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on Experimental Economics |
| By: | Teresa Backhaus; Yves Breitmoser |
| Abstract: | Reanalyzing 12 experiments on the repeated prisoner’s dilemma (PD), we identify three distinct subject types: defectors, cautious cooperators and strong cooperators. The defectors defect with a high probability in every round. Both cooperating types play semigrim behavior strategies. This simple three-type mixture fits significantly better than any model consisting of combinations of (generalized) pure strategies from the literature, which we fitted at the treatment level (considering 1051 pure-strategy mixtures), even when we use constant specifications of the three types across all experiments. The three best fitting strategies vary slightly across experiments, however. Structurally analyzing these strategies, we find that subjects have limited foresight and subjectively assign utility values to the four states (cc,cd,dc,dd) of the supergame, which relate to the original stage-game payoffs in a manner compatible with inequity aversion. This subjectively transforms the prisoners dilemma game into a coordination game and can reliably explain the strategies used across all 12 experiments and 32 treatments. |
| Keywords: | Repeated game, Behavior, Tit-for-tat, Mixed strategy, Memory, Belief-free equilibrium, Laboratory experiment |
| JEL: | C72 C73 C92 D12 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_341&r= |
| By: | Federico Innocenti; Linnéa Marie Rohde |
| Abstract: | Can strategic information acquisition harm the provision of a public good? We investigate this question in an incentivized online experiment with a large and heterogeneous sample of the German population. The marginal returns of the public good are uncertain: it is either socially efficient to contribute or not. In the information treatment, participants can choose between two information sources with opposing biases. One source is more likely to report low marginal returns, whereas the other is more likely to report high marginal returns. Most participants select the source biased towards low marginal returns, independent of their prior beliefs. As a result, the information treatment significantly reduces contributions and increases free-riding. When contributing is socially efficient, the information treatment reduces social welfare by up to 5.3%. Moreover, social preferences affect information acquisition:socially-oriented participants are more likely to acquire information and to select the source that is biased towards low marginal returns. We corroborate our findings by showing that participants’ behavior in our experiment is consistent with their attitudes towards actual public goods. |
| Keywords: | Experiment, Information Avoidance, Limited Attention, Media Bias, Media Pluralism, Public Good, Selective Exposure, German Internet Panel |
| JEL: | D12 D61 D83 H41 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_340&r= |
| By: | Long, Iain W (Cardiff Business School); Matthews, Kent (Cardiff Business School); Sivarajasingam, Vaseekaran (Cardiff University,School of Dentistry) |
| Abstract: | Alcohol has long been known as the demon drink; an epithet owed to numerous social ills associated with it. Our lab-in-the-field experiment assesses the extent to which intoxication leads to changes in overconfidence or cognitive ability that are often linked to problematic behaviours. Results suggest that it is the joint effect of being intoxicated in a bar that matters. Subjects systematically underestimated their magnitude, suggesting that they cannot be held fully accountable for their actions. |
| Keywords: | Alcohol intoxication, overconfidence |
| JEL: | C93 D91 I18 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2022/6&r= |
| By: | Shai Bernstein; Kunal Mehta; Richard R. Townsend; Ting Xu |
| Abstract: | We analyze a field experiment conducted on AngelList Talent, a large online search platform for startup jobs. In the experiment, AngelList randomly informed job seekers of whether a startup was funded by a top-tier investor and/or was funded recently. We find that the same startup receives significantly more interest when information about top-tier investors is provided. Information about recent funding has no effect. The effect of top-tier investors is not driven by low-quality candidates and is stronger for earlier-stage startups. The results show that venture capitalists can add value passively, simply by attaching their names to startups. |
| JEL: | C93 G24 J22 J24 L26 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29847&r= |
