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on Experimental Economics |
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Issue of 2014‒01‒24
nineteen papers chosen by |
| By: | Erte Xiao (Department of Social and Decision Sciences Carnegie Mellon University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University) |
| Abstract: | We develop and model a two-stage incentivized intervention to promote pro-sociality. In the first stage, participants are incentivized to complete a compound task consisting of a targeted pro-social activity and a complement activity. In the second stage, participants are incentivized to complete repeatedly only the complement activity. The model predicts that, conditional on compliance with the first-stage compound task, intrinsic interest in the target activity is promoted regardless of compliance with the second-stage task. To test this we design and implement a field experiment on volunteering. The results are consistent with our model. Moreover, in the one year subsequent to our experiment, those who participated in our compound-task mechanism reported volunteering systematically more than those who participated in alternative mechanisms we investigated. Our approach has useful implications for promoting positive individual and social outcomes in many behavioral domains. Length: 41 |
| Keywords: | volunteering, incentives, pro-social attitudes, cognitive dissonance, field experiment |
| JEL: | C93 D02 D03 D04 D64 H41 Z13 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1043&r=exp |
| By: | Mette Trier Damgaard (Department of Economics and Business, Aarhus University, Denmark); Christina Gravert (Department of Economics and Business, Aarhus University, Denmark) |
| Abstract: | This study designs two field experiments to estimate the effect of binding deadlines and reminders on charitable giving. We sent out 62,000 e-mails and text messages to prior donors of a large Danish charity while varying the length of the deadline and whether they received a reminder. We find that a reminder increases both the likelihood of making a donation and the amount donated. We find no effect of the deadlines on the propensity to give. Instead we observe a “now-or-never” effect; either donations are made immediately or not at all. In line with the “avoiding-the-ask” theory, both shorter deadlines and the reminder increase the number of requests to be taken off the mailing list. |
| Keywords: | Field experiment, charitable contributions, time preferences, avoiding-the-ask |
| JEL: | C93 D03 D64 |
| Date: | 2014–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2014-03&r=exp |
| By: | Christina Gravert (Department of Economics and Business, Aarhus University, Denmark) |
| Abstract: | I conduct a field experiment at a charitable bookstore to provide evidence for the role of identity under "pay-what-you-want pricing". When subtly reminded of their participation in the store's membership program members paid significantly more per book then without a reminder, while this nudge had no effect on non-members. Making an individual aware of its close social connection to the seller can thus, in a charitable setting, increase voluntarily paid prices. |
| Keywords: | Field experiment, Pay-What-You-Want, Charitable contributions, Identity |
| JEL: | C93 D03 D4 D64 |
| Date: | 2014–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2014-04&r=exp |
| By: | Baert, Stijn (Ghent University); Decuypere, Lynn (Ghent University) |
| Abstract: | In this letter we present a laboratory experiment to assess the relative and independent effect of perceived attractiveness and personality traits on hiring decisions. Our results indicate that attractiveness and conscientiousness, followed by emotional stability, are important drivers of recruiters' decisions. |
| Keywords: | lab experiments, hiring discrimination, economics of beauty, economics of personality |
| JEL: | C91 J24 J71 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7847&r=exp |
| By: | Frederik Schwerter |
| Abstract: | This study test whether social reference points impact individual risk taking. In a laboratory experiment, decision makers observe the earnings of a peer subject before making a risky choice. We exogenously manipulate the peer earnings across two treatments. We find a signicant treatment effect on risk taking: decision makers vary their risk taking in order to surpass or stay ahead of their peer. Our findings are consistens with a social-comparison-based, reference-dependent preference model that formalizes relative concerns via social loss aversion. Additionally, we relate our findings to the impact of private reference points on risk taking. |
| Keywords: | Social Comparisons, Social Loss Aversion, Reference-Dependent Preferences, Lab Experiments, Relative Income Concerns |
| JEL: | C91 D03 D81 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:bon:bonedp:bgse11_2013&r=exp |
| By: | Giacomo Degli Antoni (University of Parma, Department of Law; Econometica, Inter-University Center for Economic Ethics and Corporate Social Responsibility, Italy); Gianluca Grimalda (University of Duisburg-Essen, Centre for Global Cooperation Research and Kiel Institute for the World Economy, Germany; LEE-Universitat Jaume I of Castellón, Spain) |
