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on Experimental Economics |
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Issue of 2017‒08‒13
eighteen papers chosen by |
| By: | Strobl, Renate (University of Basel); Wunsch, Conny (University of Basel) |
| Abstract: | In this study we experimentally investigate whether solidarity, which is a crucial base for informal insurance arrangements in developing countries, is sensitive to the extent to which individuals can influence their risk exposure. With slum dwellers of Nairobi our design measures subjects' willingness to share income with a worse-off partner both in a setting where participants could either deliberately choose or were randomly assigned to a safe or a risky project. We find that when risk exposure is a choice, willingness to give is roughly 9 percentage points lower compared to when it is exogenously assigned to subjects. The reduction of solidarity is driven by a change in giving behaviour of persons with the risky project. Compared to their counterparts in the random treatment, voluntary risk takers are seemingly less motivated to share their high payoff with their partner, especially if this person failed after choosing the risky project. This suggests that the willingness to show solidarity is influenced by both the desire for own compensation and attributions of responsibility. Our findings have important implications for policies that interact with existing informal insurance arrangements. |
| Keywords: | solidarity, risk taking, Kenya |
| JEL: | D81 C91 O12 D63 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10906&r=exp |
| By: | Gaudeul, Alexia; Kaczmarek, Magdalena C. |
| Abstract: | Recent evidence suggests that nudges, i.e. alterations in the decisional context, can have large effects on decisions and can improve individual and public welfare. This paper presents the results of a controlled experiment that was designed to evaluate not only the effectiveness of a default manipulation on decision making in a charity giving context, but also whether yielding or opposing a nudge affects attitudes, and whether nudging intentions (pledges) translate into behaviour (donations). The results show that while making pledges the default increased pledges, it did not increase donations because the nudge affected only participants who were close to indifference between pledging and not pledging and were thus unlikely to actually do the effort of translating their pledges into donations. Participants who were nudged to pledge pledged more often than participants who were nudged to keep, but they were less likely to maintain their participation in the experiment, and those who kept participating were less likely to pledge again. This, along with high attrition among nudged pledgers explains why nudging pledges did not result in higher actual donations. We interpret our findings in terms of a selection effect of nudges, and discuss practical implications of our experiment in terms of the applicability of default-based nudges as a tool for policy interventions. |
| Keywords: | attitudes,decision making,charity giving,defaults,intentions,nudges,pro-social behaviour,selection effect |
| JEL: | C9 D04 D10 D64 H41 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:318&r=exp |
| By: | Janina Isabel Steinert; Lucie Dale Cluver; Franziska Meinck; Jenny Doubt; Sebastian Vollmer |
| Abstract: | Using data from a randomized field experiment with 552 households in South Africa, we examine the impact of a financial literacy and savings training that was integrated into a broader psychosocial parenting intervention. We document significant improvements in financial behaviors, including higher savings and lower borrowing rates. We also see wider implications for household economic welfare, expressed in reduced financial distress, better resilience to economic shocks, and a greater capacity to securing basic needs. We further find that program effects are non-differential for ultra poor participants and tend to be higher for those who reside in rural locations and live without a male partner or spouse. Overall, our findings suggest that "hybrid" program curricula that offer combinations of financial and psychosocial components might be more successful than stand-alone financial literacy training. |
| Keywords: | Financial Literacy; Saving; Parenting; RCT; South Africa |
| JEL: | D14 D91 I31 O12 O16 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2017-11&r=exp |
| By: | Halim, Edward; Riyanto, Yohanes Eko; Roy, Nilanjan |
| Abstract: | We design an experiment to study the implications of information networks for the incentive to acquire costly information, market liquidity, investors' earnings and asset price characteristics in a financial market. Social communication crowds out information production as a result of agent's temptation to free ride on the signals purchased by their neighbors. Although information exchange among traders increases trading volume, improves liquidity and enhances the ability of asset prices to reflect the aggregate amount of information in the market, it fails to improve price accuracy. Net earnings are higher with information sharing due to reduced acquisition of costly signals. |
