Other Economics Commons^™

Responses To The Assurance Game In Monkeys, Apes, And Humans Using Equivalent Procedures, Sarah F. Brosnan, Audrey E. Parrish, Michael J. Beran, Timothy Flemming, Lisa Heimbauer, Catherine F. Talbot, Susan P. Lambeth, Steven J. Schapiro, Bart J. Wilson

ESI Publications

There is great interest in the evolution of economic behavior. In typical studies, species are asked to play one of a series of economic games, derived from game theory, and their responses are compared. The advantage of this approach is the relative level of consistency and control that emerges from the games themselves; however, in the typical experiment, procedures and conditions differ widely, particularly between humans and other species. Thus, in the current study, we investigated how three primate species, capuchin monkeys, chimpanzees, and humans, played the Assurance (or Stag Hunt) game using procedures that were, to the best of …

Sweet Diversity: Colonial Goods And The Welfare Gains From Trade After 1492, Jonathan Hersh, Hans-Joachim Voth

Economics Faculty Articles and Research

When did overseas trade start to matter for living standards? Traditional real-wage indices suggest that living standards in Europe stagnated before 1800. In this paper, we argue that welfare rose substantially, but surreptitiously, because of an influx of new goods as a result of overseas trade. Colonial luxuries such as tea, coffee, and sugar transformed European diets after the discovery of America and the rounding of the Cape of Good Hope. These goods became household items in many countries by the end of the 18th century. We use three different methods to calculate welfare gains based on price data and …

Strategic Behavior In Schelling Dynamics: A New Result And Experimental Evidence, Juan Miguel Benito, Pablo Brañas-Garza, Penélope Hern´Andez, Juan A. Sanchis

ESI Working Papers

In this paper we experimentally test Schelling’s (1971) segregation model and confirm the striking result of segregation. In addition, we extend Schelling’s model theoretically by adding strategic behavior and moving costs. We obtain a unique subgame perfect equilibrium in which rational agents facing moving costs may find it optimal not to move (anticipating other participants’ movements). This equilibrium is far for full segregation. We run experiments for this extended Schelling model. We find that the percentage of strategic players dramatically increases with the cost of moving and that the degree of segregation depends on the distribution of rational subjects.

Double Bubbles In Assets Markets With Multiple Generations, Cary Deck, David Porter, Vernon Smith

ESI Working Papers

We construct an asset market in a finite horizon overlapping-generations environment. Subjects are tested for comprehension of their fundamental value exchange environment, and then reminded during each of 25 periods of its declining new value. We observe price bubbles forming when new generations enter the market with additional liquidity and bursting as old generations exit the market and withdrawing cash. The entry and exit of traders in the market creates an M shaped double bubble price path over the life of the traded asset. This finding is significant in documenting that bubbles can reoccur within one extended trading horizon and, …

Cognitive Effort In The Beauty Contest Game, Pablo Brañas-Garza, Teresa García-Muñoz

ESI Working Papers

This paper analyzes cognitive effort in 6 different one-shot p-beauty games. We use both Raven and Cognitive Reáection tests to identify subjects' abilities. We find that the Raven test does not provide any insight on beauty contest game playing but CRT does: subjects with higher scores on this test are more prone to play dominant strategies.

Don’T Ask Me If You Will Not Listen: The Dilemma Of Participative Decision Making, Brice Corgnet, Roberto Hérnan-Gonzalez

ESI Working Papers

We study the effect of participative decision making in an experimental principalagent game, where the principal can consult the agent’s preferred option regarding the task to be undertaken in the final stage of the game. We show that consulting the agent was beneficial to principals as long as they followed the agent’s choice. Ignoring the agent’s choice was detrimental to the principal as it engendered negative emotions and low levels of transfers. Nevertheless, the majority of principals were reluctant to change their mind and adopt the agent’s proposal. Our results suggest that the ability to change one’s own mind is …

Transparency, Efficiency And The Distribution Of Economic Welfare In Pass-Through Investment Trust Games, Thomas A. Rietz, Roman M. Sheremeta, Timothy W. Shields, Vernon Smith

ESI Working Papers

We design an experiment to examine welfare and behavior in a multi-level trust game representing a pass through investment in an intermediated market. In a repeated game, an Investor invests via an Intermediary who lends to a Borrower. A pre-experiment one-shot version of the game serves as a baseline and to type each subject. We alter the transparency of exchanges between non-adjacent parties. We find transparency of the exchanges between the investor and intermediary does not significantly affect welfare. However, transparency regarding exchanges between the intermediary and borrower promotes trust on the part of the investor, increasing welfare. Further, this …

Blood Lipids, Infection, And Inflammatory Markers In The Tsimane Of Bolivia, Sarinnapha Vasunilashorn, Eileen M. Crimmins, Jung Ki Kim, Jeff Winking, Michael Gurven, Hillard Kaplan, Caleb Finch

ESI Publications

Objectives—Little is known about blood cholesterol (blood-C) levels under conditions of infection and limited diet. This study examines blood-C and markers of infection and inflammation in the Tsimane of the Bolivian Amazon, indigenous forager farmers living in conditions that model preindustrial European populations by their short life expectancy, high load of infections and inflammation, and limited diets.

