New Economics Papers
on Experimental Economics
Issue of 2012‒05‒08
24 papers chosen by



  1. Designing package markets to eliminate exposure risk By Jacob K. Goeree; Luke Lindsay
  2. Students, Volunteers and Subjects: Experiments on Social Preferences By Pablo Branas-Garza; Antonio M. Espin; Filippos Exadaktylos
  3. Does consultation improve decision making? By Alessia Isopi; Daniele Nosenzo; Chris Starmer
  4. The roles of incentives and voluntary cooperation for contractual compliance By Simon Gaechter; Esther Kessler; Manfred Koenigstein
  5. Social preferences are stable over long periods of time By Carlsson, Fredrik; Johansson-Stenman, Olof; Pham, Khanh Nam
  6. Escalation Bargaining: Theoretical Analysis and Experimental Test By Swee-Hoon Chuah; Robert Hoffmann; Jeremy Larner
  7. The Experimental Economics of Religion By Robert Hoffmann
  8. Peer Effects and Social Preferences in Voluntary Cooperation By Christian Thoeni; Simon Gaechter
  9. The Tradeoff between Redistribution and effort: Evidence from the Field and from the Lab By Claudia M. Buch; Christoph Engel
  10. Sorting Out Mechanical and Psychological Effects in Candidate Elections: An Appraisal with Experimental Data By Blais, Andre; Laslier, Jean-François; Sauger, Nicolas; Van Der Straeten, Karine
  11. Sorting Out Mechanical and Psychological Effects in Candidate Elections: An Appraisal with Experimental Data By Blais, Andre; Laslier, Jean-François; Sauger, Nicolas; Van Der Straeten, Karine
  12. The Effect of Early Entrepreneurship Education: Evidence from a Randomized Field Experiment By Rosendahl Huber, Laura; Sloof, Randolph; van Praag, Mirjam
  13. Sex Hormones and Competitive Bidding By Schipper, Burkhard C.
  14. Are small groups Expected Utility? By Andrea Morone; Piergiuseppe Morone
  15. Do Loan Officers' Incentives Lead to Lax Lending Standards? By Ben-David, Itzhak; Agarwal, Sumit
  16. The Good, the Bad and the Naive: Do Fair Prices Signal Good Types or Do They Induce Good Behaviour? By Dulleck, Uwe; Johnston, David W.; Kerschbamer, Rudolf; Sutter, Matthias
  17. Sex Hormones and Choice under Risk By Schipper, Burkhard C.
  18. Problem-based learning in secondary education: Evaluation by a randomized experiment By De Witte, Kristof; Rogge, Nicky
  19. Can Personality Type Explain Heterogeneity in Probability Distortions? By C. Mónica Capra; Bing Jiang; Jan Engelmann; Gregory Berns
  20. Contract farming and smallholder incentives to produce high quality: experimental evidence from the Vietnamese dairy sector By Saenger, Christoph; Qaim, Matin; Torero, Maximo; Viceisza, Angelino
  21. The value of lies in a power-to-take game with imperfect information By Besancenot, Damien; Dubart, Delphine; Vranceanu, Radu
  22. The demand for, and consequences of, formalization among informal firms in Sri Lanka By Suresh De Mel; David McKenzie; Christopher Woodruff
  23. Destructor Game By Esther Kessler; Maria Ruiz-Martos; David Skuse
  24. The Good, the Bad and the Naive: Do fair prices signal good types or do they induce good behaviour? By Uwe Dulleck; David Johnston; Rudolf Kerschbamer; Matthias Sutter

  1. By: Jacob K. Goeree; Luke Lindsay
    Abstract: This paper reports results from a series of laboratory experiments designed to evaluate the impact of exposure risk on market performance. Exposure risk arises when there are complementarities between trades, e.g. when the purchase of a new house requires selling the old one. The continuous double auction (CDA), which has proven to be remarkably effective in a wide variety of settings, performs poorly in a treatment with high exposure risk: overall market efficiency is only 20% and there are many instances of no trade. In a parallel treatment with lower exposure risk, efficiency under the CDA is higher (55%) but is dominated, for instance, by a top-trading-cycles procedure that uses no money. The CDA's poor performance does not depend on whether house values are private information or common knowledge, indicating that exposure risk is due to strategic uncertainty not objective uncertainty about others' preferences. We introduce a simple package market and show that it effectively resolves exposure risk: efficiency levels are 82% and 89% respectively for the low and high exposure treatments. The proposed package market is a simple extension of the CDA and could potentially be applied in a variety contexts.
