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Full-Text Articles in Other Economics

Your Money Or Your Time? Experimental Evidence On Overbidding In All-Pay Auctions, Adriana Breaban, Charles N. Noussair, Andreea Victoria Popescu Mar 2018

Your Money Or Your Time? Experimental Evidence On Overbidding In All-Pay Auctions, Adriana Breaban, Charles N. Noussair, Andreea Victoria Popescu

ESI Working Papers

Competition for a prize frequently takes the form of dedicating time toward winning a contest. Those who spend the most time become more likely to obtain the prize. We model this competition as an all-pay auction under incomplete information, and report an experiment in which expenditures and rewards are in terms of time. In the experiment, subjects must stay in the laboratory doing nothing for an initially prespecified length of time. However, they can bid, in terms of time, to leave early. The auction has an allpay structure so that if an individual does not submit the highest bid within …

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Experimental Evidence On The Cyclicality Of Investment, Cortney S. Rodet, Andrew Smyth Feb 2018

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.

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Indefinitely Repeated Contests: An Experimental Study, Philip Brookins, Dmitry Ryvkin, Andrew Smyth Feb 2018

Indefinitely Repeated Contests: An Experimental Study, Philip Brookins, Dmitry Ryvkin, Andrew Smyth

ESI Working Papers

We experimentally explore indefinitely repeated contests. Theory predicts more cooperation, in the form of lower expenditures, in indefinitely repeated contests with a longer expected time horizon, yet our data do not support this prediction. Theory also predicts more cooperation in indefinitely repeated contests compared to finitely repeated contests of the same expected length, but we find no significant difference empirically. When controlling for risk and gender, we actually find significantly higher long-run expenditure in some indefinite contests relative to finite contests. Finally, theory predicts no difference in cooperation across indefinitely repeated winner-take-all and proportional-prize contests. We find significantly less cooperation …

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Low Perceived Control Over Health Is Associated With Lower Treatment Uptake In A High Mortality Population Of Bolivian Forager-Farmers, Sarah Alami, Jonathan Stieglitz, Hillard Kaplan, Michael Gurven Jan 2018

Low Perceived Control Over Health Is Associated With Lower Treatment Uptake In A High Mortality Population Of Bolivian Forager-Farmers, Sarah Alami, Jonathan Stieglitz, Hillard Kaplan, Michael Gurven

ESI Publications

Indigenous people worldwide suffer from higher rates of morbidity and mortality than neighboring populations. In addition to having limited access to public health infrastructure, indigenous people may also have priorities and health perceptions that deter them from seeking adequate modern healthcare. Here we propose that living in a harsh and unpredictable environment reduces motivation to pursue deliberate, costly action to improve health outcomes. We assess whether variation in Health Locus of Control (HLC), a psychological construct designed to capture self-efficacy with respect to health, explains variation in treatment uptake behavior among Tsimane Amerindians (N=690; age range: 40–89 years; 55.8% female; …

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Testing The Boundaries Of The Double Auction: The Effects Of Complete Information And Market Power, Erik O. Kimbrough Jan 2018

Testing The Boundaries Of The Double Auction: The Effects Of Complete Information And Market Power, Erik O. Kimbrough

Economics Faculty Articles and Research

We report boundary experiments testing the robustness of price convergence in double auction markets for non-durable goods in which there is extreme earnings inequality at the competitive equilibrium (CE). Following up on a conjecture by Smith (1976a), we test whether the well-known equilibrating power of the double auction institution is robust to the presence of complete information about traders’ values and costs and the presence of symmetric market power. We find that complete information is insufficient to impede convergence to CE prices; however, introducing market power consistently causes prices to deviate from the CE, whether or not subjects possess complete …

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The Tug-Of-War In The Laboratory, Cary Deck, Roman Sheremeta Jan 2018

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

ESI Working Papers

The tug-of-war is a multi-battle contest often used to describe extended interactions in economics, operations management, political science, and other disciplines. While there has been some theoretical work, 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 derived under standard assumptions. In the first battle of the tug-of-war, subjects often bid less, while in the follow-up battles, they bid more than predicted. Also, contrary to the prediction, bids tend to increase in the duration of the tug-of-war. Finally, extending the margin necessary to win …

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Time Delay And Investment Decisions: Evidence From An Experiment In Tanzania, Plamen Nikolov Jan 2018

Time Delay And Investment Decisions: Evidence From An Experiment In Tanzania, Plamen Nikolov

