The Handbook of Experimental Economics

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Cover......Page 1 Title......Page 4 Copyright......Page 5 CONTENTS......Page 6 Preface......Page 14 1. Introduction: Laboratory Macroeconomics......Page 24 2.1. Optimal Consumption/Savings Decisions......Page 27 2.2. Exponential Discounting and Infinite Horizons......Page 35 2.3. Exponential or Hyperbolic Discounting?......Page 36 2.4. Expectation Formation......Page 37 3.1. Poverty Traps......Page 44 3.2. Bank Runs......Page 47 3.3. Resolving Coordination Problems: Sunspots......Page 50 3.4. Resolving Coordination Problems: The Global Game Approach......Page 53 4. Fields in Macroeconomics......Page 55 4.1. Monetary Economics......Page 56 4.2. Labor Economics......Page 69 4.3. International Economics......Page 73 4.4. Multisectoral Macroeconomics......Page 78 5.1. Ricardian Equivalence......Page 84 5.2. Commitment versus Discretion......Page 87 5.3. Monetary Policy......Page 90 5.4. Fiscal and Tax Policies......Page 96 6. Conclusions......Page 101 Notes......Page 102 References......Page 105 1. Introduction......Page 114 2. Preferences for Giving......Page 115 2.1. Is Giving Rational?......Page 118 2.2. Motives......Page 120 3. Fundraising......Page 131 3.1. Announcements: Sequential and Dynamic Giving......Page 132 3.2. Lotteries......Page 142 3.3. Auctions......Page 146 3.4. Rebates and Matches......Page 149 4. Conclusion......Page 154 Notes......Page 156 References......Page 164 INTRODUCTION......Page 176 1.1. The Cellular Structure of the Brain......Page 179 1.2. From Neurons to Networks......Page 184 2. Functional MRI: A Window into the Working Brain......Page 187 2.1. Functional MRI and the BOLD Signal......Page 188 2.2. Design Considerations......Page 189 2.3. Image Analysis......Page 191 2.4. Summary of Functional MRI......Page 194 3.2. Prospect Theory......Page 195 3.3. Causal Manipulations......Page 198 3.4. Logical Rationality and Biological Adaptation......Page 199 4. Intertemporal Choice and Self-regulation......Page 200 4.1. Empirical Regularities......Page 201 4.2. Multiple-Self Models with Selves That Have Overlapping Periods of Control......Page 204 4.4. Unitary-Self Models......Page 205 5. The Neural Circuitry of Social Preferences......Page 206 5.1. Social Preferences and Reward Circuitry......Page 207 5.3. The Role of the Prefrontal Cortex in Decisions Involving Social Preferences......Page 209 5.4. Summary......Page 211 6.1. Strategic Awareness......Page 212 6.2. Beliefs, Iterated Beliefs, and Strategic Choice......Page 213 6.3. Learning......Page 215 6.4. Strategic Teaching and Influence Value......Page 217 6.5. Discussion of Strategic Neuroscience......Page 219 6.6. Summary......Page 222 Acknowledgments......Page 223 Notes......Page 224 References......Page 225 INTRODUCTION......Page 240 I. Where Things Stood Circa 1995......Page 241 A. Outcome-Based Social Preference Models......Page 245 B. Some Initial Tests of the Bolton-Ockenfels and Fehr-Schmidt Models......Page 248 C. Social Preferences versus Difference Aversion......Page 254 D. Models Incorporating Reciprocity/Intentions of Proposers......Page 256 E. Other-Regarding Behavior and Utility Maximization......Page 258 F. Learning......Page 259 A. The Investment/Trust Game......Page 263 B. Results from Multilateral Bargaining Experiments......Page 265 C. A Second Look at Dictator Games......Page 267 D. Procedural Fairness......Page 270 E. Diffusion of Responsibility......Page 272 F. Group Identity and Social Preferences......Page 276 G. Generalizability......Page 278 A. An Initial Series