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Articles 91 - 120 of 319
Full-Text Articles in Econometrics
Making It Public: The Effect Of (Private And Public) Wage Proposals On Efficiency And Income Distribution, Lara Ezquerra, Joaquín Gómez-Miñambres, Natalia Jiminez, Praveen Kujal
Making It Public: The Effect Of (Private And Public) Wage Proposals On Efficiency And Income Distribution, Lara Ezquerra, Joaquín Gómez-Miñambres, Natalia Jiminez, Praveen Kujal
ESI Working Papers
The implications of (public or private) pre-play communication and information revelation in a labour relationship is not well understood. We address these implications theoretically and experimentally. In our baseline experiments, the employer offers a wage to the worker who may then accept or reject it. In the public and private treatment, workers, moving first, make a non-binding private or public wage proposal. Our theoretical model assumes that wage proposals convey information about a worker’s minimum acceptable wage and are misreported with a certain probability. It predicts that, on average, wage proposals lead to higher wage offers and acceptance rates, with …
An Experimental Study Of Within- And Cross-Cultural Cooperation: Chinese And American Play In The Prisoner’S Dilemma Game, Michael Kuroda, Jieran Li, Jason Shachat, Lijia Wei, Bochen Zhu
An Experimental Study Of Within- And Cross-Cultural Cooperation: Chinese And American Play In The Prisoner’S Dilemma Game, Michael Kuroda, Jieran Li, Jason Shachat, Lijia Wei, Bochen Zhu
ESI Working Papers
We study whether cross- and within-culture groups have different cooperation rates in the Prisoner’s Dilemma Game. In an experiment, university students in China and America engage in a single iteration of the game, complete belief elicitation tasks regarding their opponents’ play and take a survey including attitudinal measurements regarding their in- and out-group attitudes. Cooperation rates are higher across the two countries are higher in both cross-culture and in within-culture interactions, although not significantly. We also find that Chinese participants cooperate less than American ones. Further, female Chinese participants are more cooperative than Chinese male ones. In the cross-culture treatment, …
Economics Of Majoritarian Identity Politics, Rohit Ticku, Raghul S. Venkatesh
Economics Of Majoritarian Identity Politics, Rohit Ticku, Raghul S. Venkatesh
ESI Working Papers
Majoritarian identity politics has become salient in representative democracies. Why do parties engage in identity politics and what are its consequences? We present a model of electoral competition in which parties capture voter groups based on their identity, and compete over an economic policy platform for the support of non-partisan voters. In addition, the party that caters to majoritarian interests makes a costly investment in polarizing identity. The investment provides subsequent payoffs to voters who have a preference for identity. When voter preferences over policy platforms are idiosyncratic in nature, greater investment in polarizing identity (i) increases both parties’ rents …
Group-Identity And Long-Run Cooperation: An Experiment, Gabriele Camera, Lukas Hohl
Group-Identity And Long-Run Cooperation: An Experiment, Gabriele Camera, Lukas Hohl
ESI Working Papers
We stress-test the limits of the power of group identity in the context of cooperation by constructing laboratory economies where participants confront an indefinitely repeated social dilemma as strangers. Group identity is artificially induced by random assignment to color-coded groups, and reinforced by an initial cooperation task played in-group and in fixed pairs. Subsequently subjects interact in-group and out-group in large economies, as strangers. Indefinite repetition guarantees full cooperation is an equilibrium. Decision-makers can discriminate based on group affiliation, but cannot observe past behaviors. We find no evidence of group biases. This suggests that group effects are less likely to …
Classical Theory Of Competitive Market Price Formation, Sabiou M. Inoua, Vernon L. Smith
Classical Theory Of Competitive Market Price Formation, Sabiou M. Inoua, Vernon L. Smith
ESI Working Papers
We offer an information theory of market price formation, formalizing and elaborating on an old, implicit, classical tradition of supply and demand based on buyers’ and sellers’ mone-tary valuations of commodities (formally their reservation prices) and competition as a multilat-eral higgling and bargaining process. The early laboratory market experiments, as it turns out with hindsight, established the remarkable stability, efficiency, and robustness of the old view of competitive price discovery, and not the neoclassical price theory (based on individual utility and profit maximization for given prices). Herein, we present a partial-equilibrium version of the the-ory in which wealth is implicitly …
