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on Experimental Economics |
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Issue of 2021‒04‒12
25 papers chosen by |
| By: | Liza Charroin (Sorbonne Economic Centre, University of Paris 1); Bernard Fortin (Economics Department, Laval University, Québec, CIRPÉE, and CIRANO, Canada. IZA, Bonn, Germany); Marie Claire Villeval (Univ Lyon, CNRS, GATE UMR 5824, 93 Chemin des Mouilles, F-69130, Ecully, France. IZA, Bonn, Germany) |
| Abstract: | If individuals tend to behave like their peers, is it because of conformity, that is, the preference of people to align behavior with the behavior of their peers; homophily, that is, the tendency of people to bond with similar others; or both? We address this question in the context of an ethical dilemma. Using a peer effect model allowing for homophily, we designed a real-effort laboratory experiment in which individuals could misreport their performance to earn more. Our results reveal a preference for conformity and for homophily in the selection of peers, but only among participants who were cheating in isolation. The size of peer effects is similar when identical peers were randomly assigned and when they were selected by individuals. We thus jointly reject the presence of a self-selection bias in the peer effect estimates and of a link strength effect. |
| Keywords: | Peer Effects, Homophily, Dishonesty, Self-Selection Bias, Experiment |
| JEL: | C92 D83 D85 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2107&r=all |
| By: | Silvia Angerer; Daniela Glätzle-Rützler; Christian Waibel |
| Abstract: | Credence goods markets are characterized by asymmetric information concerning the needed and/or provided quality between experts and consumers. The functioning of the market heavily relies on trust on the side of the consumer as well as trustworthiness on the side of the expert. However, a great amount of empirical and experimental papers document for a range of different credence goods markets the existence of over-, undertreatment, and overcharging. In this paper, we study two determinants of trust and trustworthiness in experimental credence goods markets, namely the effect of a health frame (versus a neutral frame) as well as the identity of the expert (being either a standard student subject or a prospective physician). Our results reveal that the identity in combination with a health frame has a significant impact on the level of trust shown by a higher willingness of consumers (patients) to enter the market. Trustworthiness, as measured by the provision and charging behavior of experts, however, is not significantly influenced by the health care framing, nor by the subject pool. |
| Keywords: | Health care economics, trust, fraud, framing effects, experts, credence goods, undertreatment, overcharging, laboratory experiment |
| JEL: | C91 D82 I11 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2021-13&r=all |
| By: | Bjorvatn, K; Galle, S; Berge, LIO; Miguel, E; Posner, DN; Tungodden, B; Zhang, K |
| Abstract: | Elections affect the division of resources in society and are occasions for political elites to make appeals rooted in voters' self-interest. Hence, elections may erode altruistic norms and cause people to behave more selfishly. We test this intuition using Dictator Games in a lab-in-the-field experiment involving a sample of more than 1000 individuals in Kenya and Tanzania. We adopt two approaches. First, we experimentally prime participants to think about the upcoming or most recent elections and find that this priming treatment reduces how much money participants are willing to give to other players. Second, we compare results obtained across lab rounds in Kenya taking place right before the country's 2013 national elections and eight months prior, and find that selfishness is greater in the lab round more proximate to the election. Our results suggest that elections may affect social behavior in important—and previously unrecognized—ways. |
| Keywords: | Elections, Altruism, Dictator Game, Clientelism, East-Africa, Africa, Clientelism Kenya, Tanzania, Selfishness, Kenya, Political Science, Political Science & Public Administration |
| Date: | 2021–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:econwp:qt6c55s38q&r=all |
| By: | David McKenzie; Aakash Mohpal; Dean Yang |
| Abstract: | A randomized experiment among poor entrepreneurs tested the impact of exogenously inducing higher financial aspirations. In theory, raising aspirations could have positive effects by inducing higher effort, but could also reduce effort if unmet aspirations lead to frustration. Treatment resulted in more ambitious savings goals, but nearly all individuals fell far short of reaching these goals. Two years later, treated individuals had not saved more, and actually had lower borrowing and business investments. Treatment also reduced belief in the amount of control over one’s life. Setting aspirations too high can lead to frustration, leading individuals to reduce their economic investments. |
