problem of predicting initial play in strategicform games, with the goal of uncovering new regularities in play and improving the predictions of existing theories. The analysis is implemented on data from previous laboratory experiments, and also a new data set of 200 games played on Mechanical Turk. We ï¬ rst use machine learning algorithms to train prediction rules based on a large set of game features. Examination of the games where our algorithm predicts play correctly, but the existing models do not, leads us to introduce a risk aversion parameter that we ï¬ nd signiï¬ cantly improves predictive accuracy. Second, we augment existing empirical models by using play in a set of training games to predict how the models’ parameters vary across new games. This modiï¬ ed approach generates better out-of-sample predictions, and provides insight into how and why the parameters vary. These methodologies are not special to the problem of predicting play in games, and may be useful in other contexts. |
| Date: | 2017–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:18-009&r=exp |
| By: | Isamaël Rafaï; Sébastien Duchêne; Eric Guerci; Guerci; Ariane Lambert-Mogiliansky; Fabien Mathy |
| Abstract: | In this paper, we will put forward an original experiment to reveal empirical “anomalies” in the process of acquisition, elaboration and retrieval of information in the context of reading economic related content. Our results support the existence of the memory dual process suggested in the Fuzzy Trace Theory: acquisition of information leads to the formation of a gist representation which may be incompatible with the exact verbatim information stored in memory. We give to subjects complex and complete information and evaluate their cognitive ability. To answer some specific questions, individuals used this gist representation rather than processing verbatim information appropriately. |
| Keywords: | Fuzzy Trace Theory, memory, dual process, cognitive reflection test, bounded rationality |
| JEL: | C91 D83 D89 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpceem:18-25&r=exp |
| By: | Frauke H. Peter; C. Katharina Spiess; Vaishali Zambre |
| Abstract: | Although the proportion of students enrolled in college increased in the last decades, students from non-college family backgrounds remain underrepresented in higher education around the world. This study sheds light on whether the provision of information in a randomized controlled trial with more than 1,000 German high school students results in higher college enrollment rates. One year prior to high school graduation, we treated students in randomly selected schools by giving an in-class presentation on the benefits and costs of higher education as well as on possible funding options for college education. We collected data from students prior to the information intervention and followed them for four consecutive years. We find evidence that an information intervention increases students’ application as well as their enrollment rates, in particular for students from non-college backgrounds with enrollment intentions prior to treatment. Moreover, treated students persist in college at a similar rate as students in the control group, i.e. they are not more likely to drop out of college. Our results indicate that a low-cost information intervention is an efficient tool to encourage students to translate their college intentions into actual enrollment. |
| Keywords: | college enrollment, college benefits, college costs, educational inequality, information, randomized controlled trial |
| JEL: | I21 I24 J24 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1770&r=exp |
| By: | Hoem Sjursen, Ingrid (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | The Rentier State Hypothesis states that taxation promotes government accountability. The argument is that citizens demand more accountability for spending of tax revenue than for spending of windfall revenue (e.g., natural resource revenue). This paper presents evidence from a between-subject experiment that tests the effect of taxation on demand for accountability and the underlying mechanisms explaining this effect. The design focuses on two main features that distinguish tax from windfall revenue: Tax revenue is produced by citizens' work and has been in their possession before being collected as tax. These features are theorized to increase the salience of fairness considerations in public service provision, and this increased salience of fairness is in turn hypothesized to increase demand for accountability. The main finding is that taxation causes a higher demand for accountability when both features of taxation are present. This result is evidence in support of the Rentier State Hypothesis. |
