Sick Pay Provision in Experimental Labor Markets

Sick pay is a common provision in most labor contracts. This paper employs an experimental gift-exchange environment to explore two related questions using both managers and undergraduates as subjects. First, do workers reciprocate sick pay in the same way as they reciprocate wage payments? Second, do firms benefit from offering sick pay? Firms may benefit in two different ways: directly, from workers reciprocating higher sick pay with higher efforts; and indirectly, from self-selection of reciprocal workers into contracts with higher sick pay. Our main finding is that the direct effect is rather weak in terms of effort and negative in terms of profits. However, when there is competition among firms for workers, sick pay can become an important advantage. Consequently, competition leads to a higher provision of sick pay relative to a monopsonistic labor market.sick pay, sick leave, experiment, gift exchange

Sick Pay Provision in Experimental Labor Markets

Sick pay is a common provision in most labor contracts. This paper employs an experimental gift-exchange environment to explore two related questions using both managers and undergraduates as subjects. First, do workers reciprocate sick pay in the same way as they reciprocate wage payments? Second, do firms benefit from offering sick pay? Firms may benefit in two different ways: directly, from workers reciprocating higher sick pay with higher efforts; and indirectly, from self-selection of reciprocal workers into contracts with higher sick pay. Our main finding is that the direct effect is rather weak in terms of effort and negative in terms of profits. However, when there is competition among firms for workers, sick pay can become an important advantage. Consequently, competition leads to a higher provision of sick pay relative to a monopsonistic labor market.

Essays in Behavioral and Experimental Economics

Chapter I We use a large-scale internet experiment to explore how subjects learn to play against computers that are programmed to follow one of a number of standard learning algorithms. The learning theories are (unbeknown to subjects) a best response process, fictitious play, imitation, reinforcement learning, and a trial & error process. We explore how subjects' performances depend on their opponents' learning algorithm. Furthermore, we test whether subjects try to influence those algorithms to their advantage in a forward-looking way (strategic teaching). We find that strategic teaching occurs frequently and that all learning algorithms are subject to exploitation with the notable exception of imitation. Chapter II In a punishment experiment, we separate the demand for punishment in general from a possible demand to conduct punishment personally. Subjects experience an unfair split of their earnings from a real effort task and have to decide on the punishment of the person who determines the distribution. First, it is established whether the allocator's payoff is reduced and, afterwards, subjects take part in a second price auction for the right to (physically) carry out the act of payoff reduction. This auction only resolves who will punish, not whether punishment takes place, so only subjects with a demand for personal punishment should bid. Chapter III This paper experimentally investigates whether risk-averse individuals punish less if the outcome of punishment is uncertain than when it is certain. We compare subjects’ behavior in two treatments: Certain Punishment in which the prisoner’s dilemma game is followed by a punishment stage allowing subjects to decrease the other player’s payoff by 2 Euros; and Uncertain Punishment in which subjects could decrease the other player’s payoff with a 50% probability by 1 Euro and with a 50% probability by 3 Euros. We observe only several instances of punishment in our setup. Consequently, we find that in both cases risk-averse subjects are equally likely to cooperate in the prisoner’s dilemma and equally likely to punish in the punishment stage. Chapter IV Does a mere availability of punishment increase cooperation in the one-shot prisoner’s dilemma game? In our experiment we observe that the subjects almost never use punishment. Consistently, the data shows no increase in the cooperation rate as the subjects correctly anticipated that they would not be punished for defection. Thus, the availability of punishment is ineffective in inducing cooperation in a one-shot game. Moreover, we do not find any evidence that risk attitude is a factor when making the decision to cooperate

Risky punishment and reward in the prisoner's dilemma

We conduct a prisoner’s dilemma experiment with a punishment/reward stage, where punishments and rewards are risky. This is compared with a risk free treatment. We find that subjects do not change their behavior in the face of risky outcomes. Additionally, we measure risk attitude and the emotions of subjects. While we find a strong influence of emotions, individual risk aversion has no effect on the decision to punish or reward. This is good news for lab experiments who abstract from risky outcomes. From the perspective of social preferences, our results provide evidence for risk neutral inclusion of other player’s payoffs in the decisionmaker’s utility function

Rage Against the Machines - How Subjects Learn to Play Against Computers

We use an experiment to explore how subjects learn to play against computers which are programmed to follow one of a number of standard learning algorithms. The learning theories are (unbeknown to subjects) a best response process, fictitious play, imitation, reinforcement learning, and a trial & error process. We test whether subjects try to influence those algorithms to their advantage in a forward-looking way (strategic teaching). We find that strategic teaching occurs frequently and that all learning algorithms are subject to exploitation with the notable exception of imitation. The experiment was conducted, both, on the internet and in the usual laboratory setting. We find some systematic differences, which however can be traced to the different incentives structures rather than the experimental environment.