Methods—We use multivariate models to determine the relationships between lipid levels and markers of infection and inflammation. Adult Tsimane (N = 418, age 20–84) were characterized for blood lipids, cells, and inflammatory markers in relation to individual loads of parasites and …

Homo Economicus: Alive And Diversified In The Economic Research Program, Bradley R. Turner

Renée Crown University Honors Thesis Projects - All

This paper seeks to (1) offer a conceptual overview of the methodology of science research programs (MSRP) of Imre Lakatos; (2) apply the framework of that methodology to the neoclassical theory of Gary S. Becker; and (3) explore a quantitative-driven, atheoretical alternative, which challenges the view that there can be or should be any body of theoretical economics. The MSRP framework is used in an instrumental manner in the pursuit of a lucid and interesting historical analysis. The pros and cons of Becker’s approach are presented in the tradition of instrumentalism, and in light of recent discussion of economics imperialism. …

Determinants Of Housing Prices In Pittsylvania County, Jason Hall

Undergraduate Theses and Capstone Projects

The purpose of this research is to determine the implicit factors influencing housing prices in Pittsylvania County, a rural county in Southside Virginia. Currently in Pittsylvania County there is a debate over whether or not to mine what is believed to be the largest deposit of uranium in the United States, containing approximately 119 million pounds of uranium ore at an estimated value of $7 billion to $10 billion. The Virginia Coal and Energy Commission issued its final approval for the National Academy of Sciences to study the debate from a socio-economic standpoint. The $1.2 million study is currently taking …

The Social Strategy Game: Resource Competition Within Female Social Networks Among Small-Scale Forager-Horticulturalists, Stacey L. Rukas, Michael Gurven, Hillard Kaplan, Jeffrey Winking

ESI Publications

This paper examines social determinants of resource competition among Tsimane Amerindian women of Bolivia. We introduce a semi-anonymous experiment (the Social Strategy Game) designed to simulate resource competition among women. Information concerning dyadic social relationships and demographic data were collected to identify variables influencing resource competition intensity, as measured by the number of beads one woman took from another. Relationship variables are used to test how the affiliative or competitive aspects of dyads affect the extent of prosociality in the game. Using a mixed-modeling procedure, we find that women compete with those with whom they are quarreling over accusations of …

Product Innovation And Stability Of Collusion, Sougata Poddar, Bibhas Saha

Economics Faculty Articles and Research

We study the nature of market competition in relation to stability of collusion in the infinitely repeated play of a twostage game of product innovation and market competition, and show that cooperation in giving R&D efforts is more easily sustained when firms compete in quantity than in price.

Visibility Of Contributions And Cost Of Information: An Experiment On Public Goods, Anya Savikhin, Roman M. Sheremeta

ESI Working Papers

We experimentally investigate the impact of visibility of information about contributors on contributions in the public goods game. We systematically consider several treatments that are similar to a wide range of situations in practice. First, we vary the cost of viewing identifiable information about contributors. Second, we vary recognizing all, top or bottom contributors. We find that recognizing all contributors significantly increases contributions relative to the baseline. Recognizing only the top contributors is not significantly different from not recognizing contributors, but recognizing only the bottom contributors is as effective as recognizing all contributors. When viewing information about contributors is costly, …

Fight Or Flight? Defending Against Sequential Attacks In The Game Of Siege, Cary Deck, Roman M. Sheremeta

ESI Working Papers

This paper examines theory and behavior in a two-player game of siege, sequential attack and defense. The attacker’s objective is to successfully win at least one battle while the defender’s objective is to win every battle. Theoretically, the defender either folds immediately or, if his valuation is sufficiently high and the number of battles is sufficiently small, then he has a constant incentive to fight in each battle. Attackers respond to defense with diminishing assaults over time. Consistent with theoretical predictions, our experimental results indicate that the probability of successful defense increases in the defenders valuation and it decreases in …

Affecting Policy By Manipulating Prediction Markets: Experimental Evidence, Cary Deck, Shengle Lin, David Porter

ESI Working Papers

Documented results indicate prediction markets effectively aggregate information and form accurate predictions. This has led to a proliferation of markets predicting everything from the results of elections to a company’s sales to movie box office receipts. Recent research suggests prediction markets are robust to manipulation attacks and resulting market outcomes improve forecast accuracy. However, we present evidence from the lab indicating that single‐minded, well‐funded manipulators can in fact destroy a prediction market’s ability to aggregate informative prices and mislead those who are making forecasts based upon market predictions. However, we find that manipulators primarily influence market trades meaning outstanding bids …

