Economic Theory Commons^™

Money And The Scale Of Cooperation, Maria Bigoni, Gabriele Camera, Marco Casari

ESI Working Papers

This study reveals the existence of a causal link between the availability of money and an expanded scale of interaction. We constructed an experiment where participants chose the group size, either a low-value partnership or a high-value group of strangers, and then faced an intertemporal cooperative task. Theoretically, a monetary system was inessential to achieve cooperation. Empirically, without a working monetary system, participants were reluctant to expand the scale of interaction; and when they did, they ended up destroying surplus compared to partnerships, because cooperation collapsed in large groups. This economic failure was reversed only when participants managed to concurrently …

Helminth Infection, Fecundity, And Age Of First Pregnancy In Women, Aaron D. Blackwell, Marilyne D. Tamayo, Bret Beheim, Benjamin C. Trumble, Jonathan Stieglitz, Paul L. Hooper, Melanie Martin, Hillard Kaplan, Michael Gurven

ESI Publications

Infection with intestinal helminths results in immunological changes that influence the odds of comorbid infections, and might also affect fecundity by inducing immunological states supportive of conception and pregnancy. Here we investigate associations between intestinal helminths and fertility in human females, utilizing nine years of longitudinal data from 986 Bolivian forger-horticulturalists, experiencing natural fertility and a 70% helminth prevalence. We find that different species of helminth are associated with opposing effects on fecundity. Infection with roundworm (Ascaris lumbricoides) is associated with earlier first births and shortened interbirth intervals, while infection with hookworm is associated with delayed first pregnancy and extended …

Natural Sleep And Its Seasonal Variations In Three Pre-Industrial Societies, Gandhi Yetish, Hillard Kaplan, Michael Gurven, Brian Wood, Herman Pontzer, Paul R. Manger, Charles Wilson, Ronald Mcgregor, Jerome M. Siegel

ESI Publications

How did humans sleep before the modern era? Because the tools to measure sleep under natural conditions were developed long after the invention of the electric devices suspected of delaying and reducing sleep, we investigated sleep in three preindustrial societies[1–3]. We find that all three show similar sleep organization, suggesting that they express core human sleep patterns, likely characteristic of pre-modern era Homo sapiens. Sleep periods, the times from onset to offset, averaged 6.9–8.5-h, with sleep durations of 5.7–7.1-h, amounts near the low end of those industrial societies[4–7]. There was a difference of nearly 1-h between summer and winter sleep. …

Calcaneal Quantitative Ultrasound Indicates Reduced Bone Status Among Physically Active Adult Forager-Horticulturalists, Jonathan Stieglitz, Felicia C. Madimenos, Hillard Kaplan, Michael Gurven

ESI Publications

Six months of exclusive breastfeeding (EBF) is considered optimal for infant health, though globally most infants begin complementary feeding (CF) earlier—including among populations that practice prolonged breastfeeding. Two frameworks for understanding patterns of early CF emerge in the literature. In the first, maternal and infant needs trade-off, as “maternal-centric” factors—related to time and energy demands, reproductive investment, cultural influences, and structural barriers— favor supplanting breastfeeding with earlier and increased CF. A second framework considers that “infant-centric” factors—related to infant energetic needs—favor CF before six months to supplement breastfeeding.

We apply these two frameworks in examining early CF among the Tsimane—a …

Tug-Of-War In The Laboratory, Cary Deck, Roman M. Sheremeta

ESI Working Papers

Tug-of-war is a multi-battle contest often used to describe extended interactions in economics, management, political science, and other disciplines. While there has been some theoretical work, there is scant empirical evidence regarding behavior in a tug-of-war game. To the best of our knowledge, this paper provides the first experimental study of the tug-of-war. The results show notable deviations of behavior from theory. In the first battle of the tug-of-war, subjects exert fewer resources, while in the follow-up battles, they exert more resources than predicted. Also, contrary to the theoretical prediction, resource expenditures tend to increase in the duration of the …

