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on Experimental Economics |
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Issue of 2015‒07‒18
seventeen papers chosen by |
| By: | Siyu Wang (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University) |
| Abstract: | This paper investigates why cheap-talk natural language communication is systematically found to promote coordination better than predetermined intention signaling. We hypothesize the reason is that, when communicating with natural language, people both use and respond to intentions and attitudes, where attitude indicates the strength of a message sender’s desire to have her message followed. We test our hypothesis using controlled laboratory experiments in both the United States and China. We find (i) free-form messages do include both signaled intentions and attitudes; (ii) people respond both to intentions and attitudes when making decisions; and (iii) the use of attitude significantly improves coordination. Moreover, while males and females recognize and respond to intentions and attitudes equally well, we find females are more likely to send more demanding signals than males, while males send messages focused more on the equilibrium outcome than attitude. Length: 45 |
| Keywords: | communication; coordination; experiment; attitude; gender |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:gms:wpaper:1053&r=exp |
| By: | Kunte, Sebastian; Wollni, Meike |
| Abstract: | Contract flexibility can be expedient for economic exchange in environments with high ambiguity and risk, but may also encourage opportunistic behavior. We run a modified investment game, including the choice between two different contract designs and asymmetric information about the realized surplus (i.e., hidden knowledge). We examine if Nairobi slum dwellers choose flexible over rigid contracts when interacting in risky environments and whether preferences for contract flexibility are sensitive to the exogenous probability of experiencing a negative shock. We find that most interaction is realized through flexible agreements. Principals offer a higher level of flexibility if the likelihood of a shock is high, relative to the low-risk environment. Agents are somewhat more reluctant to sign rigid agreements when facing the threat of a bad state. While agents and the overall efficiency benefit from higher flexibility, principals always do better by opting for a rigid contract. |
| Keywords: | contract flexibility, risk sharing, hidden knowledge, artefactual field experiment, investment game, Nairobi slums, Kenya, Institutional and Behavioral Economics, Risk and Uncertainty, C72, D82, L14, O12, |
| Date: | 2015–05 |
| URL: | https://d.repec.org/n?u=RePEc:ags:gagfdp:205914&r=exp |
| By: | Pascaline Dupas; Anthony Keats; Jonathan Robinson |
| Abstract: | The welfare impact of expanding access to bank accounts depends on whether accounts crowd out pre-existing financial relationships, or whether private gains from accounts are shared within social networks. To study the effect of accounts on financial linkages, we provided free bank accounts to a random subset of 885 households. Within households, we randomized which spouse was offered an account and find no evidence of negative spillovers to spouses. Across households, we document positive spillovers: treatment households become less reliant on grown children and siblings living outside their village, and become more supportive of neighbors and friends within their village. |
| JEL: | C93 D14 G21 O16 |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:21339&r=exp |
| By: | Huck, Steffen; Szech, Nora; Wenner, Lukas M. |
| Abstract: | In a tedious real effort task, agents can choose to receive information about their piece rate that is either low or ten times higher. One third of subjects deliberately decide to forego this instrumental information, revealing a preference for information avoidance. Strikingly, agents who face uncertainty about their wage outperform all others, including those who know that their wage is high. This also holds for enforced uncertainty. We demonstrate that all our findings can be captured by a model of optimally distorted expectations following Brunnermeier and Parker (2005). |
| Keywords: | Optimal Expectations,Belief Design,Performance,,Real Effort Task |
| JEL: | D83 D84 J31 M52 |
| Date: | 2015 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2015304&r=exp |
| By: | Dmitry Ryvkin (Department of Economics, Florida State University); Danila Serra (Department of Economics, Southern Methodist University); James Tremewan (Department of Economics, University of Vienna) |
