Communication channels and induced behavior

This paper reports recent findings on the effects of cheap talk communication on behavior. It exemplifies how different communication channels influence decisions in various games and information environments and addresses possible consequences for the design of real-world economic environments.communication, economic experiment, bargaining, public good

How do coalitions get built - Evidence from an extensive form coalition game with renegotiation & externalities

We investigate a three-person coalition game in which one bargainer, the builder, can propose and build a coalition over two stages. In equilibrium, coalition building ends with an efficient grand coalition, while the equilibrium path is contingent on the values of the two-person coalitions and associated externality payoffs. Considering relative payoffs need not change the equilibrium path. Nevertheless, outcomes in the experiment are often inefficient. One explanation is that bargainers have difficulties anticipating the future actions of other bargainers. This problem might be mitigated by allowing bargainers to communicate prior to each stage. A test finds that communication does in fact increase efficiency, although unevenly, and at the cost of the builder. The study implies that the nature and pattern of communication among bargainers is a critical factor in efficient coalition building.coalitional bargaining, communication, game theory, experiment

The Monotonicity Puzzle. An Experimental Investigation of Incentives Structures

Non–monotone incentive structures, which — according to theory — are able to induce optimal behavior, are often regarded as empirically less relevant for labor relationships. Scientific attention is (therefore) confined to monotone if not linear contracts. This paper reports on experimental tests comparing non–monotone vs. monotone contracts in a simple dynamic agency model. The results demonstrate that selecting the non–monotone contract over of the monotone one is not only optimal from a theoretical point of view, but also remains preferable given the agents’ observed behavior. However, roughly 50 per cent of the principals prefer the monotone contract.experimental agency, non–monotone contracts

Selfish in the End?:An Investigation of Consistency and Stability of individual Behavior

This paper puts three of the most prominent specifications of ‘other-regarding’ preferences to the experimental test, namely the theories developed by Charness and Rabin, by Fehr and Schmidt, and by Andreoni and Miller. In a series of experiments based on various dictator and prisoner’s dilemma games, we try to uncover which of these concepts, or the classical selfishapproach, is able to explain most of our experimental findings. The experiments are special with regard to two aspects: First, we investigate the consistency of individual behavior within and across different classes of games. Second, we analyze the stability of individual behavior over time by running the same experiments on the same subjects at several points in time. Our results demonstrate that in the first wave of experiments, all theories of other-regarding preferences explain a high share of individual decisions. Other-regarding preferences seem to wash out over time, however. In the final wave, it is the classical theory of selfish behaviorthat delivers the best explanation. Stable behavior over time is observed only for subjects, who behave strictly selfish. Most subjects behave consistently with regard to at least one of the theories within the same class of games, but are much less consistent across games.individual preferences; consistency; stability; experimental economics

Communication channels and induced behavior

This paper reports recent findings on the effects of cheap talk communication on behavior. It exemplifies how different communication channels influence decisions in various games and information environments and addresses possible consequences for the design of real-world economic environments

Promises and Social Distance in Buyer-Determined Procurement Auctions

This study explores the effects of communication and its interaction with reputation information. Our focus is on buyer-determined procurement auctions with moral hazard in which buyers can select a bidder based on prices and all other information available. The results of our controlled laboratory experiment demonstrate that in contrast to reputation information communication only slightly increases market efficiency. If reputation information is available, communication has no additional efficiency effect. Buyers' choice of a bidder is influenced by both, reputation information and the content of communication. Specifically, buyers prefer bidders with a good reputation and bidders who promise them a specific profit. If this kind of promise is infeasible as it is often the case in real auctions, buyers prefer bidders whose argu-ments reduce social distance. Unspecific promises have no significant effect. Using a unique set of field data, we compare observed buyer choices with those in the field and find a choice pattern that is consistent with our lab data. High reputation bidders and bidders reducing social distance by initiating communication through additional channels are more likely to be selected as auction winners

Laying off or Not? the Influence of Framing and Economics Education

This paper provides a critical re-examination of Rubinstein's survey (Rubinstein; Economic Journal 2006), in which he questions the way economics is taught. The observations obtained in our new survey cast some doubts on the original findings, and, in particular, question Rubinstein's conjecture that our students' views on economic issues are influenced by the way we teach economics.

Still different after all these years: Solidarity in East and West Germany

Motivated by recent research on survey data, we test the influence of the political regime on social norms under controlled laboratory conditions. Comparing solidarity behavior revealed by East and West Germans in 1995 and 2009, we find that East Germans persistently show much less solidarity than West Germans. Twenty years after the fall of the Berlin Wall, social norms of solidarity have not converged. This suggests that norms of social behavior change much more slowly than the political environment

Selfish in the End?:An Investigation of Consistency and Stability of individual Behavior

This paper puts three of the most prominent specifications of ‘other-regarding’ preferences to the experimental test, namely the theories developed by Charness and Rabin, by Fehr and Schmidt, and by Andreoni and Miller. In a series of experiments based on various dictator and prisoner’s dilemma games, we try to uncover which of these concepts, or the classical selfishapproach, is able to explain most of our experimental findings. The experiments are special with regard to two aspects: First, we investigate the consistency of individual behavior within and across different classes of games. Second, we analyze the stability of individual behavior over time by running the same experiments on the same subjects at several points in time. Our results demonstrate that in the first wave of experiments, all theories of other-regarding preferences explain a high share of individual decisions. Other-regarding preferences seem to wash out over time, however. In the final wave, it is the classical theory of selfish behaviorthat delivers the best explanation. Stable behavior over time is observed only for subjects, who behave strictly selfish. Most subjects behave consistently with regard to at least one of the theories within the same class of games, but are much less consistent across games