Date of Award

8-11-2020

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Vjollca Sadiraj

Second Advisor

James Cox

Third Advisor

Thomas Mroz

Fourth Advisor

Michael Kummer

Abstract

The broad goal of this research is to understand the implications of various institutional environments on social welfare and equity through laboratory experiments. In the first chapter, I analyze pricing structures and market behavior in markets with two-sided platforms, and for my second chapter, I explore the determinants of giving behavior in dictator game experiments.

Recent court battles between Amazon and publishing companies over the control of ebook sales prices prompted the research question for my first chapter about the welfare effects of different types of pricing schemes in two-sided markets, where the presence of indirect network effects plays a crucial role unlike in traditional, one-sided markets. I conduct a novel, two-sided market experiment with competing platforms, sellers, and buyers to compare two pricing schemes: (1) the agency pricing scheme and (2) the platform pricing scheme. Under the agency pricing scheme, sellers retain control of prices over their goods or services (e.g. Amazon Marketplace), whereas, under the platform pricing scheme, platforms have control over prices (e.g. Uber). I also allow subjects to chat with one another in another set of treatments and find that communication leads to collusive behavior but only in the Agency Pricing Treatment. My findings suggest that the platforms’ lack of perfect information on the sellers’ costs as well as the less accommodating learning environment for platforms under platform pricing leads to lower market efficiency under the Platform Pricing Treatment than the Agency Pricing Treatment. As a result, policymakers may want to consider the role that information asymmetry plays across the two pricing schemes in their regulations of two-sided markets.

My second chapter, joint work with Dr. James Cox, Dr. Vjollca Sadiraj, and Sean Bokelmann, is a meta-study of dictator game experiments. Using metadata collected by Engel (2011) from 620 dictator games from 131 papers, we explore the determinants of giving behavior and test the theory of “moral reference points”—introduced by Cox et. al (2017)—to explain giving behavior. Cox et al. (2017) define the moral reference points as an observable feature of opportunity sets (in dictator games) that captures information on the players’ endowments and the dictator’s action space. We update Engel’s (2011) data with additional information on the initial endowments and the minimal expectation points (via maximum and minimum amounts that the dictators can give or take) in order to calculate the moral reference points for each treatment.

Using this updated data, we re-estimate Engel’s (2011) regression and meta-regression analyses and compare results to those when we include the moral reference points as covariates. Our results support the moral monotonicity hypothesis, the main defining characteristic of Cox et al.’s (2017) theory of moral reference points. Our findings have implications for the literature on charitable giving and altruistic behavior.

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