Trustors’ Disregard For Trustees Deciding Intuitively Or Reflectively: Three Experiments On Time Constraints, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti
Trustors’ Disregard For Trustees Deciding Intuitively Or Reflectively: Three Experiments On Time Constraints, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti
ESI Working Papers
Human decisions in the social domain are modulated by the interaction between intuitive and reflective processes. Requiring individuals to decide quickly or slowly triggers these processes and is thus likely to elicit different social behaviors. Meanwhile, time pressure has been associated with inefficiency in market settings and market regulation often requires individuals to delay their decisions via cooling-off periods. Yet, recent research suggests that people who make reflective decisions are met with distrust. If this extends to external time constraints, then forcing individuals to delay their decisions may be counterproductive in scenarios where trust considerations are important. In three Trust …
Standard Vs Random Dictator Games: On The Effects Of Role Uncertainty And Framing On Generosity, Ernesto Mesa-Vázquez, Ismael Rodriguez-Lara, Amparo Urbano
Standard Vs Random Dictator Games: On The Effects Of Role Uncertainty And Framing On Generosity, Ernesto Mesa-Vázquez, Ismael Rodriguez-Lara, Amparo Urbano
ESI Working Papers
We show that generosity is affected when we vary the level of role uncertainty, i.e., the probability that the dictator’s decision will be implemented. We also show that framing matters for generosity in that subjects are less generous when they are told that their choices will be implemented with a certain probability, compared with a setting in which they are told that their choices will not be implemented with certain probability.
Legalized Same-Sex Marriage And Coming Out In America: Evidence From Catholic Seminaries, Avner Seror, Rohit Ticku
Legalized Same-Sex Marriage And Coming Out In America: Evidence From Catholic Seminaries, Avner Seror, Rohit Ticku
ESI Working Papers
We study the effect of legalization of same-sex marriage on coming out in the United States. We overcome data limitations by inferring coming out decisions through a revealed preference mechanism. We exploit data on enrollment in seminary studies for the Catholic priesthood, hypothesizing that Catholic priests' vow of celibacy may lead gay men to self-select as a way to avoid a heterosexual lifestyle. Using a differences-in-differences design that exploits variation in the timing of legalization across states, we find that city-level enrollment in priestly studies fell by about 15% exclusively in states adopting the reform. The celibacy norm appears to …
The Influence Of Food Recommendations: Evidence From A Randomized Field Experiment, Kamal Bookwala, Caleb Gallemore, Joaquín Gómez-Miñambres
The Influence Of Food Recommendations: Evidence From A Randomized Field Experiment, Kamal Bookwala, Caleb Gallemore, Joaquín Gómez-Miñambres
ESI Working Papers
We report results from a randomized field experiment conducted at two food festivals. Our primary aim is to assess the impact of two types of recommendations commonly observed in food settings: most popular and chef’s choice. Subjects select a cupcake from a binary menu. The two options, offered by the same bakery, are the best seller in the bakery and the baker’s recommended cupcake. Our treatments manipulate whether the recommendation is disclosed in tandem with the cupcakes in the menu. We find that the most popular is the only recommendation that statistically significantly increased consumers’ demand relative to …
A Class Of N-Player Colonel Blotto Games With Multidimensional Private Information, Christian Ewerhart, Dan Kovenock
A Class Of N-Player Colonel Blotto Games With Multidimensional Private Information, Christian Ewerhart, Dan Kovenock
ESI Working Papers
In this paper, we study N-player Colonel Blotto games with incomplete information about battlefield valuations. Such games arise in job markets, research and development, electoral competition, security analysis, and conflict resolution. For M ≥ N + 1 battlefields, we identify a Bayes-Nash equilibrium in which the resource allocation to a given battlefield is strictly monotone in the valuation of that battlefield. We also explore extensions such as heterogeneous budgets, the case M ≤ N, full-support type distributions, and network games.
