Papers - All

John A List, Jason F Shogren

Cited by*: 24 Downloads*: 1

Examining panel data on bidding behavior in over forty second-price auction markets with repeated trials, we observe that (i) posted prices influence the behavior of the median naive bidder; (ii) posted prices do not affect the behavior of the median experienced bidder or the bidder for familiar goods; and (iii) anticipated strategic behavior wanes after two trials. The results suggest that while affiliation might exist in auctions for new goods, the repeated trial design with nonprice information removes the correlation of values and provides the experience that bidders need to understand the market mechanism.

Glenn W Harrison, John A List

Cited by*: 23 Downloads*: 10

There has been a dramatic increase in the use of experimental methods in the past two decades. An oft-cited reason for this rise in popularity is that experimental methods provide the necessary control to estimate treatment effects in isolation of other confounding factors. We examine the relevance of experimental findings from laboratory settings that abstract from the field context of the task that theory purports to explain. Using common value auction theory as our guide, we identify naturally occurring settings in which one can test the theory. In our treatments the subjects are not picked at random, as in lab experiments with student subjects, but are deliberately identified by their trading roles in the natural field setting. We find that experienced agents bidding in familiar roles do not fall prey to the winner's curse. Yet, when experienced agents are observed bidding in an unfamiliar role, we find that they frequently fall prey to the winner's curse. We conclude that the theory predicts field behavior well when one is able to identify naturally occurring field counterparts to the key theoretical conditions.

Colin F Camerer

Cited by*: 23 Downloads*: 19

To test whether naturally occurring markets can be strategically manipulated, $500 and $1,000 bets were made, then cancelled, at horse racing tracks. The net effects of these costless temporary bets give clues about how market participants react to information large bets might contain. The bets moved odds on horses visibly (compared to matched-pair control horses with similar prebet odds) and had a slight tendency to draw money toward the horse that was temporarily bet, but the net effect was close to zero and statistically insignificant. The results suggest that some bettors inferred information from bets and others did not, and their actions roughtly cancelled out.

Abhijit Banerjee, Angus Deaton, Esther Duflo

Cited by*: 23 Downloads*: 44

There is surprisingly little information about the delivery of health care in rural India, and about the relationship, if any, between health care and health status. Some, such as the Commission on Macroeconomics and Health of the World Health Organization (2001), have argued that better health care is the key to improving health as well as economic growth in poor countries, but there is little systematic evidence that gives us a sense of how easy it is to impact the quality of health care delivery in developing countries and through these improvements to impact the health of the population. This paper reports on a recent survey in a poor rural area of the state of Rajasthan in India intended to shed some light on this issue, where we use a set of interlocking surveys to collect data on health and economic status, as well as the public and private provision of health care.

Alison Booth, Andrew Leigh

Cited by*: 23 Downloads*: 19

We test for gender discrimination by sending fake CVs to apply for entry-level jobs. Female candidates are more likely to receive a callback, with the difference being largest in occupations that are more female-dominated.

Amanda Agan, Sonja Starr

Cited by*: 22 Downloads*: 27

"Ban-the-Box" (BTB) policies restrict employers from asking about applicants' criminal histories on job applications and are often presented as a means of reducing unemployment among black men, who disproportionately have criminal records. However, withholding information about criminal records could risk encouraging statistical discrimination: employers may make assumptions about criminality based on the applicant's race (or other observable characteristics). To investigate BTB's effects, we sent approximately 15,000 fictitious online job applications to employers in New Jersey and New York City both before and after the adoption of BTB policies. These applications varied the race and felony conviction status of the applicants. We confirm that criminal records are a major barrier to employment: employers that ask about criminal records were 63% more likely to call back an applicant if he has no record. However, our results support the concern that BTB policies encourage statistical discrimination on the basis of race: we find that the race gap in callbacks grows dramatically at the BTB-affected companies after the policy goes into effect. Before BTB, white applicants to employers with the box received 7% more callbacks than similar black applicants, but BTB increases this gap to 45%.

Raymond C Battalio, Leonard Green, John H Kagel

Cited by*: 22 Downloads*: 70

No abstract available

Robert Berrens , Alok Bohara, Joe Kerkvliet, John A List

Cited by*: 22 Downloads*: 1

n/a

Anne Rozan, Anne Stenger, Marc Willinger

Cited by*: 22 Downloads*: 39

We study the impact of new information about food safety on subjects' willingness-to-pay for food products, in an experimental setting. We elicit prices using either a second price auction or the Becker-DeGroot-Marschak procedure. There are three stages of bidding. In stage 1, subjects bid for products without any information. In stage 2, public information about health impact is provided. In stage 3, new certified products become available, and subjects bid then for non-certified and certified products. The introduction of certified products induces an asymmetric updating of initial bids, bids for non-certified products are lowered, but bids for certified products remain equal to the initial bids.

