The Impact of Beliefs on Effort in Telecommuting Teams

with E. Glenn Dutcher (Ohio University)
Working PaperRevisions Requested


The use of telecommuting policies remains controversial for many employers because of the perceived opportunity for shirking outside of the traditional workplace; a problem that is potentially exacerbated if employees work in teams. Using a controlled experiment, where individuals work in teams with varying numbers of telecommuters, we test how telecommuting affects the effort choice of workers. We find that differences in productivity within the team do not result from shirking by telecommuters; rather, changes in effort result from an individual's belief about the productivity of their teammates. In line with stereotypes, a high proportion of both telecommuting and non-telecommuting participants believed their telecommuting partners were less productive. Consequently, lower expectations of partner productivity resulted in lower effort when individuals were partnered with telecommuters. Our results suggest that managers should actively engage in disseminating productivity information to their telecommuting team in order to avoid negative effects on productivity.

Default and Resale-Based Limited Liability in Second Price Auctions

(Earlier draft circulated as: An Analysis of Market-Based and Statutory Limited Liability in Second Price Auctions)

Working PaperRevisions Requested


In auctions where bidders are uncertain of their value, the potential for losses exists if bids exceed realized values. If bidders are able to mitigate this downside loss through some form of limited liability bids will be higher, but how aggressively bidders are predicted to respond depends on the type and level of liability. Using a combination of theory and experiment, I examine a second price auction with uncertain private values under three liability environments: full liability, limited liability induced through default with a penalty payment, and resale-based limited liability. The experimental results confirm theoretical predictions of more aggressive bidding under a low default penalty and resale. The highest bids are observed in the low default penalty, but revenue is highest under resale due to the frequency of default. In contrast to predictions, bids under a high default penalty are equivalent to bids under full liability.

Is "Real" Effort More Real?

with Glenn Dutcher (Ohio University), Tim Salmon (Southern Methodist University)
Working Paper


In recent years, a growing number of studies have researchers opting to use real effort designs for laboratory experiments where subjects complete an actual task to exert effort rather than using what is perhaps a more traditional design of stylized effort where subjects simply choose an effort level from a pre-determined set. The commonly argued reason for real effort is that it makes the results more generalizable and field relevant. Some researchers go further and make a distinction between trivial and useful real effort, i.e. whether the task is only relevant for the experiment or if it leads to tangible production for some purpose outside of the experiment, and claim that the useful effort model is even more likely to be generalizable. We present an experiment designed to test whether these three modes of effort, stylized, trivial, and useful, have any impact on behavior in a public goods setting. We find that all three forms of effort lead to identical decision making and then discuss how these results help to inform us about the use of real effort in laboratory experiments.

Entry by Successful Speculators in Auctions with Resale

with Marco Pagnozzi (University of Naples Federico II, CSEF)
Journal ArticleExperimental Economics, forthcoming


We experimentally analyze the role of speculators, who have no use value for the objects on sale, in auctions. The environment is a uniform-price sealed-bid auction for 2 identical objects, followed by a free-form bargaining resale market. There is always one positive-value bidder, and either one to two speculators who may choose whether to enter the auction. We show that the bidder accommodates speculators by reducing demand in the auction and subsequently purchasing in the resale market, which encourages entry by speculators. The presence of multiple speculators induces each speculator to enter less often, but increases competition in the auction and the auction price. Speculators earn positive profits on average, except when multiple speculators enter the auction.

Coordination and Focality Under Gain-Loss Framing: Experimental Evidence

with Odile Poulsen (University of East Anglia)
Journal ArticleEconomics Letters, forthcoming


Are people better at coordinating on a focal point when the game is framed as coordinating on a division of losses rather than gains? In an experimental coordination game, we vary the payoff framing (gain vs loss) and stake size (low vs high) to examine this question. We find that loss framing reduces coordination on the focal point, with the strongest effect observed in high stakes games.

Efficiency in Auctions with (Failed) Resale

with Marco Pagnozzi (University of Naples Federico II, CSEF)
Journal ArticleJournal of Economic Behavior and Organization, forthcoming


We analyze how the possibility of resale affects efficiency in multi-object uniform-price auctions with asymmetric bidders using a combination of theory and experiments. The resale market is modelled as an unstructured bargaining game between auction bidders. Our experimental design consists of four treatments that vary the (exogenous) probability that bidders participate in a resale market after the auction. In all treatments, the possibility of resale increases efficiency after the auction, but it also induces demand reduction by high-value bidders during the auction, which reduces auction efficiency. In contrast to what is usually argued, resale does not necessarily increase final efficiency. When there is a low probability of a resale market, final efficiency is actually lower than in an auction without resale.

