Papers - Artefactual

John A List

Cited by*: 9 Downloads*: 12

Walrasian tatonnement has been a fundamental assumption in economics ever since Walras' 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.

Brian Albrecht, Omar Al-Ubaydli, Peter Boettke

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Economists well understand that the work of Friedrich Hayek contains important theoretical insights. It is less often acknowledged that his work contains testable predictions about the nature of market processes. Vernon Smith termed the most important one the 'Hayek hypothesis': that gains from trade can be realized in the presence of diffuse, decentralized information, and in the absence of price-taking behavior and centralized market direction. Vernon Smith tested this prediction by surveying data on laboratory experimental markets and found strong support. We extend Smith's work first by showing how subsequent theoretical advances provide a theoretical foundation for the Hayek Hypothesis. We then test the hypothesis using recent field experimental market data. Using field experiments allows us to test several other predictions from Hayek, such as that market experience increases the realized gains from trade. Generally speaking, we find support for Hayek's theories.

Isabelle Brocas, Juan D Carrillo

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Adults do not play the Nash equilibrium in the well known centipede game. While Palacios-Huerta and Volij (2009) argued that behavior results from the failure of backward induction logic, Levitt et al. (2011) found that players who know how to backward induct still do not play Nash. Here, we ask children and adolescents (ages 8 to 16) to play the centipede game in the laboratory and we leverage knowledge about developing abilities to assess the contribution of backward induction logic. In line with the literature, we find that the ability to perform backward induction increases with age. However, it predicts behavior only in elementary school children: those with advanced logical abilities over-apply their skills. Starting in middle school, students who reason logically know that the unraveling argument should not be applied blindly. They utilize Theory-of-Mind (ToM) abilities to form beliefs about others' play and (optimally) refrain from stopping immediately. Their behavior is in line with the deviations observed in adults. Interestingly, developing ToM leads to a gradual decrease in stopping stages with age, which is accompanied by a decrease in payoffs with age. The results indicate that ToM is the key contributor of behavior that helps departing from backward induction when beneficial.

Daniel Houser, John A List, Anya Samek

Cited by*: 0 Downloads*: 32

Young children have long been known to act selfishly and gradually appear to become more generous across middle childhood. While this apparent change has been well documented, the underlying mechanisms supporting this remain unclear. The current study examined the role of early theory of mind and executive functioning in facilitating sharing in a large sample (N = 98) of preschoolers. Results reveal a curious relation between early false-belief understanding and sharing behavior. Contrary to many commonsense notions and predominant theories, competence in this ability is actually related to less sharing. Thus, the relation between developing theory of mind and sharing may not be as straightforward as it seems in preschool age children. It is precisely the children who can engage in theory of mind that decide to share less with others.

John A List, Jason F Shogren

Cited by*: 9 Downloads*: 8

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Sujoy Chakravarty, Carine Sebi, E Somanathan, Emmanuel Theophilus

Cited by*: 0 Downloads*: 7

The public goods problem (Hardin, 1968) either viewed as a problem of extraction or that of contribution has had a long history in the Social Sciences.Our experimental design uses a standard Voluntary Contributions Mechanism (VCM) game with a moderately large group of ten and face-to-face communication. The subjects, who are villagers in the Gori-Ganga Basin of the Central Himalayas, are not re-matched every period.Our results are somewhat different from laboratory experiments using a similar design such as Isaac and Walker (1988a, 1988b). A noteworthy general observation is that even with a relatively low Marginal Per Capita Return (MPCR = 0.2) and a large group we find a steady contribution rate around 55 percent, which diminishes slightly at the end of the session to around 45 percent. We also delve into the demographic characteristics of our subject pool and find that individual contribution to the common pool is determined by gender, age, caste, literacy and history of cooperation in the experiment. However, face-to-face communication is not seen to increase average individual contribution to the common pool.

