Narrow Results

This paper provides experimental evidence for the theory of Che et al. (2013, Pandering to persuade, American Economic Review, 103(1), 47–79). Basic communication games with outside options developed by Che et al. (2013, Pandering to persuade, American Economic Review, 103(1), 47–79) are tested in the experiments, and experimental variations with additional conflicts over projects and with private information about outside options are also investigated. Moreover, in these games, strategies concerning delegation have been discussed as well. In general, the experimental results are aligned with the theoretical predictions. As the value of the outside options increases, communication becomes less informative and the experts may pander toward the conditionally better-looking project, the decision makers take their outside options more often and retain their decision rights with higher frequencies.

The under-provision of efforts in built heritage conservation was due to market failure to allocate cost and benefit efficiently. Conservation agency could facilitate conservation effort, which was considered not beneficial from the point of view of the private owners of the heritage houses, by providing conservation subsidy. In this paper, we conducted three different experimental auctions, namely, (i) discriminative price auction, (ii) uniform price auction, and (iii) random nth price auction to investigate bidding behaviors and efficiency levels in allocating conservation subsidies. Both uniform and random nth price auctions were able to encourage cost revealing bids. Random nth price auction was able to engage the off-margin bidders. However, discriminative price auction was more cost efficient compared to the other two auctions.