BENC one-half day symposium, 3 May 2-5:30 pm, NUBS 4.25



14:00 - 15:00, Andrew Caplin (New York University)

Title: Rationally Inattentive Behavior: Characterizing and Generalizing Shannon Entropy 

Abstract: We introduce analytically tractable new entropy-based attention cost functions. We characterize behaviors consistent with these general models as well as the Shannon model. What makes the Shannon model unique is a "Compression" axiom whereby choices depend only on the probabilistic structure of payoffs, not the nature of the underlying state space.


15:00 - 15:30, Xu Yan (Rotterdam School of Management)

Title: Behind the Veil of Ignorance: Risk Aversion or Inequality Aversion?

Abstract: This paper successfully decomposes risk attitude and social preference behind the veil of ignorance (VoI). Using a novel experiment wherein subjects move a slider to divide a pie of money between high and low reward in both lottery and VoI treatments, we are able to collect rich data sets at the individual level. We check individual preference characteristics including consistency and homotheticity in pure risk and in distributive scenarios and employ two structure models to estimate underlying motivations. The results show aversions of unequal distribution behind VoI are not the same concepts as risk aversions and they are highly heterogeneous among subjects. A significant amount of subjects demonstrate other-regarding preference in the sense of aversion for unequal distribution and of not being jealous when receiving low rewards.


15:30 - 16:00 Coffee Network


16:00 - 16:30, Sarah Zhang (University of Manchester)

Title: Humans versus Agents: Experimental Evidence on the Impact of High Frequency Trading

Abstract: We study the influence of high frequency trading (HFT) on market efficiency and on human trading behavior and affective processes in a laboratory market. Based on the traditional design by Smith (1962), we conduct a laboratory experiment with human participants and computer agents with different trading speeds. In order to assess the physiological arousal of human participants, we measure their heart rate. We find that computer agents significantly improve market efficiency and quality, while they lower trading profits and induce higher price aggressiveness of human traders. Based on the theory of competitive arousal, we conclude that rivalry is mitigated when agents are present. This in turn translates into lower human risk taking and higher aggressiveness in the presence of agents.


16:30 - 17:30, Tim Cason (Purdue University)

Title: Continuous Time Crowdfunding with Refund Bonuses

Abstract: Public goods, and creative and social entrepreneurship projects, are often financed through voluntary contributions made by many individuals. Such crowdfunding efforts often involve funding target thresholds, with contributions solicited over a specific timeframe. This experiment studies a new refund bonus mechanism, in which each contributor has her contribution refunded if the threshold is not met, along with a refund bonus that is proportional to her proposed contribution. As long as the refund bonus is sufficiently small, for this mechanism worthwhile projects are always funded successfully in equilibrium. We find that the funding rate is significantly greater with the refund bonus compared to a no-bonus baseline, particularly when contributors can simultaneously give to alternative projects. Contributions occur in continuous time, and a rush of last-second contributions near the threshold leads to some coordination failure and inefficiency.


Last modified: Mon, 17 Apr 2017 14:47:37 BST