The process of allocating rights to resources can be viewed as a contest: parties compete with each other for the right to claim a larger allocation. In some situations, the amount of the resource that is available to allocate may be unknown when parties are competing for shares and perhaps not realized until contestants actually attempt to claim their shares of the resource. For example, fishing quotas may be awarded based on estimated fish populations, but if there are fewer fish than anticipated, those who are last to harvest may not be able to fill their quota. We model contests of this form and test the predictions of the model using a controlled laboratory experiment. The general result, supported by both theory and experimental data, is that participants compete less intensively for shares of the resource when uncertainty regarding the size of the prize is resolved later in the process.

There is substantial evidence that the decisions of experienced and inexperienced agents differ in ways that impact both individual earnings and aggregate market outcomes. Typically, such evidence is gathered by studying experience as it accumulates within subjects over time. We examine a new question; whether behaviors associated with experience can be transferred directly to new market participants. Specifically, we study the intergenerational transmission of information, including direct advice, in experimental asset markets. Empirical results suggest that advice is a substitute for experience. Prices in sessions with advised traders shift towards fundamentals—a pattern consonant with prior work exploring the impact of own-experience on pricing dynamics. Further, convergence is observed in mixed-markets where only a subset of traders are advised.

We study dictator allocations using a 2×2 experimental design that varies the level of anonymity and the choice set, allowing observation of audience effects in both give and take frames. Changes in the distribution of responses across treatment cells allow us to distinguish among alternative motives as elaborated in recent theory. We observe significant audience effects that vary by both frame and gender. The pattern of responses suggests that heterogeneous concerns for reputation and self-signaling across gender give rise to the contextual effects associated with the give and take frames that have previously been observed in the literature.

This computerized web experiment immerses students in an environment where they are in the role of bank managers, complementing existing experiments in which they act as depositors. The experiment is programmed to run on a variety of devices, including student’s phones and is suitable for use in intermediate macroeconomics or money and banking courses. Students learn the basic elements of bank balance sheets, the tradeoffs a bank makes when it hedges against liquidity risk, and the macroeconomic implications of the network aspects of the banking system. Key parameters are chosen by the instructor, and all results are saved as a spreadsheet data file. Early trials show that a team's performance is positively correlated with its success in managing interbank deposits.

Studies of individual choices have yielded evidence of the importance of comparative ignorance. Aversion to ambiguity - where information about probabilities is missing - is strengthened when a comparison to risky lotteries with known probabilities is available. The current study advances this literature by exploring the importance of this finding for market outcomes and finds support for the comparative ignorance in the market setting. A sizeable effect of ambiguity on prices is observed – but only when the experimental treatment makes the risky and ambiguous assets easily comparable. Further, when ambiguity is salient, individual attitudes towards ambiguity and behavior in the marketplace are linked; ambiguity-averse subjects tend to avoid ambiguous assets in the marketplace. However, a simple experimental manipulation that makes the distinction between risk and ambiguity less salient changes outcomes dramatically; the correlation between individual ambiguity attitudes and market allocations disappears, and market prices of risky and ambiguous assets converge.

A burgeoning literature in the neurosciences suggests that individuals modify their behavior not only in response to their own experiences, but also from what they learn about the experiences of others engaged in similar tasks. Importantly, these different forms of learning are associated with common neurological processes. We explore whether others’ advice provides a fictive learning signal that substitutes for one’s own experience. We examine this question in an environment where inexperienced traders frequently perform poorly – an experimental asset market. Prices in sessions with advice tend towards fundamentals mitigating the severity of price bubbles. Further, advice allays behaviors shown to yield bubbles in prior studies. Taken jointly, our data suggest that advice triggers fictive learning which helps agents avoid the “mistakes” made by naive counterparts.

Assessment of regional economic impacts can be accomplished using either an input-output analysis or a social accounting matrix (SAM) analysis. While these approaches can generate important insights, they have significant limitations for some cases, e.g., the event of the need to reallocate limited resources such as land, labor, etc., because they do not include a complete set of decision makers' activities and managerial options. This study develops a flexible approach to link the firm level linear programming model to regional economic models to overcome these limitations, a LP-SAM. To demonstrate the LP-SAM a ranch-level economic model is linked to the regional SAM to investigate the impact of wildfire on the southeastern Oregon. The LP-SAM successfully traces out the decision makers' responses to wildfire and also regional economic impacts.

Abstract A ranch-level economic model is linked to a social accounting matrix (SAM), a.k.a. LP-SAM, to investigate the impact of wildfire on the regional economy. This study is the expansion of Alevy and Harris (2008) with a stochastic wildfire model based on historical wildfire data. The LP-SAM model is used to estimate the impact of wildfire in southeast Oregon. Wildfire limits ranchers’ access to public grazing land and causes the economic losses of $20 million ~ $65 million per year in the near future, equivalently about 0.2%~0.5% of the total value of regional production. Cattle and ranching sector loses $7 million ~ $20 million per year (3% ~ 8% of total sectoral production) per year. The value of agricultural and hay production decrease by $1.7 million ~ $5.1 million directly due to wildfire and indirectly due to reduction of cattle sector production. This study suggests that the wildfire loss can be substantial and efforts to reduce wildfire damage to public lands should be expanded.

Psychological insights have made inroads within most areas of study in economics. One area where less advance has occurred is environmental and resource economics. In this study, we examine preference reversals over evaluation modes, in which economic values critically depend on whether a good is valued jointly with others, or in isolation. The question arises because two methods for eliciting stated preferences differ in that one presents objects together and another presents them in isolation. Our empirical evidence demonstrates the import of behavioral economics and sheds new light on the possible insensitivity of valuations to the scope of the good. (JEL Q51)

Field experiments were conducted with farmers in the Limari Valley of Chile to test extant theory on right-to-choose auctions. Water volumes that differed by reservoir source and time of availability were offered for sale by the research team. The auctions were supplemented by protocols to elicit risk and time preferences of bidders. We find that the right-to-choose auctions raise significantly more revenue than the benchmark sequential auction. Risk attitudes explain a substantial amount of the difference in bidding between auction institutions, consonant with received theory. The auction bidding revealed distinct preferences for water types, which has implications for market re-design.

A pillar of behavioral research is that preferences are constructed during the process of choice. A prominent finding is that uninformative numerical anchors influence judgment and valuation. It remains unclear whether such processes influence market equilibria. We conduct two experiments that extend the study of anchoring to field settings. The first experiment produces evidence that some consumers' valuations can be anchored in novel situations; there is no evidence that experienced agents are influenced by anchors. The second experiment finds that anchors have only transient effects on market outcomes that converge to equilibrium predictions after a few market periods. (JELC93, D11)

Market participants make use of a plethora of information to assist decision-making. While much of this information takes the form of public announcements, many “advisors” target their advice more carefully. We investigate the impact of targeted advice using the intergenerational framework of Schotter and Sopher (2003) in an experimental asset market. Empirical results suggest others’ advice is a close substitute for experience. Prices in sessions with advice tend towards fundamentals mitigating the severity of price bubbles. We also find that advice serves to allay the types of types of behavior – i.e., momentum trading – shown to yield bubbles in prior studies.