The Visible Hand: Finger Ratio (2D:4D) and Competitive Bidding

In an experiment using two-bidder first-price sealed bid auctions with symmetric independent private values and 400 subjects, we scan also the right hand of each subject. We study how the ratio of the length of the index and ring fingers (2D:4D) of the right hand, a measure of prenatal hormone exposure, is correlated with bidding behavior and total profits. 2D:4D has been reported to predict competitiveness in sports competition (Manning and Taylor, 2001, and Hoenekopp, Manning, and Mueller, 2006), risk aversion in lottery tasks (Dreber and Hoffman, 2007, Garbarino et al., 2010), and the average profitability of high-frequency traders in financial markets (Coates, Gurnell, and Rustichini, 2009). We do not find any significant correlation between 2D:4D on either bidding or profits. However, there might be racial differences in the correlation between 2D:4D and bidding and profits.Hormones, Digit ratio, 2D:4D, Risk behavior, Competition, Competitive behavior, Auctions, Bidding, Endocrinological economics

Testosterone and cortisol jointly predict the ambiguity premium in an Ellsberg-urns experiment

Previous literature has tried to establish whether and how steroid hormones are related to economic risk-taking. In this study, we investigate the relationship between testosterone (T) and cortisol (C) on one side and attitudes toward risk and ambiguity on the other. We asked 78 male undergraduate students to complete several tasks and provide two saliva samples. In the task "Reveal the Bag," participants expressed their beliefs on an ambiguous situation in an incentivized framework. In the task "Ellsberg Bags," we elicited from the participants through an incentive-compatible mechanism the reservation prices for a risky bet and an ambiguous bet. We used the difference between the two prices to calculate each participant's ambiguity premium. We found that participants' salivary T and C levels jointly predicted the ambiguity premium. Participants featuring comparatively lower levels of T and C showed the highest levels of ambiguity aversion. The beliefs expressed by a subset of participants in the "Reveal the Bag" task rationalize (in a revealed preference sense) their choices in the "Ellsberg Bags" task.info:eu-repo/semantics/publishedVersio

La testosterona y el cortisol predicen conjuntamente la prima de ambigüedad en un experimento de ellsberg-urns

Previous literature has tried to establish whether and howsteroid hormones are related to economic risk-taking. In this study, we investigate the relationship between testosterone (T) and cortisol (C) on one side and attitudes toward risk and ambiguity on the other. We asked 78 male undergraduate students to complete several tasks and provide two saliva samples. In the task “Reveal the Bag,” participants expressed their beliefs on an ambiguous situation in an incentivized framework. In the task “Ellsberg Bags,” we elicited fromthe participants through an incentive-compatible mechanismthe reservation prices for a risky bet and an ambiguous bet. We used the difference between the two prices to calculate each participant’s ambiguity premium. We found that participants’ salivary T and C levels jointly predicted the ambiguity premium. Participants featuring comparatively lower levels of T and C showed the highest levels of ambiguity aversio

How stressful are economic competitions in the lab? An investigation with physiological measures

Competition is ubiquitous in economic life. Yet, negative consequences of competitive environments have been reported and everyday experience suggests that competitive situations can be very stressful. It is, however, an open question whether or not economic competitions in the laboratory indeed elicit physiological stress reactions. Our study examined the subjectively perceived stress and the physiological changes induced by a well-established economic laboratory competition paradigm (first used in Niederle and Vesterlund 2007) in a mixed-gender sample of 105 healthy participants. A mental arithmetic task was performed first under a piece rate (i.e., non-competitive) payment scheme and afterwards under a tournament condition. In a third round, participants decided how to be paid (i.e., piece rate or tournament). Our results indicate that compared to a control group, which performed only the non-competitive condition, the competitive game condition indeed elicited subjective and physiological reactions that are indicative of mild stress. Furthermore, reactions that are thought to reflect an active coping style were related to the self-selection into competition in the third round of the game. We speculate that real-life economic competitions might be even stronger stressors and the way how people cope with this kind of stress might be related to competitiveness in real-life economic contexts

Facial Masculinity: How the Choice of Measurement Method Enables to Detect Its Influence on Behaviour

