In an experiment using two-bidder first-price sealed bid auctions with symmetric independent private values and 400 subjects, we scan also the right hand of each subject. We study how the ratio of the length of the index and ring fingers (2D:4D) of the right hand, a measure of prenatal hormone exposure, is correlated with bidding behavior and total profits. 2D:4D has been reported to predict competitiveness in sports competition (Manning and Taylor in Evol. Hum. Behav. 22:61–69, 2001, and Hönekopp et al. in Horm. Behav. 49:545–549, 2006), risk aversion in lottery tasks (Dreber and Hoffman in Portfolio selection in utero. Stockholm School of Economics, 2007; Garbarino et al. in J. Risk Uncertain. 42:1–26, 2011), and the average profitability of high-frequency traders in financial markets (Coates et al. in Proc. Natl. Acad. Sci. 106:623–628, 2009). We do not find any significant correlation between 2D:4D on either bidding or profits. However, there might be racial differences in the correlation between 2D:4D and bidding and profits.
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We use the term “risk-taking” in a broader sense to refer to all dispositions that are behaviorally indistinguishable from risk in the first-price auction such as anticipated looser regret (see Filiz and Ozbay 2007) or relative payoff concerns (see Morgan et al. 2003). For a discussion of experimental evidence for risk aversion in first-price auctions, we refer to Kagel (1995, Chap. 7 I.G).
Research on aggressive behavior and 2D:4D may also be suggestive for a potential connection between competition and 2D:4D. Benderlioglu and Nelson (2004) find a correlation between lower 2D:4D and the higher force of hanging up the phone and the choice of a more aggressive language of a letter after an unsuccessful charity solicitation in females but not in males. In contrast, Bailey and Hurd (2005) find that lower 2D:4D is correlated with higher aggression evaluated with a questionnaire in males but not females. We thank an anonymous referee for suggesting these references.
We thank a referee for emphasizing this point.
Subjects were allowed to select multiple majors and ethnic backgrounds. Thus, the means do not add up to unity.
For comparison, the distribution of ethnicities among all UC Davis students is 42% White, 38% Asian, 3% Black, 14% Hispanic, and 3% Others. See http://facts.ucdavis.edu/studentheadcountethnicity.lasso. We don’t know why we have a larger fraction of Asians in our sample. It could be that relative more Asians are enrolled in majors that we reached with our advertisements. We advertised mostly by announcements in big classes accessible to us, on Facebook, and through the distribution of leaflets. The experiment was advertised as a “market game”. Another reason could be that Asians were more attracted to our experiments. For instance, Loo et al. (2008) surveying the literature on Chinese gambling find that gambling is widespread preferred form of entertainment among Chinese.
For one subject, we accidentally measure the left hand. For this subject we include here the digit ratio of the left hand. Our results remain unchanged when we drop this subject from the analysis.
We include a cubic polynomial in order not to force bids to be a linear function of values as risk neutrality or constant relative risk aversion would require (see for instance Cox et al. 1988). However, we should mention that estimated coefficients for the quadratic and cubic terms are zero and our results do not change in any substantial way when omitting the quadratic and cubic term.
Our results do not change if the time period dummies are replaced by a time period regressor. Period dummies have the advantage of not assuming a necessarily linear effect of time.
For instance, see Sanders et al. (2005) for a mental rotation task. Perhaps more closely related to our study, Benderlioglu and Nelson (2004) find a correlation between lower 2D:4D and a behavioral measure of aggressiveness in females but not in males. In contrast, Bailey and Hurd (2005) find that lower 2D:4D is correlated with a higher survey measure of aggression in males but not females.
See Sect. 4 for a more detailed discussion of how the digit ratio may effect bidding and profits.
We thank an anonymous referee to encouraging us to study possible interaction effects.
The interaction with a dummy variable is more meaningful than an interaction with the value or the mean-centered value since the probability of having any particular value is relatively low. A value of zero is excluded by design and drawing the mean value is rare for a bidder.
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We are grateful to the editor, Jordi Brandts, and two anonymous referees for very helpful comments. We thank Yan Chen for providing us the z-tree programs of her experiment. Financial support by the Institute of Governmental Affairs, UC Davis, and the UC Davis Hellman Fellowship is gratefully acknowledged. We thank Coren Apicella, Nicole Baran, Giacomo Bonanno, Anna Dreber, Doug Miller, and participants in the 2009 Workshop on Neuroeconomics and Endocrinological Economics at UC Davis. Moreover, we thank Gabriel Mathy, Wen Yong Tang, and Nick Zolas for excellent research assistance.
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Pearson, M., Schipper, B.C. The visible hand: finger ratio (2D:4D) and competitive bidding. Exp Econ 15, 510–529 (2012). https://doi.org/10.1007/s10683-011-9311-7
- Digit ratio
- Risk behavior
- Competitive behavior
- Endocrinological economics