| JEL: | D14 G53 O12 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28607&r=all |
| By: | El-Bialy, Nora; Fraile Aranda, Elisa; Nicklisch, Andreas; Saleh, Lamis; Voigt, Stefan |
| Abstract: | Does the experience of civil war promote in-group bias among survivors? We try to answer this question by analyzing cooperation in a prisoner's dilemma game among Syrian refugees in two host countries, Germany and Jordan. We use a between-subjects analysis to test our in-group cooperation hypothesis. We find that Syrians are more likely to cooperate when they are interacting with another Syrian participant than when they are interacting with a German or a Jordanian participant. While Syrian refugees self-report a feeling of relative welcome in the host country, punishment of cooperation norm violations by ingroup or out-group members does not differ significantly. We conclude that our results are more likely to be driven by in-group favoritism rather than out-group hostility. |
| Keywords: | cooperation,in-group favoritism,refugees,experiments |
| JEL: | C71 C92 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:48&r=all |
| By: | Rene Schwaiger; Laura Hueber |
| Abstract: | We present results from a highly powered online experiment with 937 participants on Amazon Mechanical Turk (MTurk) that examined whether MTurkers exhibit myopic loss aversion (MLA). The experiment consisted of measuring MLA-compliant behavior in two between-subjects treatments that differed only regarding the risk profile of the risky asset employed. We found no statistically significant evidence of MLA-compliant behavior among MTurkers in both treatments. |
| Keywords: | online experiment, myopic loss aversion, risk, mturk |
| JEL: | G10 G11 G41 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2021-12&r=all |
| By: | Ismaël Rafaï (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro; Université Côte d'Azur, France; GREDEG CNRS); Sébastien Duchêne (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro); Eric Guerci (Université Côte d'Azur, France; GREDEG CNRS); Irina Basieva (Department of Psychology, City University, London, United Kingdom); Andrei Khrennikov (International Center for Mathematical Modeling, in Physics and Cognitive Science Linnaeus University, Växjö, Sweden) |
| Abstract: | Recently quantum probability theory started to be actively used in studies of human decision-making, in particular for the resolution of paradoxes (such as the Allais, Ellsberg, and Machina paradoxes). Previous studies were based on a cognitive metaphor of the quantum double-slit experiment - the basic quantum interference experiment. In this paper, we report on an economics experiment based on a three-slit experiment design, where the slits are menus of alternatives from which one can choose. The test of nonclassicality is based on the Sorkin equality (which was only recently tested in quantum physics). Each alternative is a voucher to buy products in one or more stores. The alternatives are obtained from all disjunctions including one, two or three stores. The participants have to reveal the amount for which they are willing to sell the chosen voucher. Interference terms are computed by comparing the willingness to sell a voucher built as a disjunction of stores and the willingness to sell the vouchers corresponding to the singleton stores. These willingness to sell amounts are used to estimate probabilities and to test both the law of total probabilities and the Born Rule. Results reject neither classical nor quantum probability. We discuss this initial experiment and our results and provide guidelines for future studies. |
| Keywords: | Input-output, Covid-19, Lockdown, Italy |
| JEL: | C63 C67 D57 E17 I18 R15 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2021-16&r=all |
| By: | Roman Frydman (Department of Economics, New York University); Morten Nyboe Tabor (Institute for New Economic Thinking (INET)) |
| Abstract: | We propose a novel interpretation and formalization of Kahneman and Tversky's findings in the Linda experiment which implies that subjects are rational in the sense of Muth's hypothesis and provides an approach to specifying rational assessment of uncertainty in macroeconomic models. Behavioral-finance theorists have appealed to Kahneman and Tversky's findings as an empirical foundation for a general approach replacing rational expectations. We show that behavioral models' specifications of participants' irrational forecasts and predictable errors are incompatible with Kahneman and Tversky's findings. Our interpretation of Kahneman and Tversky's findings is supportive of Lucas's compelling critique of inconsistent macroeconomic models. |
| Keywords: | Uncertainty in Economic Models; Kahneman and Tversky's Experimental Findings; Behavioral Finance; Muth's Hypothesis; REH. |
