Presentation Effects in Cross-Cultural Experiments - An Experimental Framework for Comparisons

This paper investigates the impact of game presentation dependent on ethnical affiliation. Two games representing the same logical and strategical problem are introduced. Presented games are continuous prisoner’s dilemma games where decision makers can choose an individual level of cooperation from a given range of possible actions. In the first condition, a positive transfer creates a positive externality for the opposite player. In the second condition, this externality is negative. Accomplishing a cross-cultural experimental study involving subjects from the West Bank and Jerusalem (Israel) we test for a strategic presentation bias applying these two conditions. Subjects in the West Bank show a substantially higher cooperation level in the positive externality treatment. In Jerusalem no presentation effect is observed. Critically discussing our findings, we argue that a cross-cultural comparison leads to only partially meaningful and opposed results if only one treatment condition is evaluated. We therefore suggest a complementary application and consideration of different presentations of identical decision problems within cross-cultural research.Cooperation, presentation of decision problems, framing, methodology, cross-cultural research

On the Prevalence of Framing Effects Across Subject-Pools in a Two- Person Cooperation Game

In this experimental study, involving subjects from Abu-Dis (West Bank), Chengdu (China), Helsinki (Finland), and Jerusalem (Israel), we test for a presentation bias in a two-person cooperation game. In the positive frame of the game, a transfer creates a positive externality for the opposite player, and in the negative frame, a negative one. Subjects in Abu-Dis and Chengdu show a substantially higher cooperation level in the positive externality treatment. In Helsinki and Jerusalem, no framing effect is observed. These findings are also reflected in associated first-order beliefs. We argue that comparisons across subject-pools might lead to only partially meaningful and opposed conclusions if only one treatment condition is evaluated. We therefore suggest a complementary application and consideration of different presentations of identical decision problems within (cross-cultural) research on subject-pool differences.framing of decision problems, methodology, subject-pool differences

Experimental Investigation of a Cyclic Duopoly Game

The notion of a cyclic game has been introduced by Selten and Wooders (2001). They illustrate the concept by the analysis of a cyclic  duopoly game. The experiments reported concern this game. The game was played by eleven matching groups of six players each. The observed choice fre- quencies were compared with the predictions of Nash equilibrium, impulse balance equilibrium (Selten, Abbink and Cox (2005), Selten and Chmura (2007)) and two-sample equilbrium (Osborne and Rubinstein(1998)). Pair- wise comparisons by the Wilcoxon Signed-rank test show that impulse balance equilibrium as well as two-sample equilibrium have a significantly better predictive success than Nash equilibrium. The difference between impulse balance equilibrium and two-sample equilibrium is not   significant.In each matching group three players acted only in uneven periods and   the other three only in even periods. This game has two pure strategy equi- libria in which both types of players behave differently. The data exhibit a weak but significant tendency in the direction of coordination at a   pure strategy equilibrium.cyclic game duopoly experiment, impulse balance equilibrium, two-sample equilibrium

The Janus Face of Cooperation - An Intra- and Cross-Cultural Review

This paper introduces a two-sided methodological framework for   studies on cooperation based on a new game design. Presented games are continuous prisoner's   dilemma games with positive and negative presentations of an identically structured   decision problem. Decision makers can choose an individual level of cooperation from a   given range of possible actions. Within a cross-cultural experimental study involving   Palestinian and Israeli subjects we test for a strategic presentation bias applying our   framework. Palestinians show a substantially higher cooperation level in the positive externality   treatment. In Israel no presentation effect is observed. Critically discussing our findings,   we argue that cross-cultural comparison leads to only partially meaningful and opposed results if   only one treatment condition is evaluated. We therefore suggest a complementary   application and consideration of different presentations of identical   decision problems within cross-cultural research.Cooperation , presentation of decision problems, framing, methodology, cross-cultural research

Learning in experimental 2 x 2 games

In this paper, we introduce two new learning models: impulse-matching learning and action-sampling learning. These two models together with the models of self-tuning EWA and reinforcement learning are applied to 12 different 2 x 2 games and their results are compared with the results from experimental data. We test whether the models are capable of replicating the aggregate distribution of behavior, as well as correctly predicting individuals' round-by-round behavior. Our results are two-fold: while the simulations with impulse-matching and action-sampling learning successfully replicate the experimental data on the aggregate level, individual behavior is best described by self-tuning EWA. Nevertheless, impulse-matching learning has the second highest score for the individual data. In addition, only self-tuning EWA and impulse-matching learning lead to better round-by-round predictions than the aggregate frequencies, which means they adjust their predictions correctly over time.learning, 2 x 2 games, Experimental data

Equity and Efficiency in Multi-Worker Firms: Insights from Experimental Economics

In this paper, we discuss recent evidence from economic experiments that study the impact of social preferences on workplace behavior. We focus on situations in which a single employer interacts with multiple employees. Traditionally, equity and efficiency have been seen as opposing aims in such work environments: individual pay-for-performance schemes maximize efficiency but might lead to inequitable outcomes. We present findings from laboratory experiments that show under which circumstances partially incomplete contracts can create equitable work environments while at the same time reaching surprisingly efficient outcomes.laboratory experiments, wage setting, equity, gift exchange, reciprocity, incomplete contracts, incentives, organizational economics

Learning in experimental 2×2 games

In this paper we introduce four new learning models: impulse balance learning, impulse matching learning, action-sampling learning, and payoff-sampling learning. With this models and together with the models of self- tuning EWA learning and reinforcement learning, we conduct simulations over 12 different 2×2 games and compare the results with experimental data obtained by Selten & Chmura (2008). Our results are two-fold: While the simulations, especially those with action-sampling learning and impulse matching learning successfully replicate the experimental data on the aggregate, they fail in describing the individual behavior. A simple inertia rule beats the learning models in describing individuals behavior.Learning, Action-sampling, Payo?-sampling, Impulse balance, Impulse matching, Reinforcement, self-tuning EWA, 2×2 games, Experimental data

