Partners and strangers in non-linear public goods environments

Data from three non-linear public goods experiments provide evidence that the random reassignment of participants to groups during a session does not have a significant effect on voluntary contributions as compared with voluntary contributions made by participants in groups whose members do not change over the session in which they participate. This extends the literature considering the effects of random rematching members of groups in voluntary contribution games beyond those with linear payoff functions.

Partners and strangers in non-linear public goods environments

Data from three non-linear public goods experiments provide evidence that the random reassignment of participants to groups during a session does not have a significant effect on voluntary contributions as compared with voluntary contributions made by participants in groups whose members do not change over the session in which they participate. This extends the literature considering the effects of random rematching members of groups in voluntary contribution games beyond those with linear payoff functions.

Hypothetical and convenience sample biases in value orientations ring games

The social value orientations ring game is often used to identify behavioural types and provide insight regarding choices made by individuals in market or non-market environments. However, research on the impact of providing salient rewards to individuals making choices in the ring game is sparse. As well, the comparison of student and non-student samples with regard to social value orientations is limited. Following literature from other experimental fields, this paper is concerned with the presence of hypothetical bias (i.e. difference between subject behaviour when rewards are not salient (stated intentions) and actual subject behaviour when rewards are salient) and convenience sample bias (i.e. difference in findings of students versus non-student community subjects) in the social value orientation ring game. Looking at the social value orientation measures and their consistency, we find no evidence of hypothetical bias but significant differences when comparing student and community samples. Our findings suggest caution in generalizing value orientation results across different populations while they support the collection of value orientations at lower cost without compromising the consistency of the results.value orientations; hypothetical bias; convenience sample bias

What Have We Learned From Emissions Trading Experiments?

Emissions trading is a form of environmental regulation in which a regulatory body specifies the total allowable discharge of pollutants, divides this cap into individual permits assigned to individual polluters, and allows trading of the resulting permits. Laboratory experiments, in which paid subjects participate in controlled markets, can be used to test both proposals for emission trading and the theories on which they are based. This paper surveys the laboratory research that has investigated the efficiency of emission trading programs, role of alternative instruments and institutions, the effects of allowing firms to carry inventories of permits, and the extent to which market power can be exercised.

Advance Production Duopolies and Posted Prices or Market-Clearing Prices

The paper reports the results of 39 laboratory duopoly markets for which pricing institution and participant experience are treatments. Duopolies in which producers with complete information about market demand make advance-production output decisions and sell their output at a clearing price (Cournot markets) are contrasted with comparable duopolies who post prices for sale through an efficient rationing mechanism (Kreps-Scheinkman or KS markets). Inexperienced participants in KS markets have much more difficulty selecting capacities consistent with the theoretical predictions than do those in Cournot markets. With experience, the differences disappear. If trading sessions last sufficiently long, it is likely that differences will disappear with inexperienced participants.

Rate of Return Parity in Experimental Asset Markets

This paper applies experimental methods to evaluate the completeness of arbitrage and rate of return parity in simultaneous asset markets in which the assets are denominated in different currencies. Two assets, which return uncertain, but known, dividends in each trading period, are traded over twenty periods, after which the asset has no value. Results indicate that risk neutral rate of return parity is a strong predictor of relative asset prices when assets have common expected dividends and the expected dividends have common variances. The predictive power of risk neutral rate of return parity is reduced as the assets become differentiated.

Quantity Precommitment with Price Competition versus Quantity Precommitment with Market Clearing Prices in the Laboratory

The paper reports the results of 39 laboratory duopoly markets for which pricing institution and participant experience are treatments. Cournot (C) duopolies (quantity precommitment and a price determined to clear the market) are contrasted with Kreps-Scheinkman (KS) duopolies (quantity precommitment and posted prices). Inexperienced participants in KS markets have much more difficulty selecting capacities consistent with the theoretical predictions than do those in C markets. With experience, the differences disappear.Duopoly; Laboratory experiment; Quantity precommitment; Posted prices; Price competition; Market-clearing prices; Experience

Environmental Policy: Lessons from the Laboratory

The controlled laboratory experiment is spreading rapidly as a method for evaluating theories of economic behaviour and policy prescriptions. Environmental regulation is an area that is ripe for laboratory investigation. This paper presents insights drawn from the existing literature using laboratory methods in economics and related disciplines on the use of taxation and subsidy, standards and fines, transferable quota, and voluntary restraint as mechanisms for environmental regulation.

Subsidizing Public Inputs

Investment in research and development may (with some probability) lead to reductions in a firm’s production cost. If the production-cost savings associated with successful research and development is freely disseminated to other firms as soon as it is realized, too few resources may be allocated to this input. In such an environment, subsidies to the public input can lead to optimal input use. Four alternative subsidy instruments are considered in this paper. Two are incremental subsidies and the others are conventional level subsidies. One of the incremental subsidies and one of the level subsidies crudely capture characteristics of incentive mechanisms used in the United States and Canada. A laboratory implementation of these instruments generally confirms that incremental subsidies are inferior to level subsidies.