| Keywords: | Taxation; experiment; fairness; behavioral economics; accountability |
| JEL: | C91 D63 D90 H27 |
| Date: | 2018–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2018_024&r=exp |
| By: | Dvorak, Fabian (University of Konstanz); Fehrler, Sebastian (University of Konstanz) |
| Abstract: | Case studies of cartels and recent theory suggest that repeated communication is key for stable cooperation in environments where signals about others' actions are noisy. However, empirically the exact role of communication is not well understood. We study cooperation under different monitoring and communication structures in the laboratory. Under all monitoring structures - perfect, imperfect public, and imperfect private - communication boosts efficiency. However, under imperfect monitoring, where actions can only be observed with noise, cooperation is stable only when subjects can communicate before every round of the game. Beyond improving coordination, communication increases efficiency by making subjects' play more lenient and forgiving. We further find clear evidence for the exchange of private information - the central role ascribed to communication in recent theoretical contributions. |
| Keywords: | infinitely repeated games, monitoring, communication, cooperation, strategic uncertainty, prisoner's dilemma |
| JEL: | C72 C73 C92 D83 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11897&r=exp |
| By: | Epper, Thomas; Fehr-Duda, Helga |
| Abstract: | Standard economic models view risk taking and time discounting as two independent dimensions of decision makers’ behavior. However, mounting experimental evidence demonstrates the existence of robust and systematic interaction effects. There are striking parallels in patternsof risk taking and time discounting behavior, which suggests that there is a common underlying force driving these interactions. Here we show that decision makers’ anticipationof something going wrong in the future conjointly with their proneness to probability weighting generates a unifying framework for explaining seven puzzling regularities: delay-dependent risk tolerance, aversion to sequential resolution of uncertainty, preferences for resolution timing, hyperbolic discounting, subadditive discounting, the differential discounting of risky and certain outcomes, and the order dependence of prospect valuation. Finally, we discuss the implications of our framework for understanding real-world behavior, such as the coexistence of underinsuring and overinsuring. |
| Keywords: | Risk preferences, time preferences, time-dependent risk tolerance, decreasing impatience, timing and frequency of uncertainty resolution, probability-dependent risk attitudes, over-/under-insurance. |
| JEL: | D01 D81 D91 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2018:12&r=exp |
| By: | Liebenehm, S.; Waibel, H. |
| Abstract: | In this paper, we analyze risk and time preferences as factors related to technology adoption. In the context of West African small-scale cattle farm households, we examine why the adoption of prophylactic drugs as an ex-ante risk management strategy to protect cattle from tsetse-transmitted African Animal Trypanosomosis (AAT) despite experts recommendation is low. To do so, we conducted two types of economic field experiments: (i) to elicit farmers risk and time preferences, considering additional behavioral information beyond standard economic theory and (ii) to observe farmers adoption decision of alternative drug treatments to manage the risk of AAT. Results show that loss aversion and high discount rates are associated with low prophylaxis take-up. More specifically, farmers value losses of animals that are infected with AAT larger than gains from healthy animals and short-term benefits from therapeutic treatment over long-term benefits from prophylactic treatment. As a consequence, a loss averse and impatient farmer that is less likely to apply AAT prophylaxis forgives chances of higher and sustainable returns, thereby deteriorates risk management abilities and likely perpetuates poverty. We suggest that the consideration of farmers risk and time preferences can help improving the effectiveness of livestock extension and veterinary services in West Africa. Acknowledgement : This work was supported by the German Research Foundation (DFG) [grant number WA 1002/8-1]. |
| Keywords: | Food Security and Poverty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277480&r=exp |
| By: | Cabrales, Antonio (Department of Economics, University College London); Drouvelis, Michalis (University of Birmingham); Gurguc, Zeynep; Ray, Indrajit (Cardiff Business School) |
