2014 ESA North-American Meeting,
Fort Lauderdale, Florida
Oct 16-18, 2014
XS/FS The Experimental Social Science
Cluster at FSU
Last Revised 07:10:41 PDT, 2014.10.15
Program Overview
Venue: The Westin Beach Resort & Spa in Fort Lauderdale,
Florida
Thursday, Oct 16 2014
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6:00 pm - 8:00 pm ESA Welcome Reception
Friday, Oct 17, 2014
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8:00am - 8:50am Breakfast
9:00am - 10:00am Plenary Talk I (Las Olas Ballroom I-II-V-VI): Rebecca Morton,
'Experiments on Other-Regarding Voting'
10:00am - 10:20am Coffee Break (Las Olas Foyer I)
10:20am - 12:00am Parallel Sessions 1
12:00pm -1:30pm Lunch Break
1:30pm - 3:10pm Parallel Sessions 2
3:10pm - 3:30pm Coffee Break (Las Olas Foyer I)
3:30pm - 5:00pm Parallel Sessions 3
Saturday, Oct 18, 2014
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8:00am - 8:50am Breakfast
9:00am - 10:40am Parallel Sessions 4
10:40am - 11:00am Coffee Break (Las Olas Foyer I)
11:00am - 12:40am Parallel Sessions 5
12:40pm -2:10pm Lunch Break
2:10pm - 3:50pm Parallel Sessions 6
3:50pm - 4:10pm Coffee Break (Las Olas Foyer I)
4:10pm - 5:50pm Parallel Sessions 7
6:15pm - 7:00pm Cash Bar Open at Las Olas Ballroom
7:00pm - 10:00pm Plenary Talk (Las Olas Ballroom I-II-V-VI): John Kagel 'TBD', and
Conference Dinner
Friday, Oct 17, 9:00am -10:00am
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Plenary Talk I (Las Olas Ballroom I-II-V-VI): Rebecca Morton, NYU 'Experiments
on Other-Regarding Voting'
Chair: TBD
Saturday, Oct 18, 7:00pm -10:00pm
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Plenary Talk (Las Olas Ballroom I-II-V-VI): John Kagel 'TBD', and Conference
Dinner
Friday, 10:20 AM
Session 1, Atlantic Ballroom I: Decision Theory
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Tom Cunningham, Biases and Implicit Knowledge
Daniel Saunders, Errors and Altruism in Threshold Public Goods
Ragan Petrie, Adaptive Preferences
Matt Goldman, Loss Aversion around a Fixed Reference Point in Highly Experienced
Agents
Session 2, Atlantic Ballroom II: Repeated Games I
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Julian Romero, Constructing Strategies in Indefinitely Repeated Games
Sevgi Yuksel, Backward Induction in the Finitely Repeated Prisoner's Dilemma:
Experimental Evidence
Ajalavat Viriyavipart, Equilibrium Selection in Global Entry Games with Strategic
Substitutes and Complements
Anthony Bradfield, Forgiveness: Do Grand Gestures Work?
Session 3, Atlantic Ballroom III: Communication I
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Kory Garner, Contests, Communication, and Network Externalities: An Experiment
Rulliere Jean-Louis, Independent Behavior and Communication in Corporate Governance
Benjamin Ho, The Present Value of Future Explanations
David Cooper, Silence is Golden: Communication Cost and the Team Problem Solving
Session 4, Atlantic Ballroom IV: Coordination
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John Hamman, Coordination Norms in Dynamic Groups
Katerina Sherstyuk, Auctions or Contests? Allocating the Right to Play a Minimum
Effort Coordination Game
Michalis Drouvelis, Social Identity and Punishment in a Minimum Effort Game
Koji Abe, Experiments on the Emergence of Leadership in Teams
Session 5, Atlantic Ballroom V: Field Experiments I
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Antonios Proestakis, Peer Active field experiment: Social networks and peer pressure for
raising physical activity in children.
Rong Rong, I'll Be There: Promises in the Field
Sera Linardi, Globalization and Altruism Towards the Poor: An Experimental Study in
India
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John Gibson, Beliefs, Preferences and Migration: Evidence from Combining Lab-in-Field
and Natural Experiments
Session 6, Atlantic Ballroom VI: Markets I
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Cary Deck, Do Prediction Markets Aid Defenders in a Weak-Link Contest?
Sascha Fullbrunn, A speculation elicitation task
Aleksandar Giga, Asset allocation: an experimental analysis
Li Qi, Liquidity Shocks in Experimental Asset Markets
Session 7, Las Olas Ballroom III: Labor I
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Walter Theseira, The Effect of Free Travel on Labour Choices: Evidence from a largescale policy experiment
Frederic Schneider, Job Tenure and Job Hopping as a Signal of Reliability: Combined
Evidence from a Lab, a Field, and a Survey Experiment
Fatemeh Momeni, The value of Interim Performance Information: An experiment
Session 8, Las Olas Ballroom IV: Voting
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Jens Grosser, Tentative and definite policy proposals in committees: An experimental
study
Andrzej Baranski, Individual Contributions and Collective Redistribution
Kai Ou, The Origin of Other-regarding Voting: The Effects of Economic Status on
Voting Behavior in a Real-Effort Experiment
Dmitry Ryvkin, The chicken or the egg: An experimental study of democracy survival,
income, and inequality
Friday, 1:30 PM
Session 1, Atlantic Ballroom I: Decision Theory: Risk and Ambiguity I
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Giorgia Romagnoli, The effect of ambiguity on status quo bias - An experimental study
Catherine Eckel, Inconsistency Pays
Svetlana Pevnitskaya, Separating risk preferences and ambiguity preferences
Daniel Burghart, A Risky Perspective On Uncertainty
Session 2, Atlantic Ballroom II: Repeated Games II
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Alistair Wilson, Dynamic Games and Markov Perfection: Putting the 'conditional' in
cooperation
Piotr Evdokimov, Cooperative Institutions
Maren Tonn, Division of the Tax Burden in Investment Settings - An Experimental
Investigation
Session 3, Atlantic Ballroom III: Communication II
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Siyu Wang, Demanding or Deferring? An Analysis of Simultaneous Communication
with Attitude
Jonathan Lafky, Incentives for Social Information Transmission: Theory and Behavior
Diego Grijalva, Fighting with Words: Contested Communication in a Social Dilemma
Roman Sheremeta, Asymmetric and Endogenous Communication in Competition
between Groups
Session 4, Atlantic Ballroom IV: Contests I
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Blake Allison, An Experimental Study of the Role of Bargaining in Investment in
Conflict
J. Philipp Reiss, Behavioral Variation in Tullock Contests
Jonathan Woon, Behavior and Search in Contests with Asymmetric Valuations
John Lightle, An experimental study of sorting in group contests
Session 5, Atlantic Ballroom V: Field Experiments II
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Elif Incekara Hafalir, Self-Control and Awareness: Evidence from Homeless Shelter
Sheheryar Banuri, Fight for thrill or fight for country? Task vs. mission based motives in
healthcare
Jing Cai, Subsidy Policies and Insurance Demand
Jing Cai, The Impact of Contract Design on Insurance Take-up
Session 6, Atlantic Ballroom VI: Markets II
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Li Hao, Analysis of Dynamic Games with Biased Beliefs: An Experimental Study
Alexander Brown, Exploding Offers with Experimental Consumer Goods
James Fan, The Robustness of Asset Markets as an Equilibrium Selection Device in
Coordination Games
Curtis Kephart, Hotelling in Continuous Time
Session 7, Las Olas Ballroom III: Labor II
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Jonathan de Quidt, Your Loss Is My Gain: A Recruitment Experiment With Framed
Incentives
Luigi Butera, Hidden Costs of Control under Aligned Monetary Interests
Michele Belot, Does Searching Broader Improve Job Prospects?
Erich Cromwell, The Gift of the Living Wage: A Study of Unequal Wage Schedules in
an Experimental Labor Market
Session 8, Las Olas Ballroom IV: Macroeconomics and Behavior
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Anthony Kwasnica, Aggregate Sentiment and Investment: An Experimental Study
Luba Petersen, Monetary Policy and Central Bank Communication in Liquidity Traps
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Matthias Weber, Macroeconomic Behavior and Monetary Policy under Behavioral
Expectations: Theory and Experiment
Friday, 3:30 PM
Session 1, Atlantic Ballroom I: Decision Theory: Risk and Ambiguity II
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Devjani Roy, The Anatomy of Ignorance: Literature as the Laboratory
Kim Fairley, Ambiguity attitudes and borrowing behavior
Alex Roomets, A Test of Ambiguity Hedging and Timing
Kim Fairley, Social sources of risk and ambiguity
Session 2, Atlantic Ballroom II: Ethical Behavior
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Quoc Tran, Wealth Status and Unethical Behavior
Silvia Saccardo, Motivated Self-Deception and Unethical Behavior
Melinda Ford, Social Norm or Window Dressing: The Effectiveness of Codes of Ethics
Paola Mallucci, Power and Fairness
Session 3, Atlantic Ballroom III: Matching Markets
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Ming Jiang, When Do Stable Matching Mechanisms Fail? The Role of Standardized Test
in College Admissions
Tingting Ding, Learning versus inter-generational advice in school matching
mechanisms: An experimental study
Daniel Stephenson, Evolutionary Preference Revelation Dynamics under School Choice
Mechanisms
Ahrash Dianat, Truncation Strategies in Two-Sided Matching Markets: Theory and
Experiment
Session 4, Atlantic Ballroom IV: Contests II
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Lucas Rentschler, Behavior in highly competitive all-pay auctions
Ernesto Reuben, Turf Wars
Puja Bhattacharya, Asymmetric Team Contest
Zhengzheng Wang, An Experimental Analysis of the Non-constant-sum Colonel Blotto
Game
Session 5, Atlantic Ballroom V: Field Experiments: Social Behavior
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Angelino Viceisza, Coordination requires more than one leader! Experimental Evidence
from Rural Producer Organizations in Senegal
Bettina Rockenbach, Direct and indirect punishment among strangers coexist in the field
Lars Hansen, Guilt and pro social motivation crowding out
Maria Santana, Trust in Microfinance Markets
Session 6, Atlantic Ballroom VI: Markets III
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Jean Paul Rabanal, Evolution of markets: Call Market, Decentralized and Posted Offer
Greg Leo, Taking Turns
J. Forrest Williams, Time as Money: Contribution-Based Assignment Auctions
Session 7, Las Olas Ballroom III: Labor III
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Angela de Oliveira, Reward the Lucky?
Karim Sadrieh, Organizational distance and reciprocity in labor relationships
Thorsten Chmura, Perceptions and Misconceptions: Multi Channel Beliefs, Economic
Preferences, Trust and Cooperation Decisions in the UK (England, Ireland, Northern
Ireland, Scotland and Wales)
Ola Andersson, Risking Other People's Money: Experimental Evidence on Bonus
Schemes, Competition, and Altruism
Session 8, Las Olas Ballroom IV: Auctions I
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Arthur Zillante, Budget Constrained Bidding
Robert A. White, The effect of feedback on performance of charity auctions
Sotiris Georganas, Not Optimal but Reasonable: Revisiting Overbidding in Sealed Bid
Auctions
Kevin McLaughlin, Online Ad Auctions: An Experiment
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Saturday, 9:00 AM
Session 1, Atlantic Ballroom I: Decision Theory: Risk I
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P. C. Roger Cheng, An Experimental Investigation of Probability Weighting in Risky
Choice under Civil Court Scenario
Maik Kecinski, Stigma Mitigation and the Importance of Redundant Treatments: On
Overcoming Concerns about Drinking Water Contamination
Todd Swarthout, An Eye-tracking Study of Risky Choice
Matthias Wibral, How Malleable Are Choice Brackets? The Case of Myopic Loss
Aversion
Session 2, Atlantic Ballroom II: Methodology I
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Maria Recalde, Public good games with interior Nash equilibria: Advantages of the
piece-wise linear VCM
Ronald Peeters, Eliciting and aggregating individual expectations: An experimental study
Muriel Niederle, Pre-Analysis Plans are not the Solution Replications Might Be
Antonio Alonso Arechar, Conducting interactive decision making experiments online
Session 3, Atlantic Ballroom III: Pro-Social Behavior I
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Lars Hansen, Price reactions when consumers are concerned about pro-social reputation
Hakan Holm, Are Entrepreneurs More Prosocial than Others?
Alexander Gotthard Real, Visibility, Group Size and Pro-Social Behavior
Yunfeng Lu, Prosocial Behavior Differences within China Explained by the Rice Culture
Session 4, Atlantic Ballroom IV: Public Goods I
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Tim Cason, Rewarding Insufficient Contributions Promotes the Voluntary Provision of
Public Goods
Andrea Robbett, Is There Cooperation with Private Valuation? Demand Revelation in a
Public Goods Game
Toke Fosgaard, How much does cooperation decay? An experimental study of a repeated
public good game among ordinary citizens
Jose Castillo, Four Classic Public Goods Experiments: A replication study
Session 5, Atlantic Ballroom V: Incentive Schemes in the Field and in the Lab
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Severine Toussaert, Connecting commitment to self-sontrol: a field experiment with
participants in a weight loss challenge
Anat Bracha, Nudging a Score in the US
Sabrina Teyssier, Energy Saving Measures and Heterogeneous Preferences: Investments
and Consumption
Chiradip Chatterjee, Emission Tax and Health Insurance: Policy Treatments to Reduce
Residential Energy Consumption
Session 6, Atlantic Ballroom VI: Games
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Emanuel Vespa, Endogenous sample selection in common value environments: A
laboratory study
Sandra Maximiano, Game Form Representation and Knowledge Spillovers
Joseph Wang, Uncover Components of Individual's Strategic IQ: An Experimental Study
Zhijian Wang, Non-equilibrium in Laboratory Fixed Pair Matching Pennies Game
Session 7, Las Olas Ballroom I: Charitable Giving
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Jeffrey Naecker, The Lives of Others: Predicting Donations with Non-Choice Responses
Edward Millner, Charitable Giving, Charitable Taking, and Taking Aversion
Laura Gee, Matching Money and Donor Beliefs
Christine Exley, Excusing Selfishness in Charitable Giving: The Role of Risk
Session 8, Las Olas Ballroom III: Auctions II
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Ro'i Zultan, Auction Mechanisms and Bidder Collusion: Bribes, Signals and Selection
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Yuri Khoroshilov, An experimental study of signaling in takeover auctions with flexible
reserve price
Charles Holt, A Comparison of the Price and Quantity 'Collars' for Stabilizing Emissions
Allowance Prices
Krista Jabs Saral, Speculators and Entry in Multi-Object Auctions with Resale
Saturday, 11:00 AM
Session 1, Atlantic Ballroom I: Decision Theory: Risk II
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Jason Aimone, Nudging' Risky Decision-Making: How Modifying Information Order
Influences Decision-Making Under Risk
Mengxia Zhang, Can there ever be too many flavors of Häagen-Dazs?: Choice overload,
product category stereotypes and sampling risk
Daniel Burghart, The Two Faces of Independence: Betweenness and Homotheticity
Jonathan de Quidt, Judgements of Preference and Judgements of Fact
Session 2, Atlantic Ballroom II: Methodology II
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Stephen Cheung, Replications Might Be
Glenn Harrison, Recovering Subjective Probability Distributions
Tom Cunningham, Identifying Implicit Preferences
Younjun Kim, Does pay-one-randomly incentive mechanism bias elicited risk references
in multiple-price-list methods?
Session 3, Atlantic Ballroom III: Pro-Social Behavior II
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Margaret Samahita, Pay-What-You-Want in Competition
Mark Owens, The Motivations for Charitable Purchases: Evidence from Girl Scout
Cookie Sales
Sascha Fullbrunn, Am I my Peer's keeper? Social Responsibility in financial decision
making
Tushi Baul, Network dynamics and social preferences
Session 4, Atlantic Ballroom IV: Public Goods II
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Jubo Yan, Can The Voluntary Contribution Mechanism be Efficient? The Role of Social
Norms and Automatic Donation in Charitable Giving
Sebastian Kube, Endogenous Institution Formation in Public Good Games
Daniele Nosenzo, The effects of voluntary participation on cooperation: entry or exit?
Tatsuyoshi Saijo, Instability of the Voluntary Contribution Mechanism
Session 5, Atlantic Ballroom V: Field Experiments: Labor Market
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Luis Miller, Labor market transitions and the acknowledgment of earned endowment: a
lab experiment in the field
Tanjim Hossain, Testing the Theory of Multitasking: Evidence from a Natural Field
Experiment in Chinese Factories
Andy Brownback, A Classroom Experiment on Effort Allocation under Relative Grading
Sherry Li, Social Distance and Technology Sharing between Trainers and Trainees
Session 6, Atlantic Ballroom VI: Gender I
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Jordi Brandts, Status Anxiety Makes Women Underperform
John Ifcher, Gender and Competition in Games without Agency
David Wozniak, Gender Differences in Asset Information Acquisition
Session 7, Las Olas Ballroom I: Health
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Hernan Bejarano, HIDE: Health Investment Decision Experiment
Ben Greiner, Aligning incentives of physicians - An experimental study of two-part
tariffs and separation of prescription and treatment in health care markets
James C. Cox, Incentivizing Cost-Effective Reductions in Hospital Readmission Rates
Anne Carpenter, Coordinating Epidemic Response: Is Behavior Prevalence Elastic?
Session 8, Las Olas Ballroom III: Trust
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Michael Jones, The Effects of Communication and Moral Hazard on Trust and
Reciprocity: An Experimental Investigat
Rick Wilson, Detecting Cooperative Behavior in Trust Games
Marc Willinger, Competition and trust: an experimental approach
Saturday, 2:10 PM
Session 1, Atlantic Ballroom I: Religion and Emotions
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Gumilang Sahadewo, Price of Religion: Experiments in Interest-Based and Profit-loss
Sharing Investments in Islamic Co
Loukas Balafoutas, The impact of worship on social preferences and conflict
David Johnson, F@!K You Very Much! Monetary Efficiency Gains Through Uncensored
Feedback
Homa Zarghamee, Impact of Absolute and Relative Income on Happiness: A Laboratory
Investigation
Session 2, Atlantic Ballroom II: Bargaining
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Maren Tonn, Cooperation under Incomplete Information - An Experimental Investigation
Kyle Hyndman, Bargaining with a Residual Claimant: An Experimental Study
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Maros Servatka, Investment in Outside Options as an Opportunistic Behavior: An
Experimental Investigation
Eric Cardella, The Effect of Listing Price Strategy on Real Estate Negotiations: An
Experimental Study
Session 3, Atlantic Ballroom III: Preferences and Choice
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Marco Castillo, Impatience Predicts Dropping Out of High School
Marta Serra-Garcia, The Impact of Financial Education on Adolescents' Intertemporal
Choices
Radovan Vadovic, "Free to Choose:' Testing the Pure Effect of Autonomous Choice
Claudia Neri, Freedom, power and interference: an experiment on decision rights
Session 4, Atlantic Ballroom IV: Public Goods III
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Zhi Li, Uniform Price Mechanisms for Threshold Public Goods Provision with Private
Information: An Experim
Abhijit Ramalingam, Choosing to accept the punishment role in public goods games
Alexander Smith, Shock Value
Friederike Mengel, Risk and Temptation in Social Dilemmas
Session 5, Atlantic Ballroom V: Common Pool Resources
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Brock Stoddard, Voluntary Provision of Common-Property Resources with Alternative
Endogenous Allocation Rules
Neslihan Uler, Behavioral Sources of Demand for Carbon Offsets: An Experimental
Study
Peter Twieg, Specialization and Endogenous Territoriality in a Spatial Commons
Experiment
Glenn Dutcher, To mitigate or to adapt? Collective action under asymmetries in
vulnerability to losses.
Session 6, Atlantic Ballroom VI: Gender II
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Anya Savikhin Samek, A University-Wide Field Experiment on Gender Differences in
Competitiveness
Muriel Niederle, Should all Women Ask?
Lise Vesterlund, Who Would You Ask? Requesting Favors from Men and Women
Joe Vecci, Women's Governance and Leadership: An Experimental Investigation
Session 7, Las Olas Ballroom I: Redistribution
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Gustavo Caballero, Information Effect Regarding Inequality of Opportunities on
Redistribution: A Lab Experiment
Marco Palma, Heterogeneous Fair Preferences and Redistribution under Different Rooted
Risks: An Experimental Study
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Joshua Chen-Yuan Teng, Justice: what money can buy an experimental test on Rawlsian
difference principle with primary social goods
Session 8, Las Olas Ballroom III: Behavioral Phenomena in Auctions
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Yu (Yvette) Zhang, Possibility of Losing Own Money Promotes Learning to Overcome
Bounded Rationality: Delayed Payment
Stefan Penczynski, The Winner's Curse: Contingent Reasoning and Belief Formation
Masao Nagatsuka, Individual Temperament and Character in Competitive Bidding
Saturday, 4:10 PM
Session 1, Atlantic Ballroom I: Neuroeconomics
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Johanna Mollerstrom, Competitiveness and stress - Investigating correlation and causality
Daniel Burghart, An Experimental Evaluation of Addiction Models
Dongil Chung, Neural substrates of trust and generosity under imposition
Sheryl Ball, Other-conferred utility explains asymmetric alignment with signals of safety
and risk
Session 2, Atlantic Ballroom II: Cooperation
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Xi Wen, Investing in Institutions for Cooperation
Roman Sheremeta, Divided Loyalists or Conditional Cooperators? Creating Consensus
about Cooperation in Multiple Simultaneous Social Dilemmas
Michael Kurschilgen, Can we manage first impressions in cooperation problems? An
experiment
Yesim Orhun, The Role of Intentions: Reciprocating to Strategically Motivated Kindness
Session 3, Atlantic Ballroom III: Political Economy
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Lana Friesen, An Experimental Study of Audit Tournaments and Compliance
Observability on Regulatory Performance
J Michelle Brock, Do judges care about reputation? Experimental evidence from judges
in Tajikistan
Alicja Reuben, The People's Hired Guns? Experimentally Testing the Motivating Force
of a legal frame
Judd Kessler, The Articulation of Government Policy: Health Insurance Mandates Versus
Taxes
Session 4, Atlantic Ballroom IV: Beliefs
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Morten Lau, Information Characteristics and Errors in Expectations
Dimitry Mezhvinsky, How Will Others Play This Game?: Evolving Beliefs in a Strategy
Method Centipede Game
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Alexander Coutts, Testing Models of Belief Bias: An Experiment
Elisabet Rutstrom, Risk Perceptions in the Virtual Wilderness
Session 5, Atlantic Ballroom V: Corruption and Tax Evasion
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Vjollca Sadiraj, Political Institutions and Corruption: An Experimental Examination of
the 'Right to Recall'
Oege Dijk, Corruption Cascades
Raluca Pavel, Tax Evasion Dynamics: an Experimental Study
Sebastian J. Goerg, Spillovers of Tax Evasion'Unexpected Costs of Tax Evasion
Session 6, Atlantic Ballroom VI: Punishment
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Luke Boosey, Network Monitoring and Punishment in Public Goods Games
Haley Harwell, When does Punishment Enhance Cooperation?
Felix Albrecht, Punishment Patterns
Enrique Fatas, Immolation. An Experiment on the Political Economy of Extreme
Intergroup Punishment
Session 7, Las Olas Ballroom I: Social Norms
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Erin Krupka, Social Norms and Identity Driven Choice
Garret Ridinger, Understanding others: theory of the mind, and norms in real effort
bargaining
John Lynham, On the origins of fairness
Stefan Mondorf, Towards an Understanding of Betrayal Aversion
Session 8, Las Olas Ballroom III: Markets and Social Relationships
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Matt Stephenson, Trust and the division of labor
Kevin McCabe, An experiment on the effects of cost sharing on strategic discovery
Ginny Seung Choi, The Emergence of Social Relationships in Markets
Rudy Santore, Do colluders care about consumers? Some experimental evidence
Saturday, 7:00 PM
Session 1, Las Olas Ballroom I-II-V-VI: Conference Dinner
Abstracts
Biases and Implicit Knowledge
Tom Cunningham, tom.cunningham@iies.su.se
IIES
ABSTRACT:
I present a model of judgment in a brain consisting of two systems, each of which has private
information, but in which the second system has access to the output of the first system.
Judgments will be influenced by irrelevant associations, an empirical regularity which has been
described elsewhere as 'heuristic', 'inattentive', 'coarse', or 'similarity-based' reasoning. The
model additionally predicts that, although decisions may be inconsistent, decision-makers will
never choose dominated outcomes, a stylized fact of the experimental literature. The model has
implications for interpreting laboratory choices, and for the economic analysis of persuasive
advertising and policy nudges.
Author(s): Tom Cunningham
Topic: Decision Theory: Bounded Rationality, Psychology and Biology: Neuroeconomics
Link: https://dl.dropboxusercontent.com/u/13046545/paper_heuristics.pdf
Back to session: Decision Theory
Errors and Altruism in Threshold Public Goods
Daniel Saunders, danks626@gmail.com
University of California Santa Barbara
ABSTRACT:
The rise of online threshold fundraising offers a novel opportunity for the private provision of
public and information goods. However, the underlying coordination problem may lead to
inefficient allocations. Online mechanisms have two unique features that are not well
understood: (1) uncommonly large groups and (2) little information regarding others' incentives.
Conventional thinking suggests that, in isolation, increasing either group-size or payoff
uncertainty should increase coordination failure. Yet, it is not obvious how these two features
will interact in practice given the strong strategic interaction generated by the threshold. I
conduct a two-by-two experiment varying group-size and payoff uncertainty, and I use the data
to estimate a logit QRE. The model captures a great deal of observed behavior at the individual
and group level, and it accounts for the sign of all significant treatment effects. The model underpredicts the level of contributions. However, incorporating altruism into utility may correct for
this bias.
Author(s): Daniel K. Saunders
Topic: Decision Theory: Bounded Rationality, Public Choice: Public Goods and Common Pool
Resource
Link:
https://dl.dropboxusercontent.com/u/23033489/Website/Saunders%20Threshold%20Game.pdf
Back to session: Decision Theory
Adaptive Preferences
Ragan Petrie, rpetrie1@gmu.edu
George Mason University
ABSTRACT:
Visual perception varies with the amount of available light and exemplifies how the senses can
adapt to stimuli. It demonstrates the importance of context in responding to incentives. A natural
way of thinking about reference dependent preferences is that as reference points change
decision makers should acclimatize their choices to the new environment, just as our biological
senses adapt to changes. We ask, as our senses adapt to environmental changes, does economic
decision making do the same? Using a simple laboratory experiment based on the Choi et al
(2007) graphical design, individuals make allocation choices between two risky assets by
choosing a point on a budget line on an x-y graph. The budget line represents relative prices, and
we vary the visual stimulus of the line, by changing relative prices, to examine how preferences
adapt to new environments. The key to our design is that whether relative prices are represented
as flat or steep lines is irrelevant to payoffs because the support of prices is constant and the two
assets are equally likely to be realized. Neither the mean nor the variance of payoffs is affected
by this alternation. We then exploit this symmetry and present subjects with either flat or steep
lines to sensitize them to more price variation with respect to the asset on the x-axis or y-axis.
We find that subjects who see a lot of price variation with respect to the y-axis asset (more steep
lines) react less to variation in the price of asset y than those who see a lot of price variation with
respect to the x-axis asset (more flat lines). Standard and behavioral theories of decision-making
under risk cannot predict these changes in behavior. That subjects react less strongly to prices
with a larger support demonstrates that economic decision-making acclimatizes to the
environment. We confirm this result in a second experiment by observing that price elasticity
decreases as price variation increases.
Author(s): Marco Castillo and Ragan Petrie
Topic: Decision Theory: Other, Psychology and Biology: Cogonition
Back to session: Decision Theory
Loss Aversion around a Fixed Reference Point in Highly Experienced Agents
Matt Goldman, mattgoldman5850@gmail.com
UCSD
ABSTRACT:
We study how reference dependence and loss aversion motivate highly experienced agents,
professional basketball players. We find a very large 'losing motivates' effect, an average team
scores like a league leader when trailing by ten points and a bottom dweller leading by ten.
Detailed data on players' actions shows this effect comes through differential exertion of effort.
Using betting spreads and lagged score margin, we test if expectations influence the reference
point; they do not. The reference point appears remarkably stable around zero, far less malleable
than previously found in experimental work studying less experienced agents.
Author(s): Matthew Goldman and Justin Rao
Topic: Decision Theory: Preferences, Games: Contests
Link: http://econweb.ucsd.edu/~mrgoldman/LossAverseAgents.pdf
Back to session: Decision Theory
The effect of ambiguity on status quo bias - An experimental study
Giorgia Romagnoli, gr763@nyu.edu
NYU
ABSTRACT:
We conduct an experiment to determine the effect of ambiguity on status quo bias. We vary the
presence of ambiguity in the choice problem and compare the presence and magnitude of the
bias across treatments. We find no evidence for the bias in the absence of ambiguity and when
ambiguity is present in both the status quo and the alternative option. We find strong evidence
for the bias when ambiguity enters the choice problem asymmetrically - when the status quo is
non-ambiguous and the alternative is or when the status quo is ambiguous and the alternative is
not. In the two asymmetric treatments the presence of a status quo is associated to an average
loss of 10% in terms of expected payoffs. Our findings improve the understanding of the choice
domains in which the status quo bias exists and show a clear pattern for the emergence of the
bias relating it to the asymmetric presence of ambiguity. The results are discussed in the light of
existing theories on status quo bias such as loss aversion and Bewley incomplete preferences.
Author(s): Amnon Maltz, Giorgia Romagnoli
Topic: Decision Theory: Ambiguity, Decision Theory: Risk
Back to session: Decision Theory: Risk and Ambiguity I
Inconsistency Pays
Catherine Eckel, catherine.c.eckel@gmail.com
Texas A&M University
ABSTRACT:
Experimental choice data from 881 participants based on 40 time-tradeoff and 32 risky choice
items indicate that most participants are time-inconsistent and also violate the consistency
assumptions of expected utility theory. These inconsistencies cannot be explained by theories
such as hyperbolic discounting or cumulative prospect theory, nor are they inversely correlated
with math ability. Aggregating expected payoffs and risk associated with the 72 choice items,
statistical associations between inconsistency and expected payoffs are reported. Time
inconsistent participants and those who violate expected utility theory, both earn substantially
higher expected payoffs, and these positive associations survive the presence of various controls
in total payoff regressions. Consistent participants earn lower than average payoffs because most
are consistently impatient or consistently risk averse. Positive payoff effects from inconsistency
are not fully explained by greater risk taking, however. Controlling for the total risk, math ability
and socio-economic differences, both time-inconsistent and expected-utility-violating
participants earn significantly more money. Positive returns to inconsistency extend beyond the
domain in which the inconsistencies occur, with time-inconsistent participants earning more on
risky choice items, and expected utility violators earning more on time-tradeoff items. The
results raise questions regarding the normative status of rationality axioms based on internal
consistency and common interpretations that draw on insights from behavioral economics to
form a mistaken premise: that inconsistency is evidence of pathological decision making which
motivates paternalistic intervention.
Author(s): Nathan Berg, Catherine Eckel and Cathleen Johnson
Topic: Decision Theory: Preferences, Decision Theory: Risk
Back to session: Decision Theory: Risk and Ambiguity I
Separating risk preferences and ambiguity preferences
Svetlana Pevnitskaya, spevnitskaya@fsu.edu
Florida State University
ABSTRACT:
Previous studies of decision making under uncertainty investigated the environments involving
risk and ambiquity separately. This paper reports results of an experiment where subjects face
uncertainty about possible states and can, from sampling, approximate their likelihoods. There is
a range in the amount of sampling where decisions under ambiguity are qualitatively different
from when a situation is perceived as risk. There is heterogeneity in ambiguity preferences, risk
preferences, and in subjects' propensity to identify uncertainty as closer to risk or ambiquity. The
results of the experiment inform on the connection between these two frameworks of modeling
uncertainty and the applicability of existing models to explain subjects' choices.
Author(s): Svetlana Pevnitskaya
Topic: Decision Theory: Ambiguity, Decision Theory: Risk
Back to session: Decision Theory: Risk and Ambiguity I
A Risky Perspective On Uncertainty
Daniel Burghart, dan.burghart@econ.uzh.ch
University of Zurich
ABSTRACT:
We examine decision-making under uncertainty using lower envelope lotteries. Lower envelope
lotteries specify minimum probabilities for monetary outcomes and the aggregate amount of
unassigned probability mass, a quantity we call ambiguity. To study ambiguity preferences we
adapt the alpha-MaxMin Expected Utility (aMMEU) model to this setting. Using non-parametric
tests, we find that about 60% of participants in our experiment made choices consistent with the
postulates of aMMEU. Individual-specific parameter estimates of alpha, a parameter that
measures (constant) ambiguity preferences, indicate that 43% of participants exhibited ambiguity
neutrality, 46% ambiguity aversion, and 11% ambiguity seeking. Estimates from finite-mixture
models, using pooled data, indicate that a constant ambiguity attitude may not be a reasonable
assumption for many participants. Broadly speaking, participants with non-constant ambiguity
attitudes show increases in ambiguity aversion as the expectation for receiving a good outcome
increases.
Author(s): Daniel R. Burghart, Thomas Epper, Ernst Fehr
Topic: Decision Theory: Ambiguity
Back to session: Decision Theory: Risk and Ambiguity I
The Anatomy of Ignorance: Literature as the Laboratory
Devjani Roy, devjani_roy@hks.harvard.edu
Harvard Kennedy School
ABSTRACT:
Ignorance represents a situation in which some outcomes and their probabilities are unknown to
the decision maker. Ignorance is thus a distinct setting that lies beyond both risk (known
probabilities, unknown outcomes) and uncertainty (unknown probabilities, unknown outcomes).
For the study of ignorance, the laboratory, the workhorse of behavioral decision, is of limited
value. The concept, by its very nature, stretches into long periods of time and encompasses many
shifting, often unrecognized variables. Equally important, ignorance is of greatest interest to the
decision maker when it is highly consequential, as in the situations studied here. Lab experiments
utilizing small monetary payments for minor decisions cannot capture the essence of ignorance,
at least not when it is important. To understand this phenomenon, a different kind of laboratory
must be found. Our study employs a data source where individuals decisions under uncertainty
have long been effectively chronicled: the decisions made by individuals as recorded in great
works of literature. To illustrate, prominent authors such as William Shakespeare, Jane Austen,
and F. Scott Fitzgerald, to name only a few, have captured human attempts to grapple with
situations of ignorance as they arise in real life. The fundamental assumption underlying our
approach is that examining literature enables us to examine decision making under ignorance in
an economical manner. This approach also brings to light relevant biases and heuristics,
including some that are particular to ignorance. Primary ignorance represents situations where
decision makers do not recognize their ignorance ( ignorance of ignorance ); (ii) Recognized
ignorance, applies to situations where decision makers recognize that important potential
outcomes have not been contemplated. We introduce the concept of a CAD, or Consequential
Amazing Development. A CAD is a consequential and amazing event that lurks beyond the
realm of the decision maker's contemplation. Mere outliers - such as an extreme stock market
drop - do not qualify as CADs; they could be foreseen as a possibility, albeit a low probability
one. (Good examples of CADs would be the 9/11 attack, or the discovery that a trusted spouse
has been carrying an extended adulterous affair.) We divide CADs into three categories: (i) Deep
CADs could not possibly be contemplated; (ii) Conventional CADs might be contemplated with
some cognitive effort; (iii) Blindered CADs could easily be contemplated, but are missed due to
emotions overpowering rational concerns. (Think of the adulterous husband who fails to consider
the potential consequences for his marriage.) We also analyze CADs by scope as broad and
narrow, the former affecting large swaths of society and the latter, just one or a few individuals.
