Todd L. Cherry

Hardnose the Dictator

Lab experiments have gone to extremes to isolate and repress other-regarding behavior in extensive-form bargaining games, with limited success. Consider, for example, Elizabeth Hoffman et al.’s (1996; hereafter HMS) Anonymous Dictator game. This game controls self-interested strategic behavior by giving a person complete control over the distribution of wealth, and complete anonymity from all others including the experimenter. While theory predicts people with complete control and complete anonymity will offer up nothing to others, in fact they still share the wealth in about 40 percent of the observed bargains. Such other-regarding choice is another example in which individual behavior differs from that predicted by subgame perfection, and supports the call for a new “behavioral game theory” (Colin F. Camerer, 1997). Herein we extend the work of HMS to reveal a setting in which 95 percent of dictators follow game-theoretic predictions. In contrast to previous studies, our design has people bargain over earned wealth rather than unearned wealth granted by the experimenter. We argue that just as rewards must be salient (Kyung Hwan Baik et al., 1999), the assets in a bargain must be legitimate to produce rational behavior. Our results support this conjecture. Dictators bargaining over earned wealth were more selfinterested than observed in previous studies; and when they had complete anonymity, selfless behavior is essentially eliminated.

Learning to Accept in Ultimatum Games: Evidence from an Experimental Design that Generates Low Offers

Focusing on responder behavior, we report panel data findings from both low and high stakes ultimatum bargaining games. Whereas Slonim and Roth (1998) find that offers are rejected fairly equally across rounds in both low and high stakes games, we find that learning does take place, but only when there is sufficient money on the table. The disparate results can be reconciled when one considers the added power that our experimental design provides-detecting subtle temporal differences in responder behavior requires a data generation process that induces a significant number of proportionally low offers.

Mental accounting and other-regarding behavior: Evidence from the lab

This paper uncovers a key determinant of the other-regarding behavior that permeates bargaining experiments. Examining a one-shot dictator game that has the first-mover dictate the split of an amount of money, dictators acting over earned money exhibited self-interested behavior in 76% of bargains. This result stands in stark contrast to the baseline experiment in which dictators acting over allocated money displayed self-interested behavior in only 26% of bargains. Self-interested behavior appeared at greater levels using an earnings protocol than any previous variation of the dictator game. While the distinction between earned and unearned wealth is likely context specific, the earnings protocol may be an important option for future laboratory research. Specifically, the earnings protocol may provide a closer correspondence between the laboratory and individual choices over personal assets.

Crashing the Party: An Experimental Investigation of Strategic Voting in Primary Elections

The effect of primary formats on voting behavior and candidatefortune has been the topic of recent political, academic andlegal arguments. We address these debates by examining voterbehavior and election outcomes across primary systems in thelaboratory. While we find the rate of strategic voting isgenerally low, the rate varies across primary formats and thepotential impact on election outcomes differs fromconventional perceptions. Results suggest that more openprimary systems generate more strategic voting, but contraryto conventional wisdom, more open systems do not necessarilylead to more moderate election winners.

Unobserved heterogeneity bias when estimating the economic model of crime

Using unique and unpublished panel data from selected US cities, the paper investigates the consequences of ignoring unobserved heterogeneity in the unit of observation when estimating the economic model of crime. Results confirm that neglecting to control for unobserved heterogeneity overstates the ability of sanctions to deter criminal activity. Further, this upward bias is found to vary significantly across crime types. Interestingly, heterogeneity is insignificant in the tightly reported crimes of murder and auto-theft while being significant in assault, robbery, burglary and larceny where individuals and police have greater discretion in reporting.

Endogenous Timing in a Gaming Tournament

This paper examines the theoretical background and actual behavior in a gaming tournament with endogenous timing where a person has more incentive, structure, and time to form a strategy. The baseline treatment suggests that subgame perfection is a reasonable predictor of behavior –- subjects made 170 of 208 theoretically predicted choices of best actions, with the majority of mistakes made in timing choices by the players who did not survive the cut to the second round. Four sensitivity treatments established that the design feature that lead to more predictable behavior was time to think –- 745 of 960 correctly predicted decisions with more time versus 595 of 960 with less time. A random effects Probit model suggests that the key design feature that closed the gap between predicted and observed behavior was not necessarily the non-linear payoffs created by the tournament design, but rather that the key was providing people with more time to think about their strategy.

Climate Change Impacts On Crop Yield: Evidence From China

When estimating climate change impact on crop yield, a typical assumption is constant elasticity of yield with respect to a climate variable even though the elasticity may be inconstant. After estimating both constant and inconstant elasticities with respect to temperature and precipitation based on provincial panel data in China 1980-2008, our results show that during that period, the temperature change contributes positively to total yield growth by 1.3% and 0.4% for wheat and rice, respectively, but negatively by 12% for maize. The impacts of precipitation change are marginal. We also compare our estimates with other studies and highlight the implications of the inconstant elasticities for crop yield, harvest and food security. We conclude that climate change impact on crop yield would not be an issue in China if positive impacts of other socio-economic factors continue in the future.

Do Policymakers Locate Prisons for Economic Development

While public goods can provide an overall increase in welfare, ‘inferior’ public facilities produce externalities specifically impacting host locations. Heterogeneous jurisdictional attributes, however, can cause net social benefits to vary across potential host communities. Using data from a unique public works project, this paper empirically investigates whether policymakers consider heterogeneous conditions when locating prison facilities. Results indicate that policymakers follow a process that maximizes net social benefits by systematically delegating such facilities to lagging communities; thereby potentially using the public facilities for economic development. Additionally, results suggest that policymakers properly consider existing infrastructure and agglomeration economies in the siting mechanism.

Are preferences for skewness fixed or fungible

Are individual preferences for skewness fixed or fungible? Using preference reversals as a case study, we find evidence that preferences remained stable as reversals disappear due to arbitrage across both market-like and non-market contexts.

Financial penalties as an alternative criminal sanction: Evidence from panel data

This paper explores whether financial penalties can be a viable alternative to traditional sanction methods. Given that the annual cost of operating jails and prisons is approximately