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on Experimental Economics |
| By: | Blanco, M.; Dalton, Patricio (Tilburg University, Center For Economic Research) |
| Abstract: | This paper combines laboratory experiments with a unique feature of the city of Bogota to uncover the relationship between generosity and wealth. Bogota is divided by law into six socio-economic strata which are close proxies of household wealth and income. We recruit subjects from different strata and run a series of double-blind dictator games where the recipient is the NGO Techo-Colombia, which builds transitional housing for homeless families. We identify the stratum of each subject anonymously and blindly, and match their donations with their stratum. In a first experiment we provide a fixed endowment to all participants and nd that donations are significantly increasing with wealth. However, in a second experiment, we show that this is not because the rich are intrinsically more generous, but because the experimental endowment has lower real value for them. With endowments that are equivalent to their daily expenditures, the rich, the middle-class and the poor give a similar proportion of their stratum-equivalent endowment. Moreover, we find that the motivation to donate is similar across strata, where the generosity act is explained mainly by warm-glow rather than pure altruism. |
| Keywords: | charitable giving; social stratification; inequality; social preferences; dictator game |
| JEL: | C91 D31 D64 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:732a238e-a6d3-428b-a062-1e53f12559a5&r=all |
| By: | Syngjoo Choi; Booyuel Kim; Jungmin Lee; Sokbae Lee |
| Abstract: | We compare two groups of non-student Korean population?native-born South Koreans (SK) and North Korean refugees (NK)?with contrasting institutional and cultural backgrounds. In our experiment, subjects play dictator games under three di?erent treatments where the source of the income is varied: ?rstly, the income is exogenously given to the subject; secondly, earned by the subject¡¯s own e?ort; thirdly, individually earned by the subject and an anonymous partner and then pooled together. We ?nd that preferences for giving depend on the income source in di?erent ways for the SK and NK subjects. The SK subjects become more sel?sh when an income is individually earned than when it is given exogenously. However, the NK subjects are not responsive to the earned income treatment but behave more pro-socially when individually earned incomes are pooled. The pro-sociality of NK subjects is related to life experiences in North Korea. Our results corroborate the notion that institutions and cultures matter in shaping social norms about distributive fairness. |
| Keywords: | Sel?sh Behavior; Institutions; Division of Korea; Dictator Game; Earnings |
| JEL: | C92 C93 D03 P20 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:snu:ioerwp:no123&r=all |
| By: | Kröger, Sabine; Pierrot, Thibaud |
| Abstract: | Survey questions that elicit point predictions regarding uncertain events face an important challenge as human forecasters use various statistics to summarise their subjective expectations. In this paper, we take up the challenge and study whether alternative formulations of the questions used to elicit point predictions can be successful in driving forecasters towards reporting a particular central tendency (median or mean) of their subjective expectations distribution. We set up a laboratory experiment in which the participants act as forecasters and are asked to predict the next realisation of iid random draws coming from an objectively known distribution. We elicit the subjects' point predictions in four treatments, in which we ask for either (1) a "guess" of the next draw, as is standard in survey measures, (2) a "guess" as close as possible to the next 6 draws, and (3) the mean, or (4) the median of the next six draws. We then compare the predictions reported in the different treatments and their proximity to the three main central tendencies (mean, median, mode) of the objectively known distributions. We also investigate the cognitive process that affects the production of point predictions. We find that the majority of predictions in the two guess treatments, (1) and (2), are close to the mode. In treatment (2) ("one guess for the next six draws"), the forecasters report the mean and the median more often in comparison to (1) ("guess for the next draw"), but the mode remains the central tendency around which most of the predictions are located. In treatments (3) and (4), we find that forecasters adjust the point they report in the direction of a particular central tendency when specifically asked to report the mean or the median. Adjustments are more precise for forecasters with higher measures of numeracy and for those who have more experience. However, numeracy has no explanatory power when the forecasters are asked to report a "guess for the next draw" in treatment (1) which suggests that forecasters have different ways to summarise a distribution. |
| Keywords: | subjective expectations,forecasting,eliciting point predictions,experiment |
| JEL: | C91 C72 D84 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2019213&r=all |
| By: | Wheeler, Laurel (University of Alberta, Department of Economics); Garlick, Robert (Duke University); Johnson, Eric (RTI International); Shaw, Patrick (RTI International); Gargano, Marissa (RTI International) |
| Abstract: | Online professional networking platforms are widely used and offer the prospect of alleviating labor market frictions. We run the first randomized evaluation of training workseekers to join one of these platforms. Training increases employment at the end of the program from 70 to 77% and this effect persists for at least twelve months. Treatment effects on platform use explain most of the treatment effect on employment. Administrative data suggest that platform use increases employment by providing information to prospective employers and to workseekers. It may also facilitate referrals but does not reduce job search costs or change self-beliefs. |
