The Effects of Beliefs versus Risk Preferences on Bargaining Outcomes

In bargaining environments with uncertain impasse outcomes (e.g., litigation or labor strike outcomes), there is an identification problem that confounds data interpretation. In such environments, the minimally acceptable settlement value from a risk-averse (risk-loving) but unbiased bargainer is empirically indistinguishable from what one could get with risk-neutrality and pessimism (optimism). This paper reports data from a controlled bargaining experiment where risk preferences and beliefs are both measured in order to assess their relative importance in bargaining outcomes. The average lab subject is risk-averse, yet optimistic, which is consistent with existing studies that examine each in isolation. I also find that the effects of optimism dominate those of risk-aversion. Optimistic bargainers are significantly more likely to dispute and have aggressive final bargaining positions. Dispute rates are not statistically affected by risk preferences, but there is some evidence that risk aversion leads to less aggressive bargaining positions and lower payoff outcomes. A key implication is that increased settlement rates are more likely achieved by minimizing impasse uncertainty (to limit the potential for optimism) rather than maximizing uncertainty (to weaken the reservation point of risk-averse bargainers), as has been argued in the dispute resolution literature.risk preference, optimism, bargaining, experiments

Cash or Credit? The importance of reward medium and experiment timing in classroom preferences for fairness

The author conducts experiments examining fairness preferences (Andreoni and Miller, 2002) and compares cash versus extra credit points as the reward medium. Additionally, he explores the role that classroom experiment timing—over the course of a semester—can have on outcomes. The results show that subjects are just as rational, if not more so, when the motivation is class points rather than cash. Also, preference classifications show that subjects are significantly more likely to be Selfish (and less likely to be Utilitarian) when the experiment is conducted early in the academic semester. One possible explanation is that is that the ultimate value of an extra credit point is more uncertain early in the semester, thus leading risk-averse students to make more selfish experiment allocations.

Mars exploration planning

The topics are presented in viewgraph form and include the following: Mars Observer; Mars Environmental Survey (MESUR); and the Small Rovers and Sample Return missions

Work effort effects in the classical labor supply model

This paper considers an extension of the classical static labor-leisure choice model to allow for an on-the-job leisure choice. The key result is that an income-compensated wage increase, while theoretically increasing hours worked, will likely increase on-the-job leisure.

Naturally-occurring sleep choice and time of day effects on p-beauty contest outcomes

We explore the behavioral consequences of sleep loss and time-of-day (circadian) effects on a particular type of decision making. Subject sleep is monitored for the week prior to a decision experiment, which is then conducted at 8 a.m. or 8 p.m. A validated circadian preference instrument allows us to randomly assign subjects to a more or less preferred time-of-day session. The well-known p-beauty contest (a.k.a., the guessing game) is administered to examine how sleep loss and circadian mismatch affect subject reasoning and learning. We find that the subject responses are consistent with significantly lower levels of iterative reasoning when ‘sleep deprived’ or at non-optimal times-of-day. A non-linear effect is estimated to indicate that too much sleep also leads to choices consistent with lower levels of reasoning, with an apparent optimum at close to 7 hours sleep per night. However, repeated play shows that sleep loss and non-optimal times-of-day do not affect learning or adaptation in response to information feedback. Our results apply to environments where anticipation is important, such as in coordination games, stock trading, driving, etc. These findings have important implications for the millions of adults considered sleep deprived, as well as those employed in shift work occupations. Key Words:

Rationality around the clock. Sleep and time-of-day effects on guessing game responses

We administer a unique online version of the Guessing Game where subject responses are collected across all 24 hours of the day. While time-of-day itself does not affect guesses, when combined with a trait-level sleepiness measure and previous night sleep, adverse sleep states lead to responses significantly farther from equilibrium. These results have implications for shift workers and others whose constraints or choices lead to adverse sleep parameters. Key Words:

Thoughtful Days and Valenced Nights: How Much Will You Think About the Problem?

Research investigating risk preference has pointed towards motivation and ability as important factors for determining the strength and likelihood of the framing effect. In the current study we explored the influence of individual differences in motivation and ability through circadian rhythm. We predicted that during circadian off-times participants would exhibit stronger framing effects whereas framing effects would be relatively weaker during on-times. Six-hundred and eighty five individuals took part in the study; the findings supported our hypothesis, revealing a diurnal pattern of risk responding that varies across the 24-hour circadian cycle. Key Words:

MEAT TRACEABILITY: ARE U.S. CONSUMERS WILLING TO PAY FOR IT?

This article reports the results form a series of laboratory auction markets in which consumers bid on meat characteristics. The characteristics examined include meat traceability (i.e., the ability to tract the retail meat back to the farm or animal of hormones, or knowing the animal was humanely treated), and extra assurances (e.g., extra meat safety assurances). This laboratory study provides non-hypothetical bid data on consumer preferences for a sample of consumers in Logan, Utah, for traceability, transparency, and assurances (TTA) in red meat at a time when the United States currently lags other countries in development of TTA meat systems. Results suggest these consumers would be willing to pay for such TTA meat characteristics, and the magnitude of the consumer bids reveals that a profitable market for development of TTA systems in the United States might exist.Consumer/Household Economics,

MEAT TRACEABILITY: ARE U. S. CONSUMERS WILLING TO PAY FOR IT?

This article reports the results from a series of laboratory auction markets in which consumers bid on meat characteristics. The characteristics examined include meat traceability (i.e., the ability to trace the retail meat back to the farm or animal or origin), transparency (e.g., knowing that the meat was produced without growth hormones, or knowing the animal was humanely treated), and extra assurances (e.g., extra meat safety assurances). This laboratory study provides non-hypothetical bid data on U. S. consumer preferences for traceability, transparency, and assurances (TTA) in red meat at a time when the U.S. currently lags other countries in development of TTA meat systems. Our results suggest that U.S. consumers would be willing to pay for such TTA meat characteristics, and the magnitude of the consumer bids suggest a likely profitable market for development of U.S. TTA systems.Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Flying Airplanes: Realizing Circadian Effects (FARCE)

People differ in their diurnal (time-of-day) preferences—some are morning-types and others are evening-types. These differences are explored in a unique experiment design in which subjects are randomly assigned to produce paper airplanes at either 8:00 a.m. or 10:00 p.m. Our results show that evening-types at their more optimal time-of-day (10:00 p.m.) produce planes that fly statistically significantly farther than those produced by morning-types at their more optimal time-of-day (8:00 a.m.). Evidence also indicates that planes produced by evening-types fly straighter. These results have implications for hiring practices and shift work design in aeronautical engineering and aircraft production. Key Words: