No. 52
june 2010
Gerald Eisenkopf
Sabrina Teyssier
Learning and Peer Effects
Envy and Loss Aversion in Tournaments
Research Paper Series
Thurgau Institute of Economics and Department of Economics
at the University of Konstanz
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Envy and Loss Aversion in Tournaments
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Abstract
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Keywords: 4.8%,&?$,>:"$,B5:"'.++"&B$%+*.,"
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1. Introduction
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2. Experimental design
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&A&*,+>" >@$" +&?$" %&,(.?'5" C@.+$," /$%+.,E" ^8%>@$%?.%$:" &''" +83i$C>+" $F/$%*$,C$(" >@$" +&?$"
(*+>.%>*.,+E" 4@$" C.?/8>$%" A$,$%&>$(" .,'5" >D." %&,(.?" B&%*&3'$+E" G,$" B&%*&3'$" (*+>.%>$(" >@$"
$00.%>" .0" &''" +83i$C>+" *," >@$" +&?$" D&5U" >@$" .>@$%" (*+>.%>$(" >@$" $00.%>" .0" >@$" %&,(.?'5" C@.+$,"
/$%+.,E" ].>@" B&%*&3'$+" D$%$" (%&D," *,($/$,($,>'5" 0%.?" >@$" 8,*0.%?" (*+>%*38>*.," 3$>D$$," WS"
&,("S:"+.">@&>"+83i$C>+"D*>@">@$"+&?$"$00.%>"%$C$*B$("$F&C>'5">@$"+&?$"/&5?$,>"&>">@$"$,(".0"
>@$" $F/$%*?$,>E" 4@$" %&,(.?'5" C@.+$," +83i$C>" 0%.?" >@$" 44" +$++*.," (*(" ,.>" %$C$*B$" &,5"
&((*>*.,&'" 3$,$0*>" 0%.?" 3$*,A" C@.+$," &+" &" 3$,C@?&%-E" 4@$" /&%>*C*/&,>+" *," >@$" X)4" (*(" ,.>"
%$C$*B$"*,0.%?&>*.,"*0">@*+"%&,(.?'5"C@.+$,"+83i$C>"@&("D.,".%"'.+>"@$%".D,">.8%,&?$,>E"
"
The No-Loss-Aversion Treatment (NLT)
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>@$"44E"O.D$B$%:"D$"$'*?*,&>$">@$"%&,(.?"B&%*&3'$+E"=,+>$&(".0"&"/%.3&3*'*>5".0"D*,,*,A">@$"
/%*Q$"&+"*,">@$".>@$%">%$&>?$,>+:"*,">@*+">%$&>?$,>"+83i$C>+"C.8'("%$C$*B$"&"+@&%$".0">@$"/%*Q$E"
4@$"+83i$C>+"%$C$*B$("&">&3'$"D@*C@"[email protected]$(">@$*%"+@&%$".0">@$"/%*Q$"A*B$,">@$"(*00$%$,C$+"*,"
\"
"
$00.%>"3$>D$$,">@$?"&,(">@$"%&,(.?'5"C@.+$,"+83i$C>E"4@$">&3'$"D&+"*($,>*C&'">.">@&>"*,">@$"
/%$B*.8+">%$&>?$,>+:".,'5">@&>"C.'8?,+"D*>@"/$%C$,>&A$"B&'8$+"@&(">@$"@$&('*,$"gk.8%"+@&%$h"
*,+>$&(".0"gk.8%"D*,,*,A"/%.3&3*'*>5hE"
"
4@$" $F/$%*?$,>" D&+" C.?/8>$%*Q$(" D*>@" >@$" +.0>D&%$" gQW4%$$h" b^*+C@3&C@$%:" ;<<ScE" 4@$"
%$C%8*>?$,>" D&+" C.,(8C>$(" D*>@" >@$" +.0>D&%$" gGY2))h" b#%$*,$%:" ;<<NcE" Z''" +$++*.,+" >..-"
/'&C$"&>">@$"R,*B$%+*>5".0"P.,+>&,QE"283i$C>+"D$%$"+>8($,>+"0%.?">@*+"8,*B$%+*>5E"S9"+83i$C>+"
/&%>*C*/&>$(" *," >@$" $F/$%*?$,>:" ;\" /$%" +$++*.,E"4@$" +$++*.,+" '&+>$(" 0.%" &3.8>" TJ" ?*,8>$+E" ;J"
/.*,>+"*?/'*$("&"/&5?$,>".0"!"$8%.ET"
"
3. Behavioral Predictions
=,"&''">%$&>?$,>+:">@$"8>*'*>5".0"&"+83i$C>"($/$,(+".,"@$%".D,"$00.%>:">@$"%$&'*Q&>*.,".0"%&,(.?"
