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on Experimental Economics |
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Issue of 2016‒08‒21
twenty papers chosen by |
| By: | Anya Samek; Daniel Houser; Joachim Winter; John List; Marco Piovesan |
| Abstract: | Acts of dishonesty permeate life. Understanding their origins, and what mechanisms help to attenuate such acts is an underexplored area of research. This study takes an economics approach to explore the propensity of individuals to act dishonestly across different contexts. We conduct an experiment that includes both parents and their young children as subjects, exploring the roles of moral cost and scrutiny on dishonest behavior. We find that the highest level of dishonesty occurs in settings where the parent acts alone and the dishonest act benefits the child. In this spirit, there is also an interesting, quite different, effect of children on parents' behavior: parents act more honestly under the scrutiny of daughters than under the scrutiny of sons. This finding sheds new light on the origins of the widely documented gender differences in cheating behavior observed among adults, where a typical result is that females are more honest than males. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00418&r=exp |
| By: | Anya Samek |
| Abstract: | The gender difference in competitiveness has been cited as an important factor driving the gender gap in labor market outcomes. Using a natural field experiment with 35,000 university students, I explore the impact of compensation scheme on willingness to apply for a job. I find that competitive compensation schemes disproportionately deter women from applying, which cannot be explained by differences in risk preferences alone. I also vary whether the job is introduced as helping a non-profit, which increases application rates, suggesting a role for social preferences in application decisions. Finally, I observe a correlation between competitiveness preferences and career choice. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00419&r=exp |
| By: | Anya Samek; Jared Rubin; Roman Sheremeta |
| Abstract: | Firms face an optimization problem that requires a maximal quantity output given a quality constraint. How firms should incentivize quantity and quality to meet these dual goals remains an open question. We provide a theoretical model and conduct an experiment in which participants are paid for both quantity and quality of a real effort task. Consistent with the theoretical predictions, higher quality incentives encourage participants to shift their attention from quantity to quality and to decrease the error rate at the expense of lowering quantity of output. This quantity-quality trade-off is significantly impacted by the participant's ability and level of loss aversion. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00438&r=exp |
| By: | Anya Samek |
| Abstract: | The rising childhood obesity rate calls for interventions aimed at improving child food choice, and one recent innovation is the use of behavioral 'nudges.' We conducted a field experiment with over 1,400 children to measure the impact of interventions based on two behavioral theories: reciprocity and theories of self-control. The interventions were implemented in the classroom prior to observing choices between a healthy and less healthy milk choice in the cafeteria. We found that small, unconditional gifts (triggering reciprocity) increased the choice of the healthier milk by 15 percentage points relative to a control group. Giving the option to set a goal (an internal commitment device) was most effective for the younger children and increased the choice of the healthier milk by 10 percentage points. About two thirds of children made a goal to select the healthier milk, and almost 90 percent followed through with their goal. We also see an impact of health information delivered by teachers. Our results have implications for policy and practice, since low cost interventions implemented at school may have an impact on what kids choose to eat and in turn on obesity rates. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00433&r=exp |
| By: | Anya Samek; Charles Sprenger; Sally Sadoff |
| Abstract: | We conduct a natural field experiment with over 200 customers at a grocery store to investigate dynamic inconsistency and the demand for commitment in food choice. Subjects are invited to allocate and re-allocate food items received as part of a grocery delivery program. We observe substantial dynamic inconsistency, as well as a demand for commitment among a non-negligible number of subjects. Interestingly, individuals who demand commitment are more likely to be dynamically consistent in their prior behavior. This work provides direct evidence of dynamic inconsistency in consumption choices in the field and points towards potential extensions to models of temptation. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00417&r=exp |
| By: | Anya Samek; Roman Sheremeta |
| Abstract: | Recognizing donors by revealing their identities is important for increasing charitable giving. We conducted a field experiment to examine how different recognition methods impact giving, and found that all forms of recognition that we examined had a positive impact on increasing donations, whereby recognizing only highest donors (positive recognition) and recognizing only lowest donors (negative recognition) had the most pronounced effect. We argue that selective recognition (both positive and negative) creates tournament-like incentives. Recognizing the highest donors activates the desire to seek a positive prize of prestige, thus increasing the proportion of donors who contribute large amounts. Recognizing the lowest donors activates the desire to avoid a negative prize of shame, thus decreasing the proportion of donors who do not contribute or contribute very little. Therefore, selective recognition is an effective tool that can be used in the field by charities to increase donations. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00431&r=exp |
