nep-exp New Economics Papers
on Experimental Economics
Issue of 2019‒10‒07
thirty-one papers chosen by

  1. Pessimism and Overcommitment By Claes Ek; Margaret Samahita
  2. What’s ours is ours: An experiment on the efficiency of bargaining over the fruits of joint activity By Lian Xue; Stefania Sitzia; Theodore L. Turocy
  3. Games played through agents in the laboratory: A test of Prat & Rustichini's model By Ensthaler, Ludwig; Huck, Steffen; Leutgeb, Johannes
  4. Intrinsic vs. extrinsic motivators on creative collaboration: The effect of sharing rewards. By Giuseppe Attanasi; Ylenia Curci; Patrick Llerena; Giulia Urso
  5. Toward an Understanding of the Welfare Effects of Nudges: Evidence from a Field Experiment in Uganda By Erwin Bulte; John A. List; Daan Van Soest
  6. How Auctioneers Set Ex-Ante and Ex-Post Reserve Prices in English Auctions By Shachat, Jason; Tan, Lijia
  7. Looking at Creativity from East to West: Risk Taking and Intrinsic Motivation in Socially and Culturally Diverse Countries. By Giuseppe Attanasi; Ylenia Curci; Patrick Llerena; Maria del Pino Ramos-Sosa; Adriana Carolina Pinate; Giulia Urso
  8. Norms in the Lab: Inexperienced versus Experienced Participants By Schmidt, Robert J.; Schwieren, Christiane; Sproten, Alec N.
  9. Fraud Deterrence Institutions Reduce Intrinsic Honesty By Fabio Galeotti; Valeria Maggian; Marie Claire Villeval
  10. Arbitrage bots in experimental asset markets By Angerer, Martin; Neugebauer, Tibor; Shachat, Jason
  11. Effectively involving low-SES parents in human capital development By Haelermans, Carla; Ghysels, Joris
  12. Parents' Marital Status, Psychological Counseling and Dishonest Kindergarten Children: An Experimental Study By Tobol, Yossef; Yaniv, Gideon
  13. Current use of vasopressors in septic shock By Thomas Wl L T.W. Scheeren; Jan Bakker; Daniel De Backer; Djillali Annane; Pierre Asfar; Evert Christiaan Boerma; Maurizio Cecconi; Arnaldo Dubin; Martin Dunser; Jacques Duranteau; Anthony A.C. Gordon; Olfa Hamzaoui; Glenn Hernandez; Marc Leone; Bruno Levy; Claude Martin; Alexandre Mebazaa; Xavier Monnet; Andrea Morelli; Didier Payen; Rupert M Pearse; Michaël Pinsky; Peter Radermacher; Daniel Arnulf Reuter; Bernd Saugel; Yasser Sakr; Mervyn Singer; Pierre Squara; Antoine Vieillard-Baron; Philippe Vignon; Simon Tilma Vistisen; Iwan I.C.C. van der Horst; Jean Louis Vincent; Jean Louis Teboul
  14. Experimental Innovation Policy By Albert Bravo-Biosca
  15. Estimating the Effect of Treatments Allocated by Randomized Waiting Lists. By Clément de Chaisemartin; Luc Behaghel
  16. "Accuracy and Retaliation in Repeated Games with Imperfect Private Monitoring: Experiments" By Kayaba Yutaka; Hitoshi Matsushima; Tomohisa Toyama
  17. Cost containment in pollution auctions By Lana Friesen; Lata Gangadharan; Peyman Khezr; Ian A. MacKenzie
  18. Experimental long-term effects of early-childhood and school-age exposure to a conditional cash transfer program By Teresa Molina Millán; Karen Macours; John A. Maluccio; Luis Tejerina
  19. Point Beauty Contest: Measuring the Distribution of Focal Points on the Individual Level By Schmidt, Robert J.
  20. Collective experimentation: a laboratory study By Mikhail Freer; César Martinelli; Siyu Wang
  21. Preferences, Uncertainty, and Biases in Land Division: A Bargaining Experiment in the Field By Margarita Gáfaro; César Mantilla
  22. Why Join a Team? By David Cooper; Krista Saral; Marie Claire Villeval
  23. Do Injunctive or Descriptive Social Norms Elicited Using Coordination Games Better Explain Social Preferences? By Schmidt, Robert J.
  24. Inter-carity competition under spatial differentiation: Sorting, crowding, and splillovers By Carlo Gallier; Timo Goeschl; Martin Kesternich; Johannes Lohse; Christiane Reif; Daniel Roemer
  25. Capitalizing on the (False) Consensus Effect: Two Tractable Methods to Elicit Private Information By Schmidt, Robert J.