    Keywords: Exposure risk, package markets, market design, laboratory experiments
    JEL: C92
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:zur:econwp:071&r=exp
  2. By: Pablo Branas-Garza (GLoBE, University of Granada and Economic Science Institute, Chapman University); Antonio M. Espin (GLoBE, University of Granada); Filippos Exadaktylos (GLoBE, University of Granada)
    Abstract: Economic experiments are usually conducted with university students who voluntarily choose to participate. Outside as well as within the discipline, there is some concern about how this “particular” subject pool may systematically produce biased results. Focusing on social preferences, this study employs a representative sample of a city’s population and reports behavioral data for five experimental decisions. The dataset allows for a ceteris paribus comparison between self-selected students (i.e. the standard subject pool) and the representative population. We demonstrate that in spite of volunteers’ and students’ effects, experimental subjects seem to be an appropriate subject pool for the study of social preferences.
    Keywords: experimental economics, external validity, subject pool, selfselection bias, field experiment.
    JEL: C90 D03
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:chu:wpaper:12-11&r=exp
  3. By: Alessia Isopi (School of Economics, University of Nottingham); Daniele Nosenzo (School of Economics, University of Nottingham); Chris Starmer (School of Economics, University of Nottingham)
    Abstract: This paper reports an experiment designed to test whether prior consultation within a group affects subsequent individual decision making in tasks where demonstrability of correct solutions is low. In our experiment subjects considered two paintings created by two different artists and were asked to guess which artist made each painting. We observed answers given by individuals under two treatments: in one, subjects were allowed the opportunity to consult with other participants before making their private decisions; in the other there was no such opportunity. Our primary findings are that subjects in the first treatment evaluate the opportunity to consult positively but they perform significantly worse and earn significantly less.
    Keywords: Consultation; Decision making; Group decisions; Individual decisions
    JEL: C91 C92 D80
    Date: 2011–07
    URL: http://d.repec.org/n?u=RePEc:not:notcdx:2011-08&r=exp
  4. By: Simon Gaechter (University of Nottingham); Esther Kessler (University College London); Manfred Koenigstein (Universitaet Erfurt)
    Abstract: Efficiency under contractual incompleteness often requires voluntary cooperation in situations where self-regarding incentives for contractual compliance are present as well. Here we provide a comprehensive experimental analysis based on the gift-exchange game of how explicit and implicit incentives affect cooperation. We first show that there is substantial cooperation under non-incentive compatible contracts. Incentive-compatible contracts induce best-reply effort and crowd out any voluntary cooperation. Further experiments show that this result is robust to two important variables: experiencing Trust contracts without any incentives and implicit incentives coming from repeated interaction. Implicit incentives have a strong positive effect on effort only under non-incentive compatible contracts.
    Keywords: principal-agent games; gift-exchange experiments; incomplete contracts, explicit incentives; implicit incentives; repeated games; separability; experiments
    JEL: C70 C90
    Date: 2011–06
    URL: http://d.repec.org/n?u=RePEc:not:notcdx:2011-06&r=exp
  5. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Pham, Khanh Nam (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We measure people’s prosocial behavior, in terms of voluntary money and labor time contributions to an archetypical public good, a bridge, and in terms of voluntary money contributions in a public good game, using the same non-student sample in rural Vietnam at four different points in time from 2005 to 2011. Two of the experiments are natural experiment, one is a field experiment and one is a public good experiment. Since the experiments were conducted far apart in time, the potentially confounding effects of moral licensing and moral cleansing are presumably small, if existing at all. Despite large contextual variations, we find a strong positive and statistically significant correlation between voluntary contributions in these experiments, whether correcting for other covariates or not. This suggests that pro-social preferences are fairly stable over long periods of time and contexts.<p>
    Keywords: natural field experiment; preference stability; social preferences; moral licensing; moral cleansing.
    JEL: C93 H41
    Date: 2012–04–30
    URL: http://d.repec.org/n?u=RePEc:hhs:gunwpe:0531&r=exp
  6. By: Swee-Hoon Chuah (Nottingham University Business School, University of Nottingham); Robert Hoffmann (Nottingham University Business School, University of Nottingham); Jeremy Larner (Nottingham University Business School, University of Nottingham)
    Abstract: The standard chicken game is a popular model of certain important real scenarios but does not allow for the escalation behaviour these are typically associated with. This is problematic if the critical, final decisions in these scenarios are sensitive to previous escalation. We introduce and analyse, theoretically and by experiment, a new game which permits escalation behaviour. Compared with an equivalent chicken game, Pareto-suboptimal outcomes are significantly more frequent. This result is inconsistent with our rational choice analysis and possible psychological roots are explored.