Economics Faculty Scholarship

Attitudes toward risk underlie virtually every important economic decision an individual makes. In this experimental study, I examine how introducing a time delay into the execution of an investment plan influences individuals’ risk preferences. The field experiment proceeded in three stages: a decision stage, an execution stage and a payout stage. At the outset, in the Decision Stage (Stage 1), each subject was asked to make an investment plan by splitting a monetary investment amount between a risky asset and a safe asset. Subjects were informed that the investment plans they made in the Decision Stage are binding and will …

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Economics Of Recruiting Interactions In Collegiate Sport: An Analysis In Game Theory And Matching Markets, Jessica Twaddle Jan 2018

Economics Of Recruiting Interactions In Collegiate Sport: An Analysis In Game Theory And Matching Markets, Jessica Twaddle

Murray State Theses and Dissertations

This paper seeks to explain the interactions involved in recruiting prospective student-athletes to universities, particularly in the sport of softball. By employing the concepts of Game Theory, Prisoner’s Dilemma, and Matching Markets, the market for recruiting is explored and explained. Recent legislative changes in the market are then examined as well as possible outcomes as a result. Research on commitments in softball and lacrosse was collected in order to make claims in regard to incentives. The market for recruiting is compared to the residency placement matching system. Ideas are presented on ways to achieve a market that clears where outcomes …

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Culture And Colonial Legacy: Evidence From Public Goods Games, Latika Chaudhary, Jared Rubin, Sriya Iyer, Anand Shrivastava Jan 2018

Culture And Colonial Legacy: Evidence From Public Goods Games, Latika Chaudhary, Jared Rubin, Sriya Iyer, Anand Shrivastava

ESI Working Papers

We conduct a public goods game in three small towns in the Indian state of Rajasthan. Due to historical military conquest, until 1947 these towns were on (barely) opposite sides of a colonial border separating British India from the Princely States. Our research design offers a treatment comparison between the towns of (British) Kekri and (Princely) Sarwar, and a control comparison between (Princely) Sarwar and (Princely) Shahpura. We find no significant difference in contributions to home town groups, but a significant difference in contributions to mixed town groups. Participants in (British) Kekri are more co-operative (i.e., contribute more) in mixed …

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Trust In Humans And Robots: Economically Similar But Emotionally Different, Eric Schniter, Timothy W. Shields, Daniel Sznycer Jan 2018

Trust In Humans And Robots: Economically Similar But Emotionally Different, Eric Schniter, Timothy W. Shields, Daniel Sznycer

ESI Working Papers

Trust-based interactions with robots are increasingly common in the marketplace, workplace, on the road, and in the home. However, a looming concern is that people may not trust robots as they do humans. While trust in fellow humans has been studied extensively, little is known about how people extend trust to robots. Here we compare trust-based investments and emotions from across three nearly identical economic games: human-human trust games, human-robot trust games, and human-robot trust games where the robot decision impacts another human. Robots in our experiment mimic humans: they are programmed to make reciprocity decisions based on previously observed …

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Individualism, Collectivism, And Trade, Aidin Hajikhameneh, Erik O. Kimbrough Dec 2017

Individualism, Collectivism, And Trade, Aidin Hajikhameneh, Erik O. Kimbrough

Economics Faculty Articles and Research

While economists recognize the important role of formal institutions in the promotion of trade, there is increasing agreement that institutions are typically endogenous to culture, making it difficult to disentangle their separate contributions. Lab experiments that assign institutions exogenously and measure and control individual cultural characteristics can allow for clean identification of the effects of institutions, conditional on culture, and help us understand the relationship between behavior and culture, under a given institutional framework. We focus on cultural tendencies toward individualism/collectivism, which social psychologists highlight as an important determinant of many behavioral differences across groups and people. We design an …

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Information Transmission And The Oral Tradition: Evidence Of A Late-Life Service Niche For Tsimane Amerindians, Eric Schniter, Nathaniel T. Wilcox, Bret A. Beheim, Hillard S. Kaplan, Michael Gurven Dec 2017

Information Transmission And The Oral Tradition: Evidence Of A Late-Life Service Niche For Tsimane Amerindians, Eric Schniter, Nathaniel T. Wilcox, Bret A. Beheim, Hillard S. Kaplan, Michael Gurven