  26. Do anti-poverty programs sway voters? Experimental evidence from Uganda By Blattman, Christopher; Emeriau, Mathilde; Fiala, Nathan
  27. Emotions, Uncertainty, Gender and Residential Real Estate Prices: Evidence from a Bubble Market By Paul Ryan; Clare Branigan
  28. Improving Schools through School Choice: An Experimental Study of Deferred Acceptance By Flip Klijn; Joana Pais; Marc Vorsatz
  29. Law and Norms: Empirical Evidence By Tom Lane; Daniele Nosenzo
  30. ow Do Social Preferences and Norms of Reciprocity affect Generalized and Particularized Trust? By Holden, Stein T.; Tilahun , Mesfin
  31. A Note on Moral Licensing and Foot-In-The-Door Effect By Alistair Ulph; Luca Panzone; Denis Hilton

  1. By: Claes Ek; Margaret Samahita
    Abstract: Economic agents commonly use commitment devices to limit impulsive behavior in the interest of long-term goals. We provide evidence for excess demand for commitment in a laboratory experiment. Subjects are faced with a tedious productivity task and a tempting option to surf the internet. Subjects state their willingness-to-pay for a commitment device that removes the option to surf. The commitment device is then allocated with some probability, thus allowing us to observe the behavior of subjects who demand commitment but have to face temptation. We find that a significant share of the subjects overestimate their demand for commitment when compared to their material loss from facing the temptation. This is true even when we take into account the potential desire to avoid psychological costs from being tempted. Assuming risk aversion does not change our conclusion, though it suggests that pessimism in expected performance, rather than psychological cost, is the main driver of overcommitment. Our results suggest there is a need to reconsider the active promotion of commitment devices in situations where there is limited disutility from the tempting option.
    Keywords: Commitment device; Pessimism; Self-control
    JEL: C91 D03 D91
    Date: 2019–09
  2. By: Lian Xue (Wuhan University); Stefania Sitzia (University of East Anglia); Theodore L. Turocy (University of East Anglia)
    Abstract: We use experimental methods to test the effects of joint endowment on coordination success in tacit bargaining games. It has been well established that people use existing focal points to facilitate coordination and the power of such cues declines as payoff becomes increasingly unequal. We conducted an experiment in which two players jointly engaged in an interactive team building activity and together earned the stakes over which they bargain. In the team building exercise, two players jointly complete a shortest route task in a metaphor of a treasure hunt. After the two treasure hunters complete the journey, they independently decide how to divide their rewards using a tacit bargaining table. We find that when participants bargain over the fruits that result from joint activity, they are more likely to coordinate the focal point equilibrium.
    Keywords: Team building; Joint production; Group identity; Tacit bargaining; Focal point
    JEL: C72 C91 C92
    Date: 2017–11–27
  3. By: Ensthaler, Ludwig; Huck, Steffen; Leutgeb, Johannes
    Abstract: From the regulation of sports to lawmaking in parliament, in many situations one group of people ("agents") make decisions that affect the payoffs of others ("principals") who may offer action-contingent transfers in order to sway the agents' decisions. Prat and Rustichini (2003) characterize pure-strategy equilibria of such Games Played Through Agents. Specifically, they predict the equilibrium outcome in pure strategies to be efficient. We test the theory in a series of experimental treatments with human principals and computerized agents. The theory predicts remarkably well which actions and outcomes are implemented but subjects' transfer offers deviate systematically from equilibrium. We show how quantal response equilibrium accounts for the deviations and test its predictions out of sample. Our results show that quantal response equilibrium is particularly well suited for explaining behavior in such games.
    Keywords: games played through agents,experiment,quantal response equilibrium
    JEL: D44 C91 D72 D83
    Date: 2019
  4. By: Giuseppe Attanasi; Ylenia Curci; Patrick Llerena; Giulia Urso
    Abstract: Charness and Grieco (2019) have experimentally shown that financial incentives have a positive impact on individual creativity, but only in the case of “close” creativity, i.e., when there are constraints to the creative task that a subject has to accomplish. In this paper, we build on the same “close” creativity assignments of Charness and Grieco (2019) and analyze with undergraduate students and with experts in creativity the interplay between monetary incentives and group cooperation in creative assignments. We introduce a novel model of intrinsic vs. extrinsic motivation to group collaboration in creativity and run a theorydriven experiment to test our experimental hypotheses on the crowding out of intrinsic motivation due to extrinsic motivation to group creativity. We find more creativity in the group than in the individual treatment, apart when there are explicit monetary incentives to co-working (sharing ideas) in the creative assignment. Therefore, while Charness and Grieco (2019) show a positive interplay between monetary incentives (extrinsic individual motivation) and “close” creativity at the individual level, we provide evidence of a negative interplay between monetary incentives and “close” creativity at the group level (crowding out of intrinsic group motivation). Furthermore, and again in line with our model predictions, the latter effect is found more in the experimental sessions with experts in creativity than in those with undergraduate students.
    Keywords: Creativity, Group cooperation, Intrinsic Motivation, Extrinsic Motivation, Crowding out, Experiment.