| Keywords: | employment; information frictions; online platforms; social networks; field experiment |
| JEL: | J22 J23 J24 J64 M51 O15 |
| Date: | 2019–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2019_014&r=all |
| By: | Kröger, Sabine; Pierrot, Thibaud |
| Abstract: | In this article, we study the point predictions that forecasters report when they are asked to predict the realisation of an iid random variable. We set up a laboratory experiment where the participants act as forecasters predicting the next realisation of random draws coming from different "objectively known" distributions which vary in the location of their central tendencies. As is standard in survey measures, the subjects in our experiment must report their best guess of the next draw as a forecast. We find that most of the forecasters report point predictions that are close to one of the three main central tendencies (mean, median or mode) of the distributions provided, with a majority corresponding to the mode. Our analysis also shows that when selecting a point prediction, people have in mind a numerical value (e.g. the mean or the mode) rather than a specific percentile of the underlying distribution. Only 5% of the forecasts reported during the experiment are based on a percentile while almost 60% are based on a numerical value. |
| Keywords: | subjective expectations,forecasting,eliciting point predictions,experiment |
| JEL: | C91 C72 D84 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2019212&r=all |
| By: | Béatrice Boulu-Reshef (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Jonah Schulhofer-Wohl (University of Virginia, The Department of Politics) |
| Abstract: | Parochial altruism-individual sacrifice to benefit the in-group and harm an out-group-undermines inter-group cooperation and is implicated in a plethora of politically-significant behaviors. We report new experimental findings about the impact of variation in social distance within the in-group together with variation in social distance between the in-and out-groups on parochial altruism. Building from a minimal group paradigm setup , we find that differential social distance has a systematic effect on individual choice in a setting of potential inter-group conflict. In particular, parochial altruism is stimulated when individuals' distance to both their in-and out-group is high. A long-standing finding about behavior in contexts of inter-group conflict is that low social distance facilitates collective action. Our results suggest that the effects of high social distance may create a potential additional pathway to group-based individual action. Research on inter-group conflict and collective action can be advanced by investigating such effects. |
| Date: | 2019–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02135633&r=all |
| By: | Mark Schneider (The University of Alabama, Culverhouse College of Business); Daniel Graydon Stephenson (Virginia Commonwealth University and Economic Science Institute, Chapman University) |
| Abstract: | Classical studies of asymmetric information focus on situations where only one side of a market is informed. This study experimentally investigates a more general case where some sellers are informed and some buyers are informed. We establish the existence of semiseparating perfect Bayesian equilibria where prices serve as informative signals of quality to uninformed buyers, while informed buyers can often leverage their informational advantage by purchasing high quality items from uninformed sellers at bargain prices. These models providearationalfoundationfortheco-existenceofbargains, pricesignaling, and Pareto e?ciency in markets with asymmetric information. We test these theoretical predictions in a controlled laboratory experiment where agents repeatedly participate in markets with asymmetric information. Weobservelongrunbehaviorconsistentwithequilibrium predictions of price signaling, bargains, and partial-pooling behavior. |
| JEL: | C9 C7 D4 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-27&r=all |
| By: | Nikoloz Kudashvili; Philipp Lergetporer |
| Abstract: | Discrimination against minorities is pervasive in many societies, but little is known about strategies minorities may apply to minimize discrimination. In our trust game with 758 highschool students in the country of Georgia, ethnic Georgian trustors discriminate against the ethnic Armenian minority group. We introduce an initial signaling stage to investigate Armenians’ willingness to hide their ethnicity to avoid expected discrimination. 43 percent of Armenian trustees untruthfully signal that they have a Georgian name. Signaling behavior is driven by expected transfers and non-pecuniary motives. This strategic misrepresentation of ethnicity increases Georgian trustors’ expected back transfers and eliminates their discriminatory behavior. |
| Keywords: | discrimination; trust game; experiment; signaling; adolescents; |
| JEL: | C91 C93 D83 J15 D90 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp644&r=all |
| By: | Donja Darai; Catherine Roux; Frédéric Schneider (Cambridge Judge Business School, University of Cambridge) |
| Abstract: | We study whether firms' collusive ability influences their incentives to merge: when tacit collusion is unsuccessful, firms may merge to reduce competitive pressure. We run a series of Bertrand oligopoly experiments where the participants decide whether, when, and to whom they send merger bids. Our experimental design allows us to observe (i) when and to whom mergers are proposed, (ii) when and by whom merger offers are accepted, and (iii) the effect on prices when mergers occur in this way. Our findings suggest that firms send more merger offers when prices are closer to marginal costs. Maverick firms that cut prices and thereby fuel competition are the predominant (but reluctant) receivers of these offers. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:jbs:wpaper:201902&r=all |
