nep-exp New Economics Papers
on Experimental Economics
Issue of 2017‒05‒07
27 papers chosen by

  1. Competitive Preferences and Ethnicity: Experimental Evidence from Bangladesh By Siddique, Abu; Vlassopoulos, Michael
  2. Professional identity and the gender gap in risk-taking: Evidence from a field experiment with scientists By Drupp, Moritz A.; Khadjavi, Menusch; Riekhof, Marie-Catherine; Voss, Rüdiger
  3. Quality certifications for nonprofits, charitable giving, and donor's trust: Experimental evidence By Adena, Maja; Alizade, Jeyhun; Bohner, Frauke; Harke, Julian; Mesters, Fabio
  4. The Cultural Transmission of Trust Norms: Evidence from a Lab in the Field on a Natural Experiment By Jared Rubin; Elira Karaja
  5. An Economic Approach to Alleviate the Crises of Confidence in Science: With an Application to the Public Goods Game By Luigi Butera; John A. List
  6. Financial literacy and bank runs: an experimental analysis By Eloisa Campioni; Vittorio Larocca; Loredana Mirra; Luca Panaccione
  7. Can a Repeated Opt-Out Reminder remove hypothetical bias in discrete choice experiments? An application to consumer valuation of novel food products By Mohammed H. Alemu; Søren B. Olsen
  8. Economic preferences 2.0: Connecting competition, cooperation and inter-temporal preferences By Antonio M. Espin; Angel Sanchez; Benedikt Herrmann
  9. Fairness Concerns and Corrupt Decisions :an Experimental Approach By Lena Epp; Nastassia Leszczynska
  10. Conspiracy against the public - an experiment on collusion By Johnsen, Åshild Auglænd
  11. Medium- and Long-Term Educational Consequences of Alternative Conditional Cash Transfer Designs: Experimental Evidence from Colombia By Felipe Barrera-Osorio; Leigh L. Linden; Juan Saavedra
  12. Harnessing Policy Complementarities to Conserve Energy: Evidence from a Natural Field Experiment By John A. List; Robert D. Metcalfe; Michael K. Price; Florian Rundhammer
  13. Is Transparency an Anti-Corruption Myth? By Murray, Cameron K.; Frijters, Paul; Schaffner, Markus
  14. Exclusion in the all-pay auction: An experimental investigation By Fehr, Dietmar; Schmid, Julia
  15. Social identity and political polarization: Evidence on the impact of identity on partisan voting trade By Duell, Dominik; Valasek, Justin Mattias
  16. Do The Effects of Social Nudges Persist? Theory and Evidence from 38 Natural Field Experiments By Alec Brandon; Paul J. Ferraro; John A. List; Robert D. Metcalfe; Michael K. Price; Florian Rundhammer
  17. Limited Attention, Salience and Changing Prices: Evidence from a Field Experiment in Online Supermarket Shopping. By Eliaz, Kfir; Oren-Kolbinger, Orli; Weisburd, Sarit
  18. The effect of gender-targeted conditional cash transfers on household expenditures: Evidence from a randomized experiment By Alex Armand; Orazio Attanasio; Pedro Carneiro; Valérie Lechene
  19. Nudging the electorate: what works and why? By Felix Koelle; Tom Lane; Daniele Nosenzo; Chris Starmer
  20. On Peer Effects: Contagion of Pro- and Anti-Social Behavior and the Role of Social Cohesion By Eugen Dimant
  21. A little good is good enough: Ethical consumption, cheap excuses, and moral self-licensing By Engel, Jannis; Szech, Nora
  22. (A)symmetric Information Bubbles: Experimental Evidence By Asako, Yasushi; Funaki, Yukihiko; Ueda, Kozo; Uto, Nobuyuki
  23. Do Rewards Work?: Evidence from the Randomization of Public Works By Paul Carrillo; Edgar Castro; Carlos Scartascini
  24. ‘Randomisation bias’ in the medical literature: a review By Barbara Sianesi
  25. Affirmative Action in the Presence of a Creamy Layer: Identity or Class Based? By Guha, Brishti; Roy Chowdhury, Prabal
  26. Relative Verbal Intelligence and Happiness By Nikolaev, Boris; McGee, Jennifer
  27. Do Friendship Networks Improve Female Education? By Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves

  1. By: Siddique, Abu (University of Southampton); Vlassopoulos, Michael (University of Southampton)
    Abstract: In many countries, ethnic minorities have a persistent disadvantageous socioeconomic position. We investigate whether aversion to competing against members of the ethnically dominant group could be a contributing factor to this predicament. We conducted a lab-in-the-field experiment in rural Bangladesh recruiting males from the ethnic majority (Bengali) and an underprivileged ethnic minority group (Santal) that is severely discriminated against. We randomly assign participants into groups with different ethnic composition and elicit a measure of their competitiveness. We find that when compelled to compete, there are no ethnic differences in performance and that both ethnic groups perform better in ethnically-mixed groups than in homogeneous groups. We also find that the ethnic composition of the group of competitors is an important determinant of competitive entry and its effect varies by ethnic group. Members of the ethnic minority group are less likely to compete in groups where they are a numerical minority than when all competitors are co-ethnic, whereas the reverse is true for members of the ethnic majority group. This difference is not explained by heterogeneity in performance, risk preferences, beliefs about relative ability or various socioeconomic characteristics; instead, observed behavior seems to be driven by ethnic differences in preference for interethnic competition.