Demand Reduction in Multi-Object Auctions with Resale: An Experimental Analysis

(Earlier draft circulated as: Multi-Object Auctions with Resale: An Experimental Analysis)

with Marco Pagnozzi (University of Naples Federico II, CSEF)
Journal ArticleEcononomic Journal, 127 (2017): 2702--2729.


We analyze the effects of different resale mechanisms in multi-object uniform-price auctions with asymmetric bidders. The possibility of resale affects bidders' strategies, and hence the allocation of the objects on sale. Our experimental design consists of four treatments: one without resale and three resale treatments that vary the information available and the bargaining mechanism in the resale market. As predicted by theory: (i) without resale, asymmetry among bidders reduces demand reduction; (ii) the presence of a resale market, regardless of its structure, increases demand reduction by high-value bidders and speculation by low-value bidders, thus reducing auction efficiency. Low-value bidders always prefer resale to be allowed, but high-value bidders may not. In contrast to what is usually argued, resale does not necessarily increase final efficiency and may not reduce the seller's revenue. Features of the resale market that tend to increase its efficiency also reduce auction efficiency and the seller's revenue.

Procurement Auctions with Renegotiation and Wealth Constraints

with Wei-Shiun Chang (National Cheng Kung University), Tim Salmon (Southern Methodist University)
Journal ArticleEconomic Inquiry, 54 (2016): 1684-1704.


Renegotiation is a common practice in procurement auctions which allows for post-auction price adjustments and is nominally intended to deal with the problem that sellers might underestimate the eventual costs of a project during the auction. Using a combination of theory and experiments, we examine the effectiveness of renegotiation at solving this problem. Our findings demonstrate that renegotiation is rarely successful at solving the problem of sellers misestimating costs. The primary effect of allowing renegotiation is that it advantages sellers who possess a credible commitment of default should they have underbid the project. Renegotiation allows these weaker types of sellers to win more often and it also allows them to leverage their commitment of default into higher prices in renegotiation from a buyer.

Entrepreneurship and Team Participation: An Experimental Study

with David J. Cooper (Florida State University)
Journal ArticleEuropean Economic Review, 59 (2013): 126-140.


Entrepreneurs are surprisingly unlikely to have partners. One possible explanation for this is that entrepreneurs have distinctive preferences for working alone rather than in teams. However, a number of alternative explanations exist, such as an inability to locate suitable partners or low profitability from having a partner. Utilizing a diverse subject population with a high proportion of active entrepreneurs, we use a team production experiment to directly examine whether entrepreneurs prefer to work alone or in a team. The experiment also measures an important determinant of entrepreneurs' performances within teams, and their relative tendency to free-ride. The data indicate that entrepreneurs, while no more likely to free-ride on their teammates, are substantially more interested in working alone than similar non-entrepreneurs.

Speculation and Demand Reduction in English Clock Auctions with Resale

Journal ArticleJournal of Economic Behavior and Organization, 84 (2012): 416-431.


Many auctions are followed by a resale market which occurs when the winner of the auction resells the item won to one of the participants from the original auction. The existence of such transactions may initially appear counter intuitive. However, this paper will show that active inter-bidder resale results from payoff maximizing decisions in the auction that take into account the incentives of a resale opportunity. Specifically, I examine how the existence of an inter-bidder resale opportunity impacts bidder behavior in an English clock auction, and to what extent altering the bargaining power of the final buyer and reseller in the resale market determines the strategies followed in the initial auction, in an attempt to understand the existence of these inter-bidder transactions. Theoretical and behavioral analysis is used to develop hypotheses of speculation (bidding above value) and demand reduction (bidding below value) which are directly tested in a controlled experimental setting. While value bidding is a dominant strategy in a standard English clock auction without resale, when resale is allowed, this theoretical claim is weaker. Demand reduction is observed when the bargaining power is shifted to the final buyer in resale and when the bargaining power is shifted toward the reseller, speculation is observed. The revenue achieved in the initial auction depends on the behavior observed in the auction. Regardless of bargaining power, revenue is shown to decrease below what would have been earned in an English auction without resale due to demand reduction. When the reseller has the bargaining power, and speculation is observed, this loss in revenue is somewhat mitigated by increased speculation.