| JEL: | B41 D80 D81 D91 E71 G41 |
| Date: | 2020–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:thk:wpaper:inetwp142&r=all |
| By: | Mira Toumi (Université Côte d'Azur, France; GREDEG CNRS); Nathalie Lazaric (Université Côte d'Azur; GREDEG-CNRS) |
| Abstract: | We investigate the complementarity between diverse behavioral tools called "boosts" (through information provision) and "goal setting" (ambitious or modest goals) in a field experiment in the Principality of Monaco which ran from December 2018 to May 2019. We collected data from 77 households in four groups: ambitious energy reduction goal combined with information (treatment 1), modest energy reduction goal combined with information (treatment 2), information only (treatment 3) and a control group (treatment 4). Treatments 1 and 2 increase the chances towards reduced energy consumption. We show that a modest but more realistic energy saving goal generates better energy conservation performance when combined with “boosts” (treatment 2). We explore the link between behavioral strategies and the household’s environmental concern in the context of the new ecological paradigm (NEP). The efficiency of the treatments depends heavily on the NEP profile. Households with a high NEP profile are more likely to reduce their electricity consumption whereas as those with a low NEP profile will not respond to behavioral interventions. |
| Keywords: | Boost, nudges, goal setting, energy consumption, field experiment, environmental profile |
| JEL: | C93 D04 D83 D91 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2021-17&r=all |
| By: | van den Berg, Gerard J. (IFAU - Institute for Evaluation of Labour Market and Education Policy); Hofmann, Barbara (FEA Nuremberg); Stephan, Gesine (IAB Nuremberg); Uhlendorff, Arne (IAB Nuremberg) |
| Abstract: | Integration Agreement (IA) are contracts between the employment agency and the unemployed, nudging the latter to comply with rules on search behavior. We designed and implemented an RCT involving thousands of newly unemployed workers, randomizing at the individual level both the timing of the IA and whether it is announced in advance. Administrative registers provide outcomes. Novel theoretical and methodological analyses provide tools to detect anticipation and suggest estimation by individual baseline employability. A small positive effect on entering employment is driven by individuals with adverse prospects. For them, early IA increase re-employment within a year from 45% to 53%. |
| Keywords: | unemployment; monitoring; job search; active labor market policy; nudge; anticipation; randomized controlled trial |
| JEL: | C93 J64 J68 |
| Date: | 2021–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2021_004&r=all |
| By: | Brent Meyer; Nicholas B. Parker; Xuguang Sheng |
| Abstract: | We rely on the Atlanta Fed's Business Inflation Expectations survey to draw inference about firms' inflation perceptions, expectations, and uncertainty through the lens of firms' unit (marginal) costs. Using methods grounded in the survey literature, we find evidence that the concept of "aggregate inflation" as measured through price statistics like the consumer price index hold very little relevance for business decision makers. This lack of relevance manifests itself through experiments (including randomized controlled trials) that show how researchers word questions to elicit inflation expectations and perceptions significantly changes firms' responses. Our results suggest firms have become rationally ignorant of the concept of inflation in a low-inflation environment. Instead, we find that unit (marginal) costs are the relevant lens with which to capture firms' views on the nominal side of the economy. We then investigate both firm-level (micro) and aggregated (macro) probabilistic unit cost expectations. On a firm level, unit costs are an important determinant of firms' price-setting behavior. Aggregating across firms' beliefs, firms' unit cost perceptions strongly comove with official aggregate price statistics, and, importantly, firms' expectations for the nominal side of the economy have little in common with the "prices in general" expectations of households. Rather, firms' aggregated beliefs strongly covary with the inflation expectations of professional forecasters and market participants. |
| Keywords: | bimodality; inflation expectations; probability distributions; randomized controlled trials; uncertainty; unit cost |
| JEL: | E31 E52 |
| Date: | 2021–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:90556&r=all |
| By: | Shenhao Wang; Baichuan Mo; Stephane Hess; Jinhua Zhao |
