Can experimental measures of sensitivity to social pressure predict public good contribution?

Public good contributions may be affected by the social demand to contribute that is implicit in them. Sensitivity to social pressure predicts behavior in paired dictator and money burning games; the evidence for effects on public good contribution is mixed.     

Experimenter demand effects in economic experiments

Experimenter demand effects refer to changes in behavior by experimental subjects due to cues about what constitutes appropriate behavior. We argue that they can either be social or purely cognitive, and that, when they may exist, it crucially matters how they relate to the true experimental objectives. They are usually a potential problem only when they are positively correlated with the true experimental objectives’ predictions, and we identify techniques such as non-deceptive obfuscation to minimize this correlation. We discuss the persuasiveness or otherwise of defenses that can be used against demand effects criticisms when such correlation remains an issue.     

Understanding perpetual R&D races

This paper presents an experimental study of dynamic indefinite horizon R&D races with uncertainty and multiple prizes. The theoretical predictions are highly sensitive: small parameter changes determine if we should expect technological competition, and if so whether it is sustained, or if the market converges into one with entrenched leadership and lower aggregate R&D. The subjects’ strategies are far less sensitive. In most of the treatments, the R&D races tend to converge to entrenched leadership. We propose and apply a quantal response extension of Markov perfection that is qualitatively and largely quantitatively consistent with the experimental observations.     

Monetary policy and inferential expectations of exchange rates

We present a macroeconomic market experiment to isolate the impact of monetary shocks on the exchange rate, as an alternative to SVAR identification. In a non-stochastic treatment, covered interest rate parity holds and predicted exchange rates are tracked well. In a stochastic treatment, we model expectations using a Neyman–Pearson hypothesis test (inferential expectations) and find evidence of belief conservatism and uncovered interest rate parity failure. The market environment magnifies belief conservatism, which is opposite to the standard claim that markets tend to eliminate individual choice anomalies.     

You are not in my boat: common fate and discrimination against outgroup members

Sharing a common fate with some people but not others may affect how economic agents behave in economic transactions, quite independently of strategic incentives. We present an experimental test of the effect of perceptions of common fate on the inducement of economic discrimination in bilateral settings. In settings where the bargaining power was all with one subject (the dictator game and a ‘unilateral power game’), about half of the subjects engaged in negative discrimination: insiders were not treated better relative to control sessions, but outsiders were treated worse. Discrimination may be induced by a more conflictual perception of the decision problem.     

Institutional authority and collusion

A “collusion puzzle” exists by which, even though increasing the number of firms reduces the ability to tacitly collude, and leads to a collapse in collusion in experimental markets with three or more firms, in natural markets there are such numbers of firms colluding successfully. We present an experiment showing that, if managers are deferential toward an authority, firms can induce more collusion by delegating production decisions to middle managers and providing suitable informal nudges. This holds not only with two but also with four firms. We are also able to distinguish compliance effects from coordination effects.     

The impact of taxation and signposting on diet: an online field study with breakfast cereals and soft drinks

Experimental Economics - We present a large scale study where a nationally representative sample of 1000 participants were asked to make real purchases within an online supermarket platform. The...     

Contract Choice: Efficiency and Fairness in Revenue‐Sharing Contracts

We present a simple principal–agent experiment in which the principals are allowed to choose between a revenue‐sharing, a bonus, and a trust contract, to offer to an agent. Our findings suggest that a large majority of experimental subjects choose the revenue‐sharing contract. This choice turns out to be not only the most efficient but also, at the same time, fair. Overall, the distribution of earnings is only mildly skewed towards the principal. We conclude that, under revenue‐sharing contracts, concerns for fairness can be closely associated with the use of monetary incentives.     

Group status,minorities and trust

We present the results of an experiment measuring the impact of low group status and relative group size on trust, trustworthiness and discrimination. Subjects interact with insiders and outsiders in trust games and periodically enter markets where they can trade group membership. Low status and minority subjects have low morale: that is, they comparatively dislike being low status and being minority subjects. Group discrimination against low status and minority subjects is unchanged. However, low status subjects are deferential to high status subjects in terms of comparatively higher trust, and minority subjects are deferential to majority subjects in terms of comparatively higher trustworthiness.     

Barro-Gordon revisited: Reputational equilibria with inferential expectations

We incorporate inferential expectations into the Barro-Gordon model (Barro and Gordon, 1983a) of time inconsistency and consider reputational equilibria. The range of sustainable equilibria shrinks as the private sector becomes more belief-conservative.