We use famous stories from literature to illustrate each of these categories and the cognitive
biases and heuristics that operate within them. The final component of our study presents and
details four recommendations for grappling with ignorance, recognizing that cognitive efforts are
costly and contemplation will always be imperfect. A decision tree illustrates our approach. The
choice nodes determine when and why to devote more attention to a decision, and when to
change actions. Our analysis shows that conjecturing outcomes, estimating utilities, and
assessing subjective probabilities is extremely difficult when ignorance is about. However,
decision theoretic approaches are often most useful when they are most difficult to apply, and
they prove helpful in this context. Ultimately, we argue that an understanding of ignorance
beyond mere description is challenging to study yet worthy of attention. Many of the most
consequential decisions made by individuals, organizations and governments arise in situations
where CADs threaten. Literature helps us to understand how they respond.
Author(s): Devjani Roy & Richard Zeckhauser, Harvard Kennedy School
Topic: Decision Theory: Ambiguity, Decision Theory: Beliefs
Back to session: Decision Theory: Risk and Ambiguity II
Ambiguity attitudes and borrowing behavior
Kim Fairley, k.fairley@fm.ru.nl
Radboud University Nijmegen
ABSTRACT:
Since Ellsberg (1961) showed that people have a preference for risky over ambiguous prospects
that are equivalent under subjective expected utility, a vast amount of literature has studied the
causes of ambiguity aversion. Depending on the particular outcome domain, the underlying
source and likelihood of uncertainty, people can also display ambiguity seeking behavior. The
term A-insensitivity (ambiguity-generated likelihood insensitivity) relates to the phenomenon
that the same individual usually overweights low levels of likelihood and underweights high
levels of likelihood. Despite a vast amount of laboratory studies on ambiguity, few studies have
tried to find evidence for ambiguity attitudes and their effects outside the laboratory. In this study
we measure students' ambiguity attitudes in the laboratory and study its relationship with real life
borrowing behavior. 233 subjects participated in an incentivized laboratory experiment. We
collected decisions in four separate tasks and administered a questionnaire that asked about their
real life borrowing behavior regarding student loans. Ambiguity preferences were elicited based
on matching probabilities of three ambiguous likelihood events: 0.1, 0.5 and 0.9. We find
ambiguity aversion and strong a-insensitivity in our sample. About 1/3 of all students borrow on
a monthly basis. We find that the amount that a student borrows is influenced by ambiguity
preferences: the more ambiguity seeking, the more money a student borrows. We also find that
less overweighting of extreme events is a predictor for the amount that a subjects expects to
borrow during the course of his/her university education.
Author(s): Kim Fairley and Utz Weitzel
Topic: Decision Theory: Ambiguity, Methodology: Lab, Field and External Validity
Back to session: Decision Theory: Risk and Ambiguity II
A Test of Ambiguity Hedging and Timing
Alex Roomets, roomets@gmail.com
Heidelberg University
ABSTRACT:
We start with a very simple experiment involving an ambiguous event and a random event. We
modify the timing of the events as well as the timing of information revelation to see if this
influences the decisions of subjects as they relate to an opportunity to hedge away the ambiguity.
Author(s): Joerg Oechssler and Alex Roomets
Topic: Decision Theory: Ambiguity
Back to session: Decision Theory: Risk and Ambiguity II
Social sources of risk and ambiguity
Kim Fairley, k.fairley@fm.ru.nl
Radboud University Nijmegen
ABSTRACT:
Studies on decision making under uncertainty have mainly focused on people's preferences' for
risk andambiguity in lottery setups. Next to the distinction of the type of uncertainty (risk versus
ambiguity), our study also emphasizes the importance of acknowledging the source of
uncertainty. Real life decisions are mostly not about a mechanistic flip of a coin or the roll of a
die. People often face (strategic) uncertainty that directly stems from the conscious choice of
(an)other person(s). In this study we investigate risk and ambiguity preferences in a social
context and examine how these preferences differ compared to preferences measured by a
standard lottery setup. We use neuroimaging techniques to investigate by which neural
mechanisms preferences for uncertainty. Real life decisions are mostly not about a mechanistic
flip of a coin or the roll of a die. People often face (strategic) uncertainty that directly stems from
the conscious choice of (an)other person(s). In this study we investigate risk and ambiguity
preferences in a social context and examine how these preferences differ compared to
preferences measured by a standard lottery setup. We use neuroimaging techniques to investigate
by which neural mechanisms preferences for uncertainty are affected by its source. Twenty two
adults participated in an fMRI study. In the MRI scanner participants had to indicate how many
tokens (between 0-10) they wanted transfer to either a computerized lottery device (non-social
conditions) or to a human receiver (social conditions). In both situations participants made
transfer decisions either when probabilistic information was provided ('risky' trust game/lottery),
or not ('classic' trust game with ambiguity/lottery). Our behavioral results show that humans are
ambiguity averse in both social and non-social contexts. This aversion, however, is higher in the
social context. When comparing neural mechanisms underlying ambiguity in a social context to
ambiguity in a non-social context we found activation in the left and right fusiform gyrus, the
right inferior parietal lobule and the right superior medial gyrus; areas that have been linked to
interpretation of social information.
Author(s): Kim Fairley, Alan Sanfey, Jana Vyrastekova and Utz Weitzel
Topic: Psychology and Biology: Neuroeconomics, Decision Theory: Ambiguity
Back to session: Decision Theory: Risk and Ambiguity II
An Experimental Investigation of Probability Weighting in Risky Choice under
Civil Court Scenario
P. C. Roger Cheng, paochih@mgt.ncu.edu.tw
Economics, NCU, Taiwan
ABSTRACT:
Probability weighting captures the property in risky choice that expected utility is weighted
nonlinearly in probabilities. Evidence from some experimental data suggests that this property is
context dependent. In contrast to previous studies that focus mainly on risky choice in an
insurance context, this paper shifts the context to court and investigates how subjects change
their risk attitudes in making risky decisions when they play the role of a plaintiff or a defendant.
Our lab evidence suggests that a context effect as well as gender differences exists, more
significantly in the loss scenario than in the gain scenario. We also find significant interactions
between gender and context. Due to the fact that any civil case which may lead to a redistribution
of wealth between the two parties involved in the lawsuit incurs considerable resources during
the process, our parameter estimates provide a preliminary but valuable examination of
whether/how the condition for out-of-court settlement is met under various scenarios.
Author(s): P. C. Roger Cheng and Yi-Tsen Lin
Topic: Decision Theory: Risk
Back to session: Decision Theory: Risk I
Stigma Mitigation and the Importance of Redundant Treatments: On
Overcoming Concerns about Drinking Water Contamination
Maik Kecinski, kecinski@udel.edu
University of Delaware
ABSTRACT:
A potential solution to global drinking water scarcity is the use of technology to cleanse sewer
water and reuse it for drinking water. While these technologies cleanse the drinking water from
an objective scientific perspective, consumers frequently are resistant to water recycling due
to subjective safety concerns and feelings of disgust. In essence, consumers become stigmatized
by this water and refuse to drink it, rendering this potential solution to drinking water infeasible.
Inspired by this policy situation, experiments were conducted with 94 participants where
drinking water was 'contaminated' by coming into contact with a dead, sterilized cockroach,
which has been shown in previous research to invoke a stigma response in participants (Rozin
2001, Schulze and Wansink 2012, Keisner et al. 2013, Kecinski et al. 2014). After the dead,
autoclaved cockroach was dipped into a transparent pitcher of water at the front of the room,
participants were asked to report the minimum compensation they were Willingness-to-Accept
(WTA) to drink a cup of the contaminated water using the Becker-Degroot-Marschak
mechanism (1964). To assess whether additional methods of 'purifying' the water reduced
participants stigma (measured by reduction in WTA), they were also asked their WTA for
drinking the contaminated water after it had been either boiled, filtered with a backcountry
camping filter, diluted 1000 to 1 with uncontaminated water, or tested with a commercially
available water test kit. Treatments also included combinations of two, three, and four of these
treatments. Results indicate that the effectiveness of these treatments in reducing WTA was not
influenced by the specific treatment. Instead, what mattered most was the total number of ways
that the water was purified. The more ways of purification, the greater the overall decrease in
participants WTA. To examine the significance of these changes, WTA was explained using
two-limit Tobit regressions with dummy variables for one, two, three, or four treatments, and
participant characteristics. The dummy variables were all significant at p < 0.01. Tests for the
differences in coefficients (between dummy variables) showed that two treatments reduced WTA
compared to one treatment at the p < 0.05 level, three treatments was better than two treatments
at the p < 0.01 level, but four treatments were not significantly more effective in reducing WTA
than three treatments. The results of this study have two important implications. First, they show
that in response to 'stigmatized' drinking water, there can be both an absolutist response ('I
won t drink it, no matter what') and a more measured response ('I ll drink it for the right
amount of money'). These responses are individual specific. Second, they show that this second
type of consumers responds proportionally to the different attempts to reduce the perceived
stigma. These results have implications for educational messages about water re-use projects and
the importance of emphasizing redundant purification processes that are traditionally involved
with drinking water treatment. References: Becker, G. M., DeGroot, M. H., and Marschak, J.
(1964). 'Measuring Utility by a Single- Response Sequential Method', Behavioral Science 9,
226–232. Kecinski, M., D.K. Keisner, K.D. Messer, and W.D. Schulze. (2014). 'A Valuation of
Stigma Approach: On Drinking Cockroached Water.' APEC Working Paper RR14-05.
University of Delaware. Keisner, D.K., K.D. Messer, W.D. Schulze, and H. Zarghamee. (2013).
'Testing Social Preferences for an Economic ‘Bad': An Artefactual Field Experiment.'
Scandinavian Journal of Economics. 115(1): 27–61. Rozin, P. (2001). 'Technological stigma:
Some perspectives from the study of contagion', pp. 31–40 in Flynn, J., Slovic, P., and
Kunreuther, H. (Eds). Risk, Media, and Stigma: Understanding Public Challenges to Modern
Science and Technology. Sterling, VA: Earthscan Publication Ltd. Schulze, W.D., and B.
Wansink, (2012). 'Toxins, Toyotas, and Terrorism: The Behavioral Economics of Fear and
Stigma.' Risk Analysis. 32(4): 678-694.
Author(s): Maik Kecinski, Deborah Kerley-Keisner, Kent D. Messer and William D. Schulze
Topic: Decision Theory: Risk
Back to session: Decision Theory: Risk I
An Eye-tracking Study of Risky Choice
Todd Swarthout, swarthout@gsu.edu
Georgia State University
ABSTRACT:
We use eye-tracking technology to record eye movements by human decision makers while they
make decisions over lotteries. We then use these data to evaluate alternative models of decision
making under risk, and we explore whether certain eye movement behavior is correlated with
risk attitudes. By combining eye-movement data with choice data, we gain greater insight into
the latent decision process.
Author(s): Glenn W. Harrison and J. Todd Swarthout
Topic: Decision Theory: Risk
Back to session: Decision Theory: Risk I
How Malleable Are Choice Brackets? The Case of Myopic Loss Aversion
Matthias Wibral, mwibral@uni-bonn.de
University of Bonn
ABSTRACT:
We study whether a change in the framing of the decision problem affects how individuals
bracket their choices in the context of myopic loss aversion. We find a systematic asymmetry in
the malleability of choice brackets: Subjects who were previously exposed to a frame that
encourages narrow bracketing can learn to bracket broadly when the framing of the decision
problem changes. In contrast, subjects previously exposed to a frame encouraging broad
bracketing continue to bracket broadly after a change in framing. Our results further suggest that
narrow bracketing is a mistake rather than the outcome of preferences.
Author(s): Daniel Hilgers, Matthias Wibral
Topic: Psychology and Biology: Cogonition, Decision Theory: Risk
Back to session: Decision Theory: Risk I
Nudging' Risky Decision-Making: How Modifying Information Order Influences
Decision-Making Under Risk
Jason Aimone, jason.aimone@gmail.com
Baylor University
ABSTRACT:
When experts such as doctors or financial advisors present risky options to patients and clients
they communicate possible outcomes as well as their likelihoods. Another aspect of
communicating about risky options is the manner in which the outcomes and likelihoods are
presented. In this work we examine how the order in which this information is presented affects
the ultimate decisions of the decision-maker. Eye-tracking studies, like Areili et al. (2011),
conclude that decision makers seem to use a combination of comparing information within
decision options, consistent with expected value (or utility) calculation, and simple component
comparison procedures in decision-making processes, and conclude that these patterns appear to
be predictive of whether subjects make risk neutral or risk averse decisions [Aimone et al.,
2012]. However, until now, it has been unknown whether the order information is acquired is
simply correlated with underlying preferences or whether there is a causal relationship. The latter
would suggest a potentially effective role for 'nudging' institutions to affect risky decision
making, while the former would suggest such institutions would have limited effectiveness. Our
data suggests there is a causal connection between the order in which information is acquired and
whether a decision maker chooses a risky option, however we find that the order information is
acquired does not affect whether a decision maker chooses the expected value maximizing
options. We find that, ceteris paribus, exogenously providing information about the probability
and outcome of one gamble first then the information about the other gamble, consistent with
expected value (or utility) calculation, leads economic agents to be more likely to make riskier
decisions (but not more expected value maximizing decisions) compared to providing the
outcomes of both gambles (or both probabilities) first then the remaining information. In contrast
we find that when agents endogenously choose to first acquire information about the probability
and outcome of one gamble first, they are more likely to make expected value maximizing
decisions but not riskier decisions. These results suggest that institutions providing information
about options can be developed to 'nudge' individuals into riskier or safer decisions, thus leading
to improved decision making.
Author(s): Jason A. Aimone, Sheryl Ball, Brooks King-Casas
Topic: Decision Theory: Risk, Psychology and Biology: Cogonition
Back to session: Decision Theory: Risk II
Can there ever be too many flavors of Häagen-Dazs?: Choice overload, product
category stereotypes and sampling risk
Mengxia Zhang, zmxmdzmxmd@gmail.com
Peking University HSBC Business School
ABSTRACT:
A large body of research has attempted to demonstrate that people can suffer from
choice overload behavior (COB): the inability to choose when faced with too many choices.
However, replications have yielded mixed results. A 2010 meta-study of 50 published papers
found that the mean effect of variety COB was zero; i.e., instances of COB were balanced by
choice loving behavior (CLB). No sufficient condition for COB has been identified, though there
is little question that lack of familiarity is necessary. We hypothesized that COB was driven
by uninformed consumers’ beliefs about the risk of getting an ex-post undesired product,
based upon ex-ante beliefs about risk, which in turn are inferred from product category
stereotypes, e.g., that all ice creams are sweet and creamy. We propose that stereotypes of
heterogeneity in taste across product categories are the basis of consumers’ ex-ante beliefs of
success in sampling untried varieties. We constructed a measure of ex-ante sampling risk by
surveying consumers at a large supermarket for their “likes”, “neutral” and “dislikes” for 24
product lines (about 200 varieties). We then secretly observed other consumers purchasing
behavior after we manipulated the varieties they faced on shelves. Consistent with the metastudy, the mean effect of variety on COB was zero. However, consistent with our hypothesis,
sampling risk was a predictor of both COB and CLB. We show that a simple statistical theory of
sampling risk can explain our findings.
Author(s): David Ong, Mengxia (Eva) Zhang
Topic: Decision Theory: Risk, Decision Theory: Beliefs
Back to session: Decision Theory: Risk II
The Two Faces of Independence: Betweenness and Homotheticity
Daniel Burghart, dan.burghart@econ.uzh.ch
University of Zurich
ABSTRACT:
Many studies document failures of expected utility's key assumption, the independence axiom. A
weakening of independence that can accommodate some of these failures is the betweenness
axiom. In this study we introduce a homotheticity condition and discuss how it can accommodate
failures of independence that betweenness cannot. We then demonstrate that homotheticity and
betweenness are necessary and sufficient conditions for independence. This result lets us
empirically assess betweenness in a new, albeit indirect, way -- if preferences fail independence,
but satisfy homotheticity, it is because betweenness is violated. Using data from an experiment,
our nonparametric tests reveal that 1/3 of our participants violate independence but satisfy
homotheticity indicating that betweenness is violated. Another 1/3 of participants satisfy
independence. The remaining 1/3 fail both independence and homotheticity and may also fail
betweenness.
Author(s): Daniel R. Burghart, Thomas Epper, and Ernst Fehr
Topic: Decision Theory: Risk, Decision Theory: Preferences
Back to session: Decision Theory: Risk II
Judgements of Preference and Judgements of Fact
Jonathan de Quidt, jdequidt@gmail.com
IIES, Stockholm University
ABSTRACT:
Anomalies in judgment of preference are well known. Our project compares them to anomalies
in judgment of fact. We exploit a similarity in normative structure between preference over
lotteries, and certain domains of fact. For example, just as the utility of a gamble should be linear
in the probability of a prize, the weight of a collection of objects should be linear in the number
of items in that collection. Our experiments find that a common bias in choice among gambles,
the 'common ratio' effect, is mirrored by a bias in judgment of the relative weights of bundles of
objects. The results have deep implications for the interpretation of anomalies in decisionmaking. In particular, it is often debated whether behavior consistent with nonlinear probability
weighting reflects errors of judgement or preferences. It is not possible to distinguish between
these explanations in choice between lotteries as this involves both judgement of fact (evaluating
the relative likelihood of outcomes) and preference. The fact that the same biases show up in
pure judgements of fact suggests that such behavior can be explained, at least in part, by a bias in
the perception of numerical magnitudes, with probability weighting as a special case. The
implication is that choice anomalies may indeed reflect errors, not tastes.
Author(s): Tom Cunningham and Jonathan de Quidt
Topic: Decision Theory: Risk, Decision Theory: Preferences
Back to session: Decision Theory: Risk II
Price of Religion: Experiments in Interest-Based and Profit-loss Sharing
Investments in Islamic Co
Gumilang Sahadewo, gas61@pitt.edu
University of Pittsburgh
ABSTRACT:
Choices that benefit oneself are often in tension with what is regarded to be right or ethical by
legal rules, perceived social norms, or religious beliefs. We investigate the Islamic prohibition
against interest-bearing loans that highlights such tension faced by modern-day Muslims. The
Islamic religious law prohibits the use of interest, however, interest-based banking (IB) is widely
accepted in many Islamic countries. On the other hand, the take up rate of profit- and losssharing (PLS), a socially responsible investment promoted by Islam, is quite low in many
Muslim countries. We conduct an incentivized experiment that resembles the choice between IB
and PLS. The main objective of the experiment is to analyze how various factors, such as risk
attitude, religiosity, and religious priming, influence individuals' and collective choices between
IB and PLS. The experiment is conducted in multiple countries to study the extent to which
individual level variation, as opposed to country-level variations, explains results.
Author(s): Sera Linardi, Rebecca Morton, Kai Ou, Gumilang Sahadewo, Xiangdong Qing
Topic: Social Behavior: Norms and Morals, Social Behavior: Other-regarding Preferences
Back to session: Religion and Emotions
The impact of worship on social preferences and conflict
Loukas Balafoutas, loukas.balafoutas@uibk.at
University of Innsbruck
ABSTRACT:
We conduct a study on the interplay between religion and conflict by investigating
experimentally the so-called 'worship effect', which predicts a higher level of in-group altruism
and out-group hostility after worship. This is a concept frequently used in media coverage of
religiously motivated conflict, but not yet tackled by academic research. We present evidence
from a field experiment conducted in two different areas in Ethiopia, one strongly affected by
conflict between the Christian and Muslim population and one relatively conflict-free area.
Church-goers play three different games – a trust game, a dictator game and a joy-of-destruction
game, allowing us to elicit social preferences and hostility (spite) in different treatments. In
particular, we vary the perceived religious affiliation of the partners by means of their first
names, and we run treatments immediately before and immediately after church in order to
isolate the impact of worship on social preferences and on behavior towards the own and other
religious group.
Author(s): Karla Henning, Björn Vollan, Loukas Balafoutas
Topic: Social Behavior: Norms and Morals, Field Experiments: General
Back to session: Religion and Emotions
F@!K You Very Much! Monetary Efficiency Gains Through Uncensored
Feedback
David Johnson, johnsod@ucalgary.ca
University of Calgary
ABSTRACT:
Non-monetary punishments are fairly well understood. Research repeatedly shows these types of
punishments induce pro-social behavior in a variety of contexts. However, in most cases,
punishment is neutered by the experimenters in the interest participant well being. In this study, I
extend current understanding of non-monetary punishments. I deviate from previous work by
introducing the possibility of unrestricted feedback from responders to proposers after an
observed offer. I find the possibility of unrestricted feedback from responders to proposers
significantly increases the amounts sent by proposers. The effect of potential feedback is
significant statistically and large in magnitude. Further, I show subjects leaving negative
feedback have higher expectations.
Author(s): David Blake Johnson
Topic: Social Behavior: Communication, Psychology and Biology: Emotions
Link: http://econ.ucalgary.ca/johnsod/research.html
Back to session: Religion and Emotions
Impact of Absolute and Relative Income on Happiness: A Laboratory
Investigation
Homa Zarghamee, hzargham@barnard.edu
Barnard College
ABSTRACT:
We conduct experiments leveraging the control of the experimental economics laboratory to
precisely estimate the causal impact of income on various measures of subjective well-being
(SWB). Subjects answer a host of SWB and personality questions and then receive an income
shock. We vary the subjects' income both absolutely and relative to other subjects in the session,
and then observe the impact of income on SWB using a post-shock questionnaire.
Author(s): Lina Diaz, Dan Houser, John Ifcher, Homa Zarghamee
Topic: Psychology and Biology: Emotions, Social Behavior: Other-regarding Preferences
Back to session: Religion and Emotions
Competitiveness and stress - Investigating correlation and causality
Johanna Mollerstrom, johanna.mollerstrom@gmail.com
George Mason University
ABSTRACT:
We ask whether competition induces stress and whether differences in stress reactions to
competitive activities can explain willingness to compete at the individual level. Participants
perform a simple task first under piece-rate payment, then under a competitive incentive scheme.
In a third round they can choose whether or not they want to compete. As measures of stress we
use the hormone cortisol (collected through saliva samples) and skin conductance. In the first
experiment, we test the hypothesis that the stress reaction induced by the Round 2 competition
predicts willingness to compete in Round 3. We focus specifically on understanding the extent to
which differences in stress reactions to competition between men and women can explain gender
differences in willingness to compete. In the second experiment, we manipulate feelings of stress
by using the cold pressor task and thereafter ask participants to choose whether to compete or
not. Thereby we deepen our understanding of the causal impact of stress on the choice to
compete.
Author(s): Thomas Buser, Anna Dreber, Johanna Mollerstrom
Topic: Psychology and Biology: Neuroeconomics, Psychology and Biology: Gender and
Individual Differences
Back to session: Neuroeconomics
An Experimental Evaluation of Addiction Models
Daniel Burghart, dan.burghart@econ.uzh.ch
University of Zurich
ABSTRACT:
The foundations for interventionist addiction policies are economic models of individual
decision-making, tailored to addictive substances. These 'addiction models' assume that addicts
experience different 'states' which produce differing demands for addictive substances.
Additionally, all addiction models assume, within a given state, that preferences are imbued with
tractable properties: transitivity, completeness, monotonicity, concavity, and continuity. To
empirically evaluate these assumptions we engaged opiate-dependent individuals in an incentivecompatible experiment involving tradeoffs between money and intravenous delivery of
morphine. Our observations were collected during a week-long clinical-trail in which patients
were administered (i) a large dose of morphine, (ii) saline, and (iii) naloxone, an opiate-receptor
blocker that produces withdrawal. We interpret these pharmacological administrations as
experimentally-controlled states and we collected data from every patient, in each of these three
states. Within each of these states, participant choices can be modeled with preferences that have
tractable properties because choices adhered to the generalized axiom of revealed preference.
Moreover, demand for morphine differs meaningfully between these three states. The way
demand differs between states, however, is highly idiosyncratic. Some patients exhibited high
demand for morphine following naloxone administration (withdrawal), while other patients
exhibited high demand following morphine or saline administration. Put simply, which
biological/pharmacological state constitutes an economic 'hot state' for one addict may not
constitute an economic 'hot state' for another addict. While these results are consistent with
economic models of addiction, they highlight a need to understand the idiosyncratic mappings
between objective states and subjective demands. A deeper understanding of these mappings can
improve interventionist addiction policies.
Author(s): Daniel R. Burghart, Paul W. Glimcher, Stephen Ross MD, John Rotrosen MD
Topic: Psychology and Biology: Neuroeconomics, Decision Theory: Other
Back to session: Neuroeconomics
Neural substrates of trust and generosity under imposition
Dongil Chung, chungdi@vtc.vt.edu
Virginia Tech Carilion Research Institute
ABSTRACT:
Trust is a core element that regulates repeated social interaction (1-3). However, how trust and
social interactions change under one-sided repeated sacrifice remains unknown. We propose a
new iterative paradigm that excludes the guaranteed monetary incentive for the trustee that is
assumed in typical trust games. By ruling out altruistic motivations for the investor and monetary
benefit for the trustees (4), the current study investigates neurobehavioral underpinnings of social
interaction based on trust in others' generosity and repeated one-sided assistance (i.e., 'favors').
Participants were paired in fixed role 'investor - trustee' dyads and asked to make a series of
monetary decisions. On each trial, investors decided how much to trust the partner (investment),
the trustee decided how much to help (or not) the investor (repayment), but without any
possibility of monetary benefit to the trustee (trustee 'generosity' = repayment / investment).
Thirty investor-trustee dyads played the game during functional magnetic resonance imaging
(fMRI). We measured 40 rounds of behavioral interactions and both the investor and trustees'
blood oxygen level dependent (BOLD) responses during scanning. On average, investors showed
significant non-zero trust and trustees showed significant generosity. The invested amounts at
round t+1 and round t were negatively correlated, thus showing a pattern of oscillation through
all rounds, while trustee generosity showed a decreasing pattern over time. Furthermore, we
found significant diminished caudate activation in trustees that predicts trustees' subsequent
generosity level. These results suggest that generosity is a dynamically changing social
characteristic that may be expended through repeated requests. The pattern of oscillatory trust
requests observed in investors suggests an awareness that generosity is a limited resource.
Furthermore, frontostriatal neural responses in trustees predicting reduced generosity suggest
that favors may be an unwelcome burden.
Author(s): Dongil Chung, Jason Aimone, Brooks King-Casas, Pearl Chiu
Topic: Psychology and Biology: Neuroeconomics, Social Behavior: Other-regarding Preferences
Back to session: Neuroeconomics
Other-conferred utility explains asymmetric alignment with signals of safety and
risk
Sheryl Ball, sball@vt.edu
Virginia Tech
ABSTRACT:
Individuals' risk attitudes are known to guide choices about uncertain options. However, in the
presence of others' decisions, these choices can be swayed and manifest as riskier or safer
behavior than one would express alone. To test the mechanisms underlying effective 'nudges' in
risky decision-making, we used functional neuroimaging and a paradigm in which participants
made decisions about gambles alone and after observing others' choices. We show here that
others' choices of an option increase the subjective value (utility) of that option. This 'otherconferred utility' explains bi-directional effects of social influence, is encoded in ventromedial
prefrontal cortex, and interacts parametrically with individual risk preferences in anterior
cingulate. These data provide a principled explanation for asymmetric neural and behavioral
responses to signals of safety and risk that may underlie both beneficial and detrimental effects
of social influence.
Author(s): Dongil Chung, George Christopoulos, Brooks King-Casas, Sheryl Ball and Pearl H.
Chiu
Topic: Psychology and Biology: Neuroeconomics, Decision Theory: Risk
Back to session: Neuroeconomics
Constructing Strategies in Indefinitely Repeated Games
Julian Romero, jnromero@purdue.edu
Purdue University
ABSTRACT:
We develop a new interface for running experiments on indefinitely repeated games in the lab.
The approach has two main advantages. First, it allows us to run long repeated games (very low
discount factor). Second, it allows us to incorporate the strategy method by having the subject
construct strategies that will play for them in a simple way. This gives us insight into what
happens in long repeated games and into the type of strategies that subjects use in indefinitely
repeated games. We use the interface to run experiments on the Prisoners' Dilemma and examine
how strategies evolve across supergames.
Author(s): Julian Romero and Yaroslav Rosokha
Topic: Games: Repeated Games
Back to session: Repeated Games I
Backward Induction in the Finitely Repeated Prisoner's Dilemma: Experimental
Evidence
Sevgi Yuksel, sevgi@nyu.edu
New York University
ABSTRACT:
More than half a century after the first experiment on the finitely repeated prisoner's dilemma,
evidence on whether subjects perform backward induction remains inconclusive. While some
studies find increases in unraveling of cooperation, others find that first defection occurs later on
in the interaction as subjects gain experience. Understanding this phenomenon is made difficult
by the fact that studies vary in the number of repetitions, horizon of the finitely repeated game,
and the parameters of the stage game. In this paper, we conduct a meta-analysis of prior
experimental research on the topic as well as present results of a new experiment to elucidate
how the ability to perform backward induction varies with the environment in this canonical
game. Contrary to the Nash equilibrium prediction, we find parameters (gain/loss in stage game
and horizon) of the finitely repeated game to have a significant impact on round 1 cooperation
rates. We identify the effect of these parameters on the potential gains from cooperation - as
captured by a new statistic we propose in this paper - to account for an important part of this
effect. Despite these significant differences in round 1 cooperation rates across studies and
treatments, we conclude behavior is consistent with the logic of backward induction. We
observe: (1) A substantial portion of the subjects to follow thresholds strategies that
conditionally cooperate (as in Grim) until a predetermined threshold round, (2) Among subjects
who achieve cooperation in early rounds, round of first defection moves in earlier with
experience, albeit slowly.
Author(s): Matthew Embrey, Guillaume Frechette, Sevgi Yuksel
Topic: Games: Repeated Games, Games: Coordination
Back to session: Repeated Games I
Equilibrium Selection in Global Entry Games with Strategic Substitutes and
Complements
Ajalavat Viriyavipart, ajalavat@neo.tamu.edu
Texas A&M University
ABSTRACT:
In a global entry game with strategic complements, most experimental work finds that subjects
use thresholds lower than the theoretical prediction and closer to the payoff dominant threshold.
This paper considers global entry games with both strategic substitutes and complements. In this
setting, subjects who choose to enter the market receive the highest payoff when half of their
counterparts choose to enter the market. In contrast to other experiments, subjects choose
thresholds higher than the theory dictates. We argue that subjects choose to enter the market less
often because doing so is not a payoff dominant equilibrium anymore.
Author(s): John Van Huyck and Ajalavat Viriyavipart
Topic: Games: Repeated Games, Games: Coordination
Back to session: Repeated Games I
Forgiveness: Do Grand Gestures Work?
Anthony Bradfield, bradfield.16@osu.edu
The Ohio State University
ABSTRACT:
We study a two-player asymmetric game to investigate the effect of forgiveness on cooperation
and efficiency. In a buyer-seller game, we allow sellers to offer buyers a grand gesture, a
monetary transfer, to help coordinate a return to cooperation after a bad outcome. We also vary if
the buyer knows the seller's action or only the outcome to see if grand gestures are used (or
work) when they do not act as an informative signal. This can be viewed as an extension of two
recent prisoner's dilemma experiments: Fudenberg, Rand, and Dreber (2012) introduce
uncertainty and Camera and Casari (2009) look at punishment in a certain environment.
Author(s): Anthony J. Bradfield, A. Gabriel Englander
Topic: Games: Repeated Games, Games: Information
Back to session: Repeated Games I
Dynamic Games and Markov Perfection: Putting the 'conditional' in cooperation
Alistair Wilson, alistair@pitt.edu
University of Pittsburgh
ABSTRACT:
We examine the selection of equilibria in dynamic games. Using the simplest dynamic
environment possible (symmetric, two-player, two-state, two-action games) we vary the presence
of two types of externality (dynamic and contemporaneous) to assess which solution concepts
best organize behavior. Subjects in our experiments show an affinity for conditional cooperation,
where they readily condition their behavior on both the state and on recent history. Where we do
see Markov perfect equilibria (only the state matters) selected with any great consistency, this is
in environments where history-dependent strategies are risky to coordinate on, and where the
efficiency gains over Markov are small. Moreover, in those environments where historydependent strategies emerge, we document the use of somewhat sophisticated asymmetric
strategies through which subjects attain efficient incentive-compatible outcomes.
Author(s): Alistair Wilson and Emanuel Vespa
Topic: Games: Repeated Games
Back to session: Repeated Games II
Cooperative Institutions
Piotr Evdokimov, piotr.evdokimov@itam.mx
ITAM
ABSTRACT:
This paper provides the first systematic experimental analysis of delay, communication and
reaction lags in a repeated prisoner's dilemma with frequent actions and imperfect monitoring.
We independently manipulate delay of information and the ability of subjects to engage in
limited communication and find that subjects earn significantly more without delay, a result that
cannot be explained by standard repeated games models. We also find that communication
always improves welfare and that average payoffs in one of our treatments (with communication
and no delay) are significantly greater than the upper bound on public Nash equilibrium payoffs.
We explore the possibility that this is driven by bounded rationality in the form of reaction lags
and find that slowing down the experiment has no significant effect on behavior.
Author(s): Piotr Evdokimov and David Rahman
Topic: Games: Repeated Games, Games: Information
Link: http://www.econ.umn.edu/~evdok003/jmp.pdf
Back to session: Repeated Games II
Division of the Tax Burden in Investment Settings - An Experimental
Investigation
Maren Tonn, Maren.tonn@fau.de
FAU Erlangen-Nuremberg
ABSTRACT:
This experiment analyzes the influence of taxation on investments, and tries to answer the
question whether the distribution of tax liabilities has an influence on the division of the tax
incidence. A standard trust game is modified such that either both players or only the responder
have to pay taxes on joint profits, whereby taxes are automatically deducted. The game is played
for 20 periods with a fixed partner-matching and between-treatment variations. In a baseline
treatment without taxes we find that proposers send an average amount of 82 (out of 100,
multiplier=3) and responders 155. When introducing a tax rate of 20% (and increasing the
multiplier accordingly), both transfers decrease. Trust rates are similar under both tax regimes,
but trustworthiness differs and tax liability side equivalence cannot be rejected in this investment
setting. The responder takes into account the tax liability of the proposer. Still the proposer
always bears the full burden of the tax. In two further treatments we allow for tax evasion. Here,
the difference in profits between proposers and responders is larger and the responder shifts not
only the tax burden to the proposer. Compliance rates are around 50 percent and correlate
positively with trustworthiness when only the responder is obliged to pay taxes. More taxes are
collected when only the responder pays taxes, in the declaration this is due to higher compliance
rates.
Author(s): Maren Tonn
Topic: Games: Repeated Games
Back to session: Repeated Games II
Wealth Status and Unethical Behavior
Quoc Tran, q1tran@bridgew.edu
Bridgewater State University
ABSTRACT:
This paper examines the effect of information on misreporting behavior. Subjects participate in a
misreporting game: each participant is provided with a high or low initial endowment, and then
with two twenty-sided die, and is asked to roll the die, sum the two numbers on the die, and to
report the outcome. Payoffs linearly increase in the outcome of the die, and all reporting in
anonymous. The subjects are asked to roll the die thirty times (although only a single roll is
paid). Expectations are also collected. The treatments vary the average endowment (low, and
high). A baseline is also conducted where no information on group average is provided. Using
student subjects at the University of Indonesia, we found that subjects propensity to misreport
depend on their relative wealth to their peers. Results indicate that individual has a higher
propensity to lie when their wealth is relative close to their peers, either being threat of overtaken
or the ability to catch up with their peers. However, this propensity diminishes when the gap in
income increases. Finally, implications for policy are also discussed.
Author(s): Quoc Tran, Sheheryar Banuri, and Ha Nguyen
Topic: Social Behavior: Lying and Cheating, Social Behavior: Norms and Morals
Back to session: Ethical Behavior
Motivated Self-Deception and Unethical Behavior
Silvia Saccardo, silvia.saccardo@rady.ucsd.edu
University of California San Diego
ABSTRACT:
We examine the role of self-deception in distorting judgment. In two experiments, we vary when
evaluators are informed about incentives to recommend one of two options: before or after their
initial private judgment. When the information regarding the incentives is provided before, we
find a significant bias in judgment in the direction of the incentive. However, when the
information is provided after they privately evaluate the options, the bias in judgment is
significantly reduced. We term this behavior 'motivated self-deception,' arguing that in the before
treatment judgment is biased such that evaluators can earn more money without compromising
their self-image.
