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Bayes Factors with an Application to Experimental Economics

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  • Gary Bolton

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  • Duncan Fong
  • Paul Mosquin

Abstract

We describe Bayes factor, an explicit measure of the strength of the evidence, the extent to which the data increase or decrease the odds a given hypothesis or model is true. Issues and techniques for deriving a Bayes factor are outlined. We illustrate the technique with data from an ultimatum game experiment that looked for an experimenter observation effect. We show that the evidence increases the odds of an effect, but not by enough to convince someone with a skeptical prior. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • Gary Bolton & Duncan Fong & Paul Mosquin, 2003. "Bayes Factors with an Application to Experimental Economics," Experimental Economics, Springer;Economic Science Association, vol. 6(3), pages 311-325, November.
  • Handle: RePEc:kap:expeco:v:6:y:2003:i:3:p:311-325
    DOI: 10.1023/A:1026281504189
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    References listed on IDEAS

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    2. Johannesson, Magnus & Persson, Bjorn, 2000. "Non-reciprocal altruism in dictator games," Economics Letters, Elsevier, vol. 69(2), pages 137-142, November.
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    4. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    5. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, vol. 6(3), pages 347-369, May.
    6. Chib S. & Jeliazkov I., 2001. "Marginal Likelihood From the Metropolis-Hastings Output," Journal of the American Statistical Association, American Statistical Association, vol. 96, pages 270-281, March.
    7. Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon L, 1996. "Social Distance and Other-Regarding Behavior in Dictator Games," American Economic Review, American Economic Association, vol. 86(3), pages 653-660, June.
    8. Fong, Duncan K H & Bolton, Gary E, 1997. "Analyzing Ultimatum Bargaining: A Bayesian Approach to the Comparison of Two Potency Curves under Shape Constraints," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 335-344, July.
    9. Bolton Gary E. & Zwick Rami, 1995. "Anonymity versus Punishment in Ultimatum Bargaining," Games and Economic Behavior, Elsevier, vol. 10(1), pages 95-121, July.
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    11. Laury, Susan K. & Walker, James M. & Williams, Arlington W., 1995. "Anonymity and the voluntary provision of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 27(3), pages 365-380, August.
    12. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
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    Cited by:

    1. Paul Resnick & Richard Zeckhauser & John Swanson & Kate Lockwood, 2006. "The value of reputation on eBay: A controlled experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 79-101, June.
    2. Duncan Fong & Wayne DeSarbo & Zhe Chen & Zhuying Xu, 2015. "A Bayesian Vector Multidimensional Scaling Procedure Incorporating Dimension Reparameterization with Variable Selection," Psychometrika, Springer;The Psychometric Society, vol. 80(4), pages 1043-1065, December.

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