B&%*&3'$+"&,(">@$"$00.%>".0"&"%&,(.?'5"&++*A,$("+83i$C>"0%.?">@$"44E"=,"&''">@%$$">%$&>?$,>+"D$"
>..-"A%$&>"C&%$">."$F/'&*,">@$"($C*+*.,"/%.3'$?".0"+8C@"&"%&,(.?'5"(%&D,"+83i$C>E"O$,C$:">@$"
3$'*$0"&3.8>">@$"$00.%>"C@.*C$".0">@*+"%&,(.?'5"C@.+$,"+83i$C>"(.$+",.>"(*00$%"+5+>$?&>*C&''5"
&C%.++" >@$" >%$&>?$,>+E" _$" ($,.>$" >@*+" 3$'*$0" D*>@" ݁Ƹ E" ^.%" .8%" /%$(*C>*.,+:" D$" C.?/&%$" >@$"
./>*?&'" $00.%>" C@.*C$" .0" >@$" +83i$C>+" *," >@$" (*00$%$,>" >%$&>?$,>+:" A*B$," ݁Ƹ E" =," >@*+" +$C>*.," D$"
(*+C8++">@$"A$,$%&'"?$C@&,*+?+E"Z//$,(*F"K"/%.B*($+",8?$%*C"($>&*'+"0.%"./>*?&'"%$+/.,+$+"
*,">@$"(*00$%$,>">%$&>?$,>+E"
=," &''" >%$&>?$,>+:" &" +83i$C>" i %$C$*B$+" >@$" $F/$C>$(" /&5.00" ‫ܧ‬ሺ‫ݔ‬௜ ሻ ൌ ʹʹͷ ൅ ʹͺͲ‫݌‬௜ െ ݁௜ଶ E" 4@$"
B&%*&3'$"pi"($,.>$+"+83i$C>"id+"/%.3&3*'*>5">."D*,:"*E$E"‫݌‬௜ ൌ ‫݌‬௜ ሺ݁௜ ǡ ݁Ƹ ሻ ൌ ܲ‫ܾ݋ݎ‬ሺ݁௜ ൅ ߝ௜ ൐ ݁Ƹ ൅ ߝƸሻ:"
D*>@"ߝƸ" ($,.>*,A">@$"(*+>.%>*.,".0">@$"%&,(.?'5"&++*A,$("+83i$C>d+"$00.%>E"G8%"/%$(*C>*.,+"8+$"
C.?/.,$,>+" 0%.?" >@%$$" >@$.%$>*C&'" /&/$%+E" ^.''.D*,A" ^$@%" &,(" 2C@?*(>" b!LLLc:" D$" ($,.>$"
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S"
"
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b;<<Jc:"$,B5"*,">.8%,&?$,>+"0.C8+$+".,">@$"(*00$%$,C$+"*,"/%*Q$+"3$>D$$,">@$">D."+83i$C>+E\"
^.''.D*,A"#*''"&,("2>.,$"b;<!<c"D$"($,.>$"'.++"&B$%+*.,"35"݈ ൐ ͲǤ"4@*+"/&%&?$>$%"?$&+8%$+"
@.D">@$"(*00$%$,C$"3$>D$$,">@$"&C>8&'"&,(">@$"$F/$C>$("/&5.00".0">@$"+83i$C>"&00$C>+"@$%"8>*'*>5"
*," >@$" C&+$" >@&>" >@*+" (*00$%$,C$" *+" ,$A&>*B$ES" _$" &++8?$" 0.%" .8%" /%$(*C>*.,+" >@&>" &''" +83i$C>+"
@&B$" >@$" +&?$" ($A%$$" .0" $,B5" &,(" '.++" &B$%+*.," >." ($%*B$" >@$" 3$@&B*.%&'" /%$(*C>*.,+E"
^8%>@$%?.%$:"D$"&++8?$">@&>"+83i$C>+"&%$"%*+-W,$8>%&'E9"
4@$"$F/$C>$("8>*'*>5"08,C>*.,".0"+83i$C>"݅"*,">@$"44"*+"D%*>>$,"&+"0.''.D+I"
"
‫ܷܧ‬௜் ൌ ʹʹͷ ൅ ʹͺͲൣ൫ͳ െ ݈ሺͳ െ ‫݌‬௜ ሻ൯‫݌‬௜ െ ሺͳ െ ‫݌‬௜ ሻߙ൧ െ ݁௜ଶ "
b!c
4@$"$F/$C>$("8>*'*>5"*,C%$&+$+"*,">@$"$F/$C>$("?.,$>&%5"3$,$0*>"bʹͺͲ‫݌‬௜ c"&,("($C%$&+$+"3.>@"*,"
