Bidding ‘as if’ risk neutral in experimental first price auctions without information feedback

Experimental research on first price sealed bid auctions has usually involved repeated settings with information feedback on winning bids and payoffs after each auction round. Relative to the risk neutral Nash equilibrium, significantly higher bidding has been reported. The present paper reports the results of experimental first price auctions with n=7 where feedback on payoffs and winning bids is withheld. Under these conditions, average bidding is below the risk neutral Nash equilibrium prediction but converges to it with repetition.

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Planned or Emergent Strategy Making? Exploring the Formation of Corporate Sustainability Strategies

In strategy research, there is a consensus that strategy making resides on a continuum from planned to emergent where most strategies are made in a mixed way. Different contingency factors have been suggested to explain the factors that influence strategy making. Sustainability research seems to overlook most of this development and assumes instead that sustainability strategies are made in a purely planned way. We contribute to a better understanding of the role of different strategy making modes for sustainability in three ways. First, we point to the bias towards planned strategy formation in sustainability research. Second, we propose a new contingency factor to help explain sustainability strategy making based on the nature of the problem addressed. Third, we discuss strategy making for different types of sustainability problems. We argue that planned strategy making is expected for salient and non‐wicked problems while emergent strategy making is likely for non‐salient and wicked problems. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

An Application of the English Clock Market Mechanism to Public Goods Games

This paper reports an experimental study of the public goods game in which contributions are not submitted all at once but incrementally as coordinated in real time by a clock. Individuals press a button as soon as the clock equals their willingness to contribute. By providing information about the point at which subjects stop further contributions we find evidence for conditionally cooperative behaviour: A subject's decision to stop contributing induces an immediate reaction of the other group members.     

Splitting leagues: promotion and demotion in contribution-based regrouping experiments

The paper reports an experimental study on a promotion-demotion mechanism to mitigate the free-rider problem in a voluntary contribution setting. The mechanism hierarchically splits a group in two; we refer to one subgroup as the Major league and to the other as the minor league. The most cooperative subject of the minor league is switched with the least cooperative subject in the Major league. The results reveal a significant increase of cooperation levels in both leagues relative to the standard voluntary contribution mechanism. We argue that a lack of sequentially-rational beliefs about continuation payoffs in Major and minor leagues leads to higher equilibrium contributions. The data suggest beyond that, the promotion-demotion mechanism regroups subjects deliberately according to their cooperativeness.     

An Experimental Analysis of Optimal Renewable Resource Management: The Fishery

This paper experimentally studies the extraction decisions of a sole owner in a fishery, the population dynamics of which behave according to the standard deterministic logistic growth model. Four treatments were implemented which differed in the level of information supplied to the subjects. Compared to the theoretic benchmark, the data reveal that efficiency losses increase as the information on population dynamics and stock size deteriorates. Three common patterns of behaviour are identified. The distribution of these patterns is significantly affected by the informational setting.     

How Politicians Make Decisions: A Political Choice Experiment

The present paper reports on a political choice experiment with elected real-world politicians. A questionnaire on political and public issues is used to examine whether prospect theory predicts the responses of experts from the field better than rational choice theory. The results indicate that framing effects do not disappear with expertise.      

Shocks at large banks and banking sector distress: The Banking Granular Residual

Size matters in banking. In this paper, we explore whether shocks originating at large banks affect the probability of distress of smaller banks and thus the stability of the banking system. Our analysis proceeds in two steps. In a first step, we follow Gabaix [Gabaix, X., 2008a. The Granular Origins of Aggregate Fluctuations. Available at SSRN: http://ssrn.com/abstract=1111765] and construct a measure of idiosyncratic shocks at large banks, the so-called Banking Granular Residual. This measure documents the importance of size effects for the German banking system. In a second step, we incorporate this measure of idiosyncratic shocks at large banks into an integrated stress-testing model for the German banking system following De Graeve et al. (2008). We find that positive shocks at large banks reduce the probability of distress of small banks.