|
on Experimental Economics |
| By: | Falk, Armin; Szech, Nora |
| Abstract: | We study how the diffusion of being pivotal affects immoral outcomes. In a first set of experiments, subjects decide about agreeing to kill mice and receiving money versus objecting to kill mice and foregoing the monetary amount. In a baseline condition, subjects decide individually about the life of one mouse. In the main treatment, subjects are organized into groups of eight and decide simultaneously. Eight mice are killed if at least one subject supports the killing. The fraction of subjects agreeing to kill is significantly higher in the main condition compared to the baseline condition. In the second set of experiments, we run the same baseline and main conditions but use a charity context and additionally study sequential decisions. We replicate our main finding from the mouse paradigm and additionally show that in the sequential treatment, prosocial behavior is even less pronounced. We further show that the observed effects increase with experience, i.e., when we repeat the experiment for a second time. Finally, we report evidence on beliefs, elicited in our main experiments but also from a treatment of noninvolved observers, and show that beliefs about being pivotal are a main driver of our results. |
| Keywords: | committees,diffusion of being pivotal,group decisions,morality,replacement logic |
| JEL: | C91 D01 D03 D23 D63 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitwps:111&r=exp |
| By: | Aurélie Bonein; Stéphane Turolla |
| Abstract: | Motivated by recent research on product differentiation, we conduct laboratory experiments to study how (aggregate) demand uncertainty influences location choices and price competition in the original Hotelling (1929)’s model. We provide new predictions on the effect of risk attitudes on both decisions under demand uncertainty and confront them with the data. Our experimental results support the predictions that demand uncertainty acts as a differentiation force for risk-neutral and risk-lover subjects. By contrast, we do not verify that demand uncertainty leads risk-averse subjects to agglomerate. This is explained primarily by learning effects and heterogeneous behaviors within this risk profile. Finally, we observe various price-setting behaviors, ranging from an attempt to collude to a price war, depending on the level of differentiation. |
| Keywords: | product differentiation, demand uncertainty, price competition, experiment |
| JEL: | C72 C91 D43 L13 R30 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:rae:wpaper:201712&r=exp |
| By: | Brice Corgnet (EM Lyon Business School, GATE); Cary Deck (University of Alabama and Chapman University); Mark DeSantis (Chapman University); David Porter (Chapman University) |
| Abstract: | Markets are often viewed as a tool for aggregating disparate private knowledge, a stance supported by past laboratory experiments. However, traders’ acquisition cost of information has typically been ignored. Results from a laboratory experiment involving six treatments varying the cost of acquiring signals of an asset’s value suggest that when information is costly, markets do not succeed in aggregating it. At an individual level, having information improves trading performance, but not enough to offset the cost of obtaining the information. Although males earn more through trading than females, this differential is offset by the greater propensity of males to buy information such that total profit is similar for males and females. Looking at individual skills, we find that higher theory of mind is associated with greater trading profit, greater overall profit, and an increased likelihood of acquiring information while cognitive reflection is associated with greater profit but not a greater propensity to acquire information. |
| Keywords: | Prediction Markets, Information Acquisition, Laboratory Experiments, Behavioral Finance |
| JEL: | C9 D8 G1 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:17-24&r=exp |
| By: | Jeffrey Flory; Andreas Leibbrandt; John List |
| Abstract: | Workplace misbehaviors are often governed by explicit monitoring and strict punishment. Such enforcement activities can serve to lessen worker productivity and harm worker morale. We take a different approach to curbing worker misbehaviour - bonuses. Examining more than 6500 donor phone calls across more than 80 workers, we use a natural field experiment to investigate how different wage contracts influence workers' propensity to break workplace rules in harmful ways. Our findings show that even though standard relative performance pay contracts, relative to a fixed wage scheme, increase productivity, they have a dark side: they cause considerable cheating and sabotage of co-workers. Yet, even in such environments, by including an unexpected bonus, the employer can substantially curb worker misbehavior. In this manner, our findings reveal how employers can effectively leverage bonuses to eliminate undesired behaviors induced by performance pay contracts. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00617&r=exp |
