|
on Experimental Economics |
|
Issue of 2023‒03‒13
sixteen papers chosen by |
| By: | Guidon Fenig (Department of Economics, University of Ottawa, Canada); Giovanni Gallipoli (Vancouver School of Economics, UBC, Canada; Rimini Centre for Economic Analysis); Yoram Halevy (Department of Economics, University of Toronto, Canada; Hebrew University of Jerusalem, Israel) |
| Abstract: | This paper develops an experimental methodology that allows the identification of decision-making processes in interactive settings using tracking of choice-process data. This non-intrusive and indirect approach provides essential information for the characterization of beliefs. The analysis reveals significant heterogeneity, which is reduced to two broad types, differentiated by the importance of pecuniary rewards in agents' payoff function. Most subjects choose actions close to maximizing monetary rewards, by best responding to beliefs. Others are able to identify these actions, but choose to systematically deviate from them – exhibiting either altruistic or competitive motives. |
| Keywords: | non-choice data, typology, tracking, response-time, coordination, public goods, complementarity, altruism, joy of giving, competitiveness, joy of winning, complexity, laboratory experiment |
| JEL: | C9 C92 C72 D9 H41 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:23-02&r=exp |
| By: | Lata Gangadharan (Monash University, Department of Economics); Philip J. Grossman (Monash University, Department of Economics); Nina Xue (Monash University, Department of Economics) |
| Abstract: | We introduce a novel experimental procedure to measure altruistic giving along a spectrum, from warm glow to pure altruism, by eliciting willingness to pay to increase the likelihood that a donation is received by a recipient. Whereas previous methods identify pure warm-glow motives, our approach directly measures altruistic preferences and is validated by a survey measure developed by Carpenter (2021). Participants who identify in the survey as altruistic givers are more likely to pay to increase the probability that the donation is implemented and pay more on average than those who identified as mainly motivated by warm glow. |
| Keywords: | warm glow, altruism, donation, charitable giving, experiment |
| JEL: | H4 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2023-04&r=exp |
| By: | King King Li (Shenzhen Audenica Financial Technology Institute); Ying-Yi Hong (Chinese University of Hong Kong - Partenaires INRAE); Bo Huang (Chinese University of Hong Kong - Partenaires INRAE); Tony Tam (Chinese University of Hong Kong - Partenaires INRAE) |
| Abstract: | This study compares Chinese people's trust and trustworthiness, risk attitude, and time preference before and after the onset of the COVID-19 pandemic in China. We compare the preferences of subjects in two online experiments with samples drawn from 31 provinces across mainland China before and after the onset of the pandemic. We test two competing hypotheses regarding trust and trustworthiness. On the one hand, the outbreak as a collective threat could enhance in-group cohesion and cooperation and thus increase trust and trustworthiness. On the other hand, to the extent that people expect their future income to decline, they may become more self-protective and self-controlled, and thus less trusting and trustworthy and more risk averse and patient. Comparing before and after the onset, we found that the subjects increased in trustworthiness. After the onset, trust and trustworthiness (and risk aversion and present bias too) were positively correlated with the COVID-19 prevalence rate in the provinces. Subjects with more pessimistic expectations about income change showed more risk aversion and lower discount rates, supporting the speculation concerning self-control. |
| Keywords: | COVID-19, trust, trustworthiness, social preference, risk attitude |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03899653&r=exp |
| By: | Maximilian Sp\"ath |
| Abstract: | The Becker DeGroot Marshak method is widely used to elicit the valuation that an individual assigns to an object. Theoretically, the second-price structure of the method gives individuals the incentive to state their true valuation. Yet, the elicitation methods empirical accuracy is subject to debate. With this paper, I provide a clear verification of the qualitative accuracy of the method. Participants of an incentivized laboratory experiment can sell a virtual object. The value of the object is publicly known and experimentally varied in a between-subjects design. Replicating previous findings on the low quantitative accuracy, I observe a very small share of individuals placing a payoff-optimal stated valuation. However, the analysis shows that the stated valuation increases with the value of the object. This result shows the qualitative accuracy of the BDM method and suggests that the method can be applied in comparative studies. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2302.04055&r=exp |
| By: | Cars Hommes; Stefanie J. Huber; Daria Minina; Isabelle Salle |
