The veil of experimental currency units in second price auctions

Journal of the Economic Science Association - Tập 1 - Trang 182-196 - 2015
Andreas C. Drichoutis1, Jayson L. Lusk2, Rodolfo M. Nayga3,4,5
1Department of Agricultural Economics & Rural Development, Agricultural University of Athens, Athens, Greece
2Department of Agricultural Economics, Oklahoma State University, Stillwater, USA
3Division of Agriculture, Department of Agricultural Economics & Agribusiness, University of Arkansas, Fayetteville, USA
4Korea University, Seoul, South Korea
5Norwegian Institute of Bioeconomy Research, Ås, Norway

Tóm tắt

Economic experiments often entail subjects making decisions with payoffs in experimental currency units (ECUs). Earnings in ECUs are converted to cash at the end of the experiment. Such a procedural choice seems to be driven more by habit or tradition than by empirical evidence that this is more appropriate to use. We report results of a private, induced value second price auction (SPA) experiment in which we manipulate the exchange rate between ECUs and cash. We find virtually no relationship between a stronger/weaker experimental currency and the ability of theory to predict observed outcomes. The only significant effect relates to the comparison of the cash-only condition to the one-to-one exchange condition. The latter produced greater behavioral deviations from theoretical predictions. However, we find that this effect is largely driven by a handful of subjects. The results suggest that the use of ECUs is not a hindrance for experimental practice, at least not in the context of an induced value SPA.

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Journal of the Economic Science Association

Tập 1

182-196

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