Building A Better Model: Variable Selection To Predict Poverty In Pakistan And Sri Lanka, Marium Afzal, Jonathan Hersh, David Newhouse

Economics Faculty Articles and Research

Numerous studies have developed models to predict poverty, but surprisingly few have rigorously examined different approaches to developing prediction models. This paper applies out of sample validation techniques to household data from Pakistan and Sri Lanka, to compare the accuracy of regional poverty predictions from models derived using manual selection, stepwise regression, and Lasso-based procedures. It also examines how much incorporating publically available satellite data into the model improves its accuracy. The five main findings are that: 1) Lasso tends to outperform both discretionary and stepwise models in Pakistan, where the set of potential predictors is large. 2) Lasso and …

Lecciones De Economía Para No Economistas, Sergio A. Berumen

Sergio A. Berumen

Este libro estudia la totalidad de los contenidos de los cursos de Introducción a la Economía y de los primeros cursos de Microeconomía y Macroeconomía de los grados y las licenciaturas en Ciencias Sociales.

Does Market Integration Buffer Risk, Erode Traditional Sharing Practices And Increase Inequality? A Test Among Bolivian Forager-Farmers, Michael Gurven, Adrian V. Jaeggi, Christopher Von Rueden, Paul L. Hooper, Hillard Kaplan

ESI Publications

Sharing and exchange are common practices for minimizing food insecurity in rural populations. The advent of markets and monetization in egalitarian indigenous populations presents an alternative means of managing risk, with the potential impact of eroding traditional networks. We test whether market involvement buffers several types of risk and reduces traditional sharing behavior among Tsimane Amerindians of the Bolivian Amazon. Results vary based on type of market integration and scale of analysis (household vs. village), consistent with the notion that local culture and ecology shape risk management strategies. Greater wealth and income were unassociated with the reliance on others for …

Private Value Determinations And The Potential Effect On The Future Of Research And Development, Amy L. Landers

Amy L. Landers

Although the promise of an emerging patent market is thought to provide future benefits to invention, innovation, and the public, this essay examines the possibility that the aggregate influence of this activity could instead destabilize patent values in a manner that mirrors the "bubble" phenomenon that occurred in certain markets in the past. To the extent that this occurs, this would destabilize the patent system and might have negative consequences for the future of investment in research, development and innovation.

Information Propagation In Financial Markets, Garrett A. Mcbrayer

Graduate Theses and Dissertations

This dissertation consists of three essays which examine information flows through financial markets and across firms, and investigates the factors affecting the process of information dissemination. The first essay examines whether the announcement of a credit rating change for a given firm contains information pertinent to the valuations of intra-industry peer firms. I identify an information spillover effect on peer firms surrounding credit rating downgrades. Further, I find that the post-announcement spillover effects are indicative of an overreaction in the market’s response to the downgrade announcement. Peer firms exhibit predictability in their post-announcement returns as a function of their relative …

Depression As Sickness Behavior? A Test Of The Host Defense Hypothesis In A High Pathogen Population, Jonathan Stieglitz, Benjamin C. Trumble, Melissa Emery Thompson, Aaron D. Blackwell, Hillard Kaplan, Michael Gurven

ESI Publications

Sadness is an emotion universally recognized across cultures, suggesting it plays an important functional role in regulating human behavior. Numerous adaptive explanations of persistent sadness interfering with daily functioning (hereafter “depression”) have been proposed, but most do not explain frequent bidirectional associations between depression and greater immune activation. Here we test several predictions of the host defense hypothesis, which posits that depression is part of a broader coordinated evolved response to infection or tissue injury (i.e. “sickness behavior”) that promotes energy conservation and reallocation to facilitate immune activation. In a high pathogen population of lean and relatively egalitarian Bolivian foragerhorticulturalists, …

Public Goods With Punishment & Payment For Relative Rank, Terence C. Burnham

ESI Working Papers

A laboratory experiment designed to investigate the role of relative performance-based payoffs on cooperation in the context of punishment. Subjects play a repeated public goods game with high-powered punishment (50:1) and additional payoffs based on relative performance. Contributions to the public good are nearly maximal. Punishment levels are substantial, higher than the same game without relative rank payoffs, and sufficiently high that total payoffs are negative. The group would make much more money in the same setting without punishment. This study contributes to investigation of the role of altruism in human cooperation.

