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Estimation of the House Money Effect Using Hurdle Models

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  • Christoph Engel

    ()
    (Max Planck Institute for Research on Collective Goods, Bonn)

  • Peter G. Moffat

    (School of Economics, University of East Anglia, Norwich, UK)

Abstract

Evidence from an experiment investigating the “house money effect” in the context of a public goods game is reconsidered. Analysis is performed within the framework of the panel hurdle model, in which subjects are assumed to be one of two types: free-riders, and potential contributors. The effect of house money is seen to be significant in the first hurdle: specifically, house money makes a subject more likely to be a potential contributor. Hence we find that the effect of house money is more than just an effect on behaviour; it has the effect of changing a subject from one type to another. This result is potentially important in the external validity debate.

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Bibliographic Info

Paper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2012_13.

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Date of creation: May 2012
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Handle: RePEc:mpg:wpaper:2012_13

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Keywords: Public Good Experiment; Hurdle Model; double hurdle model; Tobit; panel data;

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  1. Diansheng Dong & Chanjin Chung & Harry Kaiser, 2004. "Modelling milk purchasing behaviour with a panel data double-hurdle model," Applied Economics, Taylor & Francis Journals, vol. 36(8), pages 769-779.
  2. Peter Moffatt & Simon Peters, 2001. "Testing for the Presence of a Tremble in Economic Experiments," Experimental Economics, Springer, vol. 4(3), pages 221-228, December.
  3. Nicholas Bardsley & Peter Moffatt, 2005. "The Experimetrics of Public Goods: Inferring Motivations from Contributions," Discussion Papers 2005-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  4. Christoph Engel, 2010. "Dictator Games: A Meta Study," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2010_07, Max Planck Institute for Research on Collective Goods, revised Jan 2011.
  5. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June.
  6. Diansheng Dong & Harry Kaiser, 2008. "Studying household purchasing and nonpurchasing behaviour for a frequently consumed commodity: two models," Applied Economics, Taylor & Francis Journals, vol. 40(15), pages 1941-1951.
  7. Urs Fischbacher & Simon Gaechter, 2008. "Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Good Experiments," CESifo Working Paper Series 2491, CESifo Group Munich.
  8. Glenn Harrison, 2007. "House money effects in public good experiments: Comment," Experimental Economics, Springer, vol. 10(4), pages 429-437, December.
  9. Jeremy Clark, 2002. "House Money Effects in Public Good Experiments," Experimental Economics, Springer, vol. 5(3), pages 223-231, December.
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