Economics Students: Self-Selected In Preferences And Indoctrinated In Beliefs, Antonio M. Espín, Manuel Correa, Alberto Ruiz-Villaverde
Economics Students: Self-Selected In Preferences And Indoctrinated In Beliefs, Antonio M. Espín, Manuel Correa, Alberto Ruiz-Villaverde
ESI Working Papers
There is much debate as to why economics students display more self-interested behavior than other students: whether homo economicus self-select into economics or students are instead “indoctrinated” by economics learning, and whether these effects impact on preferences or beliefs about others’ behavior. Using a classroom survey (n>500) with novel behavioral questions we show that, compared to students in other majors, econ students report being: (i) more self-interested (in particular, less compassionate or averse to advantageous inequality) already in the first year and the difference remains among more senior students; (ii) more likely to think that people will be unwilling …
Institutions And Opportunistic Behavior: Experimental Evidence, Antonio Cabrales, Irma Clots-Figueras, Roberto Hernán-González, Praveen Kujal
Institutions And Opportunistic Behavior: Experimental Evidence, Antonio Cabrales, Irma Clots-Figueras, Roberto Hernán-González, Praveen Kujal
ESI Working Papers
Risk mitigating institutions have long been used by societies to protect against opportunistic behavior. We know little about how they are demanded, who demands them or how they impact subsequent behavior. To study these questions, we run a large-scale online experiment where insurance can be purchased to safeguard against opportunistic behavior. We compare two different selection mechanisms for risk mitigation, the individual and the collective (voting). We find that, whether individual or collective, there is demand for riskmitigating institutions amongst high-opportunism individuals, while low-opportunism individuals demand lesser levels of insurance. However, high-opportunism individuals strategically demand lower insurance institutions when they …
In-Group Versus Out-Group Preferences In Intergroup Conflict: An Experiment, Subhashish M. Chowdhury, Anwesha Mukherjee, Roman M. Sheremeta
In-Group Versus Out-Group Preferences In Intergroup Conflict: An Experiment, Subhashish M. Chowdhury, Anwesha Mukherjee, Roman M. Sheremeta
ESI Working Papers
Individuals participating in a group conflict have different preferences, e.g., maximizing their own payoff, maximizing the group’s payoff, or defeating the rivals. When such preferences are present simultaneously, it is difficult to distinctly identify the impact of those preferences on conflict. In order to separate in-group and out-group preferences, we conduct an experiment in which human in-group or out-group players are removed while keeping the game strategically similar. Our design allows us to study (i) how effort in a group conflict vary due to in-group and out-group preferences, and (ii) how the impact of these preferences vary when the two …
Culture, Institutions & The Long Divergence, Alberto Bisin, Jared Rubin, Avner Seror, Thierry Verdier
Culture, Institutions & The Long Divergence, Alberto Bisin, Jared Rubin, Avner Seror, Thierry Verdier
ESI Working Papers
During the medieval and early modern periods the Middle East lost its economic advantage relative to the West. Recent explanations of this historical phenomenon— called the Long Divergence—focus on these regions’ distinct political economy choices regarding religious legitimacy and limited governance. We study these features in a political economy model of the interactions between rulers, secular and clerical elites, and civil society. The model induces a joint evolution of culture and political institutions converging to one of two distinct stationary states: a religious and a secular regime. We then map qualitatively parameters and initial conditions characterizing the West and …
A Simple Measure Of Economic Complexity, Sabiou M. Inoua
A Simple Measure Of Economic Complexity, Sabiou M. Inoua
ESI Working Papers
Contrary to conventional economic growth theory, which reduces a country’s output to one aggregate variable (GDP), product diversity is central to economic development, as recent, “economic complexity”, research suggests. A country’s product diversity reflects its diversity of knowhow or “capabilities”. Researchers proposed the Economic Complexity Index (ECI) and the country Fitness index to estimate a country’s number of capabilities from international export data; these measures predict economic growth better than conventional variables such as human capital. This paper offers a simpler measure of a country’s knowhow, Log Product Diversity (or LPD, the logarithm of a country’s number of products), which …
