nep-exp New Economics Papers
on Experimental Economics
Issue of 2015‒03‒13
25 papers chosen by

  1. Cognitive (Ir)reflection: New Experimental Evidence By Carlos Cueva Herrero; Iñigo Iturbe-Ormaetxe Kortajarene; Esther Mata-Pérez; Giovanni Ponti; Marcello Sartarelli; Haihan Yu; Zhukova Vita
  2. Small Cash Rewards for Big Losers – Experimental Insights Into the Fight Against the Obesity Epidemic By Boris Augurzky; Thomas K.Bauer; Arndt R. Reichert; Christoph M. Schmidt; Harald Tauchmann
  3. Cooperation and Trustworthiness in Repeated Interaction By Cagala, Tobias; Glogowsky, Ulrich; Grimm, Veronika; Rincke, Johannes
  4. oTree - An Open-Source Platform for Laboratory, Online, and Field Experiments By Chen, Daniel Li; Schonger, Martin; Wickens, Chris
  5. "Incentives and Social Preferences: Experimental Evidence from a Seemingly Inefficient Traditional Labor Contract" By Jun Goto; Yasuyuki Sawada; Takeki Aida; Keitaro Aoyagi
  6. Reflections on the ethics of social experimentation By Humphreys, Macartan
  7. Common and private signals in public goods games with a point of no return By Werner Gueth; Maria Vittoria Levati; Ivan Soraperra
  8. Informational contagion in the laboratory By Cipriani, Marco; Guarino, Antonio; Guazzarotti, Giovanni; Tagliati, Federico; Fischer, Sven
  9. Reference Points and Redistributive Preferences: Experimental Evidence By Jimmy Charité; Raymond Fisman; Ilyana Kuziemko
  10. Doing good with other people’s money: an experiment on people's (un)willingness to grant others the freedom to choose By Fredrik Carlsson; Mitesh Kataria; Elina Lampi; Maria Vittoria Levati
  11. What kind of Welfare State do you prefer? An experiment on framing the social insurance scheme By Francesco Farina; Stefania Ottone; Ferrucio Ponzano
  12. Honesty and Informal Agreements By Martin Dufwenberg; Maroš Servátka; Radovan Vadovic
  13. Multicandidate Elections: Aggregate Uncertainty in the Laboratory By Bouton, Laurent; Castanheira, Micael; Llorente-Saguer, Aniol
  14. Time Consistency: Stationarity and Time Invariance By Halevy, Yoram
  15. Certainty and Overconfidence in Future Preferences for Food By Linda Thunström; Jonas Nordström; Jason F. Shogren
  16. Self-Transcendence Facilitates Meaning-Making and Flow Experience: Evidence from a Pilot Experimental Study By Evgeny N. Osin; Anna V. Malyutina; Natalia V. Kosheleva
  17. How Do Consumers Choose Health Insurance? – An Experiment on Heterogeneity in Attribute Tastes and Risk Preferences By Nadja Kairies-Schwarz; Johanna Kokot; Markus Vomhof; Jens Wessling
  18. Eliciting Consumer WTP for Food Characteristics in a Developing Context: Comparison of four methods in a field experiment By Alphonce, Roselyne; Alfnes, Frode
  19. Strotz meets Allais: Diminishing Impatience and the Certainty Effect By Halevy, Yoram
  20. Financial education, literacy and investment attitudes By Brugiavini, Agar; Cavapozzi, Danilo; Padula, Mario; Pettinicchi, Yuri
  21. Information networks among women and men and the demand for an agricultural technology in India: By Magnan, Nicholas; Spielman, David J.; Gulati, Kajal; Lybbert, Travis J.
  22. How Does Health Promotion Work? Evidence From The Dirty Business of Eliminating Open Defecation By Paul Gertler; Manisha Shah; Maria Laura Alzua; Lisa Cameron; Sebastian Martinez; Sumeet Patil
  23. Risk preference or financial literacy? Behavioural experiment on index insurance demand By Awel Y.; Azomahou T.T.
  24. Fair farming: Preferences for fair labor certification using four elicitation methods By Drichoutis, Andreas C.; Vassilopoulos, Achilleas; Lusk, Jayson; Nayga, Rodolfo M.