| Abstract: | Researchers have compared machine learning (ML) classifiers and discrete choice models (DCMs) in predicting travel behavior, but the generalizability of the findings is limited by the specifics of data, contexts, and authors' expertise. This study seeks to provide a generalizable empirical benchmark by comparing hundreds of ML and DCM classifiers in a highly structured manner. The experiments evaluate both prediction accuracy and computational cost by spanning four hyper-dimensions, including 105 ML and DCM classifiers from 12 model families, 3 datasets, 3 sample sizes, and 3 outputs. This experimental design leads to an immense number of 6,970 experiments, which are corroborated with a meta dataset of 136 experiment points from 35 previous studies. This study is hitherto the most comprehensive and almost exhaustive comparison of the classifiers for travel behavioral prediction. We found that the ensemble methods and deep neural networks achieve the highest predictive performance, but at a relatively high computational cost. Random forests are the most computationally efficient, balancing between prediction and computation. While discrete choice models offer accuracy with only 3-4 percentage points lower than the top ML classifiers, they have much longer computational time and become computationally impossible with large sample size, high input dimensions, or simulation-based estimation. The relative ranking of the ML and DCM classifiers is highly stable, while the absolute values of the prediction accuracy and computational time have large variations. Overall, this paper suggests using deep neural networks, model ensembles, and random forests as baseline models for future travel behavior prediction. For choice modeling, the DCM community should switch more attention from fitting models to improving computational efficiency, so that the DCMs can be widely adopted in the big data context. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2102.01130&r=all |
| By: | Loïc Berger (CNRS - Centre National de la Recherche Scientifique, IÉSEG School Of Management [Puteaux], EIEE - European Institute on Economics and the Environment, CMCC - Centro Euro-Mediterraneo per i Cambiamenti Climatici [Bologna]); Valentina Bosetti (Bocconi University [Milan, Italy], EIEE - European Institute on Economics and the Environment, CMCC - Centro Euro-Mediterraneo per i Cambiamenti Climatici [Bologna]) |
| Abstract: | We investigate the ambiguity preferences of a unique sample of real-life policymakers at the Paris UN climate conference (COP21). We find that policymakers are generally ambiguity averse. Using a simple design, we are moreover able to show that these preferences are not necessarily due to an irrational behavior, but rather to intrinsic preferences over unknown probabilities. Exploring the heterogeneity within our sample, we also show that the country of origin and the degree of quantitative sophistication affect policymakers' attitudes towards compound risk, but not towards ambiguity. Robustness results are obtained in a lab experiment with a sample of university students. |
| Keywords: | Ambiguity aversion,experiment,policymakers,compound lotteries,nonexpected utility,subjective probabilities |
| Date: | 2020–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03027138&r=all |
| By: | Devi Brands (Vrije Universiteit Amsterdam); Erik Verhoef (Vrije Universiteit Amsterdam); Jasper Knockaert (Vrije Universiteit Amsterdam) |
| Abstract: | With congestion being one of the most important externalities in transportation, it remains important to investigate effective and politically feasible solutions for it. We have conducted an 8-week experiment with tradable mobility permits, specifically applied to the use of parking facilities at a Dutch employer. We combine actual mobility behaviour with trading behaviour and survey responses of participants and non-participating employees of the same company. We have analysed the choice to participate in a voluntary experiment, and the behavioural response to tradable permits. Our results provide suggestive evidence that active participants do adjust their behaviour as intended. Furthermore, participation takes less time than people anticipate, and permits are viewed as a fairer and better functioning alternative to paid parking. |
| JEL: | C93 R41 R48 |
| Date: | 2021–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20210029&r=all |
| By: | Descamps, Ambroise; Massoni, Sébastien; Page, Lionel |
| Abstract: | We investigate how people make choices when they are unsure about the value of the options they face and have to decide whether to choose now or wait and acquire more information first. In an experiment, we find that participants deviate from optimal information acquisition in a systematic manner. They acquire too much information (when they should only collect little) or not enough (when they should collect a lot). We show that this pattern can be explained as naturally emerging from Fechner cognitive errors. Over time participants tend to learn to approximate the optimal strategy when information is relatively costly. |