Differences In Cognitive Reflection Mediate Gender Differences In Social Preferences, Antonio M. Espín, Valerio Capraro, Brice Corgnet, Simon Gächter, Roberto Hernán-González, Praveen Kujal, Stephen Rassenti
Differences In Cognitive Reflection Mediate Gender Differences In Social Preferences, Antonio M. Espín, Valerio Capraro, Brice Corgnet, Simon Gächter, Roberto Hernán-González, Praveen Kujal, Stephen Rassenti
ESI Working Papers
Previous studies have shown that women tend to be more egalitarian and less self-interested than men whereas men tend to be more concerned with social efficiency motives. The roots of such differences, however, remain unknown. Since different cognitive styles have also been associated with different distributional social preferences, we hypothesise that gender differences in social preferences can be partially explained by differences in cognitive styles (i.e., women rely more on intuition whereas men are more reflective). We test this hypothesis meta-analytically using data from seven studies conducted in four countries (USA, Spain, India, and UK; n=6,910) where cognitive reflection and …
Strategically Revealing Intentions In General Lotto Games, Keith Paarporn, Rahul Chandan, Dan Kovenock, Mahnoosh Alizadeh, Jason R. Marden
Strategically Revealing Intentions In General Lotto Games, Keith Paarporn, Rahul Chandan, Dan Kovenock, Mahnoosh Alizadeh, Jason R. Marden
ESI Working Papers
Strategic decision-making in uncertain and adversarial environments is crucial for the security of modern systems and infrastructures. A salient feature of many optimal decision-making policies is a level of unpredictability, or randomness, which helps to keep an adversary uncertain about the system’s behavior. This paper seeks to explore decision-making policies on the other end of the spectrum – namely, whether there are benefits in revealing one’s strategic intentions to an opponent before engaging in competition.We study these scenarios in a well-studied model of competitive resource allocation problem known as General Lotto games. In the classic formulation, two competing players simultaneously …
The Art Of Concession In General Lotto Games, Rahul Chandan, Keith Paarporn, Dan Kovenock, Mahnoosh Alizadeh, Jason R. Marden
The Art Of Concession In General Lotto Games, Rahul Chandan, Keith Paarporn, Dan Kovenock, Mahnoosh Alizadeh, Jason R. Marden
ESI Working Papers
Success in adversarial environments often requires investment into additional resources in order to improve one’s competitive position. But, can intentionally decreasing one’s own competitiveness ever provide strategic benefits in such settings? In this paper, we focus on characterizing the role of “concessions” as a component of strategic decision making. Specifically, we investigate whether a player can gain an advantage by either conceding budgetary resources or conceding valuable prizes to an opponent. While one might na¨ıvely assume that the player cannot, our work demonstrates that – perhaps surprisingly – concessions do offer strategic benefits when made correctly. In the context of …
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 …
A Capital Asset Pricing Model With Idiosyncratic Risk And The Sources Of The Beta Anomaly, Mark Schneider, Manuel A. Nunez
A Capital Asset Pricing Model With Idiosyncratic Risk And The Sources Of The Beta Anomaly, Mark Schneider, Manuel A. Nunez
ESI Working Papers
We introduce a generalization of the classical capital asset pricing model in which market uncertainty, market sentiment, and forms of idiosyncratic volatility and idiosyncratic skewness are priced in equilibrium. We derive two versions of the model, one based on a representative agent who cares about three criteria (risk, robustness, and expected returns), and the other with a microfoundation based on three types of investors (speculators, hedgers, and arbitrageurs). We apply the resulting capital asset pricing model with idiosyncratic risk (IR-CAPM) to provide a new theoretical account of the beta anomaly, one of the most fundamental and widely studied empirical limitations …
Financial Reporting And Moral Sentiments, Radhika Lunawat, Timothy W. Shields, Gregory B. Waymire