    JEL: I23 O31 O32
    Date: 2019
  5. By: Erwin Bulte; John A. List; Daan Van Soest
    Abstract: Social scientists have recently explored how framing of gains and losses affects productivity. We conducted a field experiment in peri-urban Uganda, and compare output levels across 1000 workers over isomorphic tasks and incentives, framed as either losses or gains. We find that loss aversion can be leveraged to increase the productivity of labor. The estimated welfare costs of using the loss contract are quite modest – perhaps because the loss contract is viewed as a (soft) commitment device.
    JEL: C93 D03 J01
    Date: 2019–09
  6. By: Shachat, Jason; Tan, Lijia
    Abstract: We compare two commonly used procurement English auction formats - the ex-ante reserve price and the ex-post reserve price, with symmetric and independently distributed private costs. Both formats are indirect implementations of Myerson's optimal mechanism. Both formats yield the same ex post payoffs when auctioneers optimally choose reserve prices. However, the optimal reserve prices follow two counter-intuitive prescriptions: optimal ex-ante reserve prices do not vary with the number of bidders, and optimal ex-post reserve prices are invariant to the realized auction prices. Anticipated regret, Davis et al (2011), and subjective posterior probability judgement, Shachat and Tan (2015), are two different approaches to rationalize observed auctioneers' choices that violate the two counter-intuitive prescriptions respectively. We generalized the latter model to one of Subjective Conditional Probabilities (SCP) which predicts optimal ex-ante reserve prices decreasing in the number of bidders and also predicts optimal ex-post reserve prices increasing in the realized auction prices. In our first experiment, in which costs follow a uniform distribution, we find two possible explanations to the experimental results. First, the auctioneers use the SCP model for both formats. Second, they use format-specific models. In our second experiment with a left-skewed cost distribution, we finally find that the SCP provides a unified behavioral model of how auctioneer set reserve prices in the two formats.
    Keywords: Procurement; English auction; ex-ante reserve price; ex-post reserve price; anticipated regret; subjective conditional probability
    JEL: C34 C91 D03 D44
    Date: 2019–09–28
  7. By: Giuseppe Attanasi; Ylenia Curci; Patrick Llerena; Maria del Pino Ramos-Sosa; Adriana Carolina Pinate; Giulia Urso
    Abstract: This article presents a mixed-methods research in the field of creativity. By making use of experiments and a questionnaire, it analyses how creativity is affected by three factors: i) motivation, ii) individuals’ attitudes towards risk and ambiguity and iii) social context. Each one of these factors has been extensively investigated in the theoretical and empirical literature getting to results still open to discussion. In particular, this research focuses on two aspects. First, we try to shed some light on the controversial findings linking risk taking and creativity that exist in the economic and psychology literature. To do so, we test the hypotheses that self perception of creative abilities may play a role in establishing a riskcreativity positive correlation. Second, being the three factors strongly influenced by culture, the study investigates whether the impacts on creativity may differ in diverse geographical locations. Following Attanasi et al. (2019), we exploit data from experiments performed in main cities of one eastern and one western country: Ho Chi Minh city (Vietnam) and Strasbourg (France). The information to build the risk and ambiguity factor derive from risk and ambiguity elicitation via lotteries. To account for motivation, different organizational scenarios are set in experimental treatments (financial incentives vs non financial incentives to collaborate). Finally, information on social context and self perception of creative abilities are collected through a self administrated questionnaire. In our analysis, we find that risk aversion, social habits and leisure activities have a positive effect on the creative performance of the French participants, while for Vietnamese the intrinsic motivation and the perception of their own creative capacities are positive correlated with creative scores. Our results suggest that in a country like France, social context has a strong influence on individual creativity, while for Vietnam individual features play a role in creativity, suggesting that the socio-cultural context has different impacts on creativity.
    Keywords: Cexperiments, risk, ambiguity, self-perceived creativity, motivation, geographical location, social context.
    JEL: I23 O31 O32
    Date: 2019
  8. By: Schmidt, Robert J.; Schwieren, Christiane; Sproten, Alec N.
    Abstract: Using coordination games, we study whether social norm perception differs between inexperienced and experienced participants in economic laboratory experiments. We find substantial differences between the two groups, both regarding injunctive and descriptive social norms in the context of participation in lab experiments. By contrast, social norm perception for the context of daily life does not differ between the two groups. We therefore conclude that learning through experience is more important than selection effects for understanding differences between the two groups. We also conduct exploratory analyses on the relation between lab and field norms and find that behaving unsocial in an experiment is considered substantially more appropriate than in daily life. This appears inconsistent with the hypothesis that social preferences measured in lab experiments are inflated and indicates a distinction between revealed social preferences as measured commonly and the elicitation of normatively appropriate behavior.