Theory And Experiments Exploring Behavioral, Financial, And Public Economics, Matthew John Mcmahon

Doctoral Dissertations

I study three questions which relate to one another only in that each explores facets of economics. First, I theoretically examine the conditions under which introducing an impure public good decreases total public provision. I introduce a central planner who can tax the private good to correct this and identify the market characteristics that typify this scenario. Second, I test the two standard competing dividend puzzle hypotheses using a laboratory experiment. Evidence from the lab, including variables unobservable in the field, reinforces empirical work supporting the outcome model over the substitute. Last, I obscure from dictators information regarding recipients' income …

مسائل منهجيّة ونظريّة متعلّقة ببحوث الاقتصاد السياسي في شمال إفريقيا وغرب آسيا, J. G. A. Saviranta

Akseli Saviranta

تبحث هذه الوثيقة في بعض المسائل المنهجية التي يمكن أن تعترض باحثي المسائل المتعلّقة بالاقتصاد السياسي في شمال إفريقيا وغرب آسيا. يعرض جزأها الأول تلخيصا لدراسة سابقة للمؤلّف عالجت مسألة الاقتصاد السياسي المتعلّق بالتكامل الاقتصادي، ويعرض جزأها الثاني بعضا من المسائل الآتي ذكرها مسبقا والتي وقع اعتراضها عند القيام بالدراسة.

Methodological And Theoretical Issues In Researching North African And West Asian Political Economy, J. G. A. Saviranta

Akseli Saviranta

This document addresses a few of the methodological issues encountered in political economy research related to North Africa and West Asia. Its first part presents notes from a previous study by the author that dealt with the issue of the political economy of integration, and its second part relates some of the aforementioned issues that were encountered while making the study.

Inclusive Fitness And Differential Productivity Across The Life Course Determine Intergenerational Transfers In A Small-Scale Human Society, Paul L. Hooper, Michael Gurven, Jeffrey Winking, Hillard Kaplan

ESI Publications

Transfers of resources between generations are an essential element in current models of human life-history evolution accounting for prolonged development, extended lifespan and menopause. Integrating these models with Hamilton’s theory of inclusive fitness, we predict that the interaction of biological kinship with the age-schedule of resource production should be a key driver of intergenerational transfers. In the empirical case of Tsimane’ forager–horticulturalists in Bolivian Amazonia, we provide a detailed characterization of net transfers of food according to age, sex, kinship and the net need of donors and recipients. We show that parents, grandparents and siblings provide significant net downward transfers …

Conflicted Emotions Following Trust-Based Interaction, Eric Schniter, Roman M. Sheremeta, Timothy W. Shields

ESI Publications

We observed reports of conflicted (concurrent positive and negative) emotions activated after interactions in the Trust game. Our analyses reveal that activation of 20 emotional states following trust-based interaction is better explained by predictions derived from a multi-dimensional Recalibrational perspective than by predictions derived from two-dimensional Valence and Arousal perspectives. The Recalibrational perspective proposes that emotions are activated according to their functional features – for example, emotions help people achieve short or long-sighted goals by up or down-regulating behavioral propensities, whereas Valence and Arousal perspectives consider simpler hedonic dimensions lacking functional specificity. The Recalibrational perspective is also distinguished from the …

The Effect Of Earned Vs. House Money On Price Bubble Formation In Experimental Asset Markets, Brice Corgnet, Roberto Hernán González, Praveen Kujal, David Porter

ESI Publications

Does house money exacerbate price bubbles? We compare house money asset market experiments with an earned money treatment where initial portfolios are constructed from a real effort task. Bubbles occur; however, trading volumes and earnings dispersion are significantly higher with house money. We investigate the role of cognitive ability in accounting for the differences in earnings distribution across treatments by using the cognitive reflection test (CRT). Low CRT subjects earned less than high CRT subjects. Low CRT subjects were net purchasers (sellers) of shares when the price was above (below) fundamental value. The opposite was true for high CRT subjects.