Author(s): Uri Gneezy, Silvia Saccardo, Marta Serra-Garcia, Roel van Veldhuizen
Topic: Social Behavior: Lying and Cheating
Back to session: Ethical Behavior
Social Norm or Window Dressing: The Effectiveness of Codes of Ethics
Melinda Ford, maf175@pitt.edu
University of Pittsburgh
ABSTRACT:
With new regulations for adoption of codes of ethics in public companies from the U.S. House of
Representatives (Sarbanes-Oxley, 2002) and in both the NYSE (Rule 303A.10, 2009) and
NASDAQ (Rule 5610, 2009), the effectiveness of these codes should be an important empirical
question. Recent experimental papers have tried to resolve the results of archival codes of ethics
studies that show varied effects of codes of ethics on management behavior through social norm
theory. Many of these experiments test codes of ethics on behavior in settings that do not have an
obvious ethical component to it, i.e. participants may not have a clear understanding of either
what is expected in the environment in which they have been placed or how the expected
behavior could be considered ethically compliant. We conduct an experiment to test the
hypotheses that the more general moral standards, as given in codes of ethics, will have more
meaning, and therefore influence, on participants when the expectations of what they should do
is clear.
Author(s): Melinda Ford, Erte Xiao, Don Moser
Topic: Social Behavior: Norms and Morals
Back to session: Ethical Behavior
Power and Fairness
Paola Mallucci, pmallucci@bus.wisc.edu
University of Wisconsin
ABSTRACT:
Understanding what is fair is central to research on fairness. While different principles have been
proposed, an important characteristic of social interaction, power, is missing. Power has been
found to make individuals more egocentric (Galinsky et al., 2008; Guinote, 2007; Keltner et al.,
2003), pay less attention to others (Fiske, 1993; Galinsky et al., 2006; Galinsky et al., 2008;
Gruenfeld et al., 2008; Overbeck & Park, 2001; Schmid Mast et al., 2009) and give less in
negotiations and bargaining (Tripp, 1993; Blader and Chen, 2012). These results beg the
question: are powerful individuals just exploiting their positions of power or does power change
what is considered fair? We address this question both theoretically and experimentally and find
evidence that power not only changes behavior, but also affects perceptions of fairness. Using an
incentive compatible, modified ultimatum game, we manipulate power by changing the
responder's ability to reject the proposer's offer. We infer subjects' fairness by using a novel
measure: acceptance threshold – a binding minimum offer declared before the offer of the
proposer is disclosed. When the offer is disclosed, offers below the threshold are automatically
rejected, while offers above the threshold are automatically accepted. First, we show analytically
that the equilibrium acceptance threshold is affected by power only when players care about
fairness and the fair outcome is affected by power. Then, we test how acceptance threshold
varies as we experimentally manipulate power. We find that subjects with higher power choose
acceptance thresholds that are 20% to 25% higher than the ones chosen by subjects with lower
power. To further explore the role of power, we add a production phase before the distribution
phase and we manipulate the stage of the game at which the information on power is revealed
and the amount of control subjects have on investments. We find that power has a constant effect
on the distribution phase. Moreover, power seems to affect the production stage.
Author(s): Paola Mallucci, Diana Wu and Tony Haitao Cui
Topic: Social Behavior: Other-regarding Preferences, Public Choice: Public Goods and
Common Pool Resource
Back to session: Ethical Behavior
Public good games with interior Nash equilibria: Advantages of the piece-wise
linear VCM
Maria Recalde, mpr25@pitt.edu
International Food Policy Research Institute
ABSTRACT:
The classic linear VCM used by economists to study voluntary public good provision is
characterized by corner solutions: a Nash equilibrium in dominant strategies typically located on
the lower boundary of the strategy space, and an efficiency maximizing outcome typically
located on the upper boundary of the strategy space. To study giving in environments with
interior solutions researchers have used concave payoff functions that generate interior equilibria
in dominant and non-dominant strategies. This paper illustrates the advantages of one such class
of payoff functions: the piece-wise linear VCM. We analyze data from two experiments that use
piece-wise linear payoff structures and show that the piece-wise linear VCM generates higher
rates of equilibrium play than the classic linear VCM and even than other public good games
with interior Nash equilibria. The piece-wise linear VCM provides a simple way to construct
public good games with interior solutions that are not too difficult for subjects to understand.
Researchers can use it to vary key features of the strategic environment'such as the location of
the Nash equilibrium and the size and location of the core of the strategy space'while holding
many more features of the strategic environment constant across treatments than is traditionally
possible using standard functional forms.
Author(s): Michael Menietti, Maria P. Recalde, Lise Vesterlund
Topic: Methodology: Experimental Design, Tools and Practices, Public Choice: Public Goods
and Common Pool Resource
Back to session: Methodology I
Eliciting and aggregating individual expectations: An experimental study
Ronald Peeters, r.peeters@maastrichtuniversity.nl
Maastricht University
ABSTRACT:
In this paper we present a mechanism to elicit and aggregate dispersed information. Our
mechanism relies on the aggregation of intervals elicited using an interval scoring rule. We test
our mechanism by eliciting beliefs about the termination times of a stochastic process in an
experimental setting. We conduct two treatments, one with high and one with low volatility.
Increasing the underlying volatility affects the location of the interval, yet it does not
significantly affect its length. Consequently, individuals perform significantly better in the low
volatility treatment than in the high volatility treatment. Next, we construct distributions by
aggregating intervals across different individuals. Our results reveal that the predictive quality of
the aggregated intervals (as measured by the Hellinger distance to the true distribution) increases
by more than 30% when increasing the aggregation level from two to eight individuals. This
shows that aggregating individual intervals may be an attractive solution when market
mechanisms are infeasible.
Author(s): Ronald Peeters, Leonard Wolk
Topic: Methodology: Experimental Design, Tools and Practices, Decision Theory: Beliefs
Back to session: Methodology I
Pre-Analysis Plans are not the Solution Replications Might Be
Muriel Niederle, niederle@stanford.edu
Stanford University
ABSTRACT:
Science has recently come under scrutiny due to false-positive results successfully masking as
truth. Many areas in the social sciences, including economics, call for pre-analysis plans in
which researchers register their data gathering and data analysis plan before collecting data. This
is seen as reducing the chance of a researcher biasing their analysis, and hence reducing the
instances of false positives. We show that while a reducing the ability of a researcher to bias their
analysis can increase the chance that a positive result is due to a true fact, this increase is
significant only when either there are very few researchers investigating a specific hypothesis, or
when the prior that a hypothesis is true is very small, there are only about a dozen researchers
investigating a specific hypothesis, and the pre-analysis plan is detailed enough to virtually
eliminate the chance of biasing data. However, pre-analysis plans are always costly, and may
have long term impacts on the style of work we do. Therefore, we propose and want to push the
discussion in a different way to attack the instances of false positives: Incentivize replications.
We present some specific proposals which we hope will further the discussion.
Author(s): Lucas C. Coffman and Muriel Niederle
Topic: Methodology: Lab, Field and External Validity
Back to session: Methodology I
Conducting interactive decision making experiments online
Antonio Alonso Arechar, antonio.alonso@yale.edu
Yale University
ABSTRACT:
In recent years, experimenters have used online labour markets like Amazon's Mechanical Turk
to study human decision making, with results largely consistent with findings from the traditional
('offline') decision making laboratory. However, online behavioural research has not yet reached
its full potential since experiments remain largely limited to individual decision making tasks.
Here we introduce LIONESS (Live Online Experiments' Server Software), an open-source
software platform for conducting interactive decision making experiments online. We illustrate
the use of the platform with an online replication of repeated public goods games with and
without punishment. We show that on aggregate, online behaviour in is in agreement with
'offline' behaviour in the laboratory. Moreover, individual responses to cooperativeness of
interaction partners closely replicate earlier lab findings. We conclude by discussing caveats and
listing practical pointers to conduct online experiments using LIONESS.
Author(s): Antonio Alonso, Lucas Molleman and Simon Gaechter
Topic: Methodology: Experimental Design, Tools and Practices, Public Choice: Public Goods
and Common Pool Resource
Back to session: Methodology I
Replications Might Be
Stephen Cheung, Stephen.Cheung@sydney.edu.au
The University of Sydney
ABSTRACT:
The question of whether risk and time preferences are conjoined is fundamental to experimental
procedures to elicit discount rates, as well as both standard economic theory and prospect theory.
I introduce a new experimental design to elicit time preference, allowing for the possibility of
non-linear utility. Because the design builds upon the Holt-Laury procedure for risk preference,
it permits a direct comparison of the curvature of utility elicited over time with that elicited under
risk. In an experiment with 122 student subjects, I find clear and highly significant evidence for a
choice pattern implied by concave utility. However, the magnitude of utility curvature elicited
over time is considerably less than that elicited under risk, such that the effect of controlling for
this concavity upon estimated discount rates is inconsequential.
Author(s): Stephen L. Cheung
Topic: Decision Theory: Preferences, Methodology: Experimental Design, Tools and Practices
Back to session: Methodology II
Recovering Subjective Probability Distributions
Glenn Harrison, gharrison@gsu.edu
Georgia State University
ABSTRACT:
An individual reports subjective beliefs over continuous events using a proper scoring rule, such
as the popular Quadratic Scoring Rule. Under some mild additional assumption, it is known that
these reports reflect latent subjective beliefs if the individual is risk neutral and obeys Subjective
Expected Utility (SEU) theory. It is also known that these reports are very close to latent
subjective beliefs if the individual obeys SEU and has a concave utility function in the range
observed over typical payments in experiments. We extend these results in two ways. First, we
demonstrate how to recover latent subjective beliefs if the individual obeys SEU and has a
concave utility function within or beyond the 'observed range' in experiments. Second, and more
significantly for practical purposes, we demonstrate how to recover latent subjective beliefs if the
individual is known to distort probabilities into decision weights using Rank Dependent Utility
(RDU) theory. We illustrate with a range of beliefs elicited from individuals in experiments, and
for whom we also have individual estimates of their risk preferences to allow us to identify SEU
and RDU individuals. These theoretical results and empirical applications significantly widen the
domain of applicability of proper scoring rules for eliciting latent subject beliefs.
Author(s): Glenn Harrison and Eric Ulm
Topic: Decision Theory: Beliefs, Methodology: Experimental Design, Tools and Practices
Back to session: Methodology II
Identifying Implicit Preferences
Tom Cunningham, tom.cunningham@iies.su.se
IIES
ABSTRACT:
A large literature in psychology studies implicit knowledge and implicit attitudes, usually by
eliciting automatic responses to stimuli. This identification is controversial. I show how implicit
preferences can be identified from ordinary data on decision-making, under the assumption that
implicit attitudes to a characteristic are stronger in indirect comparisons than direct comparisons.
The findings have applications in sex and race discrimination, as well as product demand.
Author(s): Tom Cunningham
Topic: Decision Theory: Preferences, Decision Theory: Bounded Rationality
Back to session: Methodology II
Does pay-one-randomly incentive mechanism bias elicited risk references in
multiple-price-list methods?
Younjun Kim, ykim@iastate.edu
Iowa State University
ABSTRACT:
The Pay-One-Randomly (POR) incentive mechanism is inherent in the Multiple-Price-List
(MPL) risk elicitation methods in which subjects answer binary lottery choice questions
iteratively. We test potential concern that the POR biases a subject's responses compared to the
One-Task (OT) incentive mechanism. In the POR, a subject answers several questions and is
compensated for one randomly-selected question. We focus on Holt and Laury (AER, 2002; HL)
risk elicitation questions in our test. We use a between-subject design. A group of subjects
answers the HL risk elicitation questions as well as one more question selected from the HL
questions. Another group of subjects answers only that additional question, which is a baseline in
our comparison. As a result, we find significant difference in subjects' responses between the HL
questions and the baseline, but not between that additional question and the baseline, which
implies that the POR does not bias elicited risk preferences in the HL questions. We discuss that
the formation of reference points in the HL questions may lead to the bias.
Author(s): Younjun Kim and Tanya S. Rosenblat
Topic: Special Topic: Experimental Payments, Decision Theory: Risk
Back to session: Methodology II
Cooperation under Incomplete Information - An Experimental Investigation
Maren Tonn, Maren.tonn@fau.de
FAU Erlangen-Nuremberg
ABSTRACT:
In this experiment we observe that private information about preferences makes cooperation
difficult, even in a repeated interaction setting that enables subjects to reap gains from
cooperation. Two players are involved in a joint project and preference intensities (strong or
weak) are assigned randomly to each player. Players can increase efficiency gains by not
overweighting their own interest. We vary matching protocol and cooperation-related gains to
find mechanisms that improve efficient decision making. In further treatments subjects are
involved in 8 projects per period. We observe that coordination is far from being perfect (overall
40 percent of players always state a strong preference), even when potential efficiency gains are
higher. Although fixed matching leads to better coordination and some pairs achieve nearly all
gains from cooperation, often both players always state high intensities. Only in a voting
treatment we find cooperation rates similar to cooperation under complete information.
Author(s): Dirk Engelmann, Veronika Grimm, Maren Tonn
Topic: Games: Bargaining, Public Choice: Voting and Rent Seeking
Back to session: Bargaining
Bargaining with a Residual Claimant: An Experimental Study
Kyle Hyndman, tdp062000@utdallas.edu
University of Texas at Dallas
ABSTRACT:
We investigate two-player bargaining where the payoff to one player is subject to ex-post risk,
while the other player receives a fixed payment, making the player exposed to risk a residual
claimant. Contrary to intuition, recent theoretical work argues that exposure to risk may actually
be beneficial to the residual claimant. We test this in a controlled laboratory experiment and find
residual claimants are able to extract a larger share of the pie when bargaining over a risky
distribution. Indeed, many residual claimants do better in an expected utility sense by being
exposed to risk. However, contrary to the theoretical prediction, it is the comparatively less risk
averse residual claimants who appear to benefit the most. In a subsequent study, where residual
claimants are able to choose between a less risky or a more risky distribution over which to
bargain, few choose the riskier distribution, except when the possibility of an ex-post fair split
exists. Consistent with the earlier results, it is the relatively less risk averse residual claimants
that are more likely to choose the riskier distribution. The results also indicate that asymmetric
exposure to risk creates different (self-serving) notions of fairness for the two types of players,
which leads to bargaining conflict and even disagreements.
Author(s): Matthew Embrey, Kyle Hyndman, Arno Riedl
Topic: Games: Bargaining
Link: http://www.hyndman-honhon.com/hyndman/EHR.pdf
Back to session: Bargaining
Investment in Outside Options as an Opportunistic Behavior: An Experimental
Investigation
Maros Servatka, maros.servatka@gmail.com
Department of Economics, University of Canterbury
ABSTRACT:
We experimentally investigate a bilateral trade relationship in which standard economic theory
predicts that the seller will be better off by investing in outside option to improve his bargaining
position. The seller's investment, however, might have a negative impact on the buyer's otherregarding preferences if the buyer views the investment as opportunistic behavior. We find
overall support to our hypotheses that arise from the link between other-regarding behavior and
opportunism. In our experiment the seller does not become on average better off by investing,
suggesting that costly solutions to opportunistic behavior such as vertical integration may be
unnecessary in some cases.
Author(s): Hodaka Morita and Maroš Serv'tka
Topic: Social Behavior: Other-regarding Preferences, Games: Bargaining
Back to session: Bargaining
The Effect of Listing Price Strategy on Real Estate Negotiations: An
Experimental Study
Eric Cardella, eric.cardella@ttu.edu
Texas Tech University
ABSTRACT:
When selling a home, an important decision for the home owner is choosing an optimal listing
price. This decision will depend in large part on how the chosen list price impacts the post
negotiation final sale price of the home. In this study, we design an experiment that enables us to
identify how different types of common list price strategies affect housing negotiations.
Specifically, we examine how rounded, just below and precise list prices impact the negotiation
behavior of the buyer and seller and, ultimately, the final sale price of the home. Our results
indicate that the initial list price does play an important role in the negotiation process.
Interestingly, these impacts generally attenuate with negotiating experience.
Author(s): Eric Cardella
Topic: Games: Bargaining, Markets: Industrial Organization
Back to session: Bargaining
Investing in Institutions for Cooperation
Xi Wen, xwen@wpi.edu
Worcester Polytechnic Institute
ABSTRACT:
We present a public good game experiment on making a tradeoff between investing in
contribution productivity and contributing to provision. Subjects collectively decide (by voting)
how much to invest in augmenting the technology for producing a public good and then from
their remaining money make individual voluntary contributions to provision, as in conventional
public good games. Since the efficiency of the technology for producing the public good has
diminishing returns to investment, the game has an interior social optimum such that subjects
invest a specific share of their money in augmenting the production technology and contribute
the rest to provision. Relative to the social optimum, subjects do well with investment; the
primary source of loss is their contribution behavior. As far as the tradeoff between investment
and contributions, absolute contribution amounts are not significantly related to investment,
suggesting that following high investment, the incentive effect to contribute of having an
efficient production technology is offset by the budget effect of having less money available.
Author(s): Xi Wen, Alexander Smith
Topic: Public Choice: Public Goods and Common Pool Resource
Back to session: Cooperation
Divided Loyalists or Conditional Cooperators? Creating Consensus about
Cooperation in Multiple Simultaneous Social Dilemmas
Roman Sheremeta, rshereme@gmail.com
Case Western Reserve University
ABSTRACT:
Most of us have experienced multiple social dilemmas simultaneously, where we have a fixed
pool of resources we must allocate between individual and multiple group initiatives. Yet, when
we turn to the social dilemma literature, not only has multiple simultaneous social dilemmas had
little empirical attention but there is gap confusion: two perspectives make opposite predictions
about what individuals will do when experiencing multiple simultaneous social dilemmas. The
divided-loyalty hypothesis, from organization science, predicts that cooperation will decline as
individuals experience multiple simultaneous social dilemmas with the same compared to
different group members. The conditional-cooperation hypothesis, from behavioral economics,
predicts that cooperation will increase as individuals experience multiple simultaneous social
dilemmas with the same compared to different group members. A laboratory study placing these
perspectives in competition shows support for conditional cooperation. Individuals participating
in multiple social dilemmas with different, compared to the same, group members increase their
cooperation by 56.6%. The effect is strongest in later rounds of the experiment, with twice as
many cooperators in the treatment where individuals are grouped with different, versus same,
group members. The positive effect of playing with different group members comes from
participants shifting their cooperative behavior toward the more cooperative group. Implications
for social dilemma scholarship and social cooperation are discussed.
Author(s): Matthew W. McCarter, Anya C. Samak, and Roman M. Sheremeta
Topic: Social Behavior: Group Behavior, Public Choice: Public Goods and Common Pool
Resource
Back to session: Cooperation
Can we manage first impressions in cooperation problems? An experiment
Michael Kurschilgen, kurschilgen@coll.mpg.de
Max-Planck Institute for Research on Collective Goods
ABSTRACT:
We study how cooperative behavior reacts to selective (favorable or unfavorable) pre-play
information about the cooperativeness of other, unrelated groups within an experimental
framework that is sufficiently rich for conflicting behavioral norms to emerge. We find that
cooperation crucially depends on pre-play information, coinciding with a change in initial
beliefs. Over time, behavior within both types of groups becomes increasingly homogeneous,
indicating the formation of two rather different social norms, depending on whether pre-play
information was favorable or unfavorable. In addition, we find unfavorable information to
substantially reduce the effectiveness of peer punishment. For these differences to emerge it is
immaterial whether each member or only one member of a four-person group receives the preplay information.
Author(s): Christoph Engel, Sebastian Kube, Michael Kurschilgen
Topic: Social Behavior: Group Behavior, Social Behavior: Norms and Morals
Back to session: Cooperation
The Role of Intentions: Reciprocating to Strategically Motivated Kindness
Yesim Orhun, aorhun@umich.edu
University of Michigan
ABSTRACT:
An important consideration in reciprocity is how people evaluate the kindness of an action and
whether this evaluation matters for their responses. We examine the role of the first-stage
player's motivations behind helping a second-stage player in shaping the second-stage player's
reciprocal behavior. Across conditions where the same helpful action could be motivated by
punishment-avoidance, reward-seeking, and/or pure altruism, we elicit the second-stage player's
reciprocal choices as well as her beliefs about the altruism of the first stage player. We use a full
information probabilistic design with the strategy method to elicit reward demands in situations
where the first-stage player expected a different sub-game to take place most the time. We find
that positive reciprocity is higher for an unmotivated helpful action than for the same helpful
action potentially motivated by punishment-avoidance. First-stage players who choose the
helpful option in a dictator game are perceived as on average more altruistic than those who
choose the same option when the alternative option could have led to punishment. In line with
the prediction of intention-based reciprocity theories, we show that the difference in the level of
reciprocity is driven by the changes in the altruism inferences regarding the person who took the
helpful action. The results contribute to the reciprocity literature by showing that 1) perceived
intentions impact the levels of reciprocal behavior, 2) this impact is due to changes in altruism
inferences and may differ across motives, and 3) seemingly contradictory theories and previously
inconclusive evidence regarding the role of intentions can be reconciled.
Author(s): Yesim Orhun
Topic: Social Behavior: Other-regarding Preferences, Decision Theory: Beliefs
Back to session: Cooperation
Contests, Communication, and Network Externalities: An Experiment
Kory Garner, garnerk@purdue.edu
Purdue University
ABSTRACT:
This paper examines how cheap talk communication alters behavior in a group of defenders
playing a Colonel Blotto game on a Star Network. Garner (2014) shows that groups of defenders
are unable to coordinate strategies and are far from the equilibrium allocation. I find that,
allowing within-group communication facilitates the coordination of individual strategies within
the group and pushes subjects toward the unique and e
fficient equilibrium. In equilibrium, periphery nodes are treated equally by the defense. Without
communication this result does not hold, but with communication periphery nodes are treated
significantly more equally. Additionally, groups without communication under-allocate
resources to the Center Node, however with communication they allocate more to the Center
Node than a central planner does. This is welfare-improving for the defense.
Author(s): Kory M Garner
Topic: Social Behavior: Communication, Games: Networks
Back to session: Communication I
Independent Behavior and Communication in Corporate Governance
Rulliere Jean-Louis, rulliere@gate.cnrs.fr
University of Lyon
ABSTRACT:
There is a large literature in corporate governance that argues for the independence of
compensation committees. The independence in the remuneration committee is regarded as a key
component in avoiding pay outcomes inflated in favor of the CEO. In the empirical works,
independence is typically measured through the proportion of directorsfeaturing a certain number
of demographic characteristics, such as not being an employee of the focal firm, not being a
family member of the CEO, not being a significant shareholder, etc. It is then assumed that
directors with the desired characteristics are independent, and thus are resistant to CEOs' undue
influence.This type of approach, however, begs the question if directors who are not related to
the CEO according to the above criteria really behave independently. In fact, when it comes to
controlling compliance with the recommendations of corporate governance codes, individual
directors' features in terms of economic and family linkages are examined, but independence of
mind and the consequent actual behavior are never really measured directly. The experimental
design is based on a principal agent relationship model with three players, where the first two
players (the shareholder and the CEO generate a collective project (the value of the firm) and the
third player (the director) must decide the part of the pie allocated to each one of the first two
players. This board member receives a flat wage regardless of his decision. In that respect we
design a laboratory experiment with two treatments, baseline treatment versus advice treatment
in which can send a message to the director suggesting the way to do the sharing. With this
hypothesis on a possible communication tie between the director and the CEO, this allows
measuring the behavior of the independent administrator: to what extent the director is
responsive to receipt of a message and its contents?
Author(s): Rulliere J.L., Dhuywetter W., Havet N., Wirtz P.
Topic: Social Behavior: Communication, Markets: Finance
Back to session: Communication I
The Present Value of Future Explanations
Benjamin Ho, benho@alum.mit.edu
Cornell
ABSTRACT:
In this paper, we explore the behavior of takers in a modified, repeated power-to-take game. In
our experiment, takers must send messages to receivers when taking their assets unless they can,
depending on their experimental condition, and wish to pay to avoid doing so. In particular, we
are concerned with their take rates and willingnesses to pay, the messages they send, how these
messages reflect their behavior, and how their messages and behaviors vary over time. We find
significant take rates for all treatments but note that takers who know that they will have to
explain their actions in the future and cannot pay to avoid doing so (informed, cannot pay) take
significantly less than those in all other treatments. We observe that (informed, can pay) takers
exhibit significant willingnesses to pay, lending support to the hypothesis that people
consciously thinking about future explanation change their actions in the present to afford
themselves more pleasant futures. We also discover that the messages takers send are
exceptionally good predictors of their behavior; in particular, messages concerning apology,
fairness, guilt, and selfishness significantly model takers' actions in repeated rounds. These
results carry great weight for matters of politics, finance, and other fields relating to interpersonal
interactions. By studying the actions and explanations people display, we become more able to
anticipate their future decisions and the forces driving their behavior.
Author(s): Benjamin Ho and Sean McCoy
Topic: Social Behavior: Communication, Social Behavior: Other-regarding Preferences
Back to session: Communication I
Silence is Golden: Communication Cost and the Team Problem Solving
David Cooper, djcooper@fsu.edu
Florida State University
ABSTRACT:
We study team performance solving a complex class of logic problems, nonograms. The value of
solving the puzzles quickly and the cost of sending messages are systematically varied. Either
adding a bonus for fast solutions or a cost for sending message significantly increases the
likelihood that the group is able to solve the problem quickly (faster than median). Groups
communicate frequently and are almost always on task, but sending more messages seems to
harm performance. This suggests that teams are harming performance rather than helping it.
Author(s): Gary Charness, David J. Cooper, and Zachary Grossman
Topic: Social Behavior: Group Behavior, Applied Economics: Labor Market
Back to session: Communication I
Demanding or Deferring? An Analysis of Simultaneous Communication with
Attitude
Siyu Wang, swang14@masonlive.gmu.edu
George Mason University
ABSTRACT:
Experimental evidence shows simultaneous pre-played two-way communication need not
improve subsequent coordination success. Farrell (1993) suggests that the existence of a rich,
common language among agents might help solving the problem. We model environments with
rich communication that includes attitudes (in our case, demanding and deferring). Doing so
helps to capture key features of natural communication and shows how this can promote
coordination. A simple coordination game with color-labeled options and revealed information
about gender of counterpart was conducted without or with two-way pre-play communication.
We take advantage of cultural variation in attitudes displayed towards member of different
genders among university populations in Washington DC and Shanghai, China. We find that in
both pools subjects have no problem coordinating when two players suggest same Nash
equilibrium. In Washington DC, we find subjects respond much less to attitude than subjects in
Shanghai when two players suggest different NE. When subjects suggest different Nash with
same attitude, Washington DC subjects are more likely to insist on their suggested NE, while
Shanghai subjects play Pareto-dominated mixed-strategy NE. As a result, communication with
attitude significantly improves coordination in Shanghai, while coordination rates do not
improve in DC.
Author(s): Siyu Wang, Daniel Houser
Topic: Social Behavior: Communication, Games: Coordination
Back to session: Communication II
Incentives for Social Information Transmission: Theory and Behavior
Jonathan Lafky, jlafky@gmail.com
Lafayette College
ABSTRACT:
Information sharing has become increasingly important in helping consumers make better, more
informed choices over competing products. However, to our knowledge there has been little
economic work focused on institutional design for this sharing. Our project, using novel theory
and laboratory experiments, analyzes three simple, commonly used incentive schemes against a
laissez faire baseline. Each incentive scheme has qualitatively different theoretical outcomes in
behavioral and efficiency terms, while our laboratory experiments examine the degree these
differences manifest themselves and the theory's robustness to human behavior. Our findings
indicate substantial efficiency gains from not distorting sender incentives too much. However,
those mechanisms that tradeoff even a small amount of strategic-alignment for greater
information provision substantially degrade final outcomes in the lab, even where there is the
possibility for a theoretical gain.
Author(s): Jonathan Lafky, Alistair Wilson
Topic: Social Behavior: Communication, Markets: Market design and Matching
Back to session: Communication II
Fighting with Words: Contested Communication in a Social Dilemma
Diego Grijalva, dgrijalv@uci.edu
Universidad San Francisco de Quito
ABSTRACT:
I conduct a laboratory experiment to explore the role of communication in the context of a social
dilemma. By separating communicators (leaders) from participants in the social dilemma
(followers) I consider how communicators' material interests affect followers' cooperation. On
the one hand, ,material interests opposed to cooperation limit the cooperative effect of
communication and discussion in social dilemmas. On the other hand, contested communication
has no discernible effect on cooperation relative to no communication. This raises questions
about the role of discussion as a mechanism to promote cooperation when there exist conflicting
interests.
Author(s): Diego F Grijalva
Topic: Social Behavior: Communication, Public Choice: Other
Link: http://search.proquest.com/pagepdf/1440117277
Back to session: Communication II
Asymmetric and Endogenous Communication in Competition between Groups
Roman Sheremeta, rshereme@gmail.com
Case Western Reserve University
ABSTRACT:
Costless pre-play communication has been shown to effectively facilitate within-group
coordination. However, in competitive coordination games, such as rent-seeking contests, better
within-group coordination leads to more aggressive competition and lower efficiency. We report
an experiment in which two groups compete in a weakest-link contest by expending costly
efforts. We find that allowing within-group communication makes groups compete more
aggressively. When only one group can communicate, the communicating group coordinates
better and expends higher efforts than the non-communicating group. However, the
communicating group earns payoffs that are not different from the baseline contest without
communication, while the non-communicating group earns lower payoffs than in the baseline
contest. Allowing within-group communication in both groups leads to even more aggressive
competition and the lowest payoffs to both groups. Despite such a 'harmful' effect of
communication, groups vote to endogenously open communication channels even though this
leads to lower payoffs and efficiency.
Author(s): Timothy N. Cason, Roman M. Sheremeta, Jingjing Zhang
Topic: Social Behavior: Group Behavior, Games: Contests
Back to session: Communication II
When Do Stable Matching Mechanisms Fail? The Role of Standardized Test in
College Admissions
Ming Jiang, mjng@umich.edu
University of Michigan
ABSTRACT:
In many places, students are assigned to colleges based on their test scores from standardized
tests. I show that when such standardized tests have measurement errors, stable matching
mechanisms can fail. A manipulable mechanism such as the Boston mechanism, combined with
limited information of student priorities (submitting preferences before taking the exam), can
achieve more desirable outcomes. Experimental results confirm the theory and show that the
Deferred Acceptance mechanism causes significantly more market unravelling than the Boston
mechanism.
Author(s): Ming Jiang
Topic: Markets: Market design and Matching, Applied Economics: Labor Market
Back to session: Matching Markets
Learning versus inter-generational advice in school matching mechanisms: An
experimental study
Tingting Ding, tingting.ding@nyu.edu
New York University
ABSTRACT:
We test two school choice assignment mechanisms, the Boston and the Gale-Shapley
mechanisms, in both inter-generational and repeated game treatments. Our results show that in
the repeated game treatment the strategies of subjects eventually converge but punctuated
equilibria emerge in the inter-generational treatment. For example, under the Gale-Shapley
mechanism where the truth-telling is the dominant strategy, the fraction of subjects in the
repeated game treatment who report truthful preferences monotonically increases over time,
while in the inter-generational treatment the fraction of subjects who report truthfully falls but
the overall efficiency of subjects increases. We believe the divergence of subject behavior in our
two treatments relies on the distinction between experiential and social learning taking place in
these two environments. We test this conjecture by structurally estimating a reinforcement
learning model for each of these two treatments.
Author(s): Tingting Ding and Andrew Schotter
Topic: Markets: Market design and Matching, Decision Theory: Learning
Back to session: Matching Markets
Evolutionary Preference Revelation Dynamics under School Choice Mechanisms
Daniel Stephenson, dgstephenson.econ@gmail.com
Texas A&M University
ABSTRACT:
In the United States, a growing number of school districts allow parents to choose which public
schools they want their children to attend. Unfortunately, it is often impossible to give every
student her top choice of schools, since each school can only support a limited number of
students. To resolve these shortages, policy makers may elicit each family's preference over
schools and employ matching mechanisms that assign each student to a school based on the
reported preferences. This paper experimentally investigates the impact of alternative student
assignment mechanisms on efficiency, stability, and truthfulness in school choice environments.
We employ an innovative continuous-time experimental design which closely mirrors
evolutionary models, providing novel insights into the the long run preference revelation
dynamics induced by these mechanisms.
Author(s): Daniel Stephenson
Topic: Markets: Market design and Matching
Link: https://sites.google.com/site/danielstephensonecon/
Back to session: Matching Markets
Truncation Strategies in Two-Sided Matching Markets: Theory and Experiment
Ahrash Dianat, adianat@gmu.edu
George Mason University
ABSTRACT:
We investigate a particular class of strategic behavior in the context of two-sided matching
markets: truncation strategies. First, we characterize the conditions under which an individual
agent can safely and profitably truncate her preference list in the revelation game induced by the
Gale-Shapley deferred acceptance algorithm. We then experimentally test whether agents
optimally truncate their preferences in a laboratory setting. We find that truncation behavior is
not common. In fact, truth-telling is the norm and occurs significantly more often than random
chance would predict. We also find that truncation behavior is not sensitive to the profitability of
truncation, but that it is sensitive to the safety of playing a truncation strategy. In addition, since
the optimality of truncation depends on other agents' actions, we directly manipulate subjects'
beliefs by restricting the set of strategies that both sides of the market can use. We find that
direct manipulation of subjects' beliefs does not increase the prevalence of optimal truncation. As
a result, final outcomes are not significantly closer to the receiver-optimal stable matching in
environments that are more conducive to truncation.
Author(s): Marco Castillo and Ahrash Dianat
Topic: Markets: Market design and Matching
Back to session: Matching Markets
Price reactions when consumers are concerned about pro-social reputation
Lars Hansen, lgh@ifro.ku.dk
Univerity of Copenhagen, IFRO
ABSTRACT:
In this paper, we propose a reputation-signaling model of demand for consumer goods containing
pro-social characteristics such as a 'fair trade' or 'organic' certification. We show that reputation
signaling can cause perverse price reactions resembling the crowding-out of pre-existing motives
for pro-social behavior seen in situations of volunteering and charitable giving. Finally, using a
unique combination of questionnaire and purchase panel data, we present evidence of such
reputation-driven perverse price reactions in the Danish market for organic milk.
Author(s): Goytom Abraha Kahsaya, Laura Mørch Andersena and Lars Gårn Hansena
Topic: Social Behavior: Communication, Applied Economics: Charitable Giving
Back to session: Pro-Social Behavior I
Are Entrepreneurs More Prosocial than Others?
Hakan Holm, hakan.holm@nek.lu.se
Lund University
ABSTRACT:
One important, but yet neglected question, is the potentially important role of private
entrepreneurs in the development of norms and behavior in society. In the scarce literature
concerning this issue, there are both 'bright' and 'dark' pictures of the entrepreneur, but neither
has been convincingly empirically validated by behavioral data. We report results from an
artificial field experiment where the behavior of 200 randomly sampled entrepreneurs (i.e.,
CEOs from 200 firms with at least 10 employees) is compared with the one of a control group of
200 non-entrepreneurs. The the control group subjects are randomly sampled to match the group
of entrepreneurs in important respects such as (age, education, gender and income). The
entrepreneurs and control group are recruited from two cities in the Yangtze delta (Wenzhou and
Shanghai) and are given substantial monetary incentives. The subjects are exposed to three
different games to capture the multidimensional aspects of prosocial behavior in strategic
situations. Each game is given one abstract frame and one field frame, respectively. In addition,
beliefs in each game are elicited. We obtain convincing results that entrepreneurs are
significantly more prosocial than the control group, which supports the brighter picture of the
entrepreneur. Furthermore, the entrepreneurs' and the control group's beliefs differ in that the
former group's beliefs are closer to the socially optimal strategy profile.
