3 Relevance of a Corp. Culture Flashcards
Experimental Economics: Methods
3
Empirical studies
Field data
Resultsm and measures in real companies examined with economic methods
Unfortunately, there are only a few data sets of companies available for research
Experiments
Extremely simplified abstract model of real situation
Exact test of a theory possible as there are many controllable factors
Casestudies
Only descriptive
Usually only a single case
However: develops a better understanding of the situation
Do we measure a causal effect of training?
3
Self-selection:
Motivated unemployed rather take part in training
Those would have got a job anyway probably
Critical: Control group comparable to treatment group?
If so: Difference of the proportions can be traced back to the training –> causal effect
If not: The “true“ effect of the training is biased
Economists say: Training not “exogenous“ but “endogenous“
Solution: Attempt to approach through certain econometric methods but rarely convincing solution
Furthermore: No control of other behavior of the people during that year
Control through randomization
3
Random assignment of participants to treatment groups and control
groups
no self-selection possible
Treatment and Control group equal in all aspects (big samples)
Causal effect can now be determined
Idea: “Change one variable (treatment variable) and keep everything else
constant (c.p.)“
Differences in the behavior can now be traced back to that single variable.
This is called “Treatment effect“
Control in experiments
3
Equal conditions for all participants (c.p.)
Experimenter, instructions, computer, room, time, temperature, etc.
Control of preferences via monetary incentives
Monetary preferences shall uncover the “real decision behavior“
Assumption: The individuals‘ utility increases with every additional unit of money
Costs and utility of decisions are the same for everyone
Constant procedureReplicability possible
Control of the participants‘ degree of information
Control and design of the language (Instructions)Framing
Control / Measurement of the actual decisions
Real-effort task
3
Real-effort task:
Participants receive 16 different pictures of offices (see photos)
Pictures must be verbally described (by “manager“) such that teammate (“worker“) can identify them as fast as possible
Participants receive wage depending on speed
The Merger
3
- each group has two participants –> manger and employee
- manager describes the picture to the employee who has to identify the picture
- after the merger: one manager stays and describes the picture to the two employees in the new firm
After 20 rounds all students have to state a “belief“ about how fast the
task will be fulfilled after the merger.
Questionnaire for all before and after merger regarding estimates on
the competence of the teammates
the complexity of the task for each player
opportunities corp. culture
3
threats corp. culture
3
- hires takes more time
- inflexible (mergers) –> adaption
- values/norms are not in line with performance goals