Theo Offerman

Value Orientations, Expectations and Voluntary Contributions in Public Goods

An experimental analysis of voluntary, binary contributions for step-level public goods is presented. Independent information is obtained on individual value orientation and expectations about the behavior of other subjects using incentive compatible mechanisms. The effects of increasing payoffs for the public good and of decreasing groupsize are investigated. Attention is focused on the determination of expectations, the use of expectations when deciding on behavior, and differences in expectations and behavior between individuals with different value orientations. Copyright 1996 by Royal Economic Society.

Hurting Hurts More Than Helping Helps

Previous experimental work suggests that both a dislike for an unequal division of payoffs and intentionality play a role to explain reciprocal behavior. This paper focuses on intentionality, and in particular on the question of whether negative intentionality matters more than positive intentionality. Experimental evidence obtained in the ‘hot response game’ suggests that this is the case: subjects are 67% more likely to reciprocate an intentional hurtful choice over an unintentional hurtful choice. Subjects are only 25% more likely to reciprocate an intentional helpful choice over an unintentional helpful choice. Additional evidence on the role of emotions helps explain this asymmetry between positive and negative intentionality. It is argued that a self-serving attributional style may be responsible for the observed phenomenon.

Public good provision and public bad prevention: The effect of framing.

Abstract An experimental analysis of voluntary, binary contributions for step-level public goods/bads is presented. Alternatively, the situation is presented as the provision of a public good or the prevention of a public bad. From a strategic point of view these presentations are equivalent. In early periods of the 20 round experiments, behavior is indeed observed to be similar in both cases, but after about 5 periods differences start to occur, that grow larger. A simple learning model is developed that replicates the patterns in the experiments. Extrapolation beyond 20 periods show that the pattern observed reflects an equilibrium selection.

Strategic behavior in public good games: when partners drift apart

Abstract In a public good experiment one group member is replaced by another after a prespecified number of periods. Evidence of both strategic (forward looking) and adaptive (backward looking) behavior is observed.

Efficiency in Auctions with Private and Common Values: An Experimental Study

This discussion has resulted in a publication in the American Economic Review , 2002, 92(3), 625-43. Auctions are generally not efficient when the objects expected value depends on private and common value information. We report a series of first-price auction experiments to measure the degree of inefficiency that occurs with financially motivated bidders. While some subjects fall prey to the winners curse, they weigh their private and common value information in roughly the same manner as rational bidders, with observed efficiencies close to predicted levels. Increased competition and reduced uncertainty about the common value positively affect revenues and efficiency. The public release of information about the common value also raises efficiency, although less than predicted.

Quantal response models in step-level public good games

The effect of adding noise to both an equilibrium model and a naive Bayesian model of behavior in step-level public good games is studied. Quantal response equilibria are derived for these games and a naive Bayesian quantal response function is presented. The models are fit for experimental data from such a game and compared. The results seem more promising for the naive Bayesian model than for the equilibrium model.

Cooperation in an Overlapping Generations Experiment

Abstract Recent theoretical work shows that folk theorems can be developed for infinite overlapping generations games. Cooperation in such games can be sustained as a Nash equilibrium. But, of course, there are other equilibria. This paper investigates experimentally whether cooperation actually occurs in a simple overlapping generations game. Subjects both play the game and formulate strategies. Our main finding is that subjects fail to exploit the intertemporal structure of the game. Even when we provided subjects with a recommendation to play the grim trigger strategy, most of the subjects still employed safe history-independent strategies. Journal of Economic Literature Classification Numbers: C72, C92, D90.

Imitation and luck: an experimental study on social sampling

In this paper, we present the results of two experiments on social sampling, where people make a risky decision after they have sampled the behavior of others who have done exactly the same problem before them. In an individual decision making problem as well as in the takeover game, the simple behavioral rule of imitating the best appears to be a robust description of behavior despite the fact that it is not optimal in any of the experimental tasks. Social sampling makes people look more risk seeking than the people who do not have the opportunity to sample.

Winner's curse without overbidding

Abstract We report the results of a series of second-price auction experiments where each bidders signal is given by a normally distributed value plus a normally distributed error. While bidders’ values differ in one treatment they are the same in another, which allows for a direct test of the “winners curse” irrespective of confounding factors. Bidders may also fall prey to a “news curse” when they do not sufficiently take into account that signals and errors are correlated. We find that the effects of the winners curse are mitigated by a news curse and loss or risk aversion.

Beliefs and Decision Rules in Public Good Games

Part I: Introduction. 1. Experimentation in the Social Sciences. 2. Theoretical Foundation. 3. Basic Experimental Tools. Part II: Experimental Results. 4. Decision Rules. 5. Beliefs and Learning. Part III: Evaluation of the Results. 6. Towards a Positive Theory of Public Good Games. Appendix A: Mathematical Proofs. Appendix B: Experimental Instructions. References. Subject Index. Author Index.