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Preference Uncertainty, Voter Participation and Electoral Efficiency: An Experimental Study

Jens Großer, Tamar Kugler and Arthur Schram
2003. Working Paper Series in Economics, University of Cologne, No.2.

We experimentally study the impact of preference uncertainty on voter turnout and electoral efficiency in a participation game. We find higher participation rates when the electorate isinformed about the level of support for various candidates than when group sizes remain uncertain. Moreover, despite higher free riding incentives majorities win more often than minorities. In aggregate, whether or not group sizes are known hardly affects welfare. Wealso distinguish between allied and floating voters and our data show that the lower turnout under uncertainty can be attributed to floating voters participating less. Finally, our results match better the predictions by quantal response (logit) equilibria than by (Bayesian-) Nash equilibria.

Preference Uncertainty, Voter Participation and Electoral Efficiency: An Experimental Study

Indirect Reciprocity in Cyclical Networks - An Experimental Study

Ben Greiner and Maria Vittoria Levati
2003. Journal of Economic Psychology, 26(5), 711-731.
A cyclical network of indirect reciprocity is derived organizing 3- or 6-person groups into rings of social interaction where the first individual may help the second, the second the third, and so on until the last, who in turn may help the first. Mutual cooperation is triggered by assuming that what one person passes on to the next is multiplied by a factor of 3. Participants play repeatedly either in a partners or in a strangers condition and take their decisions first simultaneously and then sequentially. We find that pure indirect reciprocity enables mutual cooperation, although strategic considerations and group size are important too.


Auktionen: Zu viel oder zu wenig geboten?

Veronika Grimm und Ulrich Schmidt
2003. Forschung und Praxis, 14, Behavioral Finance Group, University of Mannheim.

The Coevolution of Trust and Institutions in Anonymous and Non-anonymous Communities

Werner Güth and Axel Ockenfels
2003. In: Jahrbuch für Neue Politische Ökonomie, Manfred J. Holler, H. Kliemt, D. Schmidtchen and M. Streit (eds.), 20, 157-174. Tübingen: Mohr Siebeck.

Reputationsmechanismen auf Internet-Marktplattformen: Theorie und Empirie

Axel Ockenfels
2003. Zeitschrift für Betriebswirtschaft, 73(3), 295-315.

New Institutional Structures on the Internet: The Economic Design of Online Auctions

Axel Ockenfels
2003. In: Jahrbuch für Neue Politische Ökonomie, Manfred J. Holler, H. Kliemt, D. Schmidtchen and M. Streit (eds.), 20, 57-78. Tübingen: Mohr Siebeck.

Neue Experimente in Magdeburg

Axel Ockenfels
2003. In: 50 Jahre Hochschulstandort Magdeburg und 10 Jahre Otto-von-Guericke-Universität, K.E. Pollmann (ed.), 17-20. Halle a .d. Saale: Mitteldeutscher Verlag.

Hochrechnungen zur Darstellung der KWK und der Nah-/Fernwärmepotentiale unter Verwendung realistischer Wärmebedarfsstrukturen. Das Energiesystemmodell CEEM

Michael Bartels
2003. In: Aus Forschung und Entwicklung, Mitteilungen der Forschungsstelle und des Forschungsbeirates der AGFW, 8, 239-24.

Low Price Equilibrium in Multi-Unit Auctions:The GSM Spectrum Auction in Germany

Veronika Grimm, Frank Riedel and Elmar Wolfstetter
2003. International Journal of Industrial Organization, 21, 1557-1569.
The second generation GSM spectrum auction in Germany is probably the most clear cut example of a low price outcome in a simultaneous ascending bid auction. The present paper gives an account of the events, describes the auction rules and market conditions, and provides a game theoretic explanation of low price equilibrium in simultaneous, ascending bid auctions. In particular, it is shown that in perfect equilibrium, the efficient allocation is reached at prices that are at most one minimum increment higher than the minimum bid.

Fairness versus Efficiency: An Experimental Study of (Mutual) Gift Giving

Werner Güth, Hartmut Kliemt and Axel Ockenfels
2003. Journal of Economic Behavior and Organization, 50, 465-475.

Should I Organize the Conference? Cut-point Belief Reciprocity in an Experimental Public Goods Game with Alternating, Single Decision Makers

Jens Großer
2003. Working paper, CREED University of Amsterdam.