| Date: | 2021–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:6fa5q&r=all |
| By: | Brent H. Meyer (Federal Reserve Bank of Atlanta); Nicholas B. Parker (Federal Reserve Bank of Atlanta); Xuguang Simon Sheng (American University) |
| Abstract: | We rely on the Atlanta Fed's Business Inflation Expectations Survey to draw inference about firm's inflation perceptions, expectations, and uncertainty through the lens of firms' unit (marginal) costs. Using methods grounded in the survey literature, we find evidence that the concept of “aggregate inflation" as measured through price statistics like the Consumer Price Index (CPI) hold very little relevance for business decision makers. This lack of relevance manifests itself through experiments (including randomized controlled trials) that show varying question wording researchers use to elicit inflation expectations and perceptions significantly changes firm's responses. Our results suggest firms have become rationally ignorant of the concept of inflation in a low inflation environment. Instead, we find that unit (marginal) costs are the relevant lens with which to capture firms' views on the nominal side of the economy. We then investigate both firm-level (micro) and aggregated (macro) probabilistic unit cost expectations. On a firm-level, unit costs are an important determinant of firms' price-setting behavior. Aggregating across firms' beliefs, firms' unit cost perceptions strongly co-move with official aggregate price statistics and, importantly, firms' expectations for the nominal side of the economy bear little in common with the \prices in general" expectations of households. Rather, firms' aggregated beliefs strongly covary with the inflation expectations of professional forecasters and market participants. |
| Keywords: | Bimodality, Inflation Expectations, Probability Distributions, Randomized Controlled Trials, Uncertainty, Unit Cost |
| JEL: | E31 E52 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:gwc:wpaper:2021-002&r=all |
| By: | Hsiao, Yu-Chin; Kemp, Simon; Servátka, Maroš; Ward, Matt; Zhang, Le |
| Abstract: | Sequential search is often costly and time-consuming. The time cost is usually unknown ex ante and its presence and duration must be inferred as the search progresses. We disentangle the effect of time cost on search behavior from people’s (in)ability to perceive time delay between offers. We find that people are able to infer the existence of the time cost, but their inference is imperfect. We also compare the effect of time cost with the effect of monetary cost and find that the time cost reduces the amount of exerted search, but not as much as the monetary cost does. Discriminating between the effects is critical for increasing the empirical validity of search models and designing mechanisms capable of improving the quality of decisions, especially in unfamiliar or infrequently encountered situations. |
| Keywords: | Sequential Search, Time Cost, Search Cost, Experiment |
| JEL: | C6 C91 D83 |
| Date: | 2021–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105412&r=all |
| By: | Aymeric Vie |
| Abstract: | In Keynesian Beauty Contests notably modeled by p-guessing games, players try to guess the average of guesses multiplied by p. Convergence of plays to Nash equilibrium has often been justified by agents' learning. However, interrogations remain on the origin of reasoning types and equilibrium behavior when learning takes place in unstable environments. When successive values of p can take values above and below 1, bounded rational agents may learn about their environment through simplified representations of the game, reasoning with analogies and constructing expectations about the behavior of other players. We introduce an evolutionary process of learning to investigate the dynamics of learning and the resulting optimal strategies in unstable p-guessing games environments with analogy partitions. As a validation of the approach, we first show that our genetic algorithm behaves consistently with previous results in persistent environments, converging to the Nash equilibrium. We characterize strategic behavior in mixed regimes with unstable values of p. Varying the number of iterations given to the genetic algorithm to learn about the game replicates the behavior of agents with different levels of reasoning of the level k approach. This evolutionary process hence proposes a learning foundation for endogenizing existence and transitions between levels of reasoning in cognitive hierarchy models. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2103.14379&r=all |
| By: | Felix Holzmeister; Christop Huber; Stefan Palan |
