LM 27184 Experimental and Behavioural Economics

Assignment/Coursework Remit
Programme Title Master Programs
Module Title LM Behavioral and Experimental Economics
Module Code 27184
Assignment Title Experimental and Behavioural Economics
Level LM
Weighting 100%
Lecturers Amalia Di Girolamo
Hand Out Date Enter date here 25/03/24
Deadline Date & Time Enter date here 25/04/24 12pm
Feedback Post Date Enter date here 20/05/x24
Assignment Format Essay
Assignment Length 2000 words absolute maximum
Submission Format Online Individual
Assignment:
Please answer ONE of the following TWO possible questions. Each question has three subparts
(a, b, c) – please answer all parts of the question you attempt.
Whichever question you select, you will write three short essays. It is up to you how you use
the words at your disposal, but the total word count should not exceed 2000 words. This is a
strict maximum word limit. Note that in-text referencing is included in the word count, but
the reference list at the end is not. All referencing should be in a Harvard style. Weightings
appear after each sub-part.
Question 1
a) Consider the article by Harrison and List (2004). The authors propose a taxonomy in
the article to categorize the different types of experiments. For each category you
should provide a detailed description of the type of experiment, explaining the
differences in terms of subject pool, information set, task, commodity, stakes and
environment where the experimental subjects operate in. For each type of experiment,
provide an example of a study (published), shortly describe the experimental design of
the article and how it fits the category you chose to represent. You should support your
discussion with examples from the Experimental Economics literature. (40%)
b) Consider the Gift Exchange Game (Fehr et al., 1993). Explain the Fair Wage-Effort
Hypothesis as defined by Akerlof and Yellen (1990). Describe how the Fair Wage-
Effort hypothesis can be tested in a lab setting by means of the Gift Exchange Game.
You should discuss the pros and the cons of running a Gift Exchange game in a lab
setting. You should support your discussion using the experimental economics
literature. (30%)
c) In their article “Putting Behavioral Economics to Work: Testing for Gift Exchange in
Labor Markets Using Field Experiments” Gneezy and List (2006) examine the fair
wage-effort hypothesis by means of a Field Experiment. Describe the Experimental
Design used in the Field Experiment. You should explain the type of experiment used
by the authors, the treatments chosen, and the tasks undertaken by the participants.
Compare the results between the “Library Task” and the “Fundraising Task”,
highlighting common points and main differences. Discuss the contribution that the
paper by Gneezy and List (2006) makes to the Experimental Economics literature on
the Fair Wage-Effort Hypothesis. You should reflect on the difference between Lab and
Field Experiments in the context of the Fair Wage-Effort Hypothesis, supporting your
discussion with evidence from the experimental economics literature. (30%)
− Akerlof, G. A., & Yellen, J. L. (1990). “The Fair Wage-Effort Hypothesis and
Unemployment,” The Quarterly Journal of Economics, 105(2), 255–283.
− Fehr, E., Kirchsteiger, G., & Riedl, A. (1993). Does Fairness Prevent Market
Clearing? An Experimental Investigation. The Quarterly Journal of Economics,
108(2), 437-459.
− Gneezy, U. & List, J. A. (2006) “Putting Behavioral Economics to Work: Testing
for Gift Exchange in Labor Markets Using Field Experiments,” Econometrica,
vol. 74(5), pages 1365-1384.
− Harrison, G. W. and List, J. A. (2004) “Field Experiments”, Journal of Economic
Literature, Vol. 42, No. 4., pp. 1009-1055.
Question 2
a) Provide a definition of Social Norms: you should concisely summarize the economic
literature on the topic trying to combine the different shades of the concept provided by
different authors (Hint: Bicchieri and Ostrom are the most prominent economists
working on the topic, but you can also refer to other authors publishing in economics).
With reference to Krupka and Weber (2013) describe how it is possible to elicit social
norms by means of a lab experiment. Describe the experimental design, the treatments,
tasks, and stakes. Critically discuss the results of the experiment(s). (40%)
b) Kahneman and Tversky (1979) criticize Expected Utility Theory as a descriptive model
of decision making under risk, and they propose Prospect Theory as an alternative
model for describing risk preferences of individual decision makers. Discuss the
Certainty Effect and the Reflection Effect. Illustrate the main characteristics of the
Value Function, explaining how the reference point is determined and how gains and
losses are evaluated under this theory. You should graphically support your explanation
of the Value Function. (30%)
c) Consider the article by Imas et al. (2016). Discuss the experimental design. You should
explain the type of experiment used by the authors, the treatments chosen, and the tasks
undertaken by the participants. Compare the results between Experiment 1 and
Experiment 2 reflecting on the underlying theoretical predictions.
(30%)
− Imas, A., Sadoff, S. &, Samek, A. (2016) “Do People Anticipate Loss Aversion?”
Management Science 63(5):1271-1284.
− Kahneman, D., & Tversky, A. (1979). “Prospect Theory: An Analysis of Decision
under Risk.” Econometrica, 47(2), 263-291.