Can Markets Save Lives? An Experimental Investigation Of A Market For Organ Donations, Cary Deck, Erik O. Kimbrough

ESI Working Papers

Many people die while waiting for organ transplants even though the number of usable organs is far larger than the number needed for transplant. Governments have devised many policies aimed at increasing available transplant organs with variable success. However, with few exceptions, policy makers are reluctant to establish markets for organs despite the potential for mutually beneficial exchanges. We ask whether organ markets could save lives. Controlled laboratory methods are ideal for this inquiry because human lives would be involved when implementing field trials. Our results suggest that markets can increase the supply of organs available for transplant, but that …

Personality And The Consistency Of Risk Taking Behavior: Experimental Evidence, Cary Deck, Jungmin Lee, Javier Reyes

ESI Working Papers

Researchers have found that an individual’s risk attitude is not stable across elicitation methods. Results reported by Deck et al. (2009) suggest that personality may help explain the apparent inconsistency, offering support to Borghans et al.’s (2008) argument that economists should consider a multi‐domain approach to measuring risk attitudes. This paper uses laboratory methods to compare risk attitudes as measured by the Holt and Laury (2002) procedure under two different frames. We find that, as in Deck et al. (2009), one’s willingness to take financial risks (as measured by Weber et al. 2002) significantly affects behavior; however the effect is …

Perfect And Imperfect Real-Time Monitoring In A Minimum-Effort Game, Cary Deck, Nikos Nikiforakis

ESI Working Papers

This paper presents the results from a minimum-effort game in which individuals can observe the choices of others in real time. We find that under perfect monitoring almost all groups coordinate at the payoff-dominant equilibrium. However, when individuals can only observe the actions of their immediate neighbors in a circle network, monitoring improves neither coordination nor efficiency relative to a baseline treatment without real-time monitoring. We argue that the inefficiency of imperfect monitoring is due to information uncertainty, that is, uncertainty about the interpretation of the information available regarding the actions of others.

Price Increasing Competition? Experimental Evidence, Cary Deck, Jingping Gu

ESI Working Papers

Economic intuition suggests that increased competition generates lower prices. However, recent theoretical work shows that a monopolist may charge a lower price than a firm facing a competitor selling a differentiated product. The direction of the price change when competition is introduced is dependent upon the joint distribution of buyer values for the two products. We explore this relationship using controlled laboratory experiments. Our results indicate that the distribution of buyer values does affect prices in a manner consistent with the theoretical predictions, although price increasing competition is rare due in part to overly intense competition regardless of the distribution …

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

ESI Working Papers

This paper experimentally examines behavior in a two-player game of attack and defense of a weakest-link network of targets, in which the attacker‟s objective is to successfully attack at least one target and the defender‟s objective is diametrically opposed. We apply two benchmark contest success functions (CSFs): the auction CSF and the lottery CSF. Consistent with the theoretical prediction, under the auction CSF, attackers utilize a stochastic “guerilla warfare” strategy — in which a single random target is attacked — more than 80% of the time. Under the lottery CSF, attackers utilize the stochastic guerilla warfare strategy almost 45% of …

Durability, Re-Trading And Market Performance, John Dickhaut, Shengle Lin, David Porter, Vernon Smith

ESI Working Papers

Key differential structural characteristics of environments studied in previous market experiments have documented large divergences in their observed performance, particularly discrepancies in their convergence to expected equilibrium outcomes. We investigate why this should be so.

Post-Structural Logic In Marx's Theory Of Value, David Kristjanson-Gural

Faculty Journal Articles

In this essay I use Louis Althusser’s observation concerning the synchrony and diachrony of Marx’s logic in Capital to detail changes in the meaning of value, defined as socially necessary abstract labor time, throughout the three volumes of Capital. I use this analysis to identify three common types of logical error in reading Marx that result from failing to recognize this aspect of his methodology, and I provide examples to illustrate each of these common errors. I then argue that, by recognizing the synchrony and diachrony of Marx’s method, it is possible to read value theory in a way that …

Inflammation And Infection Do Not Promote Arterial Aging And Cardiovascular Disease Risk Factors Among Lean Horticulturalists, Michael Gurven, Hillard Kaplan, Jeffrey Winking, Daniel Eid Rodriguez, Sarinnapha Vasunilashorn, Jung Ki Kim, Caleb Finch, Eileen M. Crimmins

ESI Publications

Background: Arterial aging is well characterized in industrial populations, but scantly described in populations with little access to modern medicine. Here we characterize health and aging among the Tsimane, Amazonian forager-horticulturalists with short life expectancy, high infectious loads and inflammation, but low adiposity and robust physical fitness. Inflammation has been implicated in all stages of arterial aging, atherogenesis and hypertension, and so we test whether greater inflammation associates with atherosclerosis and CVD risk. In contrast, moderate to vigorous daily activity, minimal obesity, and low fat intake predict minimal CVD risk among older Tsimane.