  25. Deliberating Collective Decisions By Chan, Jimmy; Lizzeri, Alessandro; Suen, Wing; Yariv, Leeat

  1. By: Carlos Cueva Herrero (Dpto. Análisis Económico Aplicado); Iñigo Iturbe-Ormaetxe Kortajarene (Universidad de Alicante); Esther Mata-Pérez (Dpto. Fundamentos del Análisis Económico); Giovanni Ponti (Universidad de Alicante); Marcello Sartarelli (Dpto. Fundamentos del Análisis Económico); Haihan Yu (Dpto. Fundamentos del Análisis Económico); Zhukova Vita (Dpto. Fundamentos del Análisis Económico)
    Abstract: We study whether cognitive ability explains choices in a wide variety of behavioral tasks, including riskand social preferences, by collecting evidence from almost 1,200 subjects across eight experimentalprojects. Since Frederick (2005)'s Cognitive Reflection Test (CRT) has been administered to allsubjects, our dataset is one of the largest in the literature. We divide the subjects pool into three groupsdepending on their CRT performance. Reflective subjects are those answering at least two of the threeCRT questions correctly. Impulsive ones are those who are unable to suppress the instinctive impulseto follow the intuitive although incorrect answer in at least two 2 questions, and the remaining subjectsform a residual group. We find that females score significantly worse than males in the CRT, and intheir wrong answers impulsive ones are observed more frequently. The 2D-4D ratio, which is higherfor females, is correlated negatively with subject's CRT score. In addition, we find that differencesbetween CRT groups in risk aversion depend on the elicitation method used. Finally, impulsive subjectshave higher social preferences, while reflective subjects are more likely to satisfy basic consistencyconditions in lottery choices.
    Keywords: behavioral economics, cognitive reflection, gender, laboratory experiment, personality
    JEL: C91 D81 J16
    Date: 2015–02
  2. By: Boris Augurzky; Thomas K.Bauer; Arndt R. Reichert; Christoph M. Schmidt; Harald Tauchmann
    Abstract: We complement the empirical evidence on the sustainability of weight loss achieved through cash rewards and, for the first time, rigorously examine the potential of cash rewards to prevent weight cycling. In a three period randomized controlled trial, about 700 obese persons were first assigned to two treatment groups, which were promised cash contingent on the achievement of an individually assigned target weight, and to a control group. Successful participants were subsequently allocated to two treatment groups offered cash rewards for confirming the previously achieved target weight and to a control group. This is the first experiment of this kind that finds effects of weight loss rewards up to 18 months after they were removed. Additional rewards only significantly improve the sustainability of weight loss while they are in place.
    Keywords: Field experiment; weight cycling; sustainability; incentives
    JEL: I12 I18 D03 C93
    Date: 2014–12
  3. By: Cagala, Tobias; Glogowsky, Ulrich; Grimm, Veronika; Rincke, Johannes
    Abstract: Public goods provision often involves groups of contributors repeatedly interacting with administrators who can extract rents from the pool of contributions. We suggest a novel identification approach that exploits the sequential ordering of decisions in a panel vector autoregressive model to study social interactions in the laboratory. Despite rent extraction, contributors and administrators establish a stable interaction with cooperation matching the level from a comparable Public Goods Game. In the short run, temporary changes in behavior trigger substantial behavioral multiplier effects. We demonstrate that cooperation breeds trustworthiness and vice versa and that one-time disruptions are particularly damaging in settings with a lack of cooperative attitudes and trust.
    Keywords: Cooperation,trustworthiness,rent extraction,methods for laboratory experiments,panel vector autoregressive model
    JEL: C32 C91 C92 H41
    Date: 2015
  4. By: Chen, Daniel Li; Schonger, Martin; Wickens, Chris
    Abstract: oTree is an open-source and online software for implementing interactive experiments in the laboratory, online, the field or combinations thereof. oTree does not require installation of software on subjects’ devices; it can run on any device that has a web browser, be that a desktop computer, a tablet or a smartphone. Deployment can be internet-based without a shared local network, or local-network-based even without internet access. For coding, Python is used, a popular, open-source programming language. provides the source code, a library of standard game templates and demo games which can be played by anyone.
