nep-exp New Economics Papers
on Experimental Economics
Issue of 2020‒12‒14
23 papers chosen by

  1. The net effect of advice on strategy-proof mechanisms: An experiment for the Vickrey auction By Takehito Masuda; Ryo Mikami; Toyotaka Sakai; Shigehiro Serizawa; Takuma Wakayama
  2. The impact of public health messaging and personal experience on the acceptance of mask wearing during the COVID-19 pandemic By Todd L. Cherry; Alexander G. James; James J. Murphy
  3. The Effect of Group Identity on Hiring Decisions with Incomplete Information By Casoria, Fortuna; Reuben, Ernesto; Rott, Christina
  4. Competition Between Friends and Foes By Wladislaw Mill; John Morgan
  5. The Determinants of Efficient Behavior in Coordination Games By Pedro Dal B—; Guillaume R. FrŽchette; Jeongbin Kim
  6. Cognitive Skills, Strategic Sophistication, and Life Outcomes By Fe, Eduardo; Gill, David; Prowse, Victoria L.
  7. Belief Error and Non-Bayesian Social Learning: Experimental Evidence By Bo\u{g}a\c{c}han \c{C}elen; Sen Geng; Huihui Li
  8. Expressive Voting vs. Self-Serving Ignorance By Katharina Momsen; Markus Ohndorf
  9. What's in a Name? Does Racial or Gender Discrimination in Marking Exist? By Chowdhury, Shyamal; Klauzner, Ilya; Slonim, Robert
  10. Personal norms — and not only social norms — shape economic behavior By Bašic, Zvonimir; Eugenio Verrina
  11. Political Ideology, Cooperation, and National Parochialism Across 42 Nations By Angelo Romano; Matthias Sutter; James H. Liu; Daniel Balliet
  12. Do Rights to Resistance Discipline the Elites? An Experiment on the Threat of Overthrow By Konstantin Chatziathanasiou; Svenja Hippel; Michael Kurschilgen
  13. COVID-19, Trust and Solidarity in the EU By Aksoy Cevat Giray; Antonio Cabrales; Mathias Dolls; Windsteiger Lisa
  14. Eliciting demand for title deeds: lab-in-the-field evidence from urban Tanzania By Manara, Martina; Regan, Tanner
  15. Contagion and Return Predictability in Asset Markets : An Experiment with Two Lucas Trees By Noussair, C.N.; Popescu, Andreea Victoria
  16. Subgroup Analysis of Investment Constraints: Evidence from Ugandan Microenterprises By Helke Seitz
  17. The Dark Side of Monetary Bonuses : Theory and Experimental Evidence By Gonzalez-Jimenez, Victor; Dalton, Patricio; Noussair, Charles
  18. Centrality and cooperation in networks By van Leeuwen, Boris; Ramalingam, Abhijit; Rojo Arjona, David; Schram, Arthur
  19. Election fairness and government legitimacy in Afghanistan By Berman, Eli; Callen, Mike; Gibson, Clark C.; Long, James D.; Rezaee, Arman
  20. Guilt Aversion in Economics and Psychology By Bellemare, Charles; Sebald, A.; Suetens, Sigrid
  21. Transparency and Financial Inclusion : Experimental Evidence from Mobile Money (revision of CentER DP 2018-042) By Dalton, Patricio; Pamuk, H.; Ramrattan, R.; van Soest, Daan; Uras, Burak
  22. Exploiting network information to disentangle spillover effects in a field experiment on teens' museum attendance By Silvia Noirjean; Marco Mariani; Alessandra Mattei; Fabrizia Mealli
  23. Behavioral intervention to conserve energy in the workplace By Valeria Fanghella; Giovanna d'Adda; Massimo Tavoni

  1. By: Takehito Masuda; Ryo Mikami; Toyotaka Sakai; Shigehiro Serizawa; Takuma Wakayama
    Abstract: We conducted laboratory experiments for the multi-unit Vickrey auction with and without advice to subjects on strategy-proofness. The rate of truth-telling among the subjects without advice was 20%, whereas the rate increased to 47% among those who received advice. By conducting similar experiments for the pay-your-bid auction, which is not strategy-proof, we confirm that the increase in truth-telling owes significantly to the net advice effect, i.e., the effect beyond the so-called experimenter demand effect. Moreover, providing advice improves efficiency in the Vickrey auction, particularly in the early periods, when subjects are less experienced. It is well known that subjects tend to overbid in Vickrey auction experiments. Our results indicate the possibility that providing a piece of simple advice decreases such overbidding by promoting a 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 in telling the truth; however, our observations show that introducing advice on the property of strategy-proofness helps them behave “correctly."