| By: | Konstanting Lucks (Institute for Fiscal Studies); Melanie Lührmann (Institute for Fiscal Studies and Royal Holloway, University of London); Joachim K. Winter (Institute for Fiscal Studies and Ludwig-Maximilians-Universität München) |
| Abstract: | We study the effects of peers on risky decision making among adolescents in the age range of 13 to 15 years. In a field experiment, we randomly allocated school classes to two social interaction treatments. Students were allowed to discuss their choices with a natural peer – either a friend or a randomly selected classmate – before individually making choices in an incentivised lottery task. In the control group, adolescents made choices without being able to discuss them with a peer. In addition, we collected information on existing peer networks. This novel design allows us to separate two channels of peer influence, assortative matching on preferences and the effect of social interaction on choices. We find that friends and classmates are matched on socio-demographic characteristics but not on risk preferences. In contrast, social interaction strongly increases the similarity of teenagers’ risky choices. A large fraction of peers align their choices perfectly. |
| Keywords: | peer effects; assortative matching; social interaction; risk and loss aversion |
| Date: | 2017–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:17/16&r=exp |
| By: | Francesco Feri, Caterina Giannetti, Pietro Guarnieri |
| Abstract: | Relying on an novel experimental design, we study the effect of, so called, ethics meetings on risktaking for others decisions in a situation where preferences of a decision maker are not aligned with those of a passive receiver. Decision makers choose between two risky gambles, one of which always implies a better outcome for himself but exposes the receiver to higher risk. In the main treatments (i.e. Ethics meeting), in contrast to the Baseline treatment, decision makers also discuss within a group of peers – before their decision – the consequences of their choice. Our results show that, in treatments with ethics meetings, decision makers tend to choose more often the less risky gamble for the receiver. |
| Keywords: | discussion, moral psychology, ethics |
| JEL: | G02 G32 C91 D81 |
| Date: | 2017–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2017/229&r=exp |
| By: | Erik Ansink (Tinbergen Institute, Vrije Universiteit Amsterdam); Mark Koetse (Institute for Environmental Studies, Vrije Universiteit Amsterdam); Jetske Bouma (Netherlands Environmental Assessment Agency (PBL) and Institute for Environmental Studies, Vrije Universiteit Amsterdam); Dominic Hauck (Institute for Environmental Studies, Vrije Universiteit Amsterdam); Daan van Soest (Department of Economics and CentER, Tilburg University) |
| Abstract: | We assess the impact of different crowdfunding designs on the success of crowdfunded public goods using a lab-in-the-field experiment. Our design treatments aim to increase the efficiency of crowdfunding campaigns by raising aggregate contributions and decreasing possible coordination problems that may occur when potential donors are faced with a multitude of projects seeking contributions. Amongst others, we explore the potential of seed money and the impact of the attraction effect. Using a four-day time window we implement our crowdfunding experiment using a web-based user interface with multiple threshold public goods, similar in style to conventional crowdfunding websites. We find that such alternative crowdfunding designs affect efficiency via improving coordination, and not so much via affecting total contributions. These results are confirmed in a follow-up framed field experiment with actual nature conservation projects. |
| Keywords: | Crowdfunding; lab-in-the-field experiment; threshold public goods; charitable giving; nature conservation |
| JEL: | C93 H41 L31 Q57 |
| Date: | 2017–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170119&r=exp |
| By: | Kühl, Leonie; Szech, Nora |
| Abstract: | Cooperativeness among genetically unrelated humans remains a major puzzle in the social sciences. We explore the causal impact of physical distance on willingness to help. In a field setting, participants decide about supporting local refugees at the dispense of money to themselves. We vary physical distance only, and keep other factors such as cultural distance fixed. The data shows that an increase in local physical distance decreases willingness to donate. A laboratory experiment confirms this finding. We further explore the causal roles of exposure (in the field) and of larger distances (in the lab) with a total of 475 participants. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitwps:110&r=exp |