Sustaining Group Reputation, Erik O. Kimbrough, Jared Rubin

ESI Publications

When individuals trade with strangers, there is a temptation to renege on agreements. If repeated interaction or exogenous enforcement is unavailable, societies often solve this problem via institutions that rely on group, rather than individual, reputation. Groups can employ two mechanisms to uphold reputation that are unavailable to individuals: information sharing and in-group punishment. We design a laboratory experiment to distinguish the roles of these mechanisms when individual reputations are unobservable. Subjects are split into groups and play a trust game with random re-matching, where only the group identity of one’s partner is known. Treatments differ by whether information about …

Disfluent Fonts Don’T Help People Solve Math Problems, Andrew Meyer, Shane Frederick, Terence C. Burnham, Juan D. Guevera Pinto, Ty W. Boyer, Linden J. Ball, Gordon Pennycook, Rakefet Ackerman, Valerie A. Thompson, Jonathon P. Schuldt

ESI Publications

Prior research suggests that reducing font clarity can cause people to consider printed information more carefully. The most famous demonstration showed that participants were more likely to solve counterintuitive math problems when they were printed in hard-to-read font. However, after pooling data from that experiment with 16 attempts to replicate it, we find no effect on solution rates. We examine potential moderating variables, including cognitive ability, presentation format, and experimental setting, but we find no evidence of a disfluent font benefit under any conditions. More generally, though disfluent fonts slightly increase response times, we find little evidence that they activate …

Firing Threats And Tenure In Virtual Organizations: Incentives Effects And Impression Management, Brice Corgnet, Roberto Hernán González, Stephen Rassenti

ESI Publications

We study the effect of firing threats in a virtual workplace that reproduces features of existing organizations. We show that organizations in which bosses can fire up to one third of their workforce produce twice as much as organizations for which firing is not possible. Firing threats sharply decrease on-the-job leisure. Nevertheless, organizations endowed with firing threats underperformed those using individual incentives. In the presence of firing threats, employees engage in impression management activities to be seen as hard-working individuals in line with our model. Finally, production levels dropped substantially when the threat of being fired was removed, whereas on-the-job …

Peer Pressure And Moral Hazard In Teams: Experimental Evidence, Brice Corgnet, Roberto Hernán-González, Stephen Rassenti

ESI Publications

Team incentives have been found to be particularly effective both in the lab and in the field despite the moral hazard in teams problem identified by Holmström (1982). In a newly developed virtual workplace, we show that, in line with Holmström, moral hazard in teams is indeed pervasive. Subsequently, we find strong evidence for the conjecture of Kandel and Lazear (1992) that peer pressure may resolve the moral hazard in teams problem. Organizations equipped with a very weak form of peer monitoring (anonymous and without physical proximity, verbal threats or face-to-face interactions) perform as well as those using individual incentives.

The Cognitive Basis Of Social Behavior: Cognitive Reflection Overrides Antisocial But Not Always Prosocial Motives, Brice Corgnet, Antonio M. Espín, Roberto Hérnan-Gonzalez

ESI Working Papers

Even though human social behavior has received considerable scientific attention in the last decades, its cognitive underpinnings are still poorly understood. Applying a dual-process framework to the study of social preferences, we show in two studies that individuals with a more reflective/deliberative cognitive style, as measured by scores on the Cognitive Reflection Test (CRT), are more likely to make choices consistent with “mild” altruism in simple non-strategic decisions. Such choices increase social welfare by increasing the other person’s payoff at very low or no cost for the individual. The choices of less reflective individuals (i.e. those who rely more heavily …

