nep-exp New Economics Papers
on Experimental Economics
Issue of 2019‒06‒17
25 papers chosen by

  1. Dishonesty behaviors under time pressure By Manami Tsuruta; Keigo Inukai
  2. Testing an Information Intervention: Experimental Evidence on the Effect of Jamie Oliver on Fizzy Drinks Demand By Gibson, John; Tucker, Steven; Boe-Gibson, Geua
  3. Emotions of Altruism, Envy and Guilt: Experimental Evidence By Moreno, Alejandro; Viianto, Lari; García, Daniel
  4. Aggregation of Diverse Information with Double Auction Trading among Minimally-Intelligent Algorithmic Agents By Karim Jamal; Michael Maier; Shyam Sunder
  5. Central Bank Communication That Works: Lessons from Lab Experiments By Oleksiy Kryvtsov; Luba Petersen
  6. Are risk preferences stable ? A field experiment in Congo Basin countries. By Marielle Brunette; Jonas Ngouhouo-Poufoun
  7. Discrimination in Hiring Based on Potential and Realized Fertility: Evidence from a Large-Scale Field Experiment By Sascha O. Becker; Ana Fernandes; Doris Weichselbaumer
  8. Learning to cooperate in the shadow of the law By Roberto Galbiati; Emeric Henry; Nicolas Jacquemet
  9. It’s Time to Cheat! By Alessandro Bucciol; Simona Cicognani; Natalia Montinari
  10. Belief formation and belief updating under ambiguity: Evidence from experiments By Li, Wenhui; Wilde, Christian
  11. From Local to Global: External Validity in a Fertility Natural Experiment By Rajeev Dehejia; Cristian Pop-Eleches; Cyrus Samii
  12. Collective intertemporal decisions and heterogeneity in groups By Daniela Glaetzle-Ruetzler; Philipp Lergetporer; Matthias Sutter
  13. On the value of persuasion by experts By Alonso, Ricardo; Câmara, Odilon
  14. Inaccurate Statistical Discrimination By J. Aislinn Bohren,; Kareem Haggag; Alex Imas; Devin G. Pope
  15. Second thoughts of social dilemma in mechanism design By Tatsuyoshi Saijo
  16. Auction Mechanisms and Treasury Revenue By Klenio Barbosa; Dakshina De Silva; Liyu Yang; Hisayuki Yoshimoto
  17. Effectiveness of Provision of Energy-Saving Performance Information in Selection of Air Conditioners: Evidence from an Online Randomized Controlled Trial (Japanese) By HIRAI Yusuke; KOBAYASHI Yohei; YOKOO Hidefumi; TAKAHASHI Kei; TAKEDA Masahiro; YOSHIKAWA Yasuhiro
  18. Household Preferences for Load Restrictions: Is There an Effect of Pro-Environmental Framing? By Broberg, Thomas; Melkamu Daniel , Aemiro; Persson, Lars
  19. Future Design By Tatsuyoshi Saijo
  20. Evaluating the Performance of Machine Learning Algorithms in Financial Market Forecasting: A Comprehensive Survey By Lukas Ryll; Sebastian Seidens
  21. Public Accountability and Nudges: The Effect of an Information Intervention on the Responsiveness of Teacher Education Programs to External Ratings By Dan Goldhaber; Cory Koedel
  22. At What Level Should One Cluster Standard Errors in Paired Experiments? By Cl\'ement de Chaisemartin; Jaime Ramirez-Cuellar
  23. Does Computer-aided Instruction Improve Children's Cognitive and Non-cognitive Skills?: Evidence from Cambodia By ITO Hirotake; KASAI Keiko; NAKAMURO Makiko
  24. Trading in Complex Networks By Felipe M. Cardoso; Carlos Gracia-Lazaro; Frederic Moisan; Sanjeev Goyal; Angel Sanchez; Yamir Moreno
  25. Planar Beauty Contests By Mikhail Anufriev; John Duffy; Valentyn Panchenko

  1. By: Manami Tsuruta (Graduate School of Economics, Osaka University); Keigo Inukai (Department of Economics, Meiji Gakuin University)
    Abstract: Many people sometimes engage in dishonest behavior to get own material payoff. We conducted a laboratory experiment to investigate whether intuitive decisions were to lieor to be honest. Using a task that the experimenter does not know whether the subject is lying or not, and the analysis was performed using only the subjects who were aware that it was possible to lie in the experiment. We found that there was no difference in the degree of lie between time limit condition and no time limit condition. There are two possible interpretations of the result. One is that the decision system of intuition (system 1) and consideration (system 2) does not apply to lie decision-making. In other words, whether thinking about it carefully or making decisions in a hurry doesn ft change the degree of lie. Another possibility is that the time limit in the experimentwas too long. It takes only a very short time for the subject to press the numbers on the keyboard after the choices are displayed, and even under unlimited time, the average is about 1.3 seconds. Therefore, even if the time limit is 5 seconds, the subject may not have been given a sufficient load. In other words, it maybe considered that intuitive (system 1) decision-making was not performed. In a future research, we want to conduct an experiment with a shorter time limit and investigate whether the experimental result changes.
