Working Papers

"Provision of common-property resources: allocation rules," with Brock Stoddard and James Walker. Revise and resubmit.

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In a laboratory experiment, we study the allocation of an endogenously created common-property resource (CPR). Contributors voluntarily provide the CPR, and a third-party allocator assigns shares. Previous research showed that allocators can sustain contributions over time, but some opportunistic free-riding occurred due to constraints on the allocation of assigned shares. We examine two new allocator mechanisms that support deterministic allocation schemes that make full contribution a dominant strategy. The new allocator mechanisms improve contributions compared to the previously examined mechanisms. The largest average provision is observed in the mechanism that allows the allocator the greatest flexibility. However greater flexibility comes at the cost of higher variance in allocations, some of which reduce efficiency.

"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.

"Frames, Earned Money, and Cooperation in Social Dilemmas," with Oleg Korenok, Edward Millner, and Laura Razzolini.

We conduct experiments designed to test whether earning the endowment increases the difference between public goods and common resource games. We find that neither the frame nor the source of endowment affects cooperation rates.

"Common-value public goods and informational social dilemmas," with Brock Stoddard.

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We experimentally examine the role of private information and communication in a public goods environment with uncertain returns. We consider a public goods game in which the Marginal Per Capita Return (MPCR) is either high or low. Before contributing, three players observe private signals correlated with the true MPCR and then send cheap talk messages to one another. There are social gains from truthful communication, but a private incentive to exaggerate. We compare treatments with and without cheap talk, finding that messages are largely truthful and influence contribution decisions. In further treatments, we increase the incentive to exaggerate and find reduced truthfulness and smaller gains from communication.

Publications

"Strategic thinking in public goods games with teams," with Brock Stoddard. Journal of Public Economics, 161: 31-43. May 2018.

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We experimentally investigate team behavior in repeated public goods games and use team chat logs to study motives for contribution. Subjects are matched into two-person teams, and each team makes a joint decision in each period. We compare teams with individuals and find similar overall contributions. However, initial contribution is higher and endgame effects are more pronounced for teams. We examine strategic discussions within teams and find strong evidence of concern for repeated game effects and limited backward induction. We also find evidence of confusion and explore its potential sources.

"Rent-seeking and competitive preferences." Journal of Economic Psychology, 63: 102-116. December 2017. (Special Issue: Economics and Psychology of Contests.)

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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.

"Social preferences and cooperation in simple social dilemma games," with Arzé Karam and Ryan J. Murphy. Journal of Behavioral and Experimental Economics, 69: 1-3. August 2017.

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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.

"Estimating the effects of brownfields and brownfield remediation on property values in a New South city," with Peter M. Schwarz, Gwendolyn L. 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.