>@$"(*+&//.*,>?$,>"&,("$,B5E"#*''"&,("2>.,$"b;<!<c"?.($'"(*+&//.*,>?$,>"&+">@$"A&/"3$>D$$,"
>@$"$F/$C>$("&,(">@$"&C>8&'"/&5?$,>:"?8'>*/'*$("D*>@">@$"($A%$$".0"'.++"&B$%+*.,"b݈ ൈ ʹͺͲ‫݌‬௜ cE"
#%8,("&,("2'*D-&"b;<<Jc"?.($'"$,B5"&+">@$"*,C.?$"A&/"3$>D$$,"3.>@"/'&5$%+"?8'>*/'*$("D*>@"
>@$"($A%$$".0"(*+&(B&,>&A$.8+"*,$j8*>5"&B$%+*.,"bߙ ൈ ʹͺͲcE"].>@"/%$0$%$,C$+"3$C.?$"%$'$B&,>"
*0"&"+83i$C>"'.+$+">@$">.8%,&?$,>"D@*C@"@&//$,+"D*>@"/%.3&3*'*>5" ሺͳ െ ‫݌‬௜ ሻǤ"Z"+83i$C>"*,">@$"
44" ?&F*?*Q$+" >@*+" $F/$C>$(" 8>*'*>5" 35" C@..+*,A" &," ./>*?&'" $00.%>" '$B$'E" =," >@*+" C&+$:" >@$"
0.''.D*,A"0*%+>".%($%"C.,(*>*.,".3>&*,+I"
"
߲‫݌‬௜
߲‫݌‬௜
߲‫ܷܧ‬௜்
൨ െ ʹ݁௜ ൌ Ͳ"
ൌ ʹͺͲ ൤൫ͳ ൅ ߙ െ ݈ሺͳ െ ‫݌‬௜ ሻ൯
൅ ݈‫݌‬௜
߲݁௜
߲݁௜
߲݁௜
b;c
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$00.%>"*,C%$&+$+"*0"+83i$C>+"&%$"$,B*.8+Ǥ"G,">@$".>@$%"@&,(:">@$"B&%*&,C$".0"$00.%>"*,C%$&+$+"*0"
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C.,+*($%" C.?/&++*.," *," >@$" 0.''.D*,A" &,&'5+*+E" =>" D.8'(" ,.>" &00$C>" >@$" j8&'*>&>*B$" C@&%&C>$%*+>*C+" .0" .8%"
/%$(*C>*.,E"
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S
" _$" &++8?$" '.++" &B$%+*.," >." 3$" &" +>%.,A$%" +$,>*?$,>" >@&," A&*," &B$%+*.,:" *," D@*C@" 8>*'*>5" *+" %$(8C$(" *0" >@$"
(*00$%$,C$"*+"/.+*>*B$E"ZA&*,:"D$"(.",.>"C.,+*($%"A&*," &B$%+*.,"3$C&8+$"*>"(.$+",.>"A*B$"j8&'*>&>*B$'5"(*00$%$,>"
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9
"=,"&,.>@$%"$F/$%*?$,>".,">@$"/%*,C*/&'W&A$,>"%$'&>*.,+@*/"*,">.8%,&?$,>+"b)*+$,-./0"&,("4$5++*$%:";<<Lc:"D$"
0*,(">@&>"%*+-W&B$%+*.,"(.$+",.>"/'&5"&"+*A,*0*C&,>"%.'$"0.%"b?.,$>&%*Q$(c"$00.%>"C@.*C$"*,">.8%,&?$,>+E"
9"
"
+83i$C>+" &%$" +800*C*$,>'5" '.++" &B$%+$" b+$$" 0.''.D*,A" /&A$cE" Z//$,(*F" ]" /%.B*($+" ,8?$%*C"
($>&*'+"0.%">@$"$j8*'*3%*8?".8>C.?$"*,">@$"44E""
"
=,">@$"X)4:">@$"$F/$C>$("8>*'*>5"08,C>*.,"*+">@$"+&?$"&+"*,">@$"44E"O.D$B$%:"D$"$'*?*,&>$(">@$"
+C./$"0.%"$,B5"*,">@*+">%$&>?$,>:"D@*C@"$'*?*,&>$+"ߙ"*,">@$"0*%+>".%($%"C.,(*>*.,"0.%"+83i$C>+"*,"
>@$"X)4I"
߲‫݌‬௜
߲‫݌‬௜
߲‫ܷܧ‬௜஻
൨ െ ʹ݁௜ ൌ Ͳ"
