Quarterly Journal of Economics, Forthcoming, February 2001.
In this work we test the hypothesis that status affects economic outcomes in a market. Our results are consistent with experiments in social psychology that show a positive reward for status in a situation where a fixed amount of money must be allocated over a group of subjects with different characteristics. However, our experiments are more convincing because, unlike the psychology experiments, our subjects' decisions affect their earnings: decisions are salient in money. We speculate that the effect of "real" status in markets may be quite important.
Psychology and Marketing, vol 13, 381-405, 1996.
Status is an important motivator of human behavior. This paper examines the extent to which people are willing to adjust their negotiating behavior in response to their opponents status level. The results of a series of experiments on the effect of status on student subjects negotiating behavior are reported. The data suggest that status affects human interactions in a positive way, which causes people to seek status. It is, therefore, a successful advertising strategy to associate high status with consumption of a product.
This paper adds to the body of evidence on positive game theory by examining the effects of belonging to a recognizable group on invidual behavior in ultimatum games. In or experiments, subjects were divided into two groups based on scores on a trivia quiz. On one group we confer "status" by giving them a star which they wear during the experiment. We find that subjects from the "no star" group were offered significantly lower shares of the available reward than the "star" groups when subjects' winnings were not in cash. These results dissipate when cash rewards are used. We conclude that subjects discriminate when the costs are low, but not when discrimination is costly.
While experimental economic data is fraught with fewer statistical nightmares than field data, there are still some bothersome problems. One lies in the fact that the (convenience) assumptions which are typically made about the distribution of the data are definitely untrue, even more so when the number of observations is small. A second is that data are time consuming and expensive to collect t so that there is great incentive to keep the number of observations small. A researcher who is troubled by the aforementioned problems has little analytical basis on which to judge optimal sample size.
This paper presents experimental evidence on the private provision of a public project produced by a coalition of economic agents in the population. A double oral auction asset market is employed as the trading institution for the exchange of the assets that are necessary to produce the project. The experimental environmnents differ by rules about who can produce the good, information conditions, and parameters. We find that individually-rational, efficient outcomes are more likely in some environments than others, and suggest that these findings may have implications for the design of mechanisms to encourage the private provision of public projects.
The classroom exercise is one in which students trade assets of uncertain value in a sequence of market periods. Assets pay one-dollar dividends at the end of each period, but once the dividend is paid, there is fixed probability that the asset will be destroyed. Dividends and probabilities are chosen so that the fundamental value is constant over time. Speculative bubbles can be caused by divergent expectations about other traders' valuations of the asset. This exercise provides an interactive framework that facilitates discussions of discounting, rational expectations, and backward induction.
RESEARCH IN EXPERIMENTAL ECONOMICS, R. Mark Isaac, ED., volume 6, 239-292, 1996.
Experimental work in economics relies on subjects drawn from many disparage groups called "subject pools." Researchers have observed that subjects drawn from different pools will not necessarily make similar choices in experiments. Most journals now insist that researchers be very specific about the subject pool, recruitment procecure and related issues to aid readers in understanding and replicating the research. Another effect is that experimentalists wonder to what extent their choice of subject pool drives their experimental results. This work analyzes the experimental literature for evidence of subject pool effects and draws conclusions about when they are likely to occur.
ORGANIZATIONAL BEHAVIOR AND HUMAN DECISION PROCESSES 48, 1-22, 1991.
Recent research on bilateral bargaining behavior under uncertainty has found that, under asymmetric information, negotiators develop inferior bidding strategies because they fail to incorporate valuable information about the decisions of their opponents. This results in negative profits, or the "winner's curse." The present study provided subjects multiple opportunities for feedback as well as experience in both negotiator roles. Neither learning opportunity eliminates the winner's curse.
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