    Keywords: laboratory experiments; selection effects; learning; generalizability; methodology
    Date: 2019–09–27
  9. By: Fabio Galeotti (Univ Lyon, CNRS, GATE, UMR 5824, F-69130 Ecully, France); Valeria Maggian (Department of Economics, University Of Venice Cà Foscari); Marie Claire Villeval (Univ Lyon, CNRS, GATE, UMR 5824, F-69130 Ecully, France; IZA, Schaumburg-Lippe-Strasse 5-9, 53113 Bonn, Germany)
    Abstract: Deterrence institutions are widely used in modern societies to discourage rule violations but whether they have an impact beyond their immediate scope of application is usually ignored. Using a natural field experiment, we show that they affect intrinsic honesty across contexts. We identified fraudsters and non-fraudsters in public transport who were or not exposed to ticket inspections by the transport company. We then measured the intrinsic honesty of the same persons in a new unrelated context where they could misappropriate money. Instead of having an educative effect, the exposure to deterrence practices increases unethical behavior of fraudsters but also of non-fraudsters.
    Keywords: Deterrence Institutions, Intrinsic Honesty, Spillovers, Field Experiment
    JEL: C93 K42 D02 D91
    Date: 2019
  10. By: Angerer, Martin; Neugebauer, Tibor; Shachat, Jason
    Abstract: While algorithmic trading robots are a proliferating presence in asset markets, there is no consensus whether their presence improves market quality or benefits individual investors. We examine the impact of robots seeking arbitrage in experimental laboratory markets. We find that the presence of algorithmic arbitrageurs generally enhances market quality. However, the wealth of human traders suffers from the presence of algorithmic traders. These social costs can be mitigated as we find high latency algorithms harm investors less than low latency algorithms; while the improvements in market quality are indistinguishable between algorithm latency levels and whether they provide liquidity or not.
    Keywords: asset market experiment, arbitrage, algorithmic trading
    JEL: C92 G12
    Date: 2019–06–29
  11. By: Haelermans, Carla (General Economics 2 (Macro)); Ghysels, Joris
    Abstract: In this paper we analyze the effect of involving parents in human capital investment. We study the effect of a parental app on student effort in a digital homework practice tool, and its effect on subsequent human capital development. The randomized field experiment includes more than 2000 7-9 grade students of 2 schools and we specifically focus on different socio-economic status (SES) groups. The results indicate that parental involvement via an app positively affects effort and human capital development of 7th and 8th grade students, but not of 9th grade students. The positive effects are mainly driven by low-SES students and are larger for males.
    Keywords: parental involvement, randomized field experiment, socio-economic status (SES), student effort, human capital devleopment, secondary education
    JEL: I20 I21 I24 C93
    Date: 2019
  12. By: Tobol, Yossef (Jerusalem College of Technology (JTC)); Yaniv, Gideon (Ariel University)
    Abstract: The present paper reports the results of an experiment which studied the effects of parents' marital status (divorced or non-divorced) and psychological counseling (administered or not) on the honesty level of kindergarten children. Data on marital status and psychological counseling was anonymously provided by the kindergarten teachers and children's level of honesty was assessed by a flip-coin task which rewarded a self-reported favorable outcome. The experiment gave rise to two major results: first, children of divorced parents are less honest than children of non-divorced parents and second, psychological counseling helps improve honesty among children of divorced parents but fails to do so among children of non-divorced parents. No gender effect was found.
    Keywords: kindergarten children, dishonest behavior, flip coin task, psychological counseling
    JEL: C91 C92 K42
    Date: 2019–09
  13. By: Thomas Wl L T.W. Scheeren; Jan Bakker; Daniel De Backer; Djillali Annane; Pierre Asfar; Evert Christiaan Boerma; Maurizio Cecconi; Arnaldo Dubin; Martin Dunser; Jacques Duranteau; Anthony A.C. Gordon; Olfa Hamzaoui; Glenn Hernandez; Marc Leone; Bruno Levy; Claude Martin; Alexandre Mebazaa; Xavier Monnet; Andrea Morelli; Didier Payen; Rupert M Pearse; Michaël Pinsky; Peter Radermacher; Daniel Arnulf Reuter; Bernd Saugel; Yasser Sakr; Mervyn Singer; Pierre Squara; Antoine Vieillard-Baron; Philippe Vignon; Simon Tilma Vistisen; Iwan I.C.C. van der Horst; Jean Louis Vincent; Jean Louis Teboul
    Abstract: Background: Vasopressors are commonly applied to restore and maintain blood pressure in patients with sepsis. We aimed to evaluate the current practice and therapeutic goals regarding vasopressor use in septic shock as a basis for future studies and to provide some recommendations on their use. Methods: From November 2016 to April 2017, an anonymous web-based survey on the use of vasoactive drugs was accessible to members of the European Society of Intensive Care Medicine (ESICM). A total of 17 questions focused on the profile of respondents, triggering factors, first choice agent, dosing, timing, targets, additional treatments, and effects of vasopressors. We investigated whether the answers complied with current guidelines. In addition, a group of 34 international ESICM experts was asked to formulate recommendations for the use of vasopressors based on 6 questions with sub-questions (total 14). Results: A total of 839 physicians from 82 countries (65% main specialty/activity intensive care) responded. The main trigger for vasopressor use was an insufficient mean arterial pressure (MAP) response to initial fluid resuscitation (83%). The first-line vasopressor was norepinephrine (97%), targeting predominantly a MAP > 60–65 mmHg (70%), with higher targets in patients with chronic arterial hypertension (79%). The experts agreed on 10 recommendations, 9 of which were based on unanimous or strong (≥ 80%) agreement. They recommended not to delay vasopressor treatment until fluid resuscitation is completed but rather to start with norepinephrine early to achieve a target MAP of ≥ 65 mmHg. Conclusion: Reported vasopressor use in septic shock is compliant with contemporary guidelines. Future studies should focus on individualized treatment targets including earlier use of vasopressors.