| By: | Attanasi, Giuseppe Marco; Dessi, Roberta; Moisan, Frédéric; Robertson, Donald |
| Abstract: | Intergenerational interactions play an important part in society with older generations often acting as role models that in uence younger ones. We investigate in a public good experiment how the behavior of more experienced and knowledgeable players (graduate students) is affected when they are informed that some of their personal and behavioral characteristics will be transmitted to future first-year undergraduates (enrolling the following year) playing the same game at the same university. In the "information" treatment, the history of behavior is transmitted with some personal characteristics (e.g. age and gender). In the \photo" treatment, a photo is also transmitted. Despite the absence of any monetary linkage between generations, our results show a significant effect of visibility by the future audience on initial contributions and dynamic behavior. Contrary to previous findings in the literature, contributions are lower in the presence of such personal identification. We explain this surprising negative effect by a "sucker aversion" bias according to which people become more sensitive to being perceived as exploited by their peers. We argue that the nature of the "audience" matters in reaching such an undesirable outcome. |
| Keywords: | Intergenerational transmission; role models; identity; audience |
| JEL: | C91 C92 H41 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32185&r=exp |
| By: | Bradley Ruffle, Anne Wilson (Wilfrid Laurier University) |
| Abstract: | Forty percent of Americans under the age of 40 have at least one tattoo. Yet survey and experimental evidence suggests that the tattooed are viewed negatively and may face discrimination in the labor market and in commercial transactions. In view of the potentially adverse economic consequences of a tattoo, the decision to get one may be regarded as shortsighted and impulsive. We collect numerous measures of time preferences and impulsivity of tattooed and non-tattooed subjects and find broad-ranging and robust evidence that those with tattoos, especially visible ones, are more short-sighted and impulsive than the non-tattooed. Almost nothing mitigates these results, neither the motive for the tattoo, nor the time contemplated before getting tattooed, nor the time elapsed since the most recent tattoo. Even the expressed intention to get a(nother) tattoo predicts increased short-sightedness and helps to pin down the direction of causality between tattoos and short-sightedness. |
| Keywords: | experimental economics, tattoo, time preferences, impulsivity |
| JEL: | C91 Z10 |
| Date: | 2017–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wlu:lcerpa:0106&r=exp |
| By: | Gemmell, Norman; Ratto, Marisa |
| Abstract: | The ‘standard’ Allingham-Sandmo-Yitzhaki (ASY) model of tax evasion predicts effects on compliance which depend on the perceived probability of detection, tax rate and penalty for evasion. Compliance effects of detection probabilities and tax rates have been extensively tested empirically, but penalty effects are rarely tested explicitly. This paper examines the effects of late payment penalties on tax compliance based on an experiment involving New Zealand goods and service tax (GST) ‘late payers’. Firstly, based on an ASY-type model of tax late payments in which the probability of enforcement, rather than detection, is central, we develop a number of testable hypotheses. Secondly, based on a field experiment involving a specific compliance intervention, we examine how taxpayers respond when given different penalty information. The experiment also allows us to consider differences between taxpayers’ stated intentions to comply and subsequently observed compliance. Results suggest that differences in penalty information given to taxpayers and reductions in penalty rates both affect taxpayers stated intentions to comply (pay overdue tax and penalties) as predicted. However, subsequently observed responses generally appear unresponsive to penalties. Nevertheless, various individual taxpayer characteristics are identifiable that affect both compliance intentions and actual behaviour. |
| Keywords: | Tax evasion, Late payment penalties, Tax experiment, Goods and service tax, |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwcpf:6769&r=exp |
| By: | Andrea Martinangeli (Max Planck Institute for Tax and Public Finance); Peter Martinsson (University of Gothenburg); Amrish Patel (University of East Anglia) |
