nep-exp New Economics Papers
on Experimental Economics
Issue of 2016‒09‒04
thirty papers chosen by

  1. Predicting Experimental Results: Who Knows What? By Stefano DellaVigna; Devin Pope
  2. Resolving Ambiguity as a Public Good: Experimental Evidence from Guyana By Kaywana Raeburn; Jim Engle-Warnick; Sonia Laszlo
  3. Do Natural Field Experiments Afford Researchers More or Less Control than Laboratory Experiments? A Simple Model By John List; Omar Al-Ubaydli
  4. Trust, ambiguity, and financial decision-making By Jim Engle-Warnick; Diego Pulido; Marine de Montaignac
  5. Framing Manipulations in Contests: A Natural Field Experiment By Fuhai Hong; John List; Tanjim Hossain
  6. Relative Performance of Liability Rules: Experimental Evidence By Vera Angelova; Giuseppe Attanasi; Yolande Hiriart
  7. Beliefs and Utility: Experimental Evidence on Preferences for Information By Falk, Armin; Zimmermann, Florian
  8. Field Experiments on Anchoring of Economic Valuations By Craig Landry; John List; Jonathan Alevy
  9. Learning to believe in Simple Equilibria in a Complex OLG Economy - evidence from the lab By Arifovic, J.; Hommes, C.H.; Salle, I.
  10. Determinants of Food Consumption Choices: Experimental Evidence from St. Kitts By Kaywana Raeburn; Jim Engle-Warnick; Sonia Laszlo
  11. The Rapid Evolution of Homo Economicus: Brief Exposure to Neoclassical Assumptions Increases Self-Interested Behavior By Ifcher, John; Zarghamee, Homa
  12. Honesty and Informal Agreements By Dufwenberg, Martin; Servátka, Maroš; Vadovič, Radovan
  13. Field Experiments in Markets By John List; Omar Al-Ubaydli
  14. Gender and Agency within the Household: Experimental Evidence from Pakistan By Afzal, Uzma; d Adda, Giovanna; Fafchamps, Marcel; Said, Farah
  15. Can a Bonus Overcome Moral Hazard? An Experiment on Voluntary Payments, Competition, and Reputation in Markets for Expert Services By Vera Angelova; Tobias Regner;
  16. Insensitivity to Prices in a Dictator Game By Jim Engle-Warnick; Natalia Mishagina
  17. Do voluntary payments to advisors improve the quality of financial advice? An experimental sender-receiver game By Vera Angelova; Tobias Regner;
  18. Learning-by-Doing in an Ambiguous Environment By Jim Engle-Warnick; Sonia Laszlo
  19. The Marginal Voter's Curse By Herrera, Helios; Llorente-Saguer, Aniol; McMurray, Joseph C.
  20. On the Origins to Dishonesty: from Parents to Children By Anya Samek; Daniel Houser; Joachim Winter; John List; Marco Piovesan
  21. Battle of the Sexes: How Sex Ratios Affect Female Bargaining Power By Erwin Bulte; John List; Qin Tu
  22. Whistleblowing: Incentives and situational determinants By Schmolke, Klaus Ulrich; Utikal, Verena
  23. Are groups 'less behavioral'? The case of anchoring By Meub, Lukas; Proeger, Till
  24. The Tragedy of Corruption By Chen, Yefeng; Jiang, Shuguang; Villeval, Marie Claire
  25. Market competition for decision rights: An experiment based on the “Hat Puzzle Problem” By Choo, Lawrence
  26. Does the obligation to bargain make you fit the mould? An experimental analysis. By Eve-Angéline Lambert; Jean-Christian Tisserand
  27. Difference in Preferences or in Preference Orderings? Comparing Choices of Environmental Bureaucrats, Recreational Anglers, and the Public By Eggert, Håkan; Kataria, Mitesh; Lampi, Elina
  28. Supply and Demand for Discrimination: An Experiment Using Photos By Anthony Heyes; John List
  29. Loss Averse Agents and Lenient Supervisors in Performance Appraisal By Lucia Marchegiani; Tommaso Reggiani; Matteo Rizzolli
  30. The Effect of Gender-Targeted Conditional Cash Transfers on Household Expenditures: Evidence from a Randomized Experiment By Armand, Alex; Attanasio, Orazio; Carneiro, Pedro; Lechene, Valérie

  1. By: Stefano DellaVigna; Devin Pope