ൌ ʹͺͲ ൤൫ͳ െ ݈ሺͳ െ ‫݌‬௜ ሻ൯
൅ ݈‫݌‬௜
߲݁௜
߲݁௜
߲݁௜
"
bNc
4@$"$'*?*,&>*.,".0"$,B5"*,">@$"X)4"*?/'*$+">@$"0.''.D*,A"/%$(*C>*.,LI"
Hypothesis 1: Subjects in the No-Envy Treatment provide, on average, less effort than
subjects in the Tournament Treatment.
"
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+83i$C>d+" *,(*B*(8&'" ($A%$$" .0" '.++" &B$%+*.," &,(" @$%" 3$'*$0+" &3.8>" >@$" $00.%>" C@.*C$" .0" >@$"
%&,(.?'5"&++*A,$("+83i$C>E"Z"+800*C*$,>'5"@*A@"($A%$$".0"'.++"&B$%+*.,"*,(8C$+"$F>%$?$"$00.%>"
C@.*C$+:" &+" #*''" &,(" 2>.,$" b;<!<c" [email protected]" M$/$,(*,A" .," >@$" /&%&?$>$%" C.,+>$''&>*.,:" '.++"
&B$%+*.,""
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"
=," >@$" X[4:" C.,C$%,+" 0.%" '.++" &B$%+*.," &%$" $'*?*,&>$(" &+" D$''" &+" 0.%" $,B5:" &+" >@$" $F/$C>$("
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4@$" +*Q$" .0" >@*+" +@&%$" *+" $j8*B&'$,>" >." >@$" %$+/$C>*B$" /%.3&3*'*>5" .0" D*,,*,A" >@$" /%*Q$" *," >@$"
.>@$%" >D." >%$&>?$,>+" b‫݌‬௜ cE" 4@$" &((*>*.,&'" $'*?*,&>*.," .0" '.++" &B$%+*.," *?/'*$+" >@$" %$+8'>*,A"
C@&,A$"*,">@$"0*%+>".%($%"C.,(*>*.,I"
"
߲‫݌‬௜
߲‫ܷܧ‬௜ா஻
ൌ ʹͺͲ
െ ʹ݁௜ ൌ Ͳ"
߲݁௜
߲݁௜
bTc
=,">@*+"C&+$:">@$"./>*?&'"$00.%>"(.$+",.>"($/$,(".,"'.++"&B$%+*.,E"4@$%$0.%$:">@$"3$+>"%$+/.,+$"
.0"+83i$C>+"*,">@$"X[4"*+"'$++"B&%*&3'$E"_*>@">@$"+&?$"(*+>%*38>*.,".0"3$'*$0+"&3.8>">@$"$00.%>"
C@.*C$".0">@$"%&,(.?'5"&++*A,$("+83i$C>"*,"&''">%$&>?$,>+:">@$"%$(8C>*.,".0"'.++"&B$%+*.,"'$&(+"
>.">@$"+$C.,("@5/.>@$+*+I"
"
Hypothesis 2: The variance of effort choice is larger in the No-Envy Treatment than in the
No-Loss-Aversion Treatment.
"
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X[4"$'*?*,&>$+"3.>@"$,B5"&,("'.++"&B$%+*.,:"D$"?&-$">@$"0.''.D*,A"/%$(*C>*.,I"
"
Hypothesis 3: Given correct beliefs about the effort choice of the randomly assigned subject
from the Tournament Treatment, the average effort choice in the No-Loss-Aversion Treatment
is equal to the effort choice predicted by a conventional tournament model.