We study a public goods experiment where just one decision maker of a group (´organizer`) has to decide wether or not to provide the good. The others in the group (´visitors`) do not make a decision. We find that organizers update their beliefs about the next organizer providing the public good based on their own decisions in accordance with learning direction theory. This calls for a more sophisticated learning model than those of adaptive learning. Moreover, our results show that the additional information of reported beliefs about others providing the public good can explain decisions more accurate. We show that a reciprocal decision rule involving a cut-point belief of 50% performs astinishingly well in all treatments.

Should I Organize the Conference? Cut-point Belief Reciprocity in an Experimental Public Goods Game with Alternating, Single Decision Makers

The hot versus cold effect in a simple bargaining experiment

Jeannette Brosig, Joachim Weimann and Chun-Lei Yang
2003. Experimental Economics 6, 75-90.

The Online Recruitment System ORSEE - A Guide for the Organization of Experiments in Economics

Ben Greiner
2003. Papers on Strategic Interaction 10, Max Planck Institute for Research into Economic Systems, Jena.
We discuss several issues of organizing economic laboratory experiments like subject pool, recruitment, scheduling and show how we solved them with the help of the Online Recruitment System for Economic Experiments (ORSEE). This paper may serve as a manual for the system. A test system has been installed in order to visually support the reader while reading the manual.

Implementing Efficient Market Structure

Veronika Grimm, Frank Riedel and Elmar Wolfstetter
2003. Review of Economic Design, 7(4), 443-463.
This article studies the design of optimal mechanisms to regulate entry in natural oligopoly markets, assuming the regulator is unable to control the behavior of firms once they are in the market. We adapt the Clarke Groves mechanism, characterize the optimal mechanism that maximizes the weighted sum of expected social surplus and expected tax revenue, and show that these mechanisms generally avoid budget de cits and prevent excessive entry.

Bargaining under time pressure in an experimental ultimatum game

Matthias Sutter, Martin Kocher and Sabine Strauß
2003. Economics Letters, 81, 341-347.

We examine the influence of time pressure on bargaining behavior in an ultimatum game. Controlling for offers, rejection rates of responders are significantly higher under a tight than under a very weak time constraint. However, this effect vanishes with repetition.

Voting in EMU - An experimental study on institutional innovation and the role of communication in the Stability and Growth Pact

Bernd Irlenbusch, Ulrike Leopold-Wildburger, Jörg Schütze and Matthias Sutter
2003. Journal of Common Market Studies, 41, 645-664.

The Stability and Growth Pact (SGP) in the EU's Economic and Monetary Union (EMU) shall safeguard sound public finances in the EMU member states by allowing to punish countries with excessive deficits. We experimentally examine the voting procedure of the SGP and find that the institutional rules are not at all satisfactory. As an institutional innovation we test a procedure where fiscal sinners are excluded from voting as suggested by Otmar Issing. It turns out that this modification is surprisingly successful. In addition our study shows that the opportunity to communicate has a significant impact and tends to mitigate the pact's shortcomings.

The political economy of fiscal policy - An experimental study on the strategic use of deficits

Matthias Sutter
2003. Public Choice, 116, 313-332.

Field data on the strategic use of deficits to limit the budgetary scope of future governments are inconclusive about the effects of political polarization or a government's re-election probability on fiscal policy. Therefore, we designed a controlled experiment to examine the strategic use of deficits. Using a within-subjects design, we find that deficits rise with a higher degree of polarization and a lower re-election probability. However, in a between-subjects design neither polarization nor re-election probabilities have a systematic effect. We discuss the implications of our experimental results for empirical tests of the strategic use of deficits with field data.

Government strength, power dispersion in governments and budget deficits in OECD-countries. A voting power approach

Gerald Huber, Martin Kocher and Matthias Sutter
2003. Public Choice, 116, 333-350.

We test for the influence of government strength and dispersion of power among the parties of coalition governments on the size of annual debt accumulation through budget deficits in OECD-countries from 1970 to 1999. Government strength and power dispersion in coalition governments are measured by the Banzhaf index of voting power, respectively the standard deviation of Banzhaf indices of coalition parties. We believe that these are better-suited proxies than most of what has been applied so far. Government strength turns out to be insignificant. However, coalitions with equally strong partners run significantly higher deficits than coalitions with one dominating party.