    Abstract: Academic experts frequently recommend policies and treatments. But how well do they anticipate the impact of different treatments? And how do their predictions compare to the predictions of non-experts? We analyze how 208 experts forecast the results of 15 treatments involving monetary and non-monetary motivators in a real-effort task. We compare these forecasts to those made by PhD students and non-experts: undergraduates, MBAs, and an online sample. We document seven main results. First, the average forecast of experts predicts quite well the experimental results. Second, there is a strong wisdom-of-crowds effect: the average forecast outperforms 96 percent of individual forecasts. Third, correlates of expertise---citations, academic rank, field, and contextual experience--do not improve forecasting accuracy. Fourth, experts as a group do better than non-experts, but not if accuracy is defined as rank ordering treatments. Fifth, measures of effort, confidence, and revealed ability are predictive of forecast accuracy to some extent, especially for non-experts. Sixth, using these measures we identify `superforecasters' among the non-experts who outperform the experts out of sample. Seventh, we document that these results on forecasting accuracy surprise the forecasters themselves. We present a simple model that organizes several of these results and we stress the implications for the collection of forecasts of future experimental results.
    JEL: C9 C91 C93 D03
    Date: 2016–08
  2. By: Kaywana Raeburn; Jim Engle-Warnick; Sonia Laszlo
    Abstract: We present a decision-making experiment, conducted in the field, that explores the extent to which reduction of ambiguity can be a public good. We find evidence that people with a preference to avoid ambiguity contribute to the public good. We find that risk averse people free-ride. Cheap talk erases the predictability of who free rides, but does not affect the overall public good provision, either in a positive or a negative direction. Finally, we find that people draw appropriate inference from the evidence that the public good provides. We relate our findings to the issue of new technology adoption.
    Keywords: Ambiguity, Public Good, Technology Choice,
    JEL: C90 O33 Q16
    Date: 2016–08–24
  3. By: John List; Omar Al-Ubaydli
    Abstract: A commonly held view is that laboratory experiments provide researchers with more "control" than natural field experiments, and that this advantage is to be balanced against the disadvantage that laboratory experiments are less generalizable. This paper presents a simple model that explores circumstances under which natural field experiments provide researchers with more control than laboratory experiments afford. This stems from the covertness of natural field experiments: laboratory experiments provide researchers with a high degree of control in the environment which participants agree to be experimental subjects. When participants systematically opt out of laboratory experiments, the researcher's ability to manipulate certain variables is limited. In contrast, natural field experiments bypass the participation decision altogether and allow for a potentially more diverse participant pool within the market of interest. We show one particular case where such selection is invaluable: when treatment effects interact with participant characteristics.
    Date: 2015
  4. By: Jim Engle-Warnick; Diego Pulido; Marine de Montaignac
    Abstract: This paper reports results from an on-line economics experiment with head of household participants that explores the connection between trust and investment behavior. We show that trust is correlated with both the degree to which an investor makes decisions independently and the willingness to invest in an ambiguous asset. Our experiment is the first to suggest a link between trust, ambiguity, and investor independence.