!<"
"
4. Results
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>@$"X)4"&,(">@$"X[4E"4&3'$"!"&,("^*A8%$"!"3.>@"/%$+$,>">@$"&B$%&A$"$00.%>"&,(">@$"B&%*&,C$"
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"
"
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0
5
Effort
10
15
Table 1. Average and variance of effort by treatment (26 observations per treatment)
TT
NET
NLT
Figure 1. Dispersion of effort by treatment
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B&%*&,C$"*,">@$"X[4E""
Z((*>*.,&''5:"D$".3+$%B$",."(*00$%$,C$"*,"&B$%&A$"$00.%>"3$>D$$,">@$"44"&,(">@$"X[4"bH&,,W
_@*>,$5">$+>I"z=0.537:"p=.5916cE"H.%$"&CC8%&>$'5:"&B$%&A$"$00.%>"*,">@$"X[4"*+"C'.+$">.">@$"
./>*?&'"$00.%>"C@.*C$:"&++8?*,A"C.%%$C>"3$'*$0+"&3.8>"&,"&B$%&A$"$00.%>"C@.*C$".0"&3.8>"!<"35"
>@$"%&,(.?'5"&++*A,$("+83i$C>"b>W>$+>:"p=0.3128cE!!"4@$+$"%$+8'>+"+8//.%>".8%"@5/.>@$+*+">@&>"
+>&,(&%(" >.8%,&?$,>" >@$.%5:" $EAE" " [&Q$&%" &,(" Y.+$," b!L9!c:" #%$$," &,(" 2>.-$5" b!L9Nc" .%"
GdP$$00$:"`*+C8+*"&,("e$C-@&8+$%"b!L9Tc:"$F/'&*,+"$00.%>"($C*+*.,+"*,">.8%,&?$,>+"C.%%$C>'5"
.,C$"3.>@"C.,C$%,+"0.%"*,$j8*>5"&B$%+*.,"&,("'.++"&B$%+*.,"&%$"$'*?*,&>$(E"
"
5. Conclusion
[&3.%&>.%5" $F/$%*?$,>+" %$/$&>$('5" /%.(8C$" &" '&%A$" B&%*&,C$" *," $00.%>" C@.*C$" *," >.8%,&?$,>+"
D@*C@" +>&,(&%(" >.8%,&?$,>" ?.($'+" C&,,.>" $F/'&*,E" X$D" >@$.%$>*C&'" C.,>%*38>*.,+" &((%$++"
>@$+$" +@.%>C.?*,A+" 35" C.,+*($%*,A" /%$0$%$,C$+" +8C@" &+" *,$j8*>5" &B$%+*.," &,(" '.++" &B$%+*.,E"
4@*+"/&/$%"/%.B*($+"C'$&,"$B*($,C$"%$A&%(*,A">@$"*?/&C>".0">@$+$"/%$0$%$,C$+".,">@$"3$@&B*.%"
.0" +83i$C>+" *," &" >.8%,&?$,>E" G8%" %$+8'>+" [email protected]" >@&>" (*+&(B&,>&A$.8+" *,$j8*>5" &B$%+*.,:" *E$E"
$,B5:" *,(8C$+" @*A@$%" $00.%>" '$B$'+" D@*'$" '.++" &B$%+*.," *?/'*$+" @*A@$%" B&%*&,C$" .0" $00.%>E"
2>&,(&%(">.8%,&?$,>">@$.%5"?&-$+"/%$C*+$"/%$(*C>*.,+".,C$"*,$j8*>5"&,("'.++"&B$%+*.,"(.",.>"
&00$C>">@$"($C*+*.,"?&-*,AE"G8%"%$+8'>+"+8//.%>">@$"($B$'./?$,>".0">@$.%*$+"D*>@"3$@&B*.%&'"
C.,+*($%&>*.,+">."$F/'&*,"($C*+*.,+"*,">.8%,&?$,>+E"
"""""""""""""""""""""""""""""""""""""""""""""""""
!<
" 4@$" %$+8'>+" &%$" &'+." +*A,*0*C&,>" &CC.%(*,A" >." [$B$,$d+" b!L\<c" %.38+>" >$+>" +>&>*+>*C" &,(" &'>$%,&>*B$" ?$&+8%$+"
/%./.+$("35"]%.D,"&,("^.%+5>@$"b!LSTcE"
" #*B$," >@*+"3$'*$0:" >@$" ./>*?&'" $00.%>" C@.*C$" *+" !<" &+" D$''E" ZB$%&A$" $00.%>" *," >@$" $F/$C>$(" 3.,8+" >%$&>?$,>" *+"
C'.+$">.">@*+"./>*?&'"%$+/.,+$E"
!!
