Maximum effort in the minimum-effort game

We report results from standard minimum-effort experiments conducted in Copenhagen (Denmark). Our subjects frequently coordinate on the Pareto-efficient equilibrium even in groups of six. This is in stark contrast to the previous literature, as we show in a detailed analysis of experiments which had the same design but were held in different countries. The subject-pool effect is substantiated by the finding that, the higher the share of Danish subjects in a group, the higher the minimum-effort levels. These findings suggest that the prevalent coordination failures previously observed are affected by significant subject-pool effects.     

Rationality of weather predictions and insurance purchases: testing the gambler’s and hot hand fallacies

Deviations from the rational behaviour assumed in many economic models have been found in a variety of settings. Two such deviations, the gambler’s and hot hand fallacies have been found in lab settings, as well as in consequential real-world decisions. Previous economic experiments have shown that the behaviour of professionals can differ from that of the general population. In this paper, we use data from two experiments conducted with a particular group of professionals who make yearly high-stakes decisions in the face of uncertain weather and market conditions: agricultural producers. In the experiments, participants were asked to make predictions about the coming year’s weather and market conditions and make decisions in a familiar decision context. Results indicate evidence of the gambler’s fallacy, such that participants were less likely to predict a good outcome if the previous outcome(s) were good. We also observe that participants were more likely to gamble if a previous gamble was successful, but find no impact on two successful gambles. These combined results indicate that even professionals with many years of experience can exhibit behaviours that deviate from those assumed by classical models.     

Can biased polls distort electoral results? Evidence from the lab

We introduce a new methodological approach for studying the effect of biased polls on election outcomes and apply it to a set of new experiments with 375 participants. Voters may observe and learn about the bias by playing multiple voting rounds. While in control conditions, polls are unbiased, in treatment conditions, participants view only poll results where a particular candidate’s vote share is the largest. This candidate is consistently elected more often in the treatments than in the controls, because biased polls robustly distort voters’ expectations about vote shares. This effect holds after eighteen election rounds, out of which the first three are practice rounds, but somewhat more weakly in our main treatment where voters are explicitly informed about the bias.     

Students Cheat More: Comparing the Dishonesty of a Student Sample and a Representative Sample in the Laboratory*

Unethical behavior has been found in numerous experiments, yet mainly among university students. The use of student participants is potentially problematic for generalizability and the resulting policy recommendations. In this paper, I report on an experiment with potential dishonesty. The experiment was completed by a representative non-student sample and a student sample. The results show that cheating does exist, but also that students cheat systematically more. This suggests that focusing on students as participants tends to overestimate the magnitude of cheating. I further find that age is an important explanation for this difference in dishonesty. The older the participants are, the less they cheat.     

Past experience of uncertainty affects risk aversion

In an experiment with more than 500 participants we study how past experience of uncertainty (imperfect knowledge of the state space) affects risk preferences. Participants in our experiment choose between a sure outcome and a lottery in 32 periods. All treatments are exactly identical in periods 17–32 but differ in periods 1–16. In the early periods of the risk treatment there is perfect information about the lottery; in the ambiguity Treatment participants perfectly know the outcome space but not the associated probabilities; in the unawareness treatment participants have imperfect knowledge about both outcomes and probabilities. We observe strong treatment effects on behavior in periods 17–32. In particular, participants who have been exposed to an environment with very imperfect knowledge of the state space subsequently choose lotteries with high (low) variance less (more) often compared to other participants. Estimating individual risk attitudes from choices in periods 17–32 we find that the distribution of risk attitude parameters across our treatments can be ranked in terms of first order stochastic dominance. Our results show how exposure to environments with different degrees of uncertainty can affect individuals’ subsequent risk-taking behavior.     

Does context promote higher-level thinking in the beauty contest?

Some problems are more easily solved if context is provided. A stylized result from beauty contest experiments is that most choices are consistent with level-1 or level-2 thinking rather than the Nash equilibrium. The beauty contest experiment reported in this paper includes treatments in which context is added. In these treatments, participants are told choices represent the high temperature on a future date, and the winner is the participant whose choice is closest to 2/3 of the average of all choices. The context provided in this experiment hinders, rather than enhances, higher-level thinking.     

Firm-specific information and explicit collusion in experimental oligopolies

We experimentally study the effect of information about competitors’ actions on cartel stability and firms’ incentives to form cartels in Cournot markets. As in previous experiments, markets become very competitive when individualized information is available and participants cannot communicate. In contrast, when communication is possible, results reverse: markets become less competitive and cartels become more stable when individualized information is available. We also observe that the extra profits that firms obtain thanks to the possibility to communicate are higher when individualized information is present, suggesting that firms have greater incentives to form cartels in that situation.     

