Experimental Economics

by Andersson, Fredrik; Holm, Hakan J.

• ISBN13: 9780792376415
• ISBN10: 0792376412
• Format: Hardcover
• Copyright: 2002-05-01
• Publisher: Kluwer Academic Pub

Summary

Experimental Economics: Financial Markets, Auctions, And Decision Making is based on research presented at the 20th Arne Ryde Symposium on Experimental Economics, held on November 9-11 at Lund University. The volume is divided into two parts. In Part I, interviews with prominent researchers in the field, all invited speakers at the Symposium, are presented. Those interviewed are Peter Bohm, Catherine Eckel, Werner Güth, John Hey, Daniel Kahneman, Alvin Roth, Vernon Smith, and Martin Weber. The interviews address important questions about basic experimental methods and the interpretation of results. In addition, these researchers answer questions relating to their specific fields and to their contributions at the Symposium. They are also asked to single out the most important findings in the field. Part II contains selected contributions from the conference. Topics covered include attitudes towards risk and inequality; pitfalls in experimental economics; analysis of trading-period duration; robustness in learning; video experiments on decision making and fairness; sequential prisoners' dilemmas; and collusion in auctions.

Table of Contents

Part I Interviews with Invited Speakers
Peter Bohm	3	(6)
Catherine C. Eckel	9	(10)
Werner Guth	19	(10)
John Hey	29	(12)
Daniel Kahneman	41	(8)
Alvin Roth	49	(18)
Vernon Smith	67	(8)
Martin Weber	75	(10)
Part II Contributions
Attitudes towards Risk and Inequality	85	(32)
Yoram Amiel
Frank Cowell
Kaspar Richter
Introduction	85	(1)
Theoretical Background	86	(5)
Inequality and Risk	86	(2)
The Meaning of Inequality and of Risk	88	(1)
An Axiomatic Approach	89	(2)
The Experiment	91	(2)
Issues	91	(1)
Implementation	92	(1)
Data	93	(1)
Numerical responses and the Principle of Transfers	94	(3)
Descriptive results	94	(2)
Regression Analysis	96	(1)
Numerical Responses: variation by Type of Income Transfer	97	(5)
Descriptive Analysis	97	(1)
Regression Analysis	98	(1)
A provisional evaluation	99	(3)
The Verbal Question	102	(3)
The structure of the question	102	(1)
Verbal question: descriptive results	102	(2)
Regression analysis	104	(1)
Conclusions	105	(2)
Appendix	107	(1)
Variable definitions	107	(1)
The Questionnaires	107	(10)
Pitfalls in Experimental Economics	117	(10)
Peter Bohm
Introduction	117	(1)
Monetary Incentive Levels	118	(1)
Subjects	119	(2)
Testing Theory in Context or Non-Context Environments	121	(3)
Stationary Repetitions	124	(1)
Concluding Remarks	125	(2)
The Effect of Trading Period Duration	127	(32)
Darren Duxbury
Introduction	127	(1)
Relevant Literature and Research Hypotheses	128	(3)
Experimental Design	131	(5)
Overview of Experimental Procedures and Design	131	(1)
Experimental Markets	132	(1)
Participants and Motivation	132	(3)
Specific Market Designs	135	(1)
Analysis and Results	136	(17)
Data Considerations	136	(1)
Experimental Markets Group One (PN Markets)	137	(7)
Volume of Trade	144	(1)
Informational Efficiency	144	(1)
Allocational Efficiency	145	(1)
Experimental Markets Group Two (IN Markets)	145	(3)
Volume of Trade	148	(4)
Informational Efficiency	152	(1)
Allocational Efficiency	153	(1)
Experimental Markets Groups Three and Four	153	(1)
Discussion and Conclusions	153	(6)
Robust Learning Experiments	159	(26)
Werner Guth
Introduction	159	(2)
Auctions and Fair Division Games	161	(5)
Reputation formation	166	(5)
Endogenous timing in bilateral negotiations	171	(3)
Alternating offer bargaining	174	(5)
Discussion	179	(6)
The Impact of Fairness on Decision Making	185	(26)
Heike Hennig-Schmidt
Introduction	185	(2)
Relevant Literature	187	(2)
Method	189	(2)
Experimental design	191	(2)
The Ultimatum Game	191	(1)
The Tripled Take Game	191	(1)
An Alternating Offer Bargaining Game	192	(1)
Procedure	192	(1)
Results	193	(11)
Fairness is synonymous to equity	196	(6)
The influence of fairness on decision making	202	(2)
Conclusion	204	(7)
The Sequential Prisoners' Dilemma	211	(16)
Carles Sola
Introduction	211	(1)
Previous Experiments	212	(2)
Models and Predictions	214	(4)
Inequality Aversion	215	(2)
Altruism	217	(1)
Experimental Design	218	(1)
Results	219	(2)
Conclusions	221	(6)
Appendix	222	(5)
Collusion in Auctions	227	(17)
Jana Vyrastekova
Maria Montero
Introduction	227	(3)
The Game	230	(2)
Nash Equilibria of the Stage Game	231	(1)
Collusion in the Repeated Game	231	(1)
Simple collusion	232	(1)
Efficient collusion	232	(1)
The Experimental Design	232	(2)
Hypotheses	233	(1)
Results	234	(9)
Average Earnings	234	(2)
Bidding Behavior	236	(1)
Bidding Proposals	237	(1)
Round 1 data	237	(1)
Overall data	238	(3)
Value Messages	241	(1)
Sidepayments	242	(1)
Conclusion	243	(1)
Appendix: Collusion in Equilibrium	244	(1)
Incentives to tell the truth	244	(1)
Incentives to bid low	244	(1)
Incentives to give sidepayments	245