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on Experimental Economics |
| By: | Simon Gaechter (University of Nottingham); Daniele Nosenzo (University of Nottingham); Elke Renner (University of Nottingham); Martin Sefton (University of Nottingham) |
| Abstract: | We report an experiment comparing sequential and simultaneous contributions to a public good in a quasi-linear two-person setting (Varian, Journal of Public Economics, 1994). Our findings support the theoretical argument that sequential contributions result in lower overall provision than simultaneous contributions. However, the distribution of contributions is not as predicted: late contributors are sometimes willing to punish early low contributors by contributing less than their best response. This induces early contributors to contribute more than they otherwise would. A consequence of this is that we fail to observe a predicted first mover advantage. |
| Keywords: | Public Goods; Voluntary Contributions; Sequential Moves; Experiment |
| JEL: | C92 H41 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2009-07&r=exp |
| By: | Roe, Brian E. (Ohio State University); Wu, Steven Y. (Purdue University) |
| Abstract: | Experimental studies have consistently shown that cooperative outcomes can emerge even in finitely repeated games. Such outcomes are justified by existing reputation building models, which suggest that cooperative outcomes can be sustained if some subjects have other-regarding preferences. While the existence of other-regarding preferences is typically used to justify experimental outcomes, we are unaware of empirical studies that explicitly examine the interaction between cooperators (those with other-regarding preferences) and selfish subjects in sustaining cooperation. In this paper, we classify subjects as either selfish or cooperative using simple social preference games and then test for behavioral differences between the two types in a finitely-repeated labor market with unenforceable worker effort. Theory predicts, and our data confirms, that (1) selfish players mimic the actions of cooperators when trading partners can track the individual reputation of past partners and (2) selfish and cooperative types act differently when individual reputations cannot be tracked. |
| Keywords: | contracts, relational contracts, implicit contracts, market interaction, experimental economics, repeated transaction, social preferences, reputation, firm latitude, finitely-repeated games |
| JEL: | C91 D31 D86 K12 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4084&r=exp |
| By: | John Beshears; James J. Choi; David Laibson; Brigitte C. Madrian |
| Abstract: | We use an experiment to estimate the effect of the SEC’s Summary Prospectus, which simplifies mutual fund disclosure. Our subjects chose an equity portfolio and a bond portfolio. Subjects received either statutory prospectuses or Summary Prospectuses. We find no evidence that the Summary Prospectus affects portfolio choices. Our experiment sheds new light on the scope of investor confusion about sales loads. Even with a one-month investment horizon, subjects do not avoid loads. Subjects are either confused about loads, overlook them, or believe their chosen portfolio has an annualized log return that is 24 percentage points higher than the load-minimizing portfolio. |
| JEL: | C93 D14 D18 G11 G28 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14859&r=exp |
| By: | Anders U. Poulsen (School of Economics, University of East Anglia); Michael V. M. Roos (Fakultät für Wirtschaftswissenschaft, Ruhr-Universität Bochum) |
| Abstract: | The strategic commitment moves that game theory predicts players make may sometimes seem counter-intuitive. We therefore conducted an experiment to see if people make the predicted strategic move. The experiment uses a simple bargaining situation. A player can make a strategic move of committing to not seeing what another player will demand. Our data show that subjects do, but only after substantial time, learn to make the predicted strategic move. We find only weak evidence of physical timing effects. |
| Keywords: | strategic moves; commitment; bargaining; strategic value of information; physical timing effects; endogenous timing; experiment |
| JEL: | C72 C78 C90 C92 D63 D80 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0906&r=exp |
| By: | Naef, Michael (University of London); Schupp, Jürgen (DIW Berlin) |
| Abstract: | Trust is a concept that has attracted significant attention in economic theory and research within the last two decades: it has been applied in a number of contexts and has been investigated both as an explanatory and as a dependent variable. In this paper, we explore the questions of what exactly is measured by the diverse survey-derived scales and experiments claiming to measure trust, and how these different measures are related. Using nationally representative data, we test a commonly used experimental measure of trust for robustness to a number of interferences, finding it to be mostly unsusceptible to stake size, the extent of strategy space, the use of the strategy method, and the characteristics of the experimenters. Inspired by criticism of the widespread trust question used in many surveys, we created a new, improved survey trust scale consisting of three short statements. We show that the dimension of this scale is distinct from trust in institutions and trust in known others. Our new scale is a valid and reliable measure of trust in strangers. The scale is valid in the sense that it correlates with trusting behaviour in the experiment. Both survey and experimental measure correlate with related factors such as risk aversion, being an entrepreneur or a shareholder. Furthermore, we demonstrate that the survey measure's test-retest reliability (six weeks) is high. The experimental measure of trust is, on the other hand, not significantly correlated with trust in institutions nor with trust in known others. We conclude that the experimental measure of trust refers not to trust in a general sense, but specifically to trust in strangers. |
| Keywords: | representativity, survey, experiment, trust, SOEP |
| JEL: | C91 D63 Z13 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4087&r=exp |
| By: | Graversen, Brian Krogh (SFI - Danish National Centre for Social Research); van Ours, Jan C. (Tilburg University) |
| Abstract: | In an experimental setting some Danish unemployed workers were assigned to an activation program while others were not. Unemployed who were assigned to the activation program found a job more quickly. We show that the activation effect increases with the distance between the place of residence of the unemployed worker and the place where the activation took place. We also find that the quality of the post-unemployment jobs was not affected by the activation program. Both findings confirm that activation programs mainly work because they are compulsory and unemployed don't like them. |
| Keywords: | unemployment insurance, unemployment duration, experiment, activation programs |
| JEL: | C41 H55 J64 J65 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4079&r=exp |
| By: | Alison L. Booth; Patrick Nolen |
