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on Experimental Economics |
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Issue of 2017‒10‒08
eighteen papers chosen by |
| By: | Englmaier, Florian; Grimm, Stefan; Schindler, David; Schudy, Simeon |
| Abstract: | We study the role of bonuses, framed as gains and losses, in a unique environment that closely resembles many features of modern working environments: team work, knowledge re-combination and creative problem solving. We conduct a field experiment in cooperation with a provider of real life escape games. Bonuses significantly increase team performance in the field experiment whereas framing the bonus as a loss does not yield additional benefits as compared to the gain frame. We qualitatively replicate these findings with student participants in a lab-in-the field experiment that allows to study potential mechanisms underlying the productivity increase. Our findings suggest that the productivity increase among student participants result from two sources: First, single team members tend to become more dominant and to take more offten the initiative. Second, bonuses induce ”cutting corners” behavior among student participants. In contrast, teams in field experiment, who self-selected into the task, improve performance under bonus incentives without cutting corners more frequently. We discuss the implications of our findings for managers and firms designing contract structures in modern working environments. |
| Keywords: | team work,bonus,incentives,loss,gain,framing,creative |
| JEL: | C92 C93 J33 D03 M52 |
| Date: | 2017 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc17:168286&r=exp |
| By: | Patrick Lubega (Makerere University); Frances Nakakawa (Makerere University); Gaia Narciso (Department of Economics, Trinity College Dublin); Carol Newman (Department of Economics, Trinity College Dublin); Cissy Kityo (JCRC) |
| Abstract: | People living with HIV, in particular women, are often a vulnerable and marginalized group in developing countries. This paper presents the results of a randomized controlled trial designed to test the impact of role models on the livelihoods of women living with HIV in Uganda. Participants in our treatment group were exposed to the screening of short videos of role models telling their personal stories of the challenges and rewards of setting up a business. The videos were screened at HIV clinics over the space of one year. We find that the role models intervention has a positive effect on the probability of starting a business, personal income and income from enterprises and crops. The intervention improves the health of women and children and reduces the probability that children are absent from school. Moreover, women exposed to the videos increase their informal savings. Our results show that providing vulnerable women with role models that empower them to start their own enterprise activities can be effective in improving welfare outcomes. |
| Keywords: | Role models, RCT, HIV. |
| JEL: | D03 I15 I3 |
| Date: | 2017–09 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep2017&r=exp |
| By: | Qiu, Jianying; Ong, Qiyan |
| Abstract: | We develop a new approach to directly and strictly distinguish indecisiveness from indifference, and study the prevalence and welfare implications of indecisiveness. In our approach experimental subjects face a list of pairs of options. Besides the standard choice of choosing one option out of the pair (the binary choice), we also allow experimental subjects to randomize over the two options by choosing probabilities according to which either option determines the payoffs (the randomized choice). Furthermore, we elicit subjects' willingness to pay (WTP) of using the randomized choice via a modified multiple price list method. We show that subjects might strictly prefer the randomized choice over the binary choice when they are indecisive. Our results suggest that (1) the vast majority of subjects randomized actively; (2) subjects took longer time to make strictly randomized decisions; (3) subjects were willing to pay a strictly positive amount of money to randomize, and they were willing to pay more for choices that they feel more indecisive. These results provide strong evidence for the existence of indecisiveness in choices. More importantly, it suggests that there might exist significant welfare losses when indecisive individuals are forced to make all-or-nothing decisions against their potentially incomplete preferences. |
| Keywords: | indecisiveness, indifference, experiment, randomized choices |
| JEL: | C9 C91 D81 |
| Date: | 2017–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:81790&r=exp |
| By: | Yuki Sakura Kristi (Department of Economics, Padjadjaran University); Mohamad Fahmi (Department of Economics, Padjadjaran University); Martin Daniel Siyaranamual (Department of Economics, Padjadjaran University) |
| Abstract: | Through some decades, experimental studies present fascinating findings which challenge economic theories. Samuelson rule predicted that people may contribute too few resources to public goods provision (free-rider problem), but facts presented that actually people could contribute much more because of certain factors. One suggested factor is pro-social behavior. Using tobit regression, this present research examines whether pro-social behavior is a naturally human's innate behavior or a nurtured behavior, specifically whether competitive environment and different socioeconomic status/SES influence pro-social behavior. The data are obtained from dictator game and post-experiment questionnaire about children's SES. By observing children, our research may shed light on the nature of pro-social behavior. The results of control treatment strengthen the notion that people are not always selfishly rational, but we found that children’s donation is doubled in competitive treatment which assures that pro-social behavior is a nurtured behavior. Further, school’s SES also significantly influences pro-social behavior. |
