|
on Experimental Economics |
|
Issue of 2013‒11‒29
twenty-six papers chosen by |
| By: | Björn Bartling; Roberto A. Weber |
| Abstract: | This paper studies the stability of socially responsible behavior in markets. We develop a laboratory product market in which low-cost production creates a negative externality for third parties, but where alternative production with higher costs entirely mitigates the externality. Our data reveal a robust and persistent preference for avoiding negative social impact in the market, reflected both in the composition of product types and in a price premium for socially responsible products. Socially responsible behavior in the market is generally robust to varying market characteristics, such as increased seller competition and limited consumer information. Fair behavior in the market is slightly lower than that measured in comparable individual decisions. |
| Keywords: | Social responsibility, markets, externalities, competition, fairness |
| JEL: | C92 D03 D62 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:134&r=exp |
| By: | Julie A. Nelson |
| Abstract: | In their article "Strong Evidence for Gender Differences in Risk Taking", Gary Charness and Uri Gneezy (2012) review a number of experimental studies regarding investments in risky assets, and claim that these yield strong evidence that females are more risk averse than males. This study replicates and extends their article, demonstrating that its methods are highly problematic. While the methods used would be appropriate for categorical, individual-level differences, the data reviewed are not consistent with such a model. Instead, modest differences (at most) exist only at aggregate levels, such as group means. The evidence in favor of gender difference is thus considerably less strong than claimed. This analysis has important implications both for the design of behavioral and economic research and for policies related to discrimination and stereotyping. |
| Keywords: | risk aversion, gender, risk, stereotyping, effect size |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:mab:wpaper:19&r=exp |
| By: | Omar Al-Ubaydli; John A. List |
| Abstract: | Economists are increasingly turning to the experimental method as a means to estimate causal effects. By using randomization to identify key treatment effects, theories previously viewed as untestable are now scrutinized, efficacy of public policies are now more easily verified, and stakeholders can swiftly add empirical evidence to aid their decision-making. This study provides an overview of experimental methods in economics, with a special focus on developing an economic theory of generalizability. Given that field experiments are in their infancy, our secondary focus pertains to a discussion of the various parameters that they identify, and how they add to scientific knowledge. We conclude that until we conduct more field experiments that build a bridge between the lab and the naturally-occurring settings of interest we cannot begin to make strong conclusions empirically on the crucial question of generalizability from the lab to the field. |
| JEL: | C9 C90 C91 C92 C93 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19666&r=exp |
| By: | James T. Edwards; John A. List |
| Abstract: | People respond to those who ask. Within the charitable fundraising community, the power of the ask represents the backbone of most fundraising strategies. Despite this, the optimal design of communication strategies has received less formal attention. For their part, economists have recently explored how communication affects empathy, altruism, and giving rates to charities. Our study takes a step back from this literature to examine how suggestions–a direct ask for a certain amount of money–affect giving rates. We find that our suggestion amounts affect both the intensive and extensive margins: more people give and they tend to give the suggested amount. Resulting insights help us understand why people give, why messages work, and deepen practitioners’ understanding of how to use messages to leverage more giving. |
| JEL: | C9 C93 H41 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19665&r=exp |
| By: | Felix Ebeling |
| Abstract: | We conducted a large scale field experiment to test whether framing a voluntary contribution decision with different non-binding defaults affect people's behavior. On an electricity provider's website, we manipulated non-binding green energy defaults in electricity contract offers. The default was either green or non-green. Buying green is costly and protects the environment. Hence, it is a voluntary contribution to a public good. Our core results are: First, defaults have a strong effect on contributions. 69% of new customer buy green, when the default was green, but only 7% when the default was nongreen. Second, the fraction of website visitors signing an electricity contract is similar across treatments. Third, regional election results affect green energy choice of customers. |
| Keywords: | Framing, Defaults, Public Goods, Randomized Field Experiments |
| JEL: | D03 D12 Q4 |
