Tibor Neugebauer

Testing expected utility in the presence of errors

One possible conclusion from recent experimental research on decision making under risk is that observed behaviour can be reasonably accommodated by expected utility plus an error term. This conclusion implies that the violation rate of expected utility should decrease if errors are excluded. This article reports on an experiment which investigates this implication by presenting the same choice problems to subjects three times. The results show that the exclusion of errors leads to a significant reduction of the violation rate for most of the cases. This observation can be regarded as supporting evidence for expected utility plus error term. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

Within-Team Competition in the Minimum Effort Coordination Game

We report the results of an experiment on a continuous version of the minimum effort coordination game. The introduction of within-team competition significantly increases effort levels relative to a baseline with no competition and increases coordination relative to a secure treatment where the pay-off-dominant equilibrium strategy weakly dominates all other actions. Nonetheless, within-team competition does not prevent subjects from polarizing both in the efficient and the inefficient equilibria.

Does Competition Resolve the Free-Rider Problem in the Voluntary Provision of Impure Public Goods? Experimental Evidence

Publicly provided goods often create differential payoffs due to timely or spatial distances of group members. We design and test a provision mechanism which utilizes rank competition to mitigate free-riding in impure public goods. In our Rank-Order Voluntary Contribution Mechanism (Rank-Order-VCM) group members compete via observable contributions for a larger share of the public good; high contributors receive preferential access (a larger share), while low contributors receive restricted access (a lower share). In a laboratory experiment Rank-Order-VCM elicits median contributions equal to the full endowment throughout the finitely played games with constant groups. In the control treatment, with randomly assigned ranks, the contributions are significantly lower and decline over time. We thus provide evidence of rank competition, in situations where discriminatory access to public goods is possible, being efficiency enhancing.