Experimental Practices in Economics: Performativity and the Creation of Phenomena

This contribution provides a brief overview and discussion of the role of experiments in economics. It is argued that economic experiments have convinced economists and the public of the existence of phenomena that have been outside the scope of economics. The success of these experiments is partly due to the performative nature of experiments. To develop this argument, examples of experiments are provided, and two different sets of criticisms of experiments are discussed. The paper concludes with a discussion of which questions economists should address and how experiments can be used to study policy-relevant questions. ZUSAMMENFASSUNG - (Experimentelle Praktiken in der Ökonomie: Performativität und die Erzeugung neuer Phänomene) Der Beitrag beschäftigt sich mit der Rolle von Experimenten in der Ökonomie. Es wird argumentiert, dass Experimente dazu in der Lage sind, sowohl Ökonomen als auch eine breitere Öffentlichkeit davon zu überzeugen, dass bestimmte Phänomene existieren, die vorher nicht als relevant für die Ökonomie angesehen oder gar nicht wahrgenommen wurden. Diese Wirkung von Experimenten beruht zu einem wichtigen Teil auf ihrer Performativität. Um dieses Argument zu entwickeln, werden Beispiele für Experimente gegeben, verschiedene Kritikpunkte an Experimenten diskutiert sowie die Frage aufgeworfen, was die Grenzen der Ökonomie sind und wie Experimente zur Beantwortung wirtschaftspolitischer Fragen eingesetzt werden können.

Courtesy and Idleness: Gender Differences in Team Work and Team Competition

Does gender play a role in the context of team work? Our results based on a real-effort experiment suggest that performance depends on the composition of the team. We find that female and male performance differ most in mixed teams with revenue sharing between the team members, as men put in significantly more effort than women. The data also indicate that women perform best when competing in pure female teams against male teams whereas men perform best when women are present or in a competitive environment

Do Legal Standards Affect Ethical Concerns of Consumers?

In order to address the impact of regulation on ethical concerns of consumers, we study the effect of a minimum wage. In our experimental market, consumers have monopsony power, firms engage in Bertrand competition, and workers are passive recipients of a wage payment. Two treatments are employed, one with no minimum wage in the first part but with a minimum wage in the second part, and one treatment with a minimum wage at the outset that is abolished in the second part. In both treatments, wages decrease over time in the first part even though some consumers show an interest in fair wages. If a minimum wage is in place, wages decline even faster. Introducing a minimum wage in a mature market raises average wages, while abolishing it lowers them. We discuss the implications of our results, such as the crowding out of ethical behavior through legal regulation.Fairness, Crowding Out, Consumer Behavior, Minimum Wage, Experimental Economics

Experimental practices in economics: performativity and the creation of phenomena

"Der Beitrag beschäftigt sich mit der Rolle von Experimenten in der Ökonomie. Es wird argumentiert, dass Experimente dazu in der Lage sind, sowohl Ökonomen als auch eine breitere Öffentlichkeit davon zu überzeugen, dass bestimmte Phänomene existieren, die vorher nicht als relevant für die Ökonomie angesehen oder gar nicht wahrgenommen wurden. Diese Wirkung von Experimenten beruht zu einem wichtigen Teil auf ihrer Performativität. Um dieses Argument zu entwickeln, werden Beispiele für Experimente gegeben, verschiedene Kritikpunkte an Experimenten diskutiert sowie die Frage aufgeworfen, was die Grenzen der Ökonomie sind und wie Experimente zur Beantwortung wirtschaftspolitischer Fragen eingesetzt werden können." (Autorenreferat)"This contribution provides a brief overview and discussion of the role of experiments in economics. It is argued that economic experiments have convinced economists and the public of the existence of phenomena that have been outside the scope of economics. The success of these experiments is partly due to the performative nature of experiments. To develop this argument, examples of experiments are provided, and two different sets of criticisms of experiments are discussed. The paper concludes with a discussion of which questions economists should address and how experiments can be used to study policy-relevant questions." (author's abstract

Courtesy and Idleness: Gender Differences in Team Work and Team Competition

Does gender play a role in the context of team work? Our results based on a real-effort experiment suggest that performance depends on the composition of the team. We find that female and male performance differ most in mixed teams with revenue sharing between the team members, as men put in significantly more effort than women. The data also indicate that women perform best when competing in pure female teams against male teams whereas men perform best when women are present or in a competitive environment.team incentives; gender; tournaments