| Date: | 2013–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0066&r=exp |
| By: | Andreas Blume; Ernest K. Lai; Wooyoung Lim |
| Abstract: | The paper formalizes Warner's (1965) randomized response technique (RRT) as a game and implements it experimentally, thus linking game theoretic approaches to randomness in communication with survey practice in the field and a novel implementation in the lab. As predicted by our model and in line with Warner, the frequency of truthful responses is significantly higher with randomization than without. The model predicts that randomization weakly improves information elicitation, as measured in terms of mutual information, although, surprisingly, not always by RRT inducing truth-telling. Contrary to this prediction, randomization significantly reduces the elicited information in our experiment. |
| Keywords: | Randomized Response, Lying Aversion, Stigmatization Aversion, Mutual Information, Laboratory Experiments |
| JEL: | C72 C92 D82 D83 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:490&r=exp |
| By: | Thoma, Carmen |
| Abstract: | This paper reports findings of a laboratory experiment, which explores how elfassessment regarding the own relative performance is perceived by others. In particular, I investigate whether overconfident subjects or underconfident subjects are considered as more likable by others, and who of the two is expected to achieve a higher performance in a real effort task. I observe that underconfidence beats overconfidence in both respects. Underconfident subjects are rewarded significantly more often than overconfident subjects, and are significantly more often expected to win the competitive real-effort task. It seems as if subjects being less convinced of their performance are taken as more congenial and are expected to be more ambitious to improve, whereas overconfident subjects are rather expected to rest on their high beliefs. While subjects do not anticipate the stronger performance signal of underconfidence, they anticipate its higher sympathy value. The comparison to a non-strategic setting shows that men strategically deflate their self-assessment to be rewarded by others. Women, in contrast, either do not deflate their self-assessment or do so even in non-strategic situations, a behavior that might be driven by nonmonetary image concerns of women. |
| Keywords: | Self-confidence; Overconfidence; Experiment |
| JEL: | C91 D03 J16 |
| Date: | 2013–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:17460&r=exp |
| By: | Andersson, Ola (Research Institute of Industrial Economics (IFN)); Holm, Håkan J. (Lund University); Tyran, Jean-Robert (University of Vienna); Wengström, Erik (Lund University) |
| Abstract: | We study risk taking on behalf of others in an experiment on a large random sample. The decision makers in our experiment are facing high-powered incentives to increase the risk on behalf of others through hedged compensation contracts or with tournament incentives. Compared to a baseline condition without such incentives, we find that the decision makers respond strongly to these incentives that result in an increased risk exposure of others. However, we find that the increase in risk taking is mitigated by altruistic preferences and pro-social personality traits. |
| Keywords: | Incentives; Competition; Hedging; Risk taking; Social preferences |
| JEL: | C72 C90 D30 D81 |
| Date: | 2013–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0989&r=exp |
| By: | Marco Faillo; Alessandra Smerilli; Robert Sugden |
| Abstract: | Level-k and team reasoning theories, among others, have been used to explain experimental evidence on coordination games. Both theories succeed in explaining some results and both fail in explaining other results. Sometimes it is impossible to discriminate between them. For this reason we propose an experiment with pie games, similar to the ones used by Crawford et al. (2008). We observe subjects playing a series of coordination games, with different configurations of equality and Pareto-dominance, for which it is possible to provide clear predictions derived from both team reasoning and a particular cognitive hierarchy model: level-k theory. In line with previous experimental results, we find that each theory fails to predict observed behaviour in some games. However, because of the design of our experiment, we can go deeper into the matter. Our results show that Pareto dominance, fairness and uniqueness are good predictors for coordination choices. Secondly, we find mixed evidence about level-k and team reasoning theories. In particular team reasoning theory fails to predict choices when they picks out a solution which is Pareto dominated and not compensated by grater equality; Level-k theory fails in games in which it predicts the choice of one of not unique slices, and the unique choice is more equal than the alternative choices. This could represent a step forward to investigate the presence of team reasoning or level-k in coordinating behaviour |
| Keywords: | Coordination games, Focal points, Team reasoning, Level-k theory |
