An experimental investigation of intrinsic motivations for giving

This paper presents results from a modified dictator experiment aimed at distinguishing and quantifying intrinsic motivations for giving. We employ an experimental design with three treatments that vary the recipient (experimenter, charity) and amount passed (fixed, varying). We find giving to the experimenter not to be significantly different from giving to a charity, when the amount the subject donates crowds out the amount donated by the experimenter such that the charity always receives a fixed amount. This result suggests that the latter treatment, first used by Crumpler and Grossman (J Public Econ 92(5–6):1011–1021, 2008), does not provide a clean test of warm glow motivation. We then propose a new method of detecting warm glow motivation based on the idea that in a random-lottery incentive (RLI) scheme, such as the one we employ, warm glow accumulates and this may lead to satiation, whereas purely altruistic motivation does not. We also provide bounds on the magnitudes of warm glow and pure altruism as motives that drive giving in our experiment.     

Costly and discrete communication: an experimental investigation

Language is an imperfect and coarse means of communicating information about a complex and nuanced world. We report on an experiment designed to capture this feature of communication. The messages available to the sender imperfectly describe the state of the world; however, the sender can improve communication, at a cost, by increasing the complexity or elaborateness of the message. Here the sender learns the state of the world, then sends a message to the receiver. The receiver observes the message and provides a best guess about the state. The incentives of the players are aligned in the sense that both sender and receiver are paid an amount which is increasing in the accuracy of the receiver’s guess. We find that the size of the language endogenously emerges as a function of the costs of communication. Specifically, we find that higher communication costs are associated with a smaller language. Although the equilibrium predictions do not perform well, this divergence occurs in a manner which is consistent with the experimental communication literature: overcommunication. We find that the sender’s payoffs, relative to equilibrium payoffs, are decreasing in the cost of communication. We also find that the receiver’s payoffs, relative to equilibrium payoffs, are increasing in the cost of communication. Finally, we find imperfections in coordination on the basis of the experimental labels.     

When and how to satisfice: an experimental investigation

This paper is about satisficing behaviour. Rather tautologically, this is when decision-makers are satisfied with achieving some objective, rather than in obtaining the best outcome. The term was coined by Simon (Q J Econ 69:99–118, 1955), and has stimulated many discussions and theories. Prominent amongst these theories are models of incomplete preferences, models of behaviour under ambiguity, theories of rational inattention, and search theories. Most of these, however, seem to lack an answer to at least one of two key questions: when should the decision-maker (DM) satisfice; and how should the DM satisfice. In a sense, search models answer the latter question (in that the theory tells the DM when to stop searching), but not the former; moreover, usually the question as to whether any search at all is justified is left to a footnote. A recent paper by Manski (Theory Decis. doi: 10.1007/s11238-017-9592-1, 2017) fills the gaps in the literature and answers the questions: when and how to satisfice? He achieves this by setting the decision problem in an ambiguous situation (so that probabilities do not exist, and many preference functionals can therefore not be applied) and by using the Minimax Regret criterion as the preference functional. The results are simple and intuitive. This paper reports on an experimental test of his theory. The results show that some of his propositions (those relating to the ‘how’) appear to be empirically valid while others (those relating to the ‘when’) are less so.     

Savage vs. Anscombe-Aumann: an experimental investigation of ambiguity frameworks

The Savage and the Anscombe–Aumann frameworks are the two most popular approaches used when modeling ambiguity. The former is more flexible, but the latter is often preferred for its simplicity. We conduct an experiment where subjects place bets on the joint outcome of an ambiguous urn and a fair coin. We document that more than a third of our subjects make choices that are incompatible with Anscombe–Aumann for any preferences, while the Savage framework is flexible enough to account for subjects’ behaviors.

     

Individual vs. couple behavior: an experimental investigation of risk preferences

In this article, we elicit both individuals’ and couples’ preferences assuming prospect theory (PT) as a general theoretical framework for decision under risk. Our experimental method, based on certainty equivalents, allows to infer measurements of utility and probability weighting at the individual level and at the couple level. Our main results are twofold. First, risk attitude for couples is compatible with PT and incorporates deviations from expected utility similar to those found in individual decision making. Second, couples’ attitudes towards risk are found to be consistent with a mix of individual attitudes, women being more influent on couples’ preferences at low probability levels.     

