An experiment on auctions with endogenous budget constraints

We perform laboratory experiments comparing auctions with endogenous budget constraints. A principal imposes a budget limit on a bidder (an agent) in response to a principal-agent problem. In contrast to the existing literature where budget constraints are exogenous, this theory predicts that tighter constraints will be imposed in first-price auctions than in second-price auctions, tending to offset any advantages attributable to the lower bidding strategy of the first-price auction. Our experimental findings support this theory: principals are found to set significantly lower budgets in first-price auctions. The result holds robustly, whether the principal chooses a budget for human bidders or computerized bidders. We further show that the empirical revenue difference between first- and second-price formats persists with and without budget constraints.     

Asymmetric information about rivals' types in standard auctions: An experiment

This paper studies experimentally how information about rivals' types affects bidding behavior in first- and second-price auctions. The comparative static hypotheses associated with information about rivals enables us to test the relevance of such information as well as the general predictions of the auction theory, by providing an effective means to control for risk aversion and other behavioral motives that were difficult to control for in previous experiments. Our experimental evidence provides strong support for the theory, and sheds light on the roles of risk aversion and the spite motive in first- and second-price auctions, respectively.     

Informational control and organizational design

This paper focuses on issues of allocating authority between an uninformed principal and an informed expert. We analyze the benefits of informational control—restricting the precision of the expert's information (without learning its content). In this case, the result of Dessein (2002) [8] that delegating decisions to a perfectly informed expert is better than communication when preferences between the expert and the principal are not too far apart is reversed. We demonstrate that these organizational forms—informational control and delegation—can be either complements or substitutes, depending on the principal's ability to affect the expert's discretion about the set of allowed policies.     

Information acquisition and institutions: An organizational perspective

Using a World Bank survey of Chinese firms, I construct a set of measures to capture the extent to which a firm involves outsiders in information acquisition. I find that firms that outsource more are not more likely to involve outsiders in acquiring information. Weakening contracting institutions raises the difficulty of safeguarding information leakage, more so when a firm involves outsiders in information acquisition than when no outsiders are involved. I test this prediction and find that firms under weaker contracting institutions are significantly less likely to involve outsiders in information acquisition.     

Incentives,information, and organizational design

NÖG Lecture delivered to the annual meeting of the Austrian Economic Society, Vienna, September 29, 1988. Financial support from the Olin Foundation, the National Science Foundation, and the Hoover Institution is gratefully acknowledged. This paper is partly based on joint work undertaken with Raaj K. Sah, to whom I am most indebted. I have also benefitted greatly from conversations with Joseph Farrell. Research assistance of Serge Marquié and Rohit Rahi is gratefully acknowledged.     

Bare promises: An experiment

Is truth-value of a statement what lying aversion is all about? We propose an experimental test and find only limited support. In this context with ‘bare promises’, we also test for guilt aversion and again find only limited support.     

Bargaining and network structure: An experiment

We consider bargaining in a bipartite network of buyers and sellers, who can only trade with the limited number of people with whom they are connected. We perform an experimental test of a graph-theoretic model that yields unique predictions about equilibrium prices for the networks in our sessions. The results diverge sharply depending on how a connection is made between two separate simple networks, typically conforming to the theoretical directional predictions. Payoffs can be systematically affected even for agents who are not connected by the new link, and we find evidence of a form of social learning.     

Leadership and group size: An experiment

Our experimental results suggest that the effectiveness of leading by example decreases with group size. The discrepancy between the leaders' and followers' incentives increases with group size. Thus, as group size increases, followers more often refuse to follow their leaders.     

Market design with endogenous preferences

This paper explores the interdependence between market structure and an important class of cognitive biases. Starting with a familiar bilateral monopoly framework, we characterize the endogenous emergence of preference distortions during bargaining which cause negotiators to perceive their private valuations differently than they would outside the adversarial negotiation context. Using this model, we then demonstrate how a number of external interventions in the structure and/or organization of market interactions (occurring before trade, after trade, or during negotiations themselves) can profoundly alter the nature of these dispositions. Our results demonstrate that many such interventions frequently (though not always) share qualitatively similar characteristics to market interventions that are often proposed for overcoming more conventional forms of market failure. Nevertheless, our analysis underscores the importance of understanding the precise link between cognitive failures and market structure prior to the implementation of any particular proposed reform.     

Sanctions that signal: An experiment

The introduction of sanctions provides incentives for more pro-social behavior, but may also be a signal that non-cooperation is prevalent. In an experimental minimum-effort coordination game we investigate the effects of the information contained in the choice to sanction. We compare the effect of sanctions that are introduced exogenously by the experimenter to that of sanctions which have been actively chosen by a subject who has superior information about the previous effort of the other players. We find that cooperative subjects perceive actively chosen sanctions as a negative signal which significantly reduces the effect of sanctions.     

Equality,equity and incentives: An experiment

We study a fundamental conflict in economic decision-making, the trade-off between equality, equity and incentives, in a new experimental game that nests a voluntary contributions mechanism in a broader spectrum of incentive schemes. In a 2×2 design, we let subjects either vote on or exogenously encounter incentive settings while assigned unequal endowments are either task-determined or random. We find that earned endowments lead to less support for redistribution and less cooperation. Subjects' voting is influenced by egalitarian and equity concerns, in addition to self-interest. Cooperation rates respond rather continuously to incentives.     