    Keywords: Time pressure, Dishonesty, Decision making, Laboratory experiment
    JEL: C91 D91 K42
    Date: 2019–04
  2. By: Gibson, John; Tucker, Steven; Boe-Gibson, Geua
    Abstract: We conducted a salient purchasing experiment to test if an information intervention alters fizzy drinks demand. Subjects in our experiment initially made five rounds of purchases, for 14 items (energy drinks, colas, and lemonades) selected from a stratified sample of retailers. Subjects faced seven pricing environments, reflecting baseline prices, two ad valorem taxes, two specific taxes, and ad valorem and specific price cuts to reflect retailer discounting. Subjects then watched a video presentation by celebrity chef Jamie Oliver, which highlighted adverse health effects of sugary drinks. The five rounds of choices were then repeated, to generate within-subject before and after demands that show an overall 25% reduction in purchases due to the information intervention. Demand for one sugar-free option, Diet Coke, rose 36% after the intervention. The impacts under baseline prices were little different to those seen in conjunction with tax-induced price rises. Effects of the information intervention were larger for females, for the young, for the less educated, for those usually spending more on soft drinks, and for those who usually ignore sugar content when making purchases.
    Keywords: Experiment; Health; Information; Jamie Oliver; Soda taxes; Sugar
    JEL: C91 D83 I18
    Date: 2019–05–29
  3. By: Moreno, Alejandro; Viianto, Lari; García, Daniel
    Abstract: We run an economic experiment in order to find out the preferences of altruism, envy, and guilt at individual level. We extend Andreoni and Miller’s (2002) series of Dictator Experiments and Fisman et al.’s (2007) graphical experiment in order to have additional and more precise data at individual level. We run 55 graphical dictator games including some with a positive relation between the money the Dictator and the Receiver obtain, in order to estimate individual preferences for envy and guilt. Our program is interactive, as it looks for the regions where individuals´ emotions change from altruist to envy, and altruism to guilt, and changes the form of the budget sets. We find that most individuals show the emotion of altruism when facing other individuals that have similar income as themselves. However, some individuals show the emotion of envy when facing other individuals with much higher payoffs than themselves. More surprisingly, some individuals reveal the emotion of guilt when they have much higher payoffs that other individuals.