Author(s): Hakan J Holm, Victor Nee, Sonja Opper
Topic: Social Behavior: Norms and Morals, Field Experiments: General
Back to session: Pro-Social Behavior I
Visibility, Group Size and Pro-Social Behavior
Alexander Gotthard Real, gotthard-real.1@osu.edu
Ohio State University
ABSTRACT:
Visibility of actions has been conjectured and shown to induce pro-social behavior. Using a
modified Trust Game we replicate this result, but show that the effect of visibility decreases with
the size of the group that is being observed. Moreover, after a few rounds of feedback about
other players' behavior, the effect of visibility vanishes, as reciprocal players tend to imitate
selfish players. This result is consistent with a model where the psychological cost of behaving
selfishly decreases with the number of selfish individuals in a reference group.
Author(s): Alexander Gotthard-Real
Topic: Social Behavior: Norms and Morals, Social Behavior: Group Behavior
Back to session: Pro-Social Behavior I
Prosocial Behavior Differences within China Explained by the Rice Culture
Yunfeng Lu, luyunf@gmail.com
National University of Singapore
ABSTRACT:
People have different preferences, and culture plays a role on shaping it. With a novel
experimental economics data set, we find that there are systematic differences in prosocial
behavior across regions in China. We show that the rice culture measured by percent of rice
farming influences people's cooperative and trust behavior in experimental games, which
supports Talhelm et al. (2014)'s rice culture theory. We also use a large national representative
survey data to examine several other measures of prosocial behavior, and validate the previous
results.
Author(s): Soo Hong Chew, Richard Ebstein, Yunfeng Lu
Topic: Social Behavior: Other-regarding Preferences, Public Choice: Public Goods and
Common Pool Resource
Back to session: Pro-Social Behavior I
Pay-What-You-Want in Competition
Margaret Samahita, margaret.samahita@nek.lu.se
Lund University
ABSTRACT:
Extensive experimental and empirical studies have found that Pay-What-You-Want (PWYW)
pricing schemes attract positive payments and even profit, in some cases. Yet, in almost all
industries fixed-pricing (FP) still dominate. I conduct an industrial organization study of PWYW
and FP to identify the market structures allowing each pricing scheme to profit, both as a
monopolist and in a sequential competition. As a monopolist, stronger social preferences
increase PWYW profitability while using a minimum price weakly dominates both standard
PWYW and fixed-pricing. In competition, PWYW does not survive as a dominant equilibrium
with the presence of free-riders. Instead, an equilibrium where PWYW co-exists alongside fixedpricing can be explained as an optimal second mover strategy to avoid the Bertrand trap.
Author(s): Margaret Samahita
Topic: Markets: Industrial Organization
Back to session: Pro-Social Behavior II
The Motivations for Charitable Purchases: Evidence from Girl Scout Cookie
Sales
Mark Owens, mfowens4@gmail.com
Middle Tennessee State University
ABSTRACT:
Consumers derive utility from consumption and also from the satisfaction they feel in making a
charitable purchase. We collect detailed information about Girl Scout Cookie sales in front of
retail locations in Rutherford County, Tennessee over a four year time period. We conduct a field
experiment which randomly assigns specific cookie booths to receive a charitable bonus
contribution. The bonus takes on several forms which effectively vary the intensity of the
contribution to charity while holding the purchase price, and utility from consumption constant.
We will use this data to estimate a structural model which isolates the different motivations for
purchasing products from a charitable group.
Author(s): Mark F. Owens, Adam D. Rennhoff, and Charles L. Baum
Topic: Field Experiments: General, Applied Economics: Charitable Giving
Back to session: Pro-Social Behavior II
Am I my Peer's keeper? Social Responsibility in financial decision making
Sascha Fullbrunn, Fullbrunn@gmail.com
Radboud University Nijmegen
ABSTRACT:
Recent studies discuss whether investment managers show a risky or a cautious shift when
investing other peoples' money in a risky investment. But these studies focus only on either a
perfect aligned payoff - return is the same for manager and client (LEADER) - or no alignment
at all - fixed payment for the investment manager (OTHERS). We add to the literature by
considering both conditions in a within subjects design with an increased level of responsibility
(investment for six clients). Our results show that investment managers invest significantly less
for their clients than for self in both conditions. However, this barely holds for risk averse
subjects. By considering LEADER and OTHERS within-subjects, we are able to identify the
degree of altruism. While selfish investment managers invest the same amount in LEADER as
for self, altruistic investment managers invest the same amount in LEADER as in OTHERS.
Author(s): Sascha F'llbrunn, Wolfgang Luhan
Topic: Social Behavior: Other-regarding Preferences, Decision Theory: Risk
Back to session: Pro-Social Behavior II
Network dynamics and social preferences
Tushi Baul, tb91@nyu.edu
New York University Abu Dhabi
ABSTRACT:
e conduct a field experiment with real world social network of students to study how social
preferences vary with dynamic network structure. We map social networks of freshmen at the
beginning of the school year and track their social preferences and social networks through a
series of laboratory experiments and surveys conducted in each semester. We exploit two
features of our experimental design to identify peer effects: 1. Repeated measurements of
students' preferences allow us to identify changes I baseline social preferences over time. 2.
Roommates are allocated through random assignment which provides us with a alternative
identification strategy. Our study addresses the question to what extent social preferences are
'learned' from others.
Author(s): Tushi Baul, Manaswini Bhalla and Tanya Rosenblat
Topic: Field Experiments: General, Social Behavior: Other-regarding Preferences
Back to session: Pro-Social Behavior II
Impatience Predicts Dropping Out of High School
Marco Castillo, mcastil8@gmu.edu
George Mason University
ABSTRACT:
How much is patience worth? There are large monetary returns to graduating from high school,
yet the proportion of teenagers who completed high school in four years in the 2011-2012 U.S.
school year was only 80%, and it was even lower for males, Blacks and Hispanics (77, 67, 71%
respectively) (NCES, 2014). Research shows that characteristics of an individual, such as sex,
race, cognitive ability and household environment, as well as non-cognitive abilities, are
correlated with the probability of dropping out of high school. Intuition suggests that patience
would be important since the payoff from educational investment is not immediate. It requires
being willing to put off today's pleasure, e.g. playing with friends or watching TV instead of
studying, for higher earnings many years down the road. We investigate the magnitude of the
effect of patience on graduating high school by collecting experimental data on time preferences
with 865 adolescents in a school district in Georgia, USA. The experimental data were collected
with three cohorts of 8th-graders beginning in 2006, and we have administrative data on
graduation, test scores and demographics. Using these data, we find that adolescents who were
more impatient in 8th grade were more likely to drop out of high school four years later, even
controlling for scholastic achievement, past misbehavior, sex, race and income. A one standard
deviation difference in the discount rate in 8th grade is almost two-fifths the effect of being a boy
and one-fifth the effect of receiving reduced price school meals. Estimates show that a one
standard deviation decrease in the discount rate has an estimated expected yearly cost of $257.
Author(s): Marco Castillo, Jeff Jordan, Ragan Petrie
Topic: Decision Theory: Preferences, Applied Economics: Labor Market
Back to session: Preferences and Choice
The Impact of Financial Education on Adolescents' Intertemporal Choices
Marta Serra-Garcia, mserragarcia@ucsd.edu
UCSD
ABSTRACT:
We examine the impact of a large high-school financial education program on the intertemporal
choices of adolescents. We randomly assigned the program among a sample of almost 1,000
students and measured their intertemporal choices using an incentivized experiment. While
intertemporal choices in the control group exhibit significant present bias, choices among treated
students are time consistent on average. We structurally estimate individual preference
parameters, explicitly allowing choices to be stochastic. Participation in the program increases
time consistency and decreases error rates. These findings suggest that financial education can
have significant effects on intertemporal choice already at a young age.
Author(s): Melanie Luehrmann, Marta Serra-Garcia and Joachim Winter
Topic: Decision Theory: Preferences, Field Experiments: General
Link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2483682
Back to session: Preferences and Choice
"Free to Choose:' Testing the Pure Effect of Autonomous Choice
Radovan Vadovic, radovan.vadovic@carleton.ca
Carleton University
ABSTRACT:
We conduct an experimental test of a long-standing conjecture that the pure act of choosing
directly motivates people to exert higher effort (e.g., see Sen 1999, Ryan & Deci 2000). Subjects
face two projects - risky and safe. In one treatment they choose a project; in the other treatment
they are assigned one of the projects. To isolate the pure effect of autonomy we use a differencein-difference procedure that eliminates various forms of selection. Such pure effect of
autonomous choice can be derived from the theory of anticipated regret or/and the theory of selfsignaling. Our design allows us to test between these two explanations.
Author(s): Levent Ülkü, Tomas Sjöström, Radovan Vadovic
Topic: Decision Theory: Preferences, Decision Theory: Other
Back to session: Preferences and Choice
Freedom, power and interference: an experiment on decision rights
Claudia Neri, claudia.neri@unisg.ch
University of St.Gallen
ABSTRACT:
We propose a theoretical foundation for preference for decision rights, driven by preference for
freedom, power, and non-interference, which can lead subjects to value decision rights
intrinsically, i.e., beyond the expected utility associated with them. We conduct a novel
laboratory experiment in which the effect of each preference can be distinguished. The
experimental design combines a bidding stage, in which a decision right is allocated between two
players, and a decision stage, in which the player holding the decision right exercises it,
generating payoff consequences for both players. Risk preferences are elicited via an additional
lottery-choice questionnaire. We find evidence that the intrinsic value of decision rights is driven
more strongly by preference for non-interference than by preference for freedom or power. This
result suggests that individuals value decision rights not because of the actual decision-making
process, but rather because they have preference against others interfering in their outcomes.
Author(s): Claudia Neri, Hendrik Rommeswinkel
Topic: Decision Theory: Preferences
Back to session: Preferences and Choice
An Experimental Study of Audit Tournaments and Compliance Observability on
Regulatory Performance
Lana Friesen, l.friesen@economics.uq.edu.au
University of Queensland
ABSTRACT:
This paper reports an experimental study of two stochastic audit schemes for enforcing
regulatory compliance. In the Random Audit mechanism firms are randomly chosen for
inspection. In the Tournament Audit mechanism the probability of inspection increases with the
degree of estimated under-reporting. The experiment also varies the observability of identity,
output, and compliance decisions. Optimal output is theoretically independent of the auditing
schemes, but equilibrium reporting is higher under the Tournament mechanism than Random
auditing. Experimental findings are consistent with the theoretical predictions for reporting, but
not for output. In particular, we find that average output is lower and reporting is higher in the
Tournament treatment as compared to the Random Audit treatment. At the individual level, a
majority of participants misreported in most periods. Social observability does not affect output
or reporting significantly in either of the audit treatments.
Author(s): Timothy N. Cason, Lana Friesen, Lata Gangadharan
Topic: Public Choice: Other, Applied Economics: Other
Back to session: Political Economy
Do judges care about reputation? Experimental evidence from judges in
Tajikistan
J Michelle Brock, brockm@ebrd.com
European Bank for Reconstruction and Development
ABSTRACT:
Reputation can play an important role in motivating quality among professionals. Individuals
invest in their reputation not only to influence how others view them, but also to reinforce their
own self-perception. Benabou and Tirole s 2003 paper on intrinsic and extrinsic motivation
suggests that self-perception is a powerful incentive for workplace performance. Self-perception
and reputation are particularly important among judges (Posner, 1993). In this work, we
investigate the value of self-perception with respect to quality-based reputation and look at how
this interacts with rent-seeking behaviour, among Tajik judges. In Tajikistan, judicial decisions
are not made available neither for study nor review once they are passed down and qualifications
considered for reappointment are uncertain. Thus, there exists little opportunity for judges to
establish a quality-based reputation. Further, it is not clear how making decisions more visible
would improve quality, since corruption is wide-spread and there is no evidence that qualitybased reputation matters. In this setting, one s self-perception may be key to motivating quality.
We conducted a laboratory experiment with Tajik judges to investigate how the chance of
anonymous review impacts effort allocation between rent seeking and quality. The experiment
uses a real effort task that reflects judges' familiarity with Tajik commercial law. In order to
allow for rent-seeking behaviour, judges earned points for both correctly and incorrectly
completed items in the task. Time to complete the task was limited, so that investments in correct
answers required foregoing rents from providing large number of (less-time intensive) incorrect
answers. The treatment was an announcement that subjects' work may be viewed by their peers
present in the session, but, importantly, their work remained anonymous. Further, any potential
review could not impact on experimental earnings. The treatment was thus the suggestion of a
reputation effect where none was actually possible and the potential review affected the subjects
only through their self-perception. The experiment was designed with the following framework
in mind. The legal community agrees that judicial quality matters, as an underlying principle,
and that opportunism should carry stigma. Quality is defined as maximal effort put toward
appropriate application of the legal code (effort), combined with an absence of rent-seeking.
Nonetheless, if there is an opportunity for rent-seeking behaviour without getting caught,
behaving opportunistically is an established, if not entirely accepted, norm. Getting caught refers
to persecution by central government authorities and is dependent on observability. We would
expect visibility to decrease opportunism within this framework, but it is unclear whether effort
changes with visibility. Further, if output is visible but anonymous, self-perception over
reputation may still lead to changes in behaviour. We find that the chance of increased visibility
does not impact effort, but it does reduce rent-seeking behaviour, even when work is anonymous.
The experiment is couched in a context where peer review does not exist and so experimental
results do not reflect a norm in the profession. Rather, the study provides evidence on the power
of self-perception to reduce opportunistic behaviour, even in a legal system with low
accountability. More broadly, this study provides evidence of the economic importance of selfperception.
Author(s): J Michelle Brock
Topic: Public Choice: Other, Psychology and Biology: Other
Back to session: Political Economy
The People's Hired Guns? Experimentally Testing the Motivating Force of a
legal frame
Alicja Reuben, alicja.reuben@manhattan.edu
Manhattan College
ABSTRACT:
Legal realists expect prosecutors to be selfish. If they get the defendant convicted, this helps
them advance their careers. If the odds of winning on the main charge are low, prosecutors have
a second option. They can exploit the ambiguity of legal doctrine and charge the defendant for
vaguely defined crimes, like 'conspiracy'. We model the situation as a signaling game and test it
experimentally. If we have participants play the naked game, at least a minority plays the game
theoretic equilibrium and use the vague rule if a signal indicates that the defendant is guilty. This
becomes even slightly more frequent if a misbehaving defendant imposes harm on a third
participant. By contrast if we frame the situation as a court case, almost all prosecutors take the
signal at face value and knowingly run the risk of losing in court if the signal was false. Our
experimental prosecutors behave like textbook legal idealists, and follow the urge of duty.
Author(s): Christoph Engel, Alicja Reuben
Topic: Social Behavior: Norms and Morals, Games: Other
Back to session: Political Economy
The Articulation of Government Policy: Health Insurance Mandates Versus
Taxes
Judd Kessler, judd.kessler@wharton.upenn.edu
The Wharton School
ABSTRACT:
Can the articulation of government policy affect behavior? Participants in our experiment report
their probability of purchasing health insurance under one of two financially equivalent policies:
a government mandate to purchase insurance or a tax on the uninsured. During our one-year
study frame, controversy arose over the Affordable Care Act's individual mandate. Precontroversy, the mandate articulation increased purchase by 10.2 percentage points relative to the
tax articulation (equivalent to a $1000 decrease in premiums). Post-controversy, the mandate was
no more effective than the tax. We show that articulation affects behavior and should be
considered when evaluating the efficacy of policy.
Author(s): Keith M. Ericson and Judd B. Kessler
Topic: Social Behavior: Norms and Morals
Link: http://assets.wharton.upenn.edu/~juddk/papers/EricsonKessler_Mandates.pdf
Back to session: Political Economy
Coordination Norms in Dynamic Groups
John Hamman, jhamman@fsu.edu
Florida State University
ABSTRACT:
We study the stability of coordination norms in groups with changing membership. In a
threshold public goods game with heterogeneous returns and costly punishment, group members
chat to determine initial contributions to reach the threshold. Group members are then
systematically rotated by either switching between groups or using a 'generations' design. We
find that the rotation mechanism has a significant effect on norm stability when subjects may see
a contribution history when joining a new group.
Author(s): John Hamman, Ernesto Reuben
Topic: Games: Coordination, Social Behavior: Group Behavior
Back to session: Coordination
Auctions or Contests? Allocating the Right to Play a Minimum Effort
Coordination Game
Katerina Sherstyuk, katyas@hawaii.edu
University of Hawaii, Dept of Economics
ABSTRACT:
We compare methods to allocate operator licenses or assets where the future value of holding a
license is uncertain at the time of allocation as it depends on ex-post investment decisions of all
license holders because of strategic complementarities. After the licenses are allocated, the
winners make investment decisions which we model as a minimal effort coordination game. We
use a laboratory experiment to compare the following methods to allocate licenses: (1) an
auction; (2) an investment contest, where the only selection criterion is the commitment to the
future investment; and (3) a bureaucratic allocation procedure, modeled as lottery. We consider
which allocation method is more successful in promoting higher investment levels and higher
profitability for operators. We find that the investment contest with commitment is the only
allocation method that consistently leads to the highest efficiency. Allowing to revise investment
decisions after the licenses are allocated reduces efficiency as compared to a setting where all
commitments are enforced. Auctioning off licenses leads to higher investments than under
lottery, but is characterized by significant overbidding and winners' curse.
Author(s): Katerina Sherstyuk, Nina Karmanskaya and Pavel Teslia
Topic: Games: Coordination
Back to session: Coordination
Social Identity and Punishment in a Minimum Effort Game
Michalis Drouvelis, m.drouvelis@bham.ac.uk
University of Birmingham
ABSTRACT:
We design an experiment to assess the impact of social identity and punishment (and their
interplay) on coordination. The importance of social identity is widely recognised in the social
psychology and economics literature, and it has been shown that it may affect coordination over
time. Punishment mechanisms have been explored in relation to other economic environments
such as in public good games, but this study is the first to examine its effects on coordination in a
MEG and, more importantly, its interaction with group identity. The main building block of our
study is a minimum effort game (MEG) with seven Pareto-ranked equilibria. We study
experimentally whether the presence of social identity and sanctions can affect equilibrium
selection in a one-shot two-player MEG. The reason for choosing a one-shot interaction was that
it allows us to analyse the pure effects of group identity on coordination and sanctioning,
eliminating potential confounding effects that might come from repeated interaction and other
strategic considerations. Our experiment was divided into two stages. In a first stage subjects
were asked to participate in some problem solving tasks, either as a group or individually. In a
second stage, then, subjects played a one-shot two-player MEG, either with an In-group or an
Out-group counterpart (in the group treatment), or as individuals without group identity (in the
individual treatment). The MEG in this second stage was either with or without punishment
mechanism. Thus, our experiment consists of six treatments (3x2 between-subjects design). Each
treatment consists of 4 sessions, and in each session there were 12 subjects. At the beginning of a
session subjects were informed that the experiment consisted of two stages, but detailed
information about the second stage was only given once everyone had completed the first stage.
Subjects were paid according to the sum of their earnings from the two stages of the experiment.
In the first stage with the group treatment conditions, in each session subjects were randomly
divided into two teams of six and each team was randomly assigned a color (either red or blue).
Subjects then participated in two problem-solving tasks and were given the opportunity to
communicate with their fellow team members via a computer chat program before submitting
their answers. For the first task subjects were given 5 minutes to review two sets of three
paintings by Paul Klee and Wassily Kandinsky. They were then shown two different paintings
by either Klee or Kandinsky and were given 3 minutes to guess for each painting the artist who
made it. Subjects submitted their answers individually and received a small payoff for each
correct guess. Subjects then proceeded to the second task, which was identical to the first one,
with the exception being that subjects had to review two buildings designed by Zaha Hadid and
Rem Koolhaas, and then had to guess for each building the architect who made it. Subjects were
given the same amounts of time to review the buildings and make their guesses. For the control
sessions, subjects also participated in these two problem-solving tasks. However, they were not
divided into teams and could not communicate with any other participant before submitting an
answer. In all treatments, subjects did not learn whether their guesses were correct in either task
until the end of the experiment. After this first stage, subjects played a one-shot two-player
MEG. In the conditions where group identity was induced, subjects learned the team affiliation
of their counterpart they were matched with in the MEG game. In the In-group condition, a
subject's counterpart in the MEG belonged to the same team from the first stage; whereas in the
Out-group condition, a subject's counterpart in the MEG belonged to the other team from the
first stage. The control condition where no group identity was induced is the No-Identity
condition. The MEG with punishment is an extension of a basic MEG. Subjects are given the
opportunity to assign costly punishment points to their counterpart conditional on the effort
levels chosen. Assigning punishment points is costly both for the punishing and the punished
subject, with a cost-to-impact ratio equal to 1:5. That is, for every punishment point that the
punisher assigns, the punished subject incurs a loss of 5 points. We implemented the so-called
strategy method in order to elicit punishment responses. That is, once a subject has made an
effort level choice, they indicated the number of punishment points they wanted to deduce from
their counterpart for each of the seven possible effort levels that their counterpart can choose in
the MEG game. After eliciting subjects' punishment decisions conditional on the other group
member's effort level, subjects were informed about the actual effort level of their counterpart
and then their corresponding punishment decision was implemented, with payoffs being
calculated accordingly. Our main findings can be summarized as follows. Social identity is more
effective in promoting coordination as measured by average effort levels than punishment.
Within a treatment, subjects punish negative deviations harsher than positive deviations. Across
treatments, the punishment function is flatter in the Out-group treatment than in the No-Identity
treatment. The presence of punishment reduces efficiency as measured by average net earnings.
Author(s): Vessela Daskalova, Michalis Drouvelis and Nicolaas J. Vriend
Topic: Games: Coordination, Social Behavior: Other
Back to session: Coordination
Experiments on the Emergence of Leadership in Teams
Koji Abe, abe@ynu.ac.jp
Yokohama National University
ABSTRACT:
We study experimentally the emergence of leadership through endogenously formed leaderfollower relationships in team production under asymmetric information. In a treatment that
theoretically admits leadership, we observed that leadership emerged in a pattern of a particular
sequential equilibrium: a subject with a higher expectation of team productivity leads, and one
with a lower expectation follows. In a control treatment in which incompleteness of information
is removed and one in which payoffs are changed to incorporate a prisoner's dilemma situation,
leadership did not emerge. The results support the endogenous signaling theory of leadership in
teams proposed by Kobayashi and Suehiro (2005, 2008).
Author(s): Koji Abe, Hajime Kobayashi, Hideo Suehiro
Topic: Games: Information, Games: Other
Back to session: Coordination
An Experimental Study of the Role of Bargaining in Investment in Conflict
Blake Allison, allisonb@uci.edu
University of California Irvine
ABSTRACT:
We investigate a game in which players avert conflict via a bargaining scheme as an alternative
means of allocation of the prize. Prior to bargaining, players make irreversible investments
which would influence the outcome of conflict through a contest. In this paper, we
experimentally study the impact of the bargaining protocol on the investments that players make
in the contest. In particular, we test our theory which predicts that the use of the Nash bargaining
solution induces greater investments than does a Rubinstein-like alternating offers bargaining
game. Rather than having subjects explicitly engage in a bargaining process, the unique
equilibrium of the bargaining game is taken as given so that subjects may better focus on their
investments. Past experiments have provided strong evidence of overbidding in contests. Given
the incentives created by the alternating offers bargaining game to reduce investment relative to
the Nash solution (which creates the same incentives as the underlying contest), we additionally
focus on the role that bargaining may play in the degree to which subjects overbid in the contest.
Author(s): Blake A. Allison
Topic: Games: Contests, Games: Bargaining
Back to session: Contests I
Behavioral Variation in Tullock Contests
J. Philipp Reiss, philipp.reiss@kit.edu
Karlsruhe Institute of Technology (KIT)
ABSTRACT:
We conduct an experiment to uncover the reasons behind the typically large behavioral variation
and low explanatory power of Nash equilibrium observed in Tullock contests. In our standard
contest treatment, only 7% of choices are consistent with Nash equilibrium which is in line with
the literature and roughly what random (uniform) choice would predict (6.25%). We consider a
large class of social, risk and some other 'non-standard' preferences and show that heterogeneity
in preferences cannot explain these results. We then systematically vary the complexity of both
components of Nash behaviour: (i) the difficulty to form correct beliefs and (ii) the difficulty to
formulate best responses. In treatments where both the difficulty of forming correct beliefs and
of formulating best responses is reduced behavioural variation decreases substantially and the
explanatory behaviour of Nash equilibrium increases dramatically (explaining 65% of choices
with a further 20% being 'close' to NE). Our results show that bounded rationality rather than
heterogeneity in preferences is the reason behind the huge behavioral variation typically
observed in Tullock contests.
Author(s): Aidas Masiliunas; Friederike Mengel; J. Philipp Reiss
Topic: Games: Contests, Games: Other
Link: http://econpapers.wiwi.kit.edu/downloads/KITe_WP_55.pdf
Back to session: Contests I
Behavior and Search in Contests with Asymmetric Valuations
Jonathan Woon, woon@pitt.edu
University of Pittsburgh
ABSTRACT:
Contests are a ubiquitous form of economic and political interaction. Businesses invest in
research and development to win patents and market share, lobbyists spend resources to
influence policy and to win elections, and nations build up military strength and send soldiers
into battle to win disputes over territory, natural resources, and other issues. Many such contests
feature asymmetries. Each player in a contest may value the prize differently, and when players
engage in multiple contests over the course of their lifetime, they may value the outcome of each
dispute differently as well. Whereas the existing experimental literature on contests features
equal valuations between players and across rounds of play, we conduct an experiment on twoplayer contests that investigates these asymmetries between players and across time. We also
vary the availability of a payoff calculator to subjects in the experiment to test whether the
'overbidding' and 'overdispersion' phenomena observed in the existing literature may be due
partly to subjects' inability to accurately compute their expected payoffs. In a novel twist, we
analyze the complete record of guesses entered into the payoff calculator to investigate how
subjects search the strategy space and form beliefs about opponents' behavior. Preliminary
results suggest that while the payoff calculator brings effort choices closer to the Nash
equilibrium predictions, deviations remain because subjects engage in limited, incomplete
searches of the strategy space.
Author(s): Stephen Chaudoin and Jonathan Woon
Topic: Games: Contests, Public Choice: Voting and Rent Seeking
Back to session: Contests I
An experimental study of sorting in group contests
John Lightle, johnlightle@gmail.com
Florida State University
ABSTRACT:
We study experimentally the effects of sorting in contests between groups of heterogeneous
players whose within-group efforts are perfect substitutes. The theory predicts that higher
aggregate effort will be reached when variation in ability between groups is lower, i.e., by a more
balanced sorting. In the experiment, we assign subjects to four types - A, B, C, and D - ranked by
their cost of effort, with A having the lowest and D having the highest cost, and conduct contests
between two groups of two players each. In the Balanced treatment, (A,D) groups (i.e., groups
comprised of a type A and a type D player) compete with (B,C) groups, whereas in the
Unbalanced treatment, (A,B) groups compete with (C,D) groups. We find substantial
heterogeneity and overinvestment of efforts by all types in both treatments, including the
'underdog' (C,D) group which surprisingly is not demoralized by the unbalanced matching.
Despite strong overbidding, relative aggregate efforts are remarkably close to equilibrium
predictions both between treatments and between groups within each treatment. The results
confirm the prediction that balanced sorting leads to higher aggregate effort.
Author(s): Philip Brookins, John Lightle, Dmitry Ryvkin
Topic: Games: Contests
Link: http://econpapers.repec.org/paper/fsuwpaper/wp2014_5f01_5f01.htm
Back to session: Contests I
Behavior in highly competitive all-pay auctions
Lucas Rentschler, lrentschler@gmail.com
Universidad Francisco Marroquin
ABSTRACT:
We experimentally examine two-bidder all-pay auctions with incomplete information. Each
signal corresponds to the true value of the prize with positive probability, and the remaining
probability mass is assigned to the incorrect signal. We vary the probability that a signal is
correct such that signals are either strongly or weakly correlated. When signals are weakly
correlated a change in signal which increases a bidder's posterior expected value of the prize is
likely to be viewed as good news for the bidder. However, when signals are highly correlated
such a change in signals may be viewed as bad news because it is likely to be accompanied by
more aggressive bidding from other bidder. Thus, we vary the degree of (predicted)
competitiveness in the auctions.
Author(s): Lucas Rentschler and Theodore L. Turocy
Topic: Games: Contests
Back to session: Contests II
Turf Wars
Ernesto Reuben, ereuben@columbia.edu
Columbia University
ABSTRACT:
Turf wars commonly occur in environments where competition undermines collaboration among
agents. We develop a game theoretic model and experimental test of turf wars. In the game, one
agent possesses property rights over jurisdiction over a project. This agent can choose the set of
agents with jurisdiction over the project. Agents with jurisdiction decide whether to exert effort
on the project, and receive a reward based on relative performance. Thus, sharing can increase
joint productivity but also increases competition for the reward. The model predicts that high
productivity agents are most inclined to share jurisdiction, and high rewards inhibit
collaboration, but the relationship between competition and collaboration is non-monotonic. A
laboratory experiment largely confirms the predictions of the model. We also explore extensions
of the basic model, including one where each agent's productivity is private information.
Author(s): Helios Herrera, Ernesto Reuben, and Michael M. Ting
Topic: Games: Contests, Public Choice: Public Goods and Common Pool Resource
Back to session: Contests II
Asymmetric Team Contest
Puja Bhattacharya, bhattacharya.puja@gmail.com
Ohio State University
ABSTRACT:
We investigate the role of a discriminatory environment on behavior in inter-team contest games.
In the discriminatory environment, one team has a greater probability of winning given the same
contest expenditure. We explore how this asymmetry impacts behavior, asking how being
advantaged or disadvantaged influences contribution decisions. We find both advantaged and
disadvantaged teams contribute much more than theory predicts. While the team-level
contributions of advantaged and disadvantaged teams are indistinguishable, individual behavior
differs across these teams. We investigate free-riding as a share of the budget and as a share of a
subject's belief about her team's contribution. We find free riding is more common of
disadvantaged team members by both measures. Members of disadvantaged teams initially
believe that contributions from her own team and her opponent team will be lower compared to
the beliefs of members of advantaged teams. Average female contribution is significantly higher
than average male contribution in the disadvantaged team.
Author(s): Puja Bhattacharya
Topic: Games: Contests, Social Behavior: Group Behavior
Back to session: Contests II
An Experimental Analysis of the Non-constant-sum Colonel Blotto Game
Zhengzheng Wang, zhengzhengwang@econmail.tamu.edu
Texas A&M University
ABSTRACT:
This paper experimentally investigates people's behavior in the non-constant-sum Colonel Blotto
Game. In our game, two players simultaneously allocate their endowments across several boxes.
The objective of each player is to use least resources to win more boxes. We conduct the
experiment using both repeated matching protocol and random matching protocol. Experimental
results show that participants bid less than the theoretical Nash Equilibrium no matter whether
they play with same counterparts or different counterparts for each period. Although there is no
significant difference in the level or distribution of bids across two different matching protocols,
we find that subjects use different individual strategies for different matching protocols.
Author(s): Zhengzheng Wang
Topic: Games: Contests
Back to session: Contests II
Rewarding Insufficient Contributions Promotes the Voluntary Provision of
Public Goods
Tim Cason, cason@purdue.edu
Purdue University
ABSTRACT:
For funding discrete public goods, the provision point mechanism with refunds has received
much practical consideration due to its simple structure, in spite of some implementability
concerns. Indeed, this mechanism is fraught with a multiplicity of equilibria, both efficient and
inefficient. This paper experimentally studies a refinement that significantly improves the
mechanism's properties up to strict implementation and, at the same time, retains its simple
structure. The refinement is to give contributors a refund bonus as a percentage of their (fully
refunded) contribution in the event that total contributions are insufficient to finance the public
good. We test three theoretical predictions that arise from the introduction of refund bonuses.
The first prediction is that refund bonuses increase the efficiency rate of the mechanism. More
precisely, provided that the value of the public good is larger than the highest possible total
amount of refund bonuses, the only equilibrium outcome of the mechanism is the provision of
the public good. The second prediction is that refund bonuses reduce the set of efficient
equilibria: the larger the bonus in percentage, the smaller the set of equilibria. However, efficient
equilibria vanish if a too large refund bonus is promised, with total contributions falling below
the provision point. The third prediction is that in environments with the known total value of the
public good the aggregate outcome of the mechanism is robust to the introduction of individual
uncertainty. All our empirical predictions find empirical support. The introduction of refund
bonuses increases the efficiency rate of the provision point mechanism by up to 70%. When
refund bonuses are increased to a level when they can possibly exceed the net value of the public
good, the efficiency rate drops by 30–50%, but at the same time total contributions decrease by a
relatively small amount. The aggregate behavior of subjects is largely unaffected by the
introduction of individual uncertainty.
Author(s): Tim Cason and Robertas Zubrickas
Topic: Public Choice: Public Goods and Common Pool Resource, Games: Coordination
Back to session: Public Goods I
Is There Cooperation with Private Valuation? Demand Revelation in a Public
Goods Game
Andrea Robbett, arobbett@middlebury.edu
Middlebury College
ABSTRACT:
The public goods game has been studied extensively in the lab as the quintessential model of a
social dilemma. Several mechanisms have been demonstrated to promote group cooperation in
linear voluntary contribution experiments - such as communication, costly punishment, and
centralized bonuses and fines. However, these experiments typically do not include a central
obstacle to efficient public good provision: Individuals have different, private benefits from
consumption, making it impossible for either a central authority or the group members
themselves to calculate and enforce the optimal behavior. I adapt the standard public goods game
to incorporate this demand revelation problem and provide an assessment of each mechanism in
this richer environment. I find that base- line cooperation is similar to that in the standard linear
game. While sanctions are rarely used and ineffective, communication does promote
cooperation, especially when subjects are given the opportunity to reveal their demand. Finally, a
centralized fine/bonus scheme is most effective at increasing contributions, though at the
expense of low demanders.
Author(s): Andrea Robbett
Topic: Public Choice: Public Goods and Common Pool Resource, Games: Information
Back to session: Public Goods I
How much does cooperation decay? An experimental study of a repeated public
good game among ordinary citizens
Toke Fosgaard, tf@ifro.ku.dk
University of Copenhagen
ABSTRACT:
Cooperation is often highlighted as a key feature of a well-functioning society. Naturally, a huge
research interest has been devoted to understanding when voluntary cooperation occurs - and
why. Often the decision to be cooperative comes at a cost to the individual, but whereas the
individuals' cost perhaps is not offset by the individual benefit, it is often such that the society at
large experiences a net-benefit from the cooperation. Thus voluntary cooperation builds on
peoples' willingness to forego their immediate gain for the benefit of the society. One motive for
being willing to make this sacrifice is that other people would do the same and that we this way
end a situation of mutual cooperation, to the benefit of everyone. In behavioral economics,
voluntary cooperation has been intensively studied in the public good games. This game mimics
many real-life cooperation examples, by setting the participants in a social dilemma between
being cooperative, which benefits a small group of participants, and being a free rider on others'
cooperation. Two main messages have emerged from the massive literature on the public good
game. Firstly, participants due cooperate. A typical picture is an average cooperation around half
of the possible level. Secondly, cooperation decays over repetition, and approaches the fully free
riding behavior of no cooperation as time goes by. Whereas these findings are replicated over
and over again, the behavior has mainly been studied among students. This paper asks what
repeated cooperation among a representative sample looks like. To do so a sample of the
population in the greater Copenhagen area was selected by Statistics Denmark to participate.