| By: | Anya Samek; Inkyoung Hur; Ji Soo Yi; Sung-Hee Kim |
| Abstract: | We investigate the effect of different interactive technologies on the decision-making process in an information search laboratory experiment. In our experiment, the participant makes a selection from a list of differently-valued objects with multiple attributes. We compare presenting information in static form to two methods of interactive presentation. In the first, the participant can manually sort objects by attribute, a capability similar to that found in spreadsheet software. In the second, we present an interactive visual tool that (1) automatically sorts all objects by attribute and (2) uses visual cues for comparisons. Manual sorting capability does not cause an improvement in decisions in this context. On the other hand, the visual tool increases the value of the objects selected by the participant and decreases time spent deliberating. We also find that our interactive presentations affect the decision-making process of participants by changing the number of intermediate options considered. Our results highlight the importance of investigating the effect of technology on information search, and suggest that appropriate interactive visual displays may improve search in practice. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00427&r=exp |
| By: | Anya Samek; David Reiley |
| Abstract: | Direct mail fundraisers commonly provide a set of suggested donation amounts to potential donors, in addition to the option of writing in an amount. Yet little systematic evidence exists about the causal effects of suggested donation amounts on giving behavior. To this end, we conducted a field experiment on a direct mail solicitation to nearly 15,000 members of three public broadcasting stations. We varied (1) the vector of suggested amounts, and (2) whether the suggested amounts were fixed or varied as a proportion of the individual's previous donation. We find that increasing the vector of suggested amounts by about 20 percent statistically significantly reduces the overall probability of giving by about 15 percent. The overall impact on revenue is less clear, but appears to be somewhat negative. Higher suggested amounts also lead to write in amounts representing a greater proportion of donations. We attribute our result to the apparent cognitive cost of writing in a preferred amount that differs from a suggested amount. A second field experiment, in which we alter only one of the suggested amounts, gives evidence consistent with that theory and with the idea that donors prefer to give round numbers, as we see donors significantly more likely to give amounts of $90 or higher when suggested $100 versus $95. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00422&r=exp |
| By: | Anya Samek; Avner Ben-Ner; John List; Louis Putterman |
| Abstract: | An active area of research within the social sciences concerns the underlying motivation for sharing scarce resources and engaging in other pro-social actions. We develop a theoretical framework that sheds light on the developmental origins of social preferences by providing mechanisms through which parents transmit preferences for generosity to their children. Then, we conduct a field experiment with nearly 150 3-5 year old children and their parents, measuring (1) whether child and parent generosity is correlated, (2) whether children are influenced by their parents when making sharing decisions and (3) whether parents model generosity to children. We observe no correlation of independently measured parent and child sharing decisions at this young age. Yet, we find that apart from those choosing an equal allocation of resources between themselves and another child, children adjust their behaviors to narrow the gap with their parent's or other adult's choice. We find that fathers, and parents of initially generous children, increase their sharing when informed that their child will be shown their choice. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00434&r=exp |
| By: | Anya Samek; James Cox; John List; Michael Price; Vjollca Sadiraj |
| Abstract: | The literature exploring other regarding behavior sheds important light on interesting social phenomena, yet less attention has been given to how the received results speak to foundational assumptions within economics. Our study synthesizes the empirical evidence, showing that recent work challenges convex preference theory but is largely consistent with rational choice theory. Guided by this understanding, we design a new, more demanding test of a central tenet of economics - the contraction axiom - within a sharing framework. Making use of more than 325 dictators participating in a series of allocation games, we show that sharing choices violate the contraction axiom. We advance a new theory that augments standard models with moral reference points to explain our experimental data. Our theory also organizes the broader sharing patterns in the received literature. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00445&r=exp |
| By: | Anya Samek; John List; Terri Zhu |