| By: | Konstantinos Ioannidis (University of Amsterdam); Theo Offerman (University of Amsterdam); Randolph Sloof (University of Amsterdam) |
| Abstract: | We test whether markets are needed to mitigate the effects of anchoring on peoples' preferences. We anchor subjects by asking them if they are willing to sell a bottle of wine for a transparently uninformative random price. We elicit subjects' Willingness-To-Accept for the bottle before and after the market. Subjects either participate in a small or a large double auction market. The variance in subjects' Willingness-To-Accept shrinks within trading groups. Our evidence supports the idea that markets have the potential to mitigate a bias. However, the market is not needed: our anchoring manipulation failed in a large sample. |
| Keywords: | anchoring, market, experiment |
| JEL: | C91 D01 D91 |
| Date: | 2019–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20190074&r=all |
| By: | Takehito Masuda; Toyotaka Sakai; Shigehiro Serizawa; Takuma Wakayama |
| Abstract: | We conduct laboratory experiments for the multi-unit Vickrey auction with and without providing advice to subjects on strategy-proofness. Although the rate of truth-telling among the subjects stays at 20% without advice, the rate increases to 47% with advice. By conducting similar experiments for the pay-your-bid auction, which is not strategy-proof, we confirm that our results are not due to so-called experimenter demand effects. Moreover, advice improves efficiency in the Vickrey auction, particularly in early periods in which subjects are less experienced. It is well known that subjects tend to overbid in several Vickrey auction experiments. Our results indicate the possibility that simple advice decreases such overbidding by promoting better understanding of the strategy-proofness property in the Vickrey auction. Strategy-proof mechanisms are sometimes criticized because players often fail to find the benefit of truth-telling, but our observations show that introducing advice on the property of strategy-proofness helps them to behave “correctly.†|
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1048r&r=all |
| By: | Dalton, Patricio (Tilburg University, Center For Economic Research); Pamuk, H. (Tilburg University, Center For Economic Research); Ramrattan, R.; van Soest, Daan (Tilburg University, Center For Economic Research); Uras, Burak (Tilburg University, Center For Economic Research) |
| Abstract: | Electronic payment instruments have the potential to spur the transparency of business transactions and thereby reduce information frictions. We design a field experiment to understand whether e-payments facilitate the financial inclusion of SMEs in developing world and to study adoption barriers. We encourage a random sample of Kenyan merchants to adopt a new mobile-money payment instrument and find that the decision to adopt is hampered by the combination of information, know-how and seemingly small transaction costs barriers. In addition, we nd that business owners who are more averse to transparency are more reluctant to adopt. Sixteen months after the intervention, we observe that treated firms have better access to finance in the form of mobile loans. The impact on financial access is more pronounced for smaller establishments, which also experience a considerable reduction in sales volatility. We conclude that e-payments can help un-collateralized firms become transparent and get financially integrated. |
| Keywords: | SME Finance; Transparency; payment technologies; Lipa Na M-Pesa |
| JEL: | D22 G00 G21 O33 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:98cf0741-8e78-4bba-a270-4b1ee857cd39&r=all |
| By: | Sylvain Chareyron; Sammuel Gorohouna; Yannick L'Horty; Pascale Petit; Catherine Ris |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tep:teppwp:wp19-04&r=all |
| By: | Thomas Görzen (University of Paderborn) |
| Abstract: | Companies increasingly involve the crowd for collective decision making and, to aggregate the decisions, they commonly average the scores. By ignoring crowdworkers’ different levels of experience and decision biases, this method may not favor the best outcome. Alternatively, decisions can be weighted in favor of the more experienced judges in the crowd. However, previous research is inconclusive as to whether more experienced individuals are any better at avoiding decision biases. To answer this question, we conduct online crowd-based experiments with a range of treatments, comparing the anchoring effect of individuals with different levels of experience. Results indicate that not only does greater experience not protect crowdworkers from the anchoring effect but it increases their confidence in their decision, compared to less experienced individuals, even if they are wrong. Our findings provide valuable insights for both researchers and practitioners interested in improving the effectiveness of crowdworking decision-making.\\ |
| Keywords: | behavioral economics, digital nudging, decision bias, anchoring, crowdsourcing |
| JEL: | L86 C93 M55 O32 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:55&r=all |
| By: | Neyt, Brecht; Baert, Stijn; Vynckier, Jana |