    Keywords: Arterial blood pressure; Norepinephrine; Resuscitation; Sepsis; Septic shock; Shock; Vasoactive agonists; Vasopressor
    Date: 2019–12
  14. By: Albert Bravo-Biosca
    Abstract: Experimental approaches are increasingly being adopted across many policy fields, but innovation policy has been lagging. This paper reviews the case for policy experimentation in this field, describes the different types of experiments that can be undertaken, discusses some of the unique challenges to the use of experimental approaches in innovation policy, and summarizes some of the emerging lessons, with a focus on randomized trials. The paper concludes describing how at the Innovation Growth Lab we have been working with governments across the OECD to help them overcome the barriers to policy experimentation in order to make their policies more impactful.
    JEL: C93 L26 O25 O38
    Date: 2019–09
  15. By: Clément de Chaisemartin; Luc Behaghel
    Abstract: Oversubscribed treatments are often allocated using randomized waiting lists. Applicants are ranked randomly, and treatment offers are made following that ranking until all seats are filled. To estimate causal effects, researchers often compare applicants getting and not getting an offer. We show that those two groups are not statistically comparable. Therefore, the estimator arising from that comparison is inconsistent when the number of waitlists goes to infinity. We propose a new estimator, and show that it is consistent, provided the waitlists have at least two seats. Finally, we revisit an application, and we show that using our estimator can lead to significantly different results from those obtained using the commonly used estimator.
    JEL: C21 C26
    Date: 2019–09
  16. By: Kayaba Yutaka (Faculty of Economics, The University of Tokyo); Hitoshi Matsushima (Faculty of Economics, The University of Tokyo); Tomohisa Toyama (College of Liberal Arts, International Christian University)
    Abstract: e experimentally examine repeated prisoner’s dilemma with random termination, in which monitoring is imperfect and private. Our estimation indicates that a significant proportion of the subjects follow generous tit-for-tat strategies, which are stochastic extensions of tit-for-tat. However, the observed retaliating policies are inconsistent with the generous tit-for-tat equilibrium behavior. Showing inconsistent behavior, subjects with low accuracy do not tend to retaliate more than those with high accuracy. Furthermore, subjects with low accuracy tend to retaliate considerably with lesser strength than that predicted by the equilibrium theory, while subjects with high accuracy tend to retaliate with more strength than that predicted by the equilibrium theory, or with strength almost equivalent to it.
    Date: 2019–09
  17. By: Lana Friesen (School of Economics, The University of Queensland); Lata Gangadharan (Department of Economics, Monash University, Australia); Peyman Khezr (School of Economics, The University of Queensland); Ian A. MacKenzie (School of Economics, The University of Queensland)
    Abstract: This article investigates supply reserves in pollution permit auctions. A supply reserve is a fixed quantity of permits that is automatically released if the initial clearing price is sufficiently high. The main rationale for using such a reserve is for cost containment: to lower the final clearing price. We show the inclusion of a reserve does exactly the opposite and provide corroborating experimental evidence. Relative to a benchmark without a supply reserve, we find that the introduction of a supply reserve will actually increase the clearing price, increase the revenue from the auction, and increase auction efficiency. The clearing price also increases in the level of the trigger price and relative size of the reserve. This has important implications for supply reserves currently in use, such as the Cost Containment Reserve (CCR) within the US Regional Greenhouse Gas Initiative (RGGI)
    Keywords: multi-unit auction; uniform-price; supply reserve, pollution permits, experiment.
    JEL: C91 C92 Q58
    Date: 2019–09–20
  18. By: Teresa Molina Millán; Karen Macours; John A. Maluccio; Luis Tejerina
    Abstract: Numerous evaluations of conditional cash transfer (CCT) programs show positive short-term impacts, but there is only limited evidence on whether these benefits translate into sustained longer-term gains. This paper uses the municipal-level randomized assignment of a CCT program implemented for five years in Honduras to estimate long-term effects 13 years after the program began. We estimate intent-to-treat effects using individual-level data from the population census, which allows assignment of individuals to their municipality of birth, thereby circumventing migration selection concerns. For the non-indigenous, we find positive and robust impacts on educational outcomes for cohorts of a very wide age range. These include increases of more than 50 percent for secondary school completion rates and the probability of reaching university studies for those exposed at school-going ages. They also include substantive gains for grades attained and current enrollment for others exposed during early childhood, raising the possibility of further gains going forward. Educational gains are, however, more limited for the indigenous. Finally, exposure to the CCT increased the probability of international migration for young men, from 3 to 7 percentage points, also stronger for the non-indigenous. Both early childhood exposure to the nutrition and health components of the CCT as well as exposure during school-going ages to the educational components led to sustained increases in human capital.