Rage Against the Machines: How Subjects Learn to Play Against Computers

We use an experiment to explore how subjects learn to play against computers which are programmed to follow one of a number of standard learning algorithms. The learning theories are (unbeknown to subjects) a best response process, fictitious play, imitation, reinforcement learning, and a trial & error process. We test whether subjects try to influence those algorithms to their advantage in a forward-looking way (strategic teaching). We find that strategic teaching occurs frequently and that all learning algorithms are subject to exploitation with the notable exception of imitation. The experiment was conducted, both, on the internet and in the usual laboratory setting. We find some systematic differences, which however can be traced to the different incentives structures rather than the experimental environment

Rage Against the Machines: How Subjects Learn to Play Against Computers

We use an experiment to explore how subjects learn to play against computers which are programmed to follow one of a number of standard learning algorithms. The learning theories are (unbeknown to subjects) a best response process, fictitious play, imitation, reinforcement learning, and a trial & error process. We test whether subjects try to influence those algorithms to their advantage in a forward-looking way (strategic teaching). We find that strategic teaching occurs frequently and that all learning algorithms are subject to exploitation with the notable exception of imitation. The experiment was conducted, both, on the internet and in the usual laboratory setting. We find some systematic differences, which however can be traced to the different incentives structures rather than the experimental environment.learning; fictitious play; imitation; reinforcement; trial & error; strategic teaching; Cournot duopoly; experiments; internet.

Sick Pay Provision in Experimental Labor Markets

Sick pay is a common provision in most labor contracts. This paper employs an experimental gift-exchange environment to explore two related questions using both managers and undergraduates as subjects. First, do workers reciprocate sick pay in the same way as they reciprocate wage payments? Second, do firms benefit from offering sick pay? Firms may benefit in two different ways: directly, from workers reciprocating higher sick pay with higher efforts; and indirectly, from self-selection of reciprocal workers into contracts with higher sick pay. Our main finding is that the direct effect is rather weak in terms of effort and negative in terms of profits. However, when there is competition among firms for workers, sick pay can become an important advantage. Consequently, competition leads to a higher provision of sick pay relative to a monopsonistic labor market

Urban Development Measures with housing

Mit Blick auf die Aufgaben und Probleme in Ostdeutschland in den Jahren 1990 bis 1999 wird nach der Wirksamkeit der städtebaulichen Entwicklungsmaßnahme (§ 165 Baugesetzbuch) in den neuen Ländern gefragt. An Beispielen mit Wohnungsbau zeigt der Verfasser, dass die Anwendungsvoraussetzungen des Instrumentes und dessen grundsätzliche Funktionsfähigkeit zwar gegeben waren, in der Umsetzung jedoch erhebliche Probleme in Erscheinung traten. Diese resultierten primär aus dem Wegbrechen der quantitativen Wohnungsnachfrage in Verbindung mit großen Vermarktungs- und Refinanzierungsrisiken. Künftig sollten Entwicklungsmaßnahmen auf die Wiedernutzung und Sicherung städtebaulicher Strukturen sowie auf eine frühzeitige Einbeziehung der Eigentümer und Bauherren orientiert werden.In view of the duties and problems in East Germany from 1990 to 1999 this exploration investigated the efficacy of the Urban Development Measure (§ 165 Baugesetzbuch) in the new federal states. The author demonstrates using instances of housing that applicability and functioning of the instrument were basically given. Nevertheless, when it was realised many serious problems appeared. These primarily resulted from the cessation of housing inquiry connected with big marketing and refinance risks. In the future Urban Development Measures shall be orientated to safe, reuse and restore urban structures and to include the owners of the grounds and buildings at an earlier stage

A Dynamic Ellsberg Urn Experiment

Two rationality arguments are used to justify the link between conditional and unconditional preferences in decision theory: dynamic consistency and consequentialism. Dynamic consistency requires that ex ante contingent choices are respected by updated preferences. Consequentialism states that only those outcomes which are still possible can matter for updated preferences. We test the descriptive validity of these rationality arguments with a dynamic version of Ellsberg's three color experiment and find that subjects act more often in line with consequentialism than with dynamic consistency