    Keywords: escalation; brinkmanship; chicken game; experiments
    JEL: C72 C78 C91
    Date: 2011–05
    URL: http://d.repec.org/n?u=RePEc:not:notcdx:2011-05&r=exp
  7. By: Robert Hoffmann (Nottingham University Business School)
    Abstract: This article surveys the experimental economics approach to the study of religion. The field has a place in the context of the scientific study of religion generally and the social psychology of religion in particular, but employs distinct economic methods which promise new and different insights. In particular, certain features of the experimental approach as used by economists such as incentive compatibility are particularly appropriate for studying the effect of religion on individual behaviour. The paper discusses results obtained so far in terms of two roles of religion in shaping individual behaviour, i.e. as a social group identifier and as a set of values.
    Keywords: religion, religiosity, experiments
    Date: 2011–07
    URL: http://d.repec.org/n?u=RePEc:not:notcdx:2011-07&r=exp
  8. By: Christian Thoeni (University of St.Gallen); Simon Gaechter (University of Nottingham)
    Abstract: Substantial evidence suggests the behavioral relevance of social preferences and also the importance of social influence effects (“peer effects”). Yet, little is known about how peer effects and social preferences are related. In a three-person gift-exchange experiment we find causal evidence for peer effects in voluntary cooperation: agents’ efforts are positively related despite the absence of material payoff interdependencies. We confront this result with major theories of social preferences which predict that efforts are unrelated, or negatively related. Some theories allow for positively-related efforts but cannot explain most observations. Conformism, norm following and considerations of social esteem are candidate explanations.
    Keywords: social preferences, voluntary cooperation, peer effects, reflection problem, gift-exchange; conformism; social norms; social esteem
    JEL: C92 D03
    Date: 2011–09
    URL: http://d.repec.org/n?u=RePEc:not:notcdx:2011-09&r=exp
  9. By: Claudia M. Buch; Christoph Engel
    Abstract: Building on a theoretical model we test the hypothesis that effort choices and preferences for redistribution are simultaneously determined. Using cross-country panel data from the World Value Survey, we find that it is important to model preferences for redistribution and effort choices simultaneously. While respondents with stronger preferences for redistribution tend to have smaller incentives to engage in effort, the reverse does not hold true. Using a lab experiment, we show that redistribution choices even increase in imposed effort.Those with higher ability are willing to help the needy if earning income becomes more difficult for everybody.
    Keywords: Effort, redistribution, World Value Survey, simultaneous equation models, experiment
    JEL: C31 C91 D31 J28
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:iaw:iawdip:81&r=exp
  10. By: Blais, Andre (Université de Montréal); Laslier, Jean-François (Ecole Polytechnique); Sauger, Nicolas (Sciences Po Paris); Van Der Straeten, Karine (Toulouse School of Economics)
    Abstract: The paper proposes a way to measure mechanical and psychological effects of majority runoff versus plurality electoral systems in candidate elections. Building on a series of laboratory experiments, we evaluate these effects with respect to the probability of electing a Condorcet winner candidate. In our experiment, the runoff system very slightly favours the Condorcet winner candidate, but this total effect is small. We show that this is the case because the mechanical and psychological effects tend to cancel each other out. Compared to plurality, the mechanical effect of runoffs is to systematically advantage the Condorcet winner candidate, as usually assumed; but our study detects an opposite psychological effect, to the disadvantage of this candidate.
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:ide:wpaper:25770&r=exp
  11. By: Blais, Andre (Université de Montréal); Laslier, Jean-François (Ecole Polytechnique); Sauger, Nicolas (Sciences Po Paris); Van Der Straeten, Karine (Toulouse School of Economics)
    Abstract: The paper proposes a way to measure mechanical and psychological effects of majority runoff versus plurality electoral systems in candidate elections. Building on a series of laboratory experiments, we evaluate these effects with respect to the probability of electing a Condorcet winner candidate. In our experiment, the runoff system very slightly favours the Condorcet winner candidate, but this total effect is small. We show that this is the case because the mechanical and psychological effects tend to cancel each other out. Compared to plurality, the mechanical effect of runoffs is to systematically advantage the Condorcet winner candidate, as usually assumed; but our study detects an opposite psychological effect, to the disadvantage of this candidate.