They were mailed an invitation letter and could register and choose a timeslots on a recruitment
website. The actual experiment was carried out in the experimental economics laboratory at the
University of Copenhagen. A total of 424 people participated in this experiment. Baseline
treatment: In sharp contrast with the existing evidence, the main finding from this experiment is
that cooperation starts out at a very high level and pretty much stays here. Cooperation shows
almost no decreasing trend over time. To understand this surprising finding I investigate
participants' belief about other participants' behavior and preferences for cooperation. Both are
measures which have been suggested as main determinants of repeated cooperation (Firchbacher
& Gächter 2010). I find that beliefs are completely stable across time, suggesting that
participants are not decreasing their expectation of others participants' cooperation as game
evolve. Further, I find that the participants have preferences favoring a very high degree of
cooperation. In fact, if I construct a measure of contributions based on preferences and the level
of belief in a given repetition of the game, I get a completely stable prediction of cooperation. In
sum, cooperation is almost entirely stable, and belief and preference predicted cooperation are
completely stable. This suggests that the public good choice is more or less the same in all
repetitions. The subjects do not update their view on the choice, or on the behavior of others. To
further explore the importance of the cooperation preferences, I ran two other treatments of the
same experiments as supplement to the baseline. In the first treatment, I divide all subjects in two
halves before they played the repeated public good game. One half with the most cooperative
preferences and another half with the least cooperative preferences. Subjects in half with the
most pronounced preferences were at least having preference for perfect conditional cooperation,
which by definition is a preference for stable or even increasing cooperation. Within their
respective halves, subjects perform the repeated public good game, but subjects were not aware
of this division. I find that the half with the most social preferences cooperated at a higher level
than those in the baseline, but do exhibit the same minor decay effect. For the other half,
cooperation starts out at a lower level (but still around 50% of endowment) and experiences the
same minor decay effect over time. Interestingly, when evaluating the two halves jointly I find
the exact same behavior as in the baseline treatment. These findings suggest that preferences are
important for the starting level of cooperation, but not for the dynamics over time. Even when I
put people together who at least have perfect conditional cooperation preferences, I see a (minor)
decay effect over time. Furthermore, the join result suggests that letting people with the same
preference play together does not improve the overall cooperative result. In a final treatment, I
do exactly the same as above, the only difference being that now I tell subjects about division
based on preferences (before they begin the repeated game). The observed behavioral patterns
are the same as with the unknown division, but both halves have an upwards shift of cooperation
compared to subjects in the treatment with the unknown division. Thus, it seems that the
knowledge of being among similar people create higher cooperation, also for those with the least
cooperative preferences. But, interestingly it does not alter the minor decay effect of cooperation
over time - the interaction is just performed at a different level. Overall, this paper find that
repeated cooperation in a representative sample does not show the sharp decreasing tendency
constantly found among students. Surprisingly the minor decay that I do observe is not related to
preferences for cooperation. The minor decay effect applies even for subjects with at least
perfect conditional preferences, who should prefer stable or increasing cooperation. Rather it
seems like preferences are related to the starting level of cooperation. This is further confirmed
by the fact that subjects (both with relatively high and low preferences) set a higher starting
cooperation when they are interacting with likeminded people.
Author(s): Toke Fosgaard
Topic: Public Choice: Public Goods and Common Pool Resource, Methodology: Lab, Field and
External Validity
Back to session: Public Goods I
Four Classic Public Goods Experiments: A replication study
Jose Castillo, jgcastillo@tamu.edu
Texas A&M University
ABSTRACT:
We replicate four highly-cited classic public goods experiments: Isaac and Walker (1988),
Andreoni (1995a) and Andreoni (1995b) and Fehr and Gachter (2000). The experiments were
conducted as class projects for a PhD course in experimental economics at the University of
Texas at Dallas, and follow standard protocols for lab experiments in economics. Most results
show the same pattern of results as the original studies, but in all cases the treatment effects are
smaller and significance lower, sometimes falling below accepted levels of statistical
significance. In addition, we document a 'Texas effect,' with subjects in the replication
consistently exhibiting higher levels of giving than in the other studies.
Author(s): Catherine C. Eckel, Haley Harwell, and Jos' Gabriel Castillo G.
Topic: Public Choice: Public Goods and Common Pool Resource, Methodology: Other
Back to session: Public Goods I
Can The Voluntary Contribution Mechanism be Efficient? The Role of Social
Norms and Automatic Donation in Charitable Giving
Jubo Yan, jy489@cornell.edu
Cornell University
ABSTRACT:
The option of recurring automatic donation is increasingly employed by charities to raise funds
through self-renewing gifts using credit cards, payroll deductions, or scheduled withdrawals
from bank accounts. This experimental research demonstrates that sustained high efficiencies can
be obtained using voluntary contributions in a linear public good game. To achieve these high
efficiencies two conditions need to be met: 1) a social norm of giving must be established
through discussion and voting, and 2) a 'self-selected status quo' of giving must be available
through automatic donation. This choice architecture is commonly used for fundraising by
charitable organizations that combine democratic procedures with options for automatic
donation.
Author(s): Homa Zarghamee (Barnard College), Jubo Yan (Cornell University), Kent Messer
(University of Delaware), William Schulze (Cornell University)
Topic: Public Choice: Public Goods and Common Pool Resource, Social Behavior: Norms and
Morals
Back to session: Public Goods II
Endogenous Institution Formation in Public Good Games
Sebastian Kube, kube@coll.mpg.de
Max-Planck-Institute for Research on Collective Goods
ABSTRACT:
Driven by an ever-growing number of studies that explore the effectiveness of institutional
mechanisms meant to mitigate cooperation problems, recent years have seen a reviving interest
in the endogenous implementation of these institutions. In this paper, we test within a unified
framework how the process of institution formation is affected by three key aspects of natural
environments: i) heterogeneity among players in the benefits of cooperation, ii) (a)symmetry in
players' institutional obligations, and iii) potential trade-offs between efficiency and equality in
payoff allocations. We find that inequality-averse players frequently object to institutions that
fail to address players' idiosyncratic benefits from cooperation in a proper way - even if rejecting
the institution implies that strict Pareto-improvements in payoffs are foregone. Relating our
findings to previous studies on endogenous institution formation, we discuss potential
advantages and drawbacks of stipulating unanimous support for implementing institutions that
foster cooperation.
Author(s): Sebastian Kube, Sebastian Schaube, Hannah Schildberg-Hörisch, Elina Khachatryan
Topic: Public Choice: Public Goods and Common Pool Resource, Social Behavior: Otherregarding Preferences
Link: https://sites.google.com/site/drsebastiankube/Home/publications
Back to session: Public Goods II
The effects of voluntary participation on cooperation: entry or exit?
Daniele Nosenzo, Daniele.Nosenzo@nottingham.ac.uk
University of Nottingham
ABSTRACT:
Individual cooperation for the provision of public goods is vital for human societies. However,
individual material incentives to free-ride on others' contributions are detrimental to cooperation,
especially when reputation and punishment mechanisms are absent. We study voluntary
participation to public good provision as an alternative mechanism to reputation and punishment.
Voluntary participation may foster public good contributions through two distinct mechanisms.
On the one hand, cooperation may increase through assortative selection of interaction partners.
On the other hand, the fact that participation is voluntary gives group members the opportunity to
leave the group as a mean to resist exploitation by free-riders, thus reducing the incentives to
free-ride. We examine the relative effectiveness of these two mechanisms in a one-shot twoperson public goods game experiment. Across three treatments we vary the extent to which
subjects can voluntarily participate in the game: in a Baseline treatment subjects are forced to
take part into the public goods game. In an Entry treatment, before interacting in the game,
subjects choose whether or not to opt in; if at least one player does not opt in, players receive an
outside option payoff. In an Exit treatment, after having interacted in the public goods game (and
having learned the outcome of the interaction), players can opt out of the game and secure the
outside option payoff. Our results point to the crucial relevance of the exit option over the entry
one in increasing public good provision. Assortative selection of interaction partners seems to
play a minor role in our setting, whereas the threat of retaliation through exits seems to be a
powerful force that disciplines free-riding.
Author(s): Daniele Nosenzo and Fabio Tufano
Topic: Public Choice: Public Goods and Common Pool Resource, Social Behavior: Otherregarding Preferences
Back to session: Public Goods II
Instability of the Voluntary Contribution Mechanism
Tatsuyoshi Saijo, saijo@iser.osaka-u.ac.jp
Kochi University of Technology
ABSTRACT:
I show that the system with the voluntary contribution mechanism (VCM) in the quasilinear
environment is not asymptotically stable under the simultaneous difference equations and it is
structurally unstable under simultaneous differential equations. The system with the VCM in the
Cobb-Douglas (CD) environment is stable with conditions on the slope of best response
functions and the number of players under the simultaneous difference equations. On the other
hand, the system with the VCM in the CD environment is stable under simultaneous differential
equations. Most of parameters on nonlinear experiments on the VCM so far are around
boundaries between stability and instability, and almost no analysis on instability has been done.
Therefore, research on the private provision of public goods must face a new challenge other
than free-riding.
Author(s): Tatsuyoshi Saijo
Topic: Public Choice: Public Goods and Common Pool Resource
Back to session: Public Goods II
Uniform Price Mechanisms for Threshold Public Goods Provision with Private
Information: An Experim
Zhi Li, geoleepku@gmail.com
University of Washington
ABSTRACT:
This paper introduces two new mechanisms for provision point public goods, motivated by the
design of uniform price auctions: the uniform price auction mechanism (UPA) collects an
endogenously determined uniform price from everyone offering at least that price, while the
uniform price cap mechanism (UPC) collects the uniform price from everyone offering at least
that price, plus the full offer of everyone offering less. UPA and UPC are compared with the
provision point mechanism (PPM) and the proportional rebate mechanism (PR) under private
information. We characterize the mechanisms' best responses based on marginal penalty
associated with overcontribution in the framework of a Bayesian game, which, combined
numerical examples, provide benchmark predictions for an experimental comparison with
heterogeneous values. We find UPA generates by far the highest group and individual
contributions at all values, but has the lowest provision rate; UPC elicits higher aggregate
contributions than PPM and PR, and has the highest provision rate, driven by higher
contributions from high-value individuals. This is consistent with subjects offering more in
mechanisms with lower expected marginal cost conditioned on provision (i.e., marginal penalty).
Author(s): Zhi Li , Christopher Anderson , and Stephen Swallow
Topic: Public Choice: Public Goods and Common Pool Resource, Games: Other
Back to session: Public Goods III
Choosing to accept the punishment role in public goods games
Abhijit Ramalingam, a.ramalingam@uea.ac.uk
University of East Anglia
ABSTRACT:
Mutual monitoring and punishment is an effective means of improving cooperation rates in
public goods situations (see, for instance, Fehr and Gächter 2000 and Sefton et al. 2007). In most
studies of the punishment mechanism, the institution is given exogenously and entails automatic
universal participation. In this paper, we experimentally test the effectiveness of the punishment
mechanism when its provision depends on individuals acting independently to make use of it.
Will such individuals acting on their own be willing to unilaterally choose to accept the
punishment role in their groups? If so, what is its effectiveness compared to when the mechanism
is exogenously provided for all? Finally, does its effectiveness change if individuals have to bear
a (minimal) cost for providing the mechanism? When participation in punishment is endogenous
but costless, we find that groups are as successful in raising cooperation as with automatic
universal participation in punishment. Further, this is achieved with less than complete
participation in punishment; we find that groups where at least half the players participate in
punishment throughout the game are successful in raising cooperation. However, when
participation in punishment is costly, groups are unable to raise cooperation levels; contributions
to the public good stagnate at levels close to those observed in the VCM without punishment
opportunities. With costly participation in punishment, we find that an 'insufficient' number of
group members persistently participate in punishment. Further, even when punishment is used, it
is used to sanction high contributors and low contributors with equal intensity. Such perverse use
of punishment in this treatment thus provides little incentive for players to raise contribution
levels.
Author(s): Sara Godoy, Antonio Morales, Abhijit Ramalingam, James M. Walker
Topic: Public Choice: Public Goods and Common Pool Resource, Social Behavior: Group
Behavior
Back to session: Public Goods III
Shock Value
Alexander Smith, adksmith@wpi.edu
Worcester Polytechnic Institute
ABSTRACT:
I think of a shock in a repeated public good game as a subject changing her contribution by a
large amount between one round and the next. In this paper, I study the precursors and
consequences of positive and negative shocks. To begin, I examine evidence on the extent to
which shocks are motivated by forward-looking (strategic) versus backward-looking
(reactive/matching) considerations. Positive shocks are mainly reactive. With negative shocks,
there is evidence that the motivations are both strategic and reactive. As far as the consequences
of shocks, for the most past the evidence that shocks affect the average behavior of others is not
significant. The one exception is some weak evidence that when a subject who has been
contributing less than others in her group uses a positive shock, the decline of the average
contributions of others is temporarily reduced. This paper provides new insight on why an
individual might try to impact the dynamics of cooperation in her group and the implications of
such efforts.
Author(s): Alexander Smith
Topic: Public Choice: Public Goods and Common Pool Resource
Back to session: Public Goods III
Risk and Temptation in Social Dilemmas
Friederike Mengel, friederike.mengel@nottingham.ac.uk
University of Nottingham
ABSTRACT:
This paper reports the results of a meta-study of 89 prisoner's dilemma experiments comprising
more than 3000 participants across 6 countries. We organize existing evidence and explain
seemingly contradictory results in the existing literature by focusing on two dimensions of the
dilemma: ``risk'' (the percentage loss of unilaterally cooperating against a defector) and
``temptation'' (the percentage gain of unilaterally defecting against a cooperator). We find in
particular, that (i) risk best explains the variation in cooperation rates across random matching
(``stranger'') and one-shot treatments, while (ii) temptation best explains the variation in repeated
(``partner'') interactions, (iii) consistently with reputational models temptation is more effectively
contained the longer the time horizon of the game, (iv) there is more cooperation in partner than
stranger if and only if risk is high and temptation low and (v) women are more cooperative than
men if risk is low and less cooperative than men if risk is high, but there are no gender
differences on average. These results can be useful for discriminating between competing
theories of why people cooperate. For policy making, it is important to understand which
dimension of the dilemma (risk or temptation) is best targeted via interventions to yield
improved cooperation.
Author(s): Friederike Mengel
Topic: Games: Other, Public Choice: Public Goods and Common Pool Resource
Back to session: Public Goods III
Information Characteristics and Errors in Expectations
Morten Lau, mla.eco@cbs.dk
Copenhagen Business School
ABSTRACT:
Behavioural finance theories draw on evidence from psychology that suggest that some people
respond to information in a biased manner, and construct theories of inefficient markets.
However, these biases are not always robust when tested in economic conditions, which casts
doubt on their relevance to market efficiency. We design an economic experiment to test a
psychological hypothesis of errors in expectations widely cited in finance, which states that, in
violations of Bayes Rule, some people respond more forcefully to the strength of an information
signal. The strength of a signal is how saliently it supports a specific hypothesis, as opposed to
its weight, which is its predictive validity. We find that the strength-weight bias affects
expectations, but that its magnitude is three times lower than originally reported in the
psychology literature. This suggests that its impact on financial markets is likely to be smaller
than originally thought.
Author(s): Constantinos Antoniou, Glenn W. Harrison, Morten I. Lau and Daniel Read
Topic: Decision Theory: Beliefs, Decision Theory: Risk
Back to session: Beliefs
How Will Others Play This Game?: Evolving Beliefs in a Strategy Method
Centipede Game
Dimitry Mezhvinsky, mezhvinsky.1@osu.edu
The Ohio State University
ABSTRACT:
The concept of Nash equilibrium consistently fails to predict player behavior in games such as
the centipede game and the finitely repeated prisoners' dilemma game. In such games, the Nash
equilibrium strategy of immediate defection fails to be a best response when others players
follow a strategy of full or limited cooperation. I propose that heterogeneous preferences and
beliefs about other players play a role in player decision making in such games. To examine
beliefs, I conduct multiple rounds of a strategy method centipede game and solicit subjects'
beliefs about other players' actions in each round. Players' expected distribution of others' actions
changes over the course of an experimental session, with less probability placed on others
playing cooperatively and more probability placed on others defecting immediately as the
session continues. This pattern occurs despite common knowledge that players never face the
same opponent more than once and receive no information about future opponents' past actions.
These changes in beliefs are well explained by players' past experience and, in turn, are strong
predictors of players' subsequent behavior. Furthermore, this increasing pessimism about others'
cooperativeness is mirrored in players' actual behavior. The modal strategy in the first round of
play is full cooperation, but players gradually come to abandon costly cooperation in favor of
expected payoff maximization. These findings suggest that models of player behavior must allow
for player heterogeneity and dynamic beliefs.
Author(s): Dimitry Mezhvinsky
Topic: Decision Theory: Beliefs, Games: Other
Back to session: Beliefs
Testing Models of Belief Bias: An Experiment
Alexander Coutts, alexander.coutts@nyu.edu
New York University
ABSTRACT:
Evidence and theory suggest that optimistic beliefs affect important areas of economic decision
making such as financial investment and entrepreneurial entry decisions, yet direct knowledge on
how belief biases operate remains limited. In order to better understand these biases I conduct an
experiment examining beliefs about binary events with financial stakes. By varying financial
prizes in outcomes, as well as incentive payments for accuracy the experiment tests two leading
theories of optimistic belief formation that differ in their assumptions about how such beliefs are
constrained. The Optimal Expectations (OE) theory of Brunnermeier and Parker (2005) models
beliefs as being constrained through the future costs of holding incorrect beliefs, while the
Affective Decision Making (ADM) model of Bracha and Brown (2012) suggests that beliefs are
constrained by mental costs of distorting reality. The overall pattern of results suggest that
people hold optimistically biased beliefs, and the comparative statics indicate these beliefs are
not constrained by increasing the costs of making inaccurate judgements.
Author(s): Alexander Coutts
Topic: Decision Theory: Beliefs, Psychology and Biology: Emotions
Back to session: Beliefs
Risk Perceptions in the Virtual Wilderness
Elisabet Rutstrom, erutstrom@gsu.edu
Georgia State University
ABSTRACT:
In economic decision making most probabilities are formed in a compound manner through the
interaction of multiple attributes of events, each of which have likelihoods that are unknown to
various degrees. We consider how subjectively formed risk perceptions are affected by the
dispersion of the underlying objective, compound probability distribution. Our methodology
relies on virtual reality simulations of physical cues of the risk, allowing us to bring together the
natural stimuli of the field and the control of the lab. Our application is an important example of
a risk with serious economic consequences: the management of wild fire risk. This is an
important natural setting where the risk is compound, depending on many random physical
processes and where the formation of risk perceptions necessary for risk management is
therefore complex. We find that increasing the dispersion of the underlying objective risk leads
to higher subjective probabilities of the worst outcome occurring, consistent with increased
pessimism. We compare the risk perceptions of experts in this domain with non-expert residents
that are affected by the risk, and conclude that experts are not always better than non-experts at
estimating the risks. Experts appear to be locked in by their strong priors based on stimuli
outside those presented in our naturalistic virtual reality. With a global environment that
produces increasingly extreme phenomena, training experts to be less anchored on their prior
experiences will become important.
Author(s): Glenn W. Harrison and E. Elisabet Rutström
Topic: Decision Theory: Beliefs
Back to session: Beliefs
Peer Active field experiment: Social networks and peer pressure for raising
physical activity in children.
Antonios Proestakis, proestantonis@gmail.com
Joint Research Centre, European Commission
ABSTRACT:
In a policy-motivated study that aim to promote physical activity and address childhood obesity
we evaluate the possibility of using social networks and peer pressure for tackling the problem of
childhood obesity. The effectiveness of different individual, social and random monetary
incentives is tested in a school based experimental study with 349 fifth grade (10-11 years old)
students who carrying an accelerometer for 7 consecutive weeks. Results indicate that social
incentives prevail over individual or random (baseline) ones in raising children's physical
activity. Disentangling the effect of social incentives, we found that children's performance has
been mainly motivated by direct reciprocity. An interesting asymmetric gender effect also arises;
girls improve performance even when reciprocal incentives are induced in a non-direct way
(based on the classroom network interactions) while boys increase their physical activity when
participating in a 'public-goods type' incentive scheme in which the induced team interactions are
still direct.
Author(s): Antonios Proestakis, Eugenia Polizzi di Sorentino, Benedikt Herrmann, Sandra
Caldeira, Helen Brown, Esther van Sluijs
Topic: Social Behavior: Group Behavior, Games: Networks
Back to session: Field Experiments I
I'll Be There: Promises in the Field
Rong Rong, rongrong@weber.edu
Weber State University
ABSTRACT:
Those who make promises tend to fulfill them, as reported across multiple laboratory studies
(Vanberg, 2008; Hurkens and Hartik, 2009; Charness and Dufenburg,2006, 2010; Ismayilov and
Potters, 2014). While this correlation exists, whether promises cause fulfillment or the
relationship is due to a common-causal factor is unclear. Our study aims to identify this causal
effect. Using a field event that occurs naturally around the world on university
campuses'invitation to an experiment, we measure subjects' promise making and promise
fulfillment through their reply to the invitation and the actual show-up choice. By subtly varying
the invitations that 'nudge' subjects to make more promises, our invitation treatment serves as an
instrument for promise making behavior, allowing us to estimate the causal effect of promises on
final decision. Moreover, we also randomly assign subjects to different confirmation messages to
examine the causal impact of promise-receivers' (experimenters') expectations on promise
fulfillment due to guilt-aversion. Combining data from a pre-experiment survey, we further
discuss the size of the above causal effects for groups with different demographics and
personality traits.
Author(s): Rong Rong and Jared Barton
Topic: Social Behavior: Lying and Cheating, Field Experiments: General
Back to session: Field Experiments I
Globalization and Altruism Towards the Poor: An Experimental Study in India
Sera Linardi, linardi@pitt.edu
University of Pittsburgh
ABSTRACT:
The link between globalization and attitudes towards the poor has never been established in an
empirical test. Building upon Piketty (1995), we propose and test the hypothesis that in less
developed countries (LDC), globalization in the form of foreign direct investment (FDI) can
reduce altruism towards the poor. This causal link is partly driven by the perception in LDC that
FDI provides the poor with a way out of poverty. As a first step, we ran cross-country
regressions using the World Values Survey and found that FDI is indeed negatively correlated
with support for redistribution. We follow the WVS results with a framed field experiment in
India where survey takers can redistribute their compensation to very low income recipients. We
find that mentioning that the recipient lives near a foreign owned firm decreases donations only
if the foreign firm operates in a low-skill industry. We find that while both the rich and the poor
reduces giving to their recipients in response to FDI framing, the reduction in both income strata
was driven by conservatives (those who believe that the poor is unlucky). Taken as a whole, our
findings suggest that there is indeed a causal link between globalization and pro-poor
redistribution that is mediated by ideological beliefs about opportunities for the poor.
Author(s): Sera Linardi and Nita Rudra
Topic: Social Behavior: Other-regarding Preferences, Applied Economics: Economic
Development
Link: http://www.linardi.gspia.pitt.edu/?page_id=9
Back to session: Field Experiments I
Beliefs, Preferences and Migration: Evidence from Combining Lab-in-Field and
Natural Experiments
John Gibson, jkgibson@waikato.ac.nz
University of Waikato
ABSTRACT:
We had immigrants play laboratory-in-field games that provide evidence on risk preferences and
on the efficiency of decision-making by extended families. These immigrants had been
successful ballot entrants in a migration lottery program, and the same games were played in the
sending country amongst a sample of unsuccessful ballot entrants into the same migration
lottery. The pro-market beliefs, time preferences and risk preferences of both sets of participants
were also obtained with standard questions. Migration has large effects on the lives of the
immigrants, with incomes more than tripling, and large changes in other components of objective
and subjective welfare. However, most beliefs and preferences of the immigrants do not appear
to have changed up to a decade after migration, using the responses obtained from the
unsuccessful ballot entrants as a counterfactual. The only change is that immigrants appear more
trusting, in both their stated beliefs and in the game playing, and fewer of the immigrants exhibit
very high rates of time discounting when given survey questions about hypothetical intertemporal choices.
Author(s): John Gibson, David McKenzie, Halahingano Rohorua, Steven Stillman
Topic: Social Behavior: Other-regarding Preferences, Field Experiments: General
Back to session: Field Experiments I
Self-Control and Awareness: Evidence from Homeless Shelter
Elif Incekara Hafalir, incekara@cmu.edu
Carnegie Mellon University
ABSTRACT:
Resource-constrained organizations that aim to help populations with self-control problems face
several challenges. First, though one's awareness of his or her self-control problem determines
the benefit of commitment devices, measures of self-control are generally silent about awareness.
Second, the economics literature focuses almost exclusively on eliciting self-control through
incentivized choice experiments, which may not fit the organizations' needs for a method that is
task specific, low cost, and easy to administer at a large scale. In this paper, we take the first step
to fill this dual gap by investigating the potential of Ameriks et al.'s (2007) survey measure to
provide information on both awareness and self-control. This measure asks individuals what they
consider to be their ideal action in a particular situation and their prediction of which action they
will actually take. The difference between the two is expected deviation (ED). We first expand
the range of empirical evidence for ED from the financially and academically very successful
(Ameriks et al. 2007; Wong 2008) to the very impoverished by testing if ED predicts the savings
of residents at a homeless shelter. We then provide a simple theoretical interpretation of ED
survey responses, derive predictions for the correlation of ED and outcomes with and without
commitment devices, and organize existing empirical evidence within this framework.
Author(s): Elif Incekara-Hafalir and Sera Linardi
Topic: Applied Economics: Other, Field Experiments: General
Back to session: Field Experiments II
Fight for thrill or fight for country? Task vs. mission based motives in healthcare
Sheheryar Banuri, sbanuri@gmail.com
The World Bank
ABSTRACT:
We test the importance of task and mission based motives in effort provision in healthcare. We
ask whether advanced medical students are more likely to exert effort in interesting vs. mundane
tasks, and when additional effort generates public goods. Using data from nearly 250 student
doctor and student nurses in Burkina Faso, we find that students increase effort in mundane tasks
when the output from the task benefits society. In addition, effort substantially increases when
the task is interesting relative to when the task is mundane. We also find that this task-based
motivation yields significantly more effort than from mission-based motivation.
Author(s): Sheheryar Banuri and Philip Keefer
Topic: Applied Economics: Labor Market, Field Experiments: General
Back to session: Field Experiments II
Subsidy Policies and Insurance Demand
Jing Cai, caijing@umich.edu
University of Michigan
ABSTRACT:
Using data from a two-year randomized experiment in rural China, this paper studies the impact
of two subsidy policies, cost-sharing and free-distribution, on the long-term adoption of a new
weather insurance product. In the first year, we randomize the two subsidy policies on the village
level; in the second year, eight different prices are randomized on the household level. The
results show that overall, first-year subsidy policy does not affect second-year take-up and price
sensitivity substantially. In order to explain why, we compare three effects between the two
subsidy policies: effect of having access to insurance, learning effect, and price anchoring. We
find that the learning effect under a free distribution policy is much smaller than that under a
partial subsidy policy, while the payout rate in the former case is higher, which drives to the
similar average take-up rates in the second year under these two policies. In addition, we find no
price anchoring effect. As a result, free distribution subsidy policy performs no better than costsharing policy, while the cost of the former is much larger than the later.
Author(s): Jing Cai, Alain de Janvry, Elisabeth Sadoulet
Topic: Applied Economics: Economic Development, Field Experiments: General
Back to session: Field Experiments II
The Impact of Contract Design on Insurance Take-up
Jing Cai, caijing@umich.edu
University of Michigan
ABSTRACT:
This paper uses data from a randomized experiment with around 1700 households in rural China
to study the effect on insurance take-up of offering a menu of insurance contracts rather than a
single one. Surprisingly, I find that offering more choices increases the take-up rate of the basic
contract (lowest premium and payout) by 30%, while only a small proportion of farmers choose
contracts with higher premiums and payouts. Information inference explanation is ruled out by
the fact that the effect holds even when all farmers are aware of the existence of all contracts. To
explain the result, I estimate a model of insurance demand that allows preferences to be reference
dependent and those reference points to be endogenous to the choice set. A policy implication is
that strategically offering a menu of contracts can be an easy and cheap way to improve
insurance take-up.
Author(s): Jing Cai
Topic: Applied Economics: Economic Development, Field Experiments: General
Back to session: Field Experiments II
Coordination requires more than one leader! Experimental Evidence from Rural
Producer Organizations in Senegal
Angelino Viceisza, a.viceisza@cgiar.org
Spelman College
ABSTRACT:
Most decisions are taken in group contexts where one person's behavior is affected by others. It
is thus important to understand conditions under which individuals are able to coordinate. A
prime example is aggregation of smallholder farmers' production towards enhanced market
access. In this study, we explore some drivers of coordination using a sample of Rural Producer
Organizations (RPOs) of groundnut farmers in Senegal. We conduct a randomized controlled
trial in which we vary the number and the type of individuals'regular members versus
leaders'invited to a three-day training on collective commercialization. We use this variation to
identify effects on subsequent commercialization of groundnuts through the RPO—our main
measure of coordination – by members who did not attend the training. We also elicit
perceptions of strategic uncertainty using coordination games. We find that training significantly
affects the quantity of groundnuts commercialized in the treatment group. We further find that
this effect is reinforced when more than one member of the management committee is trained,
but not ordinary members are trained, nor when a single leader is trained. These results suggest
that the role of leadership in influencing coordination does not necessarily pertain to a single
individual. Rather, a sufficient number of influential, informed and visible individuals may have
a greater influence on the behavior of other members. These findings have at least two policy
implications. First, when conducting group trainings, the composition of the audience is likely to
matter for impact. Second, relatively soft and non-costly interventions can affect coordination.
Author(s): Tanguy Bernard, Ligane Sene, Angelino Viceisza, Fleur Wouterse
Topic: Field Experiments: General, Social Behavior: Group Behavior
Link: https://sites.google.com/site/viceisza/research
Back to session: Field Experiments: Social Behavior
Direct and indirect punishment among strangers coexist in the field
Bettina Rockenbach, bettina.rockenbach@uni-koeln.de
University of Cologne
ABSTRACT:
Many interactions in modern human societies are among strangers. Explaining cooperation in
such interactions is challenging. The two most prominent explanations critically depend on
individuals' willingness to punish defectors: In models of direct punishment individuals punish
anti-social behavior at a personal cost, while in models of indirect reciprocity they punish
indirectly by withholding rewards. We investigate these competing explanations in a field
experiment with real-life interactions among strangers. We find clear evidence of both direct and
indirect punishment. Direct punishment is not rewarded and, in line with models of indirect
reciprocity, crowded out by indirect punishment opportunities. Remarkably, direct punishment
does not disappear completely. The coexistence of direct and indirect punishment in daily life
indicates the importance of both means for the evolution of cooperation.
Author(s): Loukas Balafoutas, Nikos Nikiforakis, Bettina Rockenbach
Topic: Field Experiments: General, Social Behavior: Norms and Morals
Back to session: Field Experiments: Social Behavior
Guilt and pro social motivation crowding out
Lars Hansen, lgh@ifro.ku.dk
Univerity of Copenhagen, IFRO
ABSTRACT:
In a randomized field experiment Danish power consumer are given three motivation treatments
to enter a flexible power use scheme: pecuniary motivation, pro-social motivation and both. We
find no significant difference in entrance probabilities and significant differences in the
probability of answering a follow up questioner for non-entrants. We conclude that pecuniary
incentives crowd out pro-social entrance motives. We compare a selection on consumer type's
explanation for this with an individual motivation crowding explanation and find the latter
consistent with our results.
Author(s): Lars Gårn Hansen, Carsten lynge Jensen
Topic: Field Experiments: General, Social Behavior: Other
Back to session: Field Experiments: Social Behavior
Trust in Microfinance Markets
Maria Santana, maria.santana@gess.uni-mannheim.de
University of Mannheim
ABSTRACT:
Trust is an important driver of economic interactions. The more individuals trust each other, the
easier it is for them to contract with each other. Despite the importance of trust in economic
relations no behavioral measures of trust in institutions have been established, usually survey
questions are used to quantify trust. We propose a new way of experimentally measuring trust in
institutions which draws on the experimental method used to estimate time preferences. We
measure trust of clients of a Philippine Microfinance Institution (MFI) towards their MFI and we
find that the trust is 87 percent. When trust in local money lenders is measured, which is a
socially less respected financial institution due to their high interest rates, trust levels drop
approximately 8 points to 80 percent. Comparisons to survey measures indicate that the new
measure is able to pick up trust in institutions.
Author(s): Markus Fr?lich, Stefan Penczynski and Maria Isabel Santana
Topic: Field Experiments: General, Social Behavior: Other
Back to session: Field Experiments: Social Behavior
Connecting commitment to self-sontrol: a field experiment with participants in a
weight loss challenge
Severine Toussaert, st1445@nyu.edu
NYU
ABSTRACT:
While much has been written on commitment devices, little is known about the determinants of
the demand for commitment. I report the results from a field experiment with participants in a
weight loss challenge designed to explore several open questions in the literature. First, I
construct a new dataset of menu choices to analyze commitment decisions to eat healthy. The
menus presented to participants were lunch reimbursement options which only differed in the
range of foods covered by the reimbursement. With this rich dataset, I propose the first axiomatic
test of the Gul and Pesendorfer (2001) model of temptation and self-control. Secondly, I study
whether connections exist in the demand for commitment across decision environments. Besides
the reimbursement program, participants were offered to receive their payment for the study
contingent on the achievement of self-set attendance goals. I investigate whether there are
'commitment types' who prefer to commit regardless of the temptation. I find strong evidence of
a demand for commitment in both of the settings considered. Overall, 65% of participants chose
to commit through goal setting. Regarding the reimbursement program, 46% of participants
exhibit a behavior roughly consistent with temptation in the Gul and Pesendorfer model.
Furthermore, there is cross-domain consistency: those who commit through the reimbursement
program are also more likely to set goals and 35% of participants commit in both domains. These
results are in stark contrast with the low take-up rates commonly found in the literature.
Author(s): Severine Toussaert
Topic: Field Experiments: General, Decision Theory: Other
Back to session: Incentive Schemes in the Field and in the Lab
Nudging a Score in the US
Anat Bracha, anat.bracha@gmail.com
Federal Reserve Bank of Boston
ABSTRACT:
In this paper we present evidence on the effect text messages and credit card APR rates
information have on credit scores in the US. Specifically, we ran a field experiment at a tax
preparation site for low to moderate-income individuals in Boston in 2013. While waiting in line
for doing their taxes, taxpayers were offered free credit advising that included going over their
credit report. Participants in our study are those who opted into this credit advising session. We
randomized whether a) participants received, at the time of the credit advising, further
information on the average APR rates offered on basic credit cards in Boston by credit score
range, and b) participants get text-message reminders once a month to pay bills on time, at least
minimum amount, their past credit score range, top priority goal, and credit APR rates relevant
for them (if applicable). Looking at their credit report a year later, we find that low-credit score
individuals significantly benefited from receiving the text messages, while moderate to highcredit individuals were not. We find this positive effect stems mainly from reduction of debt and
evidence of better payment pattern, although this is not always significant. For moderate-credit
score individuals there is no direct effect on their credit score, yet we find a positive effect on
payment pattern, which may be slower to translate into a better credit score, but it nevertheless a
positive development. For high-credit score individuals, we find a surprising negative effect: an
overall negative effect on credit scores, which seems to be due to higher collection accounts and
worse payment pattern. Interestingly, we find that although information was a very mild
intervention it had a positive effect on moderate-credit score individuals in terms of reducing
debt and achieving their (debt) goal, and helped reducing the number of inquiries for low-credit
score individuals. The latter is possibly because knowing the average APR offer on a basic credit
cards in Boston allow individuals to assess whether an offer they receive is reasonable or not.
