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Articles 1 - 17 of 17
Full-Text Articles in Social and Behavioral Sciences
Who Withdraws First? Line Formation During Bank Runs, Hubert János Kiss, Ismael Rodriguez-Lara, Alfonso Rosa-Garcia
Who Withdraws First? Line Formation During Bank Runs, Hubert János Kiss, Ismael Rodriguez-Lara, Alfonso Rosa-Garcia
ESI Working Papers
We study how lines form in front of banks. In our model, depositors choose first the level of effort to arrive early at the bank and then whether or not to withdraw their deposit. We argue that the informational environment (i.e., the possibility of observing the action of others) affects the emergence of bank runs and should, therefore, influence the line formation. We test this prediction experimentally. While the informational environment has no effect on the line formation when we look at the average level of effort, our findings suggest that the reasons to arrive early at the bank varies …
The Conservatism Principle And Asymmetric Preferences Over Reporting Errors, Jivas Chakravarthy, Timothy W. Shields
The Conservatism Principle And Asymmetric Preferences Over Reporting Errors, Jivas Chakravarthy, Timothy W. Shields
ESI Working Papers
At present, accounting conservatism is generally viewed from a measurement or reporting perspective. In contrast, we consider whether it relates to a moral rule of conduct. Conservatism has been described as deriving from a preference for reporting errors to be in the direction of understatement rather than overstatement. We experimentally pair Reporters who provide information with Users who rely on the information. We posit that under misaligned incentives that motivate aggressive reporting, Users view an aggressive report as reflecting Reporters’ exploitative intent and expect that a social norm prohibiting aggressive reporting applies. We predict that Users use noisy reporting errors …
Trust And Trustworthiness After Negative Random Shocks, Hernán Bejerano, Joris Gillet, Ismael Rodriguez-Lara
Trust And Trustworthiness After Negative Random Shocks, Hernán Bejerano, Joris Gillet, Ismael Rodriguez-Lara
ESI Working Papers
We investigate experimentally the effect of a negative endowment shock in a trust game to assess whether different causes of inequality have different effects on trust and trustworthiness. In our trust game there may be inequality in favor of the second mover and this may (or may not) be the result of a negative random shock (i.e., the outcome of a die roll) that decreases the endowment of the first-mover. Our findings suggest that inequality leads to differences in behavior. First-movers send more of their endowment and second-movers return more when there is inequality. However, we do not find support …
An Experiment On The Neolithic Agricultural Revolution. Causes And Impact On Inequality, Antonio J. Morales, Ismael Rodriguez-Lara
An Experiment On The Neolithic Agricultural Revolution. Causes And Impact On Inequality, Antonio J. Morales, Ismael Rodriguez-Lara
ESI Working Papers
Testing causal relationships expressed by mathematical models on facts about human behaviour across history is challenging. A prominent example is the Neolithic agricultural revolution [1]. Many theoretical models of the adoption of agriculture has been put forward [2] but none has been tested. The only exception is [3], that uses a computational approach with agent-based simulations of evolutionary games. Here, we propose two games that resemble the conditions of human societies before and after the agricultural revolution. The agricultural revolution is modelled as an exogenous shock in the lab (n=180, 60 independent groups), and the transition from foraging to farming …
Co-Enforcement Of Common Pool Resources: Experimental Evidence From Turfs In Chile, Carlos A. Chávez, James J. Murphy, John K. Stranlund
Co-Enforcement Of Common Pool Resources: Experimental Evidence From Turfs In Chile, Carlos A. Chávez, James J. Murphy, John K. Stranlund
ESI Working Papers
This work presents the results of framed field experiments designed to study the co-enforcement of access to common pool resources. The experiments were conducted in the field with participants in the territorial use rights in fisheries (TURFs) management scheme that regulates access to nearshore fisheries along the coast of Chile. In the experiments, TURF members not only decided on harvest but also invested in monitoring to deter poaching by outsiders. Treatments varied whether the monitoring investment was an individual decision or determined by a group vote. Per-unit sanctions for poaching were exogenous as if provided by a government authority, and …
Experimental Evidence On The Cyclicality Of Investment, Cortney S. Rodet, Andrew Smyth
Experimental Evidence On The Cyclicality Of Investment, Cortney S. Rodet, Andrew Smyth
ESI Working Papers
We report laboratory experiments investigating the cyclicality of investment. In our setting, optimal investment is counter-cyclical because investment costs fall following market downturns. However, we do not observe counter-cyclical investment. Instead, heuristic investment models where firms invest a fixed percentage of their liquidity, or a fixed percentage of anticipated market demand, better fit our data on average than does optimal investment. We also report a control treatment without cost changes and a treatment with asymmetric investment liquidity. Both of these extensions support our main result.