| Abstract: | Can prior voluntary redistribution improve coordination? We theoretically show that distributive preferences, forward induction and signalling all imply that it can. We then experimentally test our predictions by allowing subjects to redistribute part of their endowment before playing a battle of the sexes game. To identify whether the redistribution option increases coordination, and why, we also run experiments with no redistribution and forced redistribution. Our results show that the redis- tribution option does indeed significantly increase coordination. Disentangling the reasons why, we find that behaviour is most consistent with distributive preferences and one-step of forward induction (rather than signalling or two-steps of forward induction). |
| Keywords: | coordination, redistribution, experiment, distributive preferences, forward induction, signalling altruism |
| JEL: | C72 D02 |
| Date: | 2017–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2017_07&r=exp |
| By: | Orazio Attanasio (Institute for Fiscal Studies and University College London); Sarah Cattan (Institute for Fiscal Studies); Emla Fitzsimons (Institute for Fiscal Studies and Institute of Education, University of London); Costas Meghir (Institute for Fiscal Studies and Yale University); Marta Rubio Codina (Institute for Fiscal Studies and Institute for Fiscal Studies) |
| Abstract: | We examine the channels through which a randomized early childhood intervention in Colombia led to signi cant gains in cognitive and socio-emotional skills among a sample of disadvantaged children aged 12 to 24 months at baseline. We estimate the determinants of material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The e ffects of the program can be explained by increases in parental investments, which have strong e ffects on outcomes and are complementary to both maternal skills and child's baseline skills. |
| Date: | 2017–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:17/06&r=exp |
| By: | Jeffrey V. Butler (University of California Merced, Department of Economics); Danila Serra (Southern Methodist University, Department of Economics); Giancarlo Spagnolo (SITE-Stockholm School of Economics, EIEF, Tor Vergata & CEPR) |
| Abstract: | Law-breaking activities within an organization bene?ting the ?rm at the expense of the general public are widespread but di¢ cult to uncover, making whistleblowing by employees desirable. We employ a novel laboratory experiment to investigate if and how monetary incentives and expectations of social approval or disapproval, and their interactions, a¤ect the decision to blow the whistle. Experimental results show that: i) ?nancial rewards signi?cantly increase the likelihood of whistleblowing and do not substantially crowd out non-monetary motivations activated by expectations of social judgment; and ii) the possibility of social judgment decreases (increases) whistleblowing when the public is unaware (aware) of the negative externalities generated by fraud, suggesting that whistleblowers are at least partly motivated by a desire for social approval. Our ?ndings suggest that whistleblowers on corporate fraud should be ?nancially rewarded and should be shielded from public/media scrutiny when the social cost of the illegal activity is not visible or salient to the public. We also ?nd evidence of an interesting relationship between political orientation and social judgment: while left-leaning subjects react to the possibility of receiving social approval or disapproval as expected, right-leaning people are una¤ected by it. |
| Keywords: | Whistleblowing,fraud,rewards,social judgment,experiment. |
| JEL: | K42 C92 D04 |
| Date: | 2017–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:419&r=exp |
| By: | Ceren Baysan |
| Abstract: | Many claim that increased availability of information via both old and new media drives political polarization, possibly undermining democratic institutions. However, rigorous evidence on this topic remains limited. I address this gap by conducting two experiments during a recent Turkish referendum that was on an important institutional change to weaken constraints on the executive. First, I designed a randomized door-to-door campaign. In this campaign, the opposition party gave uniform information on poor economic performance and increased terrorist activity under the incumbent's leadership to more than 130,000 voters. I show that voters, despite receiving the same information, diverged further in their vote choice on aggregate, leading to a significant increase in ideological polarization. The result is consistent with a model where polarization in vote choice is driven by differences in reaction to the same information and not self-segregation to different information sources, as others have assumed. The opposition failed to increase its vote share in this campaign, on aggregate, because it lacked the necessary data to target the subset of constituents that interpreted the information in their favor. In a second experiment with politicians, I confirm that the opposition had inadequate data on voters relative to the incumbent based on an analysis of roughly one million of their tweets. The evidence from both experiments, taken together, suggests that the incumbent party can exploit its access to higher quality data on voters to maintain its grip on power and advance an agenda that weakens democratic checks and balances. |
