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Estimation of the House Money Effect Using Hurdle Models

Author

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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.

Suggested Citation

  • Christoph Engel & Peter G. Moffat, 2012. "Estimation of the House Money Effect Using Hurdle Models," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_13, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2012_13
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    References listed on IDEAS

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    More about this item

    Keywords

    Public Good Experiment; Hurdle Model; double hurdle model; Tobit; panel data;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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