Working Papers

"Strategic thinking in public goods games with teams," with Brock Stoddard. Revise and resubmit, Journal of Public Economics.

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We experimentally investigate motives for contribution by studying team play in public goods games. Subjects are matched into two-person teams, and each team makes a joint decision in each period. We compare teams with individuals under Partners and Strangers matching, using team chat logs to examine how subjects reason about the game. Teams and individuals make similar overall contributions. However, initial contribution is higher and endgame effects are more pronounced for teams. We find that contribution is primarily driven by repeated game effects and limited backward induction. We also find evidence of confusion, but surprisingly little evidence of pro-social preferences.

"Strategic corporate hedging," with Arzé Karam and Matthias Pelster. Submitted.

We consider a dynamic multi-period framework of a Cournot duopoly with an option to engage in financial risk management and a real option to delay supply. The option to engage in financial risk management allows players to manage risk before uncertainty is realized, while the real option allows them to manage risk after uncertainty is realized. Due to the real option, our multi-period setting is not a mere repetition of a single-shot interaction. In such a setting, firms face a strategic dilemma: they must weigh the advantages of dealing with their risk exposure against the disadvantages of higher competition. In equilibrium, we show that firms consider the strategic impact of the hedging component, which enhances market competition. Our experimental results provide supportive evidence of this theory by suggesting that the simultaneous hedging device significantly increases competition and negates duopoly profits.

Publications

"Social preferences and cooperation in simple social dilemma games," with Arzé Karam and Ryan J. Murphy. Journal of Behavioral and Experimental Economics, forthcoming.

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We use a laboratory experiment to examine the role of social preferences in simple one-shot social dilemma games by comparing play with and without a human counterpart. We find that cooperation rates are slightly lower without a human counterpart in all games we consider. However, the difference is small and statistically insignificant, suggesting that social preferences are not the primary driver of cooperation in one-shot social dilemma games.

"Rent-seeking and competitive preferences." Journal of Economic Psychology, forthcoming. (Special Issue: Understanding Behaviour in Contests: Views from Economics, Psychology and Biology.)

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In this experiment, I examine the extent to which competitive social preferences can explain over-bidding in rent-seeking contests. The Human treatment is a standard two-player contest. In the Robot treatment, a single player bids against a computerized player, eliminating potential social preference motives. The results show no difference in bids between treatments at the aggregate level. Further analysis shows evidence of heterogeneous treatment effects between impulsive and reflective subjects. Moreover, impulsive subjects are more likely than reflective subjects to deviate qualitatively from the shape of the theoretical best response function.

"Estimating the effects of brownfields and brownfield remediation on property values in a New South city," with Peter M. Schwarz, Gwen Gill, and Alex Hanning. Contemporary Economic Policy, 35(1): 143-164. January 2017.

Using data from Charlotte, NC, a New South city without a legacy of heavily contaminated properties, we find unremediated brownfields – typically former industrial properties believed to have modest contamination -- to have no effect on residential sales values, but proposed cleanup and actual remediation have positive, substantial, and significant effects especially within 0.5 miles of the brownfield. Our results are consistent whether we examine all property values within a given distance, such as 0.5 miles, or examine discrete distances, such as 0.3 to 0.5 miles. A conservative estimate of the benefits is on the order of $4 million.

"Framing and feedback in social dilemmas with partners and strangers," with Brock Stoddard. Games, 6(4): 394-412. December 2015. (Special Issue: Experimental Studies of Social Dilemma Games.)

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We study framing effects in repeated social dilemmas by comparing payoff-equivalent Give- and Take-framed public goods games under varying matching mechanisms (Partners or Strangers) and levels of feedback (Aggregate or Individual). In the Give-framed game, players contribute to a public good, while in the Take-framed game, players take from an existing public good. The results show Take framing and Individual-level feedback lead to more extreme behavior (free-riding and full cooperation), especially for Partners. These results suggest Take framing and Individual-level feedback increase the variability of cooperation.

"Revealed reputations in the finitely-repeated prisoners’ dilemma," with Matthew T. Jones, Kevin E. Pflum, and Paul J. Healy. Economic Theory, 58(3): 441-484. April 2015.

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In a sequential-move, finitely-repeated prisoners’ dilemma game (FRPD), cooperation can be sustained if the first mover believes her opponent might be a behavioral type who plays a tit-for-tat strategy in every period. We test this theory by revealing second mover histories from an earlier FRPD experiment to their current opponent. Despite eliminating the possibility of reputation building, aggregate cooperation actually increases when histories are revealed. Cooperative histories lead to increased trust, but negative histories do not cause decreased trust. We develop a behavioral model to explain these findings.

"Cursed beliefs with common-value public goods." Journal of Public Economics, 121: 52-65. January 2015.

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I show how improper conditioning of beliefs can reduce contribution in public goods environments with interdependent values. I consider a simple model of a binary, excludable public good. In equilibrium, provision of the public good is good news about its value. Naive players who condition expectations only on their private information contribute too little, despite the absence of free-riding incentives. In a laboratory experiment, contributions indeed fall short of the equilibrium prediction. Using modified games with different belief-conditioning effects, I verify that subjects fail to condition beliefs properly. However, improper belief conditioning cannot fully explain the results.

"Decomposing the effects of negative framing in linear public goods games." Economics Letters, 126: 63-65. January 2015.

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I examine two dimensions of framing in public goods games: Contributing vs. Taking and Gains vs. Losses. I find decreased cooperation under the Taking frame, but not under the Loss frame. This framing effect is stronger for men than women.

"Inequity aversion and advantage seeking with asymmetric competition." Journal of Economic Behavior and Organization, 86: 121-136. February 2013.

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In this experiment I study a three-player ultimatum game in which two proposers with unequal amounts of money simultaneously submit offers to one responder, who may accept at most one offer. I derive predictions for responder behavior under inequity aversion and advantage-seeking preferences. Unlike previously studied cases of symmetric proposer competition, the predictions of these two types of social preferences differ from each other and from self-interest. Both models predict that responders will sometimes accept the smaller offer. Results suggest heterogeneity among responders, with each of these two types of social preference occurring more frequently than self-interested money maximization.