    Keywords: trust, ambiguity, investment decisions, portfolio theory, artefactual field experiment,
    JEL: C91 C93 G02 G11
    Date: 2016–08–24
  5. By: Fuhai Hong; John List; Tanjim Hossain
    Abstract: Exploiting findings that losses loom larger than gains, studies have shown that framing manipulations can increase productivity of workers. Using a natural field experiment that exogenously manipulates wage bonuses within contests in a Chinese high-tech manufacturing facility, we show that how loss aversion affects worker behavior critically depends on the incentive scheme as well as the framing manipulation. Four sets of two identical teams competed against each other to win a bonus given to the team, within a set, with the higher average hourly productivity over the week. In each set, the bonus was framed as a reward or gain for one team and as a punishment or loss for the other. Average weekly productivity was slightly higher under the loss treatment, but this increase was statistically insignificant. However, the team under the loss treatment was at least 35% more likely to win the contest. As teams' payoffs are based on relative productivity under a contest, framing effect is much stronger in terms of relative productivity. Finally, workers seemingly responded to the bonus by increasing the quality of production as well as quantity-defect rate fell as productivity increased.
    Date: 2015
  6. By: Vera Angelova; Giuseppe Attanasi; Yolande Hiriart
    Abstract: We compare the performance of liability rules for managing environmental disasters when third parties are harmed and cannot always be compensated. A firm can invest in safety to reduce the likelihood of accidents. The firm’s investment is unobservable to authorities. Externality and asymmetric information call for public intervention to define rules aimed at increasing prevention. We determine the investment in safety under No Liability, Strict Liability and Negligence, and compare it to the first best. Additionally, we investigate how the (dis)ability of the firm to fully cover potential damages affects the firm’s behavior. An experiment tests the theoretical predictions. In line with theory, Strict Liability and Negligence are equally effective; both perform better than No Liability; investment in safety is not sensitive to the ability of the firm to compensate potential victims. In contrast with theory, prevention rates absent liability are much higher and liability is much less effective than predicted.
    JEL: D82 K13 K32 Q58
    Date: 2016–08
  7. By: Falk, Armin (University of Bonn); Zimmermann, Florian (University of Zurich)
    Abstract: Beliefs are a central determinant of behavior. Recent models assume that beliefs about or the anticipation of future consumption have direct utility-consequences. This gives rise to informational preferences, i.e., preferences over the timing and structure of information. Using a novel and purposefully simple set-up, we experimentally analyze preferences for information along four dimensions. We find evidence that the majority of subjects prefers receiving information sooner. This preference, however, is not uniform but depends on context. When the environment allows subjects to not focus attention on (negative) consumption events, later information becomes more attractive. We also identify an aversion towards piecemeal information. Variations in prior distributions do not seem to affect information preferences.
    Keywords: beliefs, anticipatory utility, news utility, information preferences, attention, reference-dependent preferences, experiments
    JEL: C91 D03 D12 D83
    Date: 2016–08
  8. By: Craig Landry; John List; Jonathan Alevy
    Abstract: A pillar of behavioral research is that preferences are constructed during the process of choice. A prominent finding is that uninformative numerical "anchors" influence judgment and valuation. It remains unclear whether such processes influence market equilibria. We conduct two experiments that extend the study of anchoring to field settings. The first experiment produces evidence that some consumers' valuations can be anchored in novel situations; there is no evidence that experienced agents are influenced by anchors. The second experiment finds that anchors have only transient effects on market outcomes that converge to equilibrium predictions after a few market periods.
    Date: 2015
  9. By: Arifovic, J. (Simon Fraser University); Hommes, C.H. (University of Amsterdam); Salle, I. (University of Amsterdam; University of Amsterdam)
    Abstract: We set up a laboratory experiment within the overlapping-generations model of Grandmont (1985). Under perfect foresight this model displays infinitely many equilibria: a steady state, periodic as well as chaotic equilibria. Moreover, there exists some learning theory predicting convergence to each of these equilibria. We use experimental evidence as an equilibrium selection device in this complex OLG economy, and investigate on which outcomes subjects most likely coordinate. We use two alternative experimental designs: learning-to-forecast, in which subjects predict the future price of the good, and learning-to-optimize, in which subjects make savings decision. We find that coordination on a steady state or 2-cycle are the only outcomes in this complex environment. In the learning-to-forecast design, coordination on a 2-cycle occurs frequently, even in the chaotic parameter range. Simulations of a behavioral heuristic switching model result in initial coordination on a simple AR(1) rule though sample autocorrelation learning, with subsequent coordination on a simple second-order adaptive rule once the up-and-down pattern of prices has been learned.
