Innovative approaches to economic experiments : control, respect, and virtual reality

Staffeldt, Andreas; Harbring, Christine (Thesis advisor); Grund, Christian (Thesis advisor)

Aachen (2018)
Dissertation / PhD Thesis

Dissertation, RWTH Aachen University, 2018

Abstract

The PhD thesis involves four economic experiments that all use innovative approaches. The first chapter investigates motivational crowding-out through control by a principal. These “hidden costs of control” have been widely and controversially discussed in the field of experimental economics. Firstly, the experimental design uses a double strategy method. Secondly, the elicitation of expectations in different roles constitutes an innovative way to analyze the situation. The chapter contributes to the debate by answering the main research question: When do hidden costs of control arise and what is the role of expectations for the occurrence of these costs? Recent developments in virtual reality (VR) technology have the potential to revolutionize the way in which economists do experimental research. For the experiments of the second and of the third chapter a virtual work environment was created. For the second chapter subjects also work together with other workers who are (programed) virtual humans. Subjects work in a realistic environment conducting real-effort tasks, while at the same time the experimenter has control over the actions of (virtual) peers. Furthermore, the new methodology allows the experimenter to collect tracking data in the virtual environment, in particular the position and orientation of a subject’s head and hand(s). Information can be used to analyze how subjects make the trade-off between quantity and quality as a function of the economic incentives provided. The last chapter of this dissertation is devoted to respect. The study compares incentive effects of monetary and symbolic rewards. Therefore, a real-effort lab experiment is conducted in which agents worked for principals, and principals could respond by giving rewards. The results provide evidence that costs are essential for the effectiveness of both monetary and symbolic reward systems and that a low reward can have a detrimental effect on the subsequent work performance compared to no reward.