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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.

We consider two mechanisms to procure differentiated goods: a sealed-bid buyer-determined auction and a dynamic-bid price-based auction with bidding credits. The sealed-bid buyer-determined auction is analogous to the "request for quote" procedure commonly used by procurement agencies, and has each seller submit a price and the inherent quality of his good. Then the buyer selects the seller who offers the greatest difference in quality and price. In the dynamic-bid price-based auction with bidding credits, the buyer assigns a bidding credit to each seller conditional upon the quality of the seller's good. Then the sellers compete in an English auction, with the winner receiving the auction price and his bidding credit. Game-theoretic models predict the sealed-bid buyer-determined auction is socially efficient but the dynamic-bid price-based auction with bidding credits is not. The optimal bidding credit assignment undercompensates for quality advantages, creating a market distortion in which the buyer captures surplus at the expense of the seller's profit and social efficiency. In our experiment, the sealed-bid buyer-determined auction is less efficient than the dynamic-bid price-based auction with bidding credits. Moreover, both the buyer and seller receive more surplus in the dynamic-bid price-based auction with bidding credits.

We use laboratory experiments to evaluate the effects of cognitive stress on inventory management decisions in a finite horizon economic order quantity (EOQ) model. We manipulate two sources of cognitive stress. First, we vary individuals' participation in a 6-digit mixed number and letter memorization task involving their personal identification numbers. This exogenously increases cognitive load. Second, we introduce an intervention to reduce cognitive stress by only allowing participants to order when inventory is depleted. This restricts the order choice set. Increases in cognitive load negatively impact earnings with and without the intervention, with these impacts largely occurring in the first attempt of the task. With repetition, participants' choices in all treatments trend to near-optimal policy adoption. However, only in the intervention and low cognitive load treatment do the majority of choices reach the optimal policy. We estimate the learning dynamics of order decisions using a Markov learning model. Estimates suggest increased cognitive load reduces the probability of switching to more profitable policies. Choice set complexity increases biases for smaller order size adjustments, leading to greater policy lock-in.

Access to information via social media is one of the biggest differentiators of public health crises today. During the early stages of the Covid-19 outbreak in January 2020, we conducted an experiment in Wuhan, China to assess the impact of viral social media content on pro-social and trust behaviours and preferences towards risk taking with known and unknown probabilities. Prior to the experiment, participants viewed one of two videos that had been widely and anonymously shared on Chinese social media: a central government leader visiting a local hospital and supermarket, or health care volunteers transiting to Wuhan. In a control condition, participants watched a Neutral video, unrelated to the crisis. Viewing one of the leadership or volunteer videos leads to higher levels of pro-sociality and lesser willingness to take risks in an ambiguous situation relative to the control condition. The leadership video, however, induces lower levels of trust. We provide evidence from two post-experiment surveys that the video's impact on pro-sociality is modulated by influencing the viewer's affective emotional state. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s40881-021-00104-w.

We study whether intra- and international groups have different cooperation rates in the Prisoner's Dilemma Game. We report on an experiment in which university students in China and America engage in a single iteration of the game, complete belief elicitation tasks regarding their counterparts' play, and complete a survey including attitudinal measurements regarding their in- and out-group attitudes. We find that Chinese overall cooperation rates are less than American ones. Further, female participants are more cooperative than males. With respect to international cooperation, Chinese participants accurately estimate the likelihood of cooperative behavior of their American counterparts, while Americans overestimate the same likelihood of their Chinese counterparts. Our results further show that Chinese participants cooperate more conditionally than American ones. Finally, we find a more positive attitude towards one's living country is related to less international cooperative behavior, and a more positive attitude towards the other country is related to more international cooperation.