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on Experimental Economics |
| By: | Leonardo Becchetti (Department of Economics, Universitˆ Tor Vergata); Pierluigi Conzo (Università di Roma Tor Vergata & EIEF); Giacomo Degli Antoni (University of Milano-Bicocca) |
| Abstract: | We evaluate the effect of information disclosure on players? behaviour in a multiperiod common pool resource game experiment run in an area of notably scarce social capital such as the Nairobi slum of Kibera. We document divergence of average withdrawal rates across time with an increasingly lower cooperation in the non anonimous setting. We demonstrate that information induced asymmetric conformity contributes to explain what we observe, that is, players who withdraw less than the average of the group in the previous round react more negatively when individual payoffs are disclosed than when they are not, and their reaction is less than compensated by the mean reversion of those who withdrew more. Our results are consistent with the (Ostrom, 2000) hypothesis that, in absence of punishment, disclosure of information about individual (cooperative or non cooperative) behaviour makes common resource management more difficult and tragedy of the commons easier. |
| Keywords: | common pool resource game, conformism, information disclosure field experiments, tragedy of commons |
| JEL: | C93 Q20 H40 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp30&r=exp |
| By: | James C. Cox; Vjollca Sadiraj; Ulrich Schmidt |
| Abstract: | Experiments on choice under risk typically involve multiple decisions by individual subjects. The choice of mechanism for selecting decision(s) for payoff is an essential design feature that is often driven by appeal to the isolation hypothesis or the independence axiom. We report two experiments with 710 subjects. Experiment 1 provides the first simple test of the isolation hypothesis. Experiment 2 is a crossed design with six payoff mechanisms and five lottery pairs that can elicit four paradoxes for the independence axiom and dual independence axiom. The crossed design discriminates between: (a) behavioral deviations from postulated properties of payoff mechanisms; and (b) behavioral deviations from theoretical implications of alternative decision theories. Experiment 2 provides tests of the isolation hypothesis and four paradoxes. It also provides data for tests for portfolio effect, wealth effect, reduction, adding up, and cross-task contamination. Data from Experiment 2 suggest that a new mechanism introduced herein may be less biased than random selection of one decision for payoff |
| Keywords: | isolation, mechanisms, paradoxes, independence, dual independence, cross-task contamination, portfolio effect, wealth effect, reduction, adding-up |
| JEL: | C91 D81 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1712&r=exp |
| By: | Gill, David (University of Southampton); Prowse, Victoria L. (University of Oxford) |
| Abstract: | In this note, we present a novel computerized real effort task based on moving sliders across a screen which overcomes many of the drawbacks of existing real effort tasks. The task was first developed and used by us in Gill and Prowse (American Economic Review, forthcoming). We outline the design of our "slider task", describe its advantages compared to existing real effort tasks and provide a statistical analysis of the behavior of subjects undertaking the task. We believe that the task will prove valuable to researchers in designing future real effort experiments, and to this end we provide z-Tree code and guidance to assist researchers wishing to implement the slider task. |
| Keywords: | real effort task, slider task, design of laboratory experiments, learning and time effects, Individual heterogeneity |
| JEL: | C90 C91 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5801&r=exp |
| By: | Tiziana Assenza; Peter Heemeijer; Cars Hommes; Domenica Massaro |
| Abstract: | The way in which individual expectations shape aggregate macroeconomic variables is crucial for the transmission and effectiveness of monetary policy. We study the individual expectations formation process and the interaction with monetary policy, within a standard New Keynesian model, by means of laboratory experiments with human subjects. We find that a more aggressive monetary policy that sets the interest rate more than point for point in response to inflation stabilizes inflation in our experimental economies. We use a simple model of individual learning, with a performance-based evolutionary selection among heterogeneous forecasting heuristics, to explain coordination of individual expectations and aggregate macro behavior observed in the laboratory experiments. Three aggregate outcomes are observed: convergence to some equilibrium level, persistent oscillatory behaviour and oscillatory convergence. A simple heterogeneous expectations switching model fits individual learning as well as aggregate outcomes and outperforms homogeneous expectations benchmarks. |
| Keywords: | Experiments; Monetary Policy; Expectations; Heterogeneity |
| JEL: | C91 C92 E52 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:298&r=exp |
| By: | Mahmood Arai; Moa Bursell; Lena Nekby |
