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Expectations play a crucial role in modern macroeconomic models. We replace the common assumption of rational expectations in a New Keynesian framework by the assumption that expectations are formed according to a heuristics switching model that has performed well in earlier work. We show how the economy behaves under these assumptions with a special focus on inflation volatility. Contrary to comparable models based on full rationality, the behavioral model predicts that inflation volatility can be lowered if the central bank reacts to the output gap in addition to inflation. We test the opposing theoretical predictions with a learning to forecast experiment. The experimental results support the behavioral model and the claim that reacting to the output gap in addition to inflation can indeed lower inflation volatility.

Expectations about economic variables vary systematically across genders. In the domain of inflation, women have persistently higher expectations than men. We argue that traditional gender roles are a significant factor in generating this gender expectations gap as they expose women and men to different economic signals in their daily lives. Using unique data on the participation of men and women in household grocery chores, their resulting exposure to price signals, and their inflation expectations, we document a tight link between the gender expectations gap and the distribution of grocery shopping duties. Because grocery prices are highly volatile, and consumers focus disproportionally on positive price changes, frequent exposure to grocery prices increases perceptions of current inflation and expectations of future inflation. The gender expectations gap is largest in households whose female heads are solely responsible for grocery shopping, whereas no gap arises in households that split grocery chores equally between men and women. Our results indicate that gender differences in inflation expectations arise due to social conditioning rather than through differences in innate abilities, skills, or preferences.

Through an experiment, this study investigates the effects that verification has on honest traders. This paper demonstrates that by reducing the scope for trust verification can have a negative effect on the behaviour of honest individuals. Specifically, the analysis shows that trustworthy agents are willing to punish or seek compensation from those that deprive them of trust opportunities through the use of verification. Regulatory implications are discussed. JEL

We elicit the willingness to sell personal data (contact information, Facebook details, preferences) in laboratory experiments, using a BDM and take-it-or-leave-it offers. Our experiments are novel in that (i) the experiments are incentivized, (ii) the focus on privacy issues is salient, and (iii) the use of the data - marketing purposes - is transparent and unambiguous. We find that only a minority of about 10% to 20% of the participants are unwilling to sell personal data, a share which is roughly constant across both the type of personal data and elicitation method. Subjects willing to sell request about € 15 for their contact details and € 19 for Facebook details.

International audience; To what extent is the observed mispricing in experimental asset markets caused by strategic uncertainty and by confusion? We address this question by comparing subjects' initial price forecasts in two market environments: one with six human traders, and the other with one human and five computer traders. We find that both strategic uncertainty and confusion contribute equally to the median initial forecast deviation from the fundamental value. The effect of strategic uncertainty is greater for subjects with a perfect score in the Cognitive Reflection Test, and it is not significant for those with low scores.

We demonstrate that widely used measures of antigay sentiment and the size of the lesbian, gay, bisexual, and transgender (LGBT) population are misestimated, likely substantially. In a series of online experiments using a large and diverse but nonrepresentative sample, we compare estimates from the standard methodology of asking sensitive questions to measures from a “veiled” methodology that precludes inference about an individual but provides population estimates. The veiled method increased self-reports of antigay sentiment, particularly in the workplace: respondents were 67% more likely to disapprove of an openly gay manager when asked with a veil, and 71% more likely to say it should be legal to discriminate in hiring on the basis of sexual orientation. The veiled methodology also produces larger estimates of the fraction of the population that identifies as LGBT or has had a sexual experience with a member of the same sex. Self-reports of nonheterosexual identity rose by 65%, and same-sex sexual experiences by 59%. We conduct a “placebo test” and show that for nonsensitive placebo items, the veiled methodology produces effects that are small in magnitude and not significantly different from zero in seven out of eight items. Taken together, the results suggest antigay discrimination might be a more significant issue than formerly considered, as the nonheterosexual population and antigay workplace-related sentiment are both larger than previously measured. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2016.2503 . This paper was accepted by Uri Gneezy, behavioral economics.

We analyze the effects of different resale mechanisms on bidders’ strategies in multi-object uniform-price auctions with asymmetric bidders. Our experimental design consists of four treatments: one without resale and three resale treatments that vary the information available and the bargaining mechanism in the resale market. The presence of a resale market induces demand reduction by high-value bidders and speculation by low-value bidders, thus affecting the allocation of the objects on sale. The magnitude of these effects, however, depends on the form of the resale market. Features of the resale market that tend to increase its efficiency result in lower auction efficiency and seller’s revenue. We also show that, without resale, asymmetry among bidders reduces demand reduction.