    Keywords: experimental economics, software, laboratory experiments, field experiments, online experiments, classroom experiments
    JEL: A20 C88 C90
    Date: 2015–03–06
  5. By: Jun Goto (Institute of Economic Research,Center for Economic Institutions); Yasuyuki Sawada (Faculty of Economics, The University of Tokyo); Takeki Aida (National Graduate Institute for Policy Studies (GRIPS)); Keitaro Aoyagi (Faculty of Economics, The University of Tokyo)
    Abstract: This paper investigates the interplay between economic incentives and social norms in formulating rice planting contracts in the Philippines. In our study area, despite the potential for pervasive opportunistic behaviors by workers, a fixed-wage (FW) contract has been dominant for rice planting. To account for the use of this seemingly inefficient contractual arrangement, we adopt a hybrid experimental method of framed field experiments by randomized controlled trials (RCT), in which we randomly assign three distinct labor contracts—FW, individual piece rate (IPR), and group piece rate (GPR)—and artefactual field experiments to elicit social preference parameters. Through analyses of individual workers’ performance data from framed field experiments and data on social preferences elicited by artefactual field experiments, three main empirical findings emerge. First, our basic results show the positive incentive effects in IPR and, equivalently, moral hazard problems in FW, which are consistent with standard theoretical implications. Second, non-monetary incentives seem to play a significant role under FW: while social preferences such as altruism and guilt aversion play an important role in stimulating incentives under FW, introducing monetary incentives crowds out such intrinsic motivations, and other nonmonetary factors such as positive peer effects significantly enhance incentives under a FW contract. Finally, as alternative hypotheses, our empirical results are not necessarily consistent with the hypothesis of the interlinked contract of labor and credit transactions in mitigating moral hazard problems, the optimality of FW contract under large effort measurement errors, and the intertemporal incentives arising from performance-based contract renewal probabilities. Hence, considering the interplay of intrinsic motivations and monetary incentives as well as the monetary costs of mitigating moral hazard and free-riding problems through IPR, we may conclude that seemingly perverse traditional contractual arrangements might be socially efficient. --
    Date: 2015–03
  6. By: Humphreys, Macartan
    Abstract: Social scientists are increasingly engaging in experimental research projects of importance for public policy in developing areas. While this research holds the possibility of producing major social benefits, it may also involve manipulating populations,
    Keywords: field experiments, ethics, human subjects, consent
    Date: 2015
  7. By: Werner Gueth (Max Planck Institute of Economics); Maria Vittoria Levati (Department of Economics (University of Verona)); Ivan Soraperra (Department of Economics (University of Verona))
    Abstract: We provide experimental evidence on behavior in a public goods game featuring a so-called point of no return, meaning that if the group’s total contribution falls below this point all payoffs are reduced. Participants receive either common or private signals about the point of no return, and experience either high or low reductions in payoffs if insufficient contributions are made. Our data reveal that, as expected, contributions are higher if the cost of not reaching the threshold is high than if it is low. High signal values discourage contributions and endanger the likelihood of success when signals are common, but not when signals are private. In addition, successful coordination of contributions is less frequent in a control treatment featuring a standard provision point mechanism than in the experimental treatment where the payoff reduction factor is high, although the theoretical predictions of the two games are similar.
    Keywords: Public goods; Provision point mechanism; Experiments; Signal
    JEL: H41 C92 C72
    Date: 2015–03
  8. By: Cipriani, Marco (Federal Reserve Bank of New York); Guarino, Antonio; Guazzarotti, Giovanni; Tagliati, Federico; Fischer, Sven
    Abstract: We study the informational channel of financial contagion in the laboratory. In our experiment, two markets with correlated fundamentals open sequentially. In both markets, subjects receive private information. Subjects in the market opening second also observe the history of trades and prices in the first market. We find that although in both markets private information is only imperfectly aggregated, subjects are able to make correct inferences based on the public information coming from the market that opens first. As a result, we observe financial contagion in the laboratory: Indeed, the correlation between asset prices is very close to that predicted by the theory. Finally, as theory predicts, there is no contagion when asset fundamentals are independent: That is, subjects only react to the history of prices and trades in the first market when it is rational to do so because they convey information.