| By: | Ziyun Suo (Graduate School of Economics, Kobe University, JAPAN); Qinxin Guo (School of International Economics and Trade, Shanghai Lixin University of Accounting and Finance, CHINA); Junyi Shen (Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | In a trust game experiment with Chinese participants, we investigate the effects of trustworthy faces and attractive appearances on trust and trustworthiness behavior. The participants played the role of trustor and made decisions on how much money to transfer to their paired trustees while looking at the trustees' photos presented on a large screen. After that, the trustees decided how much money to return to their paired trustors. Results indicate that trust decisions are influenced by both a trustworthy face and an attractive appearance. In addition, a gender effect on trust decisions was found. Men are more trusting than women are, regardless of whether their counterparts are male or female. However, females are less likely to trust their male counterparts than female counterparts. Finally, it is observed that the trustees with a more attractive appearance are more likely to betray the trust they have, while this is not the case for those with more trustworthy faces. |
| Keywords: | Trustworthy face; Attractive appearance; Trust behavior; Trustworthiness behavior; Trust game experiment |
| JEL: | C72 C91 D63 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2022-03&r= |
| By: | Guillaume R. Fréchette (New York University); Alessandro Lizzeri (New York University); Jacopo Perego (Columbia University) |
| Abstract: | We study the role of commitment in communication and its interactions with rules, which determine whether or not information is verifiable. Our framework nests models of cheap talk, information disclosure, and Bayesian persuasion. Our model predicts that commitment has opposite effects on information transmission under the two alternative rules. We leverage these contrasting forces to experimentally establish that subjects react to commitment in line with the main qualitative implications of the theory. Quantitatively, not all subjects behave as predicted. We show that a form of commitment blindness leads some senders to overcommunicate when information is verifiable and undercommunicate when it is not. This generates an unpredicted gap in information transmission across the two rules, suggesting a novel role for verifiable information in practice. |
| Keywords: | Commitment, Communication, Information, Rules |
| JEL: | C92 D83 D82 D91 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2020-76&r= |
| By: | Diederich, Johannes; Goeschl, Timo; Waichman, Israel |
| Abstract: | The exogenous manipulation of choice architectures to achieve social ends ('social nudges') can raise problems of effectiveness and ethicality because it favors group outcomes over individual outcomes. One answer is to give individuals control over their nudge (`self-nudge'), but the trade-offs involved are poorly understood. We examine how subjects self-nudge in a paradigmatic social dilemma setting and whether outcomes differ between the self-nudge and two exogenous nudges in line with perfect free-riding or full cooperation. Subjects recruited from the general population play a ten-round VCM online in fixed groups of four with one daily contribution decision. The nudge takes the shape of a non-participation default contribution, comparing zero, full, and self-determined levels. We find that the average self-nudge is 44% of the endowment and only 7% of subjects choose one of the two exogenous defaults. Yet, there is a hard trade-off between ethicality and effectiveness: Self-nudging groups do not better than groups under the perfect free-riding nudge. The reason is that non-defaulting subjects contribute less. Groups under the full cooperation default exhibit no reactance against the nudge and outperform both alternative choice architectures. |
| Keywords: | choice architecture; defaults; nudging; public goods; behavioral economics; experiment |
| Date: | 2022–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0710&r= |
| By: | Feldhaus, Christoph; Gleue, Marvin; Löschel, Andreas; Werner, Peter (RS: GSBE Theme Human Decisions and Policy Design, Microeconomics & Public Economics) |
| Abstract: | We study the role of co-benefits – positive effects of climate protection projects in addition to CO2 reduction – for the motivation to contribute to climate change mitigation. In two artefactual field experiments conducted with large population samples from Germany (n = 2,400 in total), we test if and how the existence and specific nature of co-benefits affect donations. In both experiments, we find that co-benefits have a positive impact on contributions to climate protection. Our second experiment shows that contributions also respond to the nature of co-benefits, and these responses seem to be driven by individual donor preferences for the respective type of co-benefit. Moreover, we observe that making carbon footprints and thus individual responsibility for environmental externalities more salient increases donations irrespective of the existence and nature of co-benefits. Finally, when uncertainty about co-benefits is introduced, the majority of potential donors requests information in both experiments, and those who choose to be informed about co-benefits provide higher donations relative to subjects who choose not to be informed. |