| Abstract: | We examine differences in the intensity of employer priors against men and women with Arabic names in Sweden by testing how much more work experience is needed to eliminate the disadvantage of having an Arabic name on job applications. Employers are first sent CVs of equal merits in a field-experiment setup. Arabic-named CVs are thereafter enhanced with more relevant work experience than Swedishnamed CVs. Results indicate a reverse gender gap in employer priors as initial differences in call-backs disappear for female applicants when CVs for Arabic-named applications are enhanced, but remain strong and significant for male applicants. Thus, contrary to what is often assumed about the interaction of gender and ethnicity, we find that Arabic men face stronger discrimination in the labor market than Arabic women. |
| Keywords: | Employment Gaps; Gender; Ethnicity,; Field Experiments; Discrimination |
| JEL: | J15 J16 J71 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/91901&r=exp |
| By: | Burks, Stephen V. (University of Minnesota, Morris); Krupka, Erin L. (University of Michigan) |
| Abstract: | This paper presents the results of a field study at a large financial services firm that combines multiple methods, including two economic experiments, to measure ethical norms and their behavioral correlates. Standard survey questions eliciting ethical evaluations of actions in on-the-job ethical dilemmas are transformed into a series of incentivized coordination games in the first experiment. We use the results of this experiment to identify the actual ethical norms for financial adviser behavior held by key personnel – financial advisers and their corporate leaders – in three settings: a clash of incentives between serving the client and earning commissions, a dilemma about fiduciary responsibility to a client, and a dilemma about whistle-blowing on a peer. We also measure the beliefs of financial advisers about the ethical expectations of their corporate leaders and the beliefs of corporate leaders about financial adviser norms. In addition, we ask financial advisers about their personal normative opinions, matching a common methodology in the literature. We find, first, systematic agreements in the normative evaluations across the corporate hierarchy that are consistent with ex ante expectations, but second, we also find some measurable differences between the normative expectations of corporate leaders about on-the-job behavior and the actual norms shared among financial advisers. When there is a normative mismatch across the hierarchy we are able to distinguish miscommunication from ethical disagreement between leaders and employees. Our subjects also report their job satisfaction and take part in a second incentivized experiment in which it is costly to report private information honestly. A last finding is that a mismatch between advisers’ personal ethical opinions and corporate norms – especially those of peers – strongly correlates with job dissatisfaction, and less strongly but significantly with the willingness to be dishonest. |
| Keywords: | norms, ethics, financial adviser, corporate leader, financial services, field experiment, coordination game |
| JEL: | C93 D23 M14 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5818&r=exp |
| By: | T. Brenner; G. Devetag; F. Pancotto |
| Abstract: | While in the literature participants' behavior in minority games has been extensively studied, nobody so far has made the eort to open the black box of strategic arguments and considerations laying behind this behavior. To this aim we use an experimental setting in which decisions behind behaviors are analyzed tracking down decisional processes and participants reasoning as the result of transcribed video recorded sessions of teams that constitute decisional units. Such discussions are then analyzed with Content Analysis. Results show the relevance of others' behavior as well as the own history of choices and payoffs, while theoretical solutions based on game understanding as well as randomization as hypothesized by game theoretical solutions, are rare. Secondly, co-evolution between arguments is present: teams that tend to be more strategic, induce the opposite attitude in opponent teams. |
| JEL: | C72 C91 C92 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp770&r=exp |
| By: | Hannes Koppel (Max Planck Institute of Economics, Jena); Tobias Regner (Max Planck Institute of Economics, Jena) |
| Abstract: | We analyze the effect of investments in corporate social responsibility (CSR) on workers' motivation. In our experiment, a gift exchange game variant, CSR is captured by donating a certain share of profits to a charity. We are testing for CSR effects by varying the possible share of profits given away. Additionally, we investigate the effect of a mission match, i.e., a worker prefering the same charity the firm is actually donating to. Our results show that on average workers reciprocate investments into CSR with increased effort. A mission match does result in higher effort, but only when investment into CSR is high. |
| Keywords: | Corporate Social Responsibility, gift-exchange game, experiment, labor market, incentives |
| JEL: | C73 C91 J01 M14 M52 |
| Date: | 2011–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2011-030&r=exp |
| By: | Burks, Stephen V. (University of Minnesota, Morris); Carpenter, Jeffrey P. (Middlebury College); Goette, Lorenz (University of Lausanne); Rustichini, Aldo (University of Minnesota) |
