Budget Processes: Theory and Experimental Evidence

Ehrhart, Karl-Martin, Roy Gardner, Claudia Keser and Juergen von Hagen ()

No 2661, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper studies budget processes, both theoretically and experimentally. We compare the outcomes of bottom-up and top-down budget processes. It is often presumed that a top-down budget process leads to a smaller overall budget than a bottom-up budget process. We show, using structurally induced equilibrium theory, that this need not be the case. To test the implications for budget processes of structurally induced equilibrium theory, we conduct a series of experiments. The evidence from these experiments supports the predictions of structurally induced equilibrium theory, both at the aggregate and at the individual subject level.

Keywords: Budget Processes; Experimental Economics; Structurally Induced Equilibrium (search for similar items in EconPapers)
JEL-codes: D71 H61 (search for similar items in EconPapers)
Date: 2001-01
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Related works:
Working Paper: Budget Processes: Theory and Experimental Evidence (2004)
Working Paper: Budget Processes: Theory and Experimental Evidence (1999)
Working Paper: Budget Processes: Theory and Experimental Evidence (2006)
Working Paper: Budget Processes: Theory and Experimental Evidence (2006)
Journal Article: Budget processes: Theory and experimental evidence (2007)
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