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Choice experiments, a survey methodology in which consumers face a series of choice tasks requiring them to indicate their most preferred option from a choice set containing two or more options are used to generate estimates of consumer preferences to determine the appropriate allocation of public resources to competing projects or programs. The analysis of choice-experimental data typically relies on the assumptions that choices of the non-status quo option are demand-revealing and choices of the status quo option are not demand-revealing, but, rather, reflect an underlying behavioral bias in favor of the status quo. This paper reports the results of an experiment demonstrating that both of those assumptions are likely to be invalid. We demonstrate that choice experiments for a public good are vulnerable to the same types of strategic voting that affect other types of multiple-choice voting mechanisms. We show that owing to the mathematics of choice-set design, what actually is strategic voting often is misinterpreted as a behavioral bias for the status quo option. Therefore, we caution against using current choice-experimental methodologies to inform policy making about public goods. [ABSTRACT FROM AUTHOR]

We compare standard (laboratory) and non-standard (field) subject pool behavior in an extensive form public goods game with random punishment. Our experimental investigation is motivated by real-world 'Activists' encouraging public goods provision by firms; an activity known as corporate social responsibility. We find that relative to laboratory subjects, activists in Mumbai are more willing to settle at the Nash equilibrium of the game (which entails increased provision of public goods) and are more willing to punish non-cooperative firm behavior even if such punishments hurt their own payoffs. [ABSTRACT FROM AUTHOR]

We consider a two-layered review system of environmental regulation where a polluting firm periodically self-reports its emissions to a regulatory authority. The system typically requires a third party to verify the firm's report and, in addition, an official of the regulatory authority to spot-check. If there are potential gains from corruption, both the verifier and the official might be corruptible. Corruption is more likely in repeated-game situations, as suggested by the literature on corruption experiments. Our experimental design is motivated by the risk of under-reporting in emissions trading schemes where both the verifier and the official are corruptible and focuses on a situation with untruthful reporting and lax enforcement. Our test-bed is a three-player bribery game. We study how different types of rotation—a baseline of fixed matching, a complete rotation treatment, and two incomplete rotation treatments—affect untruthful reporting that requires collusion between three participants in a hierarchical structure. Our findings suggest that complete rotation improves significantly firms' truthful reporting and verifiers' truthful verification compared to situations where none is rotated, while incomplete rotation does not have such impact. In our experiment, none of the rotation treatments had a significant impact on the behavior of officials. [ABSTRACT FROM AUTHOR]

Using an experiment, we test the relation between personality traits and revealed risk and ambiguity preferences, and we consider the effects of personality traits prevalence in a group on the decision making of each group member. In the experiment, subjects reveal their risk and ambiguity preferences through lottery choices. They then participate in an unstructured group chat. Afterwards, they are given the chance to revise their initial lottery choices. Results show that personality traits affect ambiguity but not risk preferences before the chat. Specifically, agreeableness is negatively related to ambiguity aversion. We also show that the probability of changing decisions after the chat is affected by the individual's personality traits but not by the traits of the other group members. The latter only affects the direction and the degree of the change. [ABSTRACT FROM AUTHOR]

This experiment investigates a stochastic version of the infinitely repeated prisoner's dilemma. The stochastic element introduces the importance of beliefs about the future for supporting cooperation as well as cooperation and defection on the equilibrium path. There is more cooperation in treatments where beliefs predict cooperation after subjects gain sufficient experience. There is some evidence for cooperation and defection as predicted by equilibrium, but there is stronger evidence for behavior conditioning on past actions that is not consistent with equilibrium play. In particular, subjects continue cooperating even when it is no longer possible in equilibrium for the realized game. [ABSTRACT FROM AUTHOR]

Traders in global markets operate at different local times-of-day. This implies heterogeneity in circadian timing and likely sleepiness or alertness of those traders operating at less or more optimal times of the day, respectively. This, in turn, may lead to differences in both individual-level trader behavior as well as market level outcomes. We examined these factors by administering single-location and global sessions of an online asset market experiment that regularly produces mispricing and valuation bubbles. Global sessions involved real time trades between subjects in New Zealand and the U.S (i.e., "global" markets) with varied local times of day for each location. Individual traders at suboptimal times of day (or, "circadian mismatched" traders) engaged in riskier trading strategies, such as holding shares (the riskier asset) in later trading rounds and mispricing shares to a greater degree. These strategies resulted in lower earnings for circadian mismatched traders, especially in heterogeneous markets that also included traders at more optimal times-of-day. These differences were also reflected in market level outcomes. Markets with higher circadian mismatch heterogeneity across traders were more likely to exhibit longer lasting asset bubbles and greater share turnover volume. Overall, our results draw attention to a unique, but underappreciated, factor present across traders in global market environments, namely, differences in sleepiness across traders. Thus, this study hopes to highlight the role of circadian mismatch in attempting to understand trader behavior and, ultimately, market volatility. [ABSTRACT FROM AUTHOR]