| Abstract: | Theoretical and empirical research on corruption has flourished in the last three decades; however, identifying successful anti-corruption policies remains a challenge. In this paper we ask whether bottom-up institutions that rely on voluntary and anonymous reports of bribe demands, such as the "I paid a bribe" website first launched in India in 2010, could act as effective anti-corruption tools, and, if this is the case, whether and how their effectiveness could be improved. We overcome measurement and identification problems by addressing our research questions in the laboratory. Our results suggest that the presence of a reporting platform significantly reduces bribe demands. The most effective platform is one where posting is restricted to service recipients and where posts disclose specific information about the size of the bribes and the location of their requestors, i.e., a platform that could serve as a search engine for the least corrupt officials. |
| Keywords: | information sharing, extortionary corruption, experiment, crowdsourcing |
| JEL: | D73 D49 C91 |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:fsu:wpaper:wp2015_07_01&r=exp |
| By: | Gabriele Camera (Chapman University, University of Basel); Marco Casari (University of Bologna, IZA); Stefania Bortolotti (University of Cologne) |
| Abstract: | We develop a novel theoretical and experimental framework to study adoption and use of cash versus electronic payments in retail transactions. The design allows us to assess the behavioral impact of sellers’ service fees and buyers’ rewards from using electronic payments. In the experiment, buyers and sellers faced a coordination problem, independently choosing a payment method before trading. Sellers readily adopted electronic payments but buyers did not. Eliminating service fees or introducing rewards significantly increased adoption and use of electronic payments. Buyers’ economic incentives played a pivotal role in the diffusion of electronic payments but cannot fully explain their adoption choices. |
| Keywords: | money, coordination, pricing, transactions |
| JEL: | E1 E4 E5 |
| Date: | 2015 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:15-13&r=exp |
| By: | Grolleau, Gilles (SupAgro LAMETA (Laboratoire Montpelliérain d’Économie Théorique et Appliquée) and LESSAC, ESC Dijon); Mateu, Guillermo (LESSAC, ESC Dijon); Sutan, Angela (LESSAC, ESC Dijon, and LAMETA); Vranceanu, Radu (ESSEC Business School and THEMA, Cergy) |
| Abstract: | This paper builds an experiment to investigate whether asking people to state how much they will donate to a charity (to pledge) can increase their actual donation. Individuals’ endowment is either certain or a random variable. We study different types of pledges, namely private, public and irrevocable ones, which differ in individual cost of not keeping a promise. Public pledges appear to be associated to lower donation levels. Irrevocable pledges ensure an amount of donations equal to donations in absence of pledges. Moreover, a significant number of individuals keep their promises, in presence of either private or public pledges. A higher risk attached to the endowment increases donations. |
| Keywords: | Charity giving; Pledge; Commitment; Communication; Experiments |
| JEL: | C91 D03 D64 |
| Date: | 2015–06 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:essewp:dr-15012&r=exp |
| By: | Romero, Christina; Wollni, Meike |
| Abstract: | Linking small farmers to global markets through contract farming has become an important policy recommendation aiming to increase farmers’ income and foster rural development. Nevertheless, some of the arrangements involving small farmers have been reported to loose participants or collapse over time. Trust is an informal institution that can discourage opportunism and facilitate the compliance of contracts in a setting with an expensive and weak legal system. Nevertheless, the study of trust has been addressed mostly in lab experiments, but in the agribusiness context it has been addressed only by a few authors in a rather descriptive way. We use a framed field experiment with prior signaling on a sample of 180 small broccoli farmers in the highlands of Ecuador to explore the effect of opportunistic behavior on small farmers´ trust. The results reveal that this group of farmers has lower than average trust towards unknown people. Furthermore, we use a signal that mimics the payment of a loan by the B partner as treatment in the predesigned trust game. Results show that a positive signal increases trust, but a negative signal has no effect on it. Reacting slowly to external negative signs can threaten individuals who will not protect themselves towards opportunism. If farmers do not react quickly enough, they might face larger losses and will not be able to stay in business. In addition, if informal norms include weak sanctions, contract farming will be less likely and individuals will prefer the spot market were only one-time exchanges take place. |
| Keywords: | small farmers, trust, experiments, signaling, delay on payment, Institutional and Behavioral Economics, D02, Q13, |