| Keywords: | Asymmetric Information, Costly Information Acquisition, Experimental Asset Markets, Social Network, Uncertainty |
| JEL: | C92 D84 G10 G12 G14 |
| Date: | 2017–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80658&r=exp |
| By: | Falk, Armin (briq, University of Bonn) |
| Abstract: | This paper studies the causal effect of status differences on moral disengagement and violence. To measure violent behavior, in the experiment, a subject can inflict a painful electric shock on another subject in return for money. We exogenously vary relative status in the realm of sexual attractiveness. In three between-subject conditions, the assigned other subject is either of higher, lower or equal status. The incidence of electric shocks is substantially higher among subjects matched with higher- and lower-status others, relative to subjects matched with equal-status others. This causal evidence on the role of status inequality on violence suggests an important societal cost of economic and social inequalities. |
| Keywords: | morality, violence, status, inequality, laboratory experiments |
| JEL: | A13 C91 D03 Z13 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10921&r=exp |
| By: | Stijn Baert (Ghent University, Department of Social Economics) |
| Abstract: | This chapter aims to provide an exhaustive list of all (i.e. 90) correspondence studies on hiring discrimination that were conducted between 2005 and 2016 (and could be found through a systematic search). For all these studies, the direction of the estimated treatment effects is tabulated. In addition, a discussion of the findings by discrimination ground is provided. |
| Date: | 2017–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2017010&r=exp |
| By: | Jianxin Wang (School of Business, Central South University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Hui Xu (Department of Economics, Beijing Normal University) |
| Abstract: | Is it universal across cultures that females generate smaller bubbles than males? We conduct classic bubble experiments in China and the U.S. using groups of exclusively females, exclusively males and mixed gender participants. We find that female groups in China generate a similar level of bubbles as found in exclusively males groups in China and the U.S., which in turn is significantly larger than bubbles generated by exclusively female groups in the U.S. Our results imply that gender differences in financial markets may be sensitive to culture. |
| Keywords: | gender differences, bubbles, experimental asset markets, culture differences |
| JEL: | G01 G11 J16 Z13 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1063&r=exp |
| By: | Sanchez Villalba, Miguel |
| Abstract: | Sanchez Villalba (2015) claims inspection games can be modelled as global games when agents face common shocks. For the tax evasion game -his leading example- he prescribes that the tax agency should audit each individual taxpayer with a probability that is a non-decreasing function of every other taxpayer's declarations ("relative auditing strategy"). This paper uses experimental data to test the predictions of the model and finds supporting evidence for the hypothesis that the relative auditing strategy is superior to the alternative "cut-off" one. It also finds that data fit the qualitative predictions of the global game model, regarding both participants' decisions and the experiment's comparative statics. |
| Keywords: | Global Games, Experimental Economics, Tax Evasion, Rationality, Information, Beliefs |
| JEL: | C7 C91 D8 H26 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80715&r=exp |
| By: | Hartley, Robert Paul (Columbia University); Lamarche, Carlos (University of Kentucky) |
| Abstract: | Recent studies have used a distributional analysis of welfare reform experiments suggesting that some individuals reduce hours in order to opt into welfare, an example of behavioral-induced participation. Using data on Connecticut's Jobs First experiment, we find no evidence of behavioral-induced participation at the highest conditional quantiles of earnings. We offer a simple explanation for this: women assigned to Jobs First incur welfare participation costs to labor supply at higher earnings where the control group is welfare ineligible. Moreover, as expected, behavioral components and costs of program participation do not seem to play a differential role at other conditional quantiles where both groups are eligible to participate. Our findings show that a welfare program imposes an estimated cost up to 10 percent of quarterly earnings, and these costs can be heterogeneous throughout the conditional earnings distribution. The evidence is obtained by employing a semi-parametric panel quantile estimator for a model that allows women to vary arbitrarily in preferences and costs of participating in welfare programs. |