| Abstract: | Economists and psychologists have devised numerous instruments to measure time preferences and have generated a rich literature examining the extent to which time preferences predict important outcomes; however, we still do not know which measures work best. With the help of a large sample of non-student participants (truck driver trainees) and administrative data on outcomes, we gather four different time preference measures and test the extent to which they predict both on their own and when they are all forced to compete head-to-head. Our results suggest that the now familiar (β, δ) formulation of present bias and exponential discounting predicts best, especially when both parameters are used. |
| Keywords: | time preference, impatience, discounting, present bias, field experiment, trucker |
| JEL: | C93 D90 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5808&r=exp |
| By: | Robert Hoffmann (Nottingham University Business School) |
| Abstract: | This article surveys the experimental economics approach to the study of religion. The field has a place in the context of the scientific study of religion generally and the social psychology of religion in particular, but employs distinct economic methods which promise new and different insights. In particular, certain features of the experimental approach as used by economists such as incentive compatibility are particularly appropriate for studying the effect of religion on individual behaviour. The paper discusses results obtained so far in terms of two roles of religion in shaping individual behaviour, i.e. as a social group identifier and as a set of values. |
| Keywords: | Religion, Religiosity, Experiments |
| Date: | 2011–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:bbr:workpa:17&r=exp |
| By: | Karina Gose (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Abdolkarim Sadrieh (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | We study the behavior of employers and employees in a gift exchange game and find that employers offer lower wages when there is the risk of losing money. This, however, does not lead to lower effort level choices. In fact, effort per wage unit is significantly higher in the treatment with potential employer losses. This result can be in line with social comparison theories that are based on relative payoff differences. Alternatively, this result is also in line with the hypothesis that the risk of losing money increases the credibility of the employer's trust signal and, thus, the employee's reciprocity. |
| Keywords: | fair wage, efficiency wage, social comparison, loss aversion |
| JEL: | C92 J41 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:110009&r=exp |
| By: | Silvester Van Koten; Andreas Ortmann |
| Abstract: | We try to better understand the comparative advantages of structural and behavioral remedies of deregulation in electricity markets, an eminent policy issue for which the experimental evidence is scant and problematic. Specifically, we investigate theoretically and experimentally the effects on competition of introducing a forward market — considered a behavioral remedy by the European Commission. We compare this scenario with the best alternative, the structural remedy of reducing concentration by adding one more competitor by divestiture. Our study contributes to the literature by introducing more realistic cost configurations, by teasing apart competition effect and asset effect, and by investigating competitor numbers that reflect the market concentration in the European electricity industries. Our experimental data suggest that introducing a forward market has a positive effect on the aggregate supply in markets with two or three major competitors, configurations typical for the newly accessed and the old European Union member states, respectively. Introducing a forward market also increases efficiency. In contrast to previous findings, our data furthermore suggest that the effect of introducing a forward market is stronger than adding one more competitor both in markets with two, and particularly three, producers. Our data thus provides evidence that behavioral remedies may be more effective than structural remedies. Our data suggest that competition authorities are well advised, in line with EU law (European Commission, 2006a, p.11), to focus on introducing, and facilitating the proper functioning of, forward markets rather than on lowering market concentration by divestiture. |
| Keywords: | economics experiments; market power; competition; forward markets; EU electricity market; |
| JEL: | C91 D61 L13 L43 L94 Q48 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp437&r=exp |
| By: | Dietmar Fehr |