In order to acquire insight into consumer preferences for products and services that are described by certain attributes, choice experiments are employed. For e_ciency, this should be done by means of an optimal experimental design, which gives the most precise estimates for the parameters in the corresponding statistical model. Sometimes attributes of products and services can be mixtures of ingredients. Although mixture models are commonly used in industrial experiments, they have never been introduced in choice modeling. This master thesis aims at introducing mixtures in the choice context, since often consumer products and services can be described as mixtures of ingredients. An algorithm to construct semi-Bayesian D-optimal experimental designs is presented for the multinomial logit model when choices are based on a mixture of ingredients. The resulting designs are D-optimal and based on a mix- ture coordinate-exchange algorithm. Further, some features of them are discussed. It is shown that designs, when prior parameter values required for choice models are not assumed to be zero, di_er from the utility neutral designs, where such an assumption is made. We also show that semi-Bayesian designs di_er from and perform better than locally optimal ones (and the utility neutral designs) for most of the time. As often it is di_cult to obtain accurate prior parameter values, parameter misspeci_cation is also investigated. It is demonstrated that monotonous misspeci_cations in true parameters do not distort the outcome, and might help to design more robust designs.

We experimentally study the effect of auction format (sealed-bid versus closed clock versus open clock) and auction sequence (simultaneous versus sequential) on bidding behaviour and auction outcomes in auctions of multiple related multi-unit items. Prominent field applications are the sale of emission permits, fishing rights, and electricity. We find that, when auctioning simultaneously, clock auctions outperform sealed-bid auctions in terms of efficiency and revenues. This advantage disappears when the items are auctioned sequentially. In addition, auctioning sequentially has positive effects on total revenues across all auction formats, resulting from fiercer competition on the item auctioned first.

In an experimental setting in which investors can entrust their money to traders, we investigate how compensation schemes affect liquidity provision and asset prices. Investors face a trade-off between risk and return. At the benefit of a potentially higher return, they can entrust their money to a trader. However this investment is risky, as the trader might not be trustworthy. Alternatively, they can opt for a safe but low return. We study how subjects solve this trade-off when traders are either liable for losses or not, and when their bonuses are either capped or not. Limited liability introduces a conflict of interest because it makes traders value the asset more than investors. To limit losses, investors should thus restrict liquidity provision to force traders to trade at a lower price. By contrast, bonus caps make traders value the asset less than investors. This should encourage liquidity provision and decrease prices. In contrast to these predictions, we find that under limited liability investors contribute to asset price bubbles by increasing liquidity provision and that caps fail to tame bubbles. Overall, giving investors skin in the game fosters financial stability.

In this paper we measure the effect of the inflation tax on economic activity and welfare within a controlled setting. To do so, we develop a model of price posting and monetary exchange with inflation and finite populations. The model, which provides a game–theoretic foundation to Rocheteau and Wright (2005)׳s competitive search monetary equilibrium, is used to derive theoretical propositions regarding the effects of inflation in this environment, which we test with a laboratory experiment that closely implements the theoretical framework. We find that the inflation tax is harmful – with cash holdings, production and welfare all falling as inflation rises – and that its effect is relatively larger at low inflation rates than at higher rates. For instance, for inflation rates between 0% and 5%, welfare in the two markets we consider (2[seller]×2[buyer] and 3×2) falls by roughly 1 percent for each percentage–point rise in inflation, compared with 0.4 percent over the range from 5% to 30%. Our findings lead us to conclude that the impact of the inflation tax should not be underestimated, even under low inflation.

We report the findings of an experiment designed to study how people learn and make decisions in network games. Network games offer new opportunities to identify learning rules, since on networks (compared to e.g. random matching) more rules differ in terms of their information requirements. Our experimental design enables us to observe both which actions participants choose and which information they consult before making their choices. We use this information to estimate learning types using maximum likelihood methods. There is substantial heterogeneity in learning types. However, the vast majority of our participants' decisions are best characterized by reinforcement learning or (myopic) best-response learning. The distribution of learning types seems fairly stable across contexts. Neither network topology nor the position of a player in the network seem to substantially affect the estimated distribution of learning types.

We run an experiment with users of internet message boards. We find that forum users cooperate more with partners of their own forum than with partners from a different forum but they are equally altruistic when they made a gift to a partner of their forum or from another one. We also find that individuals are more active in the forums, the more altruistic they are; however, we find no relation between activity in the forum and cooperation. These results suggest that the public good provided in internet forums is mainly provided by a group of unconditional altruistic group of users, and that the feeling of community supports the cooperation in that provision.

In this paper, we compare participants in an artefactual field experiment in urban China with the survey population of migrants from which they were recruited. The experimental participants were more educated, more likely to lend money to friends, and worked fewer hours than the general population. They differ significantly from non-participants in terms of regression coefficients, such as the effects of wealth and marital status on the probability of being self-employed and distance migrated. We thus find that there was selection into our experiments on the basis of both observable characteristics and on unobserved differences in behavioral relations.

