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AbstractThis study experimentally evaluates the risk preferences of children and adolescents living in an urban Chinese environment. We use a simple binary choice task that tests risk aversion, as well as prudence. This is the first test for prudence in children and adolescents. Our results reveal that subjects from grades 5 to 11 (10 to 17 years) make mostly risk-averse and prudent choices. The choices of 3rd graders (8 to 9 years) do not differ statistically from risk neutral benchmarks, but at the same time they make mostly prudent choices. We also find evidence for a transmission of risk preferences. There is positive correlation between all children's and their parents' tendency to make risk-averse choices. There is also positive correlation between girls' and their parents' tendency to make prudent choices.

The propensity to take risks is a fundamental trait that determines the nature of decision making. For example, risk taking is regarded as an important driver of entrepreneurial and innovative behavior in an economy. In this paper, we survey the empirical evidence on individual risk-taking behavior in China. We focus on those studies that elicit preferences for risk taking involving real monetary stakes under controlled conditions, using the methods of Experimental Economics. The studies that we summarize compare Chinese subjects to those in other countries. While non-incentivized surveys find that Chinese subjects are more willing to take risks than Germans and Americans are, the existing experimental studies suggest that this relationship is less clear cut. (Asien/GIGA)

Several studies report changes in risk taking subsequent to experiencing near-loss events. We disentangle strategic and non-strategic reactions to such near-losses experimentally. We observe that near-losses affect the supply and demand for insurance under strategic uncertainty but not individual evaluations.

We study the effects of communication content and its interaction with reputation on the choice of transaction partners in markets with moral hazard. We find that buyers' choices of sellers are influenced by prices and reputation information as well as by sellers' messages: buyers prefer sellers who make specific promises. If specific promises are infeasible, buyers prefer sellers whose arguments reduce the social distance. These observations do not depend on the availability of reputation information. We also find that, if specific promises are feasible, buyers' profits do not significantly differ from hypothetical profits realized under a correct expectations rule.

We experimentally study the role of reputation in procurement using two common mechanisms: price-based and buyer-determined auctions. While buyers are bound to buy from the lowest bidder in price-based auctions, they can choose between bidders in buyer-determined auctions. Only the latter buyers can consider the reputation of bidders. We find that bidders supply higher quality in buyer-determined auctions leading to higher market efficiencies in these auctions. Accordingly, buyers prefer the buyer-determined auction over the price-based auction, while only half of the bidders do so. A more detailed analysis of buyers' and bidders' behavior and profits provides insights into their mechanism choice. © 2012 Production and Operations Management Society.

We study behavior in the race game with the aim of assessing whether teams can create synergies. The race game has the advantage that the optimal strategy depends neither on beliefs about other players nor on distributional or efficiency concerns. Our results reveal that teams not only outperform individuals but that they can also beat the "truth-wins" benchmark. In particular, varying the length of the race game we find that the team advantage increases with the complexity of the game.

This is the first study investigating the development of the capability to reason backwards in children, adolescents, and young adults aged 6 to 23 under controlled laboratory conditions. The experimental design employs a modified version of the race game. As in the original game, subjects need to apply backward analysis in order to solve the games. We find that subjects' capability to reason backwards improves with age, but that this process systematically differs across genders. Our repetition of the games indicates that differences exist also in learning between age groups and across genders.

The dynamics of behavior observed in standard public-good experiments can be explained by imperfect conditional cooperation combined with social learning (Fischbacher and Gächter, 2010). But it is unclear what determines first-round contributions. We argue that first-round contributions depend on the difference between the actual marginal per capita return (MPCR) and the minimal MPCR necessary to create a social dilemma for the given group size. We use a novel connected-lab design that allows members of large groups to simultaneously interact under laboratory conditions. In total, 5,220 subjects participated in our experiment in groups of up to 100 subjects. The results confirm that first-round contributions increase with the MPCR distance. This effect carries over to contributions made in subsequent rounds. Our results demonstrate that small groups behave similar to large groups and that the salience of the di-lemma situation is of great importance for contributions made to the public good.