    Date: 2016
  10. By: Kaywana Raeburn; Jim Engle-Warnick; Sonia Laszlo
    Abstract: In this paper, we use economics experiment laboratory intruments to measure time, risk and ambiguity preferences, which we correlate with food choice factors (items that influence food choice) and actual food consumption measures. We find that present bias, and to a lesser extent risk preferences, are significantly correlated with the food choice factors of health, natural content, and weight control. We find these correlations to be less consistent with actual reported food chocies. This finding indicates a discrepancy between what individuals ideally would like to eat and what they actually consume. This finding suggests scope for intervention to bring the two into alignment.
    Keywords: Field Experiment,
    Date: 2016–08–24
  11. By: Ifcher, John (Santa Clara University); Zarghamee, Homa (Barnard College)
    Abstract: Economics students have been shown to exhibit more selfishness than other students. Because the literature identifies the impact of long-term exposure to economics instruction (e.g., taking a course), it cannot isolate the specific course content responsible; nor can selection, peer effects, or other confounds be properly controlled for. In a laboratory experiment, we use a within- and across-subject design to identify the impact of brief, randomly-assigned economics lessons on behavior in games often used to measure selfishness: the ultimatum game (UG), dictator game (DG), prisoner's dilemma (PD), and public-goods game (PGG). We find that a brief lesson that includes the assumptions of self-interest and strategic considerations moves behavior toward traditional economic rationality in UG, PD, and DG. Despite entering the study with higher levels of selfishness than others, subjects with prior exposure to economics instruction have similar training effects. We show that the lesson reduces efficiency and increases inequity in the UG. The results demonstrate that even brief exposure to commonplace neoclassical economics assumptions measurably moves behavior toward self-interest.
    Keywords: economics instruction, self-interest, game theory, laboratory experiment, social preferences
    JEL: A2 D6 C9 C7 A1
    Date: 2016–08
  12. By: Dufwenberg, Martin; Servátka, Maroš; Vadovič, Radovan
    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 2x2 models to explore. In the experiment, a temptations-constrained version of deal-me-out emerges as the clear winner.
    Keywords: agreement, bargaining, behavioral economics, contract, deal, experiment, honesty, lost wallet game, negotiation, temptation
    JEL: C7 C91
    Date: 2016–08–30
  13. By: John List; Omar Al-Ubaydli
    Abstract: This is a review of the literature of field experimental studies of markets. The main results covered by the review are as follows: (1) Generally speaking, markets organize the efficient exchange of commodities; (2) There are some behavioral anomalies that impede efficient exchange; (3) Many behavioral anomalies disappear when traders are experienced.
    Date: 2016
  14. By: Afzal, Uzma; d Adda, Giovanna; Fafchamps, Marcel; Said, Farah
    Abstract: Theoretical and empirical work on intra-household decision making capture empowerment through bargaining weights given to individual preferences, and infer such weights from household consumption allocations. In this paper we test two key hypotheses underlying this work: first, that spousal influence is the same for all private consumption goods; and second, that women have pent up demand for pure agency. We use data from a survey and a novel laboratory experiment implemented with adult couples in Pakistan. We find that women's influence on household decisions is decreasing in the importance of the decision. We find no evidence that women have pent up demand for agency. Instead, women are less willing to pay for agency when facing an unknown man. We interpret this evidence as suggesting that women in our study population have internalized gender norms, and that these norms regulate interactions between genders most strongly outside of the household. We also find little evidence, within our experimental setting, that willingness to pay for agency is affected by the instrumental value of agency.