| Keywords: | welfare reform, quantile regression, panel data, program participation |
| JEL: | J22 I38 C21 C33 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10905&r=exp |
| By: | Christian Belzil; Arnaud Maurel; Modibo Sidibé |
| Abstract: | Using data from a Canadian field experiment on the financial barriers to higher education, we estimate the distribution of the value of financial aid for prospective students, and relate it to parental socio-economic background, individual skills, risk and time preferences. Our results point out that a considerable share of prospective students are affected by credit constraints. We find that most of the individuals are willing to pay a sizable interest premium above the prevailing market rate for the option to take up a loan, with a median interest rate wedge equal to 6.6 percentage points for a $1,000 loan. The willingness-to-pay for financial aid is highly heterogeneous across students, with preferences and in particular discount factors, playing a key role in accounting for this variation. |
| JEL: | I22 I23 J24 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23641&r=exp |
| By: | Cammelli, Federico (School of Economics and Business, Norwegian University of Life Sciences); Angelsen, Arild (School of Economics and Business, Norwegian University of Life Sciences) |
| Abstract: | Despite a fall in deforestation, frequency and severity of fires in the Brazilian Amazon are rising, causing huge carbon emissions, biodiversity losses and local economic costs. The ignition sources are anthropogenic and mostly related to the accidental spread of agricultural fires. Fire risk mitigation is a coordination problem with strategic complementarities: a farmer’s benefit of mitigation depends on complementary action of other farmers. We experimentally assess ex-ante the impact of two different policies under varying exogenous drought risk scenarios. Command and control is more effective than payments for environmental services in promoting coordination, possibly because of participants’ risk aversion (to the fine) and a local demand for justice and law enforcement. We also find evidence of a human-mediated self-reinforcing loop of drought and fires: droughts increase the exogenous component of fire risk, giving farmers less incentives to mitigate fire risk coming from their own farms. |
| Keywords: | Brazilian Amazon; forest fires; climate change; framed field experiment; coordination games |
| JEL: | C93 Q23 Q54 |
| Date: | 2017–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsseb:2017_004&r=exp |
| By: | John Gallis (Department of Biostatistics and Bioinformatics, and Duke Global Health Institute, Duke University); Fan Li (Department of Biostatistics and Bioinformatics, Duke University); Hengshi Yu (Department of Biostatistics and Bioinformatics, Duke University); Elizabeth L. Turner (Department of Biostatistics and Bioinformatics, Duke University) |
| Abstract: | Cluster randomized trials (CRTs), where clusters (e.g., schools or clinics) are randomized but measurements are taken on individuals, are commonly used to evaluate interventions in public health and social science. Since CRTs typically involve only a few clusters, simple randomization frequently leads to baseline imbalance of cluster characteristics across treatment arms, threatening the internal validity of the trial. In CRTs with a small number of clusters, classic approaches to balancing baseline characteristics—such as matching and stratification—have several drawbacks, especially when the number of baseline characteristics the researcher desires to balance is large (Ivers et al., 2012). An alternative approach is constrained randomization, whereby an allocation scheme is randomly selected from a subset of all possible allocation schemes based on the value of a balancing criterion (Raab & Butcher, 2001). Subsequently, an adjusted permutation test can be used in the analysis, which provides increased efficiency under constrained randomization compared to simple randomization (Li et al., 2015). We describe constrained randomization and permutation tests for the design and analysis of CRTs, and provide examples to demonstrate the use of our newly-created Stata package (ccrand)—which uses Mata to efficiently process large allocation matrices—to implement constrained randomization and permutation tests. |
| Date: | 2017–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:boc:scon17:11&r=exp |
| By: | Aufenanger, Tobias |
| Abstract: | This paper analyses optimal treatment allocation of experimental units to treatment and control group. 'Optimal' means that the allocation of treatments should balance covariates across treatment and control group in a way that minimizes the variance of the treatment estimator in a given linear model. This paper shows the benefits as well as the limits of this approach. In particular, it presents a sample size formula as well as several simulations to give some intuition on the minimum as well as the maximum benefits of this approach compared to random allocation as well as to alternative methods of treatment allocation. |
