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on Experimental Economics |
| By: | Daniel Rondeau; John A. List |
| Abstract: | This study designs a natural field experiment linked to a controlled laboratory experiment to examine the effectiveness of matching gifts and challenge gifts, two popular strategies used to secure a portion of the $200 billion annually given to charities. We find evidence that challenge gifts positively influence contributions in the field, but matching gifts do not. Methodologically, we find important similarities and dissimilarities between behavior in the lab and the field. Overall, our results have clear implications for fundraisers and provide avenues for future empirical and theoretical work on charitable giving. |
| JEL: | C9 C93 H4 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13728&r=exp |
| By: | Karl Inderfurth (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Abdolkarim Sadrieh (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Guido Voigt (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | The use of screening contracts is a common approach to solve supply chain coordination problems under asymmetric information. One major assumption in this context is that subjects will rather use their private information strategically than to reveal them truthfully, if they do not get any incentives to do this. This harms supply chain performance. This paper investigates the influence of costless pre-game communication (i.e. communication without any direct incentives) between a supplier and a buyer in a lotsizing framework. A laboratory experiment was conducted to test, whether this costless pre-game communication has (in contradiction to standard game-theory) an influence on supply chain coordination. |
| Keywords: | experimental economics, screening contracts, supply chain coordination |
| JEL: | M11 C92 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:08001&r=exp |
| By: | Marco Faravelli; Luca Stanca |
| Abstract: | This paper investigates single and multiple prize contests as incentive mechanisms for the private provision of public goods, under the assumptions of income heterogeneity and incomplete information about income levels. We compare experimentally a one-prize contest with a three-prize contest in a case where theory predicts that several prizes maximise revenues. We ¯nd that, contrary to the theoretical predictions, total contributions are signi¯cantly higher in the one-prize contest. In both treatments contribu- tions converge towards theoretical predictions over successive rounds, but the e®ects of repetition are di®erent: convergence is fast in the one-prize treatment, while gradual and with some undershooting in the three-prize treatment. Focusing on individual income types, the better performance of the single-prize contest is largely explained by the contributions of high- income individuals: a single larger prize provides a more e®ective incentive for richer individuals than three smaller prize |
| Keywords: | Auctions; Public Goods; Laboratory Experiments. |
| JEL: | C91 D44 H41 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:127&r=exp |
| By: | Thomas Chesney (Nottingham University Business School); Swee-Hoon Chuah (Nottingham University Business School); Robert Hoffmann (Nottingham University Business School) |
| Abstract: | We explore the scientific potential of virtual worlds for experimental economists. In particular, we report the results of a series of virtual world experiments designed to examine the suitability of (a) users as subjects and (b) the computer interface as an experimental platform. Formal results and informal observations from the sessions are discussed in terms of the methodological opportunities and challenges of virtual experimentation generally. |
| Keywords: | virtual worlds, laboratory experiments, human values survey |
| JEL: | C72 C88 C99 Z13 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2007-14&r=exp |
| By: | Simon Gaechter (University of Nottingham); Benedikt Herrmann (University of Nottingham) |
| Abstract: | We report evidence from public goods experiments with and without punishment which we conducted in Russia with 566 urban and rural participants of young and mature age cohorts. Russia is interesting for studying voluntary cooperation because of its long history of collectivism, and a huge urban-rural gap. In contrast to previous experiments we find no cooperation-enhancing effect of punishment. An important reason is that there is substantial punishment of high contributors in all four subject pools. Thus, punishment can also undermine the scope for self-governance in the sense of high levels of voluntary cooperation that are sustained by sanctioning free riders only. |
| Keywords: | social norms, free riding, misdirected punishment, experiments |
| JEL: | H41 C91 D23 C72 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2007-11&r=exp |
| By: | Michalis Drouvelis (School of Economics, University of Nottingham); Maria Montero (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham) |
| Abstract: | Power indices suggest that adding new members to a voting body may affect the balance of power between the original members even if their number of votes and the decision rule remain constant. Some of the original members may actually gain, a phenomenon known as the paradox of new members. We show that the paradox can occur as an equilibrium of a noncooperative bargaining game based on the Baron-Ferejohn (1989) model of legislative bargaining. We implement this game in the laboratory and find empirical support for the paradox. |