| JEL: | D80 D83 D72 P26 |
| Date: | 2017–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2017:pba1551&r=exp |
| By: | Luca Corrazzini (Department of Economics, University Of Venice Cà Foscari; ISLA, Bocconi University, Milan); Stefano Galavotti (Department of Economics and Management, University of Padua); Paola Valbonesi (University of Padua; National Research University Higher School of Economics, Moscow and Perm) |
| Abstract: | We experimentally study bidding behavior in sequential first-price procurement auctions where bidders’ capacity constraints are private information. Treatment differs in the ex-ante probability distribution of sellers’ capacities and in the (exogenous) probability that the second auction is actually implemented. Our results show that: (i) bidding behavior in the second auction conforms with sequential rationality; (ii) while first auction’s bids negatively depend on capacity, bidders seem unable to recognize this link when, at the end of the first auction, they state their beliefs on the opponent’s capacity. To rationalize this inconsistency between bids and beliefs, we conjecture that bidding in the first auction is also affected by a hidden, behavioral type – related to the strategic sophistication of bidders – that obfuscates the link between capacity and bids. Building on this intuition, we show that a simple level-k model may help explain the inconsistency. |
| Keywords: | Sequential auctions, capacity constraints, belief inconsistency |
| JEL: | D44 D91 H57 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2017:30&r=exp |
| By: | Hanna Fromell (University of Groningen); Daniele Nosenzo (University of Nottingham); Trudy Owens (University of Nottingham); Fabio Tufano (University of Nottingham) |
| Abstract: | Previous studies have shown that individuals are less likely to help a person in need when there are “bystanders†present who can also offer help. We designed an experiment to re-examine this “bystander effect†using modified dictator games. We find lower giving rates in the presence of bystanders, confirming the existence of a bystander effect. However, we also show that the recipient’s welfare is greater when bystanders are present, challenging the usual interpretation that the bystander effect is due to an erosion of prosocial values. |
| Keywords: | bystander effect, bystander dilemma, diffusion of responsibility, dictator game, social norms |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2017-15&r=exp |
| By: | Alm, James; Bloomquist, Kim M.; McKee, Michael |
| Abstract: | In this paper, we suggest that individuals’ tax compliance behaviours are affected by the behaviour of their “neighbours†, or those about whom they may have information, whom they may know, or with whom they may interact on a regular basis. Individuals are more likely to file and to report their taxes when they believe that other individuals are also filing and reporting their taxes; conversely, when individuals believe that others are cheating on their taxes, they may well become cheaters themselves. We use experimental methods to test the role of such information about peer effects on compliance behaviour. In one treatment setting, we inform individuals about the frequency that their neighbours submit a tax return. In a second treatment setting, we inform them about the number of their neighbours who are audited, together with the penalties that they pay. In both cases, we examine the impact of information on filing behaviour and also on subsequent reporting behaviour. We find that providing information on whether one’s neighbours are filing returns and/or reporting income has a statistically significant and economically large impact on individual filing and reporting decisions. However, this “neighbour†information does not always improve compliance, depending on the exact content of the information. |
| Keywords: | Tax evasion, Tax compliance, Behavioural economics, Experimental economics, |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwcpf:6775&r=exp |
| 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 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) had no significant effects. In the second study, we show that the success of the negative monetary incentive intervention and failure of the positive monetary incentive intervention can be partly explained by social norms. |
| Keywords: | Voter Registration; Voting; Field Experiment; Nudging; Social Norms; Fines; Rewards |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2017-16&r=exp |
