Do short-term laboratory experiments provide valid descriptions of long-term economic interactions? A study of Cournot markets

Normann, Hans‐Theo; Requate, Till; Waichman, Israel

doi:10.1007/s10683-013-9373-9

Cited by 22 publications

(12 citation statements)

References 51 publications

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“…Another concern of our manipulation is that online data might be of limited quality due to a lower degree of scrutiny compared to the laboratory (Anderhub et al 2001). Recent experimental studies conclude that online-based and lab-based inferences are equally reliable provided that similar procedures are used in both settings (Arechar et al 2018;Hergueux and Jacquemet 2015;Normann et al 2014). As detailed in Appendices A and B of the supplementary material, we invested much effort to address this concern and relied on the same subject pool and similar procedures in both treatments.…”

Section: Limitations Of Our Studymentioning

confidence: 99%

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Reactions to (the absence of) control and workplace arrangements: experimental evidence from the internet and the laboratory

Schmelz

Ziegelmeyer

2020

Exp Econ

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This paper reports an experiment designed to assess the influence of workplace arrangements on the reactions to (the absence of) control. We compare behavior in an Internet and a laboratory principal-agent game where the principal can control the agent by implementing a minimum effort requirement. Then the agent chooses an effort costly to her but beneficial to the principal. Our design captures meaningful differences between working from home and working at the office arrangements. Online subjects enjoy greater anonymity than lab subjects, they interact in a less constrained environment than the laboratory, and there is a larger physically-oriented social distance between them. Control is significantly more effective online than in the laboratory. Positive reactions to the principal's choice not to control are observed in both treatments, but they are significantly weaker online than in the laboratory. Principals often choose the highest control level, which maximizes their earnings.

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Section: Limitations Of Our Studymentioning

confidence: 99%

“… 2018 ; Hergueux and Jacquemet 2015 ; Normann et al. 2014 ). As detailed in Appendices A and B of the supplementary material, we invested much effort to address this concern and relied on the same subject pool and similar procedures in both treatments.…”

Section: Introductionmentioning

confidence: 99%

Reactions to (the absence of) control and workplace arrangements: experimental evidence from the internet and the laboratory

Schmelz

Ziegelmeyer

2020

Exp Econ

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“…The analyses on the production quantity adjustments and SCR modeled temporal correlation of the decisions (see e.g. Normann et al, 2014;Zwick and Rapoport, 2002) using an AR(p) withinsubject correlation structure, where p denotes the lag index and φ 1 , …, φ p are the parameters to be estimated.…”

Section: Resultsmentioning

confidence: 99%

“…Because the game we use is indefinitely repeated, any outcome that has better payoffs for both players than in the CournotNash equilibrium can be supported as the subgame-perfect equilibrium of the game if the players are patient enough (Schmalensee, 1988). Many experiments with this game have found that the players aim for the symmetric joint-optimum (Huck et al, 2001(Huck et al, , 1999Normann et al, 2014). …”

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confidence: 99%

Emotions in a repeated Cournot duopoly game: A psychophysiological experiment.

Leppänen¹,

Hämäläinen²

2017

Journal of Neuroscience, Psychology, and Economics

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The reason why cooperation occurs in repeated games has remained a puzzle. Earlier literature has maintained that reciprocal behavior that gives rise to cooperation can be entirely self-regarding. However, experimental evidence shows that reciprocal behavior is otherregarding in many one-shot games. This other-regarding behavior is believed to have an emotional foundation. We hypothesized that emotions play a role in reciprocal behavior in repeated games as well. We tested this hypothesis by measuring the psychophysiological correlates of emotions from pairs of subjects as they played a repeated Cournot duopoly game.The players, who were in different rooms and remained anonymous to each other, made adjustment decisions to their production quantities that determined their payoffs in each round.Autonomic nervous system arousal was activated when the payoffs of both players decreased in a round, whereas positive affect was expressed when the payoffs of both players increased in a round. The disgust expression was related to a player's own one-sided increase in the payoff.Anger was expressed occasionally but less frequently when the outcome was the player's ideal outcome. An upwards adjustment of the production quantity was observed when the other player did not cooperate. This had the effect of decreasing the payoffs of both players and this was also related to an increase in the level of arousal. Our results provide evidence on how emotions are present in reciprocal behavior in a repeated social dilemma game. The results challenge recent behavioral research that advocates self-regarded motivations of cooperation in repeated games. What is the role of emotions in cooperation in repeated games? Mounting experimental evidence from one-shot games shows that cooperative behavior is related to emotions (Camerer and Fehr, 2004;Camerer et al., 2005;Fessler and Haley, 2003;Haidt, 2007;Loewenstein et al., 2008;Phelps, 2009;Sanfey, 2007) despite of the fact that in one-shot games the players interact anonymously and expect to never meet again in the same situation. Research in behavioral economics has explained cooperation in one-shot games by the players' preferences for equity and fairness and the reciprocal punishment and reward strategies that arise from these preferences (Boyd et al., 2010;Fehr and Fischbacher, 2002;Sobel, 2005). The concepts of emotions and other-regarding preferences are two sides of the same coin. For example, unfair offers in the Ultimatum Game elicit the negative emotions of anger (Pillutla and Murnighan, 1996), sadness (Harlé and Sanfey, 2007), and disgust (Chapman et al., 2009).The findings of emotional activity in cooperation in one-shot games cannot be generalized to repeated games. This is because of the Folk Theorem arguments that are most often used to explain behavior in repeated interaction. According to the Folk Theorem, reciprocal punishments and rewards that typically demonstrate other-regarding behavior in one-shot games can be part of an adaptive and rational response strategy...

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“…This is particularly true when comparing prosocial behavior in laboratory tasks to behavior in the real world. Some studies find significant correlations (Camerer ; Dai, Galeotti, and Villeval ; Karlan ; Normann, Requate, and Waichman ), but others report remarkably robust null effects across a wide range of tasks and measures (Carpenter and Seki ; Galizzi and Navarro‐Martinez 2019; Stoop, Noussair, and van Soest ). In many studies that do report a significant relationship, the correlation is often noticeably smaller than test‐retest correlations when an individual completes the same task multiple times.…”

Section: Introductionmentioning

confidence: 99%

Cooperation in Public Goods Games Predicts Behavior in Incentive‐matched Binary Dilemmas: Evidence for Stable Prosociality

2019

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We report the results of an experiment in which subjects completed second mover public goods game tasks and second mover binary social dilemma tasks. Each task was completed under three different incentive structures which were matched across tasks. The use of nonlinear incentive structures, along with a novel categorization method, allowed us to identify behavioral subtypes that cannot be distinguished using conventional linear incentive structures. We also examined how well behavior could be predicted across tasks. Subjects' average conditional cooperation levels showed significant cross‐task predictability and stability. However, almost a third of responses (28%) demonstrated unambiguous preference reversals across tasks. We argue that prosociality is best described as an individual‐level trait, similar to risk aversion in choice under risk. (JEL C7, C91, H41)

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Do short-term laboratory experiments provide valid descriptions of long-term economic interactions? A study of Cournot markets

Cited by 22 publications

References 51 publications

Reactions to (the absence of) control and workplace arrangements: experimental evidence from the internet and the laboratory

Reactions to (the absence of) control and workplace arrangements: experimental evidence from the internet and the laboratory

Emotions in a repeated Cournot duopoly game: A psychophysiological experiment.

Cooperation in Public Goods Games Predicts Behavior in Incentive‐matched Binary Dilemmas: Evidence for Stable Prosociality

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