| JEL: | C72 C91 A13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:1306&r=exp |
| By: | Irene Comeig (Department of Finance, U. of Virginia, USA & U. of Valencia, Spain); Ainhoa Jaramillo-Gutiérrez (LEE-Department of Economics, Universitat Jaume I-Castellón, ERICES-University of Valencia, Spain); Federico Ramírez (Department of Finance, University of Valencia, Spain) |
| Abstract: | A key question in credit markets is how to disclose borrowers’ private information. Typically, banks offer incentive compatible contracts (with collateral) to induce borrowers to disclose their private information. However, if men and women systematically differ in their risk taking behavior, contract choices in the self selection mechanism with collateral may differ. If women are particularly averse to financial risk, they may be classified as high risk borrowers thus not receiving the loan designed for the good borrowers, or even suffering credit rationing. In this paper, we conduct a laboratory experiment on financial decision making in three different European countries designed to study systematic gender differences in self selection. Our results show that incentive compatible contracts with collateral fail to disclose women private information, while they disclose men private information. Thus, low risk women borrowers do not self select as “theoretical” good borrowers. Beside this contribution, our results show that gender differences arise when subjects face low failure probabilities. We provide some suggestive evidence on differences in probability weighting between men and women. |
| Keywords: | adverse selection, behavioral finance, gender, credit screening, self-selection |
| JEL: | C91 D03 D82 G32 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2013/14&r=exp |
| By: | Guillen, Pablo; Merrett, Danielle; Slonim, Robert |
| Abstract: | We propose an intergroup competition scheme (ICS) to theoretically solve free-riding in team production and provide experimental evidence from a voluntary contribution mechanism (VCM) public goods game. The ICS includes an internal transfer payment from the lowest to highest contributing team proportional to the difference in group contributions. The ICS requires minimal information, makes the efficient contribution a dominant strategy and is budget balanced. These features make the ICS ideally suited to solve the moral hazard problem in team production. Our experiment demonstrates that the ICS raises contributions to almost reach optimality with appropriate parameters. We also show experimentally that the success of the ICS can be primarily attributed to the effect of higher returns and to the introduction of competition, and is not due to the introduction of potential losses or information regarding other groups. |
| Keywords: | economic experiments; voluntary contributions mechanism; intergroup competition; public goods; free riding; moral hazard; team production |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2123/9560&r=exp |
| By: | Andreas Ortman (School of Economics, Australian School of Business, the University of New South Wales); Le Zhang (School of Banking and Finance, Australian School of Business, the University of New South Wales) |
| Abstract: | Null Hypothesis Significance Testing has been widely used in the experimental economics literature. Typically, attention is restricted to type-I-errors. We demonstrate that not taking type-II errors into account is problematic. We also provide evidence, for one prominent area in experimental economics (dictator game experiments), that most studies are severely underpowered, suggesting that their findings are questionable. We then illustrate with several examples how poor (no) power planning can lead to questionable results. |
| Keywords: | Null Hypothesis Significance Testing, Type-I-errors, Type-II errors, Significance level, Statistical power |
| JEL: | A10 B23 C12 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2013-32&r=exp |
| By: | Eric Schniter (Economic Science Institute, Chapman University and Argyros School of Business and Economics, Chapman University); Roman M. Sheremeta (Economic Science Institute, Chapman University and Department of Economics, Weatherhead School of Management, Case Western Reserve University); Timothy W. Shields (Economic Science Institute, Chapman University and Argyros School of Business and Economics, Chapman University) |
| Abstract: | We investigated whether 20 emotional states, reported by 170 participants after participating in a Trust game, were experienced in a patterned way predicted by the “Recalibrational Model” or Valence Models. According to the Recalibrational Model, new information about trust-based interaction outcomes triggers specific sets of emotions. Unlike Valence Models that predict reports of large sets of either positive or negative emotional states, the Recalibrational Model predicts the possibility of conflicted (concurrent positive and negative) emotional states. Consistent with the Recalibrational Model, we observed reports of conflicted emotional states activated after interactions where trust was demonstrated but trustworthiness was not. We discuss the implications of having conflicted goals and conflicted emotional states for both scientific and well-being pursuits. |
