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on Experimental Economics |
| By: | Reuben, Ernesto; Sapienza, Paola; Zingales, Luigi |
| Abstract: | This paper shows that there is a positive and statistically significant correlation between the short-term discount rate over a monetary reward and the short-term discount rate over a primary reward (chocolate). This correlation, however, is absent among subjects who do not like chocolate and are not hungry. This suggests that monetary rewards are suitable for the study of intertemporal choice. In fact, given the problems associated with the use of primary rewards (differing tastes for the good, hunger, and possible satiation), we argue that measurement with monetary rewards is more reliable. |
| Keywords: | time preferences; hyperbolic discounting; intertemporal choice |
| JEL: | D90 D01 C91 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10650&r=exp |
| By: | Matthias Sutter; Jürgen Huber; Michael Kirchler |
| Abstract: | We study whether information about imminent future dividends can abate bubbles in experimental asset markets. Using the seminal design of Smith et al. (1988) we find that markets where traders are asymmetrically informed about future dividends have smaller, and shorter, bubbles than markets with symmetrically informed or uninformed traders. Hence, fundamental values are better reflected in market prices – implying higher market efficiency – when some traders know more than others about the future prospects of an asset. We also find that asymmetric information has a similar abating impact on bubbles as when uninformed traders accumulate experience, though for different reasons. |
| Keywords: | Bubbles, information, experiment |
| JEL: | C91 D83 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2008-20&r=exp |
| By: | Helena Veiga; Marc Vorsatz |
| Abstract: | We study with the help of a laboratory experiment the conditions under which an uninformed manipulator - a robot trader that unconditionally buys several shares of a common value asset in the beginning of a trading period and unwinds this position later on - is able to induce higher asset prices. We find that the average contract price is significantly higher in the presence of the manipulator if, and only if, the asset takes the lowest possible value and insiders have perfect information about the true value of the asset. It is also evidenced that the robot trader makes trading gains; i.e., independently on whether the informed traders have perfect or partial information, it earns always more than the average trader. Finally, not only uninformed subjects suffer from the presence of the robot trader, but also some of the imperfectly informed insiders have lower payoffs once the robot trader is added as a market participant. |
| Keywords: | Asset market, Experiment, Price manipulation, Rational expectations |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wsrepe:ws084110&r=exp |
| By: | Reuben, Ernesto; Sapienza, Paola; Zingales, Luigi |
| Abstract: | We study experimentally the effect of expectations on trustworthiness. Most subjects respond with untrustworthy behavior if they find out that little is expected from them. This suggests that guilt aversion plays an important role in inducing trustworthiness. |
| Keywords: | trust; trustworthiness; reciprocity; guilt aversion |
| JEL: | C92 Z13 C72 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10653&r=exp |
| By: | Steven D. Levitt; John A. List |
| Abstract: | This study presents an overview of modern field experiments and their usage in economics. Our discussion focuses on three distinct periods of field experimentation that have influenced the economics literature. The first might well be thought of as the dawn of "field" experimentation: the work of Neyman and Fisher, who laid the experimental foundation in the 1920s and 1930s by conceptualizing randomization as an instrument to achieve identification via experimentation with agricultural plots. The second, the large-scale social experiments conducted by government agencies in the mid-twentieth century, moved the exploration from plots of land to groups of individuals. More recently, the nature and range of field experiments has expanded, with a diverse set of controlled experiments being completed outside of the typical laboratory environment. With this growth, the number and types of questions that can be explored using field experiments has grown tremendously. After discussing these three distinct phases, we speculate on the future of field experimental methods, a future that we envision including a strong collaborative effort with outside parties, most importantly private entities. |
| JEL: | C9 C93 D0 H0 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14356&r=exp |
| By: | Jean-Philippe Atzenhoffer |
| Abstract: | The Tragedy of the Commons refers to the dissipation of a common- pool ressource when any appropriator has free access to it. Under the behavior of absolute payoff maximisation, the common-pool resource game leads to a Nash equilibrium in which the resource is overexploited. However, some empirical studies show that the overutilization is even larger than the Nash equilibrium predicts. We account for these results in an evolutionary framework. Under an imitation-experimentation dynamics, the long run stable behavior implies a larger exploitation of the resource than in the classical Nash equilibrium. |
| Keywords: | common-pool resource, imitation behavior, evolutionary stable strategy, evolutionary games. |
| JEL: | C73 D41 Q20 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2008-21&r=exp |
| By: | Omar Al-Ubaydli (Department of Economics and Mercatus Center, George Mason University); Min Sok Lee |
| Abstract: | Do people have a stronger propensity to reward or punish? When reacting to intentions, Offerman (2002) concluded that people punish more. Using the Falk and Fischbacher (2006) model, we extend Offerman's design in two ways. First, we control for the strength of the positive/negative intentions to which an individual reacts when rewarding/punishing. Second, we can precisely compare the strength of intention- and distribution-based motives for reward/punishment. Doing so requires measuring second-order expectations of subjects' own behavior, i.e., what a subject predicts that other subjects predict that he will do. Second-order expectations can be elicited directly or they can be induced by telling a subject what others expect him to do.Under elicited second-order expectations, we find that negative reciprocity is stronger than positive reciprocity, though if we isolate the distributional motive for reciprocity, then we find that positive reciprocity is stronger than negative reciprocity. Under induced second-order expectations, positive distributional reciprocity is stronger than negative distributional reciprocity while other forms of reciprocity are equally strong. |
| Keywords: | reciprocity, reward, punishment |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1005&r=exp |
| By: | Christopher F. Chabris; David Laibson; Carrie L. Morris; Jonathon P. Schuldt; Dmitry Taubinsky |
| Abstract: | We use two different approaches to measure intertemporal preferences. First we employ the classical method of inferring preferences from a series of choices (subjects choose between $X now or $Y in D days). Second we adopt the novel approach of inferring preferences using only response time data from the same choices (how long it takes subjects to choose between $X now or $Y in D days). In principle, the inference from response times should work, since choices between items of nearly equivalent value should take longer than choices between items with substantially different values. We find that choice-based analysis and response-time-based analysis yield nearly identical discount rate estimates. We conclude that response time data sheds light on both our revealed (choice-based) preferences and on the cognitive processes that implement those preferences. |
| JEL: | C0 D01 D87 D9 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14353&r=exp |