Eszter Czibor, David Jimenez-Gomez, John A List

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What was once broadly viewed as an impossibility - learning from experimental data in economics - has now become commonplace. Governmental bodies, think tanks, and corporations around the world employ teams of experimental researchers to answer their most pressing questions. For their part, in the past two decades academics have begun to more actively partner with organizations to generate data via field experimentation. While this revolution in evidence-based approaches has served to deepen the economic science, recently a credibility crisis has caused even the most ardent experimental proponents to pause. This study takes a step back from the burgeoning experimental literature and introduces 12 actions that might help to alleviate this credibility crisis and raise experimental economics to an even higher level. In this way, we view our "12 action wish list" as discussion points to enrich the field.

Martijn Egas, Arno Riedl

Cited by*: 11 Downloads*: 5

Explaining the evolution and maintenance of cooperation among unrelated individuals is one of the fundamental problems in biology and the social sciences. Recent experimental evidence suggests that altruistic punishment is an important mechanism to maintain cooperation among humans. In this paper we explore the boundary conditions for altruistic punishment to maintain cooperation by systematically varying the cost and impact of punishment, using a subject pool which extends beyond the standard student population. We find that the economics of altruistic punishment lead to the demise of cooperation when punishment is relatively expensive and/or has low impact. Our results indicate that the 'decision to punish' comes from an amalgam of emotional response and cognitive cost-benefit analysis. Additionally, earnings are lowest when punishment promotes cooperation, suggesting that the scope for altruistic punishment as a means to maintain cooperation is limited."

Edwin Leuven, Hessel Oosterbeek, Bas van der Klaauw

Cited by*: 0 Downloads*: 62

In a randomized field experiment where first year university students could earn financial rewards for passing all first year requirements within one year we find small and non-significant average effects of financial incentives on the pass rate and the numbers of collected credit points. There is however evidence that high ability students collect significantly more credit points when assigned to (larger) reward groups. Low ability students collect less credit points when assigned to larger reward groups. After three years these effects have increased, suggesting dynamic spillovers. The small average effect in the population is therefore the sum of a positive effect for high ability students and a (partly) off-setting negative effect for low ability students. A negative effect of financial incentives for less able individuals is in line with research from psychology and recent economic laboratory experiments which shows that external rewards may be detrimental for intrinsic motivation.

Alessandra Cassar, Lucas Crowley, Bruce Wydick

Cited by*: 1 Downloads*: 13

An important question to microfinance is the relevance of existing social capital in target communities to the performance of group lending. This research presents evidence from field experiments in South Africa and Armenia, in which subjects participate in trust games and a microfinance game. We present moderately strong evidence that personal trust between group members and peer homogeneity are more important to group loan repayment than general societal trust or mere acquaintanceship between members. We also find some evidence of reciprocity in groups: those who have been helped by other members are more likely to contribute themselves.

Ernst Fehr, John A List

Cited by*: 154 Downloads*: 15

We examine experimentally how Chief Executive Officers (CEOs) respond to incentives and how they provide incentives in situations requiring trust and trustworthiness. As a control we compare the behavior of CEOs with the behavior of students. We find that CEOs are considerably more trusting and exhibit more trustworthiness than students--thus reaching substantially higher efficiency levels than students. Moreover, we find that, for CEOs as well as for students, incentives based on explicit threats to penalize shirking backfire by inducing less trustworthy behavior--giving rise to hidden costs of incentives. However, the availability of penalizing incentives also creates hidden returns: if a principal expresses trust by voluntarily refraining from implementing the punishment threat, the agent exhibits significantly more trustworthiness than if the punishment threat is not available. Thus trust seems to reinforce trustworthy behavior. Overall, trustworthiness is highest if the threat to punish is available but not used, while it is lowest if the threat to punish is used. Paradoxically, however, most CEOs and students use the punishment threat, although CEOs use it significantly less.

John A List, Daniel Rondeau

Cited by*: 8 Downloads*: 7

Evidence suggests that contributions to capital campaigns increase with the value of leadership gifts. We examine the response of subjects to the announcement of leadership gifts and its implied change in the campaign's target. The two effects are partitioned.