    Keywords: agency; Consumption; empowerment; intrahousehold efficiency; sharing rule
    JEL: D13 O15
    Date: 2016–08
  15. By: Vera Angelova; Tobias Regner;
    Abstract: Interactions between players with private information and opposed interests are often prone to bad advice and inecient outcomes, e.g. markets for nancial or health care services. In a deception game we investigate experimentally which factors could improve advice quality. Besides advisor competition and identi ability we add the possibility for clients to make a voluntary payment, a bonus, after observing advice quality. We observe a positive e ect on the rate of truthful advice when the bonus creates multiple opportunities to reciprocate, that is, when the bonus is combined with identi ability (leading to several client-advisor interactions over the course of the game) or competition (allowing one advisor to have several clients who may reciprocate within one period). Moreover, identi ability signi cantly increases truth-telling under competition.
    JEL: C91 D03 D82 G20 I11
    Date: 2016–08
  16. By: Jim Engle-Warnick; Natalia Mishagina
    Abstract: In this paper we examine the relationship between prices and violations of the Generalized Axiom of Revealed Preference (GARP) in dictator games. Using new experimental data and a new algorithm that adjusts budget prices to eliminate GARP violations, we introduce a new measure of consistency of choices, and we identify a systemic relationship between prices and violations. We find that pushing prices away from extremes tends to eliminate the violations of most subjects, a phenomenon that we call “price insensitivity”.
    Keywords: Revealed Preference, GARP, Measures of Rationality, Dictator Game,
    JEL: C90 D11 D12
    Date: 2016–08–24
  17. By: Vera Angelova; Tobias Regner;
    Abstract: The market for retail nancial products (e.g. investment funds or insurances) is marred by information asymmetries. Clients are not well informed about the quality of these products. They have to rely on the recommendations of advisors. Incentives of advisors and clients may not be aligned, when fees are used by nancial institutions to steer advice. We experimentally investigate whether voluntary contract components can reduce the con ict of interest and increase truth telling of advisors. We compare a voluntary payment upfront, an obligatory payment upfront, a voluntary bonus afterwards, and a three-stage design with a voluntary payment upfront and a bonus after. Across treatments, there is signi cantly more truthful advice when both clients and advisors have opportunities to reciprocate. Within treatments, the frequency of truthful advice is signi cantly higher when the voluntary payment is large.
    JEL: C91 D03 D82 G20 L15 M52
    Date: 2016–08
  18. By: Jim Engle-Warnick; Sonia Laszlo
    Abstract: We apply an instrument to measure ambiguity preferences in an experiment and show that revealed ambiguity preferences, but not risk preferences, predict behavior in a separate game that involves exploitation vs. exploration of a maximization problem. We provide direct evidence of ambiguity preferences acting on decision making separately from risk preferences, and advance knowledge regarding how ambiguity preferences operate on decision-making.
    Keywords: Learning-by-doing; Technology choice; Risk preferences; Risk measurement instruments; Ambiguity Aversion; Experimental economics,
    Date: 2016–08–24
  19. By: Herrera, Helios; Llorente-Saguer, Aniol; McMurray, Joseph C.
    Abstract: This paper proposes a rational model of voter participation by generalizing a common-value model of costless voting to include not just pivotal voting but also marginal voting incentives. A new strategic incentive for abstention arises in that case, to avoid the marginal voter's curse of pushing the policy outcome in the wrong direction. The marginal voter's curse presents a larger disincentive for voting than the swing voter's curse. Moreover, marginal motivations are shown to dominate pivotal motivations in large elections. Model predictions are confirmed in a laboratory experiment and applied in a comparative analysis of electoral rules.
    Keywords: Experiment; information aggregation; Turnout; Underdog effect
    JEL: C72 C92 D70
    Date: 2016–08
  20. 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 under explored area of research. This study takes an economics approach to explore the propensity of individuals to act dishonestly across different economic environments. We begin by developing a simple model that highlights the channels through which one can increase or decrease dishonest acts. We lend empirical insights into this model by using an experiment that includes both parents and their young children as subjects. We find that the highest level of dishonesty occurs in settings where the parent acts alone and the dishonest act benefits the child rather than the parent. In this spirit, there is also an interesting effect of children on parents' behavior: in the child's presence, parents act more honestly, but there are gender differences. Parents act more dishonestly in front of sons than daughters. This finding has the potential of shedding light on the origins of the widely documented gender differences in cheating behavior observed among adults.