    Keywords: competitiveness, group composition, ethnicity, minority, identity, stereotypes, lab-in-the-field experiment
    JEL: C9 C91 C93 J15
    Date: 2017–03
  2. By: Drupp, Moritz A.; Khadjavi, Menusch; Riekhof, Marie-Catherine; Voss, Rüdiger
    Abstract: The gender gap in risk-taking is often used to explain differences in labor market outcomes. Some studies, however, suggest that this gender gap does not extend to professional contexts. This paper examines potential drivers of the gender gap in risk-taking, comparing the professional context of academia to a private setting. We draw on identity economics, which posits that individuals form multiple identities that moderate behavior across contexts. In an online field experiment with 474 scientists we vary the salience of the professional or private identity. We find that the gender gap in risk-taking is mediated when the professional identity is salient. We identify the switching of identities by females as an explanation. Our results suggest that if the gender gap in risk-taking is driven by selection, the selection is not (only) along risk-aversion, but (also) along the ability to switch between identities and to adapt to prevailing norms. This provides new insights for the discussion on gender, risk-taking and labor market policies, and suggests an important role for mentoring programs.
    Keywords: gender,risk-taking,identity,priming,labor market,field experiment
    JEL: J16 D81 C93
    Date: 2017
  3. By: Adena, Maja; Alizade, Jeyhun; Bohner, Frauke; Harke, Julian; Mesters, Fabio
    Abstract: In an experiment, we test the impact of quality certificates on donations to a charity. When presented with a quality certificate, participants chose higher donations by approximately 10%. This effect is significant for donations out of prize money and actual own money donations, and not significant but positive for own money intended donations. Moreover, this effect persists over time. We also find a nega-tive but not significant effect of information about certificate fees. We find that the certificate increases trust in the nonprofit organization. There is some evi-dence pointing to the causal role of trust for donation probability.
    Keywords: non-profit certification,charitable giving,experiment,trust
    JEL: D64 C99 D81
    Date: 2017
  4. By: Jared Rubin (Chapman University); Elira Karaja (World Bank and Harriman Institute at Columbia University)
    Abstract: We conduct trust games in three villages in a northeastern Romanian commune. From 1775-1919, these villages were arbitrarily assigned to opposite sides of the Habsburg and Ottoman/Russian border despite being located seven kilometers apart. Russian and Ottoman Öscal institutions were more rapacious than Habsburg institutions, which may have eroded trust of outsiders (relative to co-villagers). Our design permits us to rigorously test this conjecture, and more generally, whether historically institutionalized cultural norms are transmitted intergenerationally. We Önd that participants on the Ottoman/Russian side are indeed less likely to trust outsiders but more likely to trust co-villagers.