| Abstract: | We consider an experiment with a version of the Battle of the Sexes game with two-sided private information, preceded by a round of either one-way or two-way cheap talk. We compare different treatments to study truthful revelation of information and subsequent payoffs from the game. We find that the players are overall truthful about their types in the cheap-talk phase in both one-way and two-way talk. Furthermore, the unique symmetric cheap-talk equilibrium in the two-way cheap talk game is played when the players fully reveal their information; however, they achieve higher payoffs in the game when the talk is one-way as the truthful reports facilitate desired coordination. |
| Keywords: | Battle of the Sexes, Private Information, Cheap talk, Coordination. |
| JEL: | C72 C92 D83 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2018/23&r=exp |
| By: | Richard Karlsson Linnér (University Amsterdam); Pietro Biroli (University of Zurich); Edward Kong (Harvard University); S. Fleur W. Meddens (University Amsterdam); Robee Wedow (University of Colorado, Boulder); Mark Alan Fontana (Center for the Advancement of Value in Musculoskeletal Care, Hospital for Special Surgery); Maël Lebreton (University of Amsterdam); Abdel Abdellaoui (Vrije Universiteit Amsterdam); Anke R. Hammerschlag (University Amsterdam); Michel G. Nivard (Vrije Universiteit Amsterdam); Aysu Okbay (Vrije Universiteit Amsterdam); Cornelius A. Rietveld (Erasmus University); Pascal N. Timshel (University of Copenhagen); Stephen P. Tino (University of Toronto); Maciej Trzaskowski (University of Queensland); Ronald de Vlaming (Vrije Universiteit Amsterdam); Christian L. Zünd (University of Zurich); Yanchun Bao (University of Essex); Laura Buzdugan (ETH Zurich); Ann H. Caplin (Stuyvesant High School); Chia-Yen Chen (Massachusetts General Hospital); Peter Eibich (University of Oxford); Pierre Fontanillas (23andMe); Juan R. Gonzalez (Barcelona Institute for Global Health); Peter K. Joshi (University of Edinburgh); Ville Karhunen (University of Oulu,); Aaron Kleinman (23andMe); Remy Z. Levin (University of California San Diego); Christina M. Lill (University of Lübeck); Gerardus A. Meddens (Team Loyalty BV); Gerard Muntané (Universitat Pompeu Fabra); Sandra Sanchez-Roige (University of California San Diego); Frank J. van Rooji (Erasmus University); Erdogan Taskesen (Vrije Universiteit Amsterdam); Yang Wu (University of Queensland); Futao Zhang (University of Queensland); 23andMe Research Team (23andMe); eQTLgen Consortium (eQTLgen Consortium); International Cannabis Consortium (International Cannabis Consortium); Psychiatric Genomics Consortium (Psychiatric Genomics Consortium); Social Science Genetic Association Consortium (Social Science Genetic Association Consortium); Adam Auton (23andMe); Jason D. Boardman (University of Colorado Boulder); David W. Clark (University of Edinburgh); Andrew Conlin (Oulu Business School); Conor C. Dolan (Vrije Universiteit Amsterdam); Urs Fischbacher (University of Konstanz); Patrick J. F. Groenen (Erasmus University); Kathleen Mullan Harris (University of North Carolina at Chapel Hill); Gregor Hasler (University of Bern); Albert Hofman (Erasmus Medical Center); Mohammad A. Ikram (Erasmus Medical Center); Sonia Jain (University of California San Diego); Robert Karlsson (Karolinska Institutet); Ronald C. Kessler (Harvard Medical School); Maarten Kooyman (SURFsara); James MacKillop (McMaster University); Minna Männikkö (University of Oulu); Carlos Morcillo-Suarez (Universitat Pompeu Fabra); Matthew B. McQueen (University of Colorado Boulder); Klaus M. Schmidt (University of Munich); Melissa C. Smart (University of Essex); Matthias Sutter (University of Cologne); A. Roy Thurik (Erasmus University); Andre G. Uitterlinden (Erasmus Medical Center); Jon White (University College London); Harriet de Wit (University of Chicago); Jian Yang (University of Queensland); Lars Bertram (University of Lübeck); Dorret Boomsma (Vrije Universiteit Amsterdam); Tõnu Esko (University of Tartu); Ernst Fehr (University of Zurich); David A. Hinds (23andMe); Magnus Johannesson (Stockholm School of Economics); Meena Kumari (University of Essex); David Laibson (Harvard University); Patrik K. E. Magnusson (Karolinska Institutet); Michelle N. Meyer (Geisinger Health System); Arcadi Navarro (Universitat Pompeu Fabra); Abraham A. Palmer (University of California San Diego); Tune H. Pers (University of Copenhagen); Danielle Posthuma (Vrije Universiteit Amsterdam); Daniel Schunk (Johannes Gutenberg University); Murray B. Stein (University of California San Diego); Rauli Svento (University of Oulu); Henning Tiemeier (Erasmus Medical Center); Paul R. H. J. Timmers (University of Edinburgh); Patrick Turley (Massachusetts General Hospital); Robert J. Ursano (University Health Science); Gert G. Wagner (Max Planck Institute for Human Development); James F. Wilson (University of Edinburgh); Jacob Gratten (University of Queensland); James J. Lee (University of Minnesota Twin Cities); David Cesarini (New York University); Daniel Benjamin (University of Southern California); Philipp Koellinger (University of Amsterdam); Jonathan Beauchamp (University of Toronto) |