Suppose a policymaker is interested in the impact of an existing social program. Impact estimates using observational data suffer potential bias, while unbiased experimental estimates are often limited to other contexts. This creates a practical trade-off between internal and external validity for evidence-based policymaking. We explore this trade-off empirically for several common policies analyzed in development economics, including microcredit, migration, and education interventions. Based on mean-squared error, non-experimental evidence within context outperforms experimental evidence from another context. This advantage declines, but may not reverse, with experimental replication. We offer four reasons these findings are of general relevance to policy evaluation.

This article briefly summarizes and judges recent experimental developments exploring the predictions of dynamically inconsistent models. An opinion is provided as to how the literature may evolve given these recent advances.

This paper proposes a methodology to implement probabilistic belief elicitation in continuous-choice games. Representing subjective probabilistic beliefs about a continuous variable as a continuous subjective probability distribution, the methodology involves eliciting partial information about the subjective distribution and fitting a parametric distribution on the elicited data. As an illustration, the methodology is applied to a double auction experiment, where traders' beliefs about the bidding choices of other market participants are elicited. Elicited subjective beliefs are found to differ from proxies such as Bayesian Nash Equilibrium (BNE) beliefs and empirical beliefs, both in terms of the forecasts of other traders' bidding choices and in terms of the best-response bidding choices prescribed by beliefs. Elicited subjective beliefs help explain observed bidding choices better than BNE beliefs and empirical beliefs. By extending probabilistic belief elicitation beyond discrete-choice games to continuous-choice games, the proposed methodology enables to investigate the role of beliefs in a wider range of applications.

We propose a new abstract definition of equilibrium in the spirit of competitive equilibrium: a profile of alternatives and a public ordering (expressing prestige, price, or a social norm) such that each agent prefers his assigned alternative to all lower-ranked ones. The equilibrium operates in an abstract setting built upon a concept of convexity borrowed from convex geometry. We apply the concept to a variety of convex economies and relate it to Pareto optimality. The “magic” of linear equilibrium prices is put into perspective by establishing an analogy between linear functions in the standard convexity and “primitive orderings” in the abstract convexity. (JEL C90, D11) In this paper, we return to the fundamental concept of competitive equilibrium and extend the notion to a more abstract setting. The extension is based on the idea that competitive equilibrium is a method of creating harmony in an interactive situation with a feasibility restriction and self-interested agents. It is built around a public ordering of the alternatives which either limits the choices available to the agents or systematically influences their preferences. In the standard economic setting, this ordering is given by prices that apply equally to all agents. These prices determine consumers’ choice sets and producers’ preferences. We propose an analogous solution concept adjusted to fit more abstract situations in which valuation using prices is replaced by valuation according to a public ordering. The road to the construction of the equilibrium concept starts with a discussion of the notion of convexity. In the Euclidean setting, the algebraic notion of convexity is central to the standard analysis of competitive equilibrium. Since we primarily consider settings that lack an algebraic structure, we employ a more abstract form of convexity. Definitions of convexity involve the primitive phrase “ b is between the elements a 1 , … , a L . ” In an Euclidean space, this means that b is an algebraic con vex combination of a 1 , … , a L . However, the phrase also has a common use in daily conversation. For example, one can say that game theory is between mathematics and economics and that Canada is culturally between the United States, the United Kingdom, and France. To accommodate this, the first step will be to borrow a formal

Previous research studies suggest a lower degree of positional concerns among people from poor countries. Yet the evidence is limited and most often builds on the assumption that people's reference groups are the same across all individuals. We conduct a survey experiment in urban Ethiopia that is modified to include multiplicity of reference groups. We estimate positional concerns considering various reference groups to test whether the low positional concerns found in the literature are due to misspecification of the reference groups. The results show a low degree of positional concern, which is highly stable across different reference groups.

A new behavioral foundation is uncovered for why money promotes impersonal exchange. In an experiment, subjects could cooperate by intertemporally exchanging goods with anonymous opponents met at random. Indefinite repetition supported multiple equilibria, from full defection to the efficient outcome. Introducing the possibility to hold and exchange intrinsically worthless tickets affected outcomes and cooperation patterns. Tickets resembled fiat money, which emerged as a tool for equilibrium selection in the economy. Monetary exchange facilitated coordination on cooperation and redistributed surplus from defectors to cooperators. Treatments where subjects could develop a reputation revealed a limited record-keeping role for monetary exchange.