No Mere Tautology: The Division Of Labor Is Limited By The Division Of Labor, Andrew Smyth, Bart J. Wilson
No Mere Tautology: The Division Of Labor Is Limited By The Division Of Labor, Andrew Smyth, Bart J. Wilson
ESI Working Papers
We explore the intersection of growth theory and the theory of the firm with an experiment. Economic growth is possible in our experiment when agents specialize to exploit increasing returns. We find that low opportunity costs are sufficient for Marshallian internal economies, but that Marshallian external economies are slow to emerge in four probing treatment conditions. Transaction costs do not hamper external economies as we anticipated prior to collecting data. When external economies falter, it is because new ideas about the cost and value of more extensive specialization fail to emerge. Ideas are what make further divisions of the …
How Product Innovation Can Affect Price Collusion, Andrew Smyth
How Product Innovation Can Affect Price Collusion, Andrew Smyth
ESI Working Papers
Price conspiracies appear endemic in many markets. This paper conjectures that low expected returns from product innovation can affect price collusion in certain markets. This conjecture is tested—and supported—by both archival and experimental data. In particular, average market prices in low innovation experiments are significantly greater than those in high innovation, but otherwise identical experiments, because price collusion is more successful in the low innovation experiments.
Equilibrium Play In Voluntary Ultimatum Games: Beneficence Cannot Be Extorted, Vernon L. Smith, Bart J. Wilson
Equilibrium Play In Voluntary Ultimatum Games: Beneficence Cannot Be Extorted, Vernon L. Smith, Bart J. Wilson
ESI Working Papers
One robust result in experimental economics is the failure to observe equilibrium play in the ultimatum game. A heretofore unnoticed feature of the game is that neither player voluntarily chooses to play the game. Motivated by Adam Smith’s proposition that beneficence—like that of non‐ equilibrium play in the ultimatum game—cannot be extorted by force, we offer the responder the opportunity to opt out of the game for a mere $1 payoff for both players. We observe high rates of equilibrium play with highly unequal splits when responders choose to play such ultimatum games with both fixed and variable sums.
Language And Cooperation In Hominin Scavenging, Bart J. Wilson, Samuel R. Harris
Language And Cooperation In Hominin Scavenging, Bart J. Wilson, Samuel R. Harris
ESI Working Papers
Bickerton (2009, 2014) hypothesizes that language emerged as the solution to a scavenging problem faced by proto‐humans. We design a virtual world to explore how people use words to persuade others to work together for a common end. By gradually reducing the vocabularies that the participants can use, we trace the process of solving the hominin scavenging problem. Our experiment changes the way we think about social dilemmas. Instead of asking how does a group overcome the selfinterest of its constituents, the question becomes, how do constituents persuade one another to work together for a common end that yields a …
Sharing As Risk Pooling In A Social Dilemma Experiment, Todd L. Cherry, E. Lance Howe, James J. Murphy
Sharing As Risk Pooling In A Social Dilemma Experiment, Todd L. Cherry, E. Lance Howe, James J. Murphy
ESI Working Papers
In rural economies with missing or incomplete markets, idiosyncratic risk is frequently pooled through informal networks. Idiosyncratic shocks, however, are not limited to private goods but can also restrict an individual from partaking in or benefiting from a collective activity. In these situations, a group must decide whether to provide insurance to the affected member. In this paper, we describe results of a laboratory experiment designed to test whether a simple sharing institution can sustain risk pooling in a social dilemma with idiosyncratic risk. We test whether risk can be pooled without a commitment device and, separately, whether effective risk …
The Effects Of Make And Take Fees In Experimental Markets, Vince Bourke, David Porter
The Effects Of Make And Take Fees In Experimental Markets, Vince Bourke, David Porter
ESI Working Papers
We conduct a series of experiments to examine the effects of the make and take fee structure currently used by equity exchanges in the U.S. We examine the effects of these fees on measures of market quality (allocative efficiency, trading volume, book depth, and the bid-ask spread). With the exception of increased book depth, we document no significant effects of make and take fees relative to a baseline case in which trading fees are assessed on both sides of a transaction.