Herrmann Benedikt, Simon Gachter

Cited by*: 15 Downloads*: 7

We report evidence from public goods experiments with and without punishment which we conducted in Russia with 566 urban and rural participants of young and mature age cohorts. Russia is interesting for studying voluntary cooperation because of its long history of collectivism, and a huge urban-rural gap. In contrast to previous experiments we find no cooperation-enhancing effect of punishment. An important reason is that there is substantial spiteful punishment of high contributors in all four subject pools. Thus, spite undermines the scope for self-governance in the sense of high levels of voluntary cooperation that are sustained by sanctioning free riders only.

Jan Potters, Frans van Winden

Cited by*: 0 Downloads*: 4

This paper reports on a series of signaling game experiments in which an informed sender can send a costly message in order to persuade an uninformed responder. We compare t he behavior of two subjects pools: 143 undergraduate students and 30 public affairs official s that are professionally familiar with strategic information transmission. The experiments comprised two parameter treatments: one with low costs for sending messages, and one with high costs. Our main conclusion is that there are neither significant nor systematic differences in the behavior of the two subject-pools.

Shachar Kariv, Daniel J. Lee, John A List, Michael K Price

Cited by*: 0 Downloads*: 82

We build on previous work in the charitable giving literature by examining not only how much subjects give to charity, but also which charities subjects prefer. We operationalize this choice in an artefactual field experiment with a representative sample of respondents. We then use these data to structurally model motives for giving. The novelty of this design allows us to ask several interesting questions regarding the choices one undertakes when deciding both whether and how much to give to charity. Further, we ask these questions in the context of a standard utility framework. Given the unique set up of this experiment, we also explore how these distributional preference parameters differ by charity choice and from what we have observed in the past. We find that there is more variation within demographics and charity types than across distributions.

Carlos A Alpizar, Steven Buck

Cited by*: 0 Downloads*: 12

In this paper, we distinguish between horizontal and vertical trust. We investigate how these measures of trust, as well as measures of trustworthiness and risk aversion are related to the probability of rural farmers of having had a loan from a bank. Using experimental and survey data from 191 farmers of the Amazon region of Ecuador, we find that: (1) controlling for risk aversion, women do not trust differently than men in each trust game, however, women compared to men do trust outside professionals more than community members, and (2) isolated rural farmers with stronger preferences for trusting outside professionals experience higher levels of bank loan uptake.

Omar Al-Ubaydli, John A List, Dana L Suskind

Cited by*: None Downloads*: None

Policymakers are increasingly turning to insights gained from the experimental method as a means of informing public policies. Whether-and to what extent-insights from a research study scale to the level of the broader public is, in many situations, based on blind faith. This scale-up problem can lead to a vast waste of resources, a missed opportunity to improve people's lives, and a diminution in the public's trust in the scientific method's ability to contribute to policymaking. This study provides a theoretical lens to deepen our understanding of the science of how to use science. Through a simple model, we highlight three elements of the scale-up problem: (1) when does evidence become actionable (appropriate statistical inference); (2) properties of the population; and (3) properties of the situation. We argue that until these three areas are fully understood and recognized by researchers and policymakers, the threats to scalability will render any scaling exercise as particularly vulnerable. In this way, our work represents a challenge to empiricists to estimate the nature and extent of how important the various threats to scalability are in practice, and to implement those in their original research.

John A List

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All happy families are alike; each unhappy family is unhappy in its own way. -Leo Tolstoy, Anna Karenina

John A List

Cited by*: None Downloads*: None

All happy families are alike; each unhappy family is unhappy in its own way. -Leo Tolstoy, Anna Karenina

Rocco Caferra, Alessia Casamassima, Alessandro Cascavilla, Andrea Morone, Paola Tiranzoni

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This work aims to identify and quantify the biases behind the anomalous behavior of people when they deal with the Three Doors dilemma, which is a really simple but counterintuitive game. Carrying out an artefactual field experiment and proposing eight different treatments to isolate the anomalies, we provide new interesting experimental evidence on the reasons why subjects fail to take the optimal decision. According to the experimental results, we can quantify the size and the impact of three main biases that explain the anomalous behavior of participants: Bayesian updating, illusion of control, and status quo bias.