    Keywords: Conditional cash transfers (CCTs), Early childhood, Education, Migration
    Date: 2019
  19. By: Schmidt, Robert J.
    Abstract: We propose the Point Beauty Contest, a mechanism to identify the distribution of focal points on the individual level. By contrast to conventional coordination, subjects coordinate by the distribution of points. This allows for nuanced coordination strategies, as subjects can invest in multiple alternatives at the same time and weigh their choice. A subject´s strategy choice then reveals her perception of the distribution of focal points. In an experiment on the elicitation of social norms, we compare the mechanism with conventional coordination. The data confirms the theoretical predictions regarding coordination behavior and demonstrates that the proposed technique is suited to identify the distribution of focal points on the individual level. Using Monte Carlo simulations, we find that the proposed mechanism identifies focal points on the population level more efficiently than conventional coordination. We point to the possibility of using the mechanism as a simple method to directly measure strategic uncertainty.
    Keywords: coordination; focal points; games theory; strategic uncertainty; social norms
    Date: 2019–09–27
  20. By: Mikhail Freer; César Martinelli; Siyu Wang
    Abstract: We develop a simple model of collective experimentation and take it to the lab. In equilibrium, as in the recent work of Strulovici (2010), majority rule has a bias toward under experimentation, as good news for a minority of voters may lead a majority of voters to abandon a policy when each of them thinks it is likely that the policy will be passed by a future majority excluding them. We compare the behavior in the lab of groups under majority rule and under the optimal voting rule, which precludes voting in intermediate stages of the policy experiment. Surprisingly, simple majority performs better than the (theoretically) optimal voting rule. Majority rule seems to be more robust than other forms of voting when players make mistakes.
    Date: 2018–01
  21. By: Margarita Gáfaro (Banco de la República de Colombia); César Mantilla
    Abstract: Divisions of rural land in developing countries reduce the possibilities of farmers to profit from agricultural returns to scale. We design and conduct a framed bargaining experiment to study whether land overvaluation (due to affective reasons) and uncertainty in land values are drivers for land division. In our bargaining game, two players with different agricultural productivity jointly inherit a land plot and individually inherit some tokens they can use to agree on a land allocation. The possible set of land allocations and the spread of land returns vary across treatment arms in the game. We conduct this experiment with 256 participants in eight rural municipalities of the Northeast of Colombia. We find that when players are allowed to divide the land plot, 75% of the bargaining interactions yield the most egalitarian, but less efficient, land allocations. Based on the predictions of a Nash bargaining model and the observations from a sample of 120 college students, we rule out land overvaluation as a driver for land divisions in the context of our game. We also find that uncertainty in land yields reduces the efficiency of land allocations when we do not allow land divisions, by increasing the likelihood of the least productive player keeping the entire land plot. Our results are consistent with a bounded rationality rule in which subjects incorporate a behavioral response to uncertainty by first bargaining over land, which is a certain outcome, and then bargaining over a token transfer. **** RESUMEN: Las divisiones de tierras rurales en los países en desarrollo limitan las posibilidades de los agricultores en estos países de aprovechar economías de escala derivadas de la mecanización. Diseñamos y llevamos a cabo un experimento de negociación para explorar si la sobrevaloración de la tierra (debido a razones afectivas) y la incertidumbre sobre el valor de la tierra explican divisiones ineficientes de tierras en contextos agrícolas. En nuestro juego de negociación, dos jugadores con diferentes niveles de productividad agrícola heredan conjuntamente una parcela de tierra e individualmente heredan algunas fichas que pueden usar para acordar una repartición de la parcela. Variamos aleatoriamente, entre grupos de tratamiento en el juego, el conjunto de posibles reparticiones de la parcela y la dispersión de los retornos de la tierra. Llevamos a cabo este experimento con 256 participantes en ocho municipios rurales del nororiente de Colombia. Encontramos que cuando se permite a los jugadores dividir la parcela, el 75% de las interacciones de negociación generan las asignaciones de tierra más igualitarias, pero menos eficientes. Con base en las predicciones de un modelo de negociación de Nash y las observaciones de una muestra de 120 estudiantes universitarios, descartamos la sobrevaluación de la tierra como motor de divisiones de tierra en el contexto de nuestro juego. Por otro lado, encontramos que una mayor incertidumbre en los rendimientos de la tierra reduce la eficiencia en las asignaciones de tierra cuando eliminamos las divisiones igualitarias del conjunto de posibles reparticiones. Nuestros resultados son consistentes con una regla de racionalidad limitada en la cual los sujetos incorporan una respuesta conductual a la incertidumbre, al negociar primero sobre una asignacin de tierra, que es un resultado fijo y determinado, y luego negociar sobre una transferencia de fichas.
