Andrew Schotter

Asymmetric Tournaments, Equal Opportunity Laws, and Affirmative Action: Some Experimental Results

This paper assesses whether affirmative action programs and equal opportunity laws affect the output of economic agents. More precisely, we find that equal opportunity laws and affirmative action programs always benefit disadvantaged groups. Equal opportunity laws also increase the effort levels of all subjects and hence the profits of the tournament administrator (usually the firm). The effects of affirmative action programs depend on the severity of a groups cost disadvantage. When the cost disadvantage is severe, these programs significantly increase effort levels (and hence profits). The opposite is true when the disadvantage is slight.

Present-Bias, Quasi-Hyperbolic Discounting, and Fixed Costs

In this paper we elicit preferences for money-time pairs via experimental techniques. We estimate a general specification of discounting that nests exponential and hyperbolic discounting, as well as various forms of present bias, including quasi-hyperbolic discounting. We find that discount rates are high and decline with both delay and amount, as most of the previous literature. We also find clear evidence for present bias. When identifying the form of the present bias, little evidence for quasi-hyperbolic discounting is found. The data strongly favor instead a specification with a small present bias in the form of a fixed cost, of the order of

Understanding Overbidding: Using the Neural Circuitry of Reward to Design Economic Auctions

4 on average across subjects. With such a fixed cost the curvature of discounting is imprecisely estimated and both exponential and hyperbolic discounting cannot be rejected for several subjects.

Social Learning and Coordination Conventions in Intergenerational Games: An Experimental Study

We take advantage of our knowledge of the neural circuitry of reward to investigate a puzzling economic phenomenon: Why do people overbid in auctions? Using functional magnetic resonance imaging (fMRI), we observed that the social competition inherent in an auction results in a more pronounced blood oxygen level–dependent (BOLD) response to loss in the striatum, with greater overbidding correlated with the magnitude of this response. Leveraging these neuroimaging results, we design a behavioral experiment that demonstrates that framing an experimental auction to emphasize loss increases overbidding. These results highlight a role for the contemplation of loss in understanding the tendency to bid “too high.” Current economic theories suggest overbidding may result from either “joy of winning” or risk aversion. By combining neuroeconomic and behavioral economic techniques, we find that another factor, namely loss contemplation in a social context, may mediate overbidding in auctions.

The sealed-bid mechanism: An experimental study

We investigate the creation and evolution of conventions of behavior in “intergenerational games” or games in which a sequence of nonoverlapping “generations” of players play a stage game for a finite number of periods and are then replaced by other agents who continue the game in their role for an identical length of time. Players in generation t can offer advice to their successors in generation \documentclass{aastex} \usepackage{amsbsy} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{bm} \usepackage{mathrsfs} \usepackage{pifont} \usepackage{stmaryrd} \usepackage{textcomp} \usepackage{portland,xspace} \usepackage{amsmath,amsxtra} \usepackage[OT2,OT1]{fontenc} \newcommand\cyr{ \renewcommand\rmdefault{wncyr} \renewcommand\sfdefault{wncyss} \renewcommand\encodingdefault{OT2} \normalfont \selectfont} \DeclareTextFontCommand{\textcyr}{\cyr} \pagestyle{empty} \DeclareMathSizes{10}{9}{7}{6} \begin{document} \landscape

Perfect Equilibria in Budget Constrained Sequential Auctions: An Experimental Study

t+1.

Decision Making with Naïve Advice

\end{document} What we find is that word‐of‐mouth social learning (in the form of advice from laboratory “parents” to laboratory “children”) can be a strong force in the creation of social conventions.

On the dynamics and severity of bank runs: An experimental study

This paper presents the results of a set of experiments performed to test the properties of a bargaining mechanism (called the sealed-bid mechanism) used to structure bargaining under incomplete information. Our results indicate that the mechanism performs quite well. When using it, experimental subjects are able to capture a large portion of the potential gains from trade. In addition, the behavior of the subjects is qualitatively consistent with one particular equilibrium of the mechanism, namely, the one with linear bidding strategies. Finally, an experiment performed allowing experienced subjects to repeat the experiment for relatively large numbers of rounds, suggests that, with enough experience, other equilibria may appear, in which the subjects use “step function” strategies. Journal of Economic Literature Classification Numbers: 022. 026.