    Keywords: information contagion; laboratory experiment
    JEL: C92 G01 G14 G15
    Date: 2015–03–01
  9. By: Jimmy Charité; Raymond Fisman; Ilyana Kuziemko
    Abstract: If individuals evaluate outcomes relative to the status quo, then a social planner may limit redistribution from rich to poor even in the absence of moral hazard. We present two experiments suggesting that individuals, placed in the position of a social planner, do in fact respect the reference points of others. First, subjects are given the opportunity to redistribute unequal, unearned initial endowments between two anonymous recipients. They redistribute significantly less when the recipients know the initial endowments (and thus may have formed corresponding reference points) than when the recipients do not know (when we observe near-complete redistribution). Subjects who are themselves risk-seeking over losses drive the effect, suggesting they project their own loss-aversion onto the recipients. In a separate experiment, respondents are asked to choose a tax rate for someone who (due to luck) became rich either five or one year(s) ago. Subjects faced with the five-year scenario choose a lower tax rate, indicating respect for the more deeply embedded (five-year) reference point. Our results thus suggest that respect for reference points of the wealthy may help explain why voters demand less redistribution than standard models predict.
    JEL: C9 D63 H21 H23
    Date: 2015–03
  10. By: Fredrik Carlsson (Department of Economics, University of Gothenburg, Sweden); Mitesh Kataria (Department of Economics, University of Gothenburg, Sweden); Elina Lampi (Department of Economics, University of Gothenburg, Sweden); Maria Vittoria Levati (Department of Economics (University of Verona))
    Abstract: We augment a standard allocation experiment to investigate how preferences for an environmental project relate to the willingness to limit others' choices. We ask the allocator to choose his own donation level, a donation level for him and his group, and the minimum donation level for the group members (excluding the allocator). We find that donations dictated to the whole group are, on average, lower than individual donations and that this decrease is consistent with the expectations of what others would like to donate. Moreover, most allocators force the others to donate a positive, though low, amount. Thus, unlimited freedom of choice is rejected by the majority of the subjects.
    Keywords: Allocation decisions; Charitable giving; Social preferences; Freedom of choice
    JEL: C92 D64 D70
    Date: 2015–03
  11. By: Francesco Farina; Stefania Ottone; Ferrucio Ponzano
    Abstract: A real-effort experiment is conducted in order to detect preferences for one of three different models of Welfare State characterized by different schemes of tax-and-transfers. Experimental subjects have to choose (both under and without veil of ignorance concerning their position in the society created in the lab) among: a) a baseline proportional scheme, where the State is neutral with respect to risk heterogeneity; b) an actuarially-fair scheme where low-ability and low-earnings subjects bear individual full responsibility for risk exposure; c) a progressive scheme where mutual risk insurance spreads risk across all subjects, so that low-ability and low-earnings individuals are compensated. The aim is to investigate how subjects posit with respect to the task performed by the Welfare State, which is the interaction between inequality of opportunity and income inequality facing low-ability and low-earnings individuals due to their relatively higher risk exposure. Our most relevant finding is that preference is not much motivated by a justice principle, but mainly by the expectation on one’s own position in the society.
    Keywords: Welfare State, insurance, redistribution, proportional system, actuarially-fair system, progressive system
    JEL: C9 D31 D63 H26
    Date: 2015–03
  12. By: Martin Dufwenberg; Maroš Servátka (University of Canterbury); Radovan Vadovic
    Abstract: We develop, and experimentally test, models of informal agreements. Agents are assumed to be honest but suffer costs of overcoming temptations. We extend two classical bargaining solutions -- split-the-difference and deal-me-out -- to this informal agreement setting. For each solution there are two natural ways to do this, leaving us with 2×2 models to explore. In the experiment, a temptations-constrained version of deal-me-out emerges as the clear winner.
    Keywords: agreement, bargaining, behavioral economics, deal, experiment, honesty, lost wallet game, negotiation, temptation
    JEL: C70 C91
    Date: 2015–02–15
  13. By: Bouton, Laurent; Castanheira, Micael; Llorente-Saguer, Aniol
    Abstract: The rational-voter model is often criticized on the grounds that two of its central predictions (the paradox of voting and Duverger's law) are at odds with reality. Recent theoretical advances suggest that these empirically unsound predictions might be an artifact of an assumption in those models: the absence of aggregate uncertainty about the distribution of preferences in the electorate. In this paper, we propose the first direct empirical evidence of the effect of aggregate uncertainty in multicandidate elections. Adopting a theory-based experimental approach, we explore whether aggregate uncertainty indeed favors the emergence of non-Duverger's law equilibria in plurality elections. Our experimental results support the main theoretical predictions: sincere voting is a predominant strategy under aggregate uncertainty, whereas without aggregate uncertainty, voters massively coordinate their votes behind one candidate, who wins almost surely.