ESI Publications

Storytelling can affect wellbeing and fitness by transmitting information and reinforcing cultural codes of conduct. Despite their potential importance, the development and timing of storytelling skills, and the transmission of story knowledge have received minimal attention in studies of subsistence societies that more often focus on food production skills. Here we examine how storytelling and patterns of information transmission among Tsimane forager-horticulturalists are predicted by the changing age profiles of storytellers’ abilities and accumulated experience. We find that storytelling skills are most developed among older adults who demonstrate superior knowledge of traditional stories and who report telling stories most. We …

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New Hampshire Effect: Behavior In Sequential And Simultaneous Multi-Battle Contests, Shakun D. Mago, Roman M. Sheremeta Dec 2017

New Hampshire Effect: Behavior In Sequential And Simultaneous Multi-Battle Contests, Shakun D. Mago, Roman M. Sheremeta

ESI Working Papers

Sequential multi-battle contests are predicted to induce lower expenditure than simultaneous contests. This prediction is a result of a “New Hampshire Effect” – a strategic advantage created by the winner of the first battle. Although our laboratory study provides evidence for the New Hampshire Effect, we find that sequential contests generate significantly higher (not lower) expenditure than simultaneous contests. This is mainly because in sequential contests, there is significant over-expenditure in all battles. We suggest sunk cost fallacy and utility of winning as two complementary explanations for this behavior and provide supporting evidence.

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Poverty Mapping Using Convolutional Neural Networks Trained On High And Medium Resolution Satellite Images, With An Application In Mexico, Boris Babenko, Jonathan Hersh, David Newhouse, Anusha Ramakrishnan, Tom Swartz Dec 2017

Poverty Mapping Using Convolutional Neural Networks Trained On High And Medium Resolution Satellite Images, With An Application In Mexico, Boris Babenko, Jonathan Hersh, David Newhouse, Anusha Ramakrishnan, Tom Swartz

Economics Faculty Articles and Research

Mapping the spatial distribution of poverty in developing countries remains an important and costly challenge. These “poverty maps” are key inputs for poverty targeting, public goods provision, political accountability, and impact evaluation, that are all the more important given the geographic dispersion of the remaining bottom billion severely poor individuals. In this paper we train Convolutional Neural Networks (CNNs) to estimate poverty directly from high and medium resolution satellite images. We use both Planet and Digital Globe imagery with spatial resolutions of 3-5 m2 and 50 cm2 respectively, covering all 2 million km2 of Mexico. Benchmark poverty estimates come from …

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Who’S Holding Out? An Experimental Study Of The Benefits And Burdens Of Eminent Domain, Abel Winn, Matthew W. Mccarter Oct 2017

Who’S Holding Out? An Experimental Study Of The Benefits And Burdens Of Eminent Domain, Abel Winn, Matthew W. Mccarter

ESI Publications

A substantial literature identifies seller holdout as a serious obstacle to land assembly, implying that eminent domain is an appropriate policy response. We conduct a series of laboratory experiments to test this view. We find that when there is no competition and no eminent domain, land assembly suffers from costly delay and failed assembly: participants lose 18.8% of the available surplus on average. Much of the inefficiency is due to low offers from the buyers (“buyer holdout”) rather than strategic holdout among sellers. When buyers can exercise eminent domain the participants lose 19.4% of the surplus on average. This loss …

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Information (Non)Aggregation In Markets With Costly Signal Acquisition, Brice Corgnet, Cary Deck, Mark Desantis, David Porter Oct 2017

Information (Non)Aggregation In Markets With Costly Signal Acquisition, Brice Corgnet, Cary Deck, Mark Desantis, David Porter

ESI Working Papers

Markets are often viewed as a tool for aggregating disparate private knowledge, a stance supported by past laboratory experiments. However, traders’ acquisition cost of information has typically been ignored. Results from a laboratory experiment involving six treatments varying the cost of acquiring signals of an asset’s value suggest that when information is costly, markets do not succeed in aggregating it. At an individual level, having information improves trading performance, but not enough to offset the cost of obtaining the information. Although males earn more through trading than females, this differential is offset by the greater propensity of males to buy …

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Nebraska Monthly Economic Indicators: September 20, 2017, Eric Thompson Sep 2017