    Date: 2015
  21. By: Erwin Bulte; John List; Qin Tu
    Abstract: A vibrant literature has emerged that explores the economic implications of the sex ratio (the ratio of men to women in the population), including changes in fertility rates, educational outcomes, labor supply, and household purchases. Previous empirical efforts, however, have paid less attention to the underlying channel via which changes in the sex ratio affect economic decisions. This study combines evidence from a field experiment and a survey to document that the sex ratio importantly influences female bargaining power: as the sex ratio increases, female bargaining power increases.
    Date: 2015
  22. By: Schmolke, Klaus Ulrich; Utikal, Verena
    Abstract: Law makers increasingly try to capitalize on individuals having acquired knowledge of corporate crimes or other misconduct by inducing them to blow the whistle. In a laboratory experiment we measure the effectiveness of incentives on the willingness to report such misconduct to a sanctioning authority. We find that fines for non-reporting insiders, rewards and even simple commands increase the probability of whistleblowing. We find the strongest effect for fines. Situational determinants also influence the willingness to blow the whistle: Insiders who are negatively affected by the misconduct are more likely to blow the whistle than non-affected or profiting insiders. Those (negatively affected) victims are also sensitive to the misconduct's impact on the authority sanctioning the misconduct (public authority or employer): Whistleblowing is more likely if the enforcement authority is negatively affected compared to positively or not affected.
    Keywords: whistleblowing,incentives,situational determinants,experiment
    JEL: C91 D82 K42 M59
    Date: 2016
  23. By: Meub, Lukas; Proeger, Till
    Abstract: Economic small group research points to groups as more rational decision-makers in numerous economic situations. However, no attempts have been made to investigate whether groups are affected similarly by behavioral biases that are pervasive for individuals. If groups were also able to more effectively avoid these biases, the relevance of biases in actual economic contexts dominated by group decision-making might be questioned. We consider the case of anchoring as a prime example of a well-established, robust bias. Individual and group biasedness in three economically relevant domains are compared: factual knowledge, probability estimates and price valuations. In contrast to previous anchoring studies, we find groups to successfully reduce, albeit not eliminate, anchoring in the factual knowledge domain. For the other two domains, groups and individuals are equally biased by external anchors. Group cooperation thus reduces biases for predominantly intellective tasks only, while no such reduction is achieved when judgmental aspects are involved.
    Keywords: anchoring bias,group decision-making,heuristics and biases,incentives,laboratory experiment
    JEL: C91 C92 D8
    Date: 2016
  24. By: Chen, Yefeng (Zhejiang University); Jiang, Shuguang (Zhejiang University); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We investigate corruption as a social dilemma by means of a bribery game in which a risk of collective sanction of the public officials is introduced when the number of officials accepting a bribe from firms reaches a certain threshold. We show that, despite the social risk, the pursuit of individual interest prevails and leads to the elimination of honest officials over time. Reducing the size of the groups while increasing the probability of collective sanction diminishes the officials' corruptibility but is not sufficient to eliminate the Tragedy of corruption that leads both firms and officials to earn less than in the absence of corruption.
    Keywords: corruption, social dilemma, collective risk, sanction, experiment
    JEL: C92 D73 H41
    Date: 2016–08
  25. By: Choo, Lawrence
    Abstract: This paper investigates the conventional wisdom that market competition for the rights to perform decision-making tasks improves aggregate performances in all relevant tasks by diverting decision rights to individuals who are better able to utilise them. To do so, I use an experiment that embeds asset markets into the Hat Puzzle Problem game. I show that players’ performances in the game will depend on their ability to employ sophisticated counterfactual reasoning and provide a behavioural framework that illustrates how market competition can improve aggregate performances in the game. Contradictory to the conventional wisdom, I find that market competition exacerbates aggregate performances and diverts decision rights to players who are less able to utilise them. I provide some evidence that the failure of markets can be linked to the formation of price “bubbles”, which distort the markets’ allocation of decision rights.