| Abstract: | We investigate the effect of beliefs and preferences on trust and trustworthiness in the first experiment involving a stratified sample of association members and a demographically comparable sample of non-members. We show that: (1) Neither expectations on others’ behaviour nor risk aversion are relevant to account for members’ significantly higher trust and trustworthiness. Hence, members and non-members must differ in their basic preferences. (2) Expectations account for the lower trust and trustworthiness observed in Southern Italians compared to Northern Italians. This sheds light on two issues of main importance in the social capital literature. |
| Keywords: | Trust; Beliefs; Other-regarding preferences; Voluntary associations; Field experiment |
| JEL: | A13 C91 C93 D03 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2013/21&r=exp |
| By: | Cox, Caleb |
| Abstract: | I show how improper conditioning of beliefs can lead to under-contribution in public goods environments with interdependent values. I consider a simple model of a binary, excludable public good. In equilibrium, provision of the public good is good news about its value. Naive players who condition expectations only on their private information contribute too little, despite the absence of free-riding incentives. In a laboratory experiment, subjects indeed under-contribute relative to equilibrium. Using modified games with different belief conditioning effects, I verify that under-contribution is due to improper belief conditioning. I find little evidence of learning over multiple rounds of play. |
| Keywords: | Public goods; experiments; cursed equilibrium; game theory |
| JEL: | C72 C92 D71 H41 |
| Date: | 2014–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53074&r=exp |
| By: | Baert, Stijn (Ghent University); Verhofstadt, Elsy (Ghent University) |
| Abstract: | We identify hiring discrimination against former juvenile delinquents in a direct way. To this end we conduct a field experiment in the Belgian labour market. We find that labour market discrimination is indeed a major barrier in the transition to work for former juvenile delinquents. Labour market entrants disclosing a history of juvenile delinquency get about 22 percent less callback compared to their counterparts without a criminal record. This discrimination is more outspoken among the low-educated. |
| Keywords: | hiring discrimination, field experiments, juvenile delinquency, transitions in youth |
| JEL: | C93 J2 J71 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7845&r=exp |
| By: | Maggian, Valeria (University of Milan Bicocca); Villeval, Marie Claire (CNRS, GATE) |
| Abstract: | While previous research has shown that social preferences develop in childhood, we study whether this development is accompanied by reduced use of deception when lies would harm others, and increased use of deception to benefit others. In a sample of children aged between 7 and 14, we find strong aversion to lying at all ages. Lying is driven mainly by selfish motives and envy. Children with stronger social preferences are less prone to deception, even when lying would benefit others at no monetary cost. Older children lie less than younger children and require more self-justification to lie. |
| Keywords: | lie aversion, deception, social preferences, children, experiment |
| JEL: | C91 D03 D63 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7857&r=exp |
| By: | Ioannou, Christos A.; Makris, Miltiadis |
| Abstract: | Global games and Poisson games have been proposed to address equilibrium indeterminacy in Coordination games. The former assume that agents face idiosyncratic uncertainty about economic fundamentals, whereas the latter, following Myerson (2000), model the number of actual players as a Poisson random variable to capture population uncertainty in large games. Given that their predictions differ, it is imperative to understand which type of uncertainty drives behavior, if any. Recent experimental literature findings that inexperienced (in the sense of limited game-play) subjects' behavior is similar in Global and Common Knowledge Coordination games, thus casting doubts on whether idiosyncratic uncertainty about economic fundamentals is an important determinant of such behavior. We design an experiment to study the behavior of inexperienced subjects in Global, Poisson and Common Knowledge Coordination games. Our findings corroborate the above experimental literature. More importantly, they also suggest that uncertainty about the number of actual players in large games does influence inexperienced subjects' behavior. In addition, inexperienced subjects' behavior under such uncertainty is, in fact, consistent with the theoretical prediction of Poisson Coordination games |
| Date: | 2014–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:stn:sotoec:1401&r=exp |
| By: | Catia Batista (Nova University of Lisbon); Gaia Narciso (Trinity College Dublin) |
