Essays on Experimental Economics

Fatemeh Momeni, Purdue University


This dissertation consists of two independent essays on experimental economics. The first essay examines how different ways of providing common pool resources affect users' extraction behavior. Common pool resource (CPR) users often face two types of problems to solve: provision problems and appropriation problems. The first essay presents a laboratory experiment to study the choices of CPR users under different provision schemes, in a heterogeneous environment. In the first two treatment conditions, the level of contribution to the provision process is determined exogenously: in the regressive treatment, poor and rich individuals pay equal amounts to the provision of the resource, and in the progressive treatment, the entire provision cost is paid by rich members. Finally, in the endogenous condition, subjects voluntarily choose how much to contribute through the Provision Point Mechanism. The experimental results provide strong evidence for inequality aversion motivating subjects' decisions. Interestingly, inequality aversion motivates subjects' choices differently in the exogenous and in the endogenous provision conditions: under the regressive and the progressive treatments, inequality aversion motivates subjects' extraction choices while in the endogenous treatment, inequality aversion motivates subjects' contribution choices but not their extraction choices. The second essay studies the effect of interim performance information on individual effort choices. Costly effort choices are often made sequentially and over multiple steps. In many situations, individuals who make effort choices do not fully observe how well they are performing during the process. A more informed party may choose to reveal their private information about the agent's performance to the agent. The second essay presents an experiment to study the impact of interim performance information on individuals' effort choices under different incentive schemes. Subjects make costly effort choices in two subsequent stages under convex and concave payment conditions. In No-Feedback treatments, subjects make their second effort choice without knowing the outcome of the first stage, and in Feedback treatment, subjects learn the outcome of the first stage before making their second effort choice. Experimental results show that interim feedback can be used as an effective tool to increase individual effort. However, the extent to which feedback impacts effort depends on the incentive scheme, as well as individual attitudes towards losses and risks.




Cason, Purdue University.

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