    Keywords: Altruism, Envy, Guilt, Experimental Economics
    JEL: C79 C91 D64
    Date: 2019–05–19
  4. By: Karim Jamal (University of Alberta); Michael Maier (University of Alberta); Shyam Sunder (School of Management and Cowles Foundation, Yale University)
    Abstract: Information dissemination and aggregation are key economic functions of financial markets. How intelligent do traders have to be for the complex task of aggregating diverse information (i.e., approximate the predictions of the rational expectations equilibrium) in a competitive double auction market? An apparent ex-ante answer is: intelligent enough to perform the bootstrap operation necessary for the task—to somehow arrive at prices that are needed to generate those very prices. Constructing a path to such equilibrium through rational behavior has remained beyond what we know of human cognitive abilities. Yet, laboratory experiments report that pro?t motivated human traders are able to aggregate information in some, but not all, market environments (Plott and Sunder 1988, Forsythe and Lundholm 1990). Algorithmic agents have the potential to yield insights into how simple individual behavior may perform this complex market function as an emergent phenomenon. We report on a computational experiment with markets populated by algorithmic traders who follow cognitively simple heuristics humans are known to use. These markets, too, converge to rational expectations equilibria in environments in which human markets converge, albeit slowly and noisily. The results suggest that high level of individual intelligence or rationality is not necessary for e?icient outcomes to emerge at the market level; the structure of the market itself is a source of rationality observed in the outcomes.
    Keywords: Algorithmic traders, Rational expectations, Structural rationality, Means-end heuristic, Information aggregation, Zero-intelligence agents
    JEL: C92 D44 D50 D70 D82 G14
    Date: 2019–06
  5. By: Oleksiy Kryvtsov; Luba Petersen
    Abstract: We use controlled laboratory experiments to test the causal effects of central bank communication on economic expectations and to distinguish the underlying mechanisms of those effects. In an experiment where subjects learn to forecast economic variables, we find that central bank communication has a stabilizing effect on individual and aggregate outcomes and that the size of the effect varies with the type of communication. Announcing past interest rate changes has the largest effect, reducing individual price and expenditure forecast volatility by one- and two-thirds, respectively; cutting half of inflation volatility; and improving price-level stability. Forward-looking announcements in the form of projections and forward guidance of upcoming rate decisions have less effect on individual forecasts, especially if they do not clarify the timing of future policy changes. Our evidence does not link the effects of communication to forecasters’ ability to predict future nominal interest rates. Rather, communication is effective via simple and relatable backward-looking announcements that exert strong influence on less-accurate forecasters. We conclude that increasing the accessibility of central bank information to the general public is a promising direction for improving central bank communication.
    Keywords: Monetary policy implementation; Transmission of monetary policy
    JEL: C9 D84 E3 E52
    Date: 2019–06
  6. By: Marielle Brunette; Jonas Ngouhouo-Poufoun
    Abstract: We compare individual risk preferences elicited through a classic Ordered Lottery Selection (OLS) procedure with five gambles, and an extended procedure composed of nine gambles. The research question is about the stability of the risk preferences across these two elicitation variants. We implemented a field experiment with 1002 rural households in the Congo Basin from December 2013 to July 2014. We show that 1/3 of the sample is extremely risk averse regardless of the procedure. We found inconsistencies in risk preferences elicited across procedures. Indeed, 45.71% are characterized by instability of preferences, either weak (34.53%) or strong (11.18%); 42.81% of the sample exhibits stable preferences and the remaining 11.48% of the sample - initially risk neutral in the classic procedure - is classified as risk loving in the extended procedure. Undereducation can be seen as the main driver of the strong instability since the incremental change brought about by the attainment of secondary school on the likelihood to remain stable is ten times greater than the other considered drivers.
    Keywords: field experiment, risk aversion, ordered lottery selection, preferences, farmers.
    JEL: C93 D81
    Date: 2019
  7. By: Sascha O. Becker; Ana Fernandes; Doris Weichselbaumer
    Abstract: Due to conventional gender norms, women are more likely to be in charge of childcare than men. From an employer’s perspective, in their fertile age they are also at “risk” of pregnancy. Both factors potentially affect hiring practices of firms. We conduct a large-scale correspondence test in Germany, Switzerland, and Austria, sending out approx. 9,000 job applications, varying job candidate’s personal characteristics such as marital status and age of children. We find evidence that, for part-time jobs, married women with older kids, who likely finished their childbearing cycle and have more projectable childcare chores than women with very young kids, are at a significant advantage vis-à-vis other groups of women. At the same time, married, but childless applicants, who have a higher likelihood to become pregnant, are at a disadvantage compared to single, but childless applicants to part-time jobs. Such effects are not present for full-time jobs, presumably, because by applying to these in contrast to part-time jobs, women signal that they have arranged for external childcare.