| Keywords: | pro-social behavior, dictator game, children, competition, socioeconomic status, Indonesia |
| JEL: | D64 H41 |
| Date: | 2016–12 |
| URL: | https://d.repec.org/n?u=RePEc:unp:wpaper:201604&r=exp |
| By: | Oliver März |
| Abstract: | Financial incentives are a common tool to encourage overcoming self-control problems and developing beneficial habits. There are different means by which such incentives can be provided, yet, up to date there is little empirical evidence on the relative effectiveness of different incentive designs. In this paper, we conduct a field experiment to explore whether and how incentives that are economically equivalent but framed differently affect the likelihood of exercising at a gym. We find that framing incentives in terms of losses, meaning individuals lose cash incentives by not exercising, encourages more frequent visits to the gym than framing incentives in terms of financial gains. After removing these incentives, we observe habit formation in gym exercise only if incentives were framed as losses rather than gains. The findings are consistent with the concept of loss aversion and suggest that cost reductions and performance improvements can be achieved if opting to frame incentives in terms of losses. |
| Keywords: | framing; self-control; financial incentives; habit formation; loss aversion |
| JEL: | C93 D30 I10 |
| Date: | 2017–09 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/258071&r=exp |
| By: | Josse (J.) Delfgaauw (Erasmus University Rotterdam; Tinbergen Institute, The Netherlands); Robert (A.J.) Dur (Erasmus University Rotterdam, CESifo Munich, and IZA Bonn); Michiel Souverijn (Erasmus University Rotterdam) |
| Abstract: | The performance of a work team commonly depends on the effort exerted by the team members as well as on the division of tasks among them. However, when leaders assign tasks to team members, performance is usually not the only consideration. Favouritism, employees' seniority, employees' preferences over tasks, and fairness considerations often play a role as well. Team incentives have the potential to curtail the role of these factors in favor of performance -- in particular when the incentive plan includes both the leader and the team members. This paper presents the results of a field experiment designed to study the effects of such team incentives on task assignment and performance. We introduce team incentives in a random subsets of 108 stores of a Dutch retail chain. We find no effect of the incentive, neither on task assignment nor on performance. |
| Keywords: | Team incentives; Task assignment; Field experiment |
| JEL: | C93 M12 M52 |
| Date: | 2017–09–22 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20170090&r=exp |
| By: | Giuseppe Danese; Luigi Mittone |
| Abstract: | Many anthropological records exist of apparently worthless objects used in traditional societies, often part of larger institutional arrangements that were instrumental in favoring cooperation and reducing conflict. The most famous examples of such objects are probably the Kula necklaces and armbands first described by B. Malinowski. In our experiment subjects can send a token to another participant before each round of a repeated public good game. We use as tokens a bracelet built by the participants, a piece of cardboard provided by the experimenter, and an object brought from home by the participants. Contributions to the public good in the treatments featuring a bracelet and cardboard are significantly higher than in a control study. The home object was not equally useful in increasing contributions. Notwithstanding the cheap talk nature of the decision to send the token, both sending and receiving the token are associated with a significant increase in contributions. |
| Keywords: | Kula, worthless objects, cooperation, public goods games, signaling, kitoum |
| JEL: | C92 D01 H40 |
| Date: | 2017 |
| URL: | https://d.repec.org/n?u=RePEc:trn:utwpce:1703&r=exp |
| By: | Hett, Florian; Kröll, Markus; Mechtel, Mario |
| Abstract: | Social identity is an important driver of behavior. But where do difierences in social identity come from? We use a novel laboratory experiment based on a revealed preference approach to analyze how individuals choose their identity. Facing a trade-off between monetary payments and belonging to difierent groups, individuals are willing to forego significant earnings to avoid certain groups and thereby reveal their identification preferences. We then show that these identification preferences are systematically related to behavioral heterogeneity in group-specific social preferences. These results illustrate the importance of identification as a choice and its relevance for explaining individual behavior. |
| Keywords: | Social Identity,Identification,Social Preferences,Outgroup Discrimination |
| JEL: | C91 C92 D03 |
| Date: | 2017 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc17:168223&r=exp |
| By: | Yasushi Asako (Waseda University); Yukihiko Funaki (Waseda University); Kozo Ueda (Waseda University and Centre for Applied Macroeconomic Analysis (CAMA)); Nobuyuki Uto (Waseda University) |