− Krupka, E.L. and Weber, R.A. (2013). Identifying Social Norms Using Coordination
Games: Why Does Dictator Game Sharing Vary? Journal of the European Economic
Association, 11: 495-524.
Grading Criteria:
Mark awarded The higher mark (100, 88, 78, etc.) should be awarded if criteria in any mark
band are fully or nearly fully met. The lower marks (62, 33, etc.) should be
awarded to scripts that are above the highest standard for the category below
but fail to meet all the criteria for the selected mark band. The middle marks
(45, 55, 65, 75) can also be used when marking between 40 and 80%.
100 (93) An outstanding essay, as good as can be reasonably expected, must show excellent
understanding of the topic and synthesis of material from a range of relevant
sources. Presentation and structure excellent with effective use of diagrams and
formulas (where appropriate). Reference material cited and listed appropriately.
88 (83) An excellent answer demonstrates full understanding of the topic. Good use of
material from a wide range of relevant sources. Extremely well written and structured
with effective use of diagrams and formulas (where appropriate). Reference material
cited and listed appropriately.
78 (75) (72) A very good essay that includes all the major points required to address the topic,
demonstrates a thorough understanding of the topic. Good use of material from
several sources. Presentation and structure good with good use of diagrams and
formulas (where appropriate). Reference material cited and listed appropriately.
68 (65) (62) A good essay that includes most of the major points required to address the topic,
shows a good understanding of the subject area. Good use of material from several
sources. Presentation and structure generally good with good use of diagrams and
formulas (where appropriate). Reference material cited and listed appropriately.
58 (55) (52) A satisfactory essay that includes the basic information required to address the topic,
shows understanding of the topic. Material may be from a limited range of sources
or too reliant on the slides provided in the module. Insufficient thought given to
structure, some use of diagrams and formulas (where appropriate). Some errors in
citing and listing reference material.
48 (45) (42) Essay incomplete with serious omissions, some sound knowledge and evidence that
the topic has, at least partly, been understood. Material may be from a limited range
of sources or too reliant on the slides provided in the module. Poorly structured with
poor use of diagrams and images. Errors in citing and listing reference material.
38 (33) Unsatisfactory essay with major omissions and errors; lacks evidence of
understanding. Material from a limited range of sources or too reliant on the slides
provided in the module but some material relevant to the topic. Poorly structured with
poor use of diagrams and formulas. Errors in citing and listing reference material.
28 (23) Poor essay but contains some relevant points. Material from a limited range of
sources or too reliant on the slides provided in the module. Poorly structured, little
use of appropriate images or diagrams. Errors in citing and listing reference material.
18 (13) Little of value, one major or a small number of minor points which may be just
relevant. Fails to address the question.
8 (3) Virtually nothing of value, maybe one or two very minor points, phrases or words that
are barely relevant. No evidence of understanding the question.
0 Answer contains nothing relevant to the question.
Feedback to Students:
Both Summative and Formative feedback is given to encourage students to reflect on their
learning that feed forward into following assessment tasks. The preparation for all
assessment tasks will be supported by formative feedback within the tutorials/seminars.
Written feedback is provided as appropriate. Please be aware to use the browser and not
the Canvas App as you may not be able to view all comments.
Plagiarism:
It is your responsibility to ensure that you understand correct referencing practices. You are
expected to use appropriate references and keep carefully detailed notes of all your
information sources, including any material downloaded from the Internet. It is your
responsibility to ensure that you are not vulnerable to any alleged breaches of the
assessment regulations. More information is available at
https://intranet.birmingham.ac.uk/as/registry/policy/conduct/plagiarism/index.aspx.
Use of Generative AI:
Unless explicitly stated otherwise, students should assume that the use of generative AI
within an assessment or assignment is not permitted. Any assessment submitted that is not
a student’s own work, including that written by generative AI tools, are in breach of the
University’s Code of Practice on Academic Integrity
(https://intranet.birmingham.ac.uk/as/registry/policy/conduct/plagiarism/index.aspx
Wellbeing Extenuating Circumstances:
The process for Extenuating Circumstances is to support students who have experienced
unforeseen issues that have impacted their ability to engage with their studies and/or
complete assessments. Students should notify Wellbeing of any extenuating circumstances
as soon as possible via the online form, following the guidance provided.
https://intranet.birmingham.ac.uk/social-sciences/college-services/wellbeing/index.aspx
Assignment Instructions
• Submit your assignment through Canvas.
• All papers mentioned in the questions are uploaded on the relevant topic pages in
Canvas. Wider reading and referencing other literature is welcome but only if
strictly relevant for the topic. This means that if you provide support to your
argument with more literature this will be evaluated positively as long as it is
relevant for the discussion.
• Please type your answer. You should produce your own equations, tables and
diagrams where relevant, either by hand (and uploaded/scanned) or digitally.
Figures copied directly from the slides or online sources will receive lower marks.
The exception is plots of data taken from published articles, which can be included
directly as long as they are appropriately referenced.
• Refer to the marking criteria for further guidance and write to me
(a.digirolamo@bham.ac.uk) if anything is unclear.