    Keywords: Fertility, discrimination, experimental economics
    JEL: C93 J16 J71
    Date: 2019
  8. By: Roberto Galbiati (OSC - Observatoire sociologique du changement - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Emeric Henry (ECON - Département d'économie - Sciences Po); Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: How does the exposure to past institutions affect current cooperation? While a growing literature focuses on behavioral channels, we show how cooperation-enforcing institutions affect rational learning about the group's value. Strong institutions, by inducing members to cooperate , may hinder learning about intrinsic values in the group. We show, using a lab experiment with independent interactions and random rematching, that participants behave in accordance with a learning model, and in particular react differently to actions of past partners whether they were played in an environment with coercive enforcement or not.
    Keywords: Enforcement,social values,cooperation,learning,spillovers,persistence of insti- tutions,repeated games,experiments
    Date: 2019–06–03
  9. By: Alessandro Bucciol (Department of Economics (University of Verona)); Simona Cicognani (Department of Economics (University of Verona)); Natalia Montinari (University of Bologna)
    Abstract: We run a lab experiment testing the correlation between time preferences and cheating at the individual level, controlling for individuals' risk attitude. In our experiment cheating only entails a moral cost for the decision maker, while it imposes no externalities on others, and it is not associated to the risk of being detected and sanctioned. Our hypothesis is that cheating is higher among individuals who attribute more importance to the present. Our experiment also allows to record socio-demographic details and information on cognitive abilities of participants. We observe widespread cheating, and statistical evidence that cheating prevails among subjects who display present bias and over-confidence. Cheating also turns out to be negatively correlated with risk aversion and the discount factor, but only for men, while the impact of present bias seems to be stronger for women.
    Keywords: Cheating, Time Discounting, Quasi-hyperbolic preferences
    JEL: D91 C91 D81
    Date: 2019–06
  10. By: Li, Wenhui; Wilde, Christian
    Abstract: Decisions under ambiguity depend on both the belief regarding possible scenarios and the attitude towards ambiguity. This paper exclusively investigates the belief formation and belief updating process under ambiguity, using laboratory experiments. The results show that half of the subjects tend to adopt a simple heuristic strategy when updating beliefs, while the other half seems to partially adopt the Bayesian updates. We recover beliefs, represented by distributions of the priors/posteriors. The recoverable initial priors mostly follow a uniform distribution. We also find that subjects on average demonstrate slight pessimism in an ambiguous environment.
    Keywords: ambiguity,learning strategy,belief updates,non-Bayesian updates,pessimism,laboratory experiments
    Date: 2019
  11. By: Rajeev Dehejia; Cristian Pop-Eleches; Cyrus Samii
    Abstract: We study issues related to external validity for treatment effects using over 100 replications of the Angrist and Evans (1998) natural experiment on the effects of sibling sex composition on fertility and labor supply. The replications are based on census data from around the world going back to 1960. We decompose sources of error in predicting treatment effects in external contexts in terms of macro and micro sources of variation. In our empirical setting, we find that macro covariates dominate over micro covariates for reducing errors in predicting treatments, an issue that past studies of external validity have been unable to evaluate. We develop methods for two applications to evidence-based decision-making, including determining where to locate an experiment and whether policy-makers should commission new experiments or rely on an existing evidence base for making a policy decision.
    Date: 2019–06
  12. By: Daniela Glaetzle-Ruetzler; Philipp Lergetporer; Matthias Sutter
    Abstract: Many important intertemporal decisions, such as investments of firms or households, are made by groups rather than individuals. Little is known what happens to such collective deci- sions when group members have different incentives for waiting, because the economics liter- ature on group decision making has, so far, assumed homogeneity within groups. In a lab ex- periment, we study the causal effect of group members’ heterogeneous payoffs from waiting on intertemporal choices. We find that three-person groups behave more patiently than indi- viduals and that this effect is driven by the presence of at least one group member with a high payoff from waiting. We present group chat content, survey data, and additional treatments to uncover the mechanism through which heterogeneity in groups increases patience.