| JEL: | D64 H41 L31 Q51 |
| Date: | 2022–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2022004&r= |
| By: | Giuseppe Attanasi (Sapienza Università di Roma, Dipartimento di Economia e Diritto, Via del Castro Laurenziano, 9 00161 Roma); Claire Rimbaud (University of Innsbruck, Department of Public Finance, Universitätsstrasse 15/4, 6020 Innsbruck, Austria); Marie Claire Villeval (Univ Lyon, CNRS, GATE UMR 5824, 93 Chemin des Mouilles, F-69130, Ecully, France. IZA, Bonn, Germany) |
| Abstract: | We investigate whether a player’s guilt aversion is modulated by the co-players’ vulnerability or whether it is only activated by the willingness to avoid disappointing them. We also explore whether the nature of vulnerability (ex-post vs. ex-ante) matters. Ex-post vulnerability arises when a player’s material payoff depends on another player’s action (e.g., recipients in a dictator games). Ex-ante vulnerability arises when her initial endowment can be entrusted to another player (e.g., trustors in trust games). Treatments vary whether trustees can condition their decision on the belief of another player who is ex-post and/or ex-ante vulnerable. We find that trustees’ guilt aversion is insensitive to the nature of the co-player’s vulnerability and to the role of the co-player. Guilt is activated even absent vulnerability of co-players. It is mainly triggered by the willingness to respond to others’ expectations, regardless of their responsibility or the kindness of their intentions. |
| Keywords: | Guilt Aversion, Vulnerability, Psychological Game Theory, Dictator Game, Trust Game, Experiment |
| JEL: | C72 C91 D91 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2203&r= |
| By: | Grimalda, Gianluca; Murtin, Fabrice; Pipke, David; Putterman, Louis G.; Sutter, Matthias |
| Abstract: | We investigate the relationship between political attitudes and prosociality in a survey of a representative sample of the U.S. population during the first summer of the COVID-19 pandemic. We find that an experimental measure of prosociality correlates positively with adherence to protective behaviors. Liberal political ideology predicts higher levels of protective behavior than conservative ideology, independently of the differences in prosociality across the two groups. Differences between liberals and conservatives are up to 4.4 times smaller in their behavior than in judging the government's crisis management. This result suggests that U.S. Americans are more polarized on ideological than behavioral grounds. |
| Keywords: | Polarization,Ideology,Trust in politicians,COVID-19,Prosociality,Health behavior,Worries |
| JEL: | D01 D72 D91 I12 I18 H11 H12 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2207&r= |
| By: | Jordi Brandts (Instituto de Análisis Económico and Barcelona School of Economics, Barcelona, Spain); Isabel Busom Piquer (Department of Applied Economics, Univ. Autonoma de Barcelona, 08193 Bellaterra, Spain); Cristina López-Mayan (Serra Húnter Fellow and AQR-IREA, Universitat de Barcelona, Barcelona, Spain); Judit Panadés Martí (Univ. Autonoma de Barcelona, 08193 Bellaterra, Spain) |
| Abstract: | The popular belief that rent–control leads to an increase in the amount of affordable housing is in contradiction with ample empirical evidence and congruent theoretical explanations. It can therefore be qualified as a misconception. We present the results of a preregistered on–line experiment in which we study how to dispel this misconception using a refutational approach both in a video and in a text format. Communication in a video format comes closer to how citizens are typically exposed to information. We find that the refutational video has a significantly higher positive impact on revising the misconception than a refutational text, an effect that is driven by the departure from the misconception by individuals who initially agreed with it. The refutational text, in turn, does not have a significant impact relative to a non–refutational baseline text. Higher cognitive reflective ability positively affects the impact on beliefs of all interventions. Our research shows that visual communication effectively reduces the gap between scientific economic knowledge and the views of citizens. |
| Keywords: | misconceptions; written and visual communication; refutation; persuasion; online experiment |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:uab:wprdea:wpdea2202&r= |
