Browsing by Author "Vesterlund, Lise"

Now showing 1 - 4 of 4
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    The Carrot or the Stick: Rewards, Punishments, and Cooperation
    (University of Oregon, Dept. of Economics, 2002-08-20) Andreoni, James; Harbaugh, William; Vesterlund, Lise
    We examine rewards and punishments in a simple proposer-responder game. The proposer first makes an offer to split a fixed-sized pie. According to the 2×2 design, the responder is or is not given a costly option of increasing or decreasing the proposer's payoff. We find substantial demands for both punishments and rewards. While rewards alone have little influence on cooperation, punishments have some. When the two are combined the effect on cooperation is dramatic, suggesting that rewards and punishments are complements in producing cooperation. Providing new insights to what motivates these demands is the surprising finding that the demands for rewards depend on the availability of punishments.
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    Prospect Theory in Choice and Pricing Tasks
    (University of Oregon, Dept. of Economics, 2002-07-20) Harbaugh, William; Krause, Kate; Vesterlund, Lise
    The most distinctive prediction of prospect theory is the fourfold pattern (FFP) of risk attitudes. People are said to be (1) risk-seeking over low-probability gains, (2) risk-averse over low-probability losses, (3) risk-averse over high-probability gains, and (4) risk-seeking over high-probability losses. Using simple gambles over real payoffs, we conduct a direct test of this FFP prediction. We find that when pricing gambles subjects’ risk attitudes are consistent with the FFP. However, when they choose between the gamble and its expected value, their decisions are not distinguishable from random choice and are often the exact opposite of the prediction. These results hold both between and within subjects, and are robust even when we allow the subjects to simultaneously review and change their price and choice decisions.
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    Risk Attitudes of Children and Adults : Choices over Small and Large Probability Gains and Losses
    (2001-11-05) Harbaugh, William; Krause, Kate; Vesterlund, Lise
    In this paper we examine how risk attitudes change with age. We present participants from age 5 to 64 with choices between simple gambles and the expected value of the gambles. The gambles are over both gains and losses, and vary in the probability of the non-zero payoff. Surprisingly, we find that many participants are risk seeking when faced with high-probability prospects over gains and risk averse when faced with small-probability prospects. Over losses we find the exact opposite. Children’s choices are consistent with the underweighting of low-probability events and the overweighting of high-probability ones. This tendency diminishes with age, and on average adults appear to use the objective probability when evaluating risky prospects.
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    Trust in Children
    (University of Oregon, Dept. of Economics, 2002-03-22) Liday, Steven G.; Vesterlund, Lise; Harbaugh, William; Krause, Kate
    In this paper we study trust/reciprocity behavior in children ages eight to eighteen using an augmented version of Berg et al.â s (1995) trust game. This study is intended to inspect and reveal when certain aspects of trust behavior are formed in individuals. In addition, we examine the affect of certain characteristics in subjects that lead to higher levels of trusting behavior.