| Abstract: | Research exploiting data on classic (offline) couple formation has confirmed predictions from evolutionary psychology in a sense that males attach more value to attractiveness and women attach more value to earnings potential. We examine whether these human partner preferences survive in a context of fewer search and social frictions. We do this by means of a field experiment on the mobile dating app Tinder, which takes a central place in contemporary couple formation. Thirty-two fictitious Tinder profiles that randomly differ in job status and job prestige are evaluated by 4,800 other, real users. We find that both males and females do not use job status or job prestige as a determinant of whom to show initial interest in on Tinder. However, we do see evidence that, after this initial phase, males less frequently begin a conversation with females when those females are unemployed but also then do not care about the particular job prestige of employed females. |
| Keywords: | job prestige,partner preferences,dating apps,online dating,Tinder |
| JEL: | J12 J16 J13 C93 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:422&r=all |
| By: | Öberg, Stefan (Department of Economic History, School of Business, Economics and Law, Göteborg University) |
| Abstract: | There has been a fundamental flaw in the conceptual design of many natural experiments used in the economics literature, particularly among studies aiming to estimate a local average treatment effect (LATE). When we use an instrumental variable (IV) to estimate a LATE, the IV only has an indirect effect on the treatment of interest. Such IVs do not work as intended and will produce severely biased and/or uninterpretable results. This comment demonstrates that the LATE does not work as previously thought and explains why using the natural experiment proposed by Angrist and Evans (1998) as the example. |
| Keywords: | causal inference; natural experiment; local average treatment effect; complier average causal effect; instrumental variable |
| JEL: | C21 C90 J13 |
| Date: | 2019–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunhis:0025&r=all |
| By: | Duarte, Belmiro P.M.; Atkinson, Anthony C.; Granjo, Jose F.O; Oliveira, Nuno M.C |
| Abstract: | Liquid–liquid equilibria (LLE) characterization is a task requiring considerable work and appreciable financial resources. Notable savings in time and effort can be achieved when the experimental plans use the methods of the optimal design of experiments that maximize the information obtained. To achieve this goal, a systematic optimization formulation based on Semidefinite Programming is proposed for finding optimal experimental designs for LLE studies carried out at constant pressure and temperature. The non-random two-liquid (NRTL) model is employed to represent species equilibria in both phases. This model, combined with mass balance relationships, provides a means of computing the sensitivities of the measurements to the parameters. To design the experiment, these sensitivities are calculated for a grid of candidate experiments in which initial mixture compositions are varied. The optimal design is found by maximizing criteria based on the Fisher Information Matrix (FIM). Three optimality criteria (D-, A- and E-optimal) are exemplified. The approach is demonstrated for two ternary systems where different sets of parameters are to be estimated. |
| Keywords: | optimal design of experiments; approximate designs; semidefinite programming; liquid–liquid equilibria; ternary systems |
| JEL: | C1 |
| Date: | 2019–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:102500&r=all |
| By: | Armenak Antinyan (Wenlan School of Business, Zhongnan University of Economics and Law); Luca Corazzini (Department of Economics, University Of Venice Cà Foscari; Center for Experimental Research in Management and Economics (CERME)); Elena D’Agostino (Elena D’Agostino Department of Economics, University of Messina); Filippo Pavesi (School of Economics and Management, LIUC Carlo Cattaneo University; Stevens Institute of Technology, School of Business, Hoboken) |
| Abstract: | Communication has been shown to play a positive role in promoting trust, yet there is no evidence on how sensitive this result is to the size of the gains from cooperation. To investigate this issue, we adopt an experimental design in which a trustee can send a free form message to a trustor, before the latter makes a delegation choice, by selecting whether or not to allow the trustee to decide how to share a given sum between the two of them. We allow the opportunity cost of delegation to vary and find that the trustee makes use of non-precise promises prevalently when the opportunity cost of delegation is low. Moreover, communication increases the trustor’s beliefs on the amount that the trustee will choose to transfer, only when this cost is high to start with. This attenuates the effect of the size of the opportunity cost of delegation on the trustor’s choice. We also find evidence of deception, but in some circumstances the trustee is overoptimistic about her ability to deceive. Indeed, in the presence of lower opportunity costs of delegation, we document an illusion effect: a trustee using non-precise promises incorrectly expects these to exert a positive effect on the trustor’s beliefs and propensity to delegate. |
| Keywords: | Communication, Trust, Language Precision, Delegation, Deception |
| JEL: | C7 C9 D9 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2019:31&r=all |
| By: | Gabriele Camera (Economic Science Institute, Chapman University; University of Bologna); Alessandro Gioffré (University of Florence) |
| Abstract: | Experiments that investigate the spontaneous emergence of money in laboratory so cieties rely on inde?nitely repeated helping games with random matching (Camera et al., 2013; Camera and Casari, 2014). An important open issue is the lack of a general proof of existence of an equilibrium capable of supporting the e?cient allocation under private monitoring, without money. Here, we ?ll this gap by o?ering a general proof, as well as by characterizing the e?cient non-monetary equilibrium. This technique can be extended to study games with simultaneous actions. |
| Keywords: | Tacit coordination; Random matching; Social norms |
| JEL: | E4 E5 C7 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-28&r=all |