We investigate how information about the preferences of others affects the persistence of 'bad' social norms. One view is that bad norms thrive even when people are informed of the preferences of others, since the bad norm is an equilibrium of a coordination game. The other view is based on pluralistic ignorance, in which uncertainty about others' preferences is crucial. In an experiment, we find clear support for the pluralistic ignorance perspective. In addition, the strength of social interactions is important for a bad norm to persist. These findings help in understanding the causes of such bad norms, and in designing interventions to change them. [ABSTRACT FROM AUTHOR]

We test the performance of myopic and farsighted stability concepts in a network formation experiment with a stream of payoffs and relatively unstructured link formation process. A subtle treatment variation demonstrates clearly the power of myopic stability concepts in precisely identifying the set of the most stable networks. However, we also find support for the predictions of farsighted concepts of stability, especially those that assume players' pessimism about the eventual outcome of a deviation. This is the first study to demonstrate that there exist environments where farsighted stability concepts identify empirically stable networks that are not identified by myopic concepts. Thus, myopic stability concepts are not necessarily sufficient to predict all stable outcomes in empirical applications. [ABSTRACT FROM AUTHOR]

We introduce several new variants of the dice experiment by Fischbacher and Föllmi-Heusi (Journal of the European Economic Association 11(3):525–547, 2013) to investigate measures to reduce lying. Hypotheses on the relative performance of these treatments are derived from a straightforward theoretical model. In line with previous research, we find that groups of two subjects lied at least to the same extent as individuals—even in a novel treatment where we assigned to one subject the role of being the other's monitor. However, we find that our participants hardly lied if they do not benefit and only others do, even if they were in a reciprocal relationship. Thus, we conclude that collaboration on lying mostly happens for personal gain. To mitigate selfish lying, an honesty oath which aims to increase moral awareness turned out to be effective. [ABSTRACT FROM AUTHOR]

Survey-based welfare measures for public goods are often very sensitive to value elicitation methods, for example, whether the elicitation is framed as an up-or-down vote or an open-ended willingness-to-pay (WTP) question. Leading hypotheses for elicitation effects are tied to either behavioral factors (e.g., psychological cues) or differences in perceived economic incentives. Past research that emphasizes behavioral drivers does not precisely control economic incentives, potentially confounding inferences. We conduct an experiment that controls economic incentives through incentive-compatible elicitation methods and compare single binary choice, double-bounded binary choice, payment card, and open-ended response formats. Our experiment retains important field survey characteristics, including the valuation of an environmental public good with passive-use value. All formats elicit statistically indistinguishable WTP distributions, suggesting that behavioral factors may not be the primary drivers of elicitation effects. To the extent that our laboratory methods can be mirrored in the field, this offers a pathway for mitigating elicitation effects. [ABSTRACT FROM AUTHOR]

Ostracism is practiced by virtually all societies around the world as a means of enforcing cooperation. In this paper, we use a public goods experiment to study whether groups choose to implement an institution that allows for the exclusion of members. We distinguish between a costless exclusion institution and a costly exclusion institution that, if chosen, reduces the endowment of all players. We also provide a comparison with an exclusion institution that is exogenously imposed upon groups. A significant share of the experimental groups choose the exclusion institution, even when it comes at a cost, and the support for the institution increases over time. Average contributions to the public good are significantly higher when the exclusion option is available, not only because low contributors are excluded but also because high contributors sustain a higher cooperation level under the exclusion institution. Subjects who vote in favor of the exclusion institution contribute more than those who vote against it, but only when the institution is implemented. These results are largely inconsistent with standard economic theory but can be better explained by assuming heterogeneous groups in which some players have selfish and others have social preferences. [ABSTRACT FROM AUTHOR]

There is a heated debate on whether markets erode social responsibility and moral behavior. However, it is a challenging task to identify and measure moral behavior in markets. Based on a theoretical model, we examine in an experiment the relation between trading volume, prices and moral behavior by setting up markets that either impose a negative externality on third parties or not. We find that moral behavior reveals itself in lower trading volume in markets with a negative externality, while prices mostly depend on the market structure. We further investigate individual characteristics that explain trading behavior in markets with negative externalities. [ABSTRACT FROM AUTHOR]

