Experimenting with strategic experimentation: Risk taking, neighborhood size and network structure

This paper investigates the effects of neighborhood size and network structure on strategic experimentation. We analyze a multi-arm bandit game with one safe and two risky alternatives. In this setting, risk taking produces a learning externality and an opportunity for free riding. We conduct a laboratory experiment to investigate whether group size and the network structure affect risk taking. We find that group size has an effect on risk taking that is qualitatively in line with equilibrium predictions. Introducing an asymmetry among agents in the same network with respect to neighborhood size leads to substantial deviations from equilibrium play. Findings suggests that subjects react to changes in their direct neighborhood but fail to play a best-response to their position within the network

Learning from the experiments of others simultaneous search, coordination in R&D and diffusion processes: Laboratory evidence

In this paper we are studying a multiple player two-armed bandit model with two risky arms in discrete time. Players have to find the superior arm and can learn from others' history of choices and successes. In equilibrium, there is no con?ict between individual and social rationality. If agents depart from perfect rationality and use count heuristics, they can benefit from coordination (or centralization) of search activities. We test the conjecture that agents gain from coordination with a between-subject design in two treatments. In the experiments we find no gains from coordination. Instead, we find less severe deviations from the equilibrium strategy in the non-coordinated treatmen

Explaining gender differences in competitiveness: Gender-task stereotypes

Gender-specific patterns of self-selection into competitive and cooperative environments may have multiple reasons. One of the most prominent explanations to this point is, that there are inherent differences between men and women when it comes to preferences regarding competition. We take a different point of view and claim that gender-task stereotypes are able to explain a large part of the under-representation of women in tournament like environments. We conduct an experiment with a quantitative task which has been shown to have a strong male connotation and a verbal task which we hypothesize to be gender neutral. After controlling for differences in performance, risk attitudes, and overconfidence, we find that women self-select significantly less into competition against men only in the quantitative task. This finding suggests that remaining gender differences for entry into competition are driven by gender-task stereotypes. As a robustness check, we explore the self-selection into incentive schemes given different gender compositions of groups and self-selection into single-sex groups given different incentive schemes. Furthermore, we report the results of a framed field experiment, where we explore a further task - throwing balls into a bucket - that has as well a male connotation. These additional results further strengthen our interpretation

Can competition spoil reciprocity? A laboratory experiment

This paper investigates how group membership and competition among trustors interact with trust and trustworthiness in a laboratory one-shot trust game. To analyze these effects, we apply a 2x2 design. We induce group membership by letting subjects play coordination games with clear focal points, leading to higher investments and trustworthiness. Introducing competition leads to a decrease in trustworthiness, especially among partners. We argue that once competition comes into play, trustees perceive trustors' investments as the outcomes of a competitive bidding process rather than good intentions, which reduces reciprocity

Social identity, competition, and finance: a laboratory experiment

There is extensive literature, both theoretical and empirical, on the effects of social identity on a wide range of economic and non-economic outcomes. However, there is only scarce knowledge about how social identity is affected by policies or market structure. We address the question how competition among suppliers of finance interacts with trust and trustworthiness in a laboratory one-shot trust game. In order to disentangle pure effects of competition and effects of competition that concern social identity, we apply a 2 x 2 treatment design. We induce social identity by letting subjects play coordination games with clear focal points, which leads to higher investments and trustworthiness in the trust game. Our results show that competition has no significant effects on trust and trustworthiness of individuals in a strangers’ framework. However, in a framework with competition of in-group and out-group investors we see that competition leads to crowding out of social identity by reducing trustworthiness. We suggest that once competition comes into play, trustees see in-group trustors’ investments as the outcomes of a competitive bidding process rather than voluntary trust, which crowds out reciprocity

Can Competition Spoil Reciprocity? - A Laboratory Experiment

This paper investigates how group membership and competition among trustors interact with trust and trustworthiness in a laboratory one-shot trust game. To analyze these effects, we apply a 2x2 design. We induce group membership by letting subjects play coordination games with clear focal points, leading to higher investments and trustworthiness. Introducing competition leads to a decrease in trustworthiness, especially among partners. We argue that once competition comes into play, trustees perceive trustors'investments as the outcomes of a competitive bidding process rather than good intentions, which reduces reciprocity