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on Experimental Economics |
| By: | Thomas Buser (University of Amsterdam, The Netherlands); Louis Putterman (Brown University, United States); Joël van der Weele (University of Amsterdam, The Netherlands) |
| Abstract: | Gender differences in voting patterns and political attitudes towards redistribution are well-documented. The experimental gender literature suggests several plausible behavioral explanations behind these differences, relating to gender differences in confidence concerning future relative income position, risk aversion, and social preferences. We use data from lab experiments on preferences for redistribution conducted in the U.S. and several European countries to disentangle these potential mechanisms. We find that when choosing to redistribute income as a disinterested observer, women choose higher tax rates than men when initial income depends on performance in a task but not when it is randomly allocated. In a veil of ignorance condition with uncertainty about the income position of the decision maker, this effect is even stronger, leading to a 10ppt gender difference in average chosen tax rates in the performance conditions. We find that this gender difference is mainly due to men being more (over)confident about their task performance and the resulting income position, with gender differences in risk aversion and social preferences playing a minor role. |
| Keywords: | gender; redistribution; overconfidence; risk attitudes; voting; taxation |
| JEL: | C91 J16 H24 D31 |
| Date: | 2016–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20160063&r=exp |
| By: | David Kelsey (Department of Economics, University of Exeter); Sara le Roux (Department of Economics, Oxford Brookes University) |
| Abstract: | We conducted a set of experiments to compare the effect of ambiguity in single person decisions and games. Our results suggest that ambiguity has a bigger impact in games than in ball and urn problems. We ?nd that ambiguity has the opposite effect in games of strategic substitutes and complements. This con?rms a theoretical prediction made by Eichberger and Kelsey (2002). The experiments also test whether subjects' ?perception of ambiguity differs when faced by a local opponent as opposed to a foreign one. Our results show that there is little evidence of more in?uence of ambiguity on behaviour when faced by foreign subjects. |
| Keywords: | Ambiguity; Choquet expected utility; strategic complements; strategic substitutes; Ellsberg urn. |
| JEL: | C72 C91 D03 D81 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:1605&r=exp |
| By: | Sprenger, Julia |
| Abstract: | The current study examines individual decision making in the field of personal finance. How do people arrive at a financial decision? A laboratory experiment investigates the way external information is integrated into the decision-making process. Financial literacy shows to lower demand for financial advice but it does not immunize against sunk cost fallacies: High financial literate subjects are not less likely to follow financial advice than less literate subjects, even when the quality of advice is moderate. Overconfidence biases the perceived need for information. Both results point to difficulties in making an informed choice. |
| Abstract: | Dieses Papier untersucht individuelle Entscheidungsprozesse im Bereich Finanzen. Wie gelangen Menschen zu einer finanziellen Entscheidung? Ein Laborexperiment untersucht, wie externe Informationen in den Entscheidungsprozess integriert werden. Die Ergebnisse zeigen, dass ein hohes Niveau an financial literacy die Nachfrage nach Ratschlägen senkt. Es bewahrt aber nicht davor, einer sunk cost fallacy zu unterliegen. Menschen mit sehr hoher financial literacy sind nicht weniger geneigt einem Ratschlag in einer finanziellen Entscheidungssituation zu folgen als Menschen mit einer geringen financial literacy, und zwar auch dann nicht, wenn die Qualität dieses Ratschlags nur moderat ist. Außerdem zeigen die Ergebnisse, wie der wahrgenommene Bedarf an Informationen durch overconfidence verzerrt wird. Beide Ergebnisse zeigen, inwiefern der Anspruch, eine fundierte Entscheidung zu treffen für Individuen mit Schwierigkeiten verbunden ist, selbst wenn eine Vielzahl externer Informationen verfügbar ist. |
| Keywords: | Financial literacy,overconfidence,financial decision making,experiment,advice |
| JEL: | C91 G02 D83 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:634&r=exp |
| By: | Lunn, Pete; Bohacek, Marek; McGowan, Feidhlim |
| Abstract: | We present a novel experimental method for investigating consumer choice. The Surplus Identification (S-ID) task is inspired by studies of detection in perceptual psychophysics. It employs a forced-choice procedure, in which participants must decide whether a novel product is worth more or less than the price at which it is being offered, that is, whether there is a positive or negative surplus. The SI-D task reveals how precision, bias and learning vary across attribute and price structures. We illustrate its use by testing for cognitive capacity constraints in multi-attribute choice in three separate experiments, with implications for models of bounded rationality and rational inattention. As the number of product attributes rises from one to four in the S-ID task (Experiment 1), participants cannot integrate additional information efficiently and they display systematic, persistent biases, despite incentivised opportunities to learn. Experiment 2 demonstrates how the S-ID task can be used to track learning and serves as a robustness check for the findings of Experiment 1. Experiment 3 adapts the S-ID task to test accuracy of surplus identification when multiple attributes are perfectly correlated. The S-ID task also has the potential to test multiple aspects of consumer choice models and to test specific hypotheses about the cognitive mechanisms behind surplus identification. |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp536&r=exp |