El estudio se centró en determinar la prevalencia de Diabetes Mellitus en mayores de 20 años en el área urbana de Nicaragua. Se seleccionó la población mayor de 20 años, utilizando la proyección del censo de 2010 en las cabeceras del norte, centro y pacífico de Nicaragua. La Costa Caribe fue excluida por problemas de factibilidad. Las cabeceras seleccionadas fueron escogidas al azar, estratificando los sectores de cada cabecera para la selección de la población, la que una vez definido los lugares los participantes fueron seleccionados al azar usando el método de lotería. El cálculo del tamaño de la muestra fue hecho usando el Programa Epidemiológico EPIINFO versión 6.04, usando una frecuencia de 0.5, un máximo error permisible de 3% y un intervalo de confianza del 95%, siendo multiplicado el total muestreado por dos para evitar el error por el efecto de diseño. Al final se entrevistaron un total de 3150 encuestas a los que se les preguntó por datos generales, datos sobre factores de riesgo de Diabetes Mellitus y una medición de variables biológicos (Presión arterial, frecuencia cardiaca, pulso, peso, talla, cintura, cadera y la medición de la glicemia ya fuese en ayunas o glicemia casual) Los resultados evidencian la prevalencia fue de 9.5%; 6.1% resultaron ser prediabéticos y 84.4% al momento de hacer la encuesta no padecían de la enfermedad. Hubo un predominio de Diabetes en el sexo masculino con 12.9% y en el sexo femenino se encontró una prevalencia de 7.4%. Por grupos etáreos predominó en la mayoría de 40 años. De los 300 diabéticos encontrados en el estudio, 171 (57%) sabían que eran diabéticos y 129 (43%) desconocían que padecían de la enfermedad. Los principales factores de riesgo encontrados fueron: la edad mayor de 45 años (OR:5.5; IC95%: 4.2-7.2), para las mujeres la 95% historia de Diabetes gestacional (OR:4.5; IC95%: 1.7-11.7), hipertensión arterial (OR:4.0; IC95%: 3.1-5.1), sedentarismo (OR:3.1; IC95%: 2.4-4.1), obesidad (OR:2.7; IC95%: 2.0-3.7), e historia familiar de Diabetes (OR:2.0; IC95%: 1.6-2.6). En conclusión, la Diabetes Mellitus constituye un problema importante para la salud pública para la población nicaragüense y que en países con pocos recursos la prevención debe ir orientada a cambiar factores de riesgo modificables como sedentarismo y obesidad en la población y la promoción de estilos de vida saludables. DOI: http://dx.doi.org/10.5377/universitas.v5i1.1476 UNIVERSITAS (León): Revista Científica de la UNAN León Vol.5(1) 2014, pp 1-10

A gondolat, amely szerint a vállalatok közötti verseny és együttműködés egyszerre van jelen az üzleti gyakorlatban, kiemelt figyelemet kap az üzleti tudományok területén, ugyanakkor meglehetősen kevés elméleti modell született a probléma megjelenítésére. A tanulmányban egy olyan modellkeret megalkotására teszünk kísérletet, amelyben az első időszakban a vállalatok arról döntenek, hogy mekkora összeggel járuljanak hozzá egy olyan közös alaphoz, amely révén vélhetően a piac bővül, így ez a szakasz egy folytonos közjószágjátékhoz hasonló helyzetet hoz létre. Ezt követően, a második időszakban a vállalatok Cournot-versenyt folytatnak. Ebben a kétlépcsős szekvenciális játékként értelmezhető keretben megvizsgáljuk az egyensúly tulajdonságait különböző feltételek mellett. Látható lesz, hogy az egyensúlyi hozzájárulási szintek általában pozitívak, sőt többnyire megegyeznek a maximális lehetséges összeggel. Megvizsgáljuk azt is, hogy az optimális hozzájárulási szintek hogyan viszonyulnak a vállalatok összprofitját, illetve a társadalmi jólétet maximalizáló hozzájárulási szintekhez. A modellünk egy speciális esetében feltesszük, hogy a közös alaphoz való hozzájárulás csökkenti a technológiai fejlesztések által termelési költségek csökkentésére fordítható forrásokat, felerősítve ezáltal a verseny és együttműködés között feszülő ellentéteket. E modellt egy laboratóriumi kísérlet során teszteljük. A kapott eredmények alátámasztják a modell hozzájárulással kapcsolatos predikcióit. Journal of Economic Literature (JEL) kód: C70, C90, D21, D22, L20., The idea of parallel competition and cooperation among firms has attracted remarkable recent interest in management. Yet there are very few theoretical models for studying it. The paper proposes a framework in which in stage 1, firms decide how much to contribute to a common fund intended to enlarge the market, so that the situation resembles a continuous public-good game. In stage 2 firms compete in Cournot fashion. The authors investigate in this sequential two-stage game the properties of the equilibrium under various conditions. It is found that equilibrium contribution levels are generally positive, sometimes even maximal. Also studied is how optimal contribution levels relate to the contribution levels that maximize the total profit of firms and social welfare. In a special case it is assumed that contributions to the common fund reduce the funds available to decrease production costs, enhancing still further the tension between cooperation and competition. The findings in this case are tested in a laboratory experiment. The predictions about the contribution level are supported by the data.