| Abstract: | This study experimentally analyzes tradersíchoices, with and without asymmetric information, based on the riding-bubble model. While asymmetric information has been necessary to explain a bubble in past theoretical models, our experiments show that traders have an incentive to hold a bubble asset for longer, thereby expanding the bubble in a market with symmetric, rather than asymmetric information. This Önding implies a possibility that information symmetry promotes cooperation. However, when traders are more experienced, the size of the bubble decreases, in which case bubbles do not arise, even with symmetric information. |
| Keywords: | riding bubbles, crashes, asymmetric information, experiment, clock game |
| JEL: | C72 D82 D84 E58 G12 G18 |
| Date: | 2016–12 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:1613&r=exp |
| By: | Laske, Katharina; Schröder, Marina |
| Abstract: | We introduce a novel experimental design in which creativity is incentivized and measured along three dimensions: quantity, quality and originality of ideas. We implement piece rate incentives for quantity alone, quantity in combination with quality and quantity in combination with originality and compare the results to a baseline with a fixed wage. Studying the effect of incentives on performance in the separate dimensions of creativity, we find that incentives significantly affect the quantity and average quality of ideas, but not the average originality. We show that incentives have both positive direct and negative spillover effects on performance in these dimensions and that organizations, therefore, face tradeoffs when introducing incentives for creative performance. When investigating the effect of incentives on a combined measure of innovation, i.e., the number of creative ideas that are at the same time of high quality and original, we find that incentives for both quantity and originality perform best. |
| Keywords: | creativity,multitasking,laboratory experiment,real-effort,incentives |
| JEL: | C91 J33 M52 O30 |
| Date: | 2017 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc17:168151&r=exp |
| By: | Coviello, Lorenzo; Gneezy, Uri; Götte, Lorenz |
| Abstract: | Companies spend billions of dollars online for paid links to branded search terms. Measuring the effectiveness of this marketing spending is hard. Blake, Nosko and Tadelis (2015) ran an experiment with eBay, showing that when the company suspended paid search, most of the traffic still ended up on its website. Can findings from one of the largest companies in the world be generalized? We conducted a similar experiment with Edmunds.com, arguably a more representative company, and found starkly different results. More than half of the paid traffic is lost when we shut off paid-links search. These results suggest money spent on search-engine marketing may be more effective than previously documented |
| Keywords: | field experiments; search-engine marketing |
| JEL: | C93 D90 |
| Date: | 2017–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:12333&r=exp |
| By: | Daichi Shimamoto (Waseda Institute of Political Economy, Waseda University); Yasuyuki Todo (Graduate School of Economics, Waseda University); Yu Ri Kim (Faculty of Political Science and Economics, Waseda University and Graduate School of Frontier Sciences, The University of Tokyo); Petr Matous (School of Engineering, Department of Civil Engineering, The University of Tokyo and Complex Systems Research Group, Faculty of Engineering and IT, The University of Sydney) |
| Abstract: | This paper investigates peer effects on firm managers’ decisions. We invited 131 randomly selected firm representatives to three one-day seminars on export promotion. We found that peers' invitation in the seminars has a positive effect on firms' participation. We distinguish between peers' invitation on the same day and other days, finding that the former has a positive effect while the latter has no significant effect. These results imply that peer effects arise mostly through a reduction of psychological cost of participation. Our results suggest that multiple equilibria in the share of participants within each network of firms may emerge. |
| Keywords: | peer effects, social networks, information confirmation, free riding, randomized controlled trials |
| JEL: | C93 D22 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:1704&r=exp |
| By: | Kenjiro Hirata; Shinsuke Ikeda; Masako Ikefuji; Myong-Il Kang; Katsunori Yamada |
| Abstract: | Designing efficient environmental policies requires knowledge about households' preference parameters for their intertemporal decisions. By conducting an original Internet-based survey using Japanese participants (n=2,906) and a follow-up survey (n=1,407), we examine how people evaluate pro-environmental policies depending on their individual attributes. The discount rates for environmental outcomes are estimated by using a discrete choice experiment. We show that participants' discount rates in environmental policy choices are on average negative and future-biased. Those who are more ambiguity-averse and patient for money concerns, and anticipate more rapid increases in future temperatures are more willing to incur present-day tax burdens to ensure future environmental improvements. These results are highly robust against alternative estimation models and stable when using the follow-up survey data obtained 21 months later. |