| Keywords: | experiment design,treatment allocation |
| JEL: | C90 C61 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:142017&r=exp |
| By: | Marcel Nutz; Yuchong Zhang |
| Abstract: | We introduce a mean field game with rank-based reward: competing agents optimize their effort to achieve a goal, are ranked according to their completion time, and paid a reward based on their relative rank. First, we propose a tractable Poissonian model in which we can describe the optimal effort for a given reward scheme. Second, we study the principal--agent problem of designing an optimal reward scheme. A surprising, explicit design is found to minimize the time until a given fraction of the population has reached the goal. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1708.01308&r=exp |
| By: | Alzúa, María Laura; Amendolaggine, Julián; Cruces, Guillermo; Greppi, Catrihel |
| Abstract: | We study the impact of a social housing policy program implemented in Argentina, exploiting the random assignment rule to identify the policy's causal effect on labor market and other socio-economic outcomes. In particular, this paper evaluates an intervention that combines access to quality housing at a heavily subsidized cost, the granting of property rights, and relocation in a suburb of Rosario, Argentina's third largest city. In a preliminary analysis, based on administrative social security records, we find that the policy generates a reduction in registered employment by more than 7 percentage points, especially for women and beneficiaries over 50 years of age. We went further and conducted a purposely-designed household survey among a sample of beneficiaries in order to understand the underlying mechanisms and welfare implications of these results. All in all, our analysis points to the existence of an income effect and confirms the registered fall in formal employment and labor force participation. We do not find an increase in informalization, although beneficiaries' perceived access to local job opportunities are signicantly reduced. |
| Keywords: | Economía, Investigación socioeconómica, Trabajo y protección social, Vivienda, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:dbl:dblpap:971&r=exp |
| By: | Larry G. Epstein; Shaolin Ji |
| Abstract: | We consider the dynamics of learning under ambiguity when learning is costly and is chosen optimally. The setting is Ellsberg's two-urn thought experiment modified by allowing the agent to postpone her choice between bets so that she can learn about the composition of the ambiguous urn. Signals are modeled by a diffusion process whose drift is equal to the true bias of the ambiguous urn and they are observed at a constant cost per unit time. The resulting optimal stopping problem is solved and the effect of ambiguity on the extent of learning is determined. It is shown that rejection of learning opportunities can be optimal for an ambiguity averse agent even given a small cost. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1708.01890&r=exp |
| By: | Akay, Alpaslan (University of Gothenburg); Bargain, Olivier (Aix-Marseille University); Jara, Xavier (KU Leuven) |
| Abstract: | Subjective well-being (SWB) data is increasingly used to perform welfare analyses. Interpreted as 'experienced utility', SWB has recently been compared to 'decision utility' using specific experiments, most often based on stated preferences. Results point to an overall congruence between these two types of welfare measures. We question whether these findings hold in the more general framework of non-experimental and large-scale data, i.e. the setting commonly used for policy analysis. For individuals in the British household panel, we compare the ordinal preferences either "revealed" from their labor supply decisions or elicited from their reported SWB. The results show striking similarities on average, reflecting the fact that a majority of individuals made decisions that are consistent with SWB maximization. Differences between the two welfare measures arise for particular subgroups, lending themselves to intuitive explanations that we illustrate for specific factors (health and labor market constraints, 'focusing illusion', aspirations). |
| Keywords: | decision utility, experienced utility, labor supply, subjective well-being |
| JEL: | C90 I31 J22 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10907&r=exp |
| By: | Peter Z. Schochet |
| Abstract: | This report describes how design-based estimators for the two-group design need to be modified for the multi-armed design when comparing pairs of research groups to each other. |
| Keywords: | Randomized controlled trials, multi-armed designs, impact estimation, quantitative methods, causal inference, education interventions |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:eedf2eac4d4c4d8e869052c1d4b2d566&r=exp |