    Keywords: trust, trust game, culture, cultural transmission, natural experiment, Öeld experiment, laboratory experiment, norms, Romania, Austria, Ottoman Empire, Habsburg Empire
    JEL: C91 C93 N33 O17 Z1
    Date: 2017
  5. By: Luigi Butera; John A. List
    Abstract: Novel empirical insights by their very nature tend to be unanticipated, and in some cases at odds with the current state of knowledge on the topic. The mechanics of statistical inference suggest that such initial findings, even when robust and statistically significant within the study, should not appreciably move priors about the phenomenon under investigation. Yet, a few well-conceived independent replications dramatically improve the reliability of novel findings. Nevertheless, the incentives to replicate are seldom in place in the sciences, especially within the social sciences. We propose a simple incentive-compatible mechanism to promote replications, and use experimental economics to highlight our approach. We begin by reporting results from an experiment in which we investigate how cooperation in allocation games is affected by the presence of Knightian uncertainty, a pervasive and yet unexplored characteristic of most public goods. Unexpectedly, we find that adding uncertainty enhances cooperation. This surprising result serves as a test case for our mechanism: instead of sending this paper to a peer-reviewed journal, we make it available online as a working paper, but we commit never to submit it to a journal for publication. We instead offered co-authorship for a second, yet to be written, paper to other scholars willing to replicate our study. That second paper will reference this working paper, will include all replications, and will be submitted to a peer-reviewed journal for publication. Our mechanism allows mutually-beneficial gains from trade between the original investigators and other scholars, alleviates the publication bias problem that often surrounds novel experimental results, and accelerates the advancement of economic science by leveraging the mechanics of statistical inference.
    JEL: A11 C92 H4 D64
    Date: 2017–04
  6. By: Eloisa Campioni (DEF and CEIS, Università di Roma "Tor Vergata",); Vittorio Larocca (Luiss Guido Carli); Loredana Mirra (DEF, Università di Roma "Tor Vergata",); Luca Panaccione (DEF and CEIS, Università di Roma "Tor Vergata",)
    Abstract: In this experimental study on the determinants of bank run, participants anonymously interact via an experimental bank deciding whether to withdraw or not their deposit. As in Diamond and Dybvig (1983), runs result from a fundamental coordination problem. We elicit subjects’ financial literacy and study whether revealing this information helps in solving the equilibrium coordination in such games with multiple equilibria. As a control we also use information about elicited general knowledge. Within the same framework, we let the bank size vary to investigate how it affects coordination on bank run. We find that, when no information is revealed, the likelihood of runs increases with bank size. Whereas, when information on financial literacy is revealed, the likelihood of runs increases in small and decreases in large banks. Our analyses also show that subjects react to information on financial literacy and general knowledge in a different way. Getting to know that a group has higher financial literacy reduces the probability of run. While, when information about general knowledge is revealed, risk aversion at group level becomes relevant and positively affects the probability of bank run. In all specifications, bank run occurrence is positively affected by short-run withdrawal history and by subjects’ experience.
    Keywords: Bank runs,Experimental studies,Financial literacy,Coordination games
    JEL: C70 C92 D80 G21
    Date: 2017–04–20
  7. By: Mohammed H. Alemu (Department of Food and Resource Economics, University of Copenhagen); Søren B. Olsen (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: Recent papers have suggested that use of a so-called Repeated Opt-Out Reminder (ROOR) might mitigate hypothetical bias in stated Discrete Choice Experiments (DCE), but evidence so far has only been circumstantial. We provide the first comprehensive test of whether a ROOR can actually mitigate hypothetical bias in stated DCE. The data originates from a field experiment concerning consumer preferences for a novel food product made from cricket flour. Utilizing a between-subject design with three treatments, we find significantly higher marginal willingness to pay values in hypothetical than in nonhypothetical settings, confirming the usual presence of hypothetical bias. Comparing this to a hypothetical setting where the ROOR is introduced, we find that the ROOR effectively eliminates hypothetical bias for one attribute and significantly reduces it for the rest of the attributes. Our results further suggest that these reductions of hypothetical bias are brought about by a decrease in the tendency to ignore the price attribute.