The Delphi method, impeachment and terrorism: Accuracies of short-range forecasts for volatile world events

Two experiments examined the effects of iterated polling and feedback on prediction accuracy for volatile world events using the Delphi paradigm. In both experiments, participants predicted rapidly changing geopolitical events. The first experiment occurred during the litigation surrounding the Clinton/Lewinsky affair in 1998. Results indicated that feedback improved individual and group accuracy for predictions of whether an event would occur. These types of predictions derived from group consensus were approximately 90% accurate, which was significantly higher than the average individual participant's accuracy. Neither polling nor feedback had much effect on time course predictions. The second experiment occurred during the American military action against the Taliban regime in Afghanistan in 2001. In Experiment 2, participants were polled three times to determine if increasing the number of iterated polls would improve Delphi accuracy. The results showed that accuracy improved from the first to the second poll but not from the second to the third. The groups predicted whether these scenarios would occur with approximately 75% accuracy, which was significantly higher than the accuracy of any individual participant. Once again, the Delphi procedure did not enhance time course predictions in Experiment 2.     

Moral self-licencing and social dilemmas: an experimental analysis from a taking game in Madagascar

This article explores whether previous good deeds may license antisocial behaviour, such as appropriating a social surplus for private benefits, in a developing country context, namely Madagascar. We design a two-step framed experiment, with one control treatment (a neutral task) and three test treatments (tasks enabling subjects to earn moral credits in three different ways), followed by a taking game in which subjects are given the opportunity to take an amount from a fund allocated to their University. On average, we find that participants in the three licencing conditions appropriate more than those in the control group and that further differences emerge according to the way the moral credits have been earned.     

‘Economics with Training Wheels’: Using Blogs in Teaching and Assessing Introductory Economics

Blogs provide a dynamic interactive medium for online discussion, consistent with communal constructivist pedagogy. The author of this article describes and evaluates a blog assignment used in the teaching and assessment of a small (40–60 students) introductory economics course. Using qualitative and quantitative data collected across four semesters, students’ participation in the blog assignment is found to be associated with student ability, gender, and student perceptions of the blog. Importantly, students with past economics experience do not appear to crowd out novice economics students. Student performance is positively associated with the quality of their blog participation after controlling for student ability, suggesting that a focus on quality of student engagement could further improve learning outcomes. Students generally report overall positive experiences with the blog assignment.     

The Paradoxical Behavioral Effects of a Directional Goal on Investors' Risk Perceptions and Valuation Judgments

Market participants who evaluate risk often have a preference or goal for positive company performance. The authors test how such a directional goal affects risk perceptions and the relation between risk perceptions and assessments of value in an investment context. Compared with investors without directional goals—who, consistent with prior behavioral research, focus on negative aspects of risk—the authors find that those with directional goals assess risk as being more symmetric (i.e., they are less focused on downside risk). However, investors with directional goals are also less likely to consider risk when assessing value. Taken together, these results suggest that a directional goal reduces one behavioral effect identified in prior literature (the tendency to focus on downside risk), but creates another behavioral effect (ignoring risk in assessing value). The authors discuss implications for standard setters and regulators seeking to communicate risk information to market participants.     

Do people plan?

We report the results of an experimental investigation of a key axiom of economic theories of dynamic decision making—namely, that agents plan. Inferences from previous investigations have been confounded with issues concerning the preference functionals of the agents. Here, we present an innovative experimental design which is driven purely by dominance: if preferences satisfy dominance, we can infer whether subjects are planning or not. We implement three sets of experiments: the first two (the Individual Treatments) in which the same player takes decisions both in the present and the future; and the third (the Pairs Treatment) in which different players take decisions at different times. The two Individual treatments differed in that, in one, the subjects played sequentially, while, in the other, the subjects had to pre-commit to their future move. In all contexts, according to economic theory, the players in the present should anticipate the decision of the player in the future. We find that over half the participants in all three experimental treatments do not appear to be planning ahead; moreover, their ability to plan ahead does not improve with experience, except possibly when we force subjects to pre-commit to their future decision. These findings identify an important lacuna in economic theories, both for individual behaviour and for behaviour in games.

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Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users.      

Do China's people favour redistribution? Evidence from an incentivized experiment

From 1949, China's leaders brought their country through three decades of income and wealth compression, which was followed by more than three decades of sharply rising inequality. What preferences do China's people hold regarding what price (if any) is worth paying for greater equality? We conduct a laboratory decision‐making experiment mimicking aspects of a macro‐political–economic environment, using Chinese undergraduate student subjects. We find that our subjects have qualitatively similar tastes for equality as their counterparts in parallel US and European experiments; for example, most are willing to sacrifice some payment for more equality of earnings among other participants, and their willingness to do this is stronger when inequalities originate randomly versus based on performance. Considering the cases permitting direct comparison between Chinese and US subjects’ choices, redistributive choices tend to be a bit higher in China if the participant pays no direct cost and a bit lower if he or she pays such a cost, but the two distributions of decisions differ significantly in under 14% of conditions. Survey data too suggests preferences for a more equal income distribution in China than in other East Asian countries, suggesting a possible impact of the Chinese Communist Party dominance in education and media.     