We study both theoretically and experimentally the set of Nash equilibria of a classical one-dimensional election game with two candidates. These candidates are interested in power and ideology, but their weights on these two motives are not necessarily identical. Apart from obtaining the well known median voter result and the two-sided policy differentiation outcome, the paper uncovers the existence of two new equilibrium configurations, called ‘one-sided’ and ‘probabilistic’ policy differentiation, respectively. Our analysis shows how these equilibrium configurations depend on the relative interests in power (resp., ideology) and the uncertainty about votersʼ preferences. The theoretical predictions are supported by the data collected from a laboratory experiment, as we observe convergence to the Nash equilibrium values at the aggregate as well as at the individual levels in all treatments, and the comparative statics effects across treatments are as predicted by the theory.

Les effets d’âge relatif (relative age effects, rae) font reference a l’avantage qu’ont les individus nes plus tot au sein d’une cohorte. En economie de l’education, le rae montre que les enfants nes tot dans l’annee obtiennent de meilleurs resultats scolaires que les autres. C’est egalement vrai dans le cas du sport dans le cadre duquel les enfants sont regroupes par classe d’âge lors de leur formation. Parce que la date delimitant les categories ne change jamais au niveau scolaire (l’annee civile), il est difficile d’identifier parfaitement l’effet causal. Nous pouvons identifier cet effet car la Federation francaise de football a change la date limite des categories de jeunes pendant la saison 1995-1996. Ainsi cette experience naturelle montre que : (1) la date-limite des categories cree le rae ; (2) les effets continuent d’exister pour les footballeurs les plus âges ; (3) il existe des differences de developpement physique entre les joueurs nes juste avant et juste apres la date limite.

In comparison to traditional laboratory experiments, internet-based experiments reduce the experimental subject’s opportunity costs. Consequently, the samples of these two experiments will likely be different in spite of size and composition. This finding is important to consider when interpreting economic experiments because self-selection may bias the external validity of experiments.

In an experiment with professionals from the financial services sector, we investigate the impact of a team incentive scheme on the recommendation quality of investment products when advisors benefit from advising lower quality products. Experimental results reveal that, when group affiliation is strong, inferior products are recommended significantly more often under team incentives than under individual incentives.

This paper examines the effect of religion on positional concerns using survey experiments. We focus on two of the dimensions of religion – degree of religiosity and religious festivals. By conducting the experiments during both the most important day of Ramadan (the Night of Power) and a day outside Ramadan, we find that Ramadan overall has a small and negative impact on positional concerns. Detailed analyses based on the sorting of individuals' degree of religiosity reveal that the decrease in the degree of positional concerns during Ramadan is mainly explained by a decrease in positionality among individuals with a low degree of religiosity. We also discuss the broader welfare implications of our findings.

Neuroeconomics shares the main goals of microeconomics: to understand what causes choices, and the welfare properties of choice. The novel goal is linking mathematical constructs and observable behavior to mechanistic details of neural circuitry. Several complementary methods are used. An initial insight from neuroscience is that distinct systems guide choice: Pavlovian and instrumental conditioning (learning) of state-value and response-value associations, overlearned habits, and model- (or goal-) directed value that requires deliberation. These systems can differ economically from rational choice—for example, habitual choices have low utility and price elasticities, whereas model-directed values are often constructed preferences. Neuroeconomics also provides evidence of situations in which utility maximization either works well (in simple binary choice) or benefits from the introduction of behavioral constructs. Neuroeconomics is well equipped to guide the theory of how choices depend on mental states, such as fear or cognitive load. Examples include extensive studies of risk and time preference, finance, and neural decoding of private information.