    Keywords: Hypothetical bias, novel food, repeated opt-out reminder, willingness to pay
    JEL: C12 C13 C83 C93 D12 Q01 Q11 Q13 Q18
    Date: 2017–04
  8. By: Antonio M. Espin (Department of Economics, Middlesex University Business School; and Granada Lab of Behavioral Economics (GLoBE)); Angel Sanchez (Grupo Interdisciplinar de Sistemas Complejos (GISC), Departamento de Matematicas, Universidad Carlos III de Madrid; and Instituto de Biocomputacion y Fisica de Sistemas Complejos (BIFI), Universidad de Zaragoza; and Institute UC3M-BS for Financial Big Data, Universidad Carlos III de Madrid); Benedikt Herrmann (Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham)
    Abstract: This paper presents a “second generation†theory on the nature of social preferences. Incorporating an inter-temporal ingredient, we generate an outcome-based model which focuses on the conflict between cooperation towards social efficiency and competition for the individual relative standing. We build on the argument that cooperative (competitive) patterns are more likely to arise when the future is perceived as secure and predictable (unsecure and unpredictable). In order to accommodate this argument with recent experimental results showing a relationship between individuals’ inter-temporal preferences and social behavior in one-shot games, social efficiency is assumed to trigger long-run satisfaction whereas relative standing is linked to short-run satisfaction. In so doing, we add a dynamic component to social preferences. This feature of the model implies that more patient individuals are more willing to get involved in cooperative affairs while more impatient individuals are more likely to display competitive patterns. Yet, an individual’s inter-temporal preferences interact with contextual factors (cues of future (un)predictability) to determine her course of action. The theory is then tested to shed new light on individuals’ decisions in different games used in experimental research where a relationship between game play and inter-temporal preferences has been found. We show that our new combination of social and inter-temporal preferences adds well to the explanatory power of economic theory on human decision making.
    Date: 2017–04
  9. By: Lena Epp; Nastassia Leszczynska
    Abstract: This study investigates the impact of a public officials' fairness considerations towards citizens in a petty corruption situation. Other-regarding preferences, and, more particularly, fairness concerns are widely acknowledged as crucial elements of individual economic decision-making. In petty corruption contexts, public officials are to a large extent aware of differences between citizens. Here, we experimentally investigate how fairness considerations may impact on corrupt behaviour. Our novel bribery game reveals that bribes are less frequently accepted when bribers are unequal in terms of endowments. These results suggest that fairness considerations can inflluence corrupt behaviour.
    Keywords: petty corruption; bribery; laboratory experiment; fairness; inequality
    JEL: C91 D63 D73 K42
    Date: 2017–04
  10. By: Johnsen, Åshild Auglænd (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: Cooperation is usually presented as prosocial and for the common good. But collusion is also a form of cooperation, where the gains from cooperation are at the public’s expense. How is collusion affected by this public aspect? Social preferences can mean caring for the public. But it can also mean caring for the bilateral relationship with one’s partner. This paper investigates cooperation when it is at the expense of the public, and compares it to cooperation when it is not at the public’s expense. I do so by running two versions of an infinitely repeated prisoner’s dilemma game: One version with and one without a public aspect. I find that there is more collusion when collusion is at the expense of the public conspiracy against the public.
    Keywords: Infinitely repeated prisoner’s dilemma game; Negative externality; Cooperation; Collusion; Experiment
    JEL: C91 D03 D62 H41
    Date: 2017–05–03
  11. By: Felipe Barrera-Osorio; Leigh L. Linden; Juan Saavedra
    Abstract: We show that three Colombian conditional cash transfer (CCT) programs for secondary schools improve educational outcomes eight and 12 years after random assignment relative to a control group. Forcing families to save a portion of the transfers until they make enrollment decisions for the next academic year increases on-time enrollment in secondary school, reduces dropout rates, and promotes tertiary enrollment and completion in the long-term. Traditionally structured bimonthly transfers improve on-time enrollment and high school exit exam completion rates in the medium term, but do not affect long-term tertiary outcomes. A delayed transfer that directly incentivizes tertiary enrollment promotes secondary school on-time enrollment and enrollment—only in lower-quality tertiary institutions—in the medium term but not the long term.
    JEL: C93 I21 I38
    Date: 2017–03
  12. By: John A. List; Robert D. Metcalfe; Michael K. Price; Florian Rundhammer
    Abstract: The literature has shown the power of social norms to promote residential energy conservation, particularly among high usage users. This study uses a natural field experiment with nearly 200,000 US households to explore whether a financial rewards program can complement such approaches. We observe strong impacts of the program, particularly amongst low-usage and lowvariance households, customers who typically are less responsive to normative messaging. Our data thus suggest important policy complementarities between behavioral and financial incentives: whereas non-pecuniary interventions disproportionately affect intense users, financial incentives are able to substantially affect the low-user, sticky households.