| Keywords: | emotion, affect valence, recalibrational theory, Trust game, experiment |
| JEL: | C73 C91 D87 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-28&r=exp |
| By: | Jacob Lariviere (Department of Economics and Baker Center for Public Policy, University of Tennessee); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Nick Hanley (Division of Economics, University of Stirling); Margrethe Aanesen (Faculty of Biosciences, Fisheries and Economics, University of Tromso); Jannike Falk-Petersen (Faculty of Biosciences, Fisheries and Economics, University of Tromso); Dugald Tinch (Division of Economics, University of Stirling) |
| Abstract: | This paper compares how increases in experience versus increases in knowledge about a public good affect willingness to pay (WTP) for its provision. This is challenging because while consumers are often certain about their previous experiences with a good, they may be uncertain about the accuracy of their knowledge. We therefore design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their WTP for it. Using data for two different public goods, we show qualitative equivalence of the effect of knowledge and experience on valuation for a public good. Surprisingly, though, we find that the causal effect of objective signals about the accuracy of a subject’s knowledge for a public good can dramatically affect their valuation for it: treatment causes an increase of $150-$200 in WTP for well-informed individuals. We find no such effect for less informed subjects. Our results imply that WTP estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states. |
| Keywords: | Information, Beliefs, Field Experiment, Valuation, Uncertainty, Choice Experiment |
| JEL: | C93 Q51 D83 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2013-30&r=exp |
| By: | Deuchert, Eva; Kauer, Lukas; Liebert, Helge; Wuppermann, Carl |
| Abstract: | We conduct a field experiment to study if student counseling offices discriminate against disabled students based on their impairment. The offices receive randomized emails from fictitious high-school graduates, requesting information on the admission process and special accommodations to ease studying. Responses are evaluated using content analysis, allowing us to examine different theoretical mechanisms how discriminative behaviour can emerge. Results show that students with depression or dyslexia are discriminated against compared to students with physical impairments. We find no evidence for taste-based or statistical discrimination. Instead, results indicate that general information deficits about health conditions exist, leading to non-purposeful discrimination. Psychological and learning impairments are not recognized as disabilities and counselors are unaware of the limitations they entail. If discrimination translates into lower access to higher education and a lower probability to graduate, disadvantages for disabled individuals on the labor market are reinforced. |
| Keywords: | Higher education, disability, discrimination, field experiment, content analysis |
| JEL: | I14 I23 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2013:36&r=exp |
| By: | Steven Glazerman; Ali Protik; Bing-ru Teh; Julie Bruch; Jeffrey Max |
| Keywords: | TTI, Teacher Transfer Incentives, High-Performing Schools, Multisite Randomized Experiment |
| JEL: | I |
| Date: | 2013–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:7958&r=exp |
| By: | Nejat Anbarci; Nick Feltovich; Mehmet Y. Gurdal |
| Abstract: | We introduce the contractor game , related to the ultimatum game (UG). The proposer makes an offer , and simultaneously sends a cheap talk message , indicating (possibly falsely) the amount of the offer. The responder observes the message with certainty and the offer with probability p before accepting or rejecting the offer. We theoretically examine versions with p = 0 and p = 0.5 along with the UG, played by some standard economic agents and others who are averse to inequity, lies and lying. The equilibria yield intuitive predictions, which are supported by our experimental results. Offers are higher when they might be seen by the responder. Messages over–state offers, but less so when the offer might be seen. Responders are more likely to accept an unseen offer if it might have been seen. When offers are seen, responders reward truthful messages, rather than punishing lies, compared to when no message is sent. |
| Keywords: | ultimatum game, messages, lies, truth–telling, other–regarding behaviour |
| JEL: | C72 C78 D82 |
| Date: | 2013–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:dkn:econwp:eco_2013_7&r=exp |
| By: | Deuchert, Eva; Kauer, Lukas |