| Abstract: | Do information flows matter for remittance behavior? We design and implement a randomized control trial to quantitatively assess the role of communication between migrants and their contacts abroad on the extent and value of remittance flows. In the experiment, a random sample of 1,500 migrants residing in Ireland was offered the possibility of contacting their networks outside the host country for free over a varying number of months. We find a sizable, positive impact of our intervention on the value of migrant remittances sent. Our results exclude that the remittance effect we identify is a simple substitution effect. Instead, our analysis points to this effect being a likely result of improved information via factors such as better migrant control over remittance use, enhanced trust in remittance channels due to experience sharing, or increased remittance recipients’ social pressure on migrants |
| Keywords: | information flows, international migration, migrant networks, remittances, randomized control trial |
| JEL: | F22 J61 O15 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2014001&r=exp |
| By: | Keser, Claudia; Schnitzler, Cornelius |
| Abstract: | Pay-for-performance has been enjoying a growing popularity among healthcare policy makers. It attempts to tie physician payment to quality of care. In a controlled laboratory experiment, we investigate the effect of pay-for-performance on physician provision behavior and patient benefit. For that purpose, we compare two payment systems, a traditional fee-for-service payment system and a hybrid payment system that blends fee-for-service and pay-for-performance incentives. Physicians are found to respond to pay-for-performance incentives. Approximately 89 percent of the participants qualify for a pay-for-performance bonus payment in the experiment. The physicians' relative share of optimal treatment decisions is significantly larger under the hybrid payment system than under fee-for-service. A patient treated under the hybrid payment system is significantly more likely to receive optimal treatment than a fee-for-service patient of matching type and illness. Pay-for-performance in many cases alleviates over- and under-provision behavior relative to fee-for-service. We observe unethical treatment behavior (i.e., the provision of medical services with no benefit to the patient), irrespective of the payment system. -- |
| Keywords: | experimental economics,physician remuneration,pay-for-performance (P4P) |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:173&r=exp |
| By: | W. David Bradford; Paul Dolan; Matteo M. Galizzi |
| Abstract: | Time discounting is at the heart of economic decision-making. We disentangle hyperbolic discounting from subjective time perception using experimental data from incentive-compatible tests to measure time preferences, and a set of experimental tasks to measure time perception. The two behavioural parameters may be related to two factors that affect how we look ahead to future events. The first is that some component of time preferences reflect hyperbolic discounting. The second factor is that non-constant discounting may also be a reflection of subjective time perception: if people's perception of time follows a near logarithmic process (as all other physiological perceptions such as heat, sound, and light do) then all existing estimates of individual discounting will be mis-measured and incorrectly suggest "hyperbolic" discounting, even if discounting over subjective time is constant. To test these hypotheses, we empirically estimate the two distinct behavioural parameter s using data collected from 178 participants to an experiment conducted at the London School of Economics Behavioural Research Lab. The results support the hypothesis that apparent non-constant discounting is largely a reflection of subjective time perception. |
| Keywords: | Time preferences, Time perception, Hyperbolic discounting |
| JEL: | D1 D10 D91 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1255&r=exp |
| By: | Ganesh Seshan; Dean Yang |
| Abstract: | We randomly assigned male migrant workers in Qatar invitations to a motivational workshop aimed at improving financial habits and encouraging joint decision-making with spouses back home in India. 13-17 months later, we surveyed migrants and wives to estimate intent-to-treat impacts in their transnational households. Wives of treated migrants changed their financial practices, and became more likely to seek out financial education themselves. Treated migrants and their wives became more likely to make joint decisions on money matters. Treatment effects on financial outcomes show potential heterogeneity, with those with lower prior savings saving differentially more than those with higher prior savings. |
| JEL: | C93 F24 O12 O16 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19805&r=exp |
| By: | Clemens, Georg; Rau, Holger A. |