| Abstract: | Precedents can facilitate successful coordination within groups by reducing strategic uncertainty, but they may lead to coordination failure when two groups with diverging precedents have to interact. This paper describes an experiment to explore how such coordination failure can be mitigated and whether subjects are aware of it. In an initial phase, groups were able to establish a precedent in a repeated weakest-link game, and in a second phase two groups with dierent precedents are merged into a larger group. As expected, this leads to coordination failures. Unlike most of the previous literature, subjects could endogenously choose to communicate in the merged group for a small fee. The results suggest that communication can mitigate the coordination failure in the merged group and, in most cases, leads to efficient coordination. However, subjects in particular from groups with an efficient precedent in the initial phase are inattentive to the potential coordination failure and choose not to communicate. This can have profound consequences since groups who fail to implement communication are unable to achieve efficient coordination in the second phase. The results may be useful for the understanding of how groups learn to solve coordination problems from past coordination success or failure. |
| Keywords: | coordination, precedent, costly communication, cheap talk |
| JEL: | C72 C92 D23 L23 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2011-039&r=exp |
| By: | Falk, Armin; Menrath, Ingo; Siegrist, Johannes; Verde, Pablo Emilio |
| Abstract: | This paper investigates physiological responses to perceptions of unfair pay. In a simple principal agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. In this environment unfairness can arise if an agent's reward expectation is not met. Throughout the experiment we record agents' heart rate variability. The latter is an indicator of stress-related impaired cardiac autonomic control, which has been shown to predict coronary heart diseases in the long run. Establishing a causal link between unfair pay and heart rate variability therefore uncovers a mechanism of how perceptions of unfairness can adversely affect cardiovascular health. We further test potential adverse health effects of unfair pay using data from a large representative data set. Complementary to our experimental findings we find a strong and highly significant association between health outcomes, in particular cardiovascular health, and fairness of pay. |
| Keywords: | experiments; fairness; health; heart rate variability; inequality; social preferences; SOEP |
| JEL: | C91 D63 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8463&r=exp |
| By: | Brown, Martin; Serra-Garcia, Marta |
| Abstract: | We examine how third-party debt enforcement affects the emergence and performance of relational contracts in credit markets. We implement an experiment with finitely repeated credit relationships in which borrowers can default. In our weak enforcement treatment defaulting borrowers can keep their funds invested. In our strong enforcement treatment defaulting borrowers have to liquidate their investment. Under weak enforcement fewer relationships emerge in which loans are extended and repaid. When such relationships do emerge they exhibit a lower credit volume than under strong enforcement. These findings suggest that relational contracting in credit markets requires a minimum standard of thirdparty debt enforcement. |
| Keywords: | Relational contracts; Debt enforcement; Creditor rights; Banking |
| JEL: | C73 G21 O16 F21 F34 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:12287&r=exp |
| By: | M. Casari; J. Zhang; C. Jackson |
| Abstract: | It is still an open question when groups will perform better than individuals in intellectual tasks. We report that in a company takeover experiment, groups placed better bids than individuals and substantially reduced the winner’s curse. This improvement was mostly due to peer pressure over the minority opinion and to group learning. Learning took place from interacting and negotiating consensus with others, not simply from observing their bids. When there was disagreement within a group, what prevailed was not the best proposal but the one of the majority. Groups underperformed with respect to a “truth wins” benchmark although they outperformed individuals deciding in isolation. |
| JEL: | C91 C92 D81 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp763&r=exp |
| By: | Tobias Regner (Max Planck Institute of Economics, Jena, Germany); Gerhard Riener (Friedrich Schiller University and Max Planck Institute of Economics, Jena, Germany) |
| Abstract: | We construct a simple three person trust game with one trustor and two trustees. The trustor has the possibility to either trust both trustees or none, while the trustees make their decisions either sequentially or simultaneously, depending on the treatment. When trustees play sequentially, follower trustees who are informed about the leader's choice are significantly less kind than in the simultaneous move treatment as well as the leader trustees. These findings can not be explained by models of inequity aversion, pure guilt aversion, or conformity. Instead, follower trustees cherry pick the motivation that serves them best. When the leader trustee played unkind, they tend to conform and play unkind, too. When the leader made a kind choice, followers seem to perceive the duty of reciprocating to the trustor as already fulfilled by the leader. While guilt works well as a motivational force in a dyadic situation, it gets alleviated easily when there is someone to shift responsibility to, like the leader in our three person game. |
| Keywords: | Team production, Trust, Principal Agent, Guilt, Guilt alleviation, Conformity, False consensus effect, Lab experiment, Cherry picking |
| JEL: | D71 C79 C92 |
| Date: | 2011–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2011-029&r=exp |