    Keywords: social norms, financial incentives, energy conservation, field experiment
    JEL: C93 Q4 D03
    Date: 2017–05
  13. By: Murray, Cameron K. (University of Queensland); Frijters, Paul (London School of Economics); Schaffner, Markus (Queensland University of Technology)
    Abstract: We look at the effect of transparency on the incidence of costly back-scratching in a laboratory setting by implementing player identification via photographs. In our experimental design players have an incentive to form bilateral alliances in which they favour their partner at the expense of others. We find no improvement in overall group payoffs from transparency. A plausible story that fits our results is that there may be two countervailing forces at play. First, more rapid alliance formation due to social cues from the photographs being used as a coordination device to facilitate faster alliance formation between some players. Second, shorter alliances due to prosocial forces at the group level. We draw out lessons for policy makers about the limits of transparency in curtailing "grey" types of corruption.
    Keywords: experiment, alliance, corruption, transparency
    JEL: C92 D7 D8
    Date: 2017–03
  14. By: Fehr, Dietmar; Schmid, Julia
    Abstract: Contest designers or managers who want to maximize the overall revenue of a contest (relative performance scheme) are frequently concerned with a trade-off between contest homogeneity and inclusion of contestants with high valuations. In our experimental study, we find that it is not profitable to exclude the most able bidder in favor of greater homogeneity among the remaining bidders, even if the theoretical exclusion principle predicts otherwise. This is because the strongest bidders are willing to give up a substantial part of their expected rent and prefer a strategy that ensures a lower but secure pay-off.
    Keywords: all-pay auction,contests,heterogeneity,superstars,experiments
    JEL: C72 C92 D84
    Date: 2017
  15. By: Duell, Dominik; Valasek, Justin Mattias
    Abstract: While scholars and pundits alike have been pointing to a trend of increasing partisan affect in the US, there has been very little analysis as to how partisan affect impacts the decisions of voters. We hypothesize that affective polarization may effect voting both through an expressive channel, as voters become more likely to vote instinctively, and through an instrumental channel, as voters expect candidates to take decisions that are more favorable towards their partisan in-group. To explore this hypothesis, we conduct a laboratory experiment designed to separate between the expressive and instrumental impact of affective polarization, and find evidence that affect significantly impacts subjects' voting decision through both channels. Importantly, however, we show that the instrumental impact of affective polarization depends on the underlying degree of polarization in policy preferences. Additionally, in contrast to the existing literature, our study demonstrates that affective polarization has a clear negative impact on social welfare by decreasing the likelihood that high valence candidates win elections. Lastly, we compare the impact of affect between groups that are formed using a neutral prime (minimal groups) and groups that are formed using the subjects' stated partisan identity. Surprisingly, we find no difference in voting behavior between the two treatments, implying that among a group of individuals that are otherwise relatively homogenous (university students) the impact of partisan identity is no greater than an arbitrary label.
    Keywords: political polarization,social identity,affective polarization
    Date: 2017
  16. By: Alec Brandon; Paul J. Ferraro; John A. List; Robert D. Metcalfe; Michael K. Price; Florian Rundhammer
    Abstract: This study examines the mechanisms underlying long-run reductions in energy consumption caused by a widely studied social nudge. Our investigation considers two channels: physical capital in the home and habit formation in the household. Using data from 38 natural field experiments, we isolate the role of physical capital by comparing treatment and control homes after the original household moves, which ends treatment. We find 35 to 55 percent of the reductions persist once treatment ends and show this is consonant with the physical capital channel. Methodologically, our findings have important implications for the design and assessment of behavioral interventions.
    Keywords: energy efficiency, field experiments, nudges, persistence
    JEL: C93 D01 D03 Q30
    Date: 2017–04
  17. By: Eliaz, Kfir; Oren-Kolbinger, Orli; Weisburd, Sarit
    Abstract: How do consumers allocate their attention over price fluctuations in multiple products, and how do they respond to information on these price changes? We address these questions using data from a field experiment on a website that offers purchase and delivery from one large local supermarket chain in the U.S. Our main findings indicate that (i) a large proportion of consumers forego significant saving opportunities that they were aware of, (ii) consumers are more likely to compare prices between substitutes that appear close to each other, and (iii) personalized "nudges" have a differential effect on consumers. Furthermore, we propose a typology of shoppers and shopping trips, based on a level of attentiveness, and show that nudges and information provision helps only the "attentive" shoppers.