Reputation and influence in charitable giving: an experiment

Previous experimental and observational work suggests that people act more generously when they are observed and observe others in social settings. However, the explanation for this is unclear. An individual may want to send a signal of her generosity to improve her own reputation. Alternately (or additionally) she may value the public good or charity itself and, believing that contribution levels are strategic complements, give more to influence others to give more. We perform the first series of laboratory experiments that can separately estimate the impact of these two social effects, and test whether realized influence is consistent with the desire to influence, and whether either of these are consistent with anticipated influence. Our experimental subjects were given the opportunity to contribute from their endowment to Bread for the World, a development NGO. Depending on treatment, “leader” subjects’ donations were reported to other subjects either anonymously or with their identities, and these were reported either before these “follower” subjects made their donation decisions. We find that “leaders” are influential only when their identities are revealed along with their donations, and female leaders are more influential than males. Identified leaders’ predictions suggest that are aware of their influence. They respond to this by giving more than either the control group or the unidentified leaders. We find mixed evidence for “reputation-seeking.”     

Aspirations as reference points: an experimental investigation of risk behavior over time

This paper examines the importance of aspirations as reference points in a multi-period decision-making context. After stating their personal aspiration level, 172 individuals made six sequential decisions among risky prospects as part of a choice experiment. The results show that individuals make different risky-choices in a multi-period compared to a single-period setting. In particular, individuals’ aspiration level is their main reference point during the early stages of decision-making, while their starting status (wealth level at the start of the experiment) becomes the central reference point during the later stages of their multi-period decision-making.     

Ambiguity attitudes and social interactions: An experimental investigation

This paper reports the results of experiments testing prevalence of non-neutral ambiguity attitudes and how these attitudes change as a result of interpersonal interactions. To address the first question we conducted experiments involving individual choice between betting on ambiguous and unambiguous events of the subject’s choice. We found that a large majority of subjects display ambiguity neutral attitudes, many others display ambiguity incoherent attitudes, and few subjects display either ambiguity-averse attitudes or ambiguity-seeking attitudes. To address the second question we designed a new experiment with a built-in incentive to persuade. We found that interpersonal interactions without incentives to persuade have no effect on behavior. However, when incentives were introduced, the ambiguity neutral subjects were better able to persuade ambiguity seeking and ambiguity incoherent subjects to adopt ambiguity neutral choice behavior and, to a lesser extent, also ambiguity averse subjects.     

Learning under uncertainty with multiple priors: experimental investigation

Journal of Risk and Uncertainty - We run an experiment to compare belief formation and learning under ambiguity and under compound risk at the individual level. We estimate a four-type mixture...     

Focal points in pure coordination games: An experimental investigation

This paper reports an experimental investigation of the hypothesis that in coordination games, players draw on shared concepts of salience to identify focal points on which they can coordinate. The experiment involves games in which equilibria can be distinguished from one another only in terms of the way strategies are labelled. The games are designed to test a number of specific hypotheses about the determinants of salience. These hypotheses are generally confirmed by the results of the experiment.     

Temporal discounting of gains and losses of time: An experimental investigation

This paper investigates “asymmetries” between non-monetary gains and losses in intertemporal choice. We considered gains and losses of spare/working time with respect to a reference duration defined in a working contract. Specifically, we elicited a behavioral model of intertemporal choice that accounts for a gain/loss-dependent discounting function and a reference-dependent utility. Additionally, we did not impose preference for the present (positive discounting) and allowed for both decreasing and increasing impatience. While our results are standard regarding the discount of money (our baseline treatment), our subjects heavily discounted gains of time. More patience was observed for losses of time and a sizable portion of subjects even exhibited negative discounting, i.e. they preferred to expedite losses of time. Our econometric estimations also reveal a much larger heterogeneity of behavior in terms of both utility and discounting for gains and losses of spare time as compared to money.     

At the nexus of risk and time preferences: An experimental investigation

Although many economic decisions involve choices between uncertain outcomes occurring at different times, most theoretical and empirical work restricts attention to one dimension or another. In this paper, we investigate whether both risk and time preferences can be represented by a single parameter. We collect experimental data to estimate models which allows for a disentanglement of risk and time preferences. Results reveal that the discounted expected utility model assumption, that risk and time preferences can be explained by a single parameter, is not supported by the data. The model estimates imply people prefer to delay the resolution of risky outcomes.     