    Keywords: Land division, Nash bargaining, affective value of land, nonuse value, División de tierras, negociación de Nash, valor afectivo, valor de no uso
    JEL: C78 C90 O13 Q15
    Date: 2019–09
  22. By: David Cooper (FSU - Florida State University [Tallahassee]); Krista Saral (UNC - University of North Carolina [Charlotte] - UNC - University of North Carolina System); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We present experiments exploring why high ability workers join teams with less able co-workers when there are no short-term financial benefits. We distinguish between two explanations: pro-social preferences and expected long-term financial gains from teaching future teammates. Participants perform a real-effort task and decide whether to work independently or join a two-person team. Treatments vary the payment scheme (piece rate or revenue sharing), whether teammates can communicate, and the role of teaching. High ability workers are more willing to join teams in the absence of revenue sharing and less willing to join teams when they cannot communicate. When communication is possible, the choice of high ability workers to join teams is driven by expected future financial gains from teaching rather than some variety of pro-social preferences. This result has important implications for the role of adverse selection in determining the productivity of teams.
    Keywords: Teams,teaching,revenue sharing,social preferences,self-selection,experiment
    Date: 2019
  23. By: Schmidt, Robert J.
    Abstract: We experimentally study the relationship between social norms and social preferences on the individual level. Subjects coordinate on injunctive and descriptive norms, and we test which type of norm is more strongly related to behavior in a series of dictator games. Our experiment yields three insights. First, both injunctive and descriptive norms explain dictator behavior and recipients' guesses, but perceptions about descriptive social norms are behaviorally more relevant. Second, our findings corroborate that coordination games are a valid tool to elicit social norm perception on the subject level, as the individuals´ coordination choices are good predictors for their actual behavior. Third, average descriptive norms on the population level accurately predict behavior on the population level. This suggests that the elicitation of descriptive social norms using coordination games is a potentially powerful tool to predict behavior in settings that are otherwise difficult to explore.
    Keywords: injunctive social norms; descriptive social norms; social preferences; coordination
    Date: 2019–09–27
  24. By: Carlo Gallier (ZEW - Leibniz Centre for European Economic Research); Timo Goeschl (Heidelberg University); Martin Kesternich (University of Kassel); Johannes Lohse (University of Birmingham); Christiane Reif (Frauenhofer Institute for Microstructure of Materials and Systems IMWS); Daniel Roemer (Kreditanstalt fuer Wiederaufbau (KfW),)
    Abstract: We study spatially differentiated competition between charities by partnering with two foodbanks in two neighboring cities to conduct a field experiment with roughly 350 donation appeals. We induce spatial differentiation by varying the observability of charities' location such that each donor faces a socially close 'home' and a distant 'away' charity. We find that spatially differentiated competition is characterized by sorting, crowding-in, and an absence of spill-overs: Donors sort themselves by distance; fundraising (through matching) for one charity raises checkbook giving to that charity, irrespective of distance; but checkbook giving to the unmatched charity is not affected. For lead donors, this implies that the social distance between donors and charities is of limited strategic important. For spatially differentiated charities, matching 'home' donations maximizes overall charitable income. Across both charities, however, the additional funds raised fail to cover the cost of the match, despite harnessing social identity for giving.
    Keywords: mispricing, online secondary market, peer-to-peer lending, belief dispersion
    JEL: C9 D7 H4
    Date: 2019–08
  25. By: Schmidt, Robert J.
    Abstract: We propose and experimentally test two tractable methods to incentivize the elicitation of private information: Benchmark and Coordination. Both mechanisms capitalize on the false consensus effect, a well-documented phenomenon that follows Bayesian reasoning. That is, individuals use their own type when predicting the type of others. Since it is not feasible to incentivize the elicitation of private information using facts, when these are not verifiable, we incentivize the respondent to reveal her perceptions about others and use that statement to predict the subject´s private information. The stronger the relationship between a subject's type and her perception about the type of others, the more effective the mechanisms are in revealing the subject´s privately held information. In an experiment, we apply the mechanisms to reveal beliefs about probabilities. On the aggregate level, both mechanisms accurately reveal mean first-order beliefs of the population. On the subject level, the modal difference between probabilities elicited in either mechanism and actual first-order beliefs is zero. The results indicate that subjects strongly anchor their statements in Benchmark and Coordination on their private information.
    Keywords: private information; false consensus effect; surveys; crowd wisdom; beliefs
    Date: 2019–09–27
  26. By: Blattman, Christopher; Emeriau, Mathilde; Fiala, Nathan
    Abstract: High-impact policies may not lead to support for the political party that introduces them. In 2008, Uganda's government encouraged groups of youth to submit proposals to start enterprises. Of 535 eligible groups, a random 265 received grants of nearly $400 per person. Prior work showed that after four years, the Youth Opportunities Program raised employment by 17% and earnings by 38%. Here we show that recipients were no more likely to support the ruling party in elections. Rather, recipients slightly increased campaigning and voting for the opposition. Potential mechanisms include program misattribution, group socialization, and financial independence freeing voters from transactional voting.