Loukas Balafoutas, Nikos Nikiforakis

Cited by*: 22 Downloads*: 77

Extensive evidence from laboratory experiments indicates that many individuals are willing to use costly punishment to enforce social norms, even in one-shot interactions. However, there appears to be little evidence in the literature of such behavior in the field. We study the propensity to punish norm violators in a natural field experiment conducted in the main subway station in Athens, Greece. The large number of passengers ensures that strategic motives for punishing are minimized. We study violations of two distinct efficiency enhancing social norms. In line with laboratory evidence, we find that individuals punish norm violators. However, these individuals are a minority. Men are more likely than women to punish violators, while the decision to punish is unaffected by the violator's height and gender. Interestingly, we find that violations of the better known of the two norms are substantially less likely to trigger punishment. We present additional evidence from two surveys providing insights into the determinants of norm enforcement.

Werner Guth, Carsten Schmidt, Matthias Sutter

Cited by*: 21 Downloads*: 21

On 11 May 2001, readers of the Berliner Zeitung were invited to participate in an ultimatum bargaining experiment played in the strategy vector mode: each participant chooses not only how much (s)he demands of the DM1,000 pie but also which of the nine possible offers of DM100, 200, ..., 900 (s)he would accept or reject. In addition, participants were asked to predict the most frequent type of behavior. Three randomly selected proposer-responder pairs were rewarded according to the rules of ultimatum bargaining and three randomly chosen participants of those who predicted the most frequent type of behavior received a prize of DM500. Decisions could be submitted by mail, fax or via the internet. Behavior is described, statistically analyzed and compared to the usual laboratory ultimatum bargaining results.

Jonathan E Alevy, Michael S Haigh, John A List

Cited by*: 21 Downloads*: 24

Previous empirical studies of information cascades use either naturally occurring data or laboratory experiments with student subjects. We combine attractive elements from each of these lines of research by observing market professionals from the Chicago Board of Trade (CBOT) in a controlled environment. As a baseline, we compare their behavior to student choices in similar treatments. We further examine whether, and to what extent, cascade formation is influenced by both private signal strength and the quality of previous public signals, as well as decision heuristics that differ from Bayesian rationality. Analysis of over 1,500 individual decisions suggests that CBOT professionals are better able to discern the quality of public signals than their student counterparts. This leads to much different cascade formation. Further, while the behavior of students is consistent with the notion that losses loom larger than gains, market professionals are unaffected by the domain of earnings. These results are important in both a positive and normative sense.

Peter A Riach, Judith Rich

Cited by*: 21 Downloads*: 27

Pairs of carefully-matched, written applications were made to advertised job vacancies in England to test for sexual discrimination in hiring. Two standard resumes were constructed for each occupation to control for all relevant supply-side variables, such as qualifications, experience and age. Consequently any differential response recorded can be attributed to demand-side discrimination. Statistically significant discrimination against men was found in the `female occupation' - secretary, and against women in the `male occupation' - engineer. Statistically significant, and unprecedented, discrimination against men was found in two `mixed occupations' - trainee chartered accountant and computer analyst programmer.

Paul Glewwe, Nauman Ilias, Michael Kremer

Cited by*: 21 Downloads*: 25

Advocates of teacher incentive programs argue that they can strengthen weak incentives, while opponents argue they lead to teaching to the test.' We find evidence that existing teacher incentives in Kenya are indeed weak, with teachers absent 20% of the time. We then report on a randomized evaluation of a program that provided primary school teachers in rural Kenya with incentives based on students' test scores. Students in program schools had higher test scores, significantly so on at least some exams, during the time the program was in place. An examination of the channels through which this effect took place, however, provides little evidence of more teacher effort aimed at increasing long-run learning. Teacher attendance did not improve, homework assignment did not increase, and pedagogy did not change. There is, however, evidence that teachers increased effort to raise short-run test scores by conducting more test preparation sessions. While students in treatment schools scored higher than their counterparts in comparison schools during the life of the program, they did not retain these gains after the end of the program, consistent with the hypothesis that teachers focused on manipulating short-run scores. In order to discourage dropouts, students who did not test were assigned low scores. Program schools had the same dropout rate as comparison schools, but a higher percentage of students in program schools took the test.

