Auctions for Public Construction with Corner-cutting

This paper reports the theoretical and experimental results of auctions for public construction in which firms cut corners. We show that the winning bids and the winner's quality choices of the constructed buildings are both zero in equilibria if there are at least two firms whose initial cash balances are zero, and it is a common knowledge. The experimental results are close to the theoretical results and indicate that firms with zero-initial cash balance win and that the winning bids and the winner's quality choices of the constructed buildings are considerably low.

Auctions for Public Construction with Corner-cutting

ISER discussion paperMay 2009, Revised August 201

The Spite Dilemma Revisited: Comparison between Chinese and Japanese

This paper studies Chinese choice behavior in the provision of public goods via the voluntary contribution mechanism. The laboratory experiment conducted in China adopts the same design as the one used in Saijo and Nakamura (1995), i.e. either cooperating (full contribution) or free riding (no contribution) is predicted as the unique Nash equilibrium with a high (larger than one) or low (smaller than one) marginal return of contribution. Comparing the results of Chinese subjects with their Japanese counterparts, we find significant differences between these two countries in terms of their choice behavior, despite the similarities in their cultures and the proximity in geographical positions. Japanese subjects are more likely to act spitefully, and, in contrast, Chinese subjects are more likely to perform cooperatively. In addition, concerning the deviations from the Nash equilibria with different marginal returns, the statistical results indicate that Chinese subjects behave more consistent with the theoretical prediction in the high marginal return case, while Japanese choice behavior seems less different from the theoretical expectation in the low marginal return case.Voluntary contribution mechanism, Spite dilemma, Chinese, Japanese

Trust and Reciprocity among International Groups : Experimental Evidence from Austria and Japan

This paper explores national identity in trust and reciprocity at the intra- and international levels by adopting a modified trust game played among groups from Austria and Japan, in which subjects play the roles of trustor and trustee consecutively without any information feedback. Intra- and international trust levels are identical across nationalities. Intranational reciprocity in Austria is greater than in Japan, but there is no significant difference in international reciprocity between the two countries. We also examine the relationship between trust and reciprocity and the relathionship between trust/reciprocity and expectations, demographic variables, the individualism index, and trust indices. International trust enhances international reciprocity in both countries, although this effect is weaker in Japan than in Austria. Expected returns enhance trust in both countries at the intra- and international levels. In Japan, expected transfers enhance international reciprocity less than they do intranational reciprocity. A larger number of females in the group reduce international trust. In Austria, this reduces international trust more than it does intranational trust.ISER discussion paperMay 2009, Revised August 201

An Experimental Study of Japanese Procurement Auctions with Endogenous Minimum Prices

ISER discussion paperJune 2009, Revised July 201

Auctions with Endogenous Price Ceiling:Theoretical and Experimental Results

This paper analyzes an auction mechanism that excludes overoptimistic bidders inspired by the rules of the procurement auctions adopted by several Japanese local governments. Our theoretical and experimental results suggest that the endogenous exclusion rule reduces the probability of suffering a monetary loss induced by winning the auction, and also mitigates the problem of the winnerfs curse in the laboratory. However, this protection comes at the price of a lower revenue for the seller.

Equity versus Equality

How should economic output be distributed among those who created it? An expansive theoretical and empirical literature seeks to answer this fundamental, and controversial, question, which has implications, inter alia, for the structure of wages, redistributive policies and international agreements. Among the possible fairness rules that have been proposed, the primary rivals are equality and equity, whereby the latter refers to allocating in proportion to some measure of individual contributions. This paper reports the results of an experiment conducted in the United States and Japan. It investigates a large variety of factors that might affect preferences for equity and equality, including multiple approaches to examining concepts of culture. We find impersonal third parties, or spectators, exclusively favour equity. Distributive preferences move incrementally toward equality, however, when subjects share personal stakes (i.e., are stakeholders), and even further toward equality, when stakeholder anonymity is lifted. Although the degree of self-interest sometimes differs across countries, these findings about fairness preferences are robust with respect to a wide range of non-ethics variables that seldom matter, including race, income, gender, nationality and culture. We interpret the findings as suggesting that equity is an impersonal (or impartial) rule of fairness, whereas fairness preferences move progressively toward equality with greater proximity, i.e., as relationships become more personal through belonging to a group and being non-anonymous

Equity versus Equality

How should economic output be distributed among those who created it? An expansive theoretical and empirical literature seeks to answer this fundamental, and controversial, question, which has implications, inter alia, for the structure of wages, redistributive policies and international agreements. Among the possible fairness rules that have been proposed, the primary rivals are equality and equity, whereby the latter refers to allocating in proportion to some measure of individual contributions. This paper reports the results of an experiment conducted in the United States and Japan. It investigates a large variety of factors that might affect preferences for equity and equality, including multiple approaches to examining concepts of culture. We find impersonal third parties, or spectators, exclusively favour equity. Distributive preferences move incrementally toward equality, however, when subjects share personal stakes (i.e., are stakeholders), and even further toward equality, when stakeholder anonymity is lifted. Although the degree of self-interest sometimes differs across countries, these findings about fairness preferences are robust with respect to a wide range of non-ethics variables that seldom matter, including race, income, gender, nationality and culture. We interpret the findings as suggesting that equity is an impersonal (or impartial) rule of fairness, whereas fairness preferences move progressively toward equality with greater proximity, i.e., as relationships become more personal through belonging to a group and being non-anonymous