| Abstract: | Humans vary substantially in their willingness to take risks. In a combined sample of over one million individuals, we conducted genome-wide association studies (GWAS) of general risk tolerance, adventurousness, and risky behaviors in the driving, drinking, smoking, and sexual domains. We identified 611 approximately independent genetic loci associated with at least one of our phenotypes, including 124 with general risk tolerance. We report evidence of substantial shared genetic influences across general risk tolerance and risky behaviors: 72 of the 124 general risk tolerance loci contain a lead SNP for at least one of our other GWAS, and general risk tolerance is moderately to strongly genetically correlated with a range of risky behaviors. Bioinformatics analyses imply that genes near general-risk-tolerance-associated SNPs are highly expressed in brain tissues and point to a role for glutamatergic and GABAergic neurotransmission. We find no evidence of enrichment for genes previously hypothesized to relate to risk tolerance. |
| Keywords: | GWAS, genome-wide association studies, risk taking, risk tolerance |
| JEL: | D81 I14 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2018-087&r=exp |
| By: | Raffaelli, R.; Menapace, L. |
| Abstract: | Indirect questioning (IQ), i.e., asking respondents to predict the behavior of others, has been employed in stated preference studies as WTP elicitation technique. This technique, also referred to as Inferred Valuation, represents a promising approach for reducing hypothetical bias when it is not possible to sell actual goods to participants and when the social desirability bias is a potential problem (e.g., preferences for sustainable food attributes). To date, several issues associated to the use of IQ have not been adequately investigated. We carried out a Discrete Choice Experiment on field to verify the effects on estimated WTPs of: i) different IQ framing, ii) monetary incentives associated to predictions; and iii) the order of presentation. First, by employing two different question formats (e.g. asking to predict others behavior in a real market situation or in a hypothetical situation) we uncover how respondents are able to anticipate the tendency of others to provide socially desirable answers. Second, monetary incentives create a rewarding environment that indirectly affects WTPs obtained from direct questions. Third, we uncover a potential debiasing effect on WTPs of asking respondents to make predictions about others before stating their own preferences, which could have interesting implications for practitioners. Acknowledgement : |
| Keywords: | Research Methods/ Statistical Methods |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277039&r=exp |
| By: | Romero, M.; Rudolf, K.; Wollni, M. |
| Abstract: | The current study addresses the question of how the adoption of native trees can be promoted among small scale oil palm farmers in Jambi Province, Indonesia. In particular, we investigate if perceptions to the ecosystem functions provided by trees planted in oil palm and intention to plan are suitable predictors to actual tree planting behavior. We conduct a randomized controlled trial with two interventions: an environmental information campaign and an additional provision of saplings. Interventions aim to close knowledge gaps and to overcome missing markets for seed material. Guided by social psychology theories, we hypothesize that information will have a positive effect on a change of perceptions and intentions, but the additional provision of saplings will encourage tree planting adoption. We employ a structural equation model to estimate mediating effects. Our findings indicate that only information in combination with saplings provision had a positive and significant effect on actual tree planting. In addition, perceptions and intentions are significant mediators to actual behavior. We conclude that interventions that combine social cognitive factors and changes on structural conditions will facilitate the adoption of pro-environmental behavior adoption. Acknowledgement : This study was undertaken as part of the research project SFB 990 Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems, Sumatra (Indonesia) (EFForTS) funded by the German Research Foundation (DFG). |