| Keywords: | voting, non-cooperative bargaining, power indices, experiments, paradox of new members |
| JEL: | C70 C92 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2007-13&r=exp |
| By: | Christiane Schwieren (Sonderforschungsbereich 504, University of Mannheim, Germany); Doris Weichselbaumer (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | In this paper we experimentally test whether competing for a desired reward does not only affect individuals’ performance, but also their tendency to cheat. Recent doping scandals in sports as well as forgery and plagiarism scandals in academia have been partially explained by „competitive pressures“, which suggests a link between competition and cheating. In our experiment subjects conduct a task where they have the possibility to make use of illegitimate tools to better their results. We find that women react much stronger to competitive pressure by increasing their cheating activity while there is no overall sex difference in cheating. However, the effect of competition on women’s cheating behavior is entirely due to the fact that women, on average, are doing worse with respect to the assigned task. Indeed we find that it is the ability of an individual to conduct a particular task and not sex that crucially affects the reaction to competition. Poor performers significantly increase their cheating behavior under competition which may be a face-saving strategy or an attempt to retain a chance of winning. |
| Keywords: | competition; tournament; piece rate; cheating; experiment |
| JEL: | C91 J24 J31 M52 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2008_01&r=exp |
| By: | Fabrizio Casalin |
| Abstract: | This paper presents an experimental investigation of strong indirect reciprocity. We examine both generalized indirect reciprocity (if A helps B then B helps C) and social indirect reciprocity (if A helps B then C helps A), in a setting where reciprocal behavior cannot be explained by strategic motivations. We also consider a treatment for direct reciprocity, as a benchmark, and use a variant of the strategy method to control for di®erences in ¯rst movers' actions across treatments. We ¯nd evidence of strong reciprocity within each treatment, both for strategies and decisions. Generalized indirect reciprocity is found to be signi¯cantly stronger than social indirect reciprocity and, interestingly, direct reciprocity. This ¯nd- ing is interpreted as re°ecting the relevance of ¯rst movers' motivation for second movers' reciprocal behavior. |
| Keywords: | Reciprocity, Experimental Economics. |
| JEL: | C78 C91 C92 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:131&r=exp |
| By: | Sebastian Goerg; Sebastian Kube; Ro'i Zultan |
| Abstract: | The importance of fair and equal treatment of workers is at the heart of the debate in organizational management. In this regard, we study how reward mechanisms and production technologies affect effort provision in teams. Our experimental results demonstrate that unequal rewards can potentially increase productivity by facilitating coordination, and that the effect strongly interacts with the exact shape of the production function. Taken together, our data highlight the relevance of the production function for organization construction and suggest that equal treatment of equals is neither a necessary nor a sufficient prerequisite for eliciting high performance in teams. |
| Keywords: | team incentives, equity, production function, social preferences, laboratory experiment, discriminating mechanism, mechanism design. |
| JEL: | C92 D23 D63 J31 J33 J41 M12 M52 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:bon:bonedp:bgse17_2007&r=exp |
| By: | Lionel Page (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Westminster Business School - University of Westminster); Louis Lévy-Garboua (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - Université du Québec à Montréal, Ecole d'économie de Paris - Paris School of Economics - Université Panthéon-Sorbonne - Paris I); Claude Montmarquette (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - Université du Québec à Montréal, Université de Montréal - Département de Sciences Economique - Université de Montréal) |
| Abstract: | The explanation of social inequalities in education is still a debated issue in economics. Recent empirical studies tend to downplay the potential role of credit constraint. This article tests a different potential explanation of social inequalities in education, specifically that social differences in aspiration level result in different educational choices. Having existed for a long time in the sociology of education, this explanation can be justified if aspiration levels are seen as reference points in a Prospect Theory framework. In order to test this explanation, this article applies the method of experimental economics to the issue of education choice and behaviour. One hundred twenty-nine individuals participated in an experiment in which they had to perform a task over fifteen stages grouped in three blocks or levels. In order to continue through the experiment, a minimum level of success was required at the end of each level. Rewards were dependent on the final level successfully reached. At the end of each level, participants could either choose to stop and take their reward or to pay a cost to continue further in order to possibly receive higher rewards. To test the impact of aspiration levels, outcomes were either presented as gains or losses relative to an initial sum. In accordance with the theoretical predictions, participants in the loss framing group choose to go further in the experiment. There was also a significant and interesting gender effect in the loss framing treatment, such that males performed better and reached higher levels. |