    Keywords: patience, time preferences, group decisions, payoff heterogeneity, experiment
    JEL: C91 C92 D03 D90
    Date: 2019–10
  13. By: Alonso, Ricardo; Câmara, Odilon
    Abstract: We consider a persuasion model in which a sender influences the actions of a receiver by selecting an experiment (public signal) from a set of feasible experiments. We ask: does the sender benefit from becoming an expert — observing a private signal prior to her selection? We provide necessary and sufficient conditions for a sender to never gain by becoming informed. Our key condition (sequential redundancy) shows that the informativeness of public experiments can substitute for the sender's expertise. We then provide conditions for private information to strictly benefit or strictly hurt the sender. Expertise is beneficial when the sender values the ability to change her experimental choice according to her private information. When the sender does not gain from expertise, she is strictly hurt when different types cannot pool on an optimal experiment.
    Keywords: information design; Bayesian persuasion; experts
    JEL: D83
    Date: 2018–03–01
  14. By: J. Aislinn Bohren, (University of Pennsylvania and Carnegie Mellon University); Kareem Haggag (Carnegie Mellon University); Alex Imas (Carnegie Mellon University); Devin G. Pope (University of Chicago)
    Abstract: Discrimination has been widely studied in economics and other disciplines. In addition to identifying evidence of discrimination, economists often categorize the source of discrimination as either taste-based or statistical. Categorizing discrimination in this way can be valuable for policy design and welfare analysis. We argue that a further categorization is important and needed. Specically, in many situations economic agents may have inaccurate beliefs about the expected productivity or performance of a social group. This motivates our proposed distinction between accurate (based on correct beliefs) and inaccurate (based on incorrect beliefs) statistical discrimination. We do a thorough review of the discrimination literature and argue that this distinction is rarely discussed. Using an online experiment, we illustrate how to identify accurate versus inaccurate statistical discrimination. We show that ignoring this distinction {as is often the case in the discrimination literature { can lead to erroneous interpretations of the motives and implications of discriminatory behavior. In particular, when not explicitly accounted for, inaccurate statistical discrimination can be mistaken for taste-based discrimination, accurate statistical discrimination, or a combination of the two.
    Keywords: Discrimination, Inaccurate Beliefs
    JEL: D90 J71
    Date: 2019–05–18
  15. By: Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology)
    Abstract: This paper shows that second thoughts are not an innocent device in our daily life, but is human wisdom that plays an important role in resolving problems such as social dilemmas. We design a simple mechanism to achieve Pareto efficiency in social dilemmas, and then compare the performance of this mechanism with and without second thoughts. First, second thoughts change the payoff structure of the game in favor of cooperation. Second, this mechanism is robust even when players deviate from a payoff maximizing behavior.
    Keywords: second thoughts, subgame perfection, social dilemma, cooperation, mechanism design
    JEL: C72 C92 D74
    Date: 2019–06
  16. By: Klenio Barbosa; Dakshina De Silva; Liyu Yang; Hisayuki Yoshimoto
    Abstract: This paper exploits a large-size auction experiment conducted by two Chinese Government Treasury security issuers -the Chinese Development Bank and the Export-Import Bank- to investigate whether Treasury securities should be sold through uniform or discriminatory auction mechanisms. Based on the outcomes of more than 300 Treasury securities issued through an alternating auction-rule market experiment, we find that auction outcome yield rates of the two auction formats are not statistically different, suggesting revenue equivalence. This equivalence is robust across different revenue measurements and participation behavior.