Information and learning in oligopoly: An experiment

This paper presents an experiment on learning in repeated games, which complements the analysis of playersʼ actual choices with data on the information acquisition process they follow. Subjects play a repeated Cournot oligopoly, with limited a priori information. The econometrics hinges on a model built upon Experience Weighted Attraction learning, and the simultaneous analysis of data on the information gathered and on actions taken by the subjects. Results suggest that learning is a composite process, in which different components coexist. Adaptive learning emerges as the leading element, but when subjects look at the strategies individually adopted by their competitors they tend to imitate the most successful behavior, which makes markets more competitive. Reinforcement learning also plays a role, as subjects favor strategies that have yielded higher profits in the past.     

Leadership and gender in groups: An experiment

We conduct a laboratory experiment to study gender differences in leadership. We strip the concept of leadership down to its most basic elements. Questions of style and evaluations of a leader based on style of leadership adopted are made irrelevant. Our leader is an average player who is distinguished merely by occupying the leadership position. Legitimacy is conferred on the leader by the special information possessed. Followers voluntarily choose whether or not to follow the better‐informed leader. The effectiveness of the leader is reduced to two simple factors: is the leader willing or not to voluntarily place him/herself in a vulnerable position to achieve an outcome beneficial to both the leader and his/her followers? Do followers trust their leaders to make the right choice? We provide experimental evidence that female leaders and followers are more cooperative than the males in most circumstances. Female leaders show a hesitation to lead in mixed‐gender environments with gender signalling in circumstances where followers' refusal to follow can significantly hurt them. The behaviour of the followers is the same toward the leaders regardless of their gender.     

员工持股计划新模式--设立投资性有限责任公司认购和管理员工持有的股份

员工持股计划的一般模式为设立员工持股会来认购和管理员工持有的股份。提出了一种员工持股计划的新模式，即设立投资性有限责任公司来认购和管理员工持有的股份(以下简称“该模式”)。该模式有利于实行员工持股计划的公司的集团化运作和股票上市。     

An empirical investigation of organizational memetic variation

The potential of a theory based on organizational memes in coevolution with the environment has been postulated, but remains empirically under-developed. This study explores whether understanding organizational memetic variation is empirically possible and, if so, whether it might, with further development, provide managers with early indications of a misalignment between organizational action (operationalized as memetic variation) and strategic intent—the amount of memetic variation needed to stay aligned with the competitive environment. A method for empirically identifying knowledge-based memes in everyday practice is developed. It stems from modern advances in genetics allowing micro-level changes in genes to be linked to macro-environmental dynamics. Using the concept that memetic variation is caused by everyday, uncontrollable uncertainties of interpretation, memetic variation is reduced to seven categorical types. A highly exploratory quasi-experimental design allows a preliminary comparison of a would-be innovative ‘Portfolio Management Committee’ with self-organizing Internet chat-room settings that are representational of open-source innovation. Results are consistent with predictions showing that higher levels of variation are seen in the latter, despite the former’s strategic intent of innovating to stay aligned with a dynamic environment. Further work is needed, however, to test reliability and validity.      

Cooperation under alternative punishment institutions: An experiment

While peer punishment has been shown to increase group cooperation, there is open debate on how cooperative norms can emerge and on what motives drive individuals to punish. In a public good experiment we compared alternative punishment institutions and found (1) higher cooperation levels under a consensual punishment institution than under autonomous individual punishment; (2) similar cooperation levels under sequential and simultaneous punishment institutions.     

Incentives and managerial effort under competitive pressure: An experiment

We investigate how increased competition affects firm owners׳ incentives and managers׳ efforts in a laboratory experiment. Each owner offers a compensation scheme to his manager in two different conditions: under monopoly and under Cournot duopoly. Following acceptance of the compensation, the manager chooses an effort level to increase the probability of a cost-reduction which affects the firm׳s profit. According to standard theoretical predictions the entry of a rival firm in a monopolistic industry affects negatively both the incentive compensation and the effort level. Our experimental findings show that the entry of a rival firm has two effects on managerial effort: an internalization effect which affects positively the level of effort and an income effect which has a negative impact on effort. The combined outcome of these two effects is neutral with respect to managerial effort: we observe that when competition reduces the firm׳s profit, the owner reacts by offering lower incentives but despite the lower incentives the manager still accepts the contract offer and exerts the same level of effort than under the monopoly condition.     

Optimal human capital policies under the endogenous choice of educational types

This study examines optimal human capital policies under nonlinear labor and capital income taxes in the presence of consumption value of education in a two‐period setting. We show that when individuals can choose educational types differing by the relative importance of consumption value and production value, education subsidies for low‐type individuals should not equal an efficient level that offsets distortions induced by nonlinear taxes on labor and capital income. Our findings imply that education policy does not restore efficiency, or the Diamond–Mirrlees production efficiency theorem fails. Moreover, capital income taxation is optimal, which means that the Atkinson–Stiglitz theorem breaks down.     

Auction design with endogenously correlated buyer types

This paper studies optimal auction design when the seller can affect the buyers? valuations through an unobservable ex ante investment. The key insight is that the optimal mechanism may have the seller play a mixed investment strategy so as to create correlation between the buyers? otherwise (conditionally) independent valuations. Assuming that the seller announces the mechanism before investing, the paper establishes conditions on the investment technology so that a mechanism exists which leaves buyers no information rent and leaves the seller indifferent between his investments. Under these conditions, the seller can, in fact, extract the first best surplus almost fully.