| Abstract: | This paper brings novel insights into group coordination and price dynamics in complex environments. We implement an overlapping-generation model in the lab where output dynamics are given by the well-known chaotic quadratic map. This model structure allows us to study previously unexplored parameter regions where perfect-foresight dynamics exhibit chaotic dynamics. This paper highlights three key findings. First, the price converges to the simplest equilibria, namely either the monetary steady state or the two-cycle in all markets. Second, we document a novel and intriguing finding: a non-monotonicity of the behavior when complexity increases. Convergence to the two-cycle occurs for the intermediate parameter range, while the extreme scenarios of both a simple, stable two-cycle and highly nonlinear dynamics (chaos) lead to coordination on the steady state in the lab. All indicators of coordination and convergence significantly exhibit this non-monotonic relationship in the learning-to-forecast experiments. This finding also persists in the learning-to-optimize design. Finally, convergence in the learning-to-optimize experiment is more challenging to achieve: coordination on the two-cycle is never observed, although the two-cycle Pareto dominates the steady state. |
| Keywords: | Business fluctuations and cycles; Economic models |
| JEL: | C62 C68 C91 C92 E13 E70 G12 G41 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-13&r=exp |
| By: | Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada |
| Abstract: | We experimentally compare two well-known mechanisms inducing the Shapley value as an ex ante equilibrium outcome of a noncooperative bargaining procedure: the demand-based Winter’s demand commitment bargaining mechanism and the offer-based Hart and Mas-Colell procedure. Our results suggest that the offer-based Hart and Mas-Colell mechanism better induces players to cooperate and to agree on an efficient outcome, whereas the demand-based Winter mechanism better implements allocations that reflect players' effective power, provided that the grand coalition is formed. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1175r&r=exp |
| By: | Sakib Anwar, Chowdhury Mohammad (BLDT, University of Winchester); Bruno, Jorge (BLDT, University of Winchester); SenGupta, Sonali (Queens Management School, Queen’s University Belfast.) |
| Abstract: | We model a dynamic public good contribution game, where players are (naturally) formed into groups. The groups are exogenously placed in a sequence, with limited information available to players about their groups’ position in the sequence. Contribution decisions are made by players simultaneously and independently, and the groups’ total contribution is made sequentially. We try to capture both inter and intra-group behaviors and analyze different situations where players observe partial history about total contributions of their predecessor groups. Given this framework, we show that even when players observe a history of defection (no contribution), a cooperative outcome is achievable. This is particularly interesting in the situation when players observe only their immediate predecessor groups’ contribution, where we observe that players play an important role in motivating others to contribute. |
| Keywords: | Social Dilemmas ; Public Goods ; Position Uncertainty ; Voluntary Contributions ; Fundraising ; Groups JEL codes: C72; D82; H41 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:wcreta:75&r=exp |
| By: | Janet Hua Jiang; Daniela Puzzello; Cathy Zhang |
| Abstract: | We develop an experimental framework to investigate the quantity theory of money and the real effects of inflation in an economy where money serves as a medium of exchange. We test the classical view that inflation reduces output and welfare by taxing monetary exchange. Inflation is engineered by constant money growth. We conduct three treatments, where the newly issued money is used to finance government spending, lump-sum transfers, and proportional transfers, respectively. Experimental results largely support theoretical predictions. Higher money growth leads to higher inflation. Output and welfare are significantly lower with government spending, and output is significantly lower with lump-sum transfers, while there are no significant real effects with proportional transfers. A deviation from theory is that the detrimental effect of money growth in our framework depends on the implementation scheme and is stronger with government spending than with lump-sum transfers. |
| Keywords: | Inflation and prices; Inflation: costs and benefits; Monetary policy |
| JEL: | C92 D83 E40 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-11&r=exp |
| By: | Wang, Liang Choon (Monash University); Vlassopoulos, Michael (University of Southampton); Islam, Asad (Monash University); Hassan, Hashibul (Jagannath University) |
