IFREE-Board Approved Small Grant Proposals

Past Awarded Grants
April 2011
January 2011
September 2010

Experimental Investigations of Alliance-building
Peter DeScioli, Departments of Psychology and Economics, Brandeis University
October 2011

Peter DeScioli was awarded an IFREE Small Grant for his proposal "Experimental investigations of alliance-building." The project examines human alliance-building in a laboratory environment in which participants can dispute over resources, recruit allies, and choose sides in other people’s disputes. The experiments will test predictions from theories about alliances, specifically that people will build alliances when disputes allow for side-taking, that alliance-building will equalize power across individuals, and that alliances will result in more costly disputes. The experiments will also vary the information available to participants about other participants' side-taking decisions to test whether more complete information facilitates alliance formation. The findings will improve our understanding of how people choose sides in disputes, offering insight into how resources are distributed in strategic social environments where people take sides in other people’s conflicts. These insights in turn can illuminate a variety of complex human social behaviors such as friendship, gossip, and moral judgment.

An Experimental Inquiry into the Ecological Determinants of Property Rights
Erik O. Kimbrough, Assistant Professor of Economics, Simon Fraser University
October 2011

Around the world, societies have developed extremely diverse systems of property rights to manage resources and reduce conflict. From rules governing access to common grazing lands to land titling rules, all property systems share certain fundamental features (e.g. delineating access rights and rules of transfer), but each particular instance differs in response to local circumstances. This project will explore the hypothesis that how each system differs is a predictable consequence of local ecological conditions, specific to the regions and resources over which rights are established. Using stylized laboratory experiments, in which these ecological conditions are subject to direct control, this project seeks to observe emergent institutional dynamics across various ecological settings in order to demonstrate the sensitivity of rules to the environment. Often development policy consists of manipulations intended to impose "good" institutions on less developed societies to align their policies with those that have proven successful in more developed countries. If, however, the choice of proper institution is contingent on ecological conditions, this may help to explain the failure of so many development initiatives to reap the promised gains.

BUBBLES AND TESTOSTERONE
Moana Vercoe, post-doctoral fellow at the Center for Neuroconomics Studies; Paul J. Zak, Founding Director of the Center for Neuroeconomics Studies and Professor of Economics, Psychology and Management, Claremont Graduate University
April 2011

The vast majority of trades on the NYST are made by male institutional traders. In part this research has been designed to study the role testosterone might play in asset market bubbles, the kind of bubbles for which the sources are not clearly understood. This study combines elements of two studies previously conducted at the Center for Neuroeconomics Studies: one examining the role of testosterone in decision making in the trust, ultimatum and dictator games, and the other based on an experimental asset. It aims to test the effects of testosterone on the formation of asset bubbles (deviations from fundamental price) in a laboratory asset trading experiment. This study will be the first to directly manipulate testosterone levels in males and to relate this causally to asset prices, and may shed light in determining how testosterone influences risk taking and confidence in individuals.

POOLING IN AUCTIONS WITH RESALE: EVIDENCE FROM THE LAB AND FIELD
Michael K. Price, Department of Economics, University of Tennessee; Robert Hammond, Department of Economics, North Carolina State University
April 2011

Investigators use an auction structure, and vary parameters of the auction to investigate a question from the real world relating to issues in land auctions conducted by the Nevada Bureau of Land Management (BLM) that in some auctions a number of bidders “pool” at the reserve price. The design varies three independent variables, the key one being whether or not there is the possibility of exchanging the objects on which people bid in a second phase. The other two independent variables are parameters (the reserve price, range of bidders’ values). The proposed research will use the institutional details of BLM auctions to design a series of laboratory experiments aimed at isolating the effect of resale opportunities on pooling at the reserve price. The laboratory setting will allow researchers to control key parameters – i.e., the distribution of values and associated reserve prices – that should theoretically influence pooling at the reserve price.