Accounting Standards And Financial Market Stability: An Experimental Examination, Shengle Lin, Glenn Pfeiffer, David Porter
Accounting Standards And Financial Market Stability: An Experimental Examination, Shengle Lin, Glenn Pfeiffer, David Porter
ESI Working Papers
We examine the effect on asset mispricing of different accounting methods in an experimental asset market characterized by bubbles and crashes. In particular, we study three alternative asset value reporting treatments: (1) Fair Value (also known as Mark-to-Market – M2M), (2) Historical Cost (HC) and (3) Marked to Fundamental Value (M2F). In addition, each of these treatments is replicated in two different financial leverage conditions. In the first condition (No Loan) traders must purchase assets from their available cash balances without the option of borrowing. In the second condition, (Loan), traders are given the option of taking out loans based …
Experimental Evidence On The Properties Of The California’S Cap And Trade Price Containment Reserve, Rachel Bodsky, Domenic Donato, Kevin James, David Porter
Experimental Evidence On The Properties Of The California’S Cap And Trade Price Containment Reserve, Rachel Bodsky, Domenic Donato, Kevin James, David Porter
ESI Working Papers
We report on a series of experiments to examine the properties of California’s Reserve Sale allocation mechanism to be implemented as part of the forthcoming cap and trade program and compare it with an alternative reserve sale mechanism. The proposed reserve sale mechanism allows covered entities to purchase allowances after the primary auction sale at fixed prices. If demand for units is greater the amount supplied in the reserve sale, a Proportional Rationing rule is used to distribute allowances based on submitted request for units. This rule is contrasted with to an alternative rule, Equal Rationing in which allowances are …
Go West Young Man: Self-Selection And Endogenous Property Rights, Taylor Jaworski, Bart J. Wilson
Go West Young Man: Self-Selection And Endogenous Property Rights, Taylor Jaworski, Bart J. Wilson
ESI Working Papers
If, as Hume argues, property is a self-referring custom of a group of people, then property rights depend on how that group forms and orders itself. In this paper we investigate how people construct a convention for property in an experiment in which groups of self-selected individuals can migrate between three geographically separate regions. We find that the absence of property rights clearly decreases wealth in our environment and that interest in establishing property rights is a key determinant of the decision to migrate to a new region. Theft is nearly eliminated among migrants, resulting in strong growth, and non-migrants …
Can Manipulators Mislead Prediction Market Observers?, Ryan Oprea, David Porter, Chris Hibbert, Robin Hanson, Dorina Tila
Can Manipulators Mislead Prediction Market Observers?, Ryan Oprea, David Porter, Chris Hibbert, Robin Hanson, Dorina Tila
ESI Working Papers
We study experimental markets where privately informed traders exchange simple assets, and where uninformed third parties are asked to forecast the values of these assets, guided only by market prices. Although prices only partially aggregate information, they signicantly improve the forecasts of third parties. In a second treatment, a portion of traders are given preferences over the forecasts made by observers. Although we find evidence that these traders attempt to manipulate prices in order to influence the beliefs of observers, we find no evidence that observers make less accurate forecasts as a result.
High Stakes Behavior With Low Payoffs: Inducing Preferences With Holt-Laury Gambles, John Dickhaut, Daniel Houser, Jason A. Aimone, Dorina Tila, Cathleen Johnson
High Stakes Behavior With Low Payoffs: Inducing Preferences With Holt-Laury Gambles, John Dickhaut, Daniel Houser, Jason A. Aimone, Dorina Tila, Cathleen Johnson
ESI Working Papers
A continuing goal of experiments is to understand risky decisions when the decisions are important. Often a decision’s importance is related to the magnitude of the associated monetary stake. Khaneman and Tversky (1979) argue that risky decisions in high stakes environments can be informed using questionnaires with hypothetical choices (since subjects have no incentive to answer questions falsely.) However, results reported by Holt and Laury (2002, henceforth HL), as well as replications by Harrison (2005) suggest that decisions in “high” monetary payoff environments are not well-predicted by questionnaire responses. Thus, a potential implication of the HL results is that studying …