An Evaluation Of The Proposal To Implement A Chained Weighted Cpi, David Lock

Applied Economics Theses

The Bureau of Labor Statistics (BLS) recently developed a way to view price changes in the economy called the chained consumer price index (C-CPI-U). There is much debate over this calculation because, if implemented, it would greatly affect government spending on programs such as Social Security and Veteran benefits. A quick overview of how the C-CPI-U is calculated does not appear to be anything to disagree with. A conclusion which can be drawn, and will be discussed in this thesis, is that the major controversy lies in what will happen to those who benefit from possible reduction of benefits in …

Generalizations Of The General Lotto And Colonel Blotto Games, Dan Kovenock, Brian Roberson

ESI Working Papers

In this paper, we generalize the General Lotto game (budget constraints satisfied in expectation) and the Colonel Blotto game (budget constraints hold with probability one) to allow for battlefield valuations that are heterogeneous across battlefields and asymmetric across players, and for the players to have asymmetric resource constraints. We completely characterize Nash equilibrium in the generalized version of the General Lotto game and then show how this characterization can be applied to identify equilibria in the Colonel Blotto version of the game. In both games, we find that there exist sets of non-pathological parameter configurations of positive Lebesgue measure with …

Performance Benefits Of Reward Choice: A Procedural Justice Perspective, Arran Caza, Matthew W. Mccarter, Gregory B. Northcraft

ESI Publications

Reward choice – employees' ability to exercise control over the formal rewards they receive from work – is an important part of many HRM strategies. Reward choice is expected to increase employee performance, but conflicting findings highlight the need to better understand how and when it will do so. Based on fairness heuristic theory, we predicted that procedural justice mediates reward choice's influence on performance, and that choice attractiveness moderates that influence. A field study and an experiment both had similar results, supporting our predictions. Reward choice can increase performance by as much as 40 per cent, but only when …

Humankind In Civilization’S Extended Order: A Tragedy, The First Part, Bart J. Wilson

ESI Publications

This article is a short, scientific story of the labyrinthian human career, of humankind’s place in the natural order of the world, and of the evolution of moral rules and rule following that make the extended order of civilization possible. Drawing upon work in anthropology, biology, and linguistics, I weave a science-based narrative of how Homo sapiens came to be the only primate to convert enemy aliens into trading friends. It is a Goethean story of the human condition that postulates the common origins of and modern tension between Pleistocene and Anthropocene morality. It is also a Hayekian story of …

Revisiting The Tradeoff Between Risk And Incentives: The Shocking Effect Of Random Shocks, Brice Corgnet, Roberto Hérnan-Gonzalez

ESI Working Papers

Despite its central role in the theory of incentives, empirical evidence of a tradeoff between risk and incentives remains scarce. We reexamine this empirical puzzle in a controlled laboratory environment so as to isolate possible confounding factors encountered in the field. In line with the principal-agent model, we find that principals increase fixed pay while lowering performance pay when the relationship between effort and output is noisier. Unexpectedly, agents produce substantially more in the noisy environment than in the baseline despite lesser pay for performance. We show that this result can be accounted for by introducing agents’ loss aversion in …

Dynamic Directed Search, Gabriele Camera, Jaehong Kim

ESI Working Papers

The directed search model (Peters, 1984) is static; its dynamic extensions typically restrict strategies, often assuming price or match commitments. We lift such restrictions to study equilibrium when search can be directed over time, without constraints and at no cost. In equilibrium trade frictions arise endogenously, and price commitments, if they do exist, are self-enforcing. In contrast to the typical model, there exists a continuum of equilibria that exhibit trade frictions. These equilibria support any price above the static price, including monopoly pricing in arbitrarily large markets. Dispersion in posted prices can naturally arise as temporary or permanent phenomenon despite …

The Impact Of Social Information On The Voluntary Provision Of Public Goods: A Replication Study, James J. Murphy, Nomin Batmunkh, Ben Nilson, Samantha Ray

ESI Working Papers

Shang and Croson (2009) found that providing information about the donation decisions of others can have a positive impact on individual donations to public radio. In this study, we attempted to replicate their results, however, we found no evidence of that social comparisons affected donation decisions. Most of our donors were renewing members, a group which Shang and Croson also found were not influenced by social information.