| Abstract: | We use a field experiment to investigate the effect of incentives on food purchase decisions at a grocery store. We recruit over 200 participants and track their purchases for a period of 6 months, permitting us a glimpse of more than 3,500 individual shopping trips. We randomize participants to one of several treatments, in which we incentivize fresh fruit and vegetable purchases, provide tips for fruit and vegetable preparation, or both. We report several key insights. First, our informational content treatment has little effect. Second, we find an important price effect: modest pecuniary incentives more than double the proportion of dollars spent on produce in the grocery store. Third, we find an interesting pattern of consumption after the experiment ends: even when incentives are removed, the treatment group has higher fruit and vegetable purchases compared to the control group. These long-term results are in stark contrast to either a standard price model or a behavioral model of 'crowd out.' Rather, our results are consonant with a habit formation model. This opens up the distinct possibility that short term incentives can be used as a key instrument to combat obesity. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:framed:00421&r=exp |
| By: | Greer Gosnell; Alessandro Tavoni |
| Abstract: | The recent global climate change agreement in Paris leaves a wide gap between pledged and requisite emissions reductions in keeping with the commonly accepted 2°C target. A recent strand of theoretical and experimental evidence establishes pessimistic predictions concerning the ability of comprehensive global environmental agreements to improve upon the business-as-usual trajectory. We introduce an economic experiment focusing on the dynamics of the negotiation process by observing subjects’ behavior in a Nash bargaining game. Throughout repeated rounds, heterogeneous players bargain over the allocation of a fixed amount of profit-generating emissions with significant losses attached to prolonged failure to reach agreement. We find that the existence of side agreements that constrain individual demands among a subset of like countries does not ensure success; however, such side agreements reduce the demands of high-emission parties. Our results highlight the importance of strong signals amongst high emitters in reaching agreement to shoulder a collective emissions reduction target. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp249&r=exp |
| By: | Möllers, Claudia; Normann, Hans-Theo; Snyder, Christopher M. |
| Abstract: | When an upstream monopolist supplies several competing downstreamfirms, it may fail to monopolize the market because it is unable to commit not to behave opportunistically. We build on previous experimental studies of this well-known commitment problem by introducing communication. Allowing the upstream firm to chat privately with each downstream firm reduces total offered quantity from near the Cournot level (observed in the absence of communication) halfway toward the monopoly level. Allowing all three firms to chat together openly results in complete monopolization. Downstream firms obtain such a bargaining advantage from open communication that all of the gains from monopolizing the market accrue to them. A simple structural model of Nash-in-Nash bargaining fits the pattern of shifting surpluses well. Using third-party coders, unsupervised text mining, among other approaches, we uncover features of the rich chat data that are correlated with market outcomes. We conclude with a discussion of the antitrust implications of open communication in vertical markets. |
| Keywords: | commitment,communication,experiments,vertical restraints |
| JEL: | L42 K21 C90 C70 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:226&r=exp |
| By: | Jung, Seeun (Inha University); Choe, Chung (Hanyang University); Oaxaca, Ronald L. (University of Arizona) |
| Abstract: | In addition to discrimination, market power, and human capital, gender differences in risk preferences might also contribute to observed gender wage gaps. We conduct laboratory experiments in which subjects choose between a risky (in terms of exposure to unemployment) and a secure job after being assigned in early rounds to both types of jobs. Both jobs involve the same typing task. The risky job adds the element of a known probability that the typing opportunity will not be available in any given period. Subjects were informed of the exogenous risk premium being offered for the risky job. Women were more likely than men to select the secure job, and these job choices accounted for between 40% and 77% of the gender wage gap in the experiments. That women were more risk averse than men was also manifest in the Pratt-Arrow Constant Absolute Risk Aversion parameters estimated from a random utility model adaptation of the mean-variance portfolio model. |
| Keywords: | occupational choice, gender wage differentials, risk aversion, lab experiment |
| JEL: | J16 J24 J31 C91 D81 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10132&r=exp |
| By: | Lucks, Konstantin |
| Abstract: | This paper explores how reduced self-control affects individual investment behavior in two laboratory tasks. For this purpose, I exogenously reduce subjects’ self-control using a well-established psychological treatment. In each task, I find no significant main treatment effect, but secondary effects consistent with findings on self-control from other studies and self-control’s potential relevance in financial markets. In experiment 1, I find no significant change in the disposition effect following the manipulation. However, treated participants trade fewer different shares per round. In experiment 2, I look at the effect of self-control on myopic loss aversion by implementing a 2×2 design by varying investment horizon and self-control in a repeated lottery environment. Average behavior suggests that reduced self-control increases framing effects, but I cannot reject the null hypothesis of equal investment levels between the self-control treatments within each investment frame. Analyzing the dynamics of decision making in more detail, self-control depleted participants in the narrow frame reduce their investment levels on average over time which seems to be driven by more intense reactions to investment experiences. |