    Date: 2020–12
  2. By: Todd L. Cherry (University of Wyoming); Alexander G. James (University of Alaska Anchorage); James J. Murphy (University of Alaska Anchorage)
    Abstract: Face coverings have been shown to slow the spread of COVID-19, yet their use is not universal and remains controversial in the United States. Designing effective nudges for widespread adoption is important when federal mandates are politically or legally infeasible. We report the results from an online survey experiment in which subjects were exposed to one of three video messages from President Trump, and then indicated their preference for wearing a mask. In the first video, the President simply recited the Centers for Disease Control and Prevention (CDC) guidelines. In the second, the President additionally emphasized that wearing a mask is optional. In the third video, the President added that he will not personally wear a mask. We find that exposure to the presidential messages can increase the stated likelihood of wearing a mask—particularly among the President’s supporters. We also explore experiential effects of COVID-19, and find that people (especially supporters of the President) are more likely to support wearing a mask if they know someone who has tested positive for COVID-19, especially if that person died as a result. These results offer guidance to policy makers and practitioners interested in understanding the factors that influence viral risk mitigation strategies.
    Keywords: experimental economics, COVID-19, Face masks, Pro-social behavior, Nudges, Field Experiment
    JEL: I1 D71 D9 C93 D62 H12 H42
    Date: 2020–11
  3. By: Casoria, Fortuna (GATE, University of Lyon); Reuben, Ernesto (New York University, Abu Dhabi); Rott, Christina (Vrije Universiteit Amsterdam)
    Abstract: We investigate the effects of group identity on hiring decisions with adverse selection problems. We run a laboratory experiment in which employers cannot observe a worker's ability nor verify the veracity of the ability the worker claims to have. We evaluate whether sharing an identity results in employers discriminating in favor of ingroup workers, and whether it helps workers and employers overcome the adverse selection problem. We induce identities using the minimal group paradigm and study two settings: one where workers cannot change their identity and one where they can. Although sharing a common identity does not make the worker's claims more honest, employers strongly discriminate in favor of ingroup workers when identities are fixed. Discrimination cannot be explained by employers' beliefs and hence seems to be taste-based. When possible, few workers change their identity. However, the mere possibility of changing identities erodes the employers' trust towards ingroup workers and eliminates discrimination.
    Keywords: discrimination, hiring, group identity, adverse selection
    JEL: J71 D91 D82
    Date: 2020–11
  4. By: Wladislaw Mill; John Morgan
    Abstract: While social preferences have been shown to be an important predictor in economic decision making it has been largely ignored in describing auction behavior. We build on theoretical models of spiteful bidding to test experimentally whether the rival's type impact bidding behavior in an auction. For that purpose, we collect data on competitions -- in form of first-price auctions -- between Donald Trump and Hillary Clinton voters. We show that the rival's type -- i.e., the competitor supports the same candidate (i.e., friend) or the competitor supports another candidate (i.e., a foe) -- influences auction behavior. Clinton voters compete more aggressively against Trump voters compared to fellow Clinton voters, in line with the theory on spiteful bidding. Trump voters, on the other hand, do not compete more aggressively against Clinton voters compared to fellow Trump voters. This behavior still prevails even if we account for beliefs. Using data on attitudes suggest that spite might be driving this behavior. We conclude that preferences over the opponent seem to influence behavior even in a competitive setting.