Financial Reporting And Moral Sentiments, Radhika Lunawat, Timothy W. Shields, Gregory B. Waymire
ESI Working Papers
Dating back at least to Adam Smith (1790), philosophers and researchers expect that people will behave differently when they know their actions are observable to others. We hypothesize that financial reporting reveals managers’ actions and leads them to take different actions that are better aligned with investor interests. We posit that the reason why is the activation of our internal mental self-evaluation that Smith refers to as an “Impartial Spectator.” We test this hypothesis with an experiment in which we manipulate the availability of a financial report that makes managerial actions transparent. Our evidence shows that financial reporting leads a …
Speed Traps: Algorithmic Trader Performance Under Alternative Market Structures, Yan Peng, Jason Shachat, Lijia Wei, S. Sarah Zhang
Speed Traps: Algorithmic Trader Performance Under Alternative Market Structures, Yan Peng, Jason Shachat, Lijia Wei, S. Sarah Zhang
ESI Working Papers
Using laboratory experiments, we illustrate that trading algorithms that prioritize low latency pose certain pitfalls in a variety of market structures and configurations. In hybrid double auctions markets with human traders and trading agents, we find superior performance of trading agents to human traders in balanced markets with the same number of human and Zero Intelligence Plus (ZIP) buyers and sellers only, thus providing a partial replication of Das et al. (2001). However, in unbalanced markets and extreme market structures, such as monopolies and duopolies, fast ZIP agents fall into a speed trap and both human participants and slow ZIP …
A Theory Of Cultural Revivals, Murat Iyigun, Jared Rubin, Avner Seror
A Theory Of Cultural Revivals, Murat Iyigun, Jared Rubin, Avner Seror
ESI Working Papers
Why do some societies have political institutions that support productively inefficient outcomes? And why does the political power of elites vested in these outcomes often grow over time, even when they are unable to block more efficient modes of production? We propose an explanation centered on the interplay between political and cultural change. We build a model in which cultural values are transmitted inter-generationally. The cultural composition of society, in turn, determines public good provision as well as the future political power of elites from different cultural groups. We characterize the equilibrium of the model and provide sufficient conditions for …
Data For "An Experimental Investigation Of Health Insurance Policy And Behavior", J. Dustin Tracy, Hillard Kaplan, Kevin James, Stephen Rassenti
Data For "An Experimental Investigation Of Health Insurance Policy And Behavior", J. Dustin Tracy, Hillard Kaplan, Kevin James, Stephen Rassenti
ESI Data Sets
We introduce a new experimental approach to measuring the effects of health insurance policy alternatives on behavior and health outcomes over the life course. Cash-motivated subjects are placed in a virtual environment where they earn income and allocate it across multi-period lives. We compare behavior across age, income and insurance plans---one priced according to an individual's expected cost and the other uniformly priced through employer-implemented cost sharing. We find that 1) subjects in the employer-implemented plan purchased insurance at higher rates; 2) the employer-based plan reduced differences due to income and age; 3) subjects in the actuarial plan engaged in …
An Experimental Investigation Of Health Insurance Policy And Behavior, J. Dustin Tracy, Hillard Kaplan, Kevin A. James, Stephen Rassenti
An Experimental Investigation Of Health Insurance Policy And Behavior, J. Dustin Tracy, Hillard Kaplan, Kevin A. James, Stephen Rassenti
ESI Working Papers
We introduce a new experimental approach to measuring the effects of health insurance policy alternatives on behavior and health outcomes over the life course. Cash-motivated subjects are placed in a virtual environment where they earn income and allocate it across multi-period lives. We compare behavior across age, income and insurance plans—one priced according to an individual’s expected cost and the other uniformly priced through employer-implemented cost sharing. We find that 1) subjects in the employer-implemented plan purchased insurance at higher rates; 2) the employer-based plan reduced differences due to income and age; 3) subjects in the actuarial plan engaged in …