    JEL: N0
    Date: 2018–12–01
  27. By: Paul Ryan; Clare Branigan
    Abstract: This paper investigates the impact of valuation uncertainty on residential property prices near the peak of a bubble. Our hand-collected sample comprises the sequence of bids and gender of the participating bidders at Irish residential real estate auctions, prior to the collapse of a bubble, which when it burst had disastrous implications for the banking system and the economy itself. Portfolios of practitioner- and hedonic pricing model-selected self-similar properties provide benchmark property price estimates and uncertainty is calculated by reference to various measures of dispersion related to prices achieved for comparable properties. We find, in aggregate, auction winners do not shade bids with increased valuation uncertainty. In addition, winning female bidders, in contrast to findings in the extant literature across a wide range of academic disciplines, including experimental bubble markets, are not less risk averse, or more likely to shy away from competitive situations than their male counterparts.
    Keywords: Auctions; Bubble; Competition; emotional finance; Emotions; female bidders; real estate bubble; Uncertainty; valuation uncertainty
    JEL: R3
    Date: 2019–01–01
  28. By: Flip Klijn; Joana Pais; Marc Vorsatz
    Abstract: In the context of school choice, we experimentally study the student-optimal stable mechanism where subjects take the role of students and schools are passive. Specifically, we study if a school can be better off when it unambiguously improves in the students’ true preferences and its (theoretic) student-optimal stable match remains the same or gets worse. Using first-order stochastic dominance to evaluate the schools’ distributions over their actual matches, we find that schools’ welfare almost always changes in the same direction as the change of the student-optimal stable matching, i.e., incentives to improve school quality are nearly idle.
    Keywords: school choice, matching, deferred acceptance, school quality, stability
    JEL: C78 C91 C92 D78 I20
    Date: 2019–09
  29. By: Tom Lane (University of Nottingham Ningbo China); Daniele Nosenzo (University of Nottingham and Luxembourg Institute of Socio-Economic Research (LISER))
    Abstract: A large theoretical literature argues laws exert a causal effect on norms. This paper is the first to provide a clean empirical test of the proposition. Using an incentivized vignette experiment, we directly measure social norms relating to actions subject to legal thresholds. Results from three samples with around 800 subjects drawn from universities in the UK and China, and the UK general population, show laws often, but not always, influence norms. The strength of the effect varies across different scenarios, with some evidence that it is more powerful when law-breaking is more likely to be intentional and accurately measurable.
    Keywords: Social Norms; Law; Expressive Function of Law
    Date: 2019–08
  30. By: Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun , Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: We study how social preferences and norms of reciprocity are related to generalized and particularized trust among members of youth business groups in northern Ethiopia. Members of these groups are recruited among land-poor rural youth. The Ethiopian government promotes youth employment among land-poor rural youth by allocating them rehabilitated communal lands for the formation of sustainable businesses. The groups are organized as primary cooperatives, elect their own board, make their own bylaw and prepare a business plan that has to be accepted by the local government. The typical sustainable production activities that the groups are allowed to invest in include apiculture, forestry, horticulture, and livestock production. A recent study found that they to a large extent organize themselves according to Ostrom’s Design Principles (Ostrom 1990; 2010; Holden and Tilahun 2018) and that group performance, including trust, is positively correlated with the degree of compliance with the Design Principles. Our study has used incentivized experiments to elicit social preferences and trust. We use data from 2427 group members in 246 functioning business groups collected in 2019. We find that members with altruistic preferences have stronger norms of reciprocity and are more trustworthy and trusting both in outgroup and ingroup contexts. The norm of reciprocity is stronger in groups with a higher share of altruistic members and this enhances both generalized and particularized trust. The average levels of trust and trustworthiness among group members were low, even in the African context, but there were large variations in average levels of trust and trustworthiness across groups. We can, therefore, rule out that high levels of trust and particular social preferences are necessary for the stability achieved by the majority of these recently established youth business groups in northern Ethiopia. This indicates that the model is quite robust and may be replicable elsewhere.
    Keywords: ocial preferences; norm of reciprocity; trust; trustworthiness; youth; sustainable business
    JEL: C93 D22 D64 D71 D91
    Date: 2019–09–23
  31. By: Alistair Ulph; Luca Panzone; Denis Hilton
    Abstract: Literature in economics and psychology on moral behaviour explores the contexts in which people act in ways that are consistent or inconsistent with their past actions. Such inconsistencies appear to violate economists' assumption of rational consumer behaviour. In this note we show that a simple model of rational (utility-maximising) consumer behaviour, in both static and dynamic forms, can explain both consistent and inconsistent behaviour.
    Keywords: behavioural consistency, moral self-regulation, moral licensing, consumer behavior, sustainable consumption
    JEL: D11 H41 M31 Q56 Q58
    Date: 2019

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.