University of Birmingham LM Behavioral and Experimental Economics Questions

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Assignment 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
25/04/2022
Due Date & Time
16/05/2022
12.00 noon
Feedback Post Date 06/06/2022
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). Using the taxonomy proposed by the
authors in the article, explain the differences between Controlled Lab Experiments
and Natural Field Experiments. You should support your discussion with examples
from the Experimental Economics literature.
(30%)
b) Consider the article from Fehr et al. (1993): the authors design a lab experiment in
order to test the fair wage-effort hypothesis. Describe the Experimental Design used
in the lab experiment. Explain how the two-stage game used in the experiment allows
the authors to test the fair wage-effort hypothesis. Interpret the experimental results:
are wages and level of efforts converging to the market-clearing level?
(35%)
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. Discuss the Experimental
Design. In particular, 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) brings 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
experimental economics evidence.
(35%)
? 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) Explain the Allais Paradox illustrating the violation of the Expected Utility Theory.
Consider the paper by John Conlisk (1989). Describe the “Three Steps Allais
Question” experiment and how the author proposes to solve the Allais Paradox. (30%)
b) Kahneman and Tversky (1979) criticize the Expected Utility Theory as a descriptive
model of decision making under risk, and they propose the 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 points 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.
(35%)
c) Consider the article by Imas et al. (2016). Discuss the Experimental Design. In
particular, 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.
(35%)
? Conlisk, J. (1989) “Three Variants on the Allais Example,” The American Economic
Review, Vol. 79, No. 3, Jun., 1989 pp. 392-396.
? 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.
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.birmingh am.ac.uk/as/
studentservices/conduct/misconduct/plagiarism/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

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Explanation & Answer:
2000 words

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Harrison and List

experiments

realism

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