Abdolkarim Sadrieh

Adaptive Learning versus Punishment in Ultimatum Bargaining

Adaptive learning and punishment are highly prominent competing explanations for ultimatum game behavior. We report on an experiment that considers each theory in stand-alone form, so that one does not rely on the other in any substantial way. Our data exhibits patterns for which punishment can account but learning by itself cannot. Initial play varies substantially- and systematically-across variations on the ultimatum game, and this leads to differences in later play as well. Hence a complete theory of ultimatum game behavior will have to predict initial conditions as well as describe the influence of repeated play.

An Intergenerational Common Pool Resource Experiment

Many renewable resources are in intergenerational common pools, exploited by one generation after another. In our experiment, the stock available to each generation depends on the extent of exploitation by previous generations and on resources growth rate, which is either slow or fast. Subjects show altruistic restraint in exploitation, but not enough to achieve the social optimum. The presence of an intergenerational link induces subjects - both in slow and in fast - to expect less resource exploitation from each other than subjects expect in a single generation control. On average, expectations are too optimistic, especially in slow, where intended free-riding behavior is predominant.

An Experimental Test of Design Alternatives for the British 3G / UMTS Auction

In spring 2000, the British government auctioned off licences for Third Generation mobile telecommunications services. In the preparation of the auction, two designs involving each a hybrid of an English and a sealed-bid auction were suggested by the government: a discriminatory and a uniform price variant. We report an experiment on these two designs, and also compare the results to those with a pure English auction. Both hybrids are similar in efficiency, revenue differences disappear as bidders get experienced. Compared to the discriminatory format, the pure English auction gives new entrants better chances.

Cross-racial Envy and Underinvestment in South Africa

Trust games are employed to investigate the effect of heterogeneity in income and race on cooperation in South Africa. The amount of socio-economic information available to the subjects about their counterparts is varied. No significant behavioural differences are observed, when no such information is provided. However, when the information is available, it significantly affects individual trust behaviour. The low income subjects from both racial groups invest significantly less in partnerships with the high income subjects of the other racial group than in any other partnership. We attribute this behaviour to cross-racial envy, which on aggregate may lead to substantial underinvestment in the economy.

Collusion under Yardstick Competition: An Experimental Study

The effectiveness of relative performance evaluation schemes, such as yardstick competition, can be undermined by collusion. The degree to which the regulated agents manage to collude will be affected by the particulars of the scheme. We hypothesize that in a repeated game setting schemes will be more prone to collusion the smaller are the rents to the agents in case they behave non-cooperatively. We illustrate the relevance of this hypothesis by means of an economic experiment in which we compare the efficiency of two performance evaluation schemes.

Trust and Trustworthiness in Anonymous Virtual Worlds

Virtual communities like Second Life (SL) represent an economic factor with increasing potential, but may induce behavior that deviates from real-world experience. This article introduces a new experimental design that is based on the trust game (Berg, Dickhaut, & McCabe, 1995), but eliminates the problem of multiple virtual identities. One treatment of the experiment in the virtual world SL was conducted and the results compared to the First Life (FL) control treatment, which was conducted on a university campus. In SL, significantly lower investment levels were found, but significantly higher average returns were found than in the FL treatment or in the literature. It is conjectured that the disparity between trusting and trustworthy behavior is a sign that the social structure in SL is still evolving. It seems plausible that the trustors in a young and developing society cautiously test the extent of trustworthiness, whereas the trustees strategically invest in levels of trustworthiness that are higher than in settled societies to build up a trustworthy environment.

Regular ArticleAdaptive Learning versus Punishment in Ultimatum Bargaining

Adaptive learning and punishment are highly prominent competing explanations for ultimatum game behavior. We report on an experiment that considers each theory in stand-alone form, so that one does not rely on the other in any substantial way. Our data exhibits patterns for which punishment can account but learning by itself cannot. Initial play varies substantially- and systematically-across variations on the ultimatum game, and this leads to differences in later play as well. Hence a complete theory of ultimatum game behavior will have to predict initial conditions as well as describe the influence of repeated play.

Sudden Termination Auctions - An Experimental Study

The design of online markets has become a major issue due to the capability of operators to implement almost any set of market rules overnight. With this study we contribute to the literature of auction market design by presenting a theoretical and experimental analysis of sudden termination auctions. Our main focus is on the candle auction that has a positive termination probability at any time in the course of the auction. Candle auctions prove to be a much faster, but equally efficient alternative to standard hard close auctions.

The Biased Effect of Aggregated and Disaggregated Income Taxation on Investment Decisions

In a laboratory experiment that allows us to vary the taxation method while keeping the financial outcomes constant, we find clear evidence that aggregated income taxation (comparable to profit taxation) with complete loss deduction induces a sustained bias towards more risky investment decisions, while disaggregated income taxation (comparable to a transaction taxation with loss offset) does not. We suggest that this bias may be exploited to increase the volume of private investments by choosing aggregated income taxation if investors are (too) risk-averse, and to decrease the volume and the risk by choosing disaggregated income taxation if investors are (too) risk-seeking.

The Desire to Influence Others

We introduce the give-or-destroy game that allows us to fully elicit an individual s social preference schedule. We find that about one third of the population exhibits both pro-social and anti-social preferences that are independent of payoff comparisons with those who are affected. We call this type of preference a desire to influence others. The other two thirds of the population consist to almost equal parts of payoff maximizers and pro-socials. Furthermore, we find that full information and experimenter demand may increase the extent of pro-social preferences, but do not affect the extent of anti-social preferences or the distribution of social types in the population.