of Experiments......Page 282 B. Incomplete Contracts......Page 284 C. Wage Rigidity......Page 285 D. The Effect of Cognitive Ability and the Big Five Personality Characteristics in Other-Regarding Behavior......Page 287 E. Why Does Gift Exchange Occur?......Page 288 F. Laboratory versus Field Settings and Real Effort......Page 290 V. Conclusions......Page 297 Acknowledgments......Page 299 Notes......Page 300 References......Page 305 1. Introduction......Page 313 2. Some Early Design Experiments: Allocation of Airport Slots......Page 318 3. FCC Spectrum Auctions......Page 323 4.1. eBay Auctions......Page 330 4.2. A Poorly Designed Auction (for Medicare Supplies)......Page 339 5.1. Designing Labor Markets for Doctors......Page 341 5.2. Matching without a Clearinghouse: The Market for Economists, and Online Dating......Page 350 6. Course Allocation......Page 352 7. Conclusions......Page 356 Notes......Page 357 References......Page 362 1. Introduction and Overview......Page 370 1.1. Methodology: Relationship to Experimental Economics......Page 371 1.2. Chapter Road Map......Page 373 2.1. Unstructured Committee Bargaining......Page 375 2.2. Committee Bargaining with a Fixed Extensive Form Structure......Page 382 3.1. The Spatial Model of Competitive Elections and the Median Voter Theorem......Page 404 3.2. Multicandidate Elections......Page 410 3.3. Candidate Competition with Valence......Page 413 4.1. Instrumental Voting Experiments......Page 415 4.2. The Effects of Beliefs, Communication, and Information on Turnout......Page 420 4.3. Expressive Voting Experiments......Page 421 5.1. Condorcet Jury Experiments......Page 423 5.2. The Swing Voter’s Curse......Page 429 6. Voting Mechanisms that Reflect Preference Intensity......Page 433 6.1. Mechanisms Where a Budget of Votes Can Be Allocated Across Issues......Page 434 6.2. Vote Trading and Vote Markets......Page 437 7. Where Do We Go From Here?......Page 441 Notes......Page 442 References......Page 447 I. Introduction......Page 458 II. Infrahumans......Page 461 II.A. Methodological Notes......Page 466 III. Children......Page 467 IV. Token Economies......Page 472 V. Elderly......Page 474 VI. Highly Demographically Varied (Representative) Sample......Page 478 VI.A. Methodological Notes......Page 483 VII. Subjects with Relevant Task Experience......Page 484 VIII. Discussion......Page 491 VIII.A. Individual Choice......Page 492 VIII.B. Games......Page 493 IX. Conclusion......Page 494 Notes......Page 495 References......Page 498 I. Introduction......Page 504 II. Gender Differences in Competitiveness......Page 508 II.A. Do Women Shy Away from Competition?......Page 509 II.B. Replication and Robustness of Women Shying Away from Competition......Page 512 II.C. Reducing the Gender Gap in Tournament Entry......Page 515 II.D. Performance in Tournaments......Page 520 II.E. Field Experiments on Gender Differences in Competitiveness......Page 526 II.F. External Relevance of Competitiveness......Page 527 III.A. Gender Differences in Task Choice......Page 530 III.B. Gender Differences in Speaking up......Page 533 IV. Altruism and Cooperation......Page 535 IV.A. Dictator-Style Games......Page 538 IV.B. Field Evidence and External Relevance of Gender Differences in Giving......Page 542 IV.C. Prisoner’s Dilemma and Public Good Games......Page 543 IV.D. New Directions......Page 546 IV.E. Conclusions......Page 547 V. Risk......Page 548 V.A. Early Work and Surveys by Psychologists......Page 550 V.B. Early and Most Commonly Used Elicitation Methods in Economics......Page 553 V.C. Early Economic Surveys......Page 556 V.D. Recent Economic