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:tse:wpaper:25769&r=exp
  12. By: Rosendahl Huber, Laura (University of Amsterdam); Sloof, Randolph (University of Amsterdam); van Praag, Mirjam (University of Amsterdam)
    Abstract: The aim of this study is to analyze the effectiveness of early entrepreneurship education. To this end, we conduct a randomized field experiment to evaluate a leading entrepreneurship education program that is taught worldwide in the final grade of primary school. We focus on pupils' development of relevant skill sets for entrepreneurial activity, both cognitive and non-cognitive. The results indicate that cognitive entrepreneurial skills are unaffected by the program. However, the program has a robust positive effect on non-cognitive entrepreneurial skills. This is surprising since previous evaluations found zero or negative effects. Because these earlier studies all pertain to education for adolescents, our result tentatively suggests that non-cognitive entrepreneurial skills are best developed at an early age.
    Keywords: skill formation, field experiment, entrepreneurship education, entrepreneurship
    JEL: L26 I21 J24 C93
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp6512&r=exp
  13. By: Schipper, Burkhard C. (University CA, Davis)
    Abstract: We correlate competitive bidding and profits in symmetric independent private value first-price auctions with salivary testosterone, estradiol, progesterone, and cortisol in more than 200 subjects. Females bid significantly higher and earn significantly lower profits than males. Moreover, females on hormonal contraceptives bid significantly higher and earn significantly lower profits than males. Bids are significantly positively correlated and profits are significantly negatively correlated with salivary progesterone when controlling for gender, the use of hormonal contraceptives, and demographics. This also applies to the female but not to the male subsamples separately. It especially applies to naturally cycling females not using hormonal contraceptives and to females in the luteal phase of their natural menstrual cycle when progesterone usually peaks. Surprisingly, we have null findings for testosterone as well as estradiol and cortisol. Controlling for risk aversion does not diminish our positive finding for progesterone. Yet, we show that our finding may be due to subjects with imprudent bidding behavior (i.e., weakly dominated bids).
    JEL: C72 C91 C92 D44 D81 D87
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:ecl:ucdeco:2012-08&r=exp
  14. By: Andrea Morone (Department of Economics, Universitat Jaume I; Department of Economics, University of Bari); Piergiuseppe Morone (Department of Economics, Universitat Jaume I; Department of Economics, University of Foggia)
    Abstract: In this paper we analyse the empirical performance of several preference functionals using individual and group data. Our investigation aims to address two fundamental questions that have, until now, not been addressed in literature. Specifically, we intend to assess if there exists a risky choice theory that statistically fits group decisions significantly better than alternative theories, and if there are significant differences between individual and group choices. Experimental findings reported in this paper provide answers to both questions showing that when risky choices are undertaken by small groups (dyads in our case), disappointment aversion outperforms several alternative preference functionals, including expected utility. Since expected utility typically emerged as the dominant model in individual risky choices, this finding suggests that differences between individual and group choices exist, showing that the preference aggregation process drives out EU.
    Keywords: group decision, expected utility, risk and uncertainty.
    JEL: C91 C92 D81 D70
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:jau:wpaper:2012/08&r=exp
  15. By: Ben-David, Itzhak (OH State University); Agarwal, Sumit (National University Singapore and Federal Reserve Bank of Chicago)
    Abstract: To understand better the role of loan officers' incentives in the origins of the financial crisis, we study a controlled field experiment conducted by a large bank. In the experiment, the incentive structure of a subset of small business loan officers was altered from fixed salary to volume-based pay. We use a diff-in-diff design to show that while the characteristics of loan applications did not change, incentive-paid loan officers book 19% loans with dollar amounts larger by 19%. We show that treated loan officers use their discretion more in the booking decision. Although loans booked by incentive-paid loan officers have better observable credit quality, they are 28% more likely to default. The increase in default is concentrated in loans that wouldn't have been booked in the absence of commission-based compensation, and in loans with excessive dollar amount. Our results support the idea that the explosion in mortgage volume during the housing bubble and the deterioration of underwriting standards can be partly attributed to the incentives of loan officers.