| By: | Jordi Brandts (Instituto de Análisis Económico and Barcelona School of Economics); Isabel Busom (Universitat Autònoma de Barcelona.); Cristina Lopez-Mayan (AQR-IREA, University of Barcelona); Judith Panadés (Universitat Autònoma de Barcelona and Barcelona School of Economics) |
| Abstract: | The popular belief that rent–control leads to an increase in the amount of affordable housing is in contradiction with ample empirical evidence and congruent theoretical explanations. It can therefore be qualified as a misconception. We present the results of a preregistered on–line experiment in which we study how to dispel this misconception using a refutational approach both in a video and in a text format. Communication in a video format comes closer to how citizens are typically exposed to information. We find that the refutational video has a significantly higher positive impact on revising the misconception than a refutational text, an effect that is driven by the departure from the misconception by individuals who initially agreed with it. The refutational text, in turn, does not have a significant impact relative to a non–refutational baseline text. Higher cognitive reflective ability positively affects the impact on beliefs of all interventions. Our research shows that visual communication effectively reduces the gap between scientific economic knowledge and the views of citizens. |
| Keywords: | Misconceptions, Written and visual communication, Refutation, Persuasion, Online experiment. JEL classification: A12, A2, D9, I2. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:202202&r= |
| By: | Jonathan Chapman (NYUAD); Mark Dean (Columbia University); Pietro Ortoleva (Princeton University); Erik Snowberg (Caltech); Colin Camerer (Caltech) |
| Abstract: | We study the pattern of correlations across a large number of behavioral regularities, with the goal of creating an empirical basis for more comprehensive theories of decision- making. We elicit 21 behaviors using an incentivized survey on a representative sample (n = 1,000) of the U.S. population. Our data show a clear and relatively simple structure underlying the correlations between these measures. Using principal components analysis, we reduce the 21 variables to six components corresponding to clear clusters of high correlations. We examine the relationship between these components, cognitive ability, and demographics. Common extant theories explain some of the patterns in our data, but each theory we examine is also inconsistent with some patterns. |
| Keywords: | Econographics, Reciprocity, Altruism, Trust, Costly Third-Party Punishment, Inequality Aversion, Risk Aversion, Common-Ratio Effect, Endowment Effect, WTA, WTP, Ambiguity Aversion |
| JEL: | C90 D64 D81 D90 D91 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:pri:econom:2020-75&r= |
| By: | Martino Banchio; Andrzej Skrzypacz |
| Abstract: | Motivated by online advertising auctions, we study auction design in repeated auctions played by simple Artificial Intelligence algorithms (Q-learning). We find that first-price auctions with no additional feedback lead to tacit-collusive outcomes (bids lower than values), while second-price auctions do not. We show that the difference is driven by the incentive in first-price auctions to outbid opponents by just one bid increment. This facilitates re-coordination on low bids after a phase of experimentation. We also show that providing information about lowest bid to win, as introduced by Google at the time of switch to first-price auctions, increases competitiveness of auctions. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.05947&r= |
| By: | Simon Jantschgi; Heinrich H. Nax; Bary S. R. Pradelski; Marek Pycia |
| Abstract: | Fees are omnipresent in markets but, with few exceptions, are omitted in economic models— such as Double Auctions—of these markets. Allowing for general fee structures, we show that their impact on incentives and efficiency in large Double Auctions hinges on whether the fees are homogeneous (as, e.g., fixed fees and price fees) or heterogeneous (as, e.g., bid-ask spread fees). Double Auctions with homogeneous fees share the key advantages of Double Auctions without fees: markets with homogeneous fees are asymptotically strategyproof and efficient. We further show that these advantages are preserved even if traders have misspecified beliefs. In contrast, heterogeneous fees lead to complex strategic behavior (price guessing) and may result in severe market failures. Allowing for aggregate uncertainty, we extend these insights to market organizations other than the Double Auction. |
| Keywords: | Double auction, fees, transaction costs, incentives, strategyproofness, efficiency, robustness |
| JEL: | C72 D44 D47 D81 D82 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:405&r= |