| By: | Simone Schaner |
| Abstract: | I use a field experiment in rural Kenya to study how temporary incentives to save impact long-run economic outcomes. Study participants randomly selected to receive large temporary interest rates on an individual bank account had significantly more income and assets 2.5 years after the interest rates expired. These changes are much larger than the short-run impacts on experimental bank account use and almost entirely driven by growth in entrepreneurship. Temporary interest rates directed to joint bank accounts had no detectable long-run impacts on entrepreneurship or income, but increased investment in household public goods and spousal consensus over finances. |
| JEL: | D14 O1 O12 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22534&r=exp |
| By: | Prakarsh Singh; Sandip Mitra |
| Abstract: | We carry out a randomized controlled experiment in West Bengal India to test three separate performance pay treatments in the public health sector. Performance is judged on improvements in child malnutrition. First, we exogenously change wages of government employed child care workers through a basic level of absolute incentives. The second treatment introduces high absolute incentives. Finally, we also test for the impact of basic relative incentives on child health. All treatments include supplying mothers with recipe books. The main results suggest that high absolute incentives reduce severe malnutrition by about 6.3 percentage points over three months. There are no signi?cant e¤ects on health outcomes of basic absolute or basic relative incentives. Results are robust to controlling for prior trends, propensity score matching, and reversion-to-the-mean. This result is consistent with a reported increase in protein-rich diet at home in the high absolute treatment. |
| Keywords: | Performance pay; Child malnutrition; Absolute and relative incentives |
| JEL: | M52 I12 I38 J38 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:nva:unnvaa:wp05-2015&r=exp |
| By: | Subhasish M. Chowdhury (School of Economics, Centre for Behavioural and Experimental Social Science, and Centre for Competition Policy, University of East Anglia); Dan Kovenock (Economic Science Institute, Chapman University); David Rojo Arjona (Department of Economics, University of Leicester); Nathaniel T. Wilcox (Economic Science Institute, Chapman University) |
| Abstract: | This article examines behavior in two-person constant-sum Colonel Blotto games in which each player maximizes the expected total value of the battlefields won. A lottery contest success function is employed in each battlefield. Recent experimental research on such games provides only partial support for Nash equilibrium behavior. We hypothesize that the salience of battlefields affects strategic behavior (the salient target hypothesis). We present a controlled test of this hypothesis – against Nash predictions – when the sources of salience come from certain asymmetries in either battlefield values or labels (as in Schelling (1960)). In both cases, subjects over-allocate the resource to the salient battlefields relative to the Nash prediction. However, the effect is stronger with salient values. In the absence of salience, we replicate previous results in the literature supporting the Nash prediction. |
| Keywords: | Conflict, Experiment, Colonel Blotto, Focal point, Asymmetry |
| JEL: | C72 C91 D72 D74 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:16-16&r=exp |
| By: | Sujata Visaria; Rajeev Dehejia; Melody M. Chao; Anirban Mukhopadhyay |
| Abstract: | In an experiment in non-formal schools in Indian slums, a reward scheme for attending a target number of school days increased average attendance when the scheme was in place, but had heterogeneous effects after it was removed. Among students with high baseline attendance, the incentive had no effect on attendance after it was discontinued, and test scores were unaffected. Among students with low baseline attendance, the incentive lowered post-incentive attendance, and test scores decreased. For these students, the incentive was also associated with lower interest in school material and lower optimism and confidence about their ability. This suggests incentives might have unintended long-term consequences for the very students they are designed to help the most. |
| JEL: | I21 I25 O15 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22528&r=exp |
| By: | Florian Lindner; Julia Rose |
| Abstract: | Time preferences drive decisions in many economic situations, such as investment contexts or salary negotiations. These situations are characterized by a very short time frame for decision making. Preferences are potentially susceptible to the confounding effects of time pressure, as proposed by dual-systems theory (Evans, 2006; Kahneman and Frederick, 2002). Results of standard methods of time preference elicitation can therefore not be directly mapped to environments characterized by severe time pressure since the underlying assumption of these models is that preferences are stable. To address the stability of time preferences under time pressure, we conduct a laboratory study with 144 subjects using convex time budgets (Andreoni and Sprenger, 2012) in order to elicit time preferences with and without time pressure in a within-subject design. We find lower present-bias under time pressure compared to the condition without time pressure on the aggregate, whereas utility function curvature and long-run discounting are stable across conditions. The findings are confirmed on the individual level. Embedding our results in dual-systems theory, how information is presented can serve as a potential means to exogenously decrease present-bias under time pressure. |