Author(s): Anat Bracha and Stephan Meier
Topic: Field Experiments: General, Applied Economics: Other
Back to session: Incentive Schemes in the Field and in the Lab
Energy Saving Measures and Heterogeneous Preferences: Investments and
Consumption
Sabrina Teyssier, sabrina.teyssier@ivry.inra.fr
INRA
ABSTRACT:
To ensure sustainable development for our society, energy expenses that damage the quality of
the environment must be reduced. The building sector is one of the most energy consuming
sectors (Eichholtz et al., 2010 and Royal Institution of Chartered Surveyors, 2005) but it also
offers large possibilities for greenhouse gas abatement (see e.g. Enkvist et al., 2007;
Intergovernmental Panel on Climate Change, 2007; Levine et al., 2007; Stern, 2008 and Evans et
al., 2011). Homeowners deciding about energy-efficient renovations face several market barriers
(Sorrell, 2004). Moreover, homeowners deciding about energy-efficient renovations have to
trade off current investments with uncertain future returns. The higher the expected future
savings on energy costs and future transaction prices, the likelier are investments in energysaving measures by homeowners (Hausman, 1979; Klier and Linn, 2008; Beresteanu and Li,
2011 and Alberini et al., 2011a). Market failures limit households investments in energyefficient renovations but heterogeneity of homeowners preferences may explain the differences
in homeowners investment behavior in energy saving measures. This paper therefore focuses
on how homeowners preferences drive their investment behavior in energy saving measures.
Our study focuses on Swiss homeowners. The aim of our study is to broaden the understanding
of homeowners investments in energy saving measures and energy consumption behavior by
eliciting Swiss homeowners preferences with respect to risk, time, environmental, and social
preferences. We do so by combining methods from experimental economics with classical
survey questions. We focus on homeowners of single family houses who live in their own house
to assure that decision makers incur the costs but also receive the benefits of renovations.
Homeowners received a letter with a questionnaire asking for characteristics of the house and
personal information. In addition, the letter contained several incentive compatible paper and
pencil experiments measuring risk and time preferences, social preferences and environmental
preferences. In total, the analysis contains 489 homeowners. Our data allow us to shed light on
which preferences affect the renovation and energy consumption decisions of single family
homeowner. Our results show that risk attitudes of homeowners are particularly important for
homeowners' decisions to retrofit their houses: homeowners who declare being risk-taking in
general are more likely to have renovated their houses or to plan to renovate their houses. This
indicates that long-term investments may be perceived as risky investments. While not investing
in energy-efficiency measures may be perceived as the 'safe' status quo, retrofitting a house is
immediately costly and savings through better home energy efficiency are frequently uncertain.
Among households who renovated at least once, we find that time preferences predict the energy
efficiency of the house. More precisely, households who value the future particularly strongly
report higher house qualities. Environmental and social preferences play minor role investments
in energy saving measures. In addition, we find that – controlling for the energy efficiency of the
house – time preferences and preferences for the environment affect homeowners' energy
consumption significantly. Future-oriented homeowners and homeowners with strong
preferences for the environment have lower energy and heating costs.
Author(s): Urs Fischbacher, Simeon Schudy and Sabrina Teyssier
Topic: Field Experiments: General, Public Choice: Public Goods and Common Pool Resource
Back to session: Incentive Schemes in the Field and in the Lab
Emission Tax and Health Insurance: Policy Treatments to Reduce Residential
Energy Consumption
Chiradip Chatterjee, c.chatterjee@unf.edu
University of North Florida
ABSTRACT:
A major share of domestic energy demand is met from conventional fossil fuel based sources,
such as coal. Combustion of fossil fuels in production of energy causes emission of greenhouse
gases and particle pollution, which leads to health hazards. As people are becoming increasingly
concerned about these hazardous impacts, they may choose to reduce their energy consumption
with energy saving installations. In this paper we present a decision-making experiment to
understand motivation for energy saving choices in a diverse set of policy contexts. The
experimental design includes multiple sets of decision-making choices differentiated with
options to purchase health insurance. Altogether 64 subjects took part in 8 decision-making
sessions. Every session consists of 3 sections and each section includes 30 rounds. In every
round, subjects make a choice whether to spend on energy saving installations to decrease their
household energy bill and emission related health risks. While each subject in the first and third
section pays a lump sum emission tax, the emission tax is proportional to the total energy bill in
the second section. Subjects make energy saving choices both with and without the option to
purchase health insurance. The data collected in this experiment, allows us to see the
effectiveness of a public policy intervention to increase energy efficiency. The empirical analysis
suggests that energy savings increase when emission tax is proportional to total energy
consumption. However, energy savings seem to be crowded out when subjects have the option to
buy health insurance to cover pollution related health risks.
Author(s): Chiradip Chatterjee and Pallab Mozumder
Topic: Decision Theory: Risk, Decision Theory: Other
Back to session: Incentive Schemes in the Field and in the Lab
Labor market transitions and the acknowledgment of earned endowment: a lab
experiment in the field
Luis Miller, luismiguel.miller@ehu.es
University of the Basque Country
ABSTRACT:
Previous studies have established a correlation between employment status and the
acknowledgement of earned entitlement. In this paper, we test a causal, not merely correlational,
relationship between these two variables. We conduct a four-person dictator game under one of
two treatments, under one initial endowment were earned, under the other they were randomly
assigned. A year later, subjects participate in the same experimental treatment. We collect
information pertaining to the employment status of the subjects during the first and second
repetition of the experiment. We find that actual labor market transitions of participants are a
good predictor of changes in experimental behavior in the lab.
Author(s): Luis Miller
Topic: Field Experiments: General, Applied Economics: Labor Market
Back to session: Field Experiments: Labor Market
Testing the Theory of Multitasking: Evidence from a Natural Field Experiment
in Chinese Factories
Tanjim Hossain, tanjim.hossain@utoronto.ca
University of Toronto
ABSTRACT:
A well-recognized problem in the multitasking literature is that workers might substantially
reduce their efforts on tasks that produce unrewarded and unobservable outputs as they seek the
salient rewards to observable outputs. This study provides empirical insights quantifying such
effects using a natural field experiment, where we observe factory workers under varying
incentive schemes. Unlike most existing studies, quantity, but not quality, of output is observed
by the management. Using more than 2200 data points across 126 workers, we find sharp
evidence that workers do trade off the non-incentivized output (quality) for the incentivized one
(quantity) as a result of a piece rate bonus scheme. Interestingly, the measured effects critically
depend on the incentive scheme the worker faces in her everyday job: while piece rate incentives
result in a large increase in quantity and a sharp decrease in quality for workers who are paid
with a flat base salary in their regular job, they result only in a small increase in quantity without
affecting quality for workers who typically face a piece rate base salary. In this way, our data not
only provides a clean test of theory, but it also highlights the importance of background
information when interpreting experimental data.
Author(s): Fuhai Hong, Tanjim Hossain, John A. List, Migiwa Tanaka
Topic: Field Experiments: General, Applied Economics: Labor Market
Link: http://www-2.rotman.utoronto.ca/tanjim.hossain/Multitasking.pdf
Back to session: Field Experiments: Labor Market
A Classroom Experiment on Effort Allocation under Relative Grading
Andy Brownback, abrownba@ucsd.edu
University of California--San Diego
ABSTRACT:
Grading on the curve, or relative grading is one of the most commonly used grading schemes in
education. Under this scheme, each student's grade is determined as a function of his or her
percentile rank in the class. Based on the law of large numbers, this mechanism is sensitive to
changes in the class size. As class size grows, the percentile ranks of its students draw closer to
their percentile ranks in the overall population, changing the students' incentives. I model this
environment with size-dependent effort in order to predict behavior for students with different
abilities as measured by their GPAs. I test this model in a large-scale classroom experiment that
measures student effort in terms of time spent on 10 online quizzes. I randomly assign students
to 'grading cohorts' of 10 or 100 students, where they receive high grades if they score in the top
70 percent of their cohort. I test the connection between the size of the grading cohort and the
effort students exert. My results show that the greater variance in the draw of students caused by
the smaller grading cohort elicits more effort from the lowest ability students. Larger cohorts
have less variance, and elicit greater mean effort and greater effort from all but the lowest ability
students. Many low ability students fail to take advantage of the randomness of the smaller
grading cohort, an allocation failure consistent with several possible behavioral biases. I discuss
the welfare implications of the observed effort patterns and make policy recommendations for
classroom designers.
Author(s): Andy Brownback
Topic: Field Experiments: General, Applied Economics: Labor Market
Back to session: Field Experiments: Labor Market
Social Distance and Technology Sharing between Trainers and Trainees
Sherry Li, sherry.xin.li@gmail.com
University of Texas - Dallas
ABSTRACT:
This paper presents a field experiment to investigate how social distance affects voluntary
technology sharing between trainers and trainees, and the trainees' productivity in a large
clothing company in east China. Workers at this clothing company come from local areas as well
as from other provinces, and speak Chinese with different accents. Workers perceive those from
the same geographic areas socially closer, and those from other areas socially distant. The
experiment is imbedded in the training workshops regularly run by the company when new
workers are recruited. We randomly assign new workers (trainees) to experienced workers
(trainers) with different social distance, i.e., pairing trainees with trainers from the same
hometowns, or from different hometowns. Our results suggest that social closeness may facilitate
voluntary technology spillover from trainers to trainees, and lead to higher productivity of the
trainees.
Author(s): Sherry Xin Li, Shengzhe Wang (University of Texas at Dallas)
Topic: Field Experiments: General, Applied Economics: Labor Market
Back to session: Field Experiments: Labor Market
Voluntary Provision of Common-Property Resources with Alternative
Endogenous Allocation Rules
Brock Stoddard, brock.stoddard@usd.edu
University of South Dakota
ABSTRACT:
In a previous experimental study examining the voluntary provision of a common-property
resource (CPR), the authors examined the efficiency enhancing properties of three mechanisms
that divided the CPR among group members. Two of the mechanisms, one based on equal shares
and the other based on asymmetric shares assigned randomly, were imposed exogenously. The
third mechanism allowed for a randomly-selected group member (the allocator) to choose one of
three division rules for allocating shares of the CPR to group members after observing provision
decisions by group members. The earnings of the allocator increased with the level of provision
of the CPR, but the allocator did not participate in provision. The primary finding of this study
was that the mechanism that allowed the allocator to choose a division rule increased provision
of the CPR relative to the other two mechanisms. This study extends the previous study by
examining provision decisions utilizing three allocator mechanisms. The mechanisms differ only
in relation to the constraints placed on the allocator in assigning shares of the CPR. A baseline
setting without an allocator, where the allocation of the common-property resource is always
equal, is also examined. The results support the findings of the previous study in that all three
allocator mechanisms result in provision of the CPR at a higher-sustained level over decision
rounds compared to the baseline setting, where provision is lower and decays over decision
rounds. In addition, the greatest average provision is observed in the mechanism that allows the
allocator the greatest flexibility in assigning shares of the CPR. Greater flexibility, however,
comes with a cost. The more flexible mechanism leads to greater variation in provision which, at
least partially, can be linked to the allocation decisions of particular allocators.
Author(s): Brock Stoddard, James Walker, Arlington Williams
Topic: Public Choice: Public Goods and Common Pool Resource, Markets: Market design and
Matching
Back to session: Common Pool Resources
Behavioral Sources of Demand for Carbon Offsets: An Experimental Study
Neslihan Uler, neslihan@umich.edu
University of Michigan
ABSTRACT:
The voluntary carbon offset market gives individuals a chance to decrease greenhouse gas
emissions in a way to neutralize their own carbon footprint. On the one hand, the mere
introduction of carbon offsets may make individuals more aware of the damages they cause to
the environment. This could either directly decrease the environmental damages they caused or
could lead to carbon offset purchases which would then decrease the total emissions. On the
other hand, the intrinsic motivation of individuals could be crowded out by the possibility of
offsetting those damages and this may lead to an increase in the total carbon footprint. This paper
proposes a controlled laboratory experiment to develop a better understanding of carbon offset
markets. We show that the presence of carbon offsets does not affect the total damages caused by
the individuals. We find a stable demand for carbon offsets when price is low. On average, offset
purchases do not depend on income, share in total damages, or total damages. However, we find
that subjects who are characterized as altruistic buy an increasing number of offsets when their
share in total damages increases and also when total damages increase.
Author(s): Kai-Uwe Kuhn and Neslihan Uler
Topic: Public Choice: Public Goods and Common Pool Resource, Markets: Other
Back to session: Common Pool Resources
Specialization and Endogenous Territoriality in a Spatial Commons Experiment
Peter Twieg, twiegp@gmail.com
George Mason University
ABSTRACT:
We build on previous work in the commons literature by demonstrating that environments that
allow for individuals to credibly commit to specializing in the collection of certain varieties of a
heterogeneous common resource can facilitate the emergence of effective commonsmanagement institutions. We do this by first defining a model wherein players making credible
and publicly-observable specialization choices can more-easily sustain cooperation when some
proportion of the players are of a punitive type than would be possible in the absence of
specialization. We then implement a context-rich spatiotemporal environment in the laboratory
based upon this model and the prior empirical literature on commons management showing that
environmental features such as communication and monitoring are important tools that groups
use to establish effective commons management regimes. We show using this environment that
introducing specialization opportunities leads to more-effective commons management, and that
this more-effective management is often instantiated in the form of stronger territorial
institutions being established within groups.
Author(s): Peter Twieg, Kevin McCabe
Topic: Public Choice: Public Goods and Common Pool Resource, Social Behavior: Norms and
Morals
Back to session: Common Pool Resources
To mitigate or to adapt? Collective action under asymmetries in vulnerability to
losses.
Glenn Dutcher, glenn.dutcher@gmail.com
University of Central Missouri
ABSTRACT:
It comes as no surprise that a typical explanation for the failure of collective action to avoid
catastrophes is the existence of free-riding incentive. Another potentially important, but often
ignored, cause of failure is the heterogeneous nature of the vulnerability of each member to
damages. This paper presents experimental findings on the influence of asymmetries in the
relative damages from a catastrophe in a setting where participants can invest in a private fund
which generates positive gains, a public fund which reduces the probability of occurrence of the
catastrophe to all (mitigation), and/or a fund which reduces the private damage in case of
occurrence (adaptation). We find that those who face potentially larger amounts of damage
contribute more to the collective action problem than those who suffer less damage. This result
holds when comparing symmetric high damage groups to low damage groups and also when
subjects are paired in asymmetric groups. In asymmetric groups, we also find the typical
'poisoning of the well' to public goods contributions whereby high damage subjects reduce their
contributions when paired with low damage subjects as compared to symmetric settings.
Interestingly, groups use the private adaptation fund, but only to a limited extend.
Author(s): Esther Blanco, E. Glenn Dutcher and Tobias Haller
Topic: Public Choice: Public Goods and Common Pool Resource
Back to session: Common Pool Resources
Political Institutions and Corruption: An Experimental Examination of the
'Right to Recall'
Vjollca Sadiraj, vsadiraj@gsu.edu
Georgia State University/ AYSPS
ABSTRACT:
Countries around the world are concerned with corruption as it potentially undermines
confidence in government and may reduce the efficiency of public goods provision. While there
has been a significant amount of research devoted to identifying the causes of corruption there
has been little empirical research on the impact of political institutions on corruption. This paper
uses a series of laboratory experiments to examine the impact of the 'right to recall government
officials' on the level of government corruption. We find experimental evidence suggesting that
such an institution can decrease the level of corruption in government through the increased
accountability it imposes on elected politicians, and equity of the system, in terms of income
distribution, may also be enhanced.
Author(s): Sarah Mansour, Vjollca Sadiraj and Sally Wallace
Topic: Public Choice: Voting and Rent Seeking
Back to session: Corruption and Tax Evasion
Corruption Cascades
Oege Dijk, oegedijk@gmail.com
Gothenburg University
ABSTRACT:
One of the reasons that corruption is so endemic in many countries is that even when a corrupt
official is caught, they can simply bribe their supervisor in order to escape any charges. If in turn
this supervisor is caught for taking bribes, they can simply bribe their superintendant. When all
officials and supervisors are rational and corruptible, nobody ever gets caught: corruption simply
cascades upwards. Increasing the penalty or likelihood of being caught does not lessen
corruption but simply alters the distribution of income along the bribe chain. We show that one
way out of this dilemma is providing inspectors with bonuses as a fraction of bribes intercepted
that are large enough to trigger a no bribe equilibrium. We characterize such equilibria and
experimentally test the theory with a Corruption Game. We find that raising inspector bonuses
above the theoretical threshold reduces the incidence of bribetaking from 70% to 30%.
Author(s): Oege Dijk and Shubhashis Ganghopadhyay
Topic: Social Behavior: Lying and Cheating, Applied Economics: Economic Development
Back to session: Corruption and Tax Evasion
Tax Evasion Dynamics: an Experimental Study
Raluca Pavel, pavel@lameta.univ-montp1.fr
Lameta
ABSTRACT:
Many countries rely on retroactive auditing schemes, in particular for income tax return.
Specifically the inspection period of taxpayers' incomes is not restricted to the current income
period but generally covers several periods. There exists a wide diversity of practices across
countries, ranging from 2 years to more than 10 years of retroaction. Why such diversity exists is
puzzling, but at first glance practices of retroactive audit policies do not seem to be based on a
detailed analysis of the taxpayers' incentives to cheat. In addition, the theoretical literature on tax
evasion does not provide a reference framework that could be used to predict the impact of
various variables on the optimal retroaction period and which could provide guidelines for
targeting audit policies. In this paper we provide experimental evidence about subjects' cheating
behavior with respect to a retroactive inspection policy. We rely on the predictions of a dynamic
tax evasion model in order to test various impacts of the retroactive inspection policy on agents'
income declaration. The model includes a parameter that accounts for the length of th'etroactivity
period, and we study the impact of manipulating this parameter on income declaration. Our
model may be interpreted as follows: the Tax Authority applies a 'statute of limitations policy' by
inspecting only past income declarations that are covered by the limitation period, i.e. the laps of
time between the current period t and some past period t-k where k is the limitation period. Any
fraud committed before period t-k benefits from leniency since no penalty will be levied. We
determine the optimal sequence of income declarations for various types of agents (risk- loving,
risk-neutral and risk-averse), by implementing a combinatorial optimization algorithm. More
precisely, at each period of time we define the optimal income declarations that maximize the
taxpayer's total expected utility. We find that higher limitation periods ('k') increase agent's
compliance until at a certain level of 'k' and then the effect becomes steady. So, applying a full
retroactive inspection, i.e. for all the past income declarations, would have similar effects with a
statute of limitation policy. We contrast our theoretical results to experimental data. Subjects
have played six sequences of the dynamic income declaration game with (k > 0) or without (k =
0) retroactive inspection. We have elicited risk-preferences based on Holt-Laury (2002).
According to our preliminary results, an increase of the level of k has a highly significant
positive impact on income declarations as predicted. Furthermore, subjects' type does not affect
the efficiency of the retroactive audit policy. However, subjects' compliance behavior is poorly
described by the underlying model (there is a significant deviation between the observed and the
predicted income declaration path). We explore alternative explanations about the impact of the
statute of limitation on income declaration.
Author(s): Raluca Pavel, Marc Willinger, Jean-Christophe Poudou
Topic: Social Behavior: Lying and Cheating, Decision Theory: Risk
Back to session: Corruption and Tax Evasion
Spillovers of Tax Evasion'Unexpected Costs of Tax Evasion
Sebastian J. Goerg, sgoerg@fsu.edu
Florida State University
ABSTRACT:
Many individuals do not pay their due taxes, and the costs to society are large. Tax revenue is
lost directly, but it has also been suggested that tax evasion can breed more tax evasion: when
someone is observed cheating on taxes, others may respond by behaving in the same way, and
exacerbate the problem. In that sense it seems fortunate that most individuals have no access to
this form of response. They cannot easily evade taxes because their income is subject to
withholding taxes or third party reporting. However, we show in a field experiment that
observing tax evasion also leads to adverse behavior outside the realm of taxation. Specifically,
we give information about tax evasion by celebrities to subjects in a data entry work
environment, and demonstrate that this causes spillovers to workplace behavior. We find
significantly higher rates of theft among subjects that were exposed to articles about tax evaders,
com- pared to those subjects that were not. This study therefore shows that the costs imposed on
society by tax evasion may be much more diverse and higher than previously thought.
Author(s): Sebastian Goerg, Oliver Himmler, Tobias Koenig
Topic: Social Behavior: Lying and Cheating, Social Behavior: Norms and Morals
Back to session: Corruption and Tax Evasion
Do Prediction Markets Aid Defenders in a Weak-Link Contest?
Cary Deck, cdeck@walton.uark.edu
University of Arkansas
ABSTRACT:
Laboratory experiments have demonstrated that prediction market prices weakly aggregate the
disparate information of the traders about states (moves) of nature. However, in many practical
applications one might want to predict the move of a strategic participant. This is particularly
important in aggressor-defender contests. This paper reports a set of such experiments where the
defender may have the advantage of observing a prediction market on the aggressor's action. The
results of the experiments indicate that: the use of prediction markets does not increase the
defender's win rate; prediction markets contain reliable information regarding aggressors'
decisions, namely excess bid information, that is not being exploited by defenders; and the
existence of a prediction market alters the behavior of the aggressor whose behavior is being
forecast.
Author(s): Cary Deck, Li Hao, Dave Porter
Topic: Markets: Finance, Games: Contests
Back to session: Markets I
A speculation elicitation task
Sascha Fullbrunn, Fullbrunn@gmail.com
Radboud University Nijmegen
ABSTRACT:
In finance, heterogeneous agent models identified the relevance of market composition in terms
of trader types like momentum traders, fundamental traders or speculators on asset pricing
behavior. But testing the influence of market composition on price bubbles in the lab remains a
difficult endeavor. Using order book information, on-going research tries to classify trader types
ex-post to find a relationship between market composition and price bubbles. In contrast, our
project tries to identify trader types ex-ante to control for market composition in experimental
asset markets. In this study, we classified speculators on a scale from 1 to 7 using a novel
screening device based on 'the Bubble Game' introduced by Moinas and Pouget (ECMA, 2013).
Ordered by the speculation score, we split the subject population in tertiles and assigned each
tertile to one independent SSW market. We find that indeed the 'speculator' markets yield higher
bubbles than the 'no-speculator' markets.
Author(s): Sascha F'llbrunn, Dirk-Jan Janssen, Utz Weitzel
Topic: Markets: Finance
Back to session: Markets I
Asset allocation: an experimental analysis
Aleksandar Giga, aleksandar.giga@usc.edu
University of Southern California
ABSTRACT:
We consider a dynamic portfolio allocation problem in an experimental setting. The optimal
portfolio of an expected utility maximizer exhibiting a HARA utility function is derived
analytically. Experimental choices are fitted to this model to assess the absolute and relative risk
aversion attitude of each of our subjects. We find a large heterogeneity in risk attitude with most
subjects exhibiting both decreasing absolute risk aversion and increasing relative risk aversion.
The behavior of subjects is relatively well accounted for by the expected utility model, even
though we find evidence of a gain/loss response asymmetry. Furthermore, there is not a
significant loss of generality in restricting to a CRRA utility model at the aggregate (session)
level.
Author(s): Isabelle Brocas, Juan Carrillo, Aleksandar Giga and Fernando Zapatero
Topic:
Back to session: Markets I
Liquidity Shocks in Experimental Asset Markets
Li Qi, qili26@yahoo.com
Agnes Scott College
ABSTRACT:
We explore the impact of an unusual trade on behavior in experimental bubbles markets. After
several rounds of trading the market receives a large quantity order at an extreme price, i.e., a
price distant from fundamental value. In the base treatment there is no liquidity shock and we
observe the typical bubble and crash pattern. With aberrant orders at both high and low prices,
the bubble is dissipated. Our results are consistent with the notion that an unusual order serves as
a synchronizing mechanism for traders who rationally understand that the asset is trading a price
that deviates from fundamentals.
Author(s): Lucy Ackert, Lei Jiang and Li Qi
Topic: Markets: Finance
Back to session: Markets I
Analysis of Dynamic Games with Biased Beliefs: An Experimental Study
Li Hao, carrie.hao@gmail.com
University of Arkansas, Fayetteville
ABSTRACT:
We conduct a laboratory experiment to evaluate the econometric procedure for estimating
dynamic games proposed by Aguirregabiria and Magesan (2012, AM hereafter). AM's procedure
is valuable because it relaxes the equilibrium assumption that players' beliefs accurately
represent the actual decisions of their opponents. The advantage of our approach over
conventional Monte Carlo studies is that our data are generated by human participants rather than
simulated agents, without losing the availability of 'known' parameters for evaluation purposes.
We (i) discover the conditions under which AM's procedure provides reliable inferences with
respect to the structural parameters, and (ii) draw inferences about the nature of human players'
beliefs in these environments.
Author(s): Li Hao, Daniel Houser, Aniket Panjwani, Joachim Winter
Topic: Markets: Industrial Organization, Markets: Other
Back to session: Markets II
Exploding Offers with Experimental Consumer Goods
Alexander Brown, abrown@econmail.tamu.edu
Texas A&M
ABSTRACT:
Recent theoretical research indicates that search deterrence strategies are generally optimal for
sellers in consumer goods markets. Yet search deterrence is not always employed in such
markets. To understand this incongruity, we develop an experimental market where profitmaximizing strategy dictates sellers should exercise one form of search deterrence, exploding
offers. We find that buyers over-reject exploding offers relative to optimal. Sellers underutilize
exploding offers relative to optimal play, even conditional on buyer over-rejection. This
tendency dissipates when sellers make offers to computerized buyers, suggesting their persistent
behavior with human buyers may be due to a preference rather than a miscalculation.
Author(s): Alexander L. Brown, Ajalavat Viriyavipart, Xiaoyuan Wang
Topic: Markets: Industrial Organization, Games: Bargaining
Link: http://econweb.tamu.edu/abrown/papers/explode.pdf
Back to session: Markets II
The Robustness of Asset Markets as an Equilibrium Selection Device in
Coordination Games
James Fan, juf187@psu.edu
Pennsylvania State University
ABSTRACT:
This paper revisits minimum coordination games with a pregame auction in order to test theory
developed from econometric modeling. Through lab experiments, this paper tests the
effectiveness of an asset market, specifically a multiple unit English clock auction, on minimum
coordination efficiency. Results are benchmarked against game theoretical predictions, and they
indicate that while the asset market alone is ineffective for inducing optimality in the minimum
coordination game, it is informationally efficient and accurately predicts coordination outcomes.
Author(s): James Fan, Anthony M. Kwasnica
Topic: Games: Coordination, Markets: Auctions
Back to session: Markets II
Hotelling in Continuous Time
Curtis Kephart, curtisk@ucsc.edu
UC Santa Cruz
ABSTRACT:
We study Hotelling's classic location model in continuous time with flow payoffs accumulated
over time and the price dimension made explicit. We find that the principle of minimum
differentiation generally holds, although in the majority of cases positions ' especially on the
price dimension ' do not stabilize. Our results also support literature that the ability to respond
quickly increases cooperation.
Author(s): Curtis Kephart and Liam Rose
Topic: Markets: Industrial Organization, Games: Repeated Games
Back to session: Markets II
Evolution of markets: Call Market, Decentralized and Posted Offer
Jean Paul Rabanal, jeanpaul.rabanal@yahoo.com
bsu
ABSTRACT:
We apply standard evolutionary dynamics (replicator) to the study of stability of three competing
market formats 'call market (CM), posted offer (PO) and decentralized market (DM). Our results
show that (i) the participation of traders at CM is much higher compared to the two other
formats, (ii) the PO coexists with CM, and (iii) DM vanishes against CM, and PO (depending on
initial conditions) in the long-run.
Author(s): Jean Paul Rabanal, Olga A. Rabanal
Topic: Markets: Market design and Matching, Games: Bargaining
Back to session: Markets III
Taking Turns
Greg Leo, gregleo@gmail.com
University of California Santa Barbara
ABSTRACT:
Two individuals have a regular task to complete that requires the effort of only one. In the spirit
of fairness, they take turns but soon encounter a problem. Some days it is less costly for one of
the individuals to complete the task, and some days it is less costly for the other individual. The
person obligated might not be best suited for the job that day. Each individual knows their own
cost but may be unable to judge the other person's cost. Is there an arrangement that can help
them assign the task to the most capable person at each instance? Further, will the efficiency of
their relationship suffer substantially if they do not use money to incentiveize such an
arrangement? This paper discusses a simple mechanism in this environment- turn taking with the
possibility for deferment (recurring rotation). The recurring rotation mechanism requires no
monetary transfers, no formal communication structure, and achieves impressive efficiency
given it's simplicity, even relative to what can be achieved with monetary transfers. This paper
formalizes the mechanism, outlines some equilibrium properties, tests the properties in the
laboratory, and presents extensions of the mechanism which can approximate the efficiency
achievable by a robust mechanism with money transfers. Experimental tests of the recurring
rotation mechanism suggest that, while equilibrium play is not abundant, achieved efficiency is
close to what is expected in equilibrium. However, there is an unexpected disequilibrium
behavioral pattern. Subjects do not ask to defer their turn often enough. The pattern cannot be
attributed to strategic aspects or social preferences. This suggests the pattern may be due to
heuristics used to cope with the complexities of the underlying decision process.
Author(s): Gregory Leo
Topic: Markets: Market design and Matching, Games: Repeated Games
Back to session: Markets III
Time as Money: Contribution-Based Assignment Auctions
J. Forrest Williams, jwilliams@econ.tamu.edu
Portland State University
ABSTRACT:
When institutional constraints prohibit the use of cash transfers, efficiently allocating scarce
resources within an organization can be difficult. In this paper, we design an alternative to the
traditional assignment auction in which time contributions to a common objective are used in
place of cash to determine auction priority. We explore the efficiency and welfare properties of
this mechanism relative to the cash baseline, exogenously varying the public benefit from
contributions.
Author(s): Michael Caldara and J. Forrest Williams
Topic: Markets: Auctions, Markets: Market design and Matching
Back to session: Markets III
Endogenous sample selection in common value environments: A laboratory
study
Emanuel Vespa, vespa@econ.ucsb.edu
University of California, Santa Barbara
ABSTRACT:
We study a common value environment in the laboratory in which actions convey information,
and optimal behavior requires agents to make inferences from others' actions and certain
hypothetical events. Subjects are not told the primitives of the environment, but they can make
inferences from past experience. Inferences must be made from a biased sample, as agents
observe the payoff to an alternative only if the group selects that alternative. We find that
subjects do not account for the sample selection problem and that Nash equilibrium play is not a
good predictor of behavior. Although some subjects behave as if partially accounting for
selection, behavior is better organized by the naïve behavioral equilibrium.
Author(s): Ignacio Esponda and Emanuel Vespa
Topic: Games: Information
Back to session: Games
Game Form Representation and Knowledge Spillovers
Sandra Maximiano, maximiano@purdue.edu
Purdue University
ABSTRACT:
Most research in game theory considers that players have the same knowledge about the game
and they understand the game equally. In reality, in many strategic interactions, this is not the
case. Our paper investigates whether in simple competitive game between two players,
individuals learn faster when facing a more knowledgeable opponent or, instead, do they become
discouraged. The game has multiple ways in which it may be presented. An experiment is
conducted where some subjects are given an easier and familiar game form while others are
given a more difficult form. We find that when subjects are given the more difficult game form
representation they make fewer mistakes in later rounds if they have been playing against an
individual with the easier representation. This suggests that knowledge spillovers trumps
discouragement when individuals are faced with strong adversaries.
Author(s): Karthik Kannan, Sandra Maximiano and Kory Garner
Topic: Games: Other, Games: Information
Back to session: Games
Uncover Components of Individual's Strategic IQ: An Experimental Study
Joseph Wang, josephw@ntu.edu.tw
National Taiwan University
ABSTRACT:
We employ principal component analysis to identify components of subject's strategic IQ in the
following three classes of games: The two-stage dominance-solvable game, Chen, Huang and
Wang (2013)'s simultaneous spatial beauty contest game, and the first-mover spatial beauty
contest game. Parallel analysis retains the first five principal components (PCs), which account
for 56% of the total variance of subject's normalized expected payoffs for each of the 33 games.
We interpret these PCs as five strategic IQs: The first SIQ indicates subjects' abilities to perform
backward induction and it is also the common g-factor that can predict subjects' performances in
most games. The second SIQ could be interpreted as subjects' abilities to perform high
dimensional backward induction. The third SIQ controls for subjects' attitudes toward risk. The
fourth SIQ reflects subjects' beliefs about social preferences. The fifth SIQ measures subjects'
accuracy of higher order beliefs about others.
Author(s): Shu-Yu Liu and Joseph Tao-yi Wang
Topic: Psychology and Biology: Gender and Individual Differences, Games: Other
Back to session: Games
Non-equilibrium in Laboratory Fixed Pair Matching Pennies Game
Zhijian Wang, wangzj@zju.edu.cn
Experimental Social Science Laboratory, Zhejiang University
ABSTRACT:
Matching Pennies game (MPG) and Rock-Paper-Scissors game (RPS) are the two elementary
games in modern game theory (Von Neumann & Morgenstern, 1944, Section 17.4, p144). In
these two games, the classical game theory predicts the mixed strategy Nash equilibrium
(MSNE), while the evolutionary game theory predicts persistent non-equilibrium processes.
Under the traditional random pairwise-matching protocol, we have found the cyclic nonequilibrium processes in Matching Pennies game (Xu et al, 2014) and Rock-Paper-Scissors game
(Xu et al, 2013). However, in fixed pair games where people may engage in more strategic
interaction to obtain a MSNE, whether this system is in equilibrium or non-equilibrium remains
unknown. In physics, entropy production is a global observable for non-equilibrium steady state
to identify the dynamical activity of a system --- in the long run, when a system is in equilibrium,
its entropy production is zero; otherwise it is non-zero, suggesting a non-equilibrium state of the
system. Using Markov chains obtained from experiments, we investigate the equilibrium
property of fixed pair two-person Matching Pennies game with entropy production measurement.
We provide the evidence that the entropy production is significantly non-zero, which indicates
that the system of fixed Matching Pennies game is in non-equilibrium. To confirm this result, we
adopt the concept of detailed balance condition to filter the net loops in stochastic experimental
trajectories and compare these two observables (entropy production and the frequency of the net
loops). We find that the entropy production has a significantly positive linear correlation with the
frequency of the net loops. Basing on the results in our standard Matching Pennies game
experiments and supported data of 10 generalized Matching Pennies game experiments (Erev et
al, 2007), we suggest the following two points. (1) The system of fixed pair two-person
Matching Pennies game, in which the mixed strategy Nash equilibrium is commonly expected, is
actually in a non-equilibrium state. (2) Technologically, entropy production can serve as an
efficient measurement to test models and explore facts in social systems with human interaction.
Author(s): Zhijian Wang, Zhu Minyi (presenter) and Bin Xu*
Topic: Decision Theory: Learning, Games: Repeated Games
Back to session: Games
Status Anxiety Makes Women Underperform
Jordi Brandts, jordi.brandts@uab.cat
Univ. Autonoma de Barcelona
ABSTRACT:
Empirical evidence suggests gender differences in the importance attributed to social status.
Uncertainty about one's status can raise anxiety and affect behavior. However, little is known
about how men and women adapt their behavior when anticipating that their status will be
revealed. We provide experimental evidence on behavior by men and women who know that
their performance will be compared, which creates an anticipation of status ranking amongst the
subjects. Using a control condition without performance comparison, we find that women
underperform in anticipation of ranking. They reduce their pace and achieve poorer results. In
contrast, in anticipation of ranking men hasten their pace, without changing their performance.
As a consequence, women's performance under anticipated ranking is lower than that of men,
whereas in absence of ranking we observe no gender differences. We also find no evidence of a
long-term effect of status ranking. Our findings complement recent research showing that
women tend to shy away from competition, even in environments where they do not perform
differently than men. Avoidance of competition has been put forward as a reason for the
under¬representation of women in top positions. This implies that increasing women's
willingness to compete would help improve their position. Our results suggest that increased
participation in competitive environments where status ranking is salient could also harm
women's success in the labor market. These results thus highlight an overlooked impediment for
workplace promotion of women and may have major implications for the design of labor market
competitions.