    Keywords: Spite, Auction, Competition, Experiment, Donald Trump, Hillary Clinton
    JEL: D44 C57 D72 C92
    Date: 2020–11
  5. By: Pedro Dal B—; Guillaume R. FrŽchette; Jeongbin Kim
    Abstract: We study the determinants of efficient behavior in stag hunt games (2x2 symmetric coordination games with Pareto ranked equilibria) using both data from eight previous experiments on stag hunt games and data from a new experiment which allows for a more systematic variation of parameters. In line with the previous experimental literature, we find that subjects do not necessarily play the efficient action (stag). While the rate of stag is greater when stag is risk dominant, we find that the equilibrium selection criterion of risk dominance is neither a necessary nor sufficient condition for a majority of subjects to choose the efficient action. We do find that an increase in the size of the basin of attraction of stag results in an increase in efficient behavior. We show that the results are robust to controlling for risk preferences.
    Date: 2020
  6. By: Fe, Eduardo (University of Strathclyde); Gill, David (Purdue University); Prowse, Victoria L. (Purdue University)
    Abstract: We investigate how childhood cognitive skills affect strategic sophistication and adult outcomes. In particular, we emphasize the importance of childhood theory-of-mind as a cognitive skill. We collected experimental data from more than seven hundred children in a variety of strategic interactions. First, we find that theory-of-mind ability and cognitive ability both predict level-k behavior. Second, older children respond to information about the cognitive ability of their opponent, which provides support for the emergence of a sophisticated strategic theory-of-mind. Third, theory-of-mind and age strongly predict whether children respond to intentions in a gift-exchange game, while cognitive ability has no influence, suggesting that different measures of cognitive skill correspond to different cognitive processes in strategic situations that involve understanding intentions. Using the ALSPAC birth-cohort study, we find that childhood theory-of-mind and cognitive ability are both associated with enhanced adult social skills, higher educational participation, better educational attainment, and lower fertility in young adulthood. Finally, we provide evidence that school spending improves theory-of-mind in childhood.
    Keywords: cognitive skills, theory-of-mind, cognitive ability, fluid intelligence, children, experiment, strategic sophistication, level-k, bounded rationality, non-equilibrium thinking, intentions, gift-exchange game, competitive game, strategic game, ALSPAC, social skills, adult outcomes, life outcomes, education, fertility, labor market, wages, employment, school spending, childhood intervention
    JEL: C91 D91 J24
    Date: 2020–11
  7. By: Bo\u{g}a\c{c}han \c{C}elen (University of Melbourne); Sen Geng (Xiamen University); Huihui Li (Xiamen University)
    Abstract: This paper experimentally studies whether individuals hold a first-order belief that others apply Bayes' rule to incorporate private information into their beliefs, which is a fundamental assumption in many Bayesian and non-Bayesian social learning models. We design a novel experimental setting in which the first-order belief assumption implies that social information is equivalent to private information. Our main finding is that participants' reported reservation prices of social information are significantly lower than those of private information, which provides evidence that casts doubt on the first-order belief assumption. We also build a novel belief error model in which participants form a random posterior belief with a Bayesian posterior belief kernel to explain the experimental findings. A structural estimation of the model suggests that participants' sophisticated consideration of others' belief error and their exaggeration of the error both contribute to the difference in reservation prices.
    Date: 2020–11
  8. By: Katharina Momsen; Markus Ohndorf
    Abstract: We experimentally examine the effect of self-serving information avoidance on democratic and individual decisions in the context of climate change mitigation. Subjects need to choose between two allocations which differ in own payoffs and contributions to carbon offsets. In a between-subjects design, we vary the observability of the offset contribution, as well as the institutional decision context: individual consumption, dictatorship, and majority voting in small and large groups. If information is directly observable, we find robust evidence for expressive voting. However, in cases where information is initially unobservable but revealable without cost, there is no significant difference in selfish decisions between institutional decision contexts. We also find robust evidence for the exploitation of moral wiggle room via self-serving information avoidance in our consumption context, as well as with voting in large groups. Our results indicate that information avoidance effectively substitutes expressive ethical voting as an instrument to manage self-image on the part of the voter. This suggests that moral biases might be less likely in elections than previously thought.