| Abstract: | Women and men may differ in their propensity to choose a risky outcome because of innate preferences or because their innate preferences are modified by pressure to conform to gender-stereotypes. Single-sex environments are likely to modify students’ risk-taking preferences in economically important ways. To test this, our controlled experiment gave subjects an opportunity to choose a risky outcome – a real-stakes gamble with a higher expected monetary value than the alternative outcome with a certain payoff- and in which the sensitivity of observed risk choices to environmental factors could be explored. The results show that girls from single-sex schools are as likely to choose the real-stakes gamble as much as boys from either coed or single sex schools, and more likely than coed girls. Moreover, gender differences in preferences for risk-taking are sensitive to the gender mix of the experimental group, with girls being more likely to choose risky outcomes when assigned to all-girl groups. This suggests that observed gender differences in behaviour under uncertainty found in previous studies might reflect social learning rather than inherent gender traits. |
| Keywords: | gender identity, controlled experiment, risk aversion, risk attitudes, single-sex schooling, coeducation |
| JEL: | C9 C91 C92 J16 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:601&r=exp |
| By: | Daniela Raeva; Eric van Dijk |
| Abstract: | We examine the behavioral consequences of experienced regret on subsequent choice. Previous experimental research findings suggest that the impact of experienced regret on repeating subsequent choice is mediated by the anticipation of experiencing regret again. We argue that this impact is due to a mechanism linked to the subjective probability to regret in the subsequent choice. We conducted an experiment to test whether this hypothesis can be generalized to the case where the subsequent choice is different than the preceding one. Participants were presented with a sequence of two different decision tasks: a choice between two risky gambles followed by a matching task. To induce experienced regret, we provided two different types of feedback on the gambles: non-regret and regret feedbacks. To gain insights to the role of anticipated regret in mediating the effect of experienced regret, we also introduced two different types of feedback on the matching task: partial and complete feedback. We found that prior experienced regret and complete feedback on the subsequent choice should be both present for a change in behavior in the subsequent different choice. To interpret our results, we provide analytical considerations based on our hypothesis of changed subjective probability to regret, consistent with the observed behavior. |
| Keywords: | risk choice, regret theory |
| JEL: | A12 C91 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:0903&r=exp |
| By: | Kocher, Martin G. (University of Munich); Pogrebna, Ganna (Columbia University); Sutter, Matthias (University of Innsbruck) |
| Abstract: | We use a laboratory experiment to examine whether and to what extent other-regarding preferences of team leaders influence their leadership style in choice under risk. We find that leaders who prefer efficiency or report high levels of selfishness are more likely to exercise an autocratic leadership style by ignoring preferences of the other team members. Yet, inequity aversion has no significant impact on leadership styles. Elected leaders have a higher propensity than exogenously assigned leaders to use a democratic leadership style by reaching team consensus. Male leaders and leaders influenced by group membership tend to employ a democratic leadership style. |
| Keywords: | leadership style, other-regarding preferences, unobserved heterogeneity |
| JEL: | C91 C92 D70 D81 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4080&r=exp |
| By: | Grimm, Veronika; Mengel, Friederike (METEOR) |
| Abstract: | We study experimentally how players learn to make decisions if they face many different (normal-form) games. Games are generated randomly from a uniform distribution in each of 100 rounds. We find that agents do extrapolate between games but learn to play strategically equivalent games in the same way. If either there are few games or if explicit information about the opponent''s behavior is provided (or both) convergence to the unique Nash equilibrium generally occurs. Otherwise this is not the case and play converges to a distribution of actions which is Non-Nash. Action choices, though, that cannot be explained by theoretical models of either belief-bundling or action bundling are never observed. Estimating different learning models we find that Nash choices are best explained by finer categorizations than Non-Nash choices. Furthermore participants scoring better in the "Cognitive Reflection Test" choose Nash actions more often than other participants. |
| Keywords: | microeconomics ; |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2009007&r=exp |
| By: | Armin Falk; Dieter Dohmen; Uwe Sunde |
| Abstract: | In this paper we discuss the complementarity of laboratory and field data. Experiments offer highly controlled environments that allow precise testing and causal inferences. Survey and field data on the other hand provide information on large and representative samples of people interacting in their natural environment. We discuss several concrete examples how to combine lab and field data and how to exploit potential complementarities. One example describes an experiment, which is run with a representative sample to guarantee control and representativeness. The second example is based on the idea to experimentally validate survey instruments to ensure behavioral validity of instruments that can be used in existing panel data sets. The third example describes the possibility to use the lab to identify causal effects, which are tested in large data sets. Topics discussed in this paper comprise the relation of cognitive skills (IQ) and risk and time preferences, determinants, prevalence and economic consequences of risk attitudes, selection into incentive schemes and the impact of unfair pay on stress. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp168&r=exp |
| By: | Urs Steiner Brandt (Department of Environmental and Business Economics, University of Southern Denmark) |
| Abstract: | Almost all economic and public choice models assume that all people are exclusively pursuing their own material self-interests and do not care about "social" goals per se. Several (laboratory) experiments address the question of the general validity of this assumption. A consistent conclusion emerges that a significant number of people deviate from the assumption of selfish rational behaviour; this conclusion is robust with respect to the design of the experiments. Therefore, public choice comes with a price: the conclusions are based on the stylized stereotype of economic man, an assumption that is not fully satisfied. The purpose of this paper is to show how to incorporate otherregarding preferences into an otherwise traditional utility approach without losing predicting power or compromising the rationality assumption. On the contrary, since other-regarding preferences are based on observed behaviour, the predicting power increases; this is demonstrated at the end of this paper, where it is shown how other-regarding preferences can explain the existence and persistence of a welfare state and why people might act sustainably. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:sdk:wpaper:80&r=exp |