23 August 2011

Notes from experimental economics

I went to Tiber-X -- a very good conference -- last week and caught up on the latest research. Although I only heard talks in italics, these results [abstracts PDF] were interesting:

Vastfjall: People give more aid to one "needy" child than to 2 or more. Lots of potential reasons for this (1:1 relationship, not overwhelmed with "need," no "friends" around who can help child). Reminders that others need help can reduce giving to the one child.

Bolderdijk: When presented with an opportunity to "fill their tires for free" to either (a) save the planet or (b) save $, people choose (a). This research fits my 20/80 view of motivations (20% of people save water b/c it's "right;" 80% will do so if they save $) b/c people acting on (a) did not think of the cost/benefit of air fills (time and hassle vs gas savings); they thought about "doing the right thing" no matter the time cost or savings.

van der Weele: People who do not care about society prefer to remain ignorant (preventing cognitive dissonance).

Chosen-Hillel: People are jealous of others getting a better deal when they just "find out about it" but not when they help them get the better deal (having a role via "agency").

Bugelmayer: Children with higher cognitive skills are more spiteful, especially boys, who may be manifesting their competitive side.

Tan: A third-party enforcer reduces punishment (and thus cooperation) among two players. This result matters in the debate between regulated (third party) and common law (harmed party brings suit) enforcement of property rights.

Ponitzsch: People pay more for public goods when they can get a private good out of it (e.g., charity auctions, Project |Red|, etc.)

Nardotto: People who send themselves reminders to use the gym use it more.

Koehler: People paying per minute on the phone OR a fee that rises with minutes but hits a maximum are more nervous than people who pay a flat fee for unlimited minutes.

Evers: People who have more of a "set" of items are willing to pay more to complete the set (Remember Time Life books? My god, what a scam.)

Snir: $x.99 prices (a psychological price point) are more likely to be used [by US supermarkets] when raising prices, since people are less likely to notice the increase (compared to $x.97 or $x.91). I guess we're not going to see the end of gasoline @ $4.219 anytime soon. Oh well.

Inbar: People are blamed when they take an action that "benefits on another's misfortune" -- even when they have NOTHING to do with it. Hear that short sellers? price gougers? Witches?

Oh, and there were talks by some stars:

Jim Andreoni explained that people prefer the certainty of $50 over a 90% chance of $50 and 10% chance of $100. This violation of "first order stochastic dominance" appears to illustrate nervousness about risk.

Dan Ariely gave a GREAT talk about cheating [short video]. Big idea: there are very few BIG cheaters (Madoff) buy very MANY small cheaters (speeding a little? tax returns? earmarks?). These cheating results are interesting for my idea of households self-declaring their headcount for per capita metering (they will cheap less if they sign the TOP of the page, pledging to be honest). Ariely also found that cheating losses double when people ask for something WORTH money instead of money. Hear that lobbyists?

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