Exchange Rules and the Incentive Compatibility of Choice Experiments

The incentive properties of stated-preference surveys continue to be a central debate in the valuation of public goods. The majority of empirical studies have focused on incentive properties of contingent valuation questions in relation to situations where answers have monetary consequences. This research explores the incentive properties of repeated, attribute-based choice questions when subjects are provided with an explicit connection between choices and outcomes. Two market/provision-rules are investigated: a posted-price market and a plurality-rule vote. These two provision rules are contrasted to treatments in which no provision rule is discussed—subjects are simply asked to choose their preferred alternative. These three hypothetical choice treatments are compared with a binding choice treatment. While none of the public good treatments are theoretically incentive compatible, we include a comparison of hypothetical and binding choices for a private-good that is incentive compatible. The private good experiments indicate that marginal willingness to pay (WTP) estimates from the hypothetical treatment are larger, but not statistically different than corresponding estimates in the binding choice treatment. Results for the public good experiments indicate that marginal WTP estimates from the hypothetical treatments are much larger, and statistically different than corresponding estimates in the binding choice treatment. The bias is largest when no provision rule is discussed. The bias is reduced with the inclusion of a provision rule, but surprisingly, there was no difference across provision rule treatments. Overall, our results indicate that choice experiments involving a public good should include a provision rule to reduce bias, but the resulting marginal WTP estimates may still be more biased, on average, than those arising from contingent valuation survey formats.     

Reprint of: A common-pool resource experiment with postgraduate subjects from 41 countries

This study reports results from a new series of experiments that examine the robustness of face-to-face communication as a cooperation-facilitating institution in common-pool resource settings. Results are reported from nine experiment sessions, initially designed for pedagogical purposes. The sessions were conducted between 1998 and 2007 as part of a series of summer institutes on institutional analysis and environmental change. Subjects were graduate students and professionals from diverse disciplines, representing 41 countries of residence. The participants in this study stand in sharp contrast to most previous studies, which used undergraduates who self-select into experiments by volunteering to participate. Results from these experiments substantiate earlier findings that non-binding communication can serve as an effective mechanism for solving social dilemma problems, with subjects achieving near socially efficient outcomes.     

Cognitive ability and strategic sophistication

In three experiments we examine the extent to which strategic sophistication (i.e., inductive reasoning, iterative dominance and level-k thinking) is determined by broader cognitive skills. In the first experiment we replicate previous results showing strong associations between cognitive ability and sophistication in a game of iterative dominance and show that similar results arise in a game requiring induction. In the second two experiments we extend the literature in new directions. In Experiment 2 we modify the games to better capture participantsʼ ability to reason inductively and predict the sophistication of others and, again, find strong associations between cognitive ability, measured using a common IQ test, and sophistication. In Experiment 3 we examine more closely the causal nature of the relationship between cognitive ability and sophistication. We use a standard tool from cognitive psychology to randomly shock the cognitive ability of participants and show that this significantly affects game performance.     

论教学语言的审美性对学生健全人格的影响

语言是人们交流思想的工具,教师高度的语言素养对学生人格的塑造起着极其重要的作用。教育教学要取得最佳效果,教学语言必须具有审美性。教学语言的审美性要求教学语言既要饱含情味、充满趣味,又要富有韵味、突出风味才既能彰显语文教学魅力,又能实现教学目标,培养学生健全的人格。     

Credible communication and cooperation: Experimental evidence from multi-stage Games

It is well known that communication often serves as a facilitator for cooperation in static games. Yet, communication can serve entirely different purposes in dynamic settings as communication during the game may work as a means for renegotiation, potentially undermining the credibility of cooperative strategies. To explore this issue, this paper experimentally investigates cooperation and non-binding communication in a two-stage game. More specifically, two treatments are considered: one with only pre-play communication and one where subjects can also communicate intra-play between the stages of the game. The results highlight a nontrivial difference concerning the effects of pre-play communication between the two treatments. Sending or receiving pre-play messages has a positive and significant effect on cooperation if there is no possibility of intra-play communication. However, this effect is significantly reduced when when intra-play communication is allowed. The results suggest that the credibility of pre-play messages may depend crucially on future communication opportunities.     

Consumption externalities, production externalities, and efficient capital accumulation under time non-separable preferences

The effects of consumption and production externalities on economic performance under time non-separable preferences are examined both theoretically and numerically. We show that a consumption externality alone has long-run distortionary effects if and only if labor is supplied elastically. With fixed labor supply, it has only transitional distortionary effects. Production externalities always generate long-run distortions, irrespective of labor supply. The optimal tax structure to correct for the distortions is characterized. We compare the implications of this model with those obtained when the consumption externality is contemporaneous. While some of the long-run effects are robust, there are also important qualitative and quantitative differences, particularly along transitional paths.     

On the Validity of the Random Lottery Incentive System

The random lottery incentive system is widely used in experimental economics to motivate subjects. This paper investigates its validity. It reports three experiments which compare responses given to decision tasks which are embedded in random lottery designs with responses in single choice designs in which each subject faces just one task for real. The experiments were designed to detect cross-task contamination effects in the random lottery treatment. No significant differences between treatments, and no significant contamination effects, were found. Over the three experiments, observed differences between the treatments are adequately explained as sampling variation.