    Keywords: aggregate uncertainty; experiments; multicandidate elections; plurality; rational-voter model
    JEL: C92 D70
    Date: 2015–03
  14. By: Halevy, Yoram
    Abstract: A sequence of experiments documents static and dynamic ``preference reversals'' between sooner-smaller and later-larger rewards, when the sooner reward could be immediate. The theoretically-motivated design permits separate identification of time-consistent, stationary and time-invariant choices. At least half of the subjects are time consistent, but only three-quarters of them exhibit stationary choices. About half of subjects with time inconsistent choices have stationary preferences. These results challenge the view that present-bias preferences are the main source of time inconsistent choices.
    Keywords: Time Discounting, diminishing imparience, dynamic consistency, present bias, stability, intertemporal preferences
    JEL: D03 D81 D91 C91
    Date: 2012–06–24
  15. By: Linda Thunström (HUI Research AB; Department of Economics and Finance, University of Wyoming); Jonas Nordström (Department of Food and Resource Economics, University of Copenhagen; Lund University School of Economics and Management); Jason F. Shogren (Department of Economics and Finance, University of Wyoming)
    Abstract: We examine consumer certainty of future preferences and overconfidence in predicting future preferences. We explore how preference certainty and overconfidence impact the option value to revise today’s decisions in the future. We design a laboratory experiment that creates a controlled choice environment, in which a subject's choice set (over food snacks) is known and constant over time, and the time frame is short -- subjects make choices for themselves today, and for one to two weeks ahead. Our results suggest that even for such a seemingly straightforward choice task, only 45 percent of subjects can predict future choices accurately, while stated certainty of future preferences (one and two weeks ahead) is around 80 percent. We define overconfidence in predicting future preferences as: the difference between actual accuracy at predicting future choices and stated certainty of future preferences. Our results suggest strong evidence of overconfidence. We find that overconfidence increases with the level of stated certainty of future preferences. Finally, we observe that the option value people attach to future choice flexibility decreases with overconfidence. Overconfidence in future preferences affects economic welfare because it says people have too much incentive to lock themselves into future suboptimal decisions.
    Keywords: Choice flexibility, Preference uncertainty, Overconfidence, Sub-optimal decisions, Food
    JEL: D03 D12 D83 D90
    Date: 2015–03
  16. By: Evgeny N. Osin (National Research University Higher School of Economics); Anna V. Malyutina (National Research University Higher School of Economics); Natalia V. Kosheleva (National Research University Higher School of Economics)
    Abstract: We review the psychological theory of flow and focus on the notion of autotelic personality, arguing that self-transcendence understood within the existential tradition of Frankl and Langle can be seen as a personality disposition that is conducive to flow experience. We present a pilot quasi-experimental study conducted in a student sample (N=84) to investigate the effect of situational meaning and self-transcendence on productivity and flow experience. Students were asked to work on a creative task (which consisted in finding solutions to a social problem) in small groups. Each group was randomly assigned with an instruction presenting the problem as happening either in a distant country (low-meaning) or home country (high-meaning). The outcome variables were measures of flow, perceived meaning, and satisfaction with time. The solutions generated by students were rated by 3 experts. The results showed that the experimental manipulation had an effect on the quality of the resulting solutions, but not on the subjective experience of participants. Self-transcendent individuals tended to experience higher flow under both conditions, however, under the high-meaning condition self-transcendence exhibited a curvilinear association with the experiential outcomes. The findings suggest that self-transcendence can be considered as a candidate trait for autotelic personality and call for more replication studies
    Keywords: flow experience, self-transcendence, personal meaning, autotelic personality
    JEL: Z
    Date: 2015
  17. By: Nadja Kairies-Schwarz; Johanna Kokot; Markus Vomhof; Jens Wessling
    Abstract: Recent health policy reforms try to increase consumer choice. We use a laboratory experiment to analyze consumers’ tastes in typical contract attributes of health insurances and to investigate their relationship with individual risk preferences. First, subjects make consecutive insurance choices varying in the number and types of contracts offered. Then, we elicit individual risk preferences according to Cumulative Prospect Theory. Applying a latent class model to the choice data, reveals five classes of consumers with considerable heterogeneity in tastes for contract attributes. From this, we infer distinct behavioral strategies for each class. The majority of subjects use minimax strategies focusing on contract attributes rather than evaluating probabilities in order to maximize expected payoffs. Moreover, we show that using these strategies helps consumers to choose contracts, which are in line with their individual risk preferences. Our results reveal valuable insights for policy makers of how to achieve efficient consumer choice.