!;"
"
[&Q$&%"&,("Y.+$,"b!L9!c"[email protected]"*,">@$*%"+$?*,&'"/&/$%"@.D"D$''W($+*A,$(">.8%,&?$,>+"*,(8C$"
%&>*.,&'"+$'0*+@"&A$,>+">."/%.B*($">@$"./>*?&'"'$B$'".0"$00.%>E"4@*+"$00.%>"C@.*C$"?&F*?*Q$+">@$"
>.>&'"/&5.00".0">@$"($+*A,$%".0">@$">.8%,&?$,>"b*E$E">@$"/%*,C*/&'c"&,(">@$"C.?/$>*,A"&A$,>+E"]5"
C.,+*($%*,A" &((*>*.,&'" /%$0$%$,C$+" &?.,A" >@$" &A$,>+:" .8%" %$+8'>+" C@&''$,A$" >@*+" 3$,*A,"
08,C>*.," .0" >.8%,&?$,>+E" ),B5" &,(" '.++" &B$%+*.," *,(8C$" +.?$" &A$,>+" >." /%.B*($" $FC$++*B$"
$00.%>"*,".%($%">."&B.*("(*+&//.*,>?$,>"&,("&"'.D"/&5.00"%$'&>*B$">.">@$"C.?/$>*>.%E"G>@$%"'.++W
&B$%+$" &A$,>+" %$(8C$" >@$*%" $00.%>" j8*>$" (%&?&>*C&''5E" ].>@" /%$0$%$,C$+" C.?3*,$(" *?/'5" &"
($C'*,$"*,".B$%&''"8>*'*>5:"&"+*A,*0*C&,>"%*+-"0.%">@$"/%*,C*/&'"&,(">@$"C.+>'5"b+$'0Wc$F/'.*>&>*.,".0"
+.?$"&A$,>+E""
"
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]'&,C.:"HE:"ME"),A$'?&,,"&,("OEW4E"X.%?&,,"b;<<9cE"lZ"_*>@*,W283i$C>"Z,&'5+*+".0"G>@$%W
Y$A&%(*,A"m%$0$%$,C$+l:"Mimeo, Royal Holloway, University of LondonE"
]%.D,:"HE"]E:"&,("ZE"]E"^.%+5>@$E"!LSTE"Y.38+>">$+>"0.%">@$"$j8&'*>5".0"B&%*&,C$+E"Journal of
the American Statistical Association"\LI"N\TWN\SE"
]8'':"KE:"ZE"2C@.>>$%"&,("PE"_$*A$'>"b!L9ScE"l4.8%,&?$,>+"&,("m*$C$"Y&>$+I"Z,")F/$%*?$,>&'"
2>8(5l:"Journal of Political Economy:"B.'E"LJb!c:"//E"!WNNE"
M&,,$,3$%A:" ZE:" 4E" Y*$C@?&,,:" ]E" 2>8%?" &,(" KE" `.A>" b;<<ScE" l=,$j8*>5" ZB$%+*.," &,("
=,(*B*(8&'" ]$@&B*.%" *," m83'*C" #..(" #&?$+I" Z," )F/$%*?$,>&'" =,B$+>*A&>*.,l:" ZEW
Discussion Paper:"X.E"<SW<NTE"
)*+$,-./0:" #E" &,(" 4$5++*$%:" 2E" b;<<LcE" lO.%*Q.,>&'" &,(" `$%>*C&'" 2.C*&'" m%$0$%$,C$+" *,"
4.8%,&?$,>+l:"Thurgau Institute of Economics Working PaperE"
^$@%:")E"&,("PE"HE"2C@?*(>"b!LLLcE"lZ"4@$.%5".0"^&*%,$++:"K.?/$>*>*.,:"&,("K../$%&>*.,l:"
The Quarterly Journal of Economics:"B.'E"!!TbNc:"//E"9!SW9\9E"
^*+C@3&C@$%:" RE" b;<<ScE" leW4%$$I" en%*C@" 4..'3.F" 0.%" Y$&(5WH&($" )C.,.?*C" )F/$%*?$,>+l:"
Experimental Economics:"B.'E"!<b;c:"//E"!S!W!S9E"
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#%$$,:"7E"YE"&,("XE"[E"2>.-$5"b!L9NcE"lZ"K.?/&%*+.,"3$>D$$,"4.8%,&?$,>+"&,("K.,>%&C>+l:"
Journal of Political Economy:"B.'E"L!bNc:"//E"NTLWN\TE"
#%$*,$%:"]E"b;<<NcE"lZ,"G,'*,$"Y$C%8*>?$,>"25+>$?"0.%")C.,.?*C")F/$%*?$,>+l:"*,"P%$?$%:"