| Keywords: | Self-control, loss aversion, disposition effect, trade clustering, myopic loss aversion |
| JEL: | D53 D81 G02 G11 |
| Date: | 2016–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73099&r=exp |
| By: | Anya Samek; Heather Royer; Manuela Angelucci; Silvia Prina |
| Abstract: | How do peers influence the impact of incentives? Despite much work on incentives, little is known about the spillover effects of incentives. We investigate two mechanisms by which these effects can occur: through peers' actions and peers' incentives. In a field experiment on snack choice (grapes versus cookies), we randomize who receives incentives, the fraction of peers incentivized, and whether or not it can be observed that peers' choices are incentivized among over 1,500 children in the school lunchroom. Incentives increase the likelihood of initially choosing grapes. However, peer spillover effects can be large enough to undo these positive effects. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:framed:00444&r=exp |
| By: | Nava Ashraf; Oriana Bandiera; B. Kelsey Jack |
| Abstract: | We conduct a field experiment to evaluate the effect of extrinsic rewards, both financial and non-financial, on the performance of agents recruited by a public health organization to promote HIV prevention and sell condoms. In this setting: (i) non-financial rewards are effective at improving performance; (ii) the effect of both types of rewards is stronger for pro-socially motivated agents; and (iii) both types of rewards are effective when their relative value is high. The findings illustrate that extrinsic rewards can improve the performance of agents engaged in public service delivery, and that non-financial rewards can be effective in settings where the power of financial incentives is limited. |
| Keywords: | financial incentives; non-monetary rewards; pro-social motivation; public service delivery |
| JEL: | D82 J33 M52 O15 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:57214&r=exp |
| By: | Alex Imas; Anya Samek; Sally Sadoff |
| Abstract: | There is growing interest in the use of loss contracts that offer performance incentives as upfront payments that employees can lose. Standard behavioral models predict a tradeoff in the use of loss contracts: employees will work harder under loss contracts than under gain contracts; but, anticipating loss aversion, they will prefer gain contracts to loss contracts. In a series of experiments, we test these predictions by measuring performance and preferences for payoff-equivalent gain and loss contracts. We find that people indeed work harder under loss than gain contracts, as the theory predicts. Surprisingly, rather than a preference for the gain contract, we find that people actually prefer loss contracts. In exploring mechanisms for our results, we find suggestive evidence that people do anticipate loss aversion but select into loss contracts as a commitment device to improve performance. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:feb:framed:00415&r=exp |
| By: | Matthias Weber (Bank of Lithuania, and Vilnius University, Lithuania); John Duffy (University of California, Irvine, United States); Arthur Schram (VU University Amsterdam, the Netherlands) |
| Abstract: | An important feature of bond markets is the relationship between initial public offering prices and the probability of the issuer defaulting. First, this probability affects the bond prices. Second, IPO prices determine the default probability. Though market equilibrium has been shown to predict well for other assets, it is a priori unclear whether markets will yield competitive prices when such interaction with the default probability occurs. We develop a flexible bond market model that is easily implemented in the laboratory and examine how subjects price bonds. We find that subjects learn to price bonds well after only a few repetitions. |
| Keywords: | bond markets; experimental finance; experimental markets; asset pricing; learning |
| JEL: | C92 C90 D47 G12 |
| Date: | 2016–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20160059&r=exp |
| By: | Armand, Alex (University of Navarra); Attanasio, Orazio (University College London); Carneiro, Pedro (University College London); Lechene, Valerie (University College London) |
| Abstract: | This paper studies the differential effect of targeting cash transfers to men or women on the structure of household expenditures on non-durables. We study a policy intervention in the Republic of Macedonia, offering cash transfers to poor households, conditional on having their children attending secondary school. The recipient of the transfer is randomized across municipalities to be either the household head or the mother. Using data collected to evaluate the conditional cash transfer program, we show that the gender of the recipient has an effect on the structure of expenditure shares. Targeting transfers to women increases the expenditure share on food by about 4 to 5%. To study the allocation of expenditures within the food basket, we estimate a demand system for food and we find that targeting payments to mothers induces, for different food categories, not only a significant intercept shift, but also a change in the slope of the Engel curve. |
| Keywords: | CCT, intra-household, gender, expenditure |
| JEL: | D12 D13 E21 O12 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10133&r=exp |