| Date: | 2015–06 |
| URL: | https://d.repec.org/n?u=RePEc:ags:gagfdp:206382&r=exp |
| By: | Mueller, Valerie; Billings, Lucy; Mogues, Tewodaj; Peterman, Amber; Wineman, Ayala |
| Abstract: | Gender disparities continue to exist in women’s control, inheritance, and ownership of land in spite of legislation directing improvements in women’s land access. Women are often excluded from traditional patrilineal inheritance systems, often lack the legal know-how or enforcement mechanisms to ensure their property rights are maintained, and often lack initial capital or asset bases to purchase land through market mechanisms. Community-based legal aid programs have been promoted as one way to expand access to justice for marginalized populations, through provision of free legal aid and education. Despite promising programmatic experiences, few rigorous evaluations have studied their impacts in developing countries. We evaluate the effect of a one-year community-based legal aid program in the Kagera Region of northwestern Tanzania using a randomized controlled trial design with specific attention to gender. We measure impacts of access to legal aid on a range of land-related knowledge, attitude, and practice outcomes using individual questionnaires administered to male and female household members separately. Effects were limited in the short term to settings with minimal transaction costs to the paralegal. Treatment women in smaller villages attend legal seminars and are more knowledgeable and positive regarding their legal access to land. Cost-effectiveness analysis shows that the costs of bringing about these changes are moderate. The difference between the impact of the intervention on men and on women is narrowed when taking into account the gender-differentiated paralegal effort, and thus costs, allocated to women and men. |
| Keywords: | Land rights, Land ownership, Gender, Women, assets, Community organizations, inheritance of property, legal aid, |
| Date: | 2015 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:ifprid:1434&r=exp |
| By: | Werner Güth; Charlotte Klempt; kerstin Pull |
| Abstract: | We confront allocator participants with dierent sharing games in a within sub- jects design: the Nash demand game, the ultimatum game, the yes-no-game and the impunity game. We allow participants to opt out rather than play the game under consideration. Beside choice data we also collect belief data to learn more about the mental representations of sharing games. |
| Date: | 2015–03 |
| URL: | https://d.repec.org/n?u=RePEc:iaw:iawdip:118&r=exp |
| By: | Alexia Gaudeul (DFG Research Training Group 1411: The Economics of Innovative Change, Friedrich-Schiller-Universität, Jena) |
| Abstract: | Social lotteries are lotteries that are played along with someone else. The experimental literature indicates that risk attitudes depend on how one's situation in the safe alternative compares to that of a peer. Evaluation of the risky alternative also depends on whether the lottery gives equal payoffs ex-post. Experiments usually present payoffs side-by-side (payoff for me, payoff for the other). This draws attention to inequality in payoffs and thus gives weight to fairness concerns. We consider whether showing own payoff as a share of the total payoff changes risk preferences. Showing total payoffs explicitly draws attention to risk at the level of the pair and may thus moderate dislike for negatively correlated lotteries, as those are less risky at the level of the group. We find that a significant minority of subjects keeps on disliking lotteries that lead to ex-post unequal distributions of payoffs. Subjects also tend to prefer taking a risk rather than obtaining safe but unequal payoff distributions. Beyond reconciling findings from the previous literature, we also discuss differences in sensitivity to the social setting across individuals and the relation between social value orientation in safe and in risky settings. |
| Keywords: | Altruism, Choice under risk, Efficiency, Experiment, Fairness, Inequality aversion, Lotteries, Social lotteries, Social preferences |
| JEL: | C91 D63 D81 |
| Date: | 2015–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:jrp:jrpwrp:2015-010&r=exp |
| By: | Amanda Pallais; Emily Glassberg Sands |
| Abstract: | Referred workers are more likely than non-referred workers to be hired, all else equal. In three field experiments in an online labor market, we examine why. We find that referrals contain positive information about worker performance and persistence that is not contained in workers' observable characteristics. We also find that referrals performed particularly well when working directly with their referrers. However, we do not find evidence that referrals exert more effort because they believe their performance will affect their relationship with their referrer or their referrer's position at the firm. |