    Keywords: Expressive voting, information avoidance, experiment, moral wiggle room, climate change
    JEL: C90 D12 D64 D72 D89 Q50
    Date: 2020
  9. By: Chowdhury, Shyamal (University of Sydney); Klauzner, Ilya (Bureau of Crime Statistics and Research); Slonim, Robert (University of Sydney)
    Abstract: We study whether racial or gender discrimination in marking exists at universities by conducting an experiment at a major Australian university where we randomly assigned names indicative of White, Chinese or Adopter identities (comprised of a White first name and Chinese surname) and male or female gender to real exam coversheets and recruited university graders to mark these exams. We find that the most economically-significant evidence of discrimination is found at grade thresholds. Exam scripts with Chinese and Adopter names are less likely than White names to receive a mark just above a grade threshold. Conversely, scripts with Chinese names receive a small marking bonus on average compared to the same script with a White name. Discrimination at grade thresholds is found to be more consistent with taste-based discrimination, whereas discrimination at the average is more consistent with statistical discrimination.
    Keywords: racial discrimination, experiment, marking
    JEL: J15 J71 J64 C93
    Date: 2020–11
  10. By: Bašic, Zvonimir (Max Planck Institute for Research on Collective Goods, Bonn); Eugenio Verrina (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: While social norms have received great attention within economics, little is known about the role of personal norms. We propose a simple utility framework — which assumes that people care about monetary payoff, social norms and personal norms — and design a novel two-part experiment to investigate the predictive value of personal norms across four economic games. We show that personal norms — together with social norms and monetary payoff — are highly predictive of individuals’ behavior. Moreover, they are: i) inherently distinct from social norms across a series of economic contexts, ii) robust to an exogenous increase in social image concerns, which increases the predictive value of social norms but does not weaken that of personal norms, and iii) complementary to social norms in predicting behavior, as a model with both personal and social norms outperforms a model with only one of the two norms. Taken together, our results support personal norms as a key driver of economic behavior, relevant in a wide array of economic settings.
    Keywords: Personal norms, social norms, social image, reputation, elicitation method, normative conflict
    JEL: C91 D01 D63 D64 D91
    Date: 2020–10
  11. By: Angelo Romano (Leiden University); Matthias Sutter (Max Planck Institute for Research on Collective Goods); James H. Liu (Massey University, Auckland, NZ); Daniel Balliet (Vrije Universiteit Amsterdam)
    Abstract: Political ideology has been hypothesized to be associated with cooperation and national parochialism (i.e., greater cooperation with members of one’s nation), with liberals thought to have more cooperation with strangers and less national parochialism, compared to conservatives. However, previous findings are limited to few – and predominantly western – nations. Here, we present a large-scale cross-societal experiment that can test hypotheses on the relation between political ideology, cooperation, and national parochialism around the globe. To do so, we recruited 18,411 participants from 42 nations. Participants made decisions in a prisoner’s dilemma game, and we manipulated the nationality of their interaction partner (national ingroup member, national outgroup member, or unidentified stranger). We found that liberals, compared to conservatives, displayed slightly greater cooperation, trust in others, and greater identification with the world as a whole. Conservatives, however, identified more strongly with their own nation and displayed slightly greater national parochialism in cooperation. Importantly, the association between political ideology and behavior was significant in nations characterized by higher wealth, stronger rule of law, and better government effectiveness. We discuss the implications of these findings for understanding the association between political ideology and cooperation.