Author(s): Jordi Brandts, Klarita Gërxhani, Arthur Schram
Topic: Psychology and Biology: Gender and Individual Differences
Back to session: Gender I
Gender and Competition in Games without Agency
John Ifcher, JIfcher@scu.edu
Santa Clara University
ABSTRACT:
Niederle and Vesterlund (2007) demonstrate that men are more willing to compete than women
in an experimental setting. This finding inspired a series of laboratory experiments to test the
robustness and limits of Niederle and Vesterlund's finding. For example, it has been shown that
the gender difference in willingness to compete is smaller or disappears when the task is less
stereotypically male, when subjects work in teams, and when there is a system of affirmative
action. In this paper, we test whether there is a gender difference in the willingness to compete in
a task without agency. Preliminary results indicate that there is no gender difference in the
willing to compete in this task. However, when the task without agency is completed after the
traditional summation task, then men are more willing to compete than women. This indicates
that the gender difference in willingness to compete can be induced in a task without agency.
Author(s): John Ifcher & Homa Zhargamee
Topic: Psychology and Biology: Gender and Individual Differences, Social Behavior: Other
Back to session: Gender I
Gender Differences in Asset Information Acquisition
David Wozniak, dwoznia4@emich.edu
Eastern Michigan University
ABSTRACT:
In financial markets individuals choose to buy or sell investments based on asset information
available to them at decision time. We use two separate experiments and two different subject
pools to explore whether a gender difference for investment information acquisition exists and
how this difference in information demand impacts investment decisions. We find that females
use less information than males to make investment decisions. We find this to be the case in both
a simplified setting involving strictly risky asset choices as well as in a separate experiment
simulated mutual fund investment decision setting which more closely resembles ``real world''
choices. The gender difference in asset information acquisition remains stable across both the
buy and sell domains.
Author(s): Matthew Taylor and David Wozniak
Topic: Psychology and Biology: Gender and Individual Differences, Markets: Finance
Back to session: Gender I
A University-Wide Field Experiment on Gender Differences in Competitiveness
Anya Savikhin Samek, anyasamak@gmail.com
University of Wisconsin-Madison
ABSTRACT:
The difference in preference for competition between men and women has been cited as an
important factor driving the gender gap in earnings in the workplace. Using a natural field
experiment with over 35,000 students from an R01 university, I explore the impact of different
compensation schemes on willingness to apply for a temporary research assistant job. Then, I
employ over 500 workers and observe their performance on the job under flat rate and
tournament compensation schemes. I find that competitive compensation schemes deter workers
of both genders from applying, but that the effect is far more pronounced for women. Moreover,
the effect is not driven by differences in preferences for variable compensations, and is
attenuated by introducing the job as helping a non-profit.
Author(s): Anya Samek
Topic: Applied Economics: Labor Market, Field Experiments: General
Back to session: Gender II
Should all Women Ask?
Muriel Niederle, niederle@stanford.edu
Stanford University
ABSTRACT:
Lean in has become a popular answer to the issue that women don;t ask. In this paper we assess
negotiations and gender differences therein first in an environment in which subjects have a
choice whether to enter a negotiation or take a proposed outcome. The distinguishing feature of
our experiment, for economic style experiments, is that when subjects choose to negotiate they
have up to three minutes to do so via chat messages. Most importantly, we therefore look at a
negotiation rather than an ultimatum, say. We find the expected result: Women enter
negotiations less than men. Participants who enter negotiations (both males and females) have
positive returns from negotiating. This suggest the Lean In advice: Maybe we should advise
(force) women to negotiate? In a second treatment, this is exactly what we do. Now, in many
situations, the returns to negotiation are not significantly positive anymore. They are, often,
simply not significantly different from zero. One way to look at this result is that the advice was
simply 'useless' but not harmful. However, we can assess what additional outcomes occurred
because of Lean In, because we forced women to negotiate. Analyzing results this way, the
advice was very negative. The vast majority of additional explanations due to forcing women to
negotiate are negative. For those situations, women would have been strictly better off if they
had not negotiated. The paper shows women (though not men) positive self-select into
negotiations: Those who negotiate well enter negotiations, and others do not. The paper also
shows that not taking self-selection into account can lead to very misleading and actually
harmful advice.
Author(s): Christine Exley, Muriel Niederle and Lise Vesterlund
Topic: Games: Bargaining, Psychology and Biology: Gender and Individual Differences
Back to session: Gender II
Who Would You Ask? Requesting Favors from Men and Women
Lise Vesterlund, vester@pitt.edu
University of Pittsburgh
ABSTRACT:
Gender differences in task allocations at work may contribute to the persistent vertical gender
segregation that exists in the labor market. If women spend more time on non-promotable tasks
(tasks that are not relevant for their advancement) then they may progress more slowly than men
in organizations. We examine whether there are gender differences in the frequency by which
men and women are asked to perform tasks that they prefer others do in their place. We find that
when participants have the option of asking a man or a woman to perform a task, they are more
likely to ask a woman. These female directed requests are rewarding as women are more likely
to respond favorably to such undesirable requests. Men who are asked are more likely to wait for
someone else to do it in their place. We argue that differences in the propensity to be asked and
to say 'no' to requests for non-promotable tasks will result in different task allocations, and that
these in turn can create barriers to the advancement of women in organizations and in society as
a whole.
Author(s): Linda Babcock, Maria Recalde, Lise Vesterlund, and Laurie Weingart
Topic: Psychology and Biology: Gender and Individual Differences, Applied Economics: Labor
Market
Back to session: Gender II
Women's Governance and Leadership: An Experimental Investigation
Joe Vecci, joseph.vecci@monash.edu
Monash University
ABSTRACT:
Women in leadership positions make different policy choices compared to men. An increase in
the proportion of female leaders can therefore alter both the nature of governance as well as the
types of public services provided.. However, whether women are effective as leaders remains an
open question. In this paper, we use data from an artefactual field experiment and individual and
community surveys from 40 Indian villages to examine the following questions: (i) is there a
backlash by men towards women in leadership positions? (ii) how do female leaders react to
males perceptions about women as leaders? (iii) does the presence of female leaders
differentially affect the behavior of males and females? We find that there is indeed a male
backlash against female leaders. Our results suggest that resistance to women leaders is due to
violation of social norms, not due to potential inefficacy of women leaders. We also find that
increased exposure to female leaders reduces the extent of bias.
Author(s): Lata Gangadharan , Tarun Jain , Pushkar Maitra and Joseph Vecci
Topic: Applied Economics: Economic Development, Psychology and Biology: Gender and
Individual Differences
Back to session: Gender II
Network Monitoring and Punishment in Public Goods Games
Luke Boosey, lboosey@fsu.edu
Florida State University
ABSTRACT:
We report experimental findings on the impact of network structure on decentralized monitoring
and punishment in public goods games. Consistent with two recent studies by Carpenter et al.
(2012) and Leibbrandt et al. (2013), individuals in our environment can only directly monitor
and punish their immediate neighbors in an exogenously determined network. We examine
contribution and punishment decisions in three network environments - a Complete network, a
Circle network, and an Asymmetric network. We show that asymmetries in the network structure
have a significant effect on contributions. The data do not support the hypothesis that players in
the Asymmetric network discriminate between their punishment targets on the basis of location,
however, a substantial number of subjects (concentrated among those with a single neighbor)
engaged in some form of anti-social punishment. Most instances of anti-social punishment
reflect retaliation (or revenge), although some subjects issue pre-emptive punishment to deter
their neighbors from punishing. These findings suggest that asymmetries in the network facilitate
more anti-social punishment, undermining the effectiveness of decentralized punishment
mechanisms.
Author(s): Luke A. Boosey & R. Mark Isaac
Topic: Public Choice: Public Goods and Common Pool Resource, Games: Networks
Back to session: Punishment
When does Punishment Enhance Cooperation?
Haley Harwell, Harwell.haley@gmail.com
Texas A&M University
ABSTRACT:
Introducing punishment mechanisms in two different cooperation games has seemingly
contradictory effects on how players behave. Second-party punishment, where one player can
punish her counterpart, increases cooperation levels in the public goods game, while the same
punishment decreases cooperation levels in the trust game. We identify key elements of the two
games and create hybrid versions by varying one element at a time. This allows us to explore
possible causes for the difference in the effectiveness of punishment. In particular, we consider
the number of players, whether the game is repeated, and whether the game is simultaneous or
sequential. We find that when the decisions are made in sequential order punishment does not
increase contributions if the game is played only once, but does increase contributions if the
game is repeated. The contributions increase most in the repeated public goods game, but there is
also an increase with contributions in the repeated trust game.
Author(s): Haley Harwell, Catherine Eckel, Ravi Hanumara
Topic: Public Choice: Public Goods and Common Pool Resource, Games: Other
Back to session: Punishment
Punishment Patterns
Felix Albrecht, falbrech@uni-bonn.de
Uni Bonn
ABSTRACT:
This paper studies patterns of punishment in a one-shot public goods game. Building upon a
novel strategy-method approach at the punishment stage of the game, we classify individual
punishment patterns. We find that almost 40% of the subjects never engage in punishment.
Among those who punish, the vast majority displays a clear pro-social pattern of punishment.
Employing a within-subject design, we then compare these punishment patterns with conditional
contribution patterns. This allows us to analyze two-dimensional type classifications.Our data
indicate high frequencies of 'consistent' types: conditional cooperators that punish pro-socially as
well as free-riders that never punish. However, the analysis also reveals a non- negligible share
of free-riders that punish and conditional cooperators that do not engage in punishment.
Author(s): Felix Albrecht, Sebastian Kube, Christian Traxler
Topic: Public Choice: Public Goods and Common Pool Resource
Link: http://www.iame.uni-bonn.de/people/felix-albrecht/felix-albrecht
Back to session: Punishment
Immolation. An Experiment on the Political Economy of Extreme Intergroup
Punishment
Enrique Fatas, e.fatas@uea.ac.uk
University of East Anglia
ABSTRACT:
We analyze the behavioral determinants of extreme punishment in inter-group conflict.
Individuals contribute to team production by a tedious real effort task. Teams compete for a prize
in asymmetric tournaments. Asymmetries are generated by nature or by the decisions of one
group, arbitrarily chosen. As the magnitude of the asymmetry is identical across conditions, we
can measure the marginal effect of political inequality when only the advantaged group votes on
the asymmetry size. We allow for a particular form of inter-group punishment. Individuals in the
disadvantaged group may punish all individuals in the other group at an extreme price: if they
decide to punish the other individuals, they lose all their individual earnings. Our results strongly
support the link between political asymmetries and extreme inter-group punishment. Relative to
a control treatment with no asymmetries, economic inequality has no significant effect on the
likelihood of inter-group punishment. Interestingly, we find that skilled individuals are more
likely to sacrifice themselves to harm the other group.
Author(s): Catherine C. Eckel, Enrique Fatas and Malcolm Kass
Topic: Social Behavior: Group Behavior, Public Choice: Public Goods and Common Pool
Resource
Back to session: Punishment
The Effect of Free Travel on Labour Choices: Evidence from a large-scale policy
experiment
Walter Theseira, wetheseira@ntu.edu.sg
Nanyang Technological University
ABSTRACT:
We examine a policy experiment giving all city-bound commuters free travel during the morning
pre-peak period on Singapore's public transit system. Using individual electronic office entryexit data, we estimate the effect of the free travel program on labour time choices at work. While
only a small proportion of workers respond to the policy experiment by traveling earlier, the
average time shifts amongst those responding to the policy are large at close to half an hour.
There is no corresponding reduction in time spent at work, suggesting that free travel causes
workers to travel earlier and to stay longer at work.
Author(s): Walter E. Theseira
Topic: Applied Economics: Labor Market, Applied Economics: Other
Back to session: Labor I
Job Tenure and Job Hopping as a Signal of Reliability: Combined Evidence
from a Lab, a Field, and a Survey Experiment
Frederic Schneider, frederic.guillaume@gmail.com
University of Zurich
ABSTRACT:
We study whether job history provides a signal of that employee's reliability and trustworthiness.
In particular, we test the hypothesis that employees with longer permanence at given positions
(job tenure) and fewer changes in employment (job hopping) are more reliable and trustworthy,
are perceived as such by employers, and benefit from greater employability in the job market.
We employ a combination of laboratory and field experiments, and a survey administered to
human resources professionals. The results confirm our hypothesis. In the laboratory experiment,
the availability of job history creates the ability for more trustworthy workers to signal this
information to the market and obtain greater employability. In our field experiment, we
demonstrate that fictitious applicants for job openings are called significantly more often when
they possess a more continuous job history. Finally, a survey of HR professionals demonstrates
that r'sum's with fewer job changes convey desirable properties, such as reliability, ho'ty, and
agreeableness. Our study highlights the importance of social ('soft') qualities of workers, and
adds this dimension to existing signaling theories of the labor market.
Author(s): Alain Cohn, Michel Marechal, Frederic Schneider, Roberto Weber
Topic: Applied Economics: Labor Market, Field Experiments: General
Back to session: Labor I
The value of Interim Performance Information: An experiment
Fatemeh Momeni, fmomeni@purdue.edu
Purdue University
ABSTRACT:
Costly effort choices are often made sequentially and over multiple steps. In many situations,
individuals who make effort choices do not fully observe how well they are performing during
the process. A more informed party may choose to reveal their private information about agent's
performance to the agent or not. This paper designs an experiment to study the impact of interim
performance information on individuals' effort choices under different incentive schemes.
Subjects make costly effort choices in two subsequent stages under convex and concave payment
conditions. In No-Feedback treatments, subjects make their second stage effort choice without
knowing the outcome of the first stage, and in Feedback treatment, subjects learn the outcome of
the first stage before making their second effort choice. Experimental results show that interim
feedback can be used as an effective tool to increase individual effort. However, the extent to
which feedback impacts effort depends on the incentive scheme, as well as individual attitudes
towards losses and risks.
Author(s): Fatemeh Momeni
Topic: Applied Economics: Labor Market, Applied Economics: Other
Back to session: Labor I
Your Loss Is My Gain: A Recruitment Experiment With Framed Incentives
Jonathan de Quidt, jdequidt@gmail.com
IIES, Stockholm University
ABSTRACT:
Several papers find that contracts framed as penalizing failure elicit greater effort than standard
bonus contracts that reward success, consistent with loss aversion. Loss aversion also predicts
that workers will demand higher wages to accept penalty contracts, a plausible explanation for
why they are rare. This paper presents a field experiment designed to test this prediction.
Surprisingly, penalty framing increased the contract acceptance rate by 25 percent, and
performance by 0.2 standard deviations with no evidence of selection effects. Two follow-up
experiments rule out a number of possible explanations, and support a salience mechanism
whereby workers' subjective valuations are influenced by the high 'base pay' in the penalty
contract.
Author(s): Jonathan de Quidt
Topic: Applied Economics: Labor Market, Field Experiments: General
Link: https://dl.dropboxusercontent.com/u/1028335/dequidt_framedincentives_ESA.pdf
Back to session: Labor II
Hidden Costs of Control under Aligned Monetary Interests
Luigi Butera, lbutera2@gmail.com
George Mason University
ABSTRACT:
Empirical evidence shows that when monetary interests are not aligned within firms, principal's
exercise of control over agents may involve hidden costs. Here we test the hypothesis that
control may come with hidden costs even when principal and agent monetary interests are
aligned. We introduce a new principal-agent-client investment game where control takes the
form of limiting agent's reciprocity towards a third party (i.e. an investor, or client) who entrusts
the agent. By varying principal's monitoring ability, we assess how agents' trust- worthiness
towards their client depends on whether principals' exercise of formal authority represents a
personal restriction to agents' actions or an impersonal rule (applied ex-ante to all type of agents)
that merely signals principals' preferences. Our results show that also with aligned monetary
interests, direct control does involve hidden costs: personal restrictions induce agents to be
relatively more generous with their client than when restrictions take the form of impersonal
rules. On the other hand, when rules are impersonal, principals are less willing to impose them.
Overall, we show that impersonal rules help mitigating the hidden costs of controlling
subordinates, increasing both agents' and principals' payoffs.
Author(s): Jason Aimone, Luigi Butera
Topic: Applied Economics: Labor Market, Social Behavior: Norms and Morals
Back to session: Labor II
Does Searching Broader Improve Job Prospects?
Michele Belot, michele.belot@ed.ac.uk
University of Edinburgh
ABSTRACT:
We conduct an experiment with 300 job seekers and investigate experimentally whether
searching broader (i.e. considering a larger range of occupations or a larger geographical area)
improve job prospects (measured by number of applications, interviews and job finding). We
invited them to come weekly to our experimental laboratory to search for (real) jobs using our
own search engine. We monitored their search activity, in particular the criteria they use to
search through vacancies (keywords used, geographical distance, salary range,'). After 4 weeks,
we manipulated the search engine for a sub-sample and thereby introduced a search of
exogenous variation in how broad they search for jobs, specifically in terms of occupation. We
find that searching broader in terms of occupation improves job prospects, but mainly for job
seekers who have been unemployed for more than three months and were searching relatively
narrowly.
Author(s): Michele Belot, Philipp Kircher, Paul Muller
Topic: Applied Economics: Labor Market, Field Experiments: General
Back to session: Labor II
The Gift of the Living Wage: A Study of Unequal Wage Schedules in an
Experimental Labor Market
Erich Cromwell, erich.cromwell@gmail.com
FSU
ABSTRACT:
Living wage ordinances, unlike traditional minimum wage laws, are policies used by cities to
increase the minimum wage for a subset of employers in the city. Sold as a tool to offset urban
wage inequality, living wage laws reshape local labor markets by creating a minimum wage
differential in which the minimum varies by firm. One proposed advantage of requiring a higher
wage through living wage laws is increased worker performance. This proposed research
investigates the behavioral response of workers and firms in markets with living wage
ordinances. Gift exchange labor markets are used with various wage restrictions to test the effect
on worker effort, policy spillover, and labor supply. This experiment seeks to directly test the
claim that living wages produce higher effort from employees. Because effort is a perfectly
observable value in laboratory experiments, differences between markets with and without a
living wage law will reveal any potential variance in worker behavior. Social preferences and
reciprocity models provide conflicting predictions for worker behavior. Because wage increases
are involuntary for affected firms, workers may not reciprocate accordingly. The findings of this
study will progress understanding of both living wage laws as well as behavioral reciprocity
models.
Author(s): Erich Cromwell
Topic: Applied Economics: Labor Market, Social Behavior: Other-regarding Preferences
Back to session: Labor II
Reward the Lucky?
Angela de Oliveira, acm.de.oliveira@gmail.com
UMass Amherst, ResEc
ABSTRACT:
We utilize laboratory experiments to examine the impact of agency and luck on bonuses.
Subjects participate in a two-player (A and B), two-part experiment. In the first stage, Player A
makes an investment decision both for themselves and Player B. In the second stage, Player B
makes a dictator allocation for each possible outcome from the investment. We compare the
dictator gifts (bonuses) across outcomes and with a control treatment, where stage 1 outcomes
are determined randomly. We do not find a tendency among B's to reward individuals who are
lucky on their behalf. Rather, we find a marginal tendency to punish agency, with bonuses lower
when stage 1 outcomes are in part determined by A's choice, and a substantial tendency to punish
agents who are unlucky.
Author(s): Angela C. M. de Oliveira, Alexander Smith, John Spraggon
Topic: Applied Economics: Labor Market, Social Behavior: Other-regarding Preferences
Back to session: Labor III
Organizational distance and reciprocity in labor relationships
Karim Sadrieh, sadrieh@ovgu.de
University of Magdeburg
ABSTRACT:
We compare the wage-effort relationship in a game with a two-tier hierarchy (twelve employees
who are subordinate to one employer) to that in a game with a three-tier hierarchy (nine
employees who are subordinate to three managers, who are subordinate to one employer). In
both games, the employer has a work relationship with each of the other participants. In the twotier hierarchy all employees recieve wage offers from the employer. In the three-tier hierarchy,
managers receive wage offers from the employer and wage budgets that they use to pay the
wages of the three employees in their team. Managers and employees engage in a costly
production process with all residual earnings going to the employer. We find wage secrecy and
the hierarchical distance to the employer to have adverse effects on the motivation to provide
effort in the three-tier hierarchy. The results suggest that organizational distance reduces
reciprocal responses, as the manager, who assigns the wages to the employees, cannot be
reciprocated directly.
Author(s): Karina Gose, Abdolkarim Sadrieh
Topic: Applied Economics: Labor Market
Back to session: Labor III
Perceptions and Misconceptions: Multi Channel Beliefs, Economic Preferences,
Trust and Cooperation Decisions in the UK (England, Ireland, Northern Ireland,
Scotland and Wales)
Thorsten Chmura, chmura@uni-bonn.de
University of Nottingham
ABSTRACT:
Extended Abstract: This paper reports about a battery of games conducted in the five major
constituent countries that make up the British Isles (England, Wales, Scotland, Northern Ireland,
Republic of Ireland). In each country 90 students participated in the experiments. We tested
economic and social preferences as well as interactions towards trust and cooperation. The
results suggest that although all member countries are risk-averse in their personal preferences,
subjects from Northern Ireland and Wales are significantly more risk averse than their neighbors.
More generally, the more risk loving our subjects are the higher their value for deception in
cooperation games and acceptance of low wages in the Gift Exchange Game and amount they
expect returned from an opponent in the Trust Game. In support of the theory that nationality
creates strong social/group identities all subjects displayed the highest levels of trust toward
opponents from their home country (within-group) when playing the Investment Game and Gift
Exchange Game. However when we consider the between-group behaviour (e.g. England v
Scotland) it was apparent that England was deemed the least trustworthy by all other member
nations and also suffered the least amount of cross-border cooperation. This was particularly
pronounced by the Scottish in what we consider to be the most topical and interesting results of
the internal dynamics of UK trust and cooperation behaviour. When subjects were offered the
opportunity to play against someone from the UK (no specific member country prime) it was
evident that this was preferred by Scots for all games over and above any other between-group
choice, coming a close second to their home country. Given the independence referendum
currently taking place in this country it would appear from the results that Scots, albeit
uncooperative and mistrusting of the English, have an economic affinity with the UK. When
each of the five member countries subject pools were asked to make decisions when playing
against a sample of other foreign countries it was evident that higher levels of trust are always
significantly positively correlated with the GDP and negatively correlated with unemployment
rates. The importance of such cross-border trust is also evident in bilateral trade rates, which are
also positively correlated with the Trust and Gift Exchange Game.
Author(s): Thorsten Chmura, Cormac Bryce, Joel Stiebale
Topic: Applied Economics: Economic Development, Applied Economics: Labor Market
Back to session: Labor III
Risking Other People's Money: Experimental Evidence on Bonus Schemes,
Competition, and Altruism
Ola Andersson, ola.lars.andersson@gmail.com
Research Institute of Industrial Economics (IFN)
ABSTRACT:
We study risk taking on behalf of others in an experiment on a large random sample. The
decision makers in our experiment are facing high-powered incentives to increase the risk on
behalf of others through hedged compensation contracts or with tournament incentives.
Compared to a baseline condition without such incentives, we find that the decision makers
respond strongly to these incentives that result in an increased risk exposure of others. However,
we find that the increase in risk taking is mitigated by altruistic preferences and pro-social
personality traits.
Author(s): Ola Andersson, Håkan J. Holm , Jean-Robert Tyran and Erik Wengström
Topic: Decision Theory: Risk, Social Behavior: Other-regarding Preferences
Link: http://www.ifn.se/wfiles/wp/wp989.pdf
Back to session: Labor III
The Lives of Others: Predicting Donations with Non-Choice Responses
Jeffrey Naecker, jnaecker@stanford.edu
Stanford University
ABSTRACT:
There is much variation in the percent of adults registered to be organ donors across the United
States. Some of this variation may be due to characteristics of the sign-up process, in particular
the form that is used when a state resident applies for or renews their driver's license. However, it
is difficult to model and predict the success of the different forms with typical methods, due to
the exceptionally large feature space and the limited data. To surmount this problem, I will apply
a methodology that uses non-choice (i.e. unincentivized) data to predict choices. This mapping
from non-choice data to choices will allow me to leverage data collected in the laboratory to
achieve the desired identification. I will first show that this methodology can predict behavior in
a laboratory experiment setting where we have good structural benchmarks. I will then apply this
methodology to predict how organ donor designation depends on the elicitation procedure used.
This methodology can be used to perform policy psuedo-experiments where field experiments
would prove prohibitively expensive or repugnant.
Author(s): Jeffrey Naecker
Topic: Applied Economics: Charitable Giving, Methodology: Lab, Field and External Validity
Back to session: Charitable Giving
Charitable Giving, Charitable Taking, and Taking Aversion
Edward Millner, emillner@vcu.edu
Virginia Commonwealth University
ABSTRACT:
We use laboratory experiments to measure the equivalent variation of giving or taking vis-a-vis
the other in dictator games. Measuring the equivalent variation answers a fundamental question
about preferences: do donors prefer a regime that frames their actions as giving or a regime that
frames their actions as taking. The equivalent variation of taking vis-a-vis giving is the
endowment the dictator is willing to sacrifice to be a giver instead of a taker; that is, the amount
that would have to be taken away from the dictator to harm him as much as forcing him from a
scenario in which he gives to one in which he takes. The amount the dictator is willing to
sacrifice measures the dictator's aversion to taking. Korenok, Millner, and Razzolini (KMR)
(2014) observed that recipients in a dictator game fare better when dictators must take rather than
give. This finding suggests that philanthropies may increase donations by framing the donation
as taking from a suggested default gift instead of giving from a default of $0. However, aversion
to taking would cause donors to avoid regimes that frame donations as taking from a suggested
default, therefore reducing or possibly reversing the increase in donations suggested by the KMR
finding. We find that the aversion to taking is prevalent and strong.
Author(s): Oleg Korenok, Edward Millner, and Laura Razzolini
Topic: Applied Economics: Charitable Giving, Social Behavior: Other-regarding Preferences
Back to session: Charitable Giving
Matching Money and Donor Beliefs
Laura Gee, laura.k.gee@gmail.com
Tufts University
ABSTRACT:
Recent charitable giving field experiments find that donation-matching fundraising institutions
yield varied levels of success. Among the proposed explanations for this inconsistency, the factor
of donor beliefs about peers has received little attention. This paper investigates the importance
of such beliefs using both a lab and a field experiment in charitable giving by testing a novel
matching mechanism we call the 'group match'. Potential donors are told they are in a group of
10 and that the charity will receive a group match bonus of $50 if a threshold number of group
members donate. Treatments vary the threshold number of members needed for the charity to
receive the group match bonus. Results suggest that donors do value matching money that can be
triggered by their own donation, but also suggest that beliefs about peers can result in donation
free-riding. This provides an explanation for the inconsistent effectiveness of donation-matching
institutions: donors may refrain from donating since they believe that matching funds will be
exhausted by other donors.
Author(s): Laura K. Gee and Michael Schreck
Topic: Applied Economics: Charitable Giving, Social Behavior: Group Behavior
Back to session: Charitable Giving
Excusing Selfishness in Charitable Giving: The Role of Risk
Christine Exley, clexley@gmail.com
Stanford University
ABSTRACT:
It is no surprise that people give less to a charity if they are unsure about the impact of their
donation. It is less clear as to whether this reduction can be fully explained by risk preferences,
or whether some other mechanism is relevant. I show the latter is the case by conducting a
controlled laboratory experiment. When participants do not tradeoff their own money with the
charity's money, they respond very similarly to risk with money for themselves or the charity.
However, when participants must tradeoff their own money with the charity's money, their
response to risk alters in a self-serving manner. In particular, they opt-out of giving by now
treating charity risk as substantially less desirable, or treating risk as an excuse to not give.
Author(s): Christine Exley
Topic: Applied Economics: Charitable Giving, Social Behavior: Other-regarding Preferences
Link: https://sites.google.com/site/clexley/
Back to session: Charitable Giving
HIDE: Health Investment Decision Experiment
Hernan Bejarano, hbejainpenn@gmail.com
Chapman, Economic Science Institute
ABSTRACT:
Socially based health disparities, like mortality rates and chronic disease prevalence, exist
everywhere but their causes and solutions are poorly understood. The difficulty in identifying the
causality between health and income is related to the fact that numerous factors, such as
education, socioeconomic status, ethnicity, and habits, are correlated with health status and
income. In addition, health status and income are endogenous and influence each other. To
overcome these obstacles and gain insights on the relationship between health and income, we
implemented a novel health investment decision experiment. The first goal of our research is to
examine how well subjects comply with the predictions of a theoretical dynamic programing
model of health investment. Our second goal is to improve our understanding of the effects that
changes in expected income have on health investment decisions. In our lab experiment, subjects
participate in a 9 period dynamic decision-making lifetime in which their goal is to maximize
'life enjoyment'. They repeat this for 10 independent lifetimes to simulate how intergenerational
knowledge transfer and learning from exogenous sources might enhance subjects' abilities to
make optimal choices. In each period, subjects generate income in a timed real-effort task.
Current health status is a state variable that determines exactly how much time that each subject
has to generate income. The subject must then allocate generated income between health
investment and life enjoyment. Investing in health increases the subject's health, his future
income generation time, and the marginal utility of life enjoyment. In contrast, life enjoyment
expenditure directly increases life enjoyment which determines experimental payoff. Subjects
were assigned fixed chat groups of 4 throughout the experiment. Between lives, subjects were
allowed to chat within their chat group. Socially-based disparities are captured by one treatment
variable, lifetime income profile. A subject experiences either an increasing or flat income
profile during the periods of all lifetimes. A second treatment variable captures the effect that
retirement has on expected income: subjects are assigned an environment with retirement (fixed
income) during the last three periods of each life, or one without it. Preliminary results show that
subjects were successful at reproducing the qualitative features predicted by the theoretical
model. However, subjects usually over-invested in health and generally would not let their health
deteriorate at the optimal rate. Overall, life enjoyment outcomes are lower than the theoretical
predictions. Health investment decisions of increasing income profile subjects deviated more
from theoretical predictions than flat income profile subjects: they underinvested in low-income
periods and overinvested in high income periods. Subjects without retirement acted as theory
predicts, maintaining higher health status in later periods of life. Furthermore, chat group
communication was found to influence health investment decisions. In particular,
communication regarding investment decisions improved performance.
Author(s): Hernan Bejarano, Hillard Kaplan and Stephen Rassenti
Topic: Applied Economics: Other, Methodology: Lab, Field and External Validity
Back to session: Health
Aligning incentives of physicians - An experimental study of two-part tariffs and
separation of prescription and treatment in health care markets
Ben Greiner, bgreiner@unsw.edu.au
University of New South Wales, School of Economics
ABSTRACT:
Overtreatment is a typical problem in credence good markets like health care where a patient
cannot verify whether or not he receives the appropriate treatment for his illness. In this study,
we experimentally explore whether different provisions in the market (separation of agents and
separation of prices) can mitigate the overtreatment problem and increase market efficiency. In
particular, based on a theoretical model, we first test the hypothesis that if patients are not
committed to take up treatment when getting a diagnosis, then doctors will overtreat patients. We
then introduce either 1) a two-part tariff (separating diagnosis and treatment prices), 2) a
separation of prescribing and treating agents, or 3) both institutional changes simultaneously, all
of which in theory should be able to yield honest treatment and restore market efficiency. We
find that separating agents yields stronger effects on the honesty of doctors and efficiency of
treatment than separating prices, but overall market-level efficiency effects are minor due to
other non-rational decision-making.
Author(s): Ben Greiner, Chengxiang Tang, Le Zhang
Topic: Applied Economics: Other, Games: Information
Back to session: Health
Incentivizing Cost-Effective Reductions in Hospital Readmission Rates
James C. Cox, jccox@gsu.edu
Georgia State University
ABSTRACT:
The recent regulatory changes enacted by the Centers for Medicare and Medicaid Services
(CMS) have identified hospital readmission rates as a critical healthcare quality metric. This
research focuses on the utilization of pay-for-performance (P4P) mechanisms combined with a
decision support software tool to cost effectively reduce hospital readmission rates and meet the
regulatory standards set by CMS. Using the experimental economics laboratory we find that both
of the P4P mechanisms researched, bonus and bundled payments, cost-effectively meet the
performance criteria set forth by CMS. The bundled payment P4P mechanism generates the
largest reduction in patient length of stay (LOS) without altering the probability of readmission.
In addition, the decision support software information substantially reduces a patient's length of
stay while effectively meeting CMS's readmission targets. Combined these results indicate that
utilizing P4P mechanisms, in conjunction with decision support software, incentivizes cost
effective reductions in hospital readmission rates.
Author(s): James C. Cox, Vjollca Sadiraj, Kurt E. Schnier and John F. Sweeney
Topic: Applied Economics: Other, Decision Theory: Other
Back to session: Health
Coordinating Epidemic Response: Is Behavior Prevalence Elastic?
Anne Carpenter, anne.carpenter007@gmail.com
University of California, Irvine
ABSTRACT:
Low investment in disease prevention technologies and high levels of preventable infectious
disease characterize many developing countries. However, despite high levels of preventable
disease, take-up of disease prevention products remains low. One potential explanation for this is
that investment in disease prevention technologies may be prevalence elastic. Thus, as disease
prevalence increases, investment in disease prevention technologies increases, and as disease
prevalence decreases, investment in disease prevention technologies decreases. I propose a new
way to explore the relationship between disease prevalence and disease prevention behavior: a
lab experiment. Using a mathematical model of disease to simulate an outbreak, I explore the
impact of disease prevalence on investment in a disease prevention technology. I conduct both a
between and a within subject experiment using a 2x2 factorial design. The two treatment
variables are the cost of investing in a disease prevention technology and the information
available regarding outbreak levels. The cost of investing in a disease prevention technology
takes on two values: high cost and low cost. The information available regarding outbreak levels
takes on two values: full information and no information. I find evidence of prevalence elastic
behavior: the number of infected individuals is significant in explaining the decision to invest in
disease prevention. Additionally, I find that high costs of investment combined with full
information regarding outbreak levels significantly reduces investment in disease prevention
technologies.
Author(s): Anne Carpenter
Topic: Games: Coordination, Applied Economics: Other
Back to session: Health
Information Effect Regarding Inequality of Opportunities on Redistribution: A
Lab Experiment
Gustavo Caballero, gacaball@ucalgary.ca
University of Calgary
ABSTRACT:
This paper presents evidence from a laboratory experiment regarding the effect of information
about opportunities and effort in redistributive behavior. In the experiment, individuals are
randomly selected into one of two groups, each endowed with differing probabilities of earning
$20. By exerting effort, individuals increase their probabilities of earning the $20 but conditional
on effort the difference in probabilities remain constant so groups are determining opportunities.
After initial earnings are determined, I examine redistribution using a dictator game where the
dictator earned $20 and the receiver earned $0. Treatments vary the level of inequality of
opportunities and information regarding receivers' opportunities and effort. I find dictators
consistently rewarding receivers' high effort. However, dictators do not consider receivers'
opportunities nor their own opportunities when redistributing. Unresponsiveness to opportunities
may stem from beliefs characteristic of North-American societies or the result of insufficient
elicitation of inequality of opportunities in the lab.