| Abstract: | Many countries provide hiring subsidies aimed at promoting the employment of people with disabilities. The effectiveness of these subsidy schemes remains unclear. The subsidy lowers wages and may thus increase employment, but may also signal lower quality of the applicant (who has to disclose a disability), which deter employers from hiring. This paper evaluates the effectiveness of employer incentives provided by the Swiss Disability Insurance using a small scale social field experiment. Participants write application letters, where it is randomly decided whether the application discloses the subsidy to the potential employer or not. The effectiveness of the hiring subsidy is measured by call-back rates for interviews. The study is conducted in two waves. The first wave focuses on graduates from sheltered Vocational Education & Training Programs. The second wave is implemented in a sample of clients from employment consulting services. Our results reveal that the subsidy is ineffective or even counterproductive in a group of adolescents who are at the end of their vocational training program, but may increase call-back rates in a group of clients of job coaching services. |
| Keywords: | Hiring subsidies, Effectiveness, Social field experiment |
| JEL: | I38 C93 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2013:35&r=exp |
| By: | König, Clemens |
| Abstract: | This paper proposes a novel explanation for the context dependency of individual choices in two-player games. Context dependency refers to the well-established phenomenon that a player, when choosing from a given opportunity set created by the other player’s strategy, chooses differently in different situations because of different alternatives to the other player’s strategy. The utility model used to explain this kind of context dependency incorporates a preference for net-loss reciprocation. Net-loss reciprocation means that a player’s willingness to impose a net loss (i.e., loss minus gain) on the other player increases in the net loss that he or she derives from the other player’s strategy. I show that net-loss reciprocation together with the method for calculating net losses developed in this paper explains the context dependencies in individual behaviour that have been documented in a number of experimental studies, whereas existing models of intention-based reciprocity fail to explain all the evidence. |
| Keywords: | Reciprocity; Fairness; Experimental economics; Game theory; Loss aversion |
| JEL: | C70 C91 D63 D64 |
| Date: | 2013–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:17474&r=exp |
| By: | SEKIZAWA Yoichi; YOSHITAKE Naomi |
| Abstract: | According to Seligman et al. (2005), writing three good things per day before going to bed over one week results in the reduction of depressive symptoms and increased happiness. In order to examine whether a similar exercise is effective on Japanese people, we carried out an internet-based randomized controlled study. A total of 1,000 adults were randomly allocated to the Three Good Things (TGT) group or the control group. Participants in the TGT group were assigned to write three good things at least twice per week for four weeks, while participants in the control group were assigned to write three memories of the past at least twice per week for four weeks. Results of the exercises showed that positive emotions were enhanced only in the TGT group at post-test, but this enhancement was not maintained at the one-month follow-up. For other measures (depressive symptoms, life satisfaction, optimism, and negative emotions), there were no significant changes both at post-test and the one-month follow up. However, the scores of the general trust scale were enhanced in both groups at post-test, and continued to be enhanced at the one-month follow-up. |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:13073&r=exp |
| By: | Esteban Klor; Sebastian Kube; Eyal Winter; Ro'i Zultan (BGU) |
| Abstract: | Conventional wisdom suggests that a global increase in monetary rewards should induce agents to exert higher effort. In this paper we demonstrate that this may not hold in team settings. In the context of sequential team production with positive externalities between agents, incentive reversal might occur: an increase in monetary rewards (either because bonuses increase or effort costs decrease) may lead agents to exert lower effort in the completion of a joint task — even if agents are fully rational, self-centered money maximizers. Herein we discuss this seemingly paradoxical phenomenon and report on two experiments that provide supportive evidence. |
| Keywords: | Incentives, Incentive Reversal, Team Production, Externalities, Laboratory Experiments, Personnel Economics. |
| JEL: | C92 D23 J31 J33 J41 M12 M52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:1309&r=exp |
| By: | Ekaterina Sherstyuk (Department of Economics, University of Hawaii at Manoa); Nori Tarui (Department of Economics, University of Hawaii at Manoa); Majah-Leah V. Ravago (School of Economics, University of the Philippines Diliman); Tatsuyoshi Saijo (Kochi University of Technology) |