Nebraska Monthly Economic Indicators: September 20, 2017, Eric Thompson

Leading Economic Indicator Reports

The Leading Economic Indicator – Nebraska (LEI-N) 1 fell by 0.38% during August of 2017. The decline in the LEI-N, which is designed to predict economic activity six months into the future, suggests that the Nebraska economy will grow slowly during the first few months of 2018. The drop in the indicator was primarily due to a decline in manufacturing hours-worked during August. Building permits for single-family homes and airline passenger enplanements also dropped slightly. There were two positive components of the LEI-N. Businesses responding to the August Survey of Nebraska Business reported plans to increase sales and employment over …

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The Welfare Effects Of Civil Forfeiture, Michael Preciado, Bart J. Wilson Sep 2017

The Welfare Effects Of Civil Forfeiture, Michael Preciado, Bart J. Wilson

ESI Publications

Using a laboratory experiment we explore competing claims on the welfare effects of civil forfeiture. Experiment participants are tasked with making trade-offs in allocating resources “to fight crime” with and without the ability to seize and forfeit assets. It is an open question whether the societal impact of reducing crime is greater in a world with or without civil forfeiture. Proponents of civil forfeiture argue that the ill-gotten gains of criminals can be used by law enforcement to further fight crime. Opponents claim that the confiscation of assets by law enforcement distorts the prioritization of cases by focusing attention, not …

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No Mere Tautology: The Division Of Labor Is Limited By The Division Of Labor, Andrew Smyth, Bart J. Wilson Sep 2017

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 …

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The Attack And Defense Of Weakest Link Networks, Dan Kovenock, Brian Roberson, Roman M. Sheremeta Aug 2017

The Attack And Defense Of Weakest Link Networks, Dan Kovenock, Brian Roberson, Roman M. Sheremeta

ESI Working Papers

We experimentally test the qualitatively different equilibrium predictions of two theoretical models of attack and defense of a weakest-link network of targets. In such a network, the attacker’s objective is to successfully attack at least one target and the defender’s objective is to defend all targets. The models differ in how the conflict at each target is modeled — specifically, the lottery and auction contest success functions (CSFs). Consistent with equilibrium in the auction CSF model, attackers utilize a stochastic “guerrilla-warfare” strategy, which involves randomly attacking at most one target with a random level of force. Inconsistent with equilibrium in …

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Loss Aversion And The Quantity-Quality Tradeoff, Jared Rubin, Anya Samek, Roman M. Sheremeta Aug 2017

Loss Aversion And The Quantity-Quality Tradeoff, Jared Rubin, Anya Samek, Roman M. Sheremeta

ESI Working Papers

Firms face an optimization problem that requires a maximal quantity output given a quality constraint. But how do firms incentivize quantity and quality to meet these dual goals, and what role do behavioral factors, such as loss aversion, play in the tradeoffs workers face? We address these questions with a theoretical model and an experiment in which participants are paid for both quantity and quality of a real effort task. Consistent with basic economic theory, higher quality incentives encourage participants to shift their attention from quantity to quality. However, we also find that loss averse participants shift their attention from …

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Human And Monkey Responses In A Symmetric Game Of Conflict With Asymmetric Equilibria, Sarah F. Brosnan, Sara A. Price, Kelly Leverett, Laurent Prétôt, Michael Beran, Bart J. Wilson Aug 2017

Human And Monkey Responses In A Symmetric Game Of Conflict With Asymmetric Equilibria, Sarah F. Brosnan, Sara A. Price, Kelly Leverett, Laurent Prétôt, Michael Beran, Bart J. Wilson

ESI Publications

To better understand the evolutionary history of human decision-making, we compare human behavior to that of two monkey species in a symmetric game of conflict with two asymmetric equilibria. While all of these species routinely make decisions in the context of social cooperation and competition, they have different socio-ecologies, which leads to different predictions about how they will respond. Our prediction was that anti-matching would be more difficult than matching in a symmetric coordination with simultaneous moves. To our surprise, not only do rhesus macaques frequently play one asymmetric Nash equilibrium, but so do capuchin monkeys, whose play in the …

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Historical Cost And Conservatism Are Joint Adaptations That Help Identify Opportunity Cost, Sudipta Basu, Gregory B. Waymire Aug 2017

Historical Cost And Conservatism Are Joint Adaptations That Help Identify Opportunity Cost, Sudipta Basu, Gregory B. Waymire

