An Application of the Panel Hurdle Model to Experimental Data

Using a user-written STATA program developed by Engel and Moffatt (2014), we apply the panel hurdle model to experimental data from a public goods game. Subjects are assumed to be one of two types: free-riders, and potential contributors. We focus on a test of the "house money effect". This effect 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.