| Abstract: | Dynamic externalities are at the core of many long-term environmental problems, from species preservation to climate change mitigation. We use laboratory experiments to compare welfare outcomes and underlying behavior in games with dynamic externalities under two distinct settings: traditionally-studied games with infinitely-lived decision makers, and more realistic inter-generational games. We show that if decision makers change across generations, resolving dynamic externalities becomes more challenging for two distinct reasons. First, decision makers’ actions may be short-sighted due to their limited incentives to care about the future generations’ welfare. Second, even when the incentives are perfectly aligned across generations, strategic uncertainty about the follower actions may lead to an increased inconsistency of own actions and beliefs about the others, making own actions more myopic. Inter-generational learning through history and advice from previous generations may improve dynamic efficiency, but may also lead to persistent myopia. |
| Keywords: | economic experiments; dynamic externalities; inter-generational games; climate change |
| JEL: | C92 D62 D90 Q54 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201320&r=exp |
| By: | Hinloopen, Jeroen; Müller, Wieland; Normann, Hans-Theo |
| Abstract: | We analyze the impact of product bundling in experimental markets. One firm has monopoly power in a first market but competes with another firm à la Cournot in a second market. We compare treatments where the multi-product firm (i) always bundles, (ii) never bundles, and (iii) chooses whether to bundle. We also contrast the simultaneous and the sequential order of moves in the duopoly market. Our data indicate support for the theory of product bundling: with bundling and simultaneous moves, the multi-product firm offers the predicted number of units. When the multi-product firm is the Stackelberg leader, the predicted equilibrium is better attained with bundling, especially when it chooses to bundle, even though in theory bundling should not make a difference here. In sum, bundling works as a commitment device that enables the transfer of market power from one market to another. -- |
| Keywords: | product bundling,commitment,Cournot,experiments,Stackelberg |
| JEL: | C92 D43 L11 L12 L41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:116&r=exp |
| By: | Jane Fortson |
| Keywords: | Playworks, Student Healthy Behaviors, Randomized Controlled Trial, Education |
| JEL: | I |
| Date: | 2013–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:7965&r=exp |
| By: | Fuhai Hong; Tanjim Hossain; John A. List; Migiwa Tanaka |
| Abstract: | A well-recognized problem in the multitasking literature is that workers might substantially reduce their effort on tasks that produce unobservable outputs as they seek the salient rewards to observable outputs. Since the theory related to multitasking is decades ahead of the empirical evidence, the economic costs of standard incentive schemes under multitasking contexts remain largely unknown. This study provides empirical insights quantifying such effects using a field experiment in Chinese factories. Using more than 2200 data points across 126 workers, we find sharp evidence that workers do trade off the incented output (quantity) at the expense of the non-incented one (quality) as a result of a piece rate bonus scheme. Consistent with our theoretical model, treatment effects are much stronger for workers whose base salary structure is a flat wage compared to those under a piece rate base salary. While the incentives result in a large increase in quantity and a sharp decrease in quality for workers under a flat base salary, they result only in a small increase in quantity without affecting quality for workers under a piece rate base salary. |
| JEL: | C9 C90 C93 D01 D22 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19660&r=exp |
| By: | Blanco, Mariana (University of Rosario); Dalton, Patricio S. (Tilburg University); Vargas, Juan F. (University of Rosario) |
| Abstract: | We investigate whether and how the type of unemployment benefit institution affects productivity. We designed a field experiment to compare workers' productivity under a welfare system, where the unemployed receive an unconditional monetary transfer, with their productivity under a workfare system, where the transfer is received conditional on the unemployed spending some time on ancillary activities. First, we find that having an unemployment benefit institution, regardless of whether it makes transfers conditional or unconditional, increases workers' productivity. Second, we find that productivity is higher under Welfare than under Workfare. Becoming unemployed under Welfare comes at the psychological cost of a drop in self-esteem, presumably due to the shame or stigma associated with receiving an unconditional unemployment benet. We document the empirical relevance of precisely this channel. The differences we observe in productivity suggest that this psychological cost acts as an extra non- monetary incentive for workers under Welfare to put a higher effort in their work. |
| Keywords: | Unemployment Benefits, Workfare, Productivity, Self-esteem, Shame. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:177&r=exp |