The replicability of some scientific findings has recently been called into question. To contribute data about replicability in economics, we replicated 18 studies published in the American Economic ...Review and the Quarterly Journal of Economics between 2011 and 2014. All of these replications followed predefined analysis plans that were made publicly available beforehand, and they all have a statistical power of at least 90% to detect the original effect size at the 5% significance level. We found a significant effect in the same direction as in the original study for 11 replications (61%); on average, the replicated effect size is 66% of the original. The replicability rate varies between 67% and 78% for four additional replicability indicators, including a prediction market measure of peer beliefs.
Risk-assessment and risk-taking in various forms are among the most important tasks financial professionals face in their daily work. A large body of experimental studies has shown a substantial ...effect of the decision domain (gain vs loss domain) on risk-taking, predominantly among students. In a series of experiments set in different contextual frameworks, we investigate whether this domain effect is also present among experienced employees in the finance industry and compare their decisions with people from the general population. Our results show that employees in the finance industry are equally prone to the domain effect in risk-taking than the general population. Interestingly, for domain-specific risk-taking in a finance context, we find that professionals are even more reluctant to sell loser stocks than non-professionals.
We investigate the impact of cash and trader inflow on price efficiency in multi-period experimental asset markets. Implementing eight treatments with 672 subjects, we find that (i) the joint inflow ...of cash and traders triggers strong overvaluation and massive price run-ups (inflow-effect). Remarkably, the effect occurs in almost all of the 30 markets with joint cash and trader inflow and is very robust. The effect even prevails in markets with complete and symmetric fundamental information. We further show that (ii) in treatments with the joint inflow of cash and traders, prices crash to fundamentals towards maturity of the asset. The analysis of traders׳ beliefs reveals that (iii) despite fundamental values staying constant, beliefs about fundamentals co-move with upwardly trending prices. Finally, we report a speculative motive only among the optimists in treatments where we observe the inflow-effect.
Tax avoidance among large multinational corporations has considerably increased in recent years, triggering an intense discussion about how to ensure that all pay their ‘fair share’. We propose a ...novel experimental design to incentive-compatibly model the firm-consumer relationship in a consumer goods market. This new paradigm allows us to analyze the effect of increased tax transparency on consumer and firm behavior in a dynamic framework. We find that absent the threat of being directly exposed as a tax avoiding firm, only 26% of the firms decide to pay taxes. Once tax avoiding firms are identifiable in the market, this rate rises to 58%. Providing market participants additionally with information about the social costs of tax avoidance increases the fraction of tax paying firms further to 74%. We observe that these improvements are the consequence of firms proactively deciding to pay taxes. At the highest level of transparency, we further observe that consumers show a stronger proclivity to boycott tax avoiding firms, even if these firms offer cheaper prices.
•We propose a novel, incentive-compatible experimental design for consumer goods markets.•Building on this design, we examine corporate tax avoidance in a dynamic market environment.•Without tax transparency, firms predominantly choose to avoid taxes.•Tax transparency significantly decreases engagement in tax avoidance.•At the highest level of transparency, consumers show a stronger proclivity to boycott tax avoiding firms.
Greed: Taking a deadly sin to the lab Razen, Michael; Stefan, Matthias
Journal of behavioral and experimental economics,
08/2019, Letnik:
81
Journal Article
Recenzirano
Odprti dostop
•Novel experimental design to render greed observable.•Feelings of entitlement increase the frequency of greedy behavior.•Feelings of social obligation have no effect.
The term greed has become very ...popular in the public debate. It is regularly argued, for instance, that greed is one of the deep-rooted reasons for the financial crisis, numerous incidents of fraud and growing inequalities in wealth. Despite its prominent role in current debates, however, empirical research on greedy behavior is rather sparse. We argue that the major impediment for observing greed empirically is the difficulty to separate it from related behaviorial conceptualizations. To overcome this methodological problem, we propose a modified version of the classic dictator game which allows us to unambiguously distinguish greed from similar types of behavior in an experimental environment. We find that greed is indeed observable under laboratory conditions and that it is even one of the predominant behaviors. We also find that feelings of entitlement significantly increase the frequency of greedy behavior. Further, our results indicate that feelings of social obligation have no impact on the proportion of greedy behavior, but result in equal sharing being the predominant choice.