PE" &,(" `E" H&C@." )(+E:" Forschung und wissenschaftliches Rechnen:" #_M#" ]$%*C@>"
\N:"#>>*,A$,I"#$+E"0%"_*++E"M&>$,B$%&%3$*>8,A:"//E"SLWLNE"
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Labour Economics:"B.'E"!<:"//E"TTNWT\TE"
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Journal of Political Economy:"B.'E"9LbJc:"//E"9T!W9\TE"
!N"
"
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Statistics: Essays in Honor of Harold HotellingE" $(E" =E" G'-*,:" 2E" #E" #@8%5$:" _E"
O.$00(*,A:" _E" #E" H&(.D:" &,(" OE" ]E" H&,,:" ;S9W;L;E" H$,'." m&%-:" KZI" 2>&,0.%("
R,*B$%+*>5"m%$++E"
GoP$$00$:"HE:"_E"PE"`*+C8+*"&,("YE"e$C-@&8+$%:"7E"b!L9TcE"l)C.,.?*C"K.,>$+>+I"K.?/&%&>*B$"
Y$D&%("2C@$?$+l:"Journal of Labor Economics:"B.'E";b!c:"//E";SWJ\E"
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)F&?*,&>*.,l:"Management Science:"B.'E"J<b;c:"//E";\9W;SLE"
4$5++*$%:"2E"b;<<LcE"l=,$j8*>5"&,("Y*+-"ZB$%+*.,"*,"2$j8$,>*&'"m83'*C"#..("#&?$+l:"Thurgau
Institute of Economics Working PaperE"
"""
Appendix
Appendix A – Instructions
_$"D$'C.?$"5.8">.">@*+"$C.,.?*C"$F/$%*?$,>E"
k.8%" ($C*+*.,+" *," >@*+" $F/$%*?$,>:" &,(" *," A*B$," C&+$+" >@$" ($C*+*.,+" .0" .>@$%" /&%>*C*/&,>+:"
*,0'8$,C$" 5.8%" /&5?$,>E" =>" *+" >@$%$0.%$" B$%5" *?/.%>&,>" >@&>" 5.8" %$&(" >@$+$" *,+>%8C>*.,+" B$%5"
C&%$08''5E"=0"5.8"@&B$"j8$+>*.,+:">@$,"/'$&+$"&((%$++">@$?">."8+"before">@$"3$A*,,*,A".0">@$"
$F/$%*?$,>E"Z''"/&%>*C*/&,>+"%$C$*B$">@$"+&?$"*,+>%8C>*.,+E"
During the experiment, talking with the other participants is not allowed. ^&*'8%$" >."
C.?/'5" D*>@" >@*+" %8'$" *+" A%.8,(+" 0.%" $FC'8+*.," 0%.?" >@$" $F/$%*?$,>" &,(" 0.%0$*>" .0" &''"
/&5?$,>+E"
M8%*,A" >@$" $F/$%*?$,>" D$" +/$&-" ,.>" .0" $8%.+:" 38>" .0" /.*,>+E" k.8%" >.>&'" *,C.?$" D*''" 3$"
C&'C8'&>$("*,*>*&''5"*,"/.*,>+E"4@$">.>&'"/.*,>+"5.8"&C@*$B$"(8%*,A">@$"$F/$%*?$,>"D*''">@$,"&>"
>@$"$,("3$"C.,B$%>$(">."$8%.+"D*>@">@$"$FC@&,A$"%&>$".0"
25 points = 1 euro
Z+"&'%$&(5"?$,>*.,$(:"&>">@$"$,(".0">.(&5d+"$F/$%*?$,>"5.8"D*''"%$C$*B$"cash"0.%">@$"/.*,>+"
5.8"$&%,$("(8%*,A"3.>@"/&%>+".0">@$"$F/$%*?$,>E"G,">@$",$F>"/&A$+"D$"D*''"$F/'&*,">@$"$F&C>"
+$j8$,C$".0"$B$,>+"0.%">@$"0*%+>"/&%>".0">@$"$F/$%*?$,>E""
"
Instructions for the TT"
1.
