Informational asymmetries abound in economic decision making and often provide an incentive for deception through telling a lie or misrepresenting information. In this article I use a cheap-talk ...sender-receiver experiment to show that telling the truth should be classified as deception too if the sender chooses the true message with the expectation that the receiver will not follow the sender's (true) message. The experimental data reveal a large degree of 'sophisticated' deception through telling the truth. The robustness of my broader definition of deception is confirmed in an experimental treatment where teams make decisions.
In this paper, we describe what economists have learned about differences between group and individual decision-making. This literature is still young, and in this paper, we will mostly draw on ...experimental work (mainly in the laboratory) that has compared individual decision-making to group decision-making, and to individual decision-making in situations with salient group membership. The bottom line emerging from economic research on group decision-making is that groups are more likely to make choices that follow standard game-theoretic predictions, while individuals are more likely to be influenced by biases, cognitive limitations, and social considerations. In this sense, groups are generally less “behavioral” than individuals. An immediate implication of this result is that individual decisions in isolation cannot necessarily be assumed to be good predictors of the decisions made by groups. More broadly, the evidence casts doubts on traditional approaches that model economic behavior as if individuals were making decisions in isolation.
About 15 years ago, economic experiments with children and adolescents were considered as an extravagant niche of economic research. Since then, this type of research has exploded in scope and depth. ...It has become clear that studying the development of economic behavior and its determinants is important to understand economic behavior of adults and to provide a basis for potential policy interventions with respect to economic behavior in childhood and adolescence. Given the huge increase of papers, we provide the first overview of economic experiments with children and adolescents. We focus on the following aspects: rationality of choices, risk preferences, time preferences, social preferences, cooperation, and competitiveness. All of these aspects are analyzed with respect to the influence of age and gender, and we also consider the role of socio-economic status or interventions.
Credence goods markets are characterized by asymmetric information between sellers and consumers that may give rise to inefficiencies, such as under- and overtreatment or market breakdown. We study ...in a large experiment with 936 participants the determinants for efficiency in credence goods markets. While theory predicts that liability or verifiability yield efficiency, we find that liability has a crucial, but verifiability at best a minor, effect. Allowing sellers to build up reputation has little influence, as predicted. Seller competition drives down prices and yields maximal trade, but does not lead to higher efficiency as long as liability is violated.
We study how the distribution of other-regarding preferences develops with age. Based on a set of allocation choices, we classify each of 717 subjects, aged 8–17 years, as either egalitarian, ...altruistic, or spiteful. We find a strong decrease in spitefulness with increasing age. Egalitarianism becomes less frequent, and altruism much more prominent, with age. Females are more frequently classified as egalitarian than males, and less often as altruistic. By varying the allocation recipient as either an in-group or an out-group member, we also study how parochialism develops with age. Parochialism emerges significantly in the teenage years.
•We study other-regarding preferences of 717 subjects, aged 8–17 years.•Subjects can be classified as spiteful, egalitarian or altruistic.•Spitefulness and egalitarianism decrease with age, altruism increases.•Females are more egalitarian than males.•There is a strong in-group/out-group divide in behavior.
Cooperation within and across borders is of paramount importance for the provision of public goods. Parochialism - the tendency to cooperate more with ingroup than outgroup members - limits ...contributions to global public goods. National parochialism (i.e., greater cooperation among members of the same nation) could vary across nations and has been hypothesized to be associated with rule of law, exposure to world religions, relational mobility and pathogen stress. We conduct an experiment in participants from 42 nations (N = 18,411), and observe cooperation in a prisoner's dilemma with ingroup, outgroup, and unidentified partners. We observe that national parochialism is a ubiquitous phenomenon: it is present to a similar degree across the nations studied here, is independent of cultural distance, and occurs both when decisions are private or public. These findings inform existing theories of parochialism and suggest it may be an obstacle to the provision of global public goods.
In a field experiment in the market for taxi rides we investigate a phenomenon called second-degree moral hazard — the tendency of the supply side in a market to react to anticipated moral hazard on ...the demand side by increasing the extent or price of the service. Our moral hazard manipulation consists of some passengers explicitly stating that their expenses will be reimbursed. This has a strong positive effect on the likelihood and the amount of overcharging and consequently increases consumer expenditure. Our results suggest that second-degree moral hazard may have a severe impact on the provision of credence goods.
We study risk attitudes, ambiguity attitudes, and time preferences of 661 children and adolescents, aged ten to eighteen years, in an incentivized experiment and relate experimental choices to field ...behavior. Experimental measures of impatience are found to be significant predictors of health-related field behavior, saving decisions, and conduct at school. In particular, more impatient children and adolescents are more likely to spend money on alcohol and cigarettes, have a higher body mass index, are less likely to save money, and show worse conduct at school. Experimental measures for risk and ambiguity attitudes are only weak predictors of field behavior. PUBLICATION ABSTRACT
Understanding persistence and changes in prosociality across the life span is fundamental to inform theory and practice. As life expectancy increases and pressing societal challenges demand ...increasing generosity and cooperation among individuals, it is crucial to understand intergenerational interactions. We present the findings from a novel lab-in-the-field experiment (N = 359, 18-90 years) that examines generosity and cooperation between generations. Our methodological approach allows us to study the effect of age on prosocial behavior as a function of the age of an unknown partner. We ask participants to make several decisions, and to state their expectations for their partners' behavior, in a dictator game and a prisoner's dilemma game with real monetary outcomes. The dictator game serves as a measure of generosity, whereas the prisoner's dilemma serves as a measure of cooperation. We find that individuals used age as key information to condition behavior. Generosity was greater among older adults in response to young and older relative to middle-aged partners. Among younger adults, cooperation was greater in response to middle-aged and older partners relative to their own age cohort. All age groups expect less cooperation from young partners than from older and middle-aged partners. However, relative to young adults, older adults are more cooperative with young partners. Our study has crucial implications for the understanding of human generosity and cooperation across the life span.
Men have been observed to have a greater willingness to compete compared to women, and it is possible that this contributes to gender differences in wages and career advancement. Policy interventions ...such as quotas are sometimes used to remedy this but these may cause unintended side-effects. Here, we present experimental evidence that a simple and practically costless tool-priming subjects with power-can close the gender gap in competitiveness. While in a neutral as well as in a low-power priming situation men are much more likely than women to choose competition, this gap vanishes when subjects are primed with a high-power situation. We show that priming with high power makes competition entry decisions more realistic and also that it reduces the level of risk tolerance among male participants, which can help explain why it leads to a closing down of the gender gap in competitiveness.
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