    Keywords: Health insurance; risk preferences; heterogeneity; heuristics; laboratory experiment; cumulative prospect theory
    JEL: C91 I13 D81
    Date: 2014–12
  18. By: Alphonce, Roselyne (School of Economics and Business, Norwegian University of Life Sciences); Alfnes, Frode (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: This paper aims at answering two objectives;1) assess consumer preference and willingness to pay for organic and food safety inspected tomatoes in a traditional African food market; 2) compare willingness to pay for the tomato attributes in four different elicitation techniques. We elicit willingness to pay for conventional, organic and/or food-safetyinspected tomatoes using methods that can be conducted with one respondent at a time: the Becker–DeGroot–Marschak mechanism, multiple price lists, multiple price lists with stated quantities, and real-choice experiments. All methods show that consumers are willing to pay a premium for organic and food-safety-inspected tomatoes. However, the size of the premium is significantly larger when consumers choose between alternatives than when they indicate their reservation price. Throughout the paper, we discuss method implementation issues for this context and make method recommendations for future research.
    Keywords: elicitation methods; framed field experiments; organic; food-safety inspected; Tanzania; WTP
    JEL: C93 D12 Q10 Q13
    Date: 2015–03–05
  19. By: Halevy, Yoram
    Abstract: Decision makers tend to exhibit a higher degree of impatience when considering a delay to an immediate reward than when contemplating an identical delay to an equal future reward. This work argues that diminishing impatience originates from the distinction between the certain present and the risky future. A simple functional representation of preferences, which exhibits time inconsistency when the future is uncertain, is derived. Existing experimental evidence, which is inconsistent with other formulations that account for diminishing impatience, supports the proposed approach. Furthermore, the new theory uncovers a tight relation between diminishing impatience and well-known behavioral regularities in the field of choice under risk and uncertainty
    Keywords: Intertemporal Substitution, Non-Expected Utility, The Dual Theory, Certainty Effect, Time Consistency, Uncertain Lifetime, Exponential Discounting, Hy
    JEL: D81 D91
    Date: 2004–10–29
  20. By: Brugiavini, Agar; Cavapozzi, Danilo; Padula, Mario; Pettinicchi, Yuri
    Abstract: Based on a sample of university students, we provide field and laboratory evidence that a small scale training intervention has a both statistically and economically significant effect on subjective and objective assessments of financial knowledge. We also show that for a large part of students whose self-assessed financial knowledge has improved we do not find an increase in their actual skills.
    Keywords: Financial education,Financial literacy,Planning,Investment attitudes
    JEL: D14 G11 I20
    Date: 2015
  21. By: Magnan, Nicholas; Spielman, David J.; Gulati, Kajal; Lybbert, Travis J.
    Abstract: Although there is ample evidence of differences in how and where men and women acquire information, most research on learning and household decisionmaking only considers access to information for a single, typically male, household head. This assumption may be problematic in developing-country agriculture, where women play a fundamental role in farming. Using gender-disaggregated social network data from Uttar Pradesh, India, we analyze agricultural information networks among men and women. We test for gender-specific network effects on demand for laser land leveling—a resource-conserving technology—using data from a field experiment that combines a Becker-DeGroot-Marschak (BDM) auction with a lottery.