ESI Publications

Braun (The ecological rationality of historical costs and conservatism. Accounting, Economics and Law: A Convivium, this issue) argues that the traditional accounting principles underlying the revenue-expense approach such as Historical Cost and Conservatism are ecologically rational in that they help organizations survive better in uncertain economic environments. More importantly, Braun argues that the revenue-expense approach generates new private information, which informs markets and makes them more effective (Hayek, 1945, The use of knowledge in society. The American Economic Review, 35(4), 519–530), as opposed to merely reflecting back market data under the asset-liability approach (e.g. Sunder, 2011, IFRS monopoly: …

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Exchange In The Absence Of Legal Enforcement: Reputation And Multilateral Punishment Under Uncertainty, Aidin Hajikhameneh, Jared Rubin Aug 2017

Exchange In The Absence Of Legal Enforcement: Reputation And Multilateral Punishment Under Uncertainty, Aidin Hajikhameneh, Jared Rubin

ESI Working Papers

Prinicpal-agent problems can reduce gains from exchange available in long distance trade. One solution to mitigate this problem is multilateral punishment, whereby groups of principals jointly punish cheating agents by giving them bad reputations. But how does such punishment work when there is uncertainty regarding whether an agent actually cheated or was just the victim of bad luck? And how might such uncertainty be mitigated—or exacerbated—by nonobservable, pro-social behavioral characteristics? We address these questions by designing a simple modified trust game with uncertainty and the capacity for principals to employ multilateral punishment. We find that a modest amount of uncertainty …

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Experimenting With Contests For Experimentation, Cary Deck, Erik O. Kimbrough Aug 2017

Experimenting With Contests For Experimentation, Cary Deck, Erik O. Kimbrough

ESI Publications

We report an experimental test of alternative rules in innovation contests when success may not be feasible and contestants may learn from each other. Following Halac, Kartik, and Liu (in press), the contest designer can vary the prize allocation rule from Winner‐Take‐All (WTA) in which the first successful innovator receives the entire prize to Shared in which all successful innovators during the contest duration share in the prize. The designer can also vary the information disclosure policy from Public in which at each period, all information about contestants' past successes and failures is publicly available, to Private, in which contestants …

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How Product Innovation Can Affect Price Collusion, Andrew Smyth Aug 2017

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.

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The Optimal Defense Of Networks Of Targets, Dan Kovenock, Brian Roberson Aug 2017

The Optimal Defense Of Networks Of Targets, Dan Kovenock, Brian Roberson

ESI Working Papers

This paper examines a game-theoretic model of attack and defense of multiple networks of targets in which there exist intra-network strategic complementarities among targets. The defender’s objective is to successfully defend all of the networks and the attacker’s objective is to successfully attack at least one network of targets. Although there are multiple equilibria, we characterize correlation structures in the allocations of forces across targets that arise in all equilibria. For example, in all equilibria the attacker utilizes a stochastic ‘guerrilla warfare’ strategy in which a single random network is attacked.

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Equilibrium Play In Voluntary Ultimatum Games: Beneficence Cannot Be Extorted, Vernon L. Smith, Bart J. Wilson Jul 2017

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.

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War And Conflict In Economics: Theories, Applications, And Recent Trends, Erik O. Kimbrough, Kevin Laughren, Roman M. Sheremeta Jul 2017

War And Conflict In Economics: Theories, Applications, And Recent Trends, Erik O. Kimbrough, Kevin Laughren, Roman M. Sheremeta

ESI Working Papers

We review the main economic models of war and conflict. These models vary in details, but their implications are qualitatively consistent, highlighting key commonalities across a variety of conflict settings. Recent empirical literature, employing both laboratory and field data, in many cases confirms the basic implications of conflict theory. However, this literature also presents important challenges to the way economists traditionally model conflict. We finish our review by suggesting ways to address these challenges.

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Passing It Along: Experiments On Creating The Negative Externalities Of Climate Change, Alessandro Del Ponte, Andrew W. Delton, Reuben Kline, Nicholas A. Seltzer Jul 2017

Passing It Along: Experiments On Creating The Negative Externalities Of Climate Change, Alessandro Del Ponte, Andrew W. Delton, Reuben Kline, Nicholas A. Seltzer

Political Science Faculty Articles and Research

Climate change is a global social dilemma. Mitigating it is partly a political problem created by inequitable distributions of the benefits of carbon emissions and the costs of climate change; that is, the people who benefit the most are not the same set of people who pay the most costs. Here we use an experimental economic approach to political science to study these inequities. In two experiments, we show that people willingly create climate problems when those problems are passed along to others. Surprisingly, this is not further exacerbated if those others are from another country. We also show that, …

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