Self-serving biases: Evidence from a simulated labor relationship

Previous studies have found evidence of a self-serving bias in bargaining and dispute resolution. We use experimental data to test for this effect in a simulated labor relatonship. We find a consistent discrepancy between employer beliefs and employee actions that can only be attributed to self-serving biases. This discrepancy is evident through stated beliefs, revealed satisfaction, and actual actions. We present evidence and discuss implications.Experiment, fairness, labor relations, self-serving bias, Leex

Altruism, equity and reciprocity in a gift-exchange experiment: An encompassing approach

Considerable experimental evidence suggests that non-pecuniary motives must be addressed when modeling behavior in economic contexts. Recent models of non-pecuniary motives can be classified as either altruism- based, equity-based, or reciprocity-based. We estimate and compare leading approaches in these categories, using experimental data. We then offer a flexible approach that nests the above three approaches, thereby allowing for nested hypothesis testing and for determining the relative strength of each of the competing theories. In addition, the encompassing approach provides a functional form for utility in different settings without the restrictive nature of the approaches nested within it. Using this flexible form for nested tests, we find that intentional reciprocity, distributive concerns, and altruistic considerations all play a significant role in players' decisions.Altruism, experiment, equity, encompassing, fairness, inequality aversion, reciprocity, Leex

The lab versus the virtual lab and virtual field - an experimental investigation of trust games with communication

We study trust games in a virtual world environment and contrast results with laboratory studies, with and without personal interaction enabled by the virtual world platform. Particular attention is given to the motives that drive behavior in the various environments and to issues that are context dependent, particularly communication and social distance. We find that allowing for personal interaction through a virtual world interface increases the amount sent relative to laboratory results, but that subjects recruited in the virtual world give and return less than the laboratory control group with the same virtual world interface

Incentives for Developers’ Contributions and Product Performance Metrics in Open Source Development: An Empirical Exploration

In open source software development, users rather than paid developers engage in innovation and development without the direct involvement of manufacturers. This paradigm cannot be explained by the two traditional models of innovation, the private investment model and the collective action model. Neither model in itself can explain the phenomenon of the open source model or its success. In order to bridge the gap between existing models and the open source phenomenon, we analyze data from a web survey of 160 open source developers. First, we investigate the motives affecting the individual developer’s contributions by comparing and contrasting the incentives from both the traditional private investment and collective action models. Second, we demonstrate that there is a common ground between the private and collective models where private returns and social considerations can coexist. Third, we explore the effect of incentives on the output of innovation—final product performance. The results show that the motivations for individual developer’s contributions are quite different from the incentives that affect product performance.

The Dynamics of Law Clerk Matching: An Experimental and Computational Investigation of Proposals for Reform of the Market

In September of 1998, the Judicial Conference of the United States abandoned as unsuccessful the attempt—the sixth since 1978—to regulate the dates at which law students are hired as clerks by Federal appellate judges. The market promptly resumed the unraveling of appointment dates that had been temporarily slowed by these efforts. In the academic year 1999-2000 many judges hired clerks in the fall of the second year of law school, almost two years before employment would begin, and before hardly any information about candidates other than first year grades was available. Hiring dates moved still earlier in the Fall of 2000 and 2001. The present paper explores proposed reforms of the market, experimentally in the laboratory, and computationally using genetic algorithms. Our results suggest that some of the special features of the judge/law-clerk market—in particular the feeling among many students and judges that students must accept offers when they are made--present obstacles to the success of the proposed reforms, including the latest reform proposed by the judges, in March 2002, which is a one year moratorium on clerkship hiring. Unlike many markets in which the inability to make binding contracts contributes to market failure, in the law clerk market it is the ease with which binding contracts are forged that harms efficiency.

UNDER-DIVERSIFICATION AND THE ROLE OF BEST REPLY TO PATTERN

Three experiments are presented that compare alternative explanations to the coexistence of risk aversion and under-diversification in investment decisions. The participants were asked to select one of several assets under two feedback conditions. In each case, one asset was a weighted combination of the other assets, allowing for lower volatility. The frequency of choice of the composite asset was highly sensitive to feedback condition. The composite asset was the least popular asset when the feedback included information concerning forgone payoffs, and increased in frequency when the feedback was limited to the obtained payoff. These results support the assertion that under-diversification can be a product of learning from feedback and in particular best reply to pattern.Risk; Diversification; Learning

Competition Between Auctions

Even though auctions are capturing an increasing share of commerce, they are typically treated in the theoretical economics literature as isolated. That is, an auction is typically treated as a single seller facing multiple buyers or as a single buyer facing multiple sellers. In this paper, we review the state of the art of competition between auctions. We consider three different types of competition: competition between auctions, competition between formats, and competition between auctioneers vying for auction traffic. We highlight the newest experimental, statistical and analytical methods in the analysis of competition between auctions

Competition Between Auctions

Even though auctions are capturing an increasing share of commerce, they are typically treated in the theoretical economics literature as isolated. That is, an auction is typically treated as a single seller facing multiple buyers or as a single buyer facing multiple sellers. In this paper, we review the state of the art of competition between auctions. We consider three different types of competition: competition between auctions, competition between formats, and competition between auctioneers vying for auction traffic. We highlight the newest experimental, statistical and analytical methods in the analysis of competition between auctions.auctions, bidding, competition, auction formats, auction houses

A Choice Prediction Competition: Choices From Experience and From Description

Erev, Ert, and Roth organized three choice prediction competitions focused on three related choice tasks: one shot decisions from description (decisions under risk), one shot decisions from experience, and repeated decisions from experience. Each competition was based on two experimental datasets: An estimation dataset, and a competition dataset. The studies that generated the two datasets used the same methods and subject pool, and examined decision problems randomly selected from the same distribution. After collecting the experimental data to be used for estimation, the organizers posted them on the Web, together with their fit with several baseline models, and challenged other researchers to compete to predict the results of the second (competition) set of experimental sessions. Fourteen teams responded to the challenge: the last seven authors of this paper are members of the winning teams. The results highlight the robustness of the difference between decisions from description and decisions from experience. The best predictions of decisions from descriptions were obtained with a stochastic variant of prospect theory assuming that the sensitivity to the weighted values decreases with the distance between the cumulative payoff functions. The best predictions of decisions from experience were obtained with models that assume reliance on small samples. Merits and limitations of the competition method are discussed.Economic