| JEL: | C93 J24 J63 M51 |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:21357&r=exp |
| By: | David B. Johnson; Matthew Webb (University of Calgary) |
| Abstract: | We examine decision making in the context of one sided matching: where individuals simultaneously submit several applications to vacancies, each match has an exogenous probability of forming, but each applicant can only fill one vacancy. In these environments individuals choose among interdependent, rival, uncertain outcomes. We design an experiment that has individuals choose a varying number of interdependent lotteries from a fixed set. We find that: 1) with few choices, subjects make safer and riskier choices, 2) subjects behave in a manner inconsistent with expected utility maximizing behavior. We discuss these findings in the context of college application decisions. |
| Date: | 2015–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:clg:wpaper:2015-12&r=exp |
| By: | Kai A. Konrad; Tim Lohse; Salmai Qari |
| Abstract: | This paper studies the effect of endogenous audit probabilities on reporting behavior in a face-to-face compliance situation such as at customs. In an experimental setting in which underreporting has a higher expected payoff than truthful reporting we find an increase in compliance of about 80% if subjects have reason to believe that their behavior towards an officer influences their endogenous audit probability. Higher compliance is driven by considerations about how own appearance and performance affect their audit probability, rather than by social and psychological effects of face-to-face contact. |
| Keywords: | Compliance, audit probability, tax evasion, face value, customs |
| JEL: | H26 H31 C91 K42 |
| Date: | 2015 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp1493&r=exp |
| By: | Sauermann, Jan (SOFI, Stockholm University) |
| Abstract: | Workers' reciprocal behavior is one argument used to explain why firms invest in employee human capital. We explore the relation between firm-sponsored training and reciprocity by providing evidence that workers reciprocate employer training investments by making greater effort. Using a field experiment with random assignment to a training program, we show that reciprocal workers have significantly higher performance than their non-reciprocal peers after participation in the training course. This result suggests that reciprocal workers exert greater effort in response to the firm's investment. |
| Keywords: | firm-sponsored training, reciprocity, field experiment |
| JEL: | J24 M53 D01 |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp9179&r=exp |
| By: | Baert, Stijn (Ghent University); Rotsaert, Olivier (Ghent University); Verhaest, Dieter (KU Leuven); Omey, Eddy (Ghent University) |
| Abstract: | We investigate the impact of student work experience on later hiring chances. To completely rule out potential endogeneity, we present a field experiment in which various forms of student work experience are randomly disclosed by more than 1000 fictitious graduates applying for jobs in Belgium. Theoretical mechanisms are investigated by estimating heterogeneous treatment effects by the relevance and timing of revealed student work experience. We find that neither form of student work experience enhances initial recruitment decisions. For a number of candidate subgroups (by education level and occupation type), even an adverse effect is found. |
| Keywords: | student employment, transitions in youth, human capital, signaling, randomised field experiments |
| JEL: | J24 I21 D83 C93 |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp9170&r=exp |
| By: | Jung , Seeun (ESSEC Business School and THEMA); Vranceanu, Radu (ESSEC Business School and THEMA) |
| Abstract: | This paper reports results from a real-eort experiment in which men and women are paired to form a two-member team and asked to execute a real-effort task. Each participant receives an equal share of the team's output. Workers who perform better than their partner can punish him/her by imposing a fi ne. We manipulate the teams' gender composition (man-man, man-woman, and woman-woman) to analyze whether an individual's performance and sanctioning behavior depends on his/her gender and the gender interaction within the team. The data show that, on average, men perform slightly better than women. A man's performance will deteriorate when paired with a woman, while a woman's performance will improve when paired with a woman. When underperforming, women are sanctioned more often and more heavily than men; if sanctioned, men tend to improve their performance, while women's performance does not change. |
| Keywords: | Gender studies; Real-effort task; Team production; Performance; Punishment; Discrimination |
| JEL: | C91 J16 M52 |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:essewp:dr-15013&r=exp |