| Abstract: | The Covid-19 pandemic caused prolonged school closures worldwide. Children in resource- poor settings were particularly affected given their limited access to remedial distance learning opportunities through the internet, television, and radio. To address the poor access to formal education, we designed an educational intervention consisting of a set of audio lessons that were delivered through mobile phones to primary school students using Interactive Voice Response (IVR). During the 15-week program period, parents could access the lessons for free by calling a designated phone number and listening to a lesson with their child at any time. We delivered the randomized intervention to 1, 763 primary school children across 90 villages in Bangladesh during the 2021 Covid-19 school closures. The intervention improved the test scores of children in literacy and numeracy by 0.60 Standard Deviations (SD). Additionally, the intervention led to an increase in the amount of time that parents spent on homeschooling. The intervention was particularly beneficial for academically weaker students, those from the poorest strata, and those with less-educated caregivers. Our results suggest that this scalable and low-cost intervention could be leveraged in similar settings to address learning losses of marginalized students. |
| Keywords: | school closures, remote education, Interactive Voice Response (IVR), COVID-19, randomized controlled trial, Bangladesh |
| JEL: | C93 I21 I24 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15920&r=exp |
| By: | Aidas Masiliūnas (Department of Economics, University of Sheffield, 9 Mappin Street, Sheffield S1 4DT, UK.) |
| Abstract: | We test whether deviations from Nash equilibrium in rent-seeking contests can be explained by the slow convergence of payoff-based learning. We identify and eliminate two noise sources that slow down learning: first, opponents are changing their actions across rounds; second, payoffs are probabilistic, which reduces the correlation between expected and realized payoffs. We find that average choices are not significantly different from the risk-neutral Nash equilibrium predictions only when both noise sources are eliminated by supplying foregone payoff information and removing payoff risk. Payoff-based learning can explain these results better than alternative theories. We propose a hybrid learning model that combines reinforcement and belief learning with risk, social and other preferences, and show that it fits data well, mostly because of reinforcement learning. |
| Keywords: | experiment, contests, reinforcement learning, foregone payoffs, payoff risk, Nash equilibrium |
| JEL: | C72 C91 D71 D81 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2023002&r=exp |
| By: | Ciril Bosch-Rosa (TU Berlin); Bernhard Kassner (LMU Munich) |
| Abstract: | In statistics, samples are drawn from a population in a data-generating process (DGP). Standard errors measure the uncertainty in estimates of population parameters. In science, evidence is generated to test hypotheses in an evidence-generating process (EGP). We claim that EGP variation across researchers adds uncertainty: Non-standard errors (NSEs). We study NSEs by letting 164 teams test the same hypotheses on the same data. NSEs turn out to be sizable, but smaller for better reproducible or higher rated research. Adding peer-review stages reduces NSEs. We further find that this type of uncertainty is underestimated by participants. |
| Keywords: | uncertainty; standard errors; reproducibility; hypotheses; |
| JEL: | C13 C18 C10 |
| Date: | 2023–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:385&r=exp |
| By: | Radosveta Ivanova-Stenzel (TU Berlin); Sabine Kröger (Laval University, Quebec) |
| Abstract: | In Buy-It-Now auctions, sellers can post a take-it-or-leave-it price offer prior to an auction. While the literature almost exclusively looks at buyers in such combined mechanisms, the current paper summarizes results from the sellers' point of view. Buy-It-Now auctions are complex mechanisms and therefore quite challenging for sellers. The paper discusses the seller's curse, a bias that sellers might fall prey to in such combined mechanisms, and how experience counterbalances this bias. Furthermore, the paper explores the role of information and bargaining power on behavior and profit prospects in Buy-It-Now auctions. |
| Keywords: | asymmetric information; laboratory experiment; field experiment; auction; BIN-auction; Buy-It-Now auction; BIN-price; Buy-It-Now price; combined mechanism; |
| JEL: | C72 C91 D44 D82 L1 |
| Date: | 2023–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:382&r=exp |
| By: | Greenstone, Michael (Energy Policy Institute and Department of Economics, University of Chicago.); Rohini Pande (Department of Economics, Yale University); Sudarshan, Anant (University of Warwick); Ryan, Nicholas (Department of Economics, Yale University) |