| By: | Wolfgang Hoechtl; Rupert Sausgruber; Jean-Robert Tyran |
| Abstract: | Mounting evidence shows that there is heterogeneity in aversion to inequality, i.e. that some people have a concern for a fair distribution. Does such a concern matter for majority voting on redistribution? Fairness preferences are relevant for redistribution outcomes only if fair voters are pivotal. Pivotality, in turn, depends on the structure of income classes. We experimentally study voting on redistribution between two income classes and show that the effects of inequality aversion are asymmetric. Inequality aversion is more likely to matter if the “rich” are in majority. With a “poor” majority, we find that redistribution outcomes look as if all voters were exclusively motivated by their pocketbook. |
| Keywords: | redistribution, self interest, inequality aversion, median voter, experiment |
| JEL: | A13 C9 D72 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2011-13&r=exp |
| By: | Jürgen Bracht (University of Aberdeen, United Kingdom); Tobias Regner (Max Planck Institute of Economics, Jena, Germany) |
| Abstract: | Actual behaviour is influenced in important ways by moral emotions, for instance guilt or shame (see among others Tangney et al., 2007). Belief-dependant models of social preferences using the framework of psychological games aim to consider such emotions to explain other-regarding behaviour. Our study links recent advances in psychological theory on moral emotions to belief-dependant models in economics. We find that - in addition to the positive effect of second-order beliefs and promises - individuals' disposition to guilt (their proneness to respond in an evaluative way to personal transgressions) is an important determinant of kind behaviour. This applies to private as well as public settings. |
| Keywords: | social preferences, other-regarding behaviour, experiments, psychological game theory, guilt aversion, shame, beliefs, emotions, partnership |
| JEL: | C70 C91 D82 |
| Date: | 2011–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2011-028&r=exp |
| By: | Stephen T. Ziliak (Roosevelt University) |
| Abstract: | In an article titled "Field Experiments in Economics: The Past, the Present, and the Future," Levitt and List (2009) make three important claims about the history, philosophy, and future of field experiments in economics. They claim that field experiments in economics began in the 1920s and 1930s, in agricultural work by Neyman and Fisher. Second, they claim that artificial randomization is the sine qua non of good experimental design; they claim that randomization is the only valid justification for use of Student‘s test of significance. Finally, they claim that the theory of the firm will be advanced by economists doing randomized controlled trials (RCTs) for private sector firms. Several areas of economics, for example the development economics of Banerjee and Duflo, have been influenced by the article, despite the absence of historical and methodological review. This comment seeks to fill that gap in the literature. Student has, it is found, priority over Fisher and Neyman; he compared balanced and random designs in the field—on crops from barley to timber—from 1905 to 1937. The power and efficiency of balanced over random designs - discovered by Student and confirmed by Pearson, Neyman, Jeffreys, and others adopting a decision-theoretic and/or Bayesian approach - is not mentioned by Levitt and List. Neglect of Student is especially regrettable, for he showed in his job as Head Brewer of Guinness that artificial randomization is neither necessary nor sufficient for improving efficiency, identifying causal relationships, or discovering economically significant differences. One way forward is to take a step backwards, from Fisher to Student. |
| Keywords: | field experiments, balanced, random |
| JEL: | B1 C9 C93 |
| Date: | 2011–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:aah:create:2011-25&r=exp |
| By: | Harbaugh, William T. (University of Oregon); Mocan, Naci (Louisiana State University); Visser, Michael S. (Sonoma State University) |
| Abstract: | We report results from economic experiments of decisions that are best described as petty larceny, with high school and college students who can anonymously steal real money from each other. Our design allows exogenous variation in the rewards of crime, and the penalty and probability of detection. We find that the probability of stealing is increasing in the amount of money that can be stolen, and that it is decreasing in the probability of getting caught and in the penalty for getting caught. Furthermore, the impact of the certainty of getting caught is larger when the penalty is bigger, and the impact of the penalty is bigger when the probability of getting caught is larger. |
| Keywords: | crime, punishment, incentives, deterrence, juvenile, arrest, risk, larceny |
| JEL: | K4 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5813&r=exp |
| By: | Nadine Chlaß (School of Economics and Business Administration FSU Jena) |