Courtesy and Idleness: Gender Differences in Team Work and Team Competition

Does gender play a role in the context of team work? Our results based on a real-effort experiment suggest that performance depends on the composition of the team. We find that female and male performance differ most in mixed teams with revenue sharing between the team members, as men put in significantly more effort than women. The data also indicate that women perform best when competing in pure female teams against male teams whereas men perform best when women are present or in a competitive environment.team incentives, gender, tournaments

Social Norms and Economic Incentives in Firms

This paper studies the interplay between economic incentives and social norms in firms. We introduce a general framework to model social norms arguing that norms stem from agents’ desire for, or peer pressure towards, social efficiency. In a simple model of team production we examine the interplay of different types of contracts with social norms. We show that one and the same norm can be output-increasing, neutral, or output-decreasing depending on the incentive scheme. We also show how social norms can induce multiplicity of equilibria and how steeper economic incentives can reduce effort.social norms, incentives, contracts

Social norms and optimal incentives in firms

This paper deals with the interplay between economic incentives and social norms in firms. We outline a simple model of team production and provide preliminary results on linear incentive schemes in the presence of a social norm that may cause multiple equilibria. The effect of the social norm on the optimal bonus rate is discussed, as well as the effectiveness of temporary changes in the bonus rate as a means to move a firm from a bad to a good equilibrium.social norms; incentives; contracts

Information and Beliefs in a Repeated Normal-form Game

We study beliefs and choices in a repeated normal-form game. In addition to a baseline treatment with common knowledge of the game structure, feedback about choices in the previous period and random matching, we run treatments (i) with fixed matching, (ii) without information about the opponent’s payoffs, and (iii) without feedback about previous play. Using Stahl and Wilson’s (1995) model of limited strategic reasoning, we classify behavior with regard to its strategic sophistication and consider its development over time. In the treatments with feedback and full information about the game, we observe more strategic play, more best-responses to beliefs and more accurate beliefs over time. While feedback is the main driving force of learning to play strategically and for forming beliefs that accurately predict the behavior of the opponent, both incomplete information about the opponent’s payoffs or lack of feedback lead to a stagnation of best-response rates over time. ZUSAMMENFASSUNG - (Information und Erwartungen in einem wiederholten Normalformspiel) Wir untersuchen die Entwicklung von den Erwartungen über das Verhalten des anderen Spielers und den Entscheidungen in einem wiederholten Normalformspiel. Zusätzlich zum Haupttreatment mit common knowledge über das Spiel, Feedback über das Ergebnis in der vorigen Runde und zufälliger Zuordnung der Spieler, gibt es Kontrolltreatments mit (i) festen paarweisen Zuordnungen der Spieler, (ii) ohne Information über die Auszahlungen des anderen Spielers und (iii) ohne Feedback über das Ergebnis der vorigen Runde. Mit Hilfe von Stahl und Wilsons (1995) Modell begrenzten strategischen Verhaltens klassifizieren wir das Verhalten der Teilnehmer im Hinblick auf die strategische Sophistikation. In den Treatments mit Feedback und vollständiger Information über das Spiel nehmen strategisches Verhalten, beste Antworten auf die eigenen Erwartungen und die Akkuratheit der Erwartungen über die Zeit zu. Während Feedback der Hauptgrund dafür ist, dass die Teilnehmer lernen, sich strategisch zu verhalten und korrekte Erwartungen über das Verhalten des anderen Spielers zu bilden, führen sowohl unvollständige Information über die Auszahlungen des Gegenspielers als auch fehlendes Feedback zu einer Stagnation der Rate der besten Antworten über die Zeit.

Telling the Truth May Not Pay Off

We investigate the matching algorithm used by the German central clearinghouse for university admissions (ZVS) in medicine and related subjects. This mechanism consists of three procedures based on final grades from school ("Abiturbestenverfahren", "Auswahlverfahren der Hochschulen") and on waiting time ("Wartezeitverfahren"). While these procedures differ in the criteria applied for admission they all make use of priority matching. In priority matching schemes, it is not a dominant strategy for students to submit their true preferences. Thus, strategic behaviour is expected. Using the full data set of applicants, we are able to detect some amount of strategic behaviour which can lead to inefficient matching. Alternative ways to organize the market are briefly discussed.Matching, university admissions, strategic behaviour