| Abstract: | Risk is one of the key aspects in financial decision-making and therefore an integral part of the behavioral economics and finance literature. Focusing on the conceptualization of the term "risk", which researchers have addressed from numerous angles, this comment aims to offer a critical perspective on the interactions between risk preferences (a latent trait), risk perceptions (how individuals judge whether something is risky), and risk-taking behavior as distinct concepts, and hence to guide future research on (individual-level) decision-making processes in this direction. |
| Keywords: | risk-taking behavior, risk preferences, risk perception |
| JEL: | D81 D91 G41 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2021-11&r=all |
| By: | Takao Maruyama; Takashi Kurosaki |
| Abstract: | School enrollment has rapidly increased since 1990 in developing countries at the primary level but the quality of education has stagnated over the years. In teaching and learning practices, textbooks are an important intermediate that links curriculum, teachers, and students. Since textbooks describe the content and methodology of teaching and learning, they can improve teaching and learning practices, if they are carefully designed. This study evaluates the effectiveness of the package of interventions including the distribution of textbooks that are carefully designed to improve student learning in math through a randomized controlled trial in El Salvador. This experiment tracked same students for two years. The average one-year impact of the package on primary school 2nd grade students’ math learning is estimatedaround 0.48 standard deviation of test scores. The impact was larger on students with higher baseline scores. The average accumulated impact of the first-year interventions one year after is around 0.12 standard deviation. The package of intervention improved math learning of 2nd grade students, and the impact persisted even after schools of the control group also received the package of interventions in the following year. |
| Keywords: | Educational Development, Math textbook development, Math learning, Human Capital and Impact evaluation |
| Date: | 2021–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:jic:wpaper:217&r=all |
| By: | Milad Haghani; Michiel C. J. Bliemer; John M. Rose; Harmen Oppewal; Emily Lancsar |
| Abstract: | The notion of hypothetical bias (HB) constitutes, arguably, the most fundamental issue in relation to the use of hypothetical survey methods. Whether or to what extent choices of survey participants and subsequent inferred estimates translate to real-world settings continues to be debated. While HB has been extensively studied in the broader context of contingent valuation, it is much less understood in relation to choice experiments (CE). This paper reviews the empirical evidence for HB in CE in various fields of applied economics and presents an integrative framework for how HB relates to external validity. Results suggest mixed evidence on the prevalence, extent and direction of HB as well as considerable context and measurement dependency. While HB is found to be an undeniable issue when conducting CEs, the empirical evidence on HB does not render CEs unable to represent real-world preferences. While health-related choice experiments often find negligible degrees of HB, experiments in consumer behaviour and transport domains suggest that significant degrees of HB are ubiquitous. Assessments of bias in environmental valuation studies provide mixed evidence. Also, across these disciplines many studies display HB in their total willingness to pay estimates and opt-in rates but not in their hypothetical marginal rates of substitution (subject to scale correction). Further, recent findings in psychology and brain imaging studies suggest neurocognitive mechanisms underlying HB that may explain some of the discrepancies and unexpected findings in the mainstream CE literature. The review also observes how the variety of operational definitions of HB prohibits consistent measurement of HB in CE. The paper further identifies major sources of HB and possible moderating factors. Finally, it explains how HB represents one component of the wider concept of external validity. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2102.02940&r=all |
| By: | Aymeric Vie |
| Abstract: | Blotto Games are a popular model of multi-dimensional strategic resource allocation. Two players allocate resources in different battlefields in an auction setting. While competition with equal budgets is well understood, little is known about strategic behavior under asymmetry of resources. We introduce a genetic algorithm, a search heuristic inspired from biological evolution, interpreted as social learning, to solve this problem. Most performant strategies are combined to create more performant strategies. Mutations allow the algorithm to efficiently scan the space of possible strategies, and consider a wide diversity of deviations. We show that our genetic algorithm converges to the analytical Nash equilibrium of the symmetric Blotto game. We present the solution concept it provides for asymmetrical Blotto games. It notably sees the emergence of "guerilla warfare" strategies, consistent with empirical and experimental findings. The player with less resources learns to concentrate its resources to compensate for the asymmetry of competition. When players value battlefields heterogeneously, counter strategies and bidding focus is obtained in equilibrium. These features are consistent with empirical and experimental findings, and provide a learning foundation for their existence. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2103.14372&r=all |