An Elementary Humanomics Approach To Boundedly Rational Quadratic Models, Michael J. Campbell, Vernon L. Smith
An Elementary Humanomics Approach To Boundedly Rational Quadratic Models, Michael J. Campbell, Vernon L. Smith
ESI Working Papers
We take a refreshing new look at boundedly rational quadratic models in economics using some elementary modeling of the principles put forward in the book Humanomics by Vernon L. Smith and Bart J. Wilson. A simple model is introduced built on the fundamental Humanomics principles of gratitude/resentment felt and the corresponding action responses of reward /punishment in the form of higher/lower payoff transfers. There are two timescales: one for strictly self-interested action, as in economic equilibrium, and another governed by feelings of gratitude/resentment. One of three timescale scenarios is investigated: one where gratitude /resentment changes much more slowly than economic …
Intertemporal Choice Experiments And Large-Stakes Behavior, Diego Aycinena, Szabolcs Blazsek, Lucas Rentschler, Charles Sprenger
Intertemporal Choice Experiments And Large-Stakes Behavior, Diego Aycinena, Szabolcs Blazsek, Lucas Rentschler, Charles Sprenger
ESI Working Papers
Intertemporal choice experiments are increasingly implemented to make inference about discounting and marginal utility, yet little is known about the predictive power of resulting measures. This project links standard experimental choices to a decision on the desire to smooth a large-stakes payment | around 10% of annual income | through time. In a sample of around 400 Guatemalan Conditional Cash Transfer recipients, we find that preferences over large-stakes payment plans are closely predicted by experimental measures of patience and diminishing marginal utility. These represent the first findings in the literature on the predictive content of such experimentally elicited measures of …
Menu-Dependent Food Choices And Food Waste, Hongxing Liu, Joaquín Gómez-Miñambres, Danyi Qi
Menu-Dependent Food Choices And Food Waste, Hongxing Liu, Joaquín Gómez-Miñambres, Danyi Qi
ESI Working Papers
We use a combination of randomized field experiments and online surveys to test how the menu design affects food choices and food waste. In our field experiment, participants face one of two menus: a narrow menu that only displays a small portion of food, or a broad menu that also contains bigger portions. While all options are equally available in both menus, they differ in how easy and fast the different choices can be made. Our results show that, compared to the broad menu, participants in the narrow menu ordered smaller portions of food. Importantly, food intake was similar across …
A Notion Of Prominence For Games With Natural-Language Labels, Alessandro Sontuoso, Sudeep Bhatia
A Notion Of Prominence For Games With Natural-Language Labels, Alessandro Sontuoso, Sudeep Bhatia
ESI Working Papers
We study games with natural-language labels (i.e., strategic problems where options are denoted by words), for which we propose and test a measurable characterization of prominence. We assume that – ceteris paribus – players find particularly prominent those strategies that are denoted by words more frequently used in their everyday language. To operationalize this assumption, we suggest that the prominence of a strategy-label is correlated with its frequency of occurrence in large text corpora, such as the Google Books corpus (“n-gram” frequency). In testing for the strategic use of word frequency, we consider experimental games with different incentive structures (such …
Trust And Trustworthiness In Procurement Contracts With Retainage, Matthew J. Walker, Elena Katok, Jason Shachat
Trust And Trustworthiness In Procurement Contracts With Retainage, Matthew J. Walker, Elena Katok, Jason Shachat
ESI Working Papers
In complex procurement projects, it is difficult to write enforceable contracts that condition price upon quality. Supplier non-performance becomes an acute risk, particularly when there is intense competition for the contract. An established incentive mechanism used to mitigate the problem of supplier non-performance is retainage, in which the buyer sets aside a portion of the purchase price. After project completion, the buyer determines the amount of retainage that is released to the seller, considering any defects that arise. While generally a feasible contract form to implement, the practical difficulties in assessing completion introduce a moral hazard for the buyer. We …