    JEL: G01 G21
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:ecl:ohidic:2012-07&r=exp
  16. By: Dulleck, Uwe (Queensland University of Technology); Johnston, David W. (Monash University); Kerschbamer, Rudolf (University of Innsbruck); Sutter, Matthias (University of Innsbruck)
    Abstract: Evidence on behavior of experts in credence goods markets raises an important causality issue: Do "fair prices" induce "good behavior", or do "good experts" post "fair prices"? To answer this question we propose and test a model with three seller types: "the good" choose fair prices and behave consumer-friendly; "the bad" mimic the good types' price-setting, but cheat on quality; and "the naive" fall victim to a projection bias that all sellers behave like the bad types. OLS, sample selection and fixed effects regressions support the model's predictions and show that causality goes from good experts to fair prices.
    Keywords: credence goods, experts, pricing, experiment, other regarding preferences, signalling, projection bias
    JEL: C91 L15 D82 D40
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp6491&r=exp
  17. By: Schipper, Burkhard C. (University CA, Davis)
    Abstract: We correlate choice under risk in Holt-Laury lottery tasks for gains and losses with salivary testosterone, estradiol, progesterone, and cortisol, the use of hormonal contraceptives, menstrual cycle information as well as the digit ratio (2D:4D) in more than 200 subjects. Risk aversion is negatively correlated with testosterone and positively correlated with cortisol, a stress hormone, for gains only. In males, testosterone is negatively correlated with risk aversion for gains only. In females, cortisol is marginally significantly positively correlated with risk aversion for gains only. No other significant correlations between risk aversion and salivary hormones are observed. In females, testosterone and progesterone are positively correlated with reflection, i.e., risk aversion for gains and risk seeking for losses. Testosterone is negatively correlated with "consistency" of preferences in females, while estradiol is negatively correlated with "consistency" of preferences in males. No significant correlations between risk aversion and the menstrual cycle or the digit ratio are observed. Females on hormonal contraceptives are more likely to make "consistent" choices although this may be due to a selection effect. Risk aversion is positively correlated with being female for losses only. Yet, if we control for salivary hormones we are surprised to find a negative correlation between female and risk aversion for gains.
    JEL: C91 C92 D44 D81 D87
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:ecl:ucdeco:2012-07&r=exp
  18. By: De Witte, Kristof (KULeuven, Maastricht Universiteit); Rogge, Nicky (Hogeschool-Universiteit Brussel (HUB))
    Abstract: The effectiveness of problem based learning (PBL) in terms of increasing student knowledge and skills has been extensively studied for higher education students and in non-experimental settings. This paper tests the effectiveness of PBL as an alternative instruction method in secondary education. In a controlled randomized experiment, we estimate its effect on tested student attainments, on perceived student attainments, on autonomous and controlled motivation and on class atmosphere. The outcomes indicate a non-significant negative effect on student achievements, a non-significant effect on motivation and a significant positive effect on class atmosphere.
    Keywords: Problem-based learning; Secondary education; Student achievements; Student motivation;Classroom social climate; Randomized experiment
    Date: 2012–02
    URL: http://d.repec.org/n?u=RePEc:hub:wpecon:201211&r=exp
  19. By: C. Mónica Capra; Bing Jiang; Jan Engelmann; Gregory Berns
    Abstract: There are two regularities we have learned from experimental studies of choice under risk. The first is that the majority of people weigh objective probabilities non-linearly. The second regularity, although less commonly acknowledged, is that there is a large amount of heterogeneity in how people distort probabilities. Despite of this, little effort has been made to identify the source of heterogeneity. In this paper, we explore the possibility that the probability distortions are linked to the personality profile of the decision maker. Using four widely utilized personality tests, we classify participants into three distinct personality types and find that these types have different risk characteristics. Particularly, the trait of motivation plays a role in explaining the attraction of gambling, while the trait of impulsiveness affects the discriminability of non-extreme probabilities. Our results suggest heterogeneity in probability distortions may be explained by personality profiles, which can be elicited though standard questionnaires.
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:emo:wp2003:1205&r=exp
  20. By: Saenger, Christoph; Qaim, Matin; Torero, Maximo; Viceisza, Angelino
    Abstract: In emerging markets for high-value food products in developing countries, processing companies search for efficient ways to source raw material of consistent quality. One widely embraced approach is contract farming. But relatively little is known about the appropriate design of contracts, especially in a small farm context. We use the example of the Vietnamese dairy sector to analyze the effectiveness of existing contracts between a processor and smallholder farmers in terms of incentivizing the production of high quality milk. A framed field experiment is conducted to evaluate the impact of two incentive instruments, a price penalty for low quality and a bonus for consistent high quality milk, on farmers’ investment in quality-improving inputs. Statistical analysis suggests that the penalty drives farmers into higher input use, resulting in better output quality. The bonus payment generates even higher quality milk. We also find that input choice levels depend on farmers’ socio- economic characteristics such as wealth, while individual risk preferences seem to be less important. Implications for the design of contracts with smallholders are discussed.