A szerző a 2008-ban kezdődött gazdasági világválság hatását vizsgálja az egy részvényre jutó nyereség előrejelzésének hibájára. Számos publikáció bizonyította, hogy az elemzők a tényértékeknél szisztematikusan kedvezőbb tervértéket adnak meg az egy részvényre jutó előrejelzéseikben. Más vizsgálatok azt igazolták, hogy az egy részvényre jutó előrejelzési hiba bizonytalan környezetben növekszik, míg arra is számos bizonyítékot lehet találni, hogy a negatív hírek hatását az elemzők alulsúlyozzák. A gazdasági világválság miatt az elemzőknek számtalan negatív hírt kellett figyelembe venniük az előrejelzések készítésekor, továbbá a válság az egész gazdaságban jelentősen növelte a bizonytalanságot. A szerző azt vizsgálja, hogy miként hatott a gazdasági világválság az egy részvényre jutó nyereség- előrejelzés hibájára, megkülönböztetve azt az időszakot, amíg a válság negatív hír volt, attól, amikor már hatásaként jelentősen megnőtt a bizonytalanság. Journal of Economic Literature (JEL) kód: C12, C90, D03, D53, D83, G02, G17, P11., The author investigated the impact of the financial crisis that started in 2008 on the forecasting error for earnings per share. There is plentiful evidence from the 1980s that analysts give systematically more favourable values in their earnings per share (EPS) forecasts than reality, i.e. they are generally optimistic. Other investigations have supported the idea that the EPS forecasting error is greater under uncertain environmental circumstances, while other researchers prove that the analysts under-react to the negative information in their forecasts. The financial crisis brought a myriad of negative information for analysts to consider in such forecasts, while also increasing the level of uncertainty for the entire economy. The article investigates the impact of the financial crisis on the EPS forecasting error, distinguishing the period when the crisis gave merely negative information, from the one when its effect of uncertainty was significantly increased over the entire economy.

This paper puts forward suggestions that could improve the efficiency of field experiments as they are currently carried out in experimental economics. Two recommendations are made: (1) Prior to the actual study, economic field experiments should include sample size calculations that confirm that meaningful effects can be detected. (2) Economic field experiments should take advantage of the power of multi-factor experimental plans.

Many clinical trials are in progress which involve the collection of patient-level data on both the health outcome and resource use consequences of the health care interventions under evaluation. The overall aim of many such evaluations will be to undertake a cost-effectiveness analysis, which will often result in a cost-effectiveness ratio summarising the value for money of the intervention in question. In this paper, we explore the issues surrounding the design and analysis of such studies. At the design stage of an analysis, we propose an improved sample size formula for cost-effectiveness analysis that allows for covariance between cost and effect differences. This approach is based on the 'net benefits' approach to the analysis of uncertainty in cost-effectiveness analysis. At the analysis stage of an evaluation, we explore the differences and similarities of the 'net benefit' approach to analysing cost-effectiveness information and the traditional approach based on cost-effectiveness ratios. Despite the apparent differences, we show that the two approaches are exactly equivalent when it comes to estimating the probability that the intervention is cost-effective under alternative values of the ceiling cost-effectiveness ratio appropriate for decision-making purposes.

In this note, we present a novel computerized real effort task based on moving sliders across a screen which overcomes many of the drawbacks of existing real effort tasks. The task was first developed and used by us in Gill and Prowse (forthcoming). We outline the design of our \slider task", describe its advantages compared to existing real effort tasks and provide a statistical analysis of the behavior of subjects undertaking the task. We believe that the task will prove valuable to researchers in designing future real effort experiments, and to this end we provide z-Tree code and guidance to assist researchers wishing to implement the slider task. Keywords; real effort task, slider task, design of laboratory experiments, learning and time effects, individual heterogeneity

Social preferences explain competitive behavior between agents and reciprocity towards a principal but there is no insight into the interaction of competition and reciprocity. We conducted a laboratory experiment with two treatments to address this issue. In a conventional tournament, an agent receives either the full prize or no prize at all. The other treatment provides the same incentives but the actual payment of an agent equals her expected payment. In both treatments the principal chooses between a low and a high guaranteed payment. Standard economic theory predicts the same effort provision in all situations. Our results show that inequity between agents’ payoffs and generosity of the principal determines the effectiveness of tournaments. Moreover, the data reveal that agents focus their preferences either on the principal or on the agent.

The paper investigates the impact of remittances on the relative concerns of households in rural China. Using the Rural to Urban Migration in China (RUMiC) dataset we estimate a series of well-being functions to simultaneously explore the relative concerns with respect to income and remittances. Our results show that although rural households experience substantial utility loss due to income comparisons, they gain utility by comparing their remittances with those received by their reference group. In other words, we find evidence of a "status-effect" with respect to income and of a "signal-effect" with respect to remittances. The magnitudes of these two opposite effects are very similar, implying that the utility reduction due to relative income is compensated by the utility gain due to relative remittances. This finding is robust to various specifications, controlling for the endogeneity of remittances and selective migration, as well as a measure of current migrants' net remittances calculated using counterfactual income and expenditures.

This report presents a practical approach to stacked generalization in surrogate model based optimization. It exemplifies the integration of stacking methods into the surrogate model building process. First, a brief overview of the current state in surrogate model based opti- mization is presented. Stacked generalization is introduced as a promising ensemble surrogate modeling approach. Then two examples (the first is based on a real world application and the second on a set of artificial test functions) are presented. These examples clearly illustrate two properties of stacked generalization: (i) combining information from two poor performing models can result in a good performing model and (ii) even if the ensemble contains a good performing model, combining its information with information from poor performing models results in a relatively small performance decrease only.