On the effects of asymmetric and endogenous taxation in experimental public goods games

Matthias Sutter and Hannelore Weck-Hannemann
2003. Economics Letters, 79, 59-67.

In our experimental public-goods game subjects face exogenously or endogenously determined asymmetric minimum contributions. Endogeneity does not affect overall contributions. If asymmetric contribution levels are approved of endogenously, the disadvantaged subjects contribute significantly less than in case of exogenous determination.

Investment and bargaining in bilateral joint ventures - An experimental study of family decision making

Wener Güth, Radosveta Ivanova-Stenzel, Matthias Sutter and Hannelore Weck-Hannemann
2003. JITE - Journal of Institutional and Theoretical Economics, 159, 323-341.

Bilateral joint ventures, like marriage, are economically inspired by their prospects of labor division and specialization. However, specialization makes the partner who invests more in relation-specific qualifications more exploitable (hold up-problem). In a two-person experiment we study investment and bargaining behavior when specialization improves the chances to win a high prize. A low (full) joint venture relies on an intermediate (high) degree of specialization and low (high) costs in case of failure, e.g. a divorce. Results show that participants choose endogenously more efficient joint venture-types and accept minor attempts of exploitation when bargaining over the revenues of the joint venture.

Can the Stability and Growth Pact in EMU cause budget deficit cycles?

Richard Hule and Matthias Sutter
2003. Empirica, 30, 25-38.

We study whether the Stability and Growth Pact (SGP) in European Monetary Union (EMU) can induce budget deficit cycles. The SGP provides a framework for sanctioning EMU-members with excessive deficits. If a government's optimal deficit policy is above the deficit threshold which triggers penalties then the deficit will be higher with the SGP in force than without. The SGP may even induce deficit cycles in the sense that a government switches its optimal deficit between the threshold provided by the SGP and an even larger deficit.

Service production functions

Dietmar Lindenberger
2003. Journal of Economics - Zeitschrift für Nationalökonomie, 80(2), 127-142.
The paper derives production functions designed to model the evolution of service industries. The derivation is based on specifying the output elasticities of the factors according to differential equations and asymptotic technological boundary conditions in factor space. The derived functional forms incorporate labor, capital, energy, and technological parameters, whose time changes model innovation and structural change. The model is applied to the evolution of the German market-determined services 1960-1989.

Fairness in the mail and opportunism in the internet - A newspaper experiment on ultimatum bargaining

Werner Güth, Carsten Schmidt and Matthias Sutter
2003. German Economic Review, 4, 243-265.

On May 11, 2001, readers of the Berliner Zeitung were invited to participate in an ultimatum bargaining experiment played in the strategy vector-mode: Each participant chooses not only how much (s)he demands of the DM 1.000-pie but also which of the nine possible offers of DM 100, 200, ..., 900 (s)he would accept or reject. In addition, participants were asked to predict the most frequent type of behavior. Three randomly selected proposer-responder pairs were rewarded according to the rules of ultimatum bargaining and three randomly chosen participants of those who predicted the most frequent type of behavior received a prize of DM 500. Decisions could be submitted by mail, fax, or via the internet. Behavior is described, statistically analyzed, and compared to usual laboratory ultimatum bargaining results.

Energy, economic growth, and the German reunification

Reiner Kümmel, Jörg Schmid and Dietmar Lindenberger
2003: In: Advances in Energy Studies, S. Ulgiati et al (eds.), 199-124. Padova.


Taxation and the veil of ignorance - A real effort experiment on the Laffer curve

Matthias Sutter and Hannelore Weck-Hannemann
2003. Public Choice, 115, 217-240.

In this paper we address the role of the veil of ignorance on work incentives and tax rates in a two-person real effort experiment. We find that effort levels decrease with a rise in tax rates. Tax revenues peak at intermediate tax rates of 50% to 65%, supporting the existence of a Laffer curve in taxation. Tax authorities do not exploit their power to tax in full, which is compatible both with revenue maximizing but also fair behavior. Behind the veil of ignorance, subjects care more for efficiency and restrict the power to tax more than in case their position (taxpayer or tax authority) is fixed in advance.

The Effect of Communication Media on Cooperation

Jeannette Brosig, Axel Ockenfels and Joachim Weimann
2003. German Economic Review, 4(2), 217-241.