| Keywords: | time preferences, time pressure, decision making, allocation decision, budget, experiment |
| JEL: | C91 D12 D81 D91 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2016-24&r=exp |
| By: | Angelucci, Manuela; Prina, Silvia; Royer, Heather; Samek, Anya |
| Abstract: | Little is known about how peers influence the impact 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 in the school lunchroom (choice of 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. We show that, while peers' actions - picking grapes - have a positive spillover effect on children's take-up of grapes, seeing that peers are incentivized to pick grapes has a negative spillover effect on take-up. When incentivized choices are public, incentivizing all children to pick grapes has no statistically significant effect on take-up, as the negative spillover offsets the positive impacts of incentives on take-up. |
| Keywords: | food choice,incentives,spillovers,field experiment |
| JEL: | C93 I1 J13 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2016205&r=exp |
| By: | Jetter, Michael (University of Western Australia); Walker, Jay K. (Niagara University) |
| Abstract: | This paper analyzes 12,596 wagering decisions of 6,064 contestants in the US game show Jeopardy!, focusing on the anchoring phenomenon in financial decision-making. We find that contestants anchor heavily on the initial dollar value of a clue in their wagering decision, even though there exists no rational reason to do so. More than half of all wagers occur within $500 of the initial dollar value, although the maximum possible wagering value averages $5,914. This anchoring phenomenon remains statistically significant on the one percent level, even after controlling for scores, clue category, time trends, and player-fixed effects. When exploiting within-player variation only and implicitly controlling for a host of individual behavioral attitudes and preferences, raising the anchoring amount by 10 percent translates to an increase of 3.1 percent in the wager. In terms of magnitude, anchoring is marginally more pronounced for women with an elasticity of 0.34 versus 0.28 for males. Finally, this paper is among the first to investigate anchoring among children and teenagers. We find little evidence for anchoring among children under the age of 13, but the effect begins to emerge for teenagers and further manifests itself among college students. Overall, our findings suggest anchoring plays a substantial role in financial decision-making under pressure. |
| Keywords: | anchoring, behavioral economics, financial decision-making, gender differences, heuristics |
| JEL: | D03 D81 D83 G11 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10151&r=exp |
| By: | Prakarsh Singh; William A. Masters |
| Abstract: | This paper provides evidence for the effectiveness of performance pay among government caregivers to improve child health in India. In a controlled study of 160 daycare centers serving over 4000 children, we randomly assign workers to receive performance pay or fixed bonuses of roughly similar expected value, and test for differences in malnutrition among the children in their care. We find that performance pay reduces the prevalence of weight-for-age malnutrition by about 5 percentage points in 3 months. This effect is sustained in the medium term with a renewal of incentives but the differential growth rate fades away once the scheme is discontinued. Fixed bonuses lead to smaller-sized effects and only in the medium-term. Both treatments appear to improve worker effort and communication with mothers, who in turn feed a more calorific diet to their children at home. |
| Keywords: | Performance pay; public health information; child malnutrition |
| JEL: | O1 I1 M5 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:nva:unnvaa:wp01-2016&r=exp |
| By: | Alex Armand; Orazio Attanasio; Pedro Carneiro; Valérie Lechene |
| 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:nva:unnvaa:wp06-2016&r=exp |
| By: | Alex Armand (Navarra Center for International Development); Pedro Carneiro; Ingvild Almas; Orazio Attanasio |
| Abstract: | This paper studies how targeted cash transfers to women affect their empowerment. We use a novel identification strategy to measure women's willingness to pay to receive cash transfers instead of their partner receiving it. We apply this among women living in poor households in urban Macedonia. We match experimental data with a unique policy intervention (CCT) in Macedonia offering poor households cash transfers conditional on having their children attending secondary school. The program randomized whether the transfer was offered to household heads or mothers at municipality level, providing us with an exogenous source of variation in (offered) transfers. We show that women who were offered the transfer reveal a lower willingness to pay, and we show that this is in line with theoretical predictions. |
| Keywords: | Targeted cash transfers; CCT |
| JEL: | D13 J16 O12 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:nva:unnvaa:wp08-2015&r=exp |