    Keywords: Treasury Security Auctions, Discriminatory Auctions, Uniform Auctions, Revenue Equivalence
    JEL: C58 D44
    Date: 2019
  17. By: HIRAI Yusuke; KOBAYASHI Yohei; YOKOO Hidefumi; TAKAHASHI Kei; TAKEDA Masahiro; YOSHIKAWA Yasuhiro
    Abstract: The "Label Display Program for Retailers" under the revised Act on the Rational Use of Energy, which was introduced in 2006, obligates retailers to make efforts to display information on energy saving performance so that consumers can recognize and compare the performance of products. In this paper, we examine which types of energy saving information increase the probability of selecting energy-saving air conditioners by utilizing an online randomized controlled trial. Our empirical results indicate that the selection probability of energy-saving products increases when multistage ratings and expected annual electricity bill information are displayed. On the other hand, our results also reveal that information on achievement rate in terms of energy-saving standards does not significantly increase the selection probability of energy-saving products.
    Date: 2019–03
  18. By: Broberg, Thomas (CERE - the Center for Environmental and Resource Economics); Melkamu Daniel , Aemiro (CERE - the Center for Environmental and Resource Economics); Persson, Lars (CERE - the Center for Environmental and Resource Economics)
    Abstract: In this paper we investigate if a pro-environmental framing influences households' stated willingness to accept restrictions on their electricity use. We use a split-sample choice experiment (CE) and ask respondents to choose between their current electricity contract and hypothetical contracts featuring various load controls and a monetary compensation. Our results indicate that the pro-environmental framing have little impact on the respondents' choices. We observe a significant framing effect on choices and marginal willingness-to-accept (MWTA) for only a few contract attributes. The results further suggest that there is no significant framing effect among households that engage in different pro-environmental activities.
    Keywords: Choice experiment; Demand response; Electricity contract; Load management; Pro-environmental framing; Willingness to accept
    JEL: C25 D83 Q51 Q54
    Date: 2019–06–12
  19. By: Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology)
    Abstract: Future Design, a new movement among Japanese researchers, asks the following question: what types of social systems are necessary if we are to leave future generations sustainable natural environments and sustainable societies? One such method is using an “imaginary future generation,†and I overview the literature including the background of this method, the results of relevant laboratory and field experiments, and the nature of relevant practical applications in cooperation with several local governments.
    Date: 2019–06
  20. By: Lukas Ryll; Sebastian Seidens
    Abstract: With increasing competition and pace in the financial markets, robust forecasting methods are becoming more and more valuable to investors. While machine learning algorithms offer a proven way of modeling non-linearities in time series, their advantages against common stochastic models in the domain of financial market prediction are largely based on limited empirical results. The same holds true for determining advantages of certain machine learning architectures against others. This study surveys more than 150 related articles on applying machine learning to financial market forecasting. Based on a comprehensive literature review, we build a table across seven main parameters describing the experiments conducted in these studies. Through listing and classifying different algorithms, we also introduce a simple, standardized syntax for textually representing machine learning algorithms. Based on performance metrics gathered from papers included in the survey, we further conduct rank analyses to assess the comparative performance of different algorithm classes. Our analysis shows that machine learning algorithms tend to outperform most traditional stochastic methods in financial market forecasting. We further find evidence that, on average, recurrent neural networks outperform feed forward neural networks as well as support vector machines which implies the existence of exploitable temporal dependencies in financial time series across multiple asset classes and geographies.
    Date: 2019–06
  21. By: Dan Goldhaber (Center for Education Data & Research); Cory Koedel (Department of Economics, University of Missouri-Columbia)
    Abstract: In the summer of 2013, the National Council on Teacher Quality (NCTQ) issued public ratings of teacher education programs. We provide the first empirical examination of NCTQ ratings, beginning with a descriptive overview of the ratings and how they evolved from 2013-2016. We also report on results from an information experiment built around the initial ratings release. In the experiment we provided targeted information about specific programmatic changes that would improve the rating for a randomly selected sample of elementary teacher education programs. Average program ratings improved between 2013 and 2016, but we find no evidence that the information intervention increased program responsiveness to NCTQ’s rating effort. In fact, treated programs had lower ratings than the control group in 2016.