"
Structure of the Experiment
"
"
=," >@*+" $F/$%*?$,>" &" +8?" .0" ;9<" /.*,>+" D*''" 3$"&''.>>$(" >."5.8" .%" &,.>@$%" /&%>*C*/&,>" .0" >@*+"
$F/$%*?$,>E" 4@*+" .>@$%" /&%>*C*/&,>" D*''" 3$" %&,(.?'5" &++*A,$(" >." 5.8" &,(" D*''" %$?&*,"
&,.,5?.8+" >@%[email protected]>" >@$" $,>*%$" $F/$%*?$,>E" k.8%" &,.,5?*>5" D*''" &'+." 3$" /%$+$%B$(" >@$"
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"
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x =0"5.8"*,C%$&+$"5.8%"*,/8>:">@$"/%.3&3*'*>5">@&>"5.8"%$C$*B$">@$"+8?"A.$+"8/E""
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"
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"
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"
Table
The difference in inputs between the participants and the resulting probabilities of receiving
the higher point sum (rounded)"
Difference in
inputs
(Your input –
other’s input)
Probability of getting
the 280 points
You
Difference in
inputs
The other
participant
W!T"
W!N"
W!;"
W!!"
W!<"
WL"
W9"
WS"
W\"
WJ"
WT"
WN"
W;"
W!"
(Your input –
other’s input)
Probability of getting
the 280 points
You
The other
participant
<p"
!<<p"
<"
J<p"
J<p"
<ENp"
LLESp"
!"
J\ELp"
TNE!p"
!E<p"
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;"
\NENp"
N\ESp"
;ENp"
LSESp"
N"
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N<ELp"
TE!p"
LJELp"
T"
STEJp"
;JEJp"
\ETp"
LNE\p"
J"
SLENp"
;<ESp"
LE;p"
L<E9p"
\"
9NESp"
!\ENp"
!;EJp"
9SEJp"
S"
9SEJp"
!;EJp"
!\ENp"
9NESp"
9"
L<E9p"
LE;p"
;<ESp"
SLENp"
L"
LNE\p"
\ETp"
;JEJp"
STEJp"
!<"
LJELp"
TE!p"
N<ELp"
\LE!p"
!!"
LSESp"
;ENp"
N\ESp"
\NENp"
!;"
LLE<p"
!E<p"
TNE!p"
J\ELp"
!N"
LLESp"
<ENp"
"
!T"
!<<p"
<p"
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"
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>*?$+:">@$,"%$(8C$"*>">D*C$"&,("*,C%$&+$"*>"&,$D".,C$E"Z0>$%">@%$$"?*,8>$+"5.8%"*,/8>"&?.8,>+"
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>@$,"\"bq"!;W\cE""
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!9"
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Table 2
The difference in inputs between your input and the input of a participant from the previous
experiment and the resulting probabilities of receiving the higher point sum (rounded)"
Difference in
inputs
Your Probability of
getting the 280 points
Difference in
inputs
(Your input –
other’s input)
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W!N"
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Your Probability of
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3.
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Instructions for the NLT"
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[email protected],E"X$F>">.">@*+"*+"5.8%"+@&%$E""
;!"
"
Table 2
The difference in inputs between your input and the input of a participant from the previous
experiment and the resulting share of the point sum (rounded)"
Difference in
inputs
Your share of the 280
points
Difference in
inputs
(Your input –
other’s input)
W!T"
W!N"
W!;"
W!!"
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WN"
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Your share of the 280
points
(Your input –
other’s input)
<p"
<ENp"
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6.
Comprehension Questions
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situation of the assigned participant from the TT)
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Appendix B – Equilibrium in the TT
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Table A1. Equilibria by loss aversion degree
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Appendix C – Optimal responses in every treatment
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No. 21
september 2007
Gerald Eisenkopf
Learning and Peer Effects
Research Paper Series
Thurgau Institute of Economics