    Date: 2017–05
  18. By: Alex Armand (Institute for Fiscal Studies and University of Navarra (Spain)); Orazio Attanasio (Institute for Fiscal Studies and University College London); Pedro Carneiro (Institute for Fiscal Studies and University College London); Valérie Lechene (Institute for Fiscal Studies and 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
    Date: 2016–08–19
  19. By: Felix Koelle (Department of Economics, University of Cologne); Tom Lane (Department of Economics, University of Nottingham); Daniele Nosenzo (School of Economics, University of Nottingham); Chris Starmer (School of Economics, University of Nottingham)
    Abstract: We report two studies investigating whether, and if so how, different interventions affect voter registration rates. In a natural field experiment conducted before the 2015 UK General Election, we varied messages on a postcard sent by Oxford City Council to 7,679 unregistered student voters encouraging them to register to vote. Relative to a baseline, emphasising negative monetary incentives (the possibility of being fined) significantly increased registration rates, while positive monetary incentives (chances of winning a lottery) and purely non-monetary nudges had no overall effects. In the second study, we show that these differences can be partly explained by social norms.
    Keywords: Voter Registration; Voting; Field Experiment; Nudging; Social Norms; Fines; Rewards
    Date: 2017–05
  20. By: Eugen Dimant (University of Pennsylvania & Harvard University)
    Abstract: Little is known about the underlying mechanisms of behavioral contagion, in particular with respect to differences in contagion of pro- versus anti-social behavior. Our principal contribution is the use of a novel experimental approach that enables us to analyze the contagion of behavior under varied levels of social distance to peers and differences in contagion of pro- and anti-social behavior. Anti-social behavior is found to be more contagious and social distance particularly drives the contagion of anti-social but not prosocial behavior. The results yield policy implications with regards to designing effective nudges and interventions to facilitate (reduce) pro- (anti-)social behavior, in both social and work environments.
    Keywords: Anti-Social Behavior, Behavioral Contagion, Charitable Giving, Peer Effects
    Date: 2017–06
  21. By: Engel, Jannis; Szech, Nora
    Abstract: This paper explores the role of cheap excuses in product choice. If a product improves upon one ethically relevant dimension, agents may care less about other independent ethical facets of the product. Opting for a product that fulfills one ethical aspect may thus suffice for keeping a high moral self-image in agents, and render it easier to ignore other ethically relevant aspects they would otherwise care about. The use of such cheap excuses could thus lead to a 'static moral self-licensing' effect. This would extend the logic of the well-known moral self-licensing over time. Our experimental study provides empirical evidence that the static counterpart of moral self-licensing exists. Furthermore, effects spill over to unrelated, ethically relevant contexts later in time. Thus, static moral self-licensing and moral self-licensing over time can amplify each other. Outsiders, though monetarily incentivized for correct estimates, are completely oblivious to the effects of moral selflicensing, both, static and over time.
    Keywords: moral self-licensing,moral spillovers,cheap excuses,outsider beliefs,moral personality
    JEL: D03 D84
    Date: 2017
  22. By: Asako, Yasushi (Waseda University); Funaki, Yukihiko (Waseda University); Ueda, Kozo (Waseda University); Uto, Nobuyuki (Waseda University)
    Abstract: Asymmetric information has been necessary to explain a bubble in past theoretical models. This study experimentally analyzes traders’ choices, with and without asymmetric information, based on the riding-bubble model. We show that traders have an incentive to hold a bubble asset for longer, thereby expanding the bubble in a market with symmetric, rather than asymmetric information. However, when traders are more experienced, the size of the bubble decreases, in which case bubbles do not arise, with symmetric information. In contrast, the size of the bubble is stable in a market with asymmetric information.