    Keywords: Agribusiness, Community/rural/urban development, Institutional and behavioral economics, Demand and price analysis, Agribusiness, Community/Rural/Urban Development, Demand and Price Analysis, Institutional and Behavioral Economics, C93, D22, L14, O13, Q12, Q13,
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:ags:gagfdp:122614&r=exp
  21. By: Besancenot, Damien (University of Paris 13 and CEPN); Dubart, Delphine (ESSEC Business School); Vranceanu, Radu (ESSEC Business School)
    Abstract: Humans can lie strategically in order to leverage on their negotiation power. For instance, governments can claim that a "scapegoat" third party is responsible for reforms that impose higher costs on citizens, in order to make the pill sweeter. This paper analyzes such communication strategy within a variant of the ultimatum game. The first player gets an endowment, and the second player can impose a tax on it. The former can reject the allocation submitted by the tax-setter. A third party is then allowed to levy its own tax, and its intake is private information to the tax-setter. In a frameless experiment, 65% of the subjects in the tax-setter role overstate the tax levied by the third party in order to manipulate taxpayer’s expectations and submit less advantageous offers; on average, for every additional currency unit of lie, measured by the gap between the claimed and the actual tax, they would reduce their offer by 0.43 currency units.
    Keywords: Ultimatum game; Taxation; Lies; Deception; Asymmetric information
    JEL: C91 D82 D83
    Date: 2012–03–16
    URL: http://d.repec.org/n?u=RePEc:ebg:essewp:dr-12005&r=exp
  22. By: Suresh De Mel; David McKenzie; Christopher Woodruff
    Abstract: We conduct a field experiment in Sri Lanka providing informal firms incentives to formalize. Information about the registration process and reimbursement of direct costs has no effect. Payments equivalent to one-half to one month (alternatively, 2 months) of the median firm’s profits leads to registration of around one-fifth (alternatively, one-half) of firms. Land ownership issues are the most common reason for not registering. Follow-up surveys 15 to 31 months later show higher mean profits, but largely in a few firms which grew rapidly. We find little evidence for other changes in behavior, but formalized firms express more trust in the state.
    JEL: O14 O17
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:18019&r=exp
  23. By: Esther Kessler (University College London, Behavioural & Brain Sciences Unit); Maria Ruiz-Martos (Department of Economics, Universitat Jaume I); David Skuse (University College London, Behavioural & Brain Sciences Unit)
    Abstract: Destructive behavior has mostly been investigated by games in which all players have the option to simultaneously destroy (burn) their partners' money. In the destructor game, players are randomly paired and assigned the roles of destructor versus passive player. The destructor player chooses to destroy or not to destroy a share of his passive partner's earnings. The passive partner cannot retaliate. In addition, a random event (nature) destroys a percentage of some passive subject's earnings. From the destructor player's view, destruction is benefit-less, costless, hidden and unilateral. Unilateral destruction diminishes with respect to bilateral destruction studies, but it does not vanish: 15% of the subjects choose to destroy. This result suggests that, at least for some, destruction is intrinsically pleasurable.
    Keywords: anti-social behaviour, nastiness, money-burning
    JEL: C72 C90 D82
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:jau:wpaper:2012/11&r=exp
  24. By: Uwe Dulleck (QUT); David Johnston (Monash University); Rudolf Kerschbamer (University of Innsbruck); Matthias Sutter (University of Gothenburg)
    Abstract: Evidence on behavior of experts in credence goods markets raises an important causality issue: Do "fair prices" induce "good behavior", or do "good experts" post "fair prices"? To answer this question we propose and test a model with three seller types: "the good" choose fair prices and behave consumer-friendly; "the bad" mimic the good types' price-setting, but cheat on quality; and "the naive" fall victim to a projection bias that all sellers behave like the bad types. OLS, sample selection and fixed effects regressions support the model’s predictions and show that causality goes from good experts to fair prices.
    Keywords: Credence Goods, Experts, Pricing,
    JEL: C91 L15 D82 D40
    Date: 2012–04–05
    URL: http://d.repec.org/n?u=RePEc:qut:auncer:2012-4&r=exp

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