| Keywords: | Marketing |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277356&r=exp |
| By: | Aislinn Bohren (Department of Economics, University of Pennsylvania); Alex Imas (Department of Economics, Carnegie Melon University); Michael Rosenberg (Wayfair, Inc.) |
| Abstract: | We model the dynamics of discrimination and show how its evolution can identify the underlying cause. We test these theoretical predictions in a field experiment on a large online platform where users post content that is evaluated by other users on the platform. We assign posts to accounts that exogenously vary by gender and history of evaluations. With no prior evaluations, women face significant discrimination, while following a sequence of positive evaluations, the direction of discrimination reverses: posts by women are favored over those by men. According to our theoretical predictions, this dynamic reversal implies discrimination driven by biased beliefs. |
| Keywords: | Discrimination, Dynamic Behavior, Field Experiment |
| JEL: | J16 D83 D9 |
| Date: | 2017–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:17-021&r=exp |
| By: | Alejandro Fuentes Espinoza; Anne Hubert; Yann Raineau; Céline Franc; Eric Giraud-Héraud |
| Abstract: | We analyze consumers’ evaluations of white wines from resistant varieties, produced in the Languedoc winegrowing region of France (2016 vintage). We use the results from a laboratory experiment performed in Paris in June 2017, where a panel of more than one hundred and sixty consumers, regular buyers of this type of wine, were asked to evaluate a wine of the Bouquet 3159 grape variety (monogenic variety resistant to mildew and powdery mildew and optimized for quality) and compare it with two conventional wines of different quality levels, and with a certified organic wine of similar type and price. The environmental and health performances and the production methods of the different wines were quantified according to several indicators: treatment frequency indicator (TFI) and pesticide residue analysis.\r\nThe consumers first evaluated the wines after tasting, having been given only a minimum amount of information about the region of origin and the vintage, then again after receiving information on production methods and the levels of our indicators. The method used to lend credibility to individual valuations used experimental economics, via a mechanism based on direct disclosure of their willingness to pay (maximum purchase price for a bottle of wine according to available information). The results showed that, on a purely sensory level, consumers had difficulty in accepting wine from a resistant variety. We were then able to see that communication focusing on environmental and health performances very much improved the position of the resistant variety of wine, putting it ultimately at the top of the average qualitative evaluations. In economic terms, we show that this promotion results in high market share, gained from conventional wines. Market share losses were lower, however, for the premium conventional wine, suggesting that the higher quality wines would be less directly challenged by wines produced from resistant varieties. |
| Keywords: | Wine, Resistant varieties, Treatment frequency indicator, Pesticide residue analysis, Willingness to pay, Experimental economics. |
| JEL: | D12 Q11 Q13 Q16 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2018-22&r=exp |
| By: | Gibson, Rajna; Sohn, Matthias; Tanner, Carmen; Wagner, Alexander F |
| Abstract: | Two laboratory experiments show that investors perceive a CEO to be more committed to honesty when the CEO resisted, at a personal cost, engaging in earnings management. For investment decisions, a one standard deviation increase in a CEO's perceived commitment to honesty compared to another CEO reduces the relevance of differences in the CEOs' claimed future returns by 40%. This effect is prominent among investors with a proself value orientation. To prosocial investors, their own honesty values and those attributed to the CEO matter directly; returns play a secondary role. Overall, CEO honesty matters to different investors for distinct reasons. |
| Keywords: | Earnings management; honesty; investor preferences; investor segmentation; protected values; social value orientation; Trust |
| JEL: | G0 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13207&r=exp |
| By: | Tristan Roger; Wael Bousselmi; Patrick Sentis; Marc Willinger |