Empirical studies cast doubt on the efficiency assumption made in standard economic models of household behavior. In couples, the allocation of time between activities remains highly differentiated by gender. In this paper we examine whether couples deviate from efficiency in household production, using an experimental design. We compare the allocation of gendered vs. gender-neutral domestic tasks. Our results show that women in the household overspecialize in "feminine tasks" and men in "masculine tasks" compared to what their comparative advantage would require, hence revealing the influence of gender roles and stereotypes on the couples' behavior. [ABSTRACT FROM AUTHOR]

With the aid of a lab experiment, we explored how imperfect monitoring and punishment networks impacted appropriation, punishment and beliefs in a common pool resource appropriation dilemma. We studied the differences between the complete network (with perfect monitoring and punishment, in which everyone can observe and punish everyone else) and two 'imperfect' networks (that systematically reduce the number of subjects who could monitor and punish others): the directed and undirected circle networks. We found that free riders were punished in all treatments, but the network topology impacted the type of punishment: the undirected circle induced more severe punishment and prosocial punishment compared to the other two networks. Both imperfect networks were more efficient because the larger punishment capacity available in the complete network elicited higher punishment amount. [ABSTRACT FROM AUTHOR]

We present results from a series of experiments that allow us to measure overbidding and, in particular, underbidding in first-price auctions. We investigate the extent to which the amount of underbidding depends on the seemingly innocuous parameters of the experimental setup. To structure our data, we present and test a theory that introduces constant markdown bidders into a population of fully rational bidders. While a fraction of bidders in the experiment can be described by Bayesian Nash equilibrium bids, a larger fraction seems either to use constant markdown bids or to rationally optimise against a population with fully rational and boundedly rational markdown bidders. [ABSTRACT FROM AUTHOR]

We experimentally investigate the relationship between (un)kind actions and subsequent deception in a two-player, two-stage game. The first stage involves a dictator game. In the second-stage, the recipient in the dictator game has the opportunity to lie to her counterpart. We study how the fairness of dictator-game outcomes affects subsequent lying decisions where lying hurts one's counterpart. In doing so, we examine whether the moral cost of lying varies when retaliating against unkind actions is financially beneficial for the self (selfish lies), as opposed to being costly (spiteful lies). We find evidence that individuals engage in deception to reciprocate unkind behavior: The smaller the payoff received in the first stage, the higher the lying rate. Intention-based reciprocity largely drives behavior, as individuals use deception to punish unkind behavior and truth-telling to reward kind behavior. For selfish lies, individuals have a moral cost of lying. However, for spiteful lies, we find no evidence for such costs. Taken together, our data show a moral cost of lying that is not fixed but instead context-dependent. [ABSTRACT FROM AUTHOR]

We use a within-subjects design to study how responsibility for the payoffs of different number of others influences the choices under risk, and how choosing together with another person changes these decisions. After controlling for the regression to the mean, we find a weak effect of responsibility for one other person on risk taking as compared to choosing just for oneself. We, however, do find that the number of others influenced by the choice matters: when it increases from one to three, risk averse subjects choose riskier options and risk loving subjects choose more cautiously, which pushes the choices towards the modal risk preferences in the population. Mutual responsibility makes choices for others shift even more in the same direction. The observed behavior is in accordance with the blame avoidance hypothesis: decision makers with responsibility try to reduce the amount of blame for their choices, which is minimal when the choices for others are consistent with what they would have chosen for themselves. [ABSTRACT FROM AUTHOR]

This paper studies whether and how strategy revision opportunities affect levels of collusion in indefinitely repeated two-player games. Consistent with standard theory, we find that such opportunities do not affect strategy choices, or collusion levels, if the game is of strategic substitutes. In games of strategic complements, by contrast, revision opportunities lead to more collusion. We discuss alternative explanations for this result. [ABSTRACT FROM AUTHOR]

Behavioural law and economics has established a burgeoning research agenda investigating the impact of bias and heuristics on legal decision-making. One of the most important behavioural contributions concerns the impact of framing on choice. The present article expands this line of scholarship by developing a novel hypothesis under which lawyers' attachment to objectivity and neutrality is assumed to militate against frames challenging the profession's underlying norms. More specifically, the "apolitical hypothesis" expects the attachment of legally irrelevant political motivation to legal arguments to decrease their attractiveness. The hypothesis is tested in an experimental setting accounting for a varying degree of legal indeterminacy in the domain of European Union law. The experimental results show support for the hypothesis: a political frame made law students 12–24% more likely to select the "apolitical" legal option. [ABSTRACT FROM AUTHOR]