    Keywords: Market Competition, Game Theory, Sophistication, Decision Rights.
    JEL: C70 C90 G10 L11
    Date: 2016–08–29
  26. By: Eve-Angéline Lambert; Jean-Christian Tisserand
    Abstract: In a lot of real-life legal disputes, the parties have the obligation to nego- tiate before an external solution is imposed to them. We investigate theoret- ically and experimentally the impact of such a constraint on the behavior of bargainers and on the outcome of this bargaining. Individuals initially choose whether to bargain over the division of a pie, and if one of them refuses, then the bargaining may be imposed to them with some probability. We show that individuals who are forced to bargain are significantly more aggressive than those who initially choose to bargain, and this behavior is indeed partly due to the constraint. This implies that the fact to be constrained does not bring individuals to behave as if they had freely made this decision, which proves that the way the bargaining process is enforced is not neutral, and affects the outcome of this process. This feature should be taken into account for the design of legal procedures of resolution of individual and collective conflicts.
    Keywords: Bargaining; Conflicts; Enforcement; Forced negotiation.
    JEL: C78 C91
    Date: 2016
  27. By: Eggert, Håkan (Department of Economics, School of Business, Economics and Law, Göteborg University); Kataria, Mitesh (Department of Economics, School of Business, Economics and Law, Göteborg University); Lampi, Elina (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Do Environmental Protection Agency (EPA) bureaucrats represent the general public or are they more in line with an interest group? We study preferences for environmental policy using a choice experiment (CE) on three populations; the general public, Swedish EPA bureaucrats, and recreational anglers. We also test for existence of multiple preference orderings, i.e., whether responses differ depending on the decision role assigned. Half of the respondents were asked to choose the alternatives that best corresponded with their opinion, and the other half was asked to take the role of a policymaker and make recommendations for environmental policy. The SEPA bureaucrats have the highest marginal willingness to pay (MWTP) to improve environmental quality. These differences are robust and not due to differences in socio-economic characteristics across the populations. We found little evidence of multiple preference orderings, but in one case the difference in MWTP between the two roles was substantial.
    Keywords: choice experiment; distribution; environmental valuation; Homo Economicus; Homo Politicus; multiple preference orderings; willingness to pay
    JEL: D61 H41 Q51 Q58
    Date: 2016–08
  28. By: Anthony Heyes; John List
    Date: 2016
  29. By: Lucia Marchegiani (University of Rome 3); Tommaso Reggiani (LUMSA University); Matteo Rizzolli (LUMSA University)
    Abstract: A consistent empirical literature shows that in many organizations supervisors systematically overrate their employees’ performance. Such leniency bias is at odds with the standard principalagent model and has been explained with causes that range from social interactions to fairness concerns and to collusive behavior between the supervisor and the agent. We show that the principal-agent model, extended to consider loss-aversion and reference-dependent preferences, predicts that the leniency bias is comparatively less detrimental to effort provision than the severity bias. We test this prediction with a laboratory experiment where we demonstrate that failing to reward deserving agents is significantly more detrimental than rewarding undeserving agents. This offers a novel explanation as to why supervisors tend to be lenient in their appraisals.
    Keywords: Performance appraisal, TypeI and TypeII errors, Leniency bias, Severity bias, Economic experiment, Loss aversion, Reference-dependent preferences.
    JEL: C91 M50 J50
    Date: 2016–07
  30. By: Armand, Alex; Attanasio, Orazio; Carneiro, Pedro; Lechene, Valérie
    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; expenditure.; Gender; intra-household
    JEL: D12 D13 E21 O12
    Date: 2016–08

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