| By: | Daiki Kishishita; Atsushi Yamagishi; Tomoko Matsumoto |
| Abstract: | The overconfident, who do not actually earn what they think they can, may attribute such cognitive gap to the unfairness of the economy and become favorable of public redistribution when they realize their cognitive bias. We conducted an online survey experiment in the US, where the treatment emphasizing each respondent's self-perception on the income-ability gap is randomly assigned. We found that the treatment lowers overconfident respondents' perception on the fairness of the economy among both left-wing and right-wing people. However, it did not increase the support for reducing income inequality. Instead, this increased support for government intervention to correct the unequal society among the leftists with high trust in the US government. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e159&r=all |
| By: | Zbozinek, Tomislav Damir (California Institute of Technology); Charpentier, Caroline Juliette; Qi, Song; mobbs, dean |
| Abstract: | Most of life’s decisions involve risk and uncertainty regarding whether reward or loss will follow. A major approach to understanding decision-making under these circumstances comes from economics research. While many economic decision-making experiments have focused on gains/losses and risk (<100% probability of a given outcome), relatively few have studied ambiguity (i.e., uncertainty about the degree of risk or magnitude of gains/losses). Within ambiguity, most studies have focused on ambiguous risk (uncertainty regarding likelihood of outcomes), but few studies have investigated ambiguous outcome magnitude (i.e., uncertainty regarding how small/large the gain/loss will be). In the present report, we investigated the effects of ambiguous outcome magnitude, risk, and gains/losses in an economic decision-making task with low stakes (Study 1; $3.60-$5.70; N = 367) and high stakes (Study 2; $6-$48; N = 210) using the same participants in Study 2 as in Study 1. We conducted computational modeling to determine individuals’ preferences/aversions for ambiguous outcome magnitudes, risk, and gains/losses. Our results show that increasing stakes increases ambiguous gain aversion, unambiguous loss aversion, and unambiguous risk aversion, but increases ambiguous loss preference. These results suggest that as stakes increase, people tend to avoid uncertainty and loss in most domains but prefer ambiguous loss. |
| Date: | 2021–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:5q4g7&r=all |
| By: | Duffy, Sean; Igan, Deniz; Pinheiro, Marcelo; Smith, John |
| Abstract: | Kording and Wolpert (2004), hereafter referred to as KW, describe an experiment where subjects engaged in a repeated task entailing movements of their finger. Subjects strove for accuracy in the stochastic environment and, on some trials, received mid-trial and post-trial feedback. KW claims that subjects learned the underlying stochastic distribution from the post-trial feedback of previous trials. KW also claims that subjects regarded mid-trial feedback that had a smaller visual size as more precise and they were therefore more sensitive to such mid-trial feedback. KW concludes that the observations are consistent with optimal Bayesian learning. Indeed, under mild assumptions, it is well-known that Bayesian learners will have posterior beliefs that converge to the true distribution. We note that the KW analysis is based on data that had been averaged across important trial-specific details and averaged across trials. Averaging data disregards possibly valuable information and its dangers have been known for some time. Notably, the KW analysis does not exclude non-Bayesian explanations. When we analyze the trial-level KW data, we find that subjects were less--not more--sensitive to mid-trial feedback when it had a smaller visual size. Our trial-level analysis also suggests a recency bias, rather than evidence that the subjects learned the stochastic distribution. In other words, we do not find that the observations are consistent with optimal Bayesian learning. In the KW dataset, it seems that evidence for optimal Bayesian learning is a statistical artifact of analyzing averaged data. |
| Keywords: | data reanalysis, memory, Bayesian judgments |
| JEL: | C10 C89 |
| Date: | 2021–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:105614&r=all |