    Keywords: Cooperation, political ideology, culture, parochial altruism
    Date: 2020–11
  12. By: Konstantin Chatziathanasiou (University of Münster); Svenja Hippel (University of Würzburg); Michael Kurschilgen (Technical University of Munich and the Max Planck Institute for Research on Collective Goods)
    Abstract: The threat of overthrow stabilizes a constitution because it disciplines the elites. This is the main rationale behind rights to resistance. In this paper, we test this conjecture experimentally. We model a society in which players can produce wealth by solving a coordination problem. Coordination is facilitated through a pre-game status-ranking. Compliance with the status hierarchy yields an efficient yet inequitable payoff distribution, in which a player’s wealth is determined by her pre-game status. Between treatments, we vary (a) whether overthrows – which reset the status-ranking via collective disobedience – are possible or not, and (b) whether voluntary redistributive transfers – which high-status players can use to appease the low-status players – are available or not. In contrast to established thinking we find that, on average, the threat of overthrow does not have a stabilizing effect as high-status players fail to provide sufficient redistribution to prevent overthrows. However, if an overthrow brings generous players into high-status positions, groups stabilize and prosper. This suggests an alternative rationale for rights to resistance.
    Keywords: rights to resistance; civil resistance; constitutional stability; redistribution; coordination; battle of the sexes; experiment
    JEL: C72 C92 D74 H23 P48
    Date: 2020–11
  13. By: Aksoy Cevat Giray; Antonio Cabrales; Mathias Dolls; Windsteiger Lisa
    Abstract: We design and conduct large-scale surveys and experiments in eleven European countries to examine the effect of the COVID-19 pandemic on social trust, reciprocity, solidarity as well as institutional trust. Using incentivized outcome questions on trust and solidarity towards fellow citizens, people from other EU countries and non-EU countries, we assess the causal effect of priming respondents about the COVID-19 crisis. We find that respondents correctly believing that they live in an EU country with a below average COVID-19 incidence show higher levels of trust and reciprocity towards fellow citizens than respondents in the control group. In contrast, respondents who wrongly assume to live in a high incidence country reveal a lower level of reciprocity. For respondents who rightly believe that incidence is high in their country we find positive treatment effects on solidarity. Our study further establishes that the pandemic reduces trust in institutions, in particular for those respondents who (rightly) believe that their country’s is strongly hit by COVID-19.
    Date: 2020
  14. By: Manara, Martina; Regan, Tanner
    Abstract: Many African cities face extremely high rates of informal land ownership. Governments implement land titling projects to alleviate poverty and facilitate urban development in these unplanned and rapidly urbanizing cities. However, these programs often register low uptake. We suggest addressing this problem with a pricing strategy that elicits local demand for titles from community leaders. We study the demand for title deeds in Dar es Salaam, Tanzania, where the fixed costs of surveying and planning have been covered, conducting two lab-in-the-field experiments with 90 local leaders and 146 property owners. Demand for property titles, as elicited by the Becker-DeGroot-Marschak (BDM) method, while largely below current fees, is substantial. We then ask if local leaders can help predict this demand ex-ante. We find that leaders have accurate information about both the aggregate demand curve in their neighbourhoods, as well as, the ability to distinguish variation in willingness-to-pay across owners in their neighbourhood. Predictions of aggregate demand deteriorate under an environment where the responses of leaders are used to allocate subsidies, but an incentive scheme of cash prizes is able to mitigate this. To keep leaders from misreporting, an appropriately designed policy will compensate leaders for accuracy.
    Keywords: property rights; willingness-to-pay; subsidy targeting
    JEL: O12 O17 H41 R22 D82
    Date: 2020–11–13
  15. By: Noussair, C.N. (Tilburg University, School of Economics and Management); Popescu, Andreea Victoria (Tilburg University, School of Economics and Management)
    Date: 2020
  16. By: Helke Seitz
    Abstract: This study examines the effect of a soft commitment device in the form of a savings goal calendar on savings for small business owners in Kampala, Uganda. We run a randomized controlled trial (RCT) under which the treatment group receives a calendar designed to set savings goals and to make a plan to reach this goal. The control group is given a plain calendar. We find no average effect on savings, but show that present-biased individuals save more when given the calendar. Further examinations indicate that present-biased individuals are more likely to use the calendar, suggesting that, in line with theory, present-biased individuals have a demand.
