Experimental economists are leaving the reservation. They are recruiting subjects in the field rather than in the classroom, using field goods rather than induced valuations, and using field context rather than abstract terminology in instructions. We argue that there is something methodologically fundamental behind this trend. Field experiments differ from laboratory experiments in many ways. Although it is tempting to view field experiments as simply less controlled variants of laboratory experiments, we argue that to do so would be to seriously mischaracterize them. What passes for “control ” in laboratory experiments might in fact be precisely the opposite if it is artificial to the subject or context of the task. We propose six factors that can be used to determine the field context of an experiment: the nature of the subject pool, the nature of the information that the subjects bring to the task, the nature of the commodity, the nature of the task or trading rules applied, the nature

We introduce a parametric model of other-regarding preferences. The income distribution, other status considerations, and the kindness or unldndness of others' choices ("intentions") systematically affect a person's emotional state. The emotional state then determines the marginal rate of substitution between own and others' payoffs, and thus the person's subsequent choices.

Much of economic analysis stems from the joint assumptions of rationality and individual greed. Common sense and experimental and field evidence point to the limits of this

We examine, experimentally and theoretically, how communication within a partnership may mitigate the problem (highlighted in contract theory) of hidden action. What is the form and content of the communication? Which model of decision-making can capture the impact of communication? We consider free-form communication, measure beliefs (about actions and beliefs), and examine which motivational forces influence subjects. We find they harbor belief-dependent preferences that can be captured using psychological game theory. In particular, agents are influenced by guilt aversion, which suggests a theory of why and how communication influences behavior in which statements of intent and resulting expectations play a special role. This has bearing on how to understand partnerships and contracts.

Using experiments, we examine whether the decision to trust a stranger in a one-shot interaction is equivalent to taking a risky bet, or if a trust decision entails an additional risk premium to balance the costs of trust betrayal. We compare a binary-choice Trust game with a structurally identical, binary-choice Risky Dictator game offering a good or a bad outcome. We elicit individuals ’ minimum acceptable probabilities (MAPs) of getting the good outcome such that they would prefer the gamble to the sure payoff. First movers state higher MAPs in the Trust game than in situations where nature determines the outcome.

CentER and CentERdata is gratefully acknowledged. We thank Hanneke Dam, Marcel Das and Corrie Vis of

Several papers study the effect of trust by using the answer to the World Values Survey (WVS) question “Generally speaking, would you say that most people can be trusted or that you can’t be too careful in dealing with people? ” to measure the level of trust. Glaeser et al. (2000) question the validity of this measure by showing that it is not correlated with senders ’ behavior in the standard trust game, but only with his trustworthiness. By using a large sample of German households, Fehr et al. (2003) find the opposite result: WVS-like measures of trust are correlated with the sender’s behavior, but not with its trustworthiness. In this paper we resolve this puzzle by recognizing that trust has two components: a beliefbased one and a preference based one. While the sender behavior’s reflects both, we show that WVS-like measures capture mostly the belief-based component, while questions on past trusting behavior are better at capturing the preference component of trust.

Abstract. Understanding more about how the brain functions should help us understand economic behaviour. But some would have us believe that it has done this already, and that insights from neuroscience have already provided insights in economics that we would not otherwise have. Much of this is just academic marketing hype, and to get down to substantive issues we need to identify that fluff for what it is. After we clear away the distractions, what is left? The answer is that a lot is left, but it is still all potential. That is not a bad thing, or a reason to stop the effort, but it does point to the need for a serious reconsideration of what neuroeconomics is and what passes for explanation in this literature. I argue that neuroeconomics can be a valuable field, but not the way it is being developed and “sold ” now. The same is true more generally of behavioural economics, which shares

Abstract. This paper develops a theory of revealed preferences over one’s own and others’monetary payo¤s. We introduce “more altruistic than”(MAT), a partial ordering over preferences, and interpret it with known parametric models. We also introduce and illustrate “more generous than ” (MGT), a partial ordering over opportunity sets. Several recent discussions of altruism focus on two player extensive form games of complete information in which the …rst mover (FM) chooses a more or less generous opportunity set for the second mover (SM). Here reciprocity can be formalized as the assertion that an MGT choice by the FM will elicit MAT preferences in the SM and, furthermore, that the e¤ect on preferences is stronger for acts of commision than acts of ommision by FM. We state and prove propositions on the observable consequences of these assertions. Then we test those propositions using existing data from investment games with dictator controls and Stackelberg games and new data from Stackelberg mini-games. The test results provide support for the theory of revealed altruism.

Abstract not found