We introduce an incentivized elicitation method for identifying social norms that uses simple coordination games. We demonstrate that concern for the norms we elicit and for money predict changes in behavior across several variants of the dictator game, including data from a novel experiment and from prior published laboratory studies, that are unaccounted for by most current theories of social preferences. Moreover, we find that the importance of social norm compliance and of monetary considerations is fairly constant across different experiments. This consistency allows prediction of treatment effects across experiments, and implies that subjects have a generally stable willingness to sacrifice money to take behaviors that are socially appropriate.
Although monitoring and regulation can be used to combat socially costly unethical conduct, their intended targets can often avoid regulation or hide their behavior. This surrenders at least part of the effectiveness of regulatory policies to firms’ and individuals’ decisions to voluntarily submit to regulation. We study individuals’ decisions to avoid monitoring or regulation and thus enhance their ability to engage in unethical conduct. We conduct a laboratory experiment in which participants engage in a competitive task and can decide between having the opportunity to misreport their performance or having their performance verified by an external monitor. To study the effect of social factors on the willingness to be subject to monitoring, we vary whether participants make this decision simultaneously with others or sequentially, as well as whether the decision is private or public. Our results show that the opportunity to avoid being submitted to regulation produces more unethical conduct than situations in which regulation is either exogenously imposed or entirely absent.
This chapter reviews research in which economic laboratory experiments are used to shed light on the processes that influence organizational formation and change. An organization, in these experiments, is represented by an abstract collective production activity that takes place in a controlled laboratory setting with incentivized human subjects. The studies typically attempt to identify factors that enhance efficient production and coordination. Our review focuses on studies that explore key features of how organizations originate, grow, and implement change, and the roles of communication and leadership in managing these processes. Our survey concludes that laboratory experiments of this type present a useful way to identify important factors that influence the relationship between individual behaviors and organizational performance at critical stages, which might otherwise be difficult to isolate outside the laboratory. Moreover, this research presents a valuable complement to traditional approaches in organizational research.
This paper develops a theory in which oligarchic ownership of land or other
natural resources may impede entrepreneurship in the manufacturing sector and
may thereby retard structural change and economic development. We show that,
due to oligopsony power of owners in the agricultural labor market, higher ownership
concentration depresses entrepreneurial investments by landless, creditconstrained
households, whose investment possibilities depend on the income
earned in the primary sector. We discuss historical evidence from Latin America,
India, Taiwan and South Korea which supports our theory.
Key words: Credit Constraints; Entrepreneurship; Oligopsony Power; Land
Concentration; Structural Change.
We consider a standard social choice environment with linear utilities and independent, one-dimensional, private types. We prove that for any Bayesian incentive compatible mechanism there exists an equivalent dominant strategy incentive compatible mechanism that delivers the same interim expected utilities for all agents and the same ex ante expected social surplus. The short proof is based on an extension of an elegant result due to Gutmann et al. (Annals of Probability, 1991). We also show that the equivalence between Bayesian and dominant strategy implementation generally breaks down when the main assumptions underlying the social choice model are relaxed, or when the equivalence concept is strengthened to apply to interim expected allocations.
In Bartling, Fehr and Schmidt (2012) we show theoretically and experimentally that it is optimal to grant discretion to workers if (i) discretion increases productivity, (ii) workers can be screened by past performance, (iii) some workers reciprocate high wages with high effort and (iv) employers pay high wages leaving rents to their workers. In this paper we show experimentally that the productivity increase due to discretion is not only sufficient but also necessary for the optimality of granting discretion to workers. Furthermore, we report representative survey evidence on the impact of discretion on workers’ welfare, confirming that workers earn rents.
Some of the best-known results in mechanism design depend criticallyon Myerson’s (Math Oper Res 6:58–73, 1981) regularity condition. For example,the second-price auction with reserve price is revenue maximizing only if the typedistribution is regular. This paper offers two main findings. First, a new interpretationof regularity is developed—similar to that of a monotone hazard rate—in terms ofbeing the next to fail. Second, using expanded concepts of concavity, a tight sufficientcondition is obtained for a density to define a regular distribution. New examples ofregular distributions are identified. Applications are discussed.
The paucity of pharmacokinetic data on testosterone gel formulations and absence of such data on estradiol administration in healthy young men constitutes a fundamental gap of knowledge in behavioral endocrinological research. We addressed this issue in a double-blind and placebo controlled study in which we applied a topical gel containing either 150mg of testosterone (N=10), 2mg of estradiol (N=8) or a respective placebo (N=10) to 28 healthy young men. We then assessed serum concentrations of estradiol and testosterone in one hour intervals up to seven hours after drug application, measured LH, SHBG and cortisol levels once at baseline and three, four as well as six hours after gel administration. Treatment with testosterone gel resulted in maximum total serum testosterone concentration three hours after administration and did not suppress LH, cortisol and SHBG levels at any time point. Administration of estradiol gel led to maximum estradiol serum concentration two hours after administration. There was no suppression of cortisol, SHBG and absolute LH levels. We report here, for the first time, pharmacokinetic data on both high dose testosterone and estradiol gel application in healthy young males. The proposed model will assist in the design of future studies that seek to establish causality between testosterone and estradiol gel administration and behavioral as well as neurophysiological effects.
The mispricing of marketing performance indicators (such as brand equity, churn, and customer satisfaction) is an important element of arguments in favor of the financial value of marketing investments. Evidence for mispricing can be assessed by examining whether or not portfolios composed of firms that load highly on marketing performance indicators deliver excess returns. Unfortunately, extant portfolio formation methods that require the use of a risk model are open to the criticism of time-varying risk factor loadings due to the changing composition of the portfolio over time. This is a serious critique, as the direction of the induced bias is unknown. As an alternative, we propose a new method and construct portfolios that are neutral with respect to the desired risk factors a priori. Consequently, no risk model is needed when analyzing the observed returns of our portfolios. We apply our method to a frequently studied marketing performance indicator, customer satisfaction. Using various ways of measuring customer satisfaction, we do not find any convincing evidence that portfolios that load on high customer satisfaction lead to abnormal returns.