| Keywords: | Education inequality, Prospect Theory, Experimental Economics |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00203145_v1&r=exp |
| By: | Spiliopoulos, Leonidas |
| Abstract: | The purpose of this paper is to reexamine the seminal belief elicitation experiment by Nyarko and Schotter (2002) under the prism of pattern recognition. Instead of modeling elicited beliefs by a standard weighted fictitious play model this paper proposes a generalized variant of fictitious play that is able to detect two period patterns in opponents’ behavior. Evidence is presented that these generalized pattern detection models provide a better fit than standard weighted fictitious play. Individual heterogeneity was discovered as ten players were classified as employing a two period pattern detection fictitious play model, compared to eleven players who followed a non-pattern detecting fictitious play model. The average estimates of the memory parameter for these classes were 0.678 and 0.456 respectively, with five individual cases where the memory parameter was equal to zero. This is in sharp contrast to the estimates obtained from standard weighted fictitious play models which are centred on one, a bias introduced by the absence of a constant in these models. Non-pattern detecting fictitious play models with memory parameters of zero are equivalent to the win-stay/lose-shift heuristic, and therefore some sub jects seem to be employing a simple heuristic alternative to more complex learning models. Simulations of these various belief formation models show that that this simple heuristic is quite effective against other more complex fictitious play models. |
| Keywords: | learning; game theory; behavioral game theory; fictitious play; repeated games; mixed strategy; non-cooperative games; pattern recognition; pattern detection; experimental economics; beliefs; belief elicitation; strategic |
| JEL: | C9 C63 C73 C72 |
| Date: | 2008–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6666&r=exp |
| By: | Uri Gneezy; Kenneth L. Leonard; John A. List |
| Abstract: | This study uses a controlled experiment to explore whether there are gender differences in selecting into competitive environments across two distinct societies: the Maasai in Tanzania and the Khasi in India. One unique aspect of these societies is that the Maasai represent a textbook example of a patriarchal society whereas the Khasi are matrilineal. Similar to the extant evidence drawn from experiments executed in Western cultures, Maasai men opt to compete at roughly twice the rate as Maasai women. Interestingly, this result is reversed amongst the Khasi, where women choose the competitive environment more often than Khasi men, and even choose to compete weakly more often than Maasai men. We view these results as potentially providing insights into the underpinnings of the factors hypothesized to be determinants of the observed gender differences in selecting into competitive environments. |
| JEL: | C9 C91 C93 J15 J16 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13727&r=exp |
| By: | Graham Loomes (School of Economics, University of East Anglia); Chris Starmer (School of Economics, University of Nottingham); Robert Sugden (School of Economics, University of East Anglia) |
| Abstract: | Previous studies suggest that two otherwise robust ‘anomalies’ – preference reversals and disparities between buying and selling valuations – are eroded when respondents participate in repeated markets. We report an experiment which investigates whether this is true when factors neglected in previous studies are controlled, and which distinguishes between anomalies revealed in the behaviour of individual market participants and anomalies revealed in market prices. Our results confirm the decay of buy/sell disparities, but not of preference reversal. This raises doubts about the hypothesis that, in general, repeated markets reveal anomaly-free preferences, even among the marginal traders who determine prices. |
| Keywords: | preference reversal, willingness to accept, willingness to pay, repeated market. |
| JEL: | C91 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2007-10&r=exp |
| By: | Dirk Engelmann (Royal Holloway, University of London); Dorothea Kübler (Technical University Berlin and IZA) |
| Abstract: | In order to address the impact of regulation on ethical concerns of consumers, we study the effect of a minimum wage. In our experimental market, consumers have monopsony power, firms engage in Bertrand competition, and workers are passive recipients of a wage payment. Two treatments are employed, one with no minimum wage in the first part but with a minimum wage in the second part, and one treatment with a minimum wage at the outset that is abolished in the second part. In both treatments, wages decrease over time in the first part even though some consumers show an interest in fair wages. If a minimum wage is in place, wages decline even faster. Introducing a minimum wage in a mature market raises average wages, while abolishing it lowers them. We discuss the implications of our results, such as the crowding out of ethical behavior through legal regulation. |
| Keywords: | fairness, crowding out, consumer behavior, minimum wage, experimental economics |
| JEL: | C91 J88 K31 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3266&r=exp |