    Keywords: information experiment, institutional nudge, NCTQ ratings, teacher education, university ratings
    JEL: D8 I2 J4
    Date: 2019
  22. By: Cl\'ement de Chaisemartin; Jaime Ramirez-Cuellar
    Abstract: In paired experiments, the units included in the randomization, e.g. villages, are matched into pairs, and then one unit of each pair is randomly assigned to treatment. We conducted a survey of papers that used paired randomized experiments in economics. To estimate the treatment effect, researchers usually regress their outcome on a treatment indicator and pair fixed effects, and cluster standard errors at the unit-of-randomization level, namely, at the village level in our example. We show that the variance estimator in this regression may be severely downward biased: under constant treatment effect, its expectation is equal to 1/2 of the true variance. Using that variance estimator may lead researchers to substantially overreject the null of no treatment effect. Instead, we argue that researchers should cluster their standard errors at the pair level.
    Date: 2019–06
  23. By: ITO Hirotake; KASAI Keiko; NAKAMURO Makiko
    Abstract: This paper examines the causal effect of computer-aided instruction (CAI) on children's cognitive and non-cognitive skills. Closely working with the Cambodian government, we ran clustered-randomized controlled trials at five elementary schools near Phnom Penn for three months. Students were randomly assigned into 20 treatment classes which were allowed to use an app based on CAI instead of regular math classes during the intervention, or 20 control classes. Our empirical results drawn from these experiments suggest that average treatment effect on cognitive skills measured using several types of math achievement tests and IQ tests is positive and statistically significant. The effect is significantly large, especially as compared with prior literature examined in developing countries: the estimated coefficients on student achievements are 0.56-0.67 standard deviations and IQ scores 0.70 standard deviations even after controlling for demographic factors. Furthermore, it is found that that CAI-based app can increase the students' subjective expectation of being able to attend tertiary education in the future. However, there is no significant effect on non-cognitive skills, such as motivation.
    Date: 2019–05
  24. By: Felipe M. Cardoso; Carlos Gracia-Lazaro; Frederic Moisan; Sanjeev Goyal; Angel Sanchez; Yamir Moreno
    Abstract: Global supply networks in agriculture, manufacturing, and services are a defining feature of the modern world. The efficiency and the distribution of surpluses across different parts of these networks depend on choices of intermediaries. This paper conducts price formation experiments with human subjects located in large complex networks to develop a better understanding of the principles governing behavior. Our first finding is that prices are larger and that trade is significantly less efficient in small-world networks as compared to random networks. Our second finding is that location within a network is not an important determinant of pricing. An examination of the price dynamics suggests that traders on cheapest -- and hence active -- paths raise prices while those off these paths lower them. We construct an agent-based model (ABM) that embodies this rule of thumb. Simulations of this ABM yield macroscopic patterns consistent with the experimental findings. Finally, we extrapolate the ABM on to significantly larger random and small world networks and find that network topology remains a key determinant of pricing and efficiency.
    Date: 2019–06
  25. By: Mikhail Anufriev (University of Technology, Sydney); John Duffy (University of California, Irvine); Valentyn Panchenko (UNSW Business School, Sydney)
    Abstract: We introduce a planar beauty contest game where agents must simultaneously guess two, endogenously determined variables, a and b. The system of equations determining the actual values of a and b is a coupled system; while the realization of a depends on the average forecast for a, a', as in a standard beauty contest game, the realization of b depends on both a' and on the average forecast for b, b'. Our aim is to better understand the conditions under which agents learn the steady state of such systems and whether the eigenvalues of the system matter for the convergence or divergence of this learning process. We find that agents are able to learn the steady state of the system when the eigenvalues are both less than 1 in absolute value (the sink property) or when the steady state is saddlepath stable with the one root outside the unit circle being negative. By contrast, when the steady state exhibits the source property (two unstable roots) or is saddlepath stable with the one root outside the unit circle being positive, subjects are unable to learn the steady state of the system. We show that these results can be explained by either an adaptive learning model or a mixed cognitive levels model, while other approaches, e.g., naive or homogeneous level-k learning, do not consistently predict whether subjects converge to or diverge away from the steady state.
    Keywords: Beauty Contest, Learning; Stability, Simultaneous Equation Systems, Level-k cognitive theory
    JEL: C30 C92 D83 D84

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