On the Efficiency of AC/DC: Bon Scott versus Brian Johnson

We explore the effects of listening to the music of AC/DC in a simple bargaining environment.bargaining; reciprocity; music; experiments

Developing Heuristic-Based Quality Judgements: Attention Blocking in Consumer Choice

Through a series of experiments we illustrate how the sequential order in which consumers receive information can influence the way this information is processed and affect consumers’ decisions. Specifically, when participants initially receive information regarding brand/quality or price/quality associations, these associations can block consumers’ attention to more relevant quality-determining physical attributes. Moreover, this process of attention blocking can carry-over to affect quality judgements pertaining to similarly branded or priced products beyond the product in which blocking was initiated. This implies that consumers judgements of quality may be heavily dependent on “first impressions” which develop into brand and price heuristics.Consumer Behavior; Consumer Learning; Marketing Strategy

Incremental willingness to pay: a theoretical and empirical exposition

Applications of willingness to pay (WTP) have shown the difficultly to discriminate between various options. This reflects the problem of embedding in both its specific sense, of options being nested within one another, and its more-general sense, whereby respondents cannot discriminate between close substitutes or between more-disparate rivals for the same budget. Furthermore, high proportions of reversals between WTP-value and simple preference based rankings of options are often highlighted. Although an incremental WTP approach was devised to encourage more differentiated answers and a higher degree of consistency among respondents, a theoretical basis for this approach has not been elucidated, and there is little evidence to show that this approach might indeed achieve greater consistency between explicit and implicit rankings inferred from WTP values.We address both these issues. Following our theoretical exposition, standard and incremental approaches were compared with explicit ranking in a study assessing preferences for different French emergency care services. 280 persons, representative of the French adult population, were interviewed. Half received the incremental version, the other half the standard version. Results suggest that the incremental approach provides a ranking of options fully in line with explicit ranking. The standard approach was reasonably consistent with explicit ranking but proved unable to differentiate between the five most preferred providers, as predicted by theory. Our findings suggest that the incremental approach provides results which can be used in priority-setting contexts

Incentive Design and Trust: Comparing the Effects of Tournament and Team-Based Incentives on Trust

We explore the extent to which the structure of incentives affects trust. We hypothesize that the degree to which different incentive mechanisms emphasize competition (via the perceived intentions of others) and entitlements (via the perceived property rights) will affect individuals’ subsequent behavior. In our experiment, bargaining pairs earned endowments through either tournaments or team-based incentives. Participants engaged in a subsequent trust game in which the sender had access to the total endowment generated by the pair. We find that the structure of the incentive mechanisms has asymmetric effects on observed trust in which participants’ relative performance framed trusting behavior.trust, incentives, experiments, tournaments

Can Foreign Aid Buy Investment? Appropriation Through Conflict

The failure of foreign aid to promote growth in the developing world has received significant attention as evidence suggests that foreign aid does not translate into investment. This research has demonstrated that poor institutions in these developing economies (particularly with respect to property rights) results in an inability to fully appropriate the return to one’s investment, thereby serving as a prominent disincentive to investment. This paper presents an experimental test of a a 2-player, one-shot game of conflict in which we vary the strength of property rights. Our results suggest that stronger property rights reduce conflict and increase investment. In addition, we test the conventional wisdom that technological progress can increase the effectiveness of aid in stimulating investment. Contrary to intuition, we find technological progress has practically no effect on investment and that this failure to stimulate investment is largely due to deficiencies in property right institutions. Key Words: Property Rights; Conflict; Investment; Foreign Aid; Experiments

Loss Aversion and Intertemporal Choice: A Laboratory Investigation

We present results from a laboratory study of loss aversion in the context of intertemporal choice. We investigate whether the provision of (windfall) endowments results in different elicited discount rates relative to subjects who earn income or earn and retain the income for a period before making intertemporal decisions. We hypothesize that loss aversion in an intertemporal choice yields higher discount rates among subjects earning and retaining. Our results support this hypothesis: among subjects who earn and retain their income we elicit substantially higher discount rates relative to those experiencing a windfall gain.intertemporal choice, discount rates, experiments

Measuring Impatience: Elicited Discount Rates and the Barratt Impulsiveness Scale

We explore intertemporal decision making to test the extent to which elicited discount rates and a self-reported scale of impatience measure the same behavioral characteristic. We conduct experiments in which we elicit discount rates using monetary rewards and a self-reported measure of impatience (the Barratt Impulsiveness Scale, BIS-11). Although researchers have utilized these measures to infer aspects of intertemporal preferences, we find no significant correlation between discount rates and the BIS-11 except in the special case where discount rates were elicited after individuals were primed with negative feedback.intertemporal choice; impulsiveness; discounting; experiments

Social Interactions and the Salience of Social Identity

In this paper, we explore the effect of identity salience on behavior in a simple social interaction. Specifically, we compare behavior in a ultimatum game across three treatments: priming subjects with a shared identity, priming subjects with an identity distinct from those with whom they will interact, and priming subjects with no particular identity. We find that subjects are most cooperative in the identity-priming treatment and least cooperative in the distinctiveness-priming treatment. Similarly, subjects reveal the highest demands in the identity-priming treatment and the lowest demands in the distinctiveness-priming treatment. We discuss the implications of these results with respect to literature on organizational identity.identity, experiments, bargaining

Cognitive Dissonance, Pessimism, and Behavioral Spillover Effects

This paper reports results from a unique two-stage experiment designed to examine the spillover effects of optimism and pessimism. In stage 1, we induce optimism or pessimism onto subjects by randomly assigning a high or low piece rate for performing a cognitive task. We find that participants receiving the low piece rate are significantly more pessimistic with respect to performance on this task. In stage 2 individuals participate in an ultimatum game. We find that minimum acceptable offers are significantly lower for pessimistic subjects, though this pessimism was generated in a completely unrelated environment. These results highlight the existence of important spillover effects that can be behaviorally and economically important - for example, pessimism regarding one’s initial conditions (e.g., living in poverty) may have spillover effects on one’s future labor market outcomes.

On the Efficiency of AC/DC: Bon Scott versus Brian Johnson

We explore the effects of listening to the music of AC/DC in a simple bargaining environment