    JEL: C72 D82 D84 E58 G12 G18
    Date: 2017–04–01
  23. By: Paul Carrillo; Edgar Castro; Carlos Scartascini
    Abstract: This paper evaluates the effect of positive inducements on tax behavior by exploiting a natural experiment in which a municipality of Argentina randomly selected 400 individuals among more than 72,000 taxpayers who had complied with payment of their property tax. These individuals were publicly recognized and awarded the construction of a sidewalk. Results indicate that: i) being selected in the lottery and publicly recognized by the government has a positive but not persistent effect on future compliance; ii) receiving the sidewalk has a large positive and persistent effect; iii) high and persistent spillover effects exist: some neighbors of those who receive the reward comply more too, and these effects can be even larger than the direct effects; and iv) there is no financial motive effect; i.e., people do not pay their taxes just to participate in the lottery. Recognition serves only as a short-term incentive, but the provision of a durable and visible good has more persistent and broader effects. These findings provide evidence on features that make a positive inducement more successful, whether for tax compliance or other policy purposes.
    Keywords: Public Works, Tax compliance, Public Services, Tax Rate, Public Policy, Tax incentives, public works, sidewalk renovation, sidewalk construction, reciprocity
    JEL: D62 H23 H42 C93
    Date: 2017–04
  24. By: Barbara Sianesi (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: Randomised controlled or clinical trials (RCTs) are generally viewed as the most reliable method to draw causal inference as to the effects of a treatment, as they should guarantee that the individuals being compared differ only in terms of their exposure to the treatment of interest. This ‘gold standard’ result however hinges on the requirement that the randomisation device determines the random allocation of individuals to the treatment without affecting any other element of the causal model. This ‘no randomisation bias’ assumption is generally untestable but if violated would undermine the causal inference emerging from an RCT, both in terms of its internal validity and in terms of its relevance for policy purposes. This paper offers a concise review of how the medical literature identifies and deals with such issues.
    Keywords: randomised trials, medical,
    Date: 2016–11–21
  25. By: Guha, Brishti; Roy Chowdhury, Prabal
    Abstract: We analyze affirmative action in the presence of income heterogeneity, with the target group containing a creamy layer, as well as poorer members. We find that a move from identity to class-based affirmative action would affect the creamy layer and the poorer members of the target group differently. While it would help the poorer members of the target group, it would hurt the creamy layer, as well as the non-target group. Further, temporary affirmative action need not have a permanent effect, since removing identity-based affirmative action may harm the poorer members of the target group. Thus either removing identity-based affirmative action, or switching to a class-based affirmative action is likely to be politically difficult.
    Keywords: Affirmative action; creamy layer; class-based affirmative action.
    JEL: D78 D82 J71 J78
    Date: 2017
  26. By: Nikolaev, Boris; McGee, Jennifer
    Abstract: Even though higher intelligence (IQ) is often associated with many positive outcomes in life, it has become a stylized fact in the happiness literature that smarter people are not happier than their less intelligent counterparts. In this paper, we examine how relative verbal intelligence correlates with happiness and present two main findings. First, our estimations from the General Social Survey for a large representative sample of Americans suggest a small, but positive and significant correlation between verbal intelligence and happiness. Second, we find that verbal intelligence has a strong positional effect on happiness, i.e., people who have greater verbal proficiency relative to their peers in their reference group are more likely to report higher levels of happiness. The positional effect of happiness holds even when we control for a large set of socio-economic characteristics as well as relative income.
    Keywords: Verbal Intelligence, Social Comparison, Happiness
    JEL: I26 I3 I31
    Date: 2016
  27. By: Hahn, Youjin (Monash University); Islam, Asadul (Monash University); Patacchini, Eleonora (Cornell University); Zenou, Yves (Monash University)
    Abstract: We randomly assign more than 6,000 students from 150 primary schools in Bangladesh to work on math assignments in one of three settings: individually, in groups with random schoolmates, or in groups with friends. The groups consist of four people and are balanced by average cognitive ability and ability distribution. While the achievement of male students is not affected by the group assignment, low-ability females assigned to groups outperform low-ability females working individually. The treatment is particularly effective when low-ability females study with friends. To rule out sorting effects, we show that random groups with identical compositions to those of friendship groups do not produce similar effects. Our study thus documents that placing students into study groups with their friends may improve learning, especially for low-ability females.
    Keywords: social interactions, education, gender, learning, friendship
    JEL: I25 J16 O12
    Date: 2017–03

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