Methods and Findings: Peripheral arterial …

Teaching Ecological And Feminist Economics In The Principles Course, Julie A. Nelson, Neva Goodwin

Economics Faculty Publication Series

It can be difficult to incorporate ecological and feminist concerns into introductory courses, when one is also obliged to teach neoclassical analysis. In this essay we briefly describe how one might extend existing “multi-paradigmatic” approaches to feminist and ecological concerns, and then present an new alternative approach that may be more suitable for some students. This “broader questions and bigger toolbox” approach can be applied in both microeconomics and macroeconomics introductory classrooms.

A Bioeconomic Approach To Marriage And The Sexual Division Of Labor, Michael Gurven, Jeffrey Winking, Hillard Kaplan, Christopher Von Rueden, Lisa Mcallister

ESI Publications

Children may be viewed as public goods whereby both parents receive equal genetic benefits yet one parent often invests more heavily than the other.We introduce a microeconomic framework for understanding household investment decisions to address questions concerning conflicts of interest over types and amount of work effort among married men and women. Although gains and costs of marriage may not be spread equally among marriage partners, marriage is still a favorable, efficient outcome under a wide range of conditions. This bioeconomic framework subsumes both cooperative and conflictive views on the sexual division of labor. We test hypotheses concerning marriage markets, …

Public Spending On Education And The Incentives For Student Achievement, William Blankenau, Gabriele Camera

Economics Faculty Articles and Research

We build a model where homogeneous workers can accumulate human capital by investing in education. Schools combine public resources and individual effort to generate productive skills. If skills are imperfectly compensated, then in equilibrium students may under-invest in effort. We examine the effect on human capital accumulation of three basic education finance policies. Increased tuition subsidies may not be beneficial because they increase enrollment but they may lower the incentives for student achievement, hence the skill level. Policies directed at enhancing the productivity of education or making degrees more informative are more successful at improving educational outcomes.

A Neuroeconomic Theory Of The Decision Process, John Dickhaut, Aldo Rustichini, Vernon L. Smith

ESI Publications

We develop a neuronal theory of the choice process (NTCP), which takes a subject from the moment in which two options are presented to the selection of one of the two. The theory is based on an optimal signal detection, which generalizes the signal detection theory by adding the choice of effort as optimal choice for a given informational value of the signal for every effort level and a cost of effort. NTCP predicts the choice made as a stochastic choice: That is, as a probability distribution over two options in a set, the level of effort provided, the error …

Asymptotic Properties Of Equilibrium In Discriminatory And Uniform Price Ipv Multi-Unit Auctions, Brett E. Katzman

Faculty Articles

This paper confronts the tractability problems that accompany IPV auction models with multi-unit bidder demands. Utilizing a first order approach, the asymptotic properties of symmetric equilibria in discriminatory and uniform price auctions are derived. It is shown that as the number of bidders increases, equilibrium bids converge to valuations in both discriminatory auctions and uniform price auctions where the price paid is determined by the lowest winning bid, thus indicating that the limiting case of these auctions correspond to price taking as in neoclassical models of consumer behavior. However, when the uniform price paid is tied to the highest losing …

Recordkeeping Alters Economic History By Promoting Reciprocity, Sudipta Basu, John Dickhaut, Gary Hecht, Kristy Towry, Gregory Waymire

ESI Publications

We experimentally demonstrate a causal link between recordkeeping and reciprocal exchange. Recordkeeping improves memory of past interactions in a complex exchange environment, which promotes reputation formation and decision coordination. Economies with recordkeeping exhibit a beneficially altered economic history where the risks of exchanging with strangers are substantially lessened. Our findings are consistent with prior assertions that complex and extensive reciprocity requires sophisticated memory to store information on past transactions. We offer insights on this research by scientifically demonstrating that reciprocity can be facilitated by information storage external to the brain. This is consistent with the archaeological record, which suggests that …

Radio Spectrum And The Disruptive Clarity Of Ronald Coase, Thomas W. Hazlett, David Porter, Vernon Smith

ESI Working Papers

In the Federal Communications Commission, Ronald Coase exposed deep foundations via normative argument buttressed by astute historical observation. The government controlled scarce frequencies, issuing sharply limited use rights. Spillovers were said to be otherwise endemic. Coase saw that Government limited conflicts by restricting uses; property owners perform an analogous function via the “price system.” The government solution was inefficient unless the net benefits of the alternative property regime were lower. Coase augured that the price system would outperform. His spectrum auction proposal was mocked by communications policy experts, opposed by industry interests, and ridiculed by policy makers. Hence, it took …