    Keywords: Agricultural technologies, Gender, Women, information, technology adoption, Developing countries, Social network analysis, peer effects, learning externalities, laser land leveling, gender disagredated data,
  22. By: Paul Gertler; Manisha Shah; Maria Laura Alzua; Lisa Cameron; Sebastian Martinez; Sumeet Patil
    Abstract: We investigate the mechanisms underlying health promotion campaigns designed to eliminate open defecation in at-scale randomized field experiments in four countries: India, Indonesia, Mali, and Tanzania. Health promotion works through a number of mechanisms, including: providing information on the return to better behavior, nudging better behavior that one already knows is in her self-interest, and encouraging households to invest in health products that lower the marginal cost of good behavior. We find that health promotion generally worked through both convincing households to invest in in-home sanitation facilities and nudging increased use of those facilities. We also estimate the causal relationship between village open defecation rates and child height using experimentally induced variation in open defecation for identification. Surprisingly we find a fairly linear relationship between village open defecation rates and the height of children less than 5 years old. Fully eliminating open defecation from a village where everyone defecates in the open would increase child height by 0.44 standard deviations. Hence modest to small reductions in open defecation are unlikely to have a detectable effect on child height and explain why many health promotion interventions designed to reduce open defecation fail to improve child height. Our results suggest that stronger interventions that combine intensive health promotional nudges with subsidies for sanitation construction may be needed to reduce open defecation enough to generate meaningful improvements in child health.
    JEL: I12 I15 O15
    Date: 2015–03
  23. By: Awel Y.; Azomahou T.T. (UNU-MERIT)
    Abstract: We use unique cross-sectional household data from Ethiopia to investigate the effect of risk preference, financial literacy and other socio-economic characteristics on demand for index insurance. We measure risk preference based on survey experiments using lottery choice game with real monetary prizes. First, we find no evidence of risk aversion on demand for index insurance. Second, we find positive impact of financial literacy on purchasing insurance. Third, relaxing liquidity constraint enhance the take-up of insurance. Finally, demographic and village characteristics have little role in the decision to uptake insurance. These findings have implications on product design and marketing strategies. The product design should focus on ways that better account for liquidity constraint of the household. Interventions that strengthen efforts in provision of financial literacy programmes are worthy. Our results are robust to changes in specification and estimation method.
    Date: 2015
  24. By: Drichoutis, Andreas C.; Vassilopoulos, Achilleas; Lusk, Jayson; Nayga, Rodolfo M.
    Abstract: High profile cases of exploitative labor practices have increased concerns over agricultural working conditions. However, it is unclear whether and to what extent the public is willing to trade-off fair working conditions for higher prices and food imports. We implement a large-scale survey to uncover Greek consumer preferences for a food labeling system that certifies fair working conditions for the workers employed at all production stages of agricultural production. Empirical findings from several disciplines suggest that results from contingent valuation surveys can be susceptible to hypothetical bias, social desirability bias, and lack of consequentiality. To test these issues, we use the 'cheap talk' method (Kling et al., 2012), Lusk and Norwood's (2009) Inferred Valuation (IV) method and the consequentiality scripts employed in Vossler and Evans (2009) and Vossler and Watson (2013). We also test predictions of reference dependent theory by testing whether framing the valuation question as an 'Equivalent Loss' (EL) differs from classical 'Willingness-to-pay elicitation' (WTP). We collected responses from more than 3,800 consumers in the cities of Athens and Ioannina in Greece. Our results show that neither the cheap talk nor the consequentiality script had any effect on elicited valuations. In contrast, the IV method appears to mitigate social desirability bias. We also find that values elicited under WTP are larger than values elicited under EL, which rejects neoclassical preferences. When social desirability is taken out of our estimates, we find that consumers are willing to pay an average premium of 72 cents/Kg for strawberries with fair labor certification, which is equivalent to 49% of current market prices.
    Keywords: fair labor label; willingness to pay; equivalent loss; contingent valuation; inferred valuation; consequentiality; cheap talk; uncertainty scale
    JEL: C83 C93 D12 Q13
    Date: 2015–03–03
  25. By: Chan, Jimmy; Lizzeri, Alessandro; Suen, Wing; Yariv, Leeat
    Abstract: We present a dynamic model of sequential information acquisition by a heterogeneous committee. At each date agents decide whether to vote to adopt one of two alternatives or continue to collect more information. The process stops when a qualified majority vote for an alternative. Three main insights emerge from our analysis and match an array of stylized facts on committee decision making. First, majority rule is more fragile than super-majority rules to impatient committee members. Second, more diverse preferences, more consensual deliberation rules, or more unanimous de- cision voting rules lead to lengthier deliberation and more accurate decisions. Last, balanced committees unanimously prefer to delegate deliberation power to a moderate chairman rather than be governed by a deliberation rule such as unanimity.
    Keywords: collec- tive learning; optimal stopping; sequential likelihood ratio test; swing voters
    JEL: D71 D72 D83
    Date: 2015–03

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