| Abstract: | Market-based environmental regulations are seldom used in developing countries, where pollution is the highest but state capacity is often low. We experimentally evaluate a new particulate matter emissions the first in the world, covering industrial plants in a large Indian city. There are three main findings. First, the market functioned well: permit trade was active and plants obtained permits to meet their compliance obligations almost perfectly. Second, treatment plants, randomly assigned to the emissions market, reduced pollution emissions by 20% to 30%, relative to control plants. Third, the market, holding emissions constant, reduces abatement costs by 11% to 14%. These cost estimates are based on a model that estimates heterogeneous plant marginal abatement costs from plant bids for emissions permits. More broadly, we find that emissions can be reduced at small increases in abatement costs. The pollution market therefore has health benefits that exceed costs by at least twenty-five times. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1453&r=exp |
| By: | Sylvain Chabé-Ferret (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Institute for Advanced Studies - Institute for Advanced Studies); Philippe Le Coënt (BRGM - Bureau de Recherches Géologiques et Minières (BRGM)); Caroline Lefebvre (Laboratoire de Virologie [Toulouse] - CHU Toulouse [Toulouse]); Raphaële Préget (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro - Montpellier SupAgro - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); François Salanié (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Subervie Julie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Sophie S. Thoyer (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier) |
| Abstract: | Nudges are increasingly used to alter the behavior of economic agents as an alternative to monetary incentives. However, little is known as to whether nudges can backfire, that is, how and when they may generate effects opposite to those they intend to achieve. We provide the first field evidence of a nudge that is designed to encourage pro-environmental behavior, which instead backfires. We randomly allocate a social comparison nudge inviting winegrowers to adopt biological pest control as an alternative to chemical pesticide use. We find that our nudge decreases by half the adoption of biological pest control among the largest vineyards, where the bulk of adoption occurs. We show that this result can be rationalized in an economic model where winegrowers and winegrower-cooperative managers bargain over future rents generated by the adoption of biological pest control. This study highlights the importance of experimenting on a small scale with nudges aimed at encouraging adoption of virtuous behaviors in order to detect unexpected adverse effects, particularly in contexts where negotiations on the sharing of the costs of adoption are likely to occur. |
| Keywords: | Nudges, Behavioral Economics, Pesticides, Government Policy. |
| Date: | 2023–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-03971193&r=exp |
| By: | Jason Allen; Robert Clark; Jean-François Houde; Shaoteng Li; Anna Trubnikova |
| Abstract: | We develop an experimental framework to investigate the quantity theory of money and the real effects of inflation in an economy where money serves as a medium of exchange. We test the classical view that inflation reduces output and welfare by taxing monetary exchange. Inflation is engineered by constant money growth. We conduct three treatments, where the newly issued money is used to finance government spending, lump-sum transfers, and proportional transfers, respectively. Experimental results largely support theoretical predictions. Higher money growth leads to higher inflation. Output and welfare are significantly lower with government spending, and output is significantly lower with lump-sum transfers, while there are no significant real effects with proportional transfers. A deviation from theory is that the detrimental effect of money growth in our framework depends on the implementation scheme and is stronger with government spending than with lump-sum transfers. |
| Keywords: | Financial institutions; Financial services; Market structure and pricing |
| JEL: | D D4 G G2 G21 L L2 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-12&r=exp |
| By: | Björkman Nyqvist, Martina (Mistra Center for Sustainable Markets (Misum)); Jayachandran, Seema (Princeton University); Zipfel, Céline (Mistra Center for Sustainable Markets (Misum)) |
| Abstract: | Building on prior evidence that mothers often have a stronger preference for spending on children than fathers do, we use a randomized experiment to evaluate the impacts of a communication training program for mothers on child health in Uganda. The hypothesis is that the training will enable women to better convey their knowledge and preferences to their husbands and, thereby, boost investments in children’s health. We find that the program increases spousal discussion about the family’s health, nutrition, and finances. However, this does not increase overall adoption of health-promoting behaviors or improve child anthropometrics. One exception is that the communication training increases women’s and children’s intake of protein-rich foods as well as household spending on these foods. |
| Keywords: | Spouse; Communication; Child health; Investments; Uganda |
| JEL: | I12 I15 J12 O15 |
| Date: | 2023–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hamisu:2023_013&r=exp |