Juan-Camilo Cardenas

Cited by*: 21 Downloads*: 33

Many forest ecosystems provide multiple goods and services to both local users (e.g. firewood, water) and to other external beneficiaries (biodiversity conservation, carbon sequestration). This calls for alternative approaches in the governance of these local ecosystems. Even if local users solve the commons dilemma they face regarding the optimal provision of the direct benefit, there might still be a need for introducing mechanisms that also address the externality that involves those outside of the group. This paper addresses the analysis of different types of mechanisms, endogenously emerged from groups vs. externally imposed to them, when facing the typical tragedy of the commons. During 2000_2002 we conducted a series of economic experiments in several rural communities in Colombia. The sub-set reported here of 53 sessions with 265 actual users of local ecosystems, were focused specifically on the effect of external and self-governing rules for inducing cooperative behavior within groups. A group extraction or 'commons' game was used to explore how rules, formal and informal, emerge and how individual behavior responds to regulatory mechanisms aimed at solving the dilemma. Three treatments were compared to a baseline design: Two external regulations (high and low penalties, and only 20% of the players monitored), and a self-governed system where individuals were allowed to have in each round a few minutes of non-binding face-to-face communication. Surprisingly, both external regulations generated very similar results regardless of the level of the penalty, and they induced behaviors very similar to those achieved by the self-governed treatment. The experimental results suggest that individuals do not seem to follow entirely the conventional economic prediction of a minimizer of expected costs of regulations against the benefits from over extracting the resource, and that humans can develop norms based on non-enforceable rules of cooperation. Instead, other elements related to social norms and subjective valuation of the benefits and costs of the regulations might be in play.

John A List

Cited by*: 21 Downloads*: 14

Walrasian tatonnement has been a fundamental assumption in economics ever since Walrasian general equilibrium theory was introduced in 1874. Nearly a century after its introduction, Vernon Smith relaxed the Walrasian tatonnement assumption by showing that neoclassical competitive market theory explains the equilibrating forces in double-auction markets. I make a next step in this evolution by exploring the predictive power of neoclassical theory in decentralized naturally occurring markets. Using data gathered from two distinct markets--the sports card and collector pin markets--I find a tendency for exchange prices to approach the neoclassical competitive model prediction after a few market periods.

John A List, Daniel L Millimet

Cited by*: 20 Downloads*: 35

Assumptions of individual rationality and preference stability provide the foundation for a convenient and tractable modeling approach. While both of these assumptions have come under scrutiny in distinct literatures, the two lines of research remain disjointed. This study begins by explicitly linking the two literatures while providing insights into perhaps the central issue facing behavioral economics today: to what extent does market experience mitigate various forms of individual irrationality? We find considerable evidence that the market is a catalyst for rationality. The study then focuses on aggregate market outcomes by examining empirically whether individual rationality is a prerequisite for market efficiency. Using field data gathered from more than 380 subjects of age 6-18 in multi-lateral bargaining markets at a shopping mall, we find that the market is a filter of irrationality--even when markets are populated solely by irrational buyers, aggregate market outcomes quickly converge to neoclassical predictions.

Francisco Galarza

Cited by*: 20 Downloads*: 17

This paper estimates the risk preferences of cotton farmers in Southern Peru, using the results from a multiple-price-list lottery game. Assuming that preferences conform to two of the leading models of decision under risk--Expected Utility Theory (EUT) and Cumulative Prospect Theory (CPT)--we find strong evidence of moderate risk aversion. Once we include individual characteristics in the estimation of risk parameters, we observe that farmers use subjective nonlinear probability weighting, a behavior consistent with CPT. Interestingly, when we allow for preference heterogeneity via the estimation of mixture models--where the proportion of subjects who behave according to EUT or to CPT is endogenously determined--we find that the majority of farmers' choices are best explained by CPT. We further hypothesize that the multiple switching behavior observed in our sample can be explained by nonlinear probability weighting made in a context of large random calculation mistakes; the evidence found on this regard is mixed. Finally, we find that attaining higher education is the single most important individual characteristic correlated with risk preferences, a result that suggests a connection between cognitive abilities and behavior towards risk.

Laura Schechter

Cited by*: 20 Downloads*: 25

Play in the traditional trust experiment depends both on trust beliefs and on levels of risk aversion. We ran two experiments with a diverse set of subjects in fifteen villages of rural Paraguay, the traditional trust experiment and a new experiment measuring only risk aversion. We find that risk attitudes are highly predictive of play in the trust game. In addition, omitting risk aversion as a regressor in trust regressions signficiantly changes the coefficients of important explanatory variables such as gender and wealth. We also use data on income and bet choice to calculate players' coefficients of relative risk aversion.

Matthias Sutter

Cited by*: 20 Downloads*: 46

Economic decisions depend on both actual outcomes as well as perceived intentions. In this paper, we examine whether and how the relative importance of outcomes or intentions for economic decisions develops with age. We report the results of ultimatum games with children, teens and university students. We find that children and teens react systematically to perceived intentions, like university students do. However, children and teens reject unequal offers much more often than university students, indicating that outcomes are relatively more important than intentions for younger subjects. Hence, the relative importance of intentions increases with age.