This study presents a new field experimental approach for measuring age discrimination in hiring. In addition to the classical approach in which candidates ages are randomly assigned within pairs of fictitious résumés that are sent to real vacancies, we randomly assign between these pairs the activities undertaken by the older candidates during their additional post-educational years. When applying this design to the case of Belgium, we find that age discrimination depends fundamentally on the older candidates career patterns. Older age only robustly affects call-back if the older candidate was employed in an out-of-field job during his or her extra post-educational years.

The hold-up problem is central to the theory of incomplete contracts. It shows how the difficulty to write complete contracts and the resulting need to renegotiate can lead to underinvestment. We describe the design of a simple teaching experiment that illustrates the hold-up problem. The model used is a simple perfect information game. The experiment can hence also be used to illustrate the concept of subgame perfect equilibrium and the problem of making non-binding commitments.

Explicit economic incentives designed to increase contributions to public goods and to promote other pro-social behavior sometimes are counterproductive or less effective than would be predicted among entirely self-interested individuals. This may occur when incentives adversely affect individuals' altruism, ethical norms, intrinsic motives to serve the public, and other social preferences. The opposite also occurs—crowding in —though it appears less commonly. In the fifty experiments that we survey, these effects are common, so that incentives and social preferences may be either substitutes (crowding out) or complements (crowding in). We provide evidence for four mechanisms that may account for these incentive effects on preferences: namely that incentives may (i) provide information about the person who implemented the incentive, (ii) frame the decision situation so as to suggest appropriate behavior, (iii) compromise a control averse individual's sense of autonomy, and (iv) affect the process by which people learn new preferences. An implication is that the evaluation of public policy must be restricted to allocations that are supportable as Nash equilibria when account is taken of these crowding effects. We show that well designed fines, subsidies, and the like minimize crowding out and may even do the opposite, making incentives and social preferences complements rather than substitutes. (JEL D02, D03, D04, D83, E61, H41, Z13)

Although legal sanctions are often nondeterrent, we frequently observe compliance with “mild laws.” A possible explanation is that the incentives to comply are shaped not only by legal, but also by social sanctions. This paper employs a novel experimental approach to study the link between legal and social norm enforcement. We analyze whether the two institutions are complements or substitutes. Our results show that legal sanctions partially crowd out social norm enforcement. Mild laws nevertheless give scope for a potentially large, positive welfare effect, as a higher level of compliance is achieved at lower social enforcement costs.

Weak electoral registration requirements are commonly thought to encourage electoral participation, but may also promote electoral fraud. For one, candidates and their supporters can more easily mobilize voters outside the district to register and vote for the candidates, even though these voters do not reside within the district. We statistically detect this classic type of electoral fraud for the first time, by taking advantage of a natural experimental setting in Japanese municipal elections. We argue that whether or not a municipal election was held in April 2003 can be regarded as an "as-if" randomly assigned treatment. The difference-in-difference analysis of municipality-month panel data shows that an increase in the new population just prior to April 2003 is significantly larger in treatment municipalities (with an election) than in control ones (without an election). The estimated effects are, in some cases, decisive enough to change the electoral results, especially when the election is competitive. We argue that our approach – "election timing as treatment" – can be applied to investigate not only this type of electoral fraud but also other "electoral connection[s]" (Mayhew 1974) in other countries.

In a laboratory experiment, subjects were endowed with money and waiting time. Preferences for waiting time reduction were elicited with salient rewards both as a private good and as a public good. The allocations of the public good that were theoretically predicted by the Nash equilibrium and the Lindahl equilibrium, respectively, were computed from the individual private good valuations and compared with the subjects’ actual contributions. We found a significant positive correlation between private good valuations in terms of willingness-to-pay and public good valuations in terms of voluntary contributions. Group contributions to public waiting time reduction significantly exceeded the non-cooperative prediction and were close to the socially optimal level. However, for a majority of subjects, the Lindahl equilibrium was not able to predict the observed contributions.

Evidence shows that real-effort investments can affect bilateral bargaining outcomes. This paper investigates whether similar investments can inhibit equilibrium convergence of experimental markets. In one treatment, sellers' relative effort affects the allocation of production costs, but a random productivity shock ensures that the allocation is not necessarily equitable. In another treatment, sellers' effort increases the buyers' valuation of a good. We find that effort investments have a short-lived impact on trading behavior when sellers' effort benefits buyers, but no effect when effort determines cost allocation. Efficiency rates are high and do not differ across treatments.