Abstract
We investigate the impact of cognitive skills and economic preferences on fund managers' professional decisions by running a battery of experiments with them. First, we find that fund ...managers’ risk tolerance positively correlates with fund risk when accounting for fund benchmark, fund category and other controls. Second, we show that fund managers’ ambiguity tolerance positively correlates with the funds’ tracking error from the benchmark. Finally, we report that cognitive skills do not explain fund performance in terms of excess returns. However, we do find that fund managers with high cognitive reflection abilities compose funds at lower risk.
Peripheral blood cells express the complete non-neuronal cholinergic system. For example synthesis of acetylcholine and nicotinic as well muscarinic receptors have been demonstrated in leucocytes ...isolated from human peripheral blood. In the present experiments mononuclear cells and granulocytes were isolated from the peripheral blood to investigate content and synthesis of acetylcholine as well as phenotypic functions like respiratory burst, phagocytosis and migration. Mononuclear cells (T-cells and monocytes) contained 0.36 pmol/106 cells acetylcholine, whereas acetylcholine content in granulocytes was 100-fold lower. Acetylcholine synthesis amounted to 23.2±4.7 nmol/mg protein/h and 2.90±0.84 in CD15+ (granulocytes) and CD3+ cells (T-lymphocytes), respectively. Neither atropine (blockade of muscarinic receptors) nor tubocurarine (blockade of nicotinic receptors) exerted an effect on the respiratory burst. Tubocurarine (30 μM), alone or in combination with atropine (1 μM), reduced phagocytosis in granulocytes by 13% and 19%, respectively (p<0.05). Spontaneous transwell migration of granulocytes was doubled by tubocurarine combined with atropine (p>0.05). Also α-bungarotoxin (10 μg/ml) enhanced spontaneous granulocyte migration, but hexamethonium (300 μM) was without effect. The present experiments demonstrate a cholinergic modulation of immune functions in peripheral leucocytes under in vitro conditions, i.e. in the absence of a neuronal innervation. Blockade of nicotine receptors (α1 muscular subtype) facilitates spontaneous migration of granulocytes.
Incentivized experiments in which individuals receive monetary rewards according to the outcomes of their decisions are regarded as the gold standard for preference elicitation in experimental ...economics. These task-related real payments are considered necessary to reveal subjects’ “true preferences.” Using a systematic, large-sample approach with three subject pools of private investors, professional investors, and students, we test the effect of task-related monetary incentives on risk preferences in four standard experimental tasks. We find no significant differences in behavior between and within subjects in the incentivized and non-incentivized regimes. We discuss implications for academic research and forions in the field.
It is conjectured that one of the major ingredients of historic financial bubbles was the inflow of money in various forms. We run 36 laboratory asset markets to investigate the joint effect of cash ...inflow and trading horizon on price efficiency. We show that markets with cash inflow and long trading horizon exhibit bubbles and crashes. We also observe that markets with extended trading horizon but without cash inflow and markets with shorter trading horizon do not trigger bubbles. Finally, we report that beliefs about prices and, importantly, about (constant) fundamentals follow bubble patterns as well.
Non-Standard Errors Menkveld, Albert J.; Dreber, Anna; Holzmeister, Felix ...
The Journal of finance (New York),
2024, Letnik:
79, Številka:
3
Journal Article
Recenzirano
Odprti dostop
In statistics, samples are drawn from a population in a data-generating process (DGP). Standard errors measure the uncertainty in estimates of population parameters. In science, evidence is generated ...to test hypotheses in an evidence-generating process (EGP). We claim that EGP variation across researchers adds uncertainty—nonstandard errors (NSEs). We study NSEs by letting 164 teams test the same hypotheses on the same data. NSEs turn out to be sizable, but smaller for more reproducible or higher rated research. Adding peer-review stages reduces NSEs. We further find that this type of uncertainty is underestimated by participants.
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