Author(s): Gustavo A. Caballero
Topic: Social Behavior: Other-regarding Preferences, Applied Economics: Charitable Giving
Link: http://ideas.repec.org/p/clg/wpaper/2014-01.html
Back to session: Redistribution
Heterogeneous Fair Preferences and Redistribution under Different Rooted
Risks: An Experimental Study
Marco Palma, mapalma@tamu.edu
Texas A&M University
ABSTRACT:
A wide range of economic questions, such as charity, fair trade agreements, labor-management
negotiations, taxation of income and inheritances, and Medicare insurance coverage, among
many others are in a connection with how fairness preferences of people are shaped and changed
in distinct contexts. In spite of the growing consensus of the importance of fairness in
understanding distributive decisions and efficient public policy design, economists are far away
from agreement about the relationship between fairness preferences of people and distributive
decision making in many different situations. This paper proposes and tests a theory of
redistributive decision making and fairness views under different rooted risks. A laboratory
experiment is designed in which subjects can endogenously determine whether they want to buy
insurance before they face one of three possible risky outcomes that will be realized with equal
probability. If the first outcome is realized, a high payment will be delivered regardless of
whether the subject buys insurance or not. The second risk is an avoidable loss (no payment)
contingent upon the subject buying insurance. The third outcome is an inevitable loss, i.e., no
payment will be delivered no matter if the subject has or does not have insurance. During the
second phase of the experiment, participants will be anonymously and randomly matched as
pairs and asked to make redistribution decisions between group counterparts. The second phase
of this experiment varies in decision power across treatments. In a high-low treatment, the
participant earning more points in each group decides how to redistribute their earnings, whereas
in a low-high treatment, the participant earning fewer points in each group decides how to
redistribute their earnings. An individual is assumed to be motivated by his/her own income in
the first stage and fairness when deciding how to distribute the total income between him/her and
the counterpart. The utility function has a form proposed by Capplen et al. (2007). V1=x1-(b(x1F1t)^2)/X V2=x2-(a(x2-F2t)^2)/X For simplicity, the subscript 1 denotes the participant with
higher income in the risk-taking phase, while subscript 2 denotes his counterpart. Vi is latent
utility function of individual i. xi is the final payoff of individual i after redistribution. a and b
measure aversion from disadvantageous and advantageous inequality. 0<=b<a. F(it) is the
fairness reference point for individual i of type t. There are two types of individuals in this
model, having social preferences of outcome inequality aversion (O) or accountability principle
(A). A random utility framework is estimated with a latent variable for the fairness type t. The
experimental design and estimation method enables us to understand heterogeneous views about
distributive justice conditional on different rooted risks. We find that people have different
fairness preferences that depend on the insurance purchase decisions and whether or not the risk
is avoidable. The results are also important for explaining some prosocial behaviors and have
implications for social and economic policies, such as Medicare insurance coverage, job training
programs, and so on.
Author(s): Phil Z Xu and Marco A Palma
Topic: Social Behavior: Other-regarding Preferences, Decision Theory: Preferences
Back to session: Redistribution
Justice: what money can buy an experimental test on Rawlsian difference
principle with primary social goods
Joshua Chen-Yuan Teng, joshuateng@gm.ntpu.edu.tw
Department of Public Finance, National Taipei University
ABSTRACT:
While most economists view the relationship between equality and efficiency as a tradeoff or
conflict, Rawls (1971) saw it differently according to his proposed difference principle: equality
has priority over efficiency in essence. Previous experimental studies lend little support to the
importance of the difference principle -- subjects whose social preferences obey the difference
principle represent only a small minority in the sample. This paper finds a much stronger support
-- a salient majority of subjects whose social preferences obey the difference principle. A key to
our departure from previous studies lies in that allocating monetary payoffs between subjects in
our experimental design embodies not simply choosing the distribution of payoffs but more
importantly the distribution of Rawls's so-called 'primary social goods,' which serve as
instruments critical to the fulfillment of people's rational desire.
Author(s): Joshua Chen-Yuan Teng, Joseph Tao-yi Wang, and C. C. Yang
Topic: Social Behavior: Other-regarding Preferences, Public Choice: Other
Back to session: Redistribution
Social Norms and Identity Driven Choice
Erin Krupka, erinkrupka@umich.edu
University of Michigan, School of Information
ABSTRACT:
Social identity describes the part of an individual's sense of self that is derived from their
perceived association with a social category. A key mechanism for social identity driven choice
stems from the normative prescriptions associated with the identity. While social identity models
have given rise to a rich set of empirical work, up until this point the norms associated with
different social identities have largely been assumed. In this work we conduct an experiment on
Mturk using a 2(identity prime) x 2(frame) x 2(choice or norms) experimental design. This
design separately and directly elicits an empirical measure of the identity-dependent norms and
then combines this with data from the choice experiments. We show that norms differ between
the primed identities and that the identity-consistent norms predict behavior better than identityinconsistent norms. We also estimate the willingness to trade-off between payoffs and
compliance with identity-based norms. By doing so we provide direct evidence of the norms
mechanism in social identity driven choice.
Author(s): D. Chang, R. Chen, E. Krupka
Topic: Social Behavior: Norms and Morals, Social Behavior: Group Behavior
Back to session: Social Norms
Understanding others: theory of the mind, and norms in real effort bargaining
Garret Ridinger, gridinge@uci.edu
University of California, Irvine
ABSTRACT:
Experimental evidence suggests that people care both others intentions. While outcomes are
important, people are influenced by others actions as well. This paper seeks to understand what
drives individual concern about others' intentions in bargaining. Humans possess theory of the
mind which allows individuals to take the viewpoint of others. People who have a higher
developed theory of mind may be more likely to be influenced by the intentions of the others.
Social norms can also explain why people are concerned about others actions. Individuals who
are more likely to follow social norms may be more concerned about how others should behave.
These ideas are tested experimentally by having subjects play four mini-ultimatum games that
vary the available offers by the proposer. Prior to the game, each subject completes a real effort
task where the top half of preforming subjects receive the endowment. Treatments varied
whether the endowment was with the proposer or the responder. Additional treatment included
symmetric case where rejection by the responder leaves both players with zero and an
asymmetric case where the proposer earns a positive sum if the offer is rejected. To capture
individual skill at theory of the mind, subjects complete the reading the mind in the eyes task.
The task is designed to measure individual ability at recognize the emotions and thoughts of
others. To measure individual sensitivity to social norms, subjects completed a task that
measured their willingness to pay in order to follow an arbitrary social rule. Using these
measures, this paper sheds light on the role of theory of the mind and social norms in explaining
individual concern about others' intentions.
Author(s): Garret Ridinger
Topic: Social Behavior: Other-regarding Preferences, Social Behavior: Norms and Morals
Back to session: Social Norms
On the origins of fairness
John Lynham, lynham@hawaii.edu
University of Hawaii
ABSTRACT:
Where do preferences for fairness come from? We use a unique field setting to test for a
spillover of sharing norms from the workplace to a laboratory experiment. Fishermen working in
teams receive random income shocks (catching fish) that they must regularly divide among
themselves. We demonstrate a clear correlation between sharing norms in the field and sharing
norms in the lab. Furthermore, the spillover effect is stronger for fishermen that have been
exposed to a sharing norm for longer, suggesting that our findings are not driven by selection
effects.
Author(s): Chaning Jang and John Lynham
Topic: Psychology and Biology: Gender and Individual Differences, Social Behavior: Norms
and Morals
Back to session: Social Norms
Towards an Understanding of Betrayal Aversion
Stefan Mondorf, smondorf@uos.de
University Osnabrueck
ABSTRACT:
Betrayal-aversion (Bohnet & Zeckhauser, 2004) is the observation that decision-makers are
ceteris paribus more averse to uncertainty when the source of uncertainty is the action(s) of other
decision-makers than when the source of uncertainty is nature. In this paper we report an
experiment that discriminates between alternative interpretations of this observation. We observe
that this effect does not arise because of the psychological costs of discovering that trust placed
in another decision-maker has been betrayed. Rather, it is the relinquishment of control over
outcomes to another person (as opposed to nature) which is important, irrespectively of whether
this person has the opportunity to betray trust. We rule-out loss-aversion as an account of this
effect. We also observe the effect to be gender-specific: we do not observe it amongst females in
our sample.
Author(s): Stefan Mondorf (presenter) & Steve Humphrey
Topic: Games: Other, Social Behavior: Other-regarding Preferences
Back to session: Social Norms
Tentative and definite policy proposals in committees: An experimental study
Jens Grosser, jgrosser@fsu.edu
Depts of Political Science and Economics
ABSTRACT:
We experimentally study a two-stage legislative bargaining game with incomplete information,
consisting of one proposer and two voters. While the proposer's ideal policy and the default
policy if the proposal is eventually rejected are common knowledge, the two voters' ideal
policies are private information. We distinguish between first-stage proposals that are tentative
(so voting decisions are 'straw polls') and definite as well as between simple-majority and
unanimity voting. On average, observed proposals and voting decisions are usually close to the
Bayesian Nash predictions. Moreover, the proportions of accepted proposals are the same for
first-stage tentative and definite proposals under simple-majority voting, but the proportion is
markedly lower for tentative proposals under unanimity voting. Our results have important
implication for the design of committee decision-making.
Author(s): Jidong Chen (Rochester University) and Jens Grosser (Florida State University)
Topic: Public Choice: Voting and Rent Seeking, Games: Bargaining
Back to session: Voting
Individual Contributions and Collective Redistribution
Andrzej Baranski, abarmad@gmail.com
Ohio State University
ABSTRACT:
I study a multilateral bargaining model where the players decide how much to invest in a
common project and then proceed to redistribute the total value of production. In a variation of
the model, each member's probability of being recognized as the proposer is proportional to her
contribution to the common project. An experimental investigation of the model shows that
voluntary contributions are close to the highest efficiency levels. In the redistributive bargaining
game, allocations are far more inclusive and fair than in the case in which the fund to distribute
is exogenously given. Low contributors are more likely to be excluded from a proposal than high
contributors. Voters are more likely to approve allocations that are more fair toward others.
These findings suggest that, absent a centralized punishment mechanism and reputation
concerns, a group can create the necessary incentives to establish cooperation via bargaining.
Author(s): Andrzej Baranski
Topic: Public Choice: Public Goods and Common Pool Resource, Games: Bargaining
Back to session: Voting
The Origin of Other-regarding Voting: The Effects of Economic Status on
Voting Behavior in a Real-Effort Experiment
Kai Ou, oukai8459@gmail.com
New York University
ABSTRACT:
This paper investigates the questions of why, when, and how some voters are observed to engage
in other-regarding voting, i.e. they vote against their material self-interest and instead vote for a
morally or ethically appealing alternative. The discussion is based on a two-stage, real-effort
experiment. In the first stage, participants can earn a relative economic status---an initial
endowment and/or a role of a game, and we vary the institution of earning economic status in
terms of both whether the subjects can earn to be a member of voter group, and by whether
subjects can earn a varied payment in the real-effort task. In the second stage, we consider a
voting game in which one of the choices is the socially optimal choice, and two types of players
engage in the voluntary voting game. We find that subjects' choices are significantly influenced
by the institution which determines economic status, such that when subjects can earn to be a
type of voter, they are are more likely to abstain. As for an individual, the less effort expended in
the real-effort task, the more likely he or she will abstain in the voting games. In addition, those
who earned the highest incomes are significantly less likely to engage in other-regarding voting
than those who earned relative less income. Our results suggest that voters' utility from ethical
choices may be dependent on how much effort they exert in the process of earning economic
status rather than purely internally motivated ethical expressive utility.
Author(s): Kai Ou
Topic: Public Choice: Voting and Rent Seeking, Social Behavior: Other-regarding Preferences
Back to session: Voting
The chicken or the egg: An experimental study of democracy survival, income,
and inequality
Dmitry Ryvkin, dryvkin@fsu.edu
Florida State University
ABSTRACT:
Many empirical studies have found a positive association between economic development and
democracy survival across countries; however, establishing a causal link between the two with
naturally occurring data is problematic. We address this question in a laboratory experiment with
democracy defined in a narrow sense as the ability of citizens to invest freely in profitable
projects and vote on redistributive income taxation. The level of economic development is
measured as the productivity of investment. In the alternative regime -- autocracy -- the dictator
decides on the investment levels and taxation for the whole group. Citizens can voluntarily
switch from democracy to autocracy by a majority vote. Using a 2$\times$2 between-subject
design, we explore how the likelihood of such switches, referred to as democracy breakdown,
varies with economic productivity and inequality in initial endowments. We find, consistent with
theoretical predictions, that democracy breakdown increases with the degree of inequality.
However, the results regarding the effect of productivity are mixed.
Author(s): Dmitry Ryvkin, Anastasia Semykina
Topic: Applied Economics: Economic Development, Applied Economics: Other
Back to session: Voting
Aggregate Sentiment and Investment: An Experimental Study
Anthony Kwasnica, kwasnica@psu.edu
Penn State University
ABSTRACT:
We theoretically and experimentally study an investment game with fundamental state
uncertainty and input complementarities---i.e., a global game environment. Our particular focus
is on how a sentiment index, closely modeled after consumer confidence surveys, aggregates
private information and influences investment. We find that a sentiment index has very similar
results to a highly informative public signal regarding the underyling state. Both forms of public
signals---one exogenous and highly precise, the other endogenous and noisier---increase
investment in a range of states where public information can induce multiplicity of equilibria.
We also observe significant heterogeneity between groups in their mappings of private signals
into sentiment reports.
Author(s): Donja Darai, Shimon Kogan, Anthony M. Kwasnica, Roberto A. Weber
Topic: Games: Coordination, Markets: Macroeconomics
Back to session: Macroeconomics and Behavior
Monetary Policy and Central Bank Communication in Liquidity Traps
Luba Petersen, lubap@sfu.ca
Simon Fraser University
ABSTRACT:
We investigate the ability of monetary policy and central bank communication to reduce the
duration and severity of liquidity traps through laboratory experiments. A constant inflation
target is compared with a state-dependent target that is either communicated explicitly or
vaguely by direction. Findings from laboratory experiments suggest that inexperienced
participants fair best under the simple Taylor rule. They experience faster recoveries and
overreact less to the liquidity trap shock. Experienced participants escape liquidity traps faster
with directional state-dependent targets and exhibit more stable expectations. We attribute the
relative improvement under the directional state-dependent target to greater perceived credibility.
Author(s): Jasmina Arifovic, Luba Petersen
Topic: Markets: Macroeconomics, Social Behavior: Communication
Back to session: Macroeconomics and Behavior
Macroeconomic Behavior and Monetary Policy under Behavioral Expectations:
Theory and Experiment
Matthias Weber, matze@posteo.de
University of Amsterdam, CREED, Tinbergen Institute
ABSTRACT:
Expectations play a crucial role in modern macroeconomic models. We replace the common
assumption of rational expectations in a New Keynesian framework by the assumption that
expectations are formed according to a heuristics switching model that has performed well in
earlier experiments. We show how the economy behaves under these assumptions with a special
focus on inflation volatility. Then we derive implications for monetary policy. We compare the
results of the behavioral model to the results arising from full rationality and conduct a learning
to forecast experiment to test the opposing theoretical predictions in the laboratory.
Author(s): Cars Hommes, Domenico Massaro, Matthias Weber
Topic: Markets: Macroeconomics
Back to session: Macroeconomics and Behavior
Budget Constrained Bidding
Arthur Zillante, azillant@uncc.edu
University of North Carolina at Charlotte
ABSTRACT:
We examine bidding behavior and outcomes in ascending auctions when bidders are budget
constrained. Bidders are matched in pairs for three items auctioned sequentially. We have three
treatments: constraints are present not binding for both bidders, are binding for only one bidder,
and are binding for both bidders. We find that bidders employ overbidding strategies,
particularly on items of low value, and conjecture that this strategy is used to exhaust an
opponent's budget. Inefficiency is present for all three items when constraints are present, but is
most prevalent for the last item auctioned.
Author(s): Arthur Zillante (UNC Charlotte, contact author), Russell Engel (Southern
Connecticut State University), Krista Jabs Saral (Webster University Geneva)
Topic: Markets: Auctions
Back to session: Auctions I
The effect of feedback on performance of charity auctions
Robert A. White, rawhite@fsu.edu
Florida State University
ABSTRACT:
Auctions are commonly used to raise money for charities. It has been shown that in auctions, and
other mechanisms, the types of feedback provided to participants can significantly affect
behavior, and therefore the outcome and revenue. We explore the effect of different types of
feedback on the performance of charity auctions. We employ a lab-field experimental design
where a portion of revenue raised in laboratory auctions is donated to actual charities chosen by
participants. Subjects also have an option to make a donation to a charity of their choice. We find
that the magnitude of funds raised, and the selection of charities, are affected by the type of
feedback provided to subjects. We identify the types of feedback that increase auction revenue
compared to control charity auctions.
Author(s): Svetlana Pevnitskaya and Robert A. White
Topic: Applied Economics: Charitable Giving, Markets: Auctions
Back to session: Auctions I
Not Optimal but Reasonable: Revisiting Overbidding in Sealed Bid Auctions
Sotiris Georganas, georganas.1@osu.edu
Ohio state
ABSTRACT:
Bidding ones value in a second-price, private-value auction is a weakly dominant solution
(Vickrey, 1961). Repeated experimental studies find more over- bidding than underbidding,
resulting in overbidding on average. In an experiment, we vary the monetary consequences of
losing an auction by sometimes mitigating realized losses and sometimes magnifying them. The
dominant strategy is unaffected by these manipulations but bidding behavior responds
predictably: the greater the cost to losing an auction, the less overbidding we observe. These
results suggest that subjects fail to discover the dominant strategy'despite the fact that the
dominant strategy only requires rationality from bidders'but respond in a common sense way to
out-of-equilibrium outcomes. We propose a model of minimal irrationality that can explain the
results of our experiment, but can also offer insight into bids above the risk neutral Nash
equilibrium in first-price auctions. Our findings lend themselves to models in which less than
fully rational bidders respond systematically to out-of-equilibrium incentives (e.g. QRE and logit
level-k), but we find that our model better fits the effects of our manipulations than all of these
models.
Author(s): Sotiris Georganas, Dan Levin, Peter McGee
Topic: Markets: Auctions, Decision Theory: Bounded Rationality
Back to session: Auctions I
Online Ad Auctions: An Experiment
Kevin McLaughlin, kevin.mclaughlin5@gmail.com
UC Santa Cruz
ABSTRACT:
We compare, for the first time, how the two main auction formats used in online advertising
(Vickrey-Clark-Groves and Generalized Second Price) perform in real time markets. A first
round of laboratory sessions using proprietary software suggest that (a) the Vickrey-ClarkGroves format is more efficient in a competitive parameter environment (achieving 73%
efficiency over random allocation vs. 53% under GSP), while generating a similar level of
auctioneer revenue, and (b) the Generalized Second Price format generates more auctioneer
revenue in a less competitive environment (capturing 109% of the unique VCG equilibrium
revenue level vs. 96% under VCG) while achieving a similar level of efficiency (about 88%).
Author(s): Kevin McLaughlin, Daniel Friedman
Topic: Markets: Auctions, Markets: Market design and Matching
Back to session: Auctions I
Auction Mechanisms and Bidder Collusion: Bribes, Signals and Selection
Ro'i Zultan, zultan@bgu.ac.il
Ben-Gurion University of the Negev
ABSTRACT:
The theoretical literature on collusion in auctions suggest that the first-price mechanism can
deter the formation of bidding rings. In equilibrium, collusive negotiations are either successful
or are avoided altogether, hence such analysis neglects the effects of failed collusion attempts. In
such contingencies, information revealed in the negotiation process is likely to affect the bidding
behavior in first-price (but not second-price) auctions. We test experimentally a setup in which
collusion is possible, but negotiation often break down and information is revealed in an
asymmetric way. the existing theoretical analysis of our setup predicts that the first-price
mechanism deters collusion. In contrast, we find the same level of collusion in firstprice and
second-price auctions. Furthermore, failed collusion attempts distort the bidding behavior in the
ensuing auction, leading to loss of efficiency. Our results suggest that the application of the
theoretical results to auction design may backfire, and should therefore be applied with caution.
Author(s): Aniol Llorente-Saguer and Ro'i Zultan
Topic: Markets: Auctions, Games: Information
Back to session: Auctions II
An experimental study of signaling in takeover auctions with flexible reserve
price
Yuri Khoroshilov, khoroshilov@telfer.uottawa.ca
University of Ottawa
ABSTRACT:
One of the widely accepted reasons behind jump bidding in takeover auctions is the first bidder's
desire to place a high opening bid in order to signal his high interest in the target, and,
consequently, to preempt competition. The original model of jump bidding in takeover auctions
was developed by Fishman ('A Theory of Preemptive Takeover Bidding,' RAND Journal of
Economics, 19, 88-101, 1988), who argues that when the competitor acquirer needs to spend
resources to investigate his value of the acquisition, the high opening bid, used to signal the first
bidder's value of acquisition, may deter competition. While high information acquisition and
transaction costs make signalling arguments especially appealing in takeover contests, Dodonova
and Khoroshilov ('ump Bidding in Takeover Auctions,' Economics Letters, 92, 339-41, 2006)
show that another feature of takeover auctions - the target's ability to reject the highest offer makes signalling equilibrium impossible. Indeed, when potential acquirers use high bids to signal
their value of acquisition, not only competitors, but also the target firm can observe such signals.
As a result, the desire to preempt competition results in a situation when the target firm finds it
profitable to reject the existing highest offer and to demand an even higher price. Such 'lexible'
reserve price is equivalent to shill bidding, which is illegal in many auction-type sales but is
perfectly legal in takeover contests. This paper reports the results of an experimental study that is
aimed to analyze how bidders and sellers behave in auctions with flexible reserve price. It uses
the experiment format in which the first bidder is able to place a jump bid after he observes his
value of acquisition and the second bidder makes his costly entry decision after observing the
opening bid. To test the 'no-signalling' hypothesis, we introduce the third player - the seller - into
the model. Depending on the treatment, the seller sets the reserve price either before or after the
opening bid is made. In total, 354 Undergraduate students have participated in the experiment.
The experiment consisted of 4 different treatments that were differentiated by the size of the
second bidder's entry costs and by the seller's ability or inability to observe the opening bid
before setting the reserve price. For each treatment, 6 separate sessions have been conducted, to a
total of 24 sessions. Each session consisted of 25 rounds preceding by 10 trial rounds. In each
round subjects were randomly divided in a group of three (different for each round), assigned
their roles (bidder #1, bidder #2, and the seller), and were asked to play a single auction game. At
the end of each round subjects were informed of the outcome of the auction and of their own
profit. We found that the seller's ability to set the reserve price after observing the opening bid
reduces jump bidding behavior of the first bidder and reduces the effect of jump bidding on the
second bidder's entry decisions. Thus, there is less signalling behavior in auctions with flexible
reserve price; however, such signaling behavior was not completely eliminated. We also found
that the seller's ability to set the reserve price as a function of the opening bid does not affect the
social surplus and the second bidder's profit, while reallocates a part of the surplus from the first
bidder to the seller. Since, as predicted by Fishman (1988), signalling jump bidding does not
affect neither the social surplus nor the second bidder's profit, but reallocates profit from the
seller to the first bidder, the fact that flexible reserve price reverses this effect is consistent with
'less signalling' hypothesis.
Author(s): Yuri Khoroshilov
Topic: Markets: Auctions, Markets: Finance
Back to session: Auctions II
A Comparison of the Price and Quantity 'Collars' for Stabilizing Emissions
Allowance Prices
Charles Holt, cah2k@virginia.edu
University of Virginia
ABSTRACT:
Auctions for emissions permits essentially impose a vertical supply curve, which can result in
high price variability in the presence of demand shocks triggered by economic downturns, mild
winters. Price variability is alleviated to some extent by permit banking and by price floors and
caps that adjust auction quantities 'on the spot' as needed. The European Union is currently
considering an alternative approach, involving automatic adjustments to auction quantities that
are triggered by abnormally high or low 'banks' of unused allowances, which are measured with
a time delay of about 2 years. Laboratory experiments are used to evaluate the performance of
this ex post 'quantity collar' and to compare it with the types of price floors and caps that have
been implemented in regional US cap-and-trade programs.
Author(s): Charles Holt and Bill Shobe
Topic: Markets: Auctions, Markets: Industrial Organization
Back to session: Auctions II
Speculators and Entry in Multi-Object Auctions with Resale
Krista Jabs Saral, kjsaral@gmail.com
Webster University Geneva
ABSTRACT:
We theoretically and experimentally examine multi-object auctions post-auction resale markets
when participants who have no use value for the object on sale (speculators) are introduced to the
environment. The auction environment is a uniform-price, sealed-bid auction with 2 identical
objects on sale, which is always followed by the possibility of a free-form bargaining resale
market if the auction allocation is inefficient. The market always consists of one regular bidder,
endowed with values for each unit, and one to two speculators. In addition to varying the number
of speculators in the auction, treatments also vary the entry choice of both regular bidders and
speculators into the auction.
Author(s): Marco Pagnozzi & Krista Jabs Saral
Topic: Markets: Auctions
Back to session: Auctions II
The Effects of Communication and Moral Hazard on Trust and Reciprocity: An
Experimental Investigat
Michael Jones, m3jones@bridgew.edu
Bridgewater State University
ABSTRACT:
Using incentivized economic experiments we examine the factors that affect rewards and
punishments in a trust relationship. The impact of reward and punishment schemes in fostering
trust will be measured. We use a modified two person trust game to understand how individuals
make punishment and reward decisions in a trust relationship and how these decisions change
when (1) expectations are violated; (2) expectations are common knowledge, and (3) moral
hazard exists. Finally, we use a second two person trust game to investigate how these decisions
subsequently impact trust and reciprocity. The results of this study will help policy makers in
government and industry design better reward/punishment systems to foster productivity and
monitor performance.
Author(s): Sheheryar Banuri, Michael Jones and Quoc Hung Tran
Topic: Social Behavior: Other-regarding Preferences, Games: Information
Back to session: Trust
Detecting Cooperative Behavior in Trust Games
Rick Wilson, rkw@rice.edu
Rice University
ABSTRACT:
I report on a series of experiments that use photographs of players in simple bargaining games.
Subjects are taken through the game and then are asked to predict the behavior of the players in
the game. Subjects' guesses are incentivized. The experiment sheds light on whether individuals
use facial and other phenotypic cues to predict cooperation. The findings indicate that those who
want to look into the eyes of their opponent to determine whether they should trust are
misguided.
Author(s): Rick K. Wilson
Topic: Social Behavior: Other-regarding Preferences, Psychology and Biology: Cogonition
Back to session: Trust
Competition and trust: an experimental approach
Marc Willinger, willinger@lameta.univ-montp1.fr
Faculty de Sciences Economiques, LAMETA, university de Montpellier 1
ABSTRACT:
We rely on the investment game (Berg et al., 1995) to study the impact of competition on trust.
Subjects were assigned to groups of 3 players (low competition) or to groups of 5 players (high
competition). Each group involved a single trustee, regardless of size. Competition among
trustors was induced in the following way: the trustor who made the largest investment was
selected to interact with the trustee. Unselected trustors kept their initial endowment. We
compare treatments with competition to treatments without competition. Without competition
trustors are randomly selected to interact with the trustee (for the same group sizes). Each
participant was involved in the two treatments: with and without competition. We control for
order effects (by comparing the Introduction and the Removal of competition), for subjects'
propensity to take risk (by means of a simple portfolio choice task) and for other-regarding
preferences (by means of a dictator game played in groups). A total of 188 subjects participated
in the experiment, 136 of which were assigned to the role of trustor. Our main findings are as
follows: (1) at the group level competition has no impact on the amount sent to the trustor, (2) at
the individual level we observe that 50% of the subjects do not react to the Introduction of
competition while the remaining ones are equally likely to increase or to decrease the amount
sent, (3) when competition is removed 16% of the subjects increase their investment while 34%
reduce it, (4) competition does not affect the amounts sent by non-egoist (with respect to the
treatment without competition) but the amounts sent by egoists increase sharply when
competition is introduced and decreases sharply when competition is removed.
Author(s): Julie Rosaz, Marc Willinger
Topic: Social Behavior: Other-regarding Preferences
Back to session: Trust
Possibility of Losing Own Money Promotes Learning to Overcome Bounded
Rationality: Delayed Payment
Yu (Yvette) Zhang, yzhang@tamu.edu
Texas A&M University
ABSTRACT:
In this paper, we design a delayed payment mechanism in second price auction (SPA)
experiments, under which subjects receive cash endowment two weeks after the experiment day
and have to use their own money to pay the experimental loss (if any) on the experiment day. We
find that bids are significantly lower with delayed payment of endowment, compared to other
payment timing schemes including 'on-the-spot' and prepaid payment mechanisms. Furthermore,
bids converge to their corresponding induced values as subjects gain experience over repeated
auction rounds, suggesting a learning effect and lending support to the role of 'bounded
rationality' in overbidding in SPAs. We conjecture that the possibility of losing own money
promotes learning thus reduces overbidding under delayed payment mechanism. To test this
hypothesis, we examine how degree of overbidding (bid-value) is affected by the interaction
between loss in the previous auction round and current round number (proxy for experience).
This effect is significantly negative with delayed payment, but not significant under other
payment timing schemes. Furthermore, the effect of interaction between gain in the previous
round and current round number is not significant under all payment timing schemes including
delayed payment mechanism. These results suggest that it is the loss instead of the gain that
triggers learning in SPAs with delayed payment of endowment. Therefore, a mechanism that
makes loss truly costly and provides subjects sufficient learning experiences can be an effective
design to reduce overbidding in laboratory SPAs.
Author(s): Yu Yvette Zhang; Rodolfo M. Nayga, Jr.; Dinah Pura T. Depositario
Topic: Special Topic: Experimental Payments, Markets: Auctions
Back to session: Behavioral Phenomena in Auctions
The Winner's Curse: Contingent Reasoning and Belief Formation
Stefan Penczynski, stefan.penczynski@uni-mannheim.de
University of Mannheim
ABSTRACT:
Based on experiments with computerized opponents, it has been argued that the winner's curse in
auctions is due to the cognitive difficulty of conditioning on future events which might hamper
the formation of beliefs (Charness and Levin, 2009; Ivanov, Levin and Niederle, 2010). Our
study compares experimental results from a very simple auction game with results from a
strategically approximated game that does not require any conditioning on future events. This
experimental design allows us to study the importance of this cognitive activity and the role of
belief formation in a human subject setting. We observe significant differences in behavior
across the two games, supporting the above-mentioned view on conditioning. In both settings,
when facing naïve computerized opponents, subjects' play changes strongly. Overall, the results
suggest that both the difficulty of conditioning on future events as well as the need to form or
evaluate own beliefs alter behavior significantly.
Author(s): Christian Koch and Stefan Penczynski
Topic: Games: Information
Back to session: Behavioral Phenomena in Auctions
Individual Temperament and Character in Competitive Bidding
Masao Nagatsuka, nagatsuka@iser.osaka-u.ac.jp
Osaka University
ABSTRACT:
This paper investigates individual Temperament and Character effects on bidding behavior in
first price Sealed bid Auction with independent private value framework. Preceding studies on
experimental first price auctions reported that selection biases, such as risk attitude, gender, and
experience causes overbidding relative to risk neutral Nash Equilibrium. This research applied a
bio psychological personality trait Temperament Character Inventory (TCI) to analyze individual
personality effects on bidding behavior. A linear regression analysis was carried out between
bidding and TCI score. The results of analysis show that Novelty Seeking (NS) significantly
increases bids, and Harm Avoidance (HA) significantly decreases bids. An elicited risk
preference and a NS score are significant predictor of overbidding.
Author(s): Masao Nagatsuka
Topic: Psychology and Biology: Gender and Individual Differences, Markets: Auctions
Back to session: Behavioral Phenomena in Auctions
Trust and the division of labor
Matt Stephenson, mstephenson17@gsb.columbia.edu
Columbia University
ABSTRACT:
Firms differ substantially in size, productivity, and internal structure. For instance, in some firms
the division of labor is extensive while in others it is not. Moreover, it's been thought since the
time of Adam Smith that a firm's internal structure affects its productivity, primarily through the
channel of gains from specialization. Our paper provides evidence of a link between
organization's culture--specifically the trust environment--and its internal structure. Specifically,
we suggest and show experimentally that exogenously imposed culture endogenously leads to
different organizational form. We prime trust using past performance from a pilot study and we
demonstrate that the level of trust within an organization affects that organization's division of
labor and consequently that organization's productivity. Our research also makes use of data
from the European Social Survey and finds that it is suggestive of a link between trust and the
division of labor. Our results point to a possible mechanism that can help explain existing results
on the connection between generalized trust and growth. It also points to an important
determinant of a firm's internal structure: trust.
Author(s): Stephan Meier & Matthew Stephenson
Topic: Social Behavior: Group Behavior, Markets: Industrial Organization
Link: https://www.dropbox.com/s/5ol1gwlvctvoz4r/TDoL%20revision.pdf?dl=0
Back to session: Markets and Social Relationships
An experiment on the effects of cost sharing on strategic discovery
Kevin McCabe, kmccabe@gmu.edu
George Mason University
ABSTRACT:
In this paper we report the results from a controlled experiment designed to study the effects of a
symmetric cost sharing rule on pretrial discovery. Relative to the more standard asymmetric cost
sharing rules, we find that symmetric cost sharing significantly reduces strategic discovery
requests, that is, those requests made solely to improve the requesters bargaining outcome. We
also find that moving to symmetric cost-sharing incentivizes decision makers to internalize the
costs they imposed on other by their decisions. In particular, we study two legal environments in
which discovery may take place. In our correlated information environment where structured
search strategies can greatly reduce discovery costs, we find that cost-sharing causes our decision
makers to become better informed about the damages they may cause others. In our uncorrelated
information environment where search strategies are more costly we find that cost-sharing causes
our decision makers to make more socially optimal choices. In conclusion our experiment
demonstrates that an institutional change in the direction of more symmetric cost sharing can
provide a win-win outcome for participants.
Author(s): William Grasmeder, Bruce Kobayashi, Stephen Kunath, Kevin McCabe, Peter Twieg
Topic: Markets: Industrial Organization
Back to session: Markets and Social Relationships
The Emergence of Social Relationships in Markets
Ginny Seung Choi, schoil@gmu.edu
ICES, George Mason University
ABSTRACT:
This paper experimentally investigates how social relations characterized by trust and reciprocity
can be established through market transactions and if these relations affect behavior in nonmarket settings. Social capital theory has stressed how individuals benefit in the market from
investment in social ties but how market activity and behavior affect social ties has been
underexplored. We utilize a novel two-stage design in which subjects are placed in a market
setting (where several features of real world markets are retained but where defection rates are
expected to be high) and then a trust setting (where key information about their former trading
partners is retained). Individuals display significantly higher levels of trust and reciprocity to
those with whom they share 'positive' relationships; senders and responders transfer 50% more
tokens to counterparts with whom they share relationships characterized by successful market
trades compared to those with whom they share relationships characterized by defected market
trades.
Author(s): Seung Ginny Choi and Virgil Henry Storr
Topic: Social Behavior: Other, Markets: Other
Back to session: Markets and Social Relationships
Do colluders care about consumers? Some experimental evidence
Rudy Santore, rsantore@utk.edu
University of Tennessee
ABSTRACT:
Other-regarding preferences have been studied extensively in various strategic settings (for
example, dictator and ultimatum games), but there has been relatively little work that focuses on
the effect of other-regarding preferences on product market competition. We investigate the
extent to which other-regarding preferences toward passive consumers can affect seller behavior
in a repeated duopoly game. In our experiment, two subjects (sellers) are anonymously paired
with one another in a 'market' and play a repeated quantity game. Collusion at 'low' outputs is
possible, however, the Cournot-Nash equilibrium of the one-shot stage game is for each seller to
choose a 'medium' output. Our experimental design assigns a human subject to the role of
consumer in one (human) treatment, but not in the other (robot) treatment. For the human
treatment, the consumer remains in the same role with the same pair of sellers for the duration of
the experiment. Collusion yields a lower payoff to the consumer than the non-collusive output
pairs. If subjects are purely self-interested, or if product market competition somehow mutes
other-regarding preferences, the presence of a human consumer should not affect the sellers'
behavior or their ability to collude. To the contrary, we find that firm sellers produce collusive
quantities less frequently and earn lower profits in the human treatment relative to the robot
treatment. This treatment effect is significant when we look at only the top earning markets. The
results suggest that other-regarding preferences toward passive consumers can affect product
market competition.
Author(s): Stephen J. Cotten, Youping Li, Rudy Santore
Topic: Social Behavior: Other-regarding Preferences
Back to session: Markets and Social Relationships