    Keywords: Entrepreneurship, investment, credit constraints, savings constraints, managerial constraints
    JEL: D22 D25 O12 O16
    Date: 2020
  17. By: Gonzalez-Jimenez, Victor; Dalton, Patricio (Tilburg University, School of Economics and Management); Noussair, Charles
    Date: 2020
  18. By: van Leeuwen, Boris (Tilburg University, School of Economics and Management); Ramalingam, Abhijit; Rojo Arjona, David; Schram, Arthur
    Date: 2019
  19. By: Berman, Eli; Callen, Mike; Gibson, Clark C.; Long, James D.; Rezaee, Arman
    Abstract: Elections can enhance state legitimacy. One way is by improving citizens’ attitudes toward government, thereby increasing their willingness to comply with rules and regulations. We investigate whether reducing fraud in elections improves attitudes toward government in a fragile state. A large, randomly assigned fraud-reducing intervention in Afghan elections leads to improvement in two indices, one measuring attitudes toward their government, and another measuring stated willingness to comply with governance. Thus, reducing electoral fraud may offer a practical, cost-effective method of enhancing governance in a fragile state.
    Keywords: election fraud; democracy; legitimacy; development; experiment; Afghanistan
    JEL: H41 O10 O17 O53 P16
    Date: 2019–12–01
  20. By: Bellemare, Charles; Sebald, A.; Suetens, Sigrid (Tilburg University, School of Economics and Management)
    Date: 2019
  21. By: Dalton, Patricio (Tilburg University, School of Economics and Management); Pamuk, H. (Tilburg University, School of Economics and Management); Ramrattan, R.; van Soest, Daan (Tilburg University, School of Economics and Management); Uras, Burak (Tilburg University, School of Economics and Management)
    Date: 2019
  22. By: Silvia Noirjean; Marco Mariani; Alessandra Mattei; Fabrizia Mealli
    Abstract: Nudging youths to visit historical and artistic heritage is a key goal pursued by cultural organizations. The field experiment we analyze is a clustered encouragement design (CED) conducted in Florence (Italy) and devised to assess how appropriate incentives assigned to high-school classes may induce teens to visit museums in their free time. In CEDs, where the focus is on causal effects for individuals, interference between units is generally unavoidable. The presence of noncompliance and spillover effects makes causal inference particularly challenging. We propose to deal with these complications by creatively blending the principal stratification framework and causal mediation methods, and exploiting information on interpersonal networks. We formally define principal natural direct and indirect effects and principal controlled direct and indirect effects, and use them to disentangle spillovers from other causal channels. The key insights are that overall principal causal effects for sub-populations of units defined by the compliance behavior combine encouragement, treatment and spillovers effects. In this situation, a synthesis of the network information may be used as a possible mediator, such that the part of the effect that is channeled by it can be attributed to spillovers. A Bayesian approach is used for inference, invoking latent ignorability assumptions on the mediator conditional on principal stratum membership.
    Date: 2020–11
  23. By: Valeria Fanghella (Grenoble Ecole de Management); Giovanna d'Adda (University of Milan); Massimo Tavoni (Politecnico di Milano)
    Abstract: This study investigates the effect of a large-scale behavioral intervention to conserve energy in the workplace, consisting of an energy-saving competition among a bank’s branches. More than 500 branches were involved for a period of one year. Using a difference-in-difference estimation, we find that the competition significantly reduces monthly electricity consumption outside the work schedule (by 7 percent), but that overall energy use does not change significantly (reduction of 2.5 percent). Branch characteristics do not lead to differentiated program response, in stark contrast with the residential sector. In the same setting, we also evaluate a technological intervention automating building energy management. The retrofit leads to significant energy savings (of 18 percent), also concentrated outside the main work schedule. Our results stress the importance of considering contextual characteristics when implementing behavioral programs and show potential overlaps with smart technology investments.
    Keywords: Behavioral intervention, Energy conservation, Energy efficiency, Workplace, Difference-in-difference
    JEL: C93 D91 H32 Q41
    Date: 2020–11

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