Recent research has explored the relationship between facial masculinity, human male behaviour and males' perceived features (i.e. attractiveness). The methods of measurement of facial masculinity employed in the literature are quite diverse. In the present paper, we use several methods of measuring facial masculinity to study the effect of this feature on risk attitudes and trustworthiness. We employ two strategic interactions to measure these two traits, a first-price auction and a trust game. We find that facial width-to-height ratio is the best predictor of trustworthiness, and that measures of masculinity which use Geometric Morphometrics are the best suited to link masculinity and bidding behaviour. However, we observe that the link between masculinity and bidding in the first-price auction might be driven by competitiveness and not by risk aversion only. Finally, we test the relationship between facial measures of masculinity and perceived masculinity. As a conclusion, we suggest that researchers in the field should measure masculinity using one of these methods in order to obtain comparable results. We also encourage researchers to revise the existing literature on this topic following these measurement methods

How Stress Affects Performance and Competitiveness across Gender

Because many key career events, such as examinations and interviews, involve competition and stress, gender differences in response to these factors could help to explain the labor market gender gap. In a laboratory experiment, we manipulate psychosocial stress using the Trier Social Stress Test and confirm that this is effective by measuring salivary cortisol level and heart rate. Subjects perform in a real-effort task under both tournament and piece-rate incentives, and we elicit willingness to compete. We find that women under heightened stress perform worse than women in the control group when compensated with tournament incentives, whereas there is no treatment difference under piece-rate incentives. For men, stress does not affect output under competition or under piece rate. The gender gap in willingness to compete is not affected by stress, but stress decreases competitiveness overall, which is related to performance for women. Our results could explain gender differences in performance under competition, with implications for hiring practices and incentive structures in firms.</p

Experimental and self-reported measures of risk taking and digit ratio (2D:4D): evidence from a large, systematic study

Using a large (n=704) sample of laboratory subjects, we systematically investigate the links between the digit ratio - a biomarker for pre-natal testosterone exposure - and two measures of individual risk taking: (i) risk preferences over lotteries with real monetary incentives, and (ii) self-reported risk attitude. The digit ratio (also called 2D:4D) is the ratio of the length of the index finger to the length of the ring finger, and we consider both hands’ digit ratios. Previous studies have found that the digit ratio correlates with risk taking in some subject samples, but not others. In our sample, we find that both the right-hand and the left-hand digit ratio are significantly associated with risk preferences: subjects with lower digit ratios tend to choose riskier lotteries. Neither digit ratio, however, is associated with self-reported risk attitude

Facial masculinity:How the choice of measurement method enables to detect its influence on behaviour

Recent research has explored the relationship between facial masculinity, human male behaviour and males' perceived features (i.e. attractiveness). The methods of measurement of facial masculinity employed in the literature are quite diverse. In the present paper, we use several methods of measuring facial masculinity to study the effect of this feature on risk attitudes and trustworthiness. We employ two strategic interactions to measure these two traits, a first-price auction and a trust game. We find that facial width-to-height ratio is the best predictor of trustworthiness, and that measures of masculinity which use Geometric Morphometrics are the best suited to link masculinity and bidding behaviour. However, we observe that the link between masculinity and bidding in the first-price auction might be driven by competitiveness and not by risk aversion only. Finally, we test the relationship between facial measures of masculinity and perceived masculinity. As a conclusion, we suggest that researchers in the field should measure masculinity using one of these methods in order to obtain comparable results. We also encourage researchers to revise the existing literature on this topic following these measurement methods

Knowing Me, Imagining You:

Overbidding in auctions has been attributed to e.g. risk aversion, loser regret, level-k, and cursedness, relying on varying identifying assumptions. I argue that "type projection'" organizes these findings and largely captures observed behavior. Type projection formally models that people tend to believe others have object values similar to their own - a robust psychological phenomenon that naturally applies to auctions. First, I show that type projection generates the main behavioral phenomena observed in auctions, including increased sense of competition ("loser regret") and broken Bayesian updating ("cursedness"). Second, re-analyzing data from seven experiments, I show that type projection explains the stylized facts of behavior across private and common value auctions. Third, in a structural analysis relaxing the identifying assumptions made in earlier studies, type projection consistently captures behavior best, in-sample and out-of-sample. The results reconcile bidding patterns across conditions and have implications for behavioral and empirical analyses as well as policy