| Abstract: | This paper experimentally analyzes the cartel coordination challenge induced by the discrimination of cartel ringleaders in leniency policies. Ringleaders often take a leading role in the coordination and formation of a cartel. A leniency policy which grants amnesty to all whistleblowers except for ringleaders may therefore reduce the incentive to become a ringleader and may disrupt cartel formation. We analyze discriminatory and non-discriminatory leniency policies in a multi-stage cartel formation experiment where multiple ringleaders may emerge. Although theory predicts that cartels will always be reported, whistleblowing rarely occurs. Paradoxically the discriminatory leniency policy induces more firms to become ringleaders, which ultimately facilitates coordination in the cartel. -- |
| Keywords: | Cartels,Leniency Programs,Ringleader Discrimination,Experiment |
| JEL: | C92 K21 L41 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:130&r=exp |
| By: | Huck, Steffen; Schmid, Julia; Wallace, Brian |
| Abstract: | We present a laboratory experiment on the impact of price framing on consumer decision making. Consumer subjects face a search market where two sellers offer a homogenous good. We examine six different price frames with linear per-unit pricing (that is displayed as such) serving as a benchmark. We find that all frames deviating from the benchmark have some negative impact on consumer decision making. The most striking result concerns drip pricing (where prices are decomposed into three elements and dripped in during the purchasing process). While leaving the actual decision problem unchanged, drip pricing wipes out 25% of consumer surplus. -- Anhand eines Laborexperiments überprüfen wir den Einfluss verschiedener 'price frames' auf das Entscheidungsverhalten von Konsumenten. Die Konsumenten entscheiden über den Kauf von gleichartigen Gütern, die von zwei Verkäufern auf einem Suchmarkt angeboten werden. Es werden sechs verschiedene Arten, die Preise der Güter zu präsentieren, untersucht, wobei der lineare Stückpreis als Benchmark dient. Es zeigt sich, dass alle Preisrahmungen, die von dem Benchmark abweichen, einen negativen Einfluss auf das Entscheidungsverhalten haben. Das augenfälligste Resultat ist der Effekt des sogenannten drip pricing. Hier ist der Endpreis in drei Bestandteile geteilt, die während des Kaufprozesses nach und nach offenbart werden. Obwohl das eigentliche Entscheidungsproblem unverändert bleibt, sinkt die Konsumentenrente unter 'drip pricing' um 25%. |
| JEL: | C72 C92 D21 D43 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2013314&r=exp |
| By: | Urs Fiscbacher; Gerson Hoffmann; Simeon Schudy |
| Abstract: | The disposition effect, i.e., the tendency to sell winning stocks too early and losing stocks too late is one of the most frequently observed and discussed biases of financial investors. We investigate in a laboratory experiment whether the option of automatic selling devices causally reduces investorsÕ disposition effect. Our investors can actively buy and sell assets, and, in the treatment group, additionally use stop-loss and take-gain options to automatically sell assets. Investors who had access to the automatic selling devices had significantly smaller disposition effects. The reduction was driven by a significant increase in realized losses. The proportion of winners realized was similar in both treatments. Additionally, our setup provides new evidence on which reference prices investors relate to when choosing limits for automatic sales. |
| Keywords: | disposition effect, stop-loss orders, limit sales, experiment, finance |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0089&r=exp |
| By: | Alessandro Tarozzi; Jaikishan Desai; Kristin Johnson |
| Abstract: | We use data from a randomized controlled trial conducted in 2003-2006 in rural Amhara and Oromiya (Ethiopia) to study the impacts of the introduction of microfinance in treated communities. We document that borrowing increased substantially in locations where the programs started their operations, but we find mixed evidence of improvements in a number of socio-economic outcomes, including income from agriculture, animal husbandry, non-farm self-employment, schooling and indicators of women's empowerment. |
| Keywords: | Microcredit; Cluster Randomized Controlled Trial; Ethiopia |
| JEL: | O12 O16 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1407&r=exp |
| By: | Raymond P. Guiteras; B. Kelsey Jack |
| Abstract: | An observed positive relationship between compensation and productivity cannot distinguish between two channels: (1) an incentive effect and (2) worker selection. We use a simplified Becker-DeGroot-Marschak mechanism, which provides random variation in piece rates conditional on revealed reservation rates, to separately identify the two channels in the context of casual labor markets in rural Malawi. A higher piece rate increases output in our setting, but does not attract more productive workers. Among men, the average worker recruited at higher piece rates is actually less productive. Local labor market imperfections appear to undermine the worker sorting observed in well-functioning labor markets. |
| JEL: | C93 J22 J24 J33 O12 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19825&r=exp |