The puzzle of cooperation in a game of chicken: an experimental study

The objective of this article is to investigate the impact of agent heterogeneity (as regards their attitude towards cooperation) and payoff structure on cooperative behaviour, using an experimental setting with incomplete information. A game of chicken is played considering two types of agents: ‘unconditional cooperators’, who always cooperate, and ‘strategic cooperators’, who do not cooperate unless it is in their interest to do so. Overall, our data show a much higher propensity to cooperate than predicted by theory. They also suggest that agent heterogeneity matters: the higher the proportion of ‘strategic cooperators’ in the population, the higher their probability to cooperate. Finally, our data confirm that higher rewards to cooperation (embedded in the payoff structure) tend to lower defection. Taken together, our results suggest that the subjects might be non-expected utility maximizers, dealing with both outcomes and probabilities in a non-linear manner.     

An experimental investigation of transitivity in set ranking

A decision under ‘complete uncertainty’ is one where the decision maker knows the set of possible outcomes for each decision, but cannot assign probabilities to those outcomes. This way, the problem of ranking decisions is reduced to a problem of ranking sets of outcomes. All rankings that have emerged in the literature in this domain imply transitivity. In the current study, transitivity is subjected to an empirical evaluation in two experiments, where subjects are asked to choose between sets of monetary consequences. After analysis with a Bayes Factor, very few violations of transitivity were found. It can be concluded that transitivity seems a plausible condition for the ranking of sets of monetary consequences.     

The role of social support when giving up drug abuse: a female perspective

This article contains a presentation and analysis of the results from two qualitative studies, which examined female drug abusers' everyday lives and the social support available to them within their close relationships. Both studies concerned women who were participating in work-training or treatment programmes and who were in the process of giving up drug abuse. The two main questions concerned the supply of social support from the women's social networks and whether the amount of support available or lack of support had any impact on the exit process. Social support within different relationships of the women's social networks is presented, as well as different types of professional social support and treatment. The results in relation to previous research about female drug abusers and social support from gender and class perspectives are discussed. Conclusions about three important factors when creating a new life after drug abuse are drawn.     

Probability and juxtaposition effects: An experimental investigation of the common ratio effect

Several theories explain the common ratio effect as a probability effect resulting from properties of individuals' preference orderings over probability distributions of consequences. In contrast, regret theory explains it as the result of changes in the juxtaposition of consequences in the action/state matrix. This article reports an experiment that allowed probability effects and juxtaposition effects to be separately identified for some common ratio problems, some of which involved real gains and others, real losses. The main finding is that changes in the juxtaposition of consequences have systematic effects on choices in the direction predicted by regret theory.University of East Anglia     

An experimental investigation of risk sharing and adverse selection

Does adverse selection hamper the effectiveness of voluntary risk sharing? How do differences in risk profiles affect adverse selection? We experimentally investigate individuals’ willingness to share risks with others. Across treatments we vary how risk profiles differ between individuals. We find strong evidence for adverse selection if individuals’ risk profiles can be ranked according to first-order stochastic dominance and only little evidence for adverse selection if risk profiles can only be ranked according to mean-preserving spreads. We observe the same pattern also for anticipated adverse selection. These results suggest that the degree to which adverse selection erodes voluntary risk sharing arrangements crucially depends on the form of risk heterogeneity.     

Does nurture matter: Theory and experimental investigation on the effect of working environment on risk and time preferences

Building upon the reference dependent preferences model, we develop a theoretical framework to examine the relationship between environment and preferences. To verify the model’s prediction, we use a combined artefactual field experiment and household survey data in Vietnam to investigate whether involvement is risky and has long-run targeted benefits, thereby causing fishermen to exhibit different risk and time preferences than workers in other occupations. Using a structural model approach, we integrate prospect theory and hyperbolic time discounting into a single framework, to simultaneously estimate and correlate the parameters of both risk and time preferences with other demographic variables. The key finding that fishermen are found to be less risk-averse and more patient than others asserts the theoretical prediction about the influence of the working environment on preferences.