| Abstract: | The winner's curse is a well-known deviation from rational self-interest in decision-making under asymmetric information. Yet, most prominent explanations for the curse have experimentally been ruled out so far. In particular, the curse did neither seem to emanate from a lack of experience with a given task (Grosskopf et al. 2007), nor from the complexity of the decision task, nor level-k thinking, nor a disability to infer information from others' actions (Charness and Levin 2009), (Ivanov et al. 2010). This paper elicits individuals' sensitivity to incur a winner's curse in a common-value auction where the explanations above do not apply, tracks down the potential source of the curse, and tests to what extent individuals' cursedness evolves (Fudenberg 2006). It finds that the curse is tightly associated with a relatively stable individual characteristic - individuals' personality traits. Personality traits explain individuals' initial cursedness, and also govern whether individuals unlearn, or instead, acquire the curse. I review biological evidence on how personality influences individuals' handling of information to explain why personality matters here. |
| Keywords: | asymmetric information, winner's curse, personality traits |
| JEL: | D82 D83 |
| Date: | 2011–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2011-027&r=exp |
| By: | Fafchamps, Marcel; McKenzie, David J.; Quinn, Simon; Woodruff, Christopher |
| Abstract: | Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male- and female-owned microenterprises in urban Ghana. Our findings cast doubt on the ability of capital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zero for women with initial profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the cash and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants are less robust. The difference in the effects of cash and in-kind grants is associated more with a lack of self-control than with external pressure. As a result, the manner in which funding is provided affects microenterprise growth. |
| Keywords: | Microenterprises; Ghana; Conditionality; Asset Integration |
| JEL: | C93 O12 O16 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8466&r=exp |
| By: | Koch, Alexander K. (University of Aarhus); Nafziger, Julia (University of Aarhus) |
| Abstract: | We model how people formulate and evaluate goals to overcome self-control problems. People often attempt to regulate their behavior by evaluating goal-related outcomes separately (in narrow psychological accounts) rather than jointly (in a broad account). To explain this evidence, our theory of endogenous narrow or broad psychological accounts combines insights from the literatures on goals and mental accounting with models of expectations-based reference-dependent preferences. By formulating goals the individual creates expectations that induce reference points for task outcomes. These goal-induced reference points make substandard performance psychologically painful and motivate the individual to stick to his goals. How strong the commitment to goals is depends on the type of psychological account. We provide conditions when it is optimal to evaluate goals in narrow accounts. The key intuition is that broad accounts make decisions or risks in different tasks substitutes and thereby create incentives to deviate from goals. Model extensions explore the robustness of our results to different timing assumptions and goal and account revision. |
| Keywords: | quasi-hyperbolic discounting, reference-dependent preferences, loss aversion, self-control, mental accounting, goals |
| JEL: | A12 C70 D81 D91 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5802&r=exp |
| By: | Katherine L. Milkman; John Beshears; James J. Choi; David Laibson; Brigitte C. Madrian |
| Abstract: | We evaluate the results of a field experiment designed to measure the effect of prompts to form implementation intentions on realized behavioral outcomes. The outcome of interest is influenza vaccination receipt at free on-site clinics offered by a large firm to its employees. All employees eligible for study participation received reminder mailings that listed the times and locations of the relevant vaccination clinics. Mailings to employees randomly assigned to the treatment conditions additionally included a prompt to write down either (1) the date the employee planned to be vaccinated or (2) the date and time the employee planned to be vaccinated. Vaccination rates increased when these implementation intentions prompts were included in the mailing. The vaccination rate among control condition employees was 33.1%. Employees who received the prompt to write down just a date had a vaccination rate 1.5 percentage points higher than the control group, a difference that is not statistically significant. Employees who received the more specific prompt to write down both a date and a time had a 4.2 percentage point higher vaccination rate, a difference that is both statistically significant and of meaningful magnitude. |
| JEL: | I10 J18 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17183&r=exp |
| By: | James C. Cox; Vjollca Sadiraj |
| Abstract: | Theories of decision under risk that challenge expected utility theory model risk attitudes at least partly with transformation of probabilities. We explain how attributing risk aversion (partly or wholly) to attitude towards probabilities, can produce extreme probability distortions that imply paradoxical risk aversion. |
| Keywords: | risk aversion, probability transformation, calibration, reference dependence, loss aversion |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2011-10&r=exp |