SPECIALIZATION AS A COORDINATION MECHANISM: A VIRTUAL WORLDS EXPERIMENT
Peter Twieg, graduate student in economics working with Professor Kevin McCabe, Kevin McCabe, Director of the Center for the Study of Neuroeconomics, GMU
April 2011

This projects investigates specialization using “Second Life,” a virtual environment that allows unstructured interaction. It seeks to explore the possibility that the potential to specialize might carry more subtle benefits such as the creation of focal points which serve to facilitate the establishment of informal property norms in environments without secure property-rights regimes. A confirmation of the main hypothesis of this experiment should have implications that can be tested against historical data, which could perhaps provide some truly valuable insight into historical patterns of institutional development, and may serve to advance our understanding of the factors underlying the historical establishment of property rights in different real-world communities.

- SMALL VICTORIES: EXAMINING MARKET-DRIVEN SOLUTIONS IN SAVINGS AND DEBT REDUCTION EXPERIMENTS
Alexander L. Brown (Department of Economics, Texas A&M University), Joanna Lahey (Bush School of Government and Public Service, Texas A&M University)
January 2011

This project is concerned with individuals’ savings decisions, specifically aimed at “suboptimal savings behavior;” that is, people who do not save “enough.” The phrase, “small victories,” refers to the idea that motivation to defer consumption can be enhanced by first successfully doing something small. To investigate this, subjects are faced with a set of unpleasant tasks, and in some cases, the tasks get larger if they are left uncompleted (simulating interest on debt). Do people choose to complete a small unpleasant task first—winning a “small victory” — and then work on the larger unpleasant task? Does ordering tasks in this way improve overall performance? This project has the potential for valuable insights.

- DICTATOR GAME GENEROSITY AND REAL WORLD LABOR MARKET OUTCOMES: THIRD WAVE OF A LONGITUDINAL STUDY
Catherine J. Weinberger (Independent Scholar affiliated with the University of CA Santa Barbara, Department of Economics, and ISBER)
January 2011

In 2002, more than 1,800 students played a dictator game in which the Receiver was a charity. The researchers intend to relate behavior in this game to labor market outcomes. For instance, do people who play generously in a dictator game wind up with lower paying jobs? This grant will provide funding to run a wave of surveys to gather employment information, including educational attainment, salary, and job sector information. The project is an interesting attempt to link laboratory game behavior to outcomes in the real world.

- RELUCTANT PRO-SOCIALITY
Jason Dana (Assistant Professor, Psychology, University of Pennsylvania)
September 2010

This proposal extends work that shows that people will ignore free information about others’ payoffs. Remaining “strategically ignorant” might give people moral license to choose a selfish option, given their lack of knowledge about the effect of their choice on others. This work presents strong challenges to “social preference” models. The present work looks at the effects of paying choosers (Dictators, in this case) to look at (others’) payoff information.

- AN INVESTIGATION OF THE AVERAGE BID MECHANISM IN PROCUREMENT AUCTIONS
Wei Shiun Chang (Pre-doc, Economics), and Timothy Salmon, (Professor/Advisor, Economics) Florida State University)
September 2010

This project investigates a bid mechanism in which buyers purchase from the seller who comes closest to the average price of the submitted bids. The first part of this work is theoretical development. The second part is experimental work. In the first part, the researchers will analyze the mechanism under different assumptions (seller costs and quality). The second part will test the predictions derived from this analysis in the lab.

- BIDDER BEHAVIOR AND PERFORMANCE OF AUCTION INSTITUTIONS WITH COSTLY PARTICIPATION
Diego Aycinena (Assistant Professor, Universad Francisco Marroquin)
September 2010

This project investigates auctions in which there is a cost to participate. One line of research investigates entry decisions into auctions, and tests the fit of a Pure Strategy Entry Equilibrium model based on a cutoff value. The second line compares first price sealed bid and ascending auctions, asking about entry under the two mechanisms. The third line investigates bidding behavior after entry decisions have been made. The studies vary the task subjects face. In one case, subjects are told the number of bidders and the cost of entry, and subjects are asked the (private) value they must have in order for them to choose to enter. In another set of treatments, subjects are given the number of bidders and their value, and asked the price below which they would enter.

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