| Date: | 2017–09 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1012&r=exp |
| By: | Hiroki Ozono (Faculty of Law, Economics and Humanities, Kagoshima University); Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Kazumi Shimizu (School of Political Science and Economics, Waseda University) |
| Abstract: | Second-order free riders, who do not owe punishment cost to first-order free riders in public goods games, lead to low cooperation. Previous studies suggest that for stable cooperation, it is critical to have a pool punishment system with second-order punishment, which gathers resources from group members and punishes second-order free riders as well as first-order free riders. In this study, we focus on the priority of punishment. We hypothesize that the pool punishment system that prioritizes second-order punishment is more likely to achieve cooperation than the system that prioritizes first-order punishment, because the former is more likely to obtain sufficient punishment resources. In the experiments, we compare four pool punishment systems: 1To2 (first-order punishment to second-order punishment), 2To1 (second-order punishment to first-order punishment), 1ONLY (first-order punishment only), and 2ONLY (second-order punishment only). We find that the 2To1 and 2ONLY systems can receive more support than the 1To2 and 1ONLY systems and only the 2To1 system can achieve high cooperation. However, the effect of priority of second-order punishment is observed only when the punishment ratio is low (Experiment 1), not high (Experiment 2), in which the punishment resource is relatively abundant. |
| Keywords: | Cooperation, Pool punishment, Second-order free rider, Public goods, Social dilemma |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:1707&r=exp |
| By: | Paetzel, Fabian; Sausgruber, Rupert |
| Abstract: | We study loyalty in groups that are exogenously assigned based on members' performances in a task. We observe that in-group bias is strong and significant among subjects who score high in performance, and that it is weak and insignificant among those who score low. This asymmetric pattern is mirrored in the punishment of disloyal subjects within groups. The results are consistent with an explanation according to which fairness judgments depend on entitlement considerations and provide a new perspective on theory and empirical research that argues that group identity increases with the status of the group. |
| Keywords: | entitlements,fairness,group loyalty,status,punishment,social norms,minimal groups |
| JEL: | C92 D31 D63 |
| Date: | 2017 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc17:168224&r=exp |
| By: | Friebel, Guido; Heinz, Matthias; Krueger, Miriam; Zubanov, Nikolay |
| Abstract: | In a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3%. Each dollar spent on the bonus generates $3.80 in sales, and $2.10 in profit. Wages increase by 2.2% while inequality rises only moderately. The analysis suggests effort complementarities to be important, and the effectiveness of peer pressure in overcoming free-riding to be limited. After rolling out the bonus, treatment and control shops’ performance converge, suggesting long-term stability of the treatment effect. |
| Keywords: | management practices,randomized controlled trial (RCT),field experiment,insider econometrics,wage inequality |
| JEL: | J3 L2 M5 |
| Date: | 2017 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc17:168285&r=exp |
| By: | Shotaro Shiba (Graduate School of Economics, Waseda University); Kazumi Shimizu (Department of Political Science and Economics, Waseda University) |
| Abstract: | Several studies in the time preference literature have found time inconsistencies (TIs) in both the gain and loss domain. However, their relationship within the same person remains unclear: that is, does an individual who demonstrates TI for gain outcomes also do so for loss? To investigate this relationship, we conducted a nonparametric designed experiment that requires only standard axioms and no parametric specification for people’s preferences. In the experiment, we allowed the measurement of TI to depend on character alternatives—such dependency has emerged as a crucial point in recent TI discussions. With these settings, we directly observed TI for gain and loss and found a so-called “future effect” for both outcomes. We also found a positive correlation between the degrees of TI for gain and loss within the same person, irrespective of character alternatives. In addition, in most cases, we found no significant differences between the degrees of TI for gain and loss. These results remained robust even when using another TI measurement. Our findings suggest that people’s TI regarding gain and loss may not differ and the source of TI among individuals is common between their preference for gain and loss. |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:1714&r=exp |
| By: | Simon, Lisa; Piopiunik, Marc; Lergetporer, Philipp |
| Abstract: | From 2014 onwards, Europe has witnessed an unprecedented influx of refugees. We conducted a survey experiment with almost 5,000 university students in Germany in which we randomly shifted the perception of refugees’ education level through information provision. We find that the perceived education level significantly affects respondents’ concerns regarding labor market competition, but these concerns do not translate into general attitudes toward refugees. |
| JEL: | H12 H53 I38 D83 D72 P16 |
| Date: | 2017 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc17:168280&r=exp |