Surveys and Meta-Analyses on Specific Elicitation Tasks......Page 558 V.E. Stability of Risk Preferences and Their External Relevance......Page 561 V.F. An Example of a Careful Control for Risk Aversion......Page 566 V.G. Conclusions......Page 568 VI. Conclusions......Page 569 Notes......Page 570 References......Page 576 INTRODUCTION......Page 586 I. Single-Unit Private Value Auctions......Page 587 1.1. Bidding above the RNNE in First-Price Private Value Auctions......Page 588 1.2. Bidding above the RNNE and Regret Theory......Page 591 1.3. Using Experimental Data to Corroborate Maintained Hypotheses in Empirical Applications to Field Data......Page 592 1.4. Second-Price Private Value Auctions......Page 593 1.5. Asymmetric Private Value Auctions......Page 595 1.6. Sequential Auctions......Page 599 1.7. Procurement Auctions......Page 601 1.8. Cash-Balance Effects and the Role of Outside Earnings On Bids......Page 603 1.9. An Unresolved Methodological Issue......Page 604 II. Single-Unit Common Value Auctions......Page 605 2.1. English Auctions......Page 606 2.2. Auctions with Insider Information......Page 610 2.3. Common Value Auctions with an Advantaged Bidder......Page 611 2.4. New Results in the Takeover Game: Theory and Experiments......Page 613 2.5. Additional Common Value Auction Results......Page 615 2.6. Is the Winner’s Curse Confined to College Sophomores?......Page 619 3.1. Auctions with Homogeneous Goods—Uniform Price and Vickrey Auctions......Page 621 3.2. More on Multiunit-Demand Vickrey Auctions......Page 627 3.3. Auctions with Synergies......Page 628 3.4. Sequential Auctions with Multiunit-Demand Bidders......Page 630 4.1. Collusion in Auctions......Page 633 4.2. Bidder’s Choice Auctions: Creating Competition Out of Thin Air......Page 638 4.3. Internet Auctions......Page 640 4.4. Entry into Auctions......Page 642 Notes......Page 646 References......Page 652 INTRODUCTION......Page 661 1.1. Six Basic Regularities and a Model......Page 664 1.2. The Effect of Limited Feedback......Page 686 1.3. Two Choice-Prediction Competitions......Page 688 2.1. The Partial Reinforcement Extinction Effect and Reinforcement Schedules......Page 691 2.2. Spontaneous Alternation, the Gambler Fallacy, and Response to Patterns......Page 693 2.4. The Effect of Delay and Melioration......Page 694 3.1. Successive Approximations, Hill Climbing, and the Neighborhood Effect......Page 695 3.2. Learned Helplessness......Page 697 3.4. The Effect of Additional Stimuli (Beyond Clicking)......Page 698 4. Social Interactions and Learning in Games......Page 700 4.1. Social Interactions Given Limited Prior Information......Page 701 4.2. Learning in Constant-Sum Games with Unique Mixed-Strategy Equilibrium......Page 703 4.3. Cooperation, Coordination, and Reciprocation......Page 706 4.4. Fairness and Inequity Aversion......Page 710 5.1. The Negative Effect of Punishments......Page 711 5.2. The Enforcement of Safety Rules......Page 712 5.3. Cheating in Exams......Page 714 5.5. Hand Washing......Page 715 5.7. Safety Devices and the Buying-Using Gap......Page 716 5.8. The Effect of Rare Terrorist Attacks......Page 717 5.10. The Pat-on-the-Back Paradox......Page 718 5.12. The Evolution of Social Groups......Page 719 5.14. Unemployment......Page 720 5.15. Interpersonal Conflicts and the Description-Experience Gap......Page 721 5.17. Summary and the Innovations-Discoveries Gap......Page 722 6. Conclusion......Page 723 Notes......Page 724 References......Page 725 Editors and Contributors......Page 740 Illustration Credits......Page 744 Name Index......Page 748 Subject Index......Page 760