| Abstract: | Recent research in finance shows that the magnitude of stock prices influences analysts’ price forecasts (Roger et al., 2018). In this paper, we report the results o fa novel experiment where some of the participants in a continuous double auction market act as analysts and forecast future prices. Participants engage in two successive markets: one in which the fundamental value is a small price and one in which the fundamental value is a large price. Our results indicate that analysts’ forecasts are more optimistic in small price markets compared to large price markets. We also find that analysts strongly anchor on past price trends when building their price forecasts. Overall, our findings support the existence of a small price bias. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpceem:18-24&r=exp |
| By: | Mira Fischer (WZB Berlin Social Science Center/ IZA Institute of Labor Economics); Valentin Wagner (Johannes Gutenberg-Universität Mainz) |
| Abstract: | Information about past performance has been found to sometimes improve and sometimes worsen subsequent performance. Two factors may help to explain this puzzle: which aspect of one’s past performance the information refers to and when it is revealed. In a field experiment in secondary schools, students received information about their absolute rank in the last math exam (level feedback), their change in ranks between the second-last and the last math exam (change feedback), or no feedback. Feedback was given either 1–3 days (early) or immediately (late) before the final math exam of the semester. Both level feedback and change feedback significantly improve students’ grades in the final exam when given early and tend to worsen them when given late. The largest effects are found for negative change feedback and are concentrated on male students, who adjust their ability beliefs downwards in response to feedback. |
| Keywords: | timing of feedback, change and level feedback, motivation, field experiment |
| JEL: | I21 M54 D91 |
| Date: | 2018–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:1820&r=exp |
| By: | Del Carpio, Lucía (INSEAD); Guadalupe, Maria (INSEAD) |
| Abstract: | This paper investigates whether social identity considerations-through beliefs and normsdrive women's occupational choices. We implement two field experiments with potential applicants to a five-month software-coding program offered to women from low-income backgrounds in Peru and Mexico. When we correct the perception that women cannot succeed in technology by providing role models, information on returns and access to a female network, application rates double and the self-selection patterns change. Analysis of those patterns suggests that identity considerations act as barriers to entering the technology sector and that some high-cognitive skill women do not apply because of their high identity costs. |
| Keywords: | occupational segregation, social norms, identity |
| JEL: | J16 J24 D91 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11876&r=exp |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Benjamin Brooks (Dept. of Economics, University of Chicago); Stephen Morris (Dept. of Economics, Princeton University) |
| Abstract: | We characterize revenue maximizing mechanisms in a common value environment where the value of the object is equal to the highest of bidders’ independent signals. The optimal mechanism exhibits either neutral selection, wherein the object is randomly allocated at a price that all bidders are willing to pay, or advantageous selection, wherein the object is allocated with higher probability to bidders with lower signals. If neutral selection is optimal, then the object is sold with probability one by a deterministic posted price. If advantageous selection is optimal, the object is sold with probability less than one at a random price. By contrast, standard auctions that allocate to the bidder with the highest signal (e.g., the ?rst-price, second-price or English auctions) deliver lower revenue because of the adverse selection generated by the allocation rule: if a bidder wins the good, then he revises his expectation of its value downward. We further show that the posted price mechanism is optimal among those mechanisms that always allocate the good. A su?icient condition for the posted price to be optimal among all mechanisms is that there is at least one potential bidder who is omitted from the auction. Our qualitative results extend to more general common value environments where adverse selection is high. |
| Keywords: | Optimal auction, Common values, Maximum game, Posted price, Revenue equivalence, Adverse selection, Neutral selection, Advantageous selection |
| JEL: | C72 D44 D82 D83 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2147&r=exp |