Four Contributions to Experimental Economics

In 2002 the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Daniel Kahneman and Vernon Smith. It was not only a distinction for the work of the two laureates, but also for the field of experimental economics. Motivating the prize for the laureates the committee stated: "Controlled laboratory experiments have emerged as a vital component of economic research and, in certain instances, experimental results have shown that basic postulates in economic theory should be modified." The four studies in the work at hand demonstrate the variety of fields on which the methods of experimental economics can be applied to. The first study deals with culture and presentation effects. Two continuous prisoner's dilemma games where decision makers can choose an individual level of cooperation from a given range of possible actions are introduced. Both games represent the same logical and strategical problem. In the first game, a positive transfer creates a positive externality for the opposite player. In the second game, this externality is negative. Accomplishing a cross-cultural experimental study involving subjects from the West Bank and Jerusalem (Israel) we test for a strategic presentation bias applying these two games. Subjects in the West Bank show a substantially higher cooperation level in the positive externality treatment than in the one with negative externality. In Jerusalem no presentation effect is observed. Discussing our findings, we argue that a cross-cultural comparison leads to only partially meaningful and opposed results if only one treatment condition is evaluated. In our setting cooperation was significantly higher in the West Bank than in Jerusalem in the game with positive externality. In contrast cooperation was significantly higher in Jerusalem than in the West Bank in the game with negative externality. We therefore suggest a complementary application and consideration of different presentations of identical decision problems within cross-cultural research. Chapter III investigates Incentives and Production Technology in Teams. We show how reward mechanisms, either egalitarian or discriminating, and production technologies, given by production functions of either complementarity or substitutability, affect effort provision in teams. Our experimental results demonstrate that unequal rewards can potentially increase productivity by facilitating coordination, and that the effect strongly interacts with the exact shape of the production function. Our findings suggest that designing (production) tasks in a way that makes workers' efforts complements i.e., the impact of a worker's input increases in the size of the others' input, rather than substitutes may lead to a major cost advantage. Since peer pressure constitutes a complementarity in effort exertion, the mere strengthening of social ties amongst the workforce alone might have a strong impact on productivity. We show that whenever the organizational technology is one of complementarity, the usage of a discriminating reward scheme might be potentially efficiency-enhancing. Thus equal treatment of equals is neither a necessary nor a sufficient prerequisite for eliciting high performance in teams. Chapter IV tests the success of three stationary concepts in describing experimental data gathered in oligopoly markets. The concepts experimentally tested are Nash equilibrium, impulse balance equilibrium and payoff-sampling equilibrium. The latter two equilibria are behavioral concepts that either depend on tendencies to play the ex-post best strategy (impulse balance equilibrium) or on samples of payoffs for each strategy (payoff-sampling equilibrium). In the experiment two different cyclic duopoly games were played and the aggregated frequencies of entering an occupied market were the test criteria to be described by the three concepts. The comparison of the three concepts with mixed strategies shows that the order of performance from best to worst is as follows: payoff-sampling equilibrium, impulse balance equilibrium, and Nash equilibrium. In addition our data exhibit a weak but significant tendency over time in the direction of coordination at a pure strategy equilibrium. The last chapter, chapter V examines learning behavior in repeated 2x2 games. In this study we introduce four new learning models: impulse balance learning, impulse matching learning, action-sampling learning, and payoff-sampling learning. With this models and together with the models of self-tuning EWA learning and reinforcement learning, we conduct simulations over 12 different 2x2-games and compare the results with experimental data. Hereby, the learning rules have to meet two challenges: First, can they reproduce the aggregate behavior of a human population and second do they adequately describe the observed behavior of a single individual? Our results are twofold: while our newly introduced models are able to capture the distribution of decisions on the aggregate level much better then self-tuning EWA does, self-tuning EWA describes the individual data in a more accurate way then our models do

The Effectiveness of Incentive Schemes in the Presence of Implicit Effort Costs

Agents' decisions to exert effort depends on the provided incentives as well as the potential costs for doing so. So far most of the attention has been on the incentive side. However, our lab experiments underline that both the incentive and cost side can be used separately to shape work performance. In our experiment, subjects work on a real-effort task. Between treatments, we vary the incentive scheme used for compensating workers. Additionally, by varying the available outside options, we explore the role of implicit costs of effort in determining workers' performance. We observe that incentive contracts and implicit costs interact in a non-trivial manner. Performance reacts significantly to changes in implicit effort costs under low-powered piece-rate and target-based bonus contracts, but not under a high piece rate contract. In addition, comparisons between the incentive schemes depend crucially on the implicit costs

Presentation Effects in Cross-Cultural Experiments - An Experimental Framework for Comparisons

This paper investigates the impact of game presentation dependent on ethnical affiliation. Two games representing the same logical and strategical problem are introduced. Presented games are continuous prisoner’s dilemma games where decision makers can choose an individual level of cooperation from a given range of possible actions. In the first condition, a positive transfer creates a positive externality for the opposite player. In the second condition, this externality is negative. Accomplishing a cross-cultural experimental study involving subjects from the West Bank and Jerusalem (Israel) we test for a strategic presentation bias applying these two conditions. Subjects in the West Bank show a substantially higher cooperation level in the positive externality treatment. In Jerusalem no presentation effect is observed. Critically discussing our findings, we argue that a cross-cultural comparison leads to only partially meaningful and opposed results if only one treatment condition is evaluated. We therefore suggest a complementary application and consideration of different presentations of identical decision problems within cross-cultural research