Randomized controlled trials are increasingly used to evaluate policies. How can we make these experiments as useful as possible for policy purposes? We argue greater use should be made of experiments that identify the behavioral mechanisms that are central to clearly specified policy questions, what we call “mechanism experiments.” These types of experiments can be of great policy value even if the intervention that is tested (or its setting) does not correspond exactly to any realistic policy option.

The "Hawthorne effect," a concept familiar to all students of social science, has had a profound influence both on the direction and design of research over the past 75 years. The Hawthorne effect is named after a landmark set of studies conducted at the Hawthorne plant in the 1920s. The first and most influential of these studies is known as the "Illumination Experiment." Both academics and popular writers commonly summarize the results as showing that every change in light, even those that made the room dimmer, had the effect of increasing productivity. The data from the illumination experiments, however, were never formally analyzed and were thought to have been destroyed. Our research has uncovered these data. We find that existing descriptions of supposedly remarkable data patterns prove to be entirely fictional. There are, however, hints of more subtle manifestations of a Hawthorne effect in the original data.

Many social experiments are run in multiple waves, or are replications of earlier social experiments. In principle, the sampling design can be modified in later stages or replications to allow for more efficient estimation of causal effects. We consider the design of a two-stage experiment for estimating an average treatment effect, when covariate information is available for experimental subjects. We use data from the first stage to choose a conditional treatment assignment rule for units in the second stage of the experiment. This amounts to choosing the propensity score, the conditional probability of treatment given covariates. We propose to select the propensity score to minimize the asymptotic variance bound for estimating the average treatment effect. Our procedure can be implemented simply using standard statistical software and has attractive large-sample properties.

In this paper we reply to Binmore and Shaked's criticism of the Fehr–Schmidt model of inequity aversion. We put the theory and their arguments into perspective and show that their criticism is not substantiated. Finally, we briefly comment on the main challenges for future research on social preferences.

This paper presents a rare study on ethnic identity and perception of psychological differences among different ethnic groups in China. The objective is to offer an empirical test on the long standing stereotypes of cultural differences between Han Chinese, the majority ethnic group in China, and Uyghur Chinese, the Muslim minority in Xinjiang region of China. A total of 1600 students from four Chinese universities have been selected and examined in aspects ranging from self-esteems to desires for cross-cultural communication, and the result shows that the psychological differences between Han Chinese and Uyghur Chinese are considered by the majority of the students from these two groups to be great, which, however, are actually even smaller than the differences among different Han Chinese majority groups. What¡¯s more, contrary to the popular belief that economic discrepancy between Han and Uyghur Chinese is the main cause of ethnic misconceptions, our study demonstrates that self-perception of economic status has no effect on psychological measurements over this subject. Finally, a question can be raised whether assumptions about cultural differences are still in line with the constant social economic changes in China, and implications for improving ethnical relations in China have also been provided.

This paper reports the results of an experiment designed to assess the ability of an incumbent seller to profitably foreclose a market with exclusive contracts. We use the strategic environment described by Rasmusen, Ramseyer, and Wiley (1991) and Segal and Whinston (2000) where entry is unprofitable when sufficiently many downstream buyers sign exclusive contracts with the incumbent. When discrimination is impossible, the game resembles a stag-hunt (coordination) game in which the buyers' payoffs are endogenously chosen by the incumbent seller. Exclusion occurs when the buyers fail to coordinate on their preferred equilibrium. Two-way non-binding pre-play communication among the buyers lowers the power of exclusive contracts and induces more generous contract terms from the seller. When discrimination and communication are possible, the exclusion rate rises. Divide-and-conquer strategies are observed more frequently when buyers can communicate with each other. Exclusion rates are significantly higher when the buyers' payoffs are endogenously chosen rather than exogenously given. Finally, secret offers are shown to decrease the incumbent's power to profitably exclude.

Many of the main scientific challenges in the fields of development, environment, and resource economics have a microeconomic foundation wherein behavioral elements play a significant role. Preferences with respect to risk, time, societal others, and the environment shape the decision-making processes of individuals. Economic experiments have been extensively carried out in the lab and in the field to test the predictions of behavioral theories; some have had a particular focus on development and environmental issues. Random interventions have also proven to be an important source of information with respect to experimentation in development and policy design. This article identifies the contributions of experiments and random interventions and reflects on the value of having a productive dialogue—in connection with said experiments—with the main stakeholders regarding the problems being studied.

Many economic decisions involve a substantial amount of uncertainty, and therefore crucially depend on how individuals process probabilistic information. In this paper, we investigate the capability for probability judgment in a representative sample of the German population. Our results show that almost a third of the respondents exhibits systematically biased perceptions of probability. The findings also indicate that the observed biases are related to individual economic outcomes, which suggests potential policy relevance of our findings.