| By: | Umer, Hamza |
| Abstract: | The author reports results from controlled laboratory experiments on the Laffer curve. Apart from studying the existence of the Laffer curve under exogenous taxation, he explores framing effects, productivity differences under the strategic method and the direct method, and cultural differences. The data collected in Japan and Pakistan delivers evidence for framing effects, although cognitively sophisticated participants doing well on the CRT questions are less prone to it. The average productivity is greater for the strategic method in the case of Pakistan, but there is no significant difference across the two methods in the case of Japan. On average, whether tasks are exogenously assigned or chosen by participants does not affect productivity. The author argues that the Laffer curve is not the result of a simple leisure-income tradeoff. Instead, the disutility of work and fairness perceptions related to taxation plays an important role on the work decisions. A simple behavioral model that incorporates these features induces a "fairness adjusted" Laffer curve, with a negative relationship between tax rate and tax revenue in the 53-57% tax range. |
| Keywords: | Laffer curve,direct method,strategic method,CRT,disutility,fairness |
| JEL: | C91 D01 D91 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:2017102&r=exp |
| By: | Crockett, Sean; Friedman, Daniel; Oprea, Ryan |
| Abstract: | Prior laboratory experiments have studied general equilibrium economies constructed from "induced preferences" for artificial goods. We introduce new methods that allow us to study economies constructed instead from subjects' actual, "homegrown" preferences. Our subjects reveal their preferences by choosing portfolios of Arrow securities from budget lines through fixed endowments for a series of prices. We then construct several different economies by sorting subjects according to their revealed preferences. The constructed economies exhibit a wide range of predicted outcomes, where predictions are competitive general equilibria given the revealed preferences. Perhaps surprisingly, in every one of our markets the predicted excess demand is well-behaved, and avoids the pathologies highlighted in the Sonnenschein-Mantel-Debreu theorem. (The main reason seems to be heterogeneity in revealed preferences.) Actual trade in the constructed economies using a tatonnement market institution closely tracks predictions in most markets. The exceptions occur in economies with severe wealth effects that generate excess demands that are flat relative to measured preference volatility. |
| Keywords: | experimental economics,general equilibrium,aggregation,portfolio choice,heterogeneity,risk preferences,tatonnement |
| JEL: | C91 C92 D03 D51 G11 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmdn:spii2017501&r=exp |
| By: | Crosetto, P.; Filippin, A. |
| Abstract: | Gender differences in risk attitudes are frequently observed, although recent literature has shown that they are context dependent rather than ubiquitous. In this paper we try to rationalize the heterogeneity of results investigating experimentally whether the presence of a safe option among the set of alternatives explains why females are more risk averse than males. We manipulate three widely used risk elicitation methods finding that the availability of a safe option causally affects risk attitudes. The presence of a riskless alternative does not entirely explain the gender gap but it has a significant effect in triggering or magnifying (when already present) such differences. Despite the pronounced instability that usually characterizes the measurement of risk preferences, we show, estimating a structural model, that the effect of a safe option is remarkably stable accross tasks. This paper constitutes the first successful attempt to shed light on the determinants of gender differences in risk attitudes. |
| Keywords: | GENDER DIFFERENCES;RISK ATTITUDES;EXPERIMENT;SAFE OPTIONS |
| JEL: | C81 C91 D81 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:gbl:wpaper:2017-05&r=exp |
| By: | Jeremy Clark (University of Canterbury); John Spraggon |
| Abstract: | This paper reports the results of a micro finance lab experiment that seeks first to replicate the difference in loan repayment rates between groups composed of high vs. low risk borrowers, and then to test a mechanism we propose to make micro finance work better for high risk borrowers. The mechanism involves revenue sharing among members of a borrowing group, above and beyond usual repayment bailouts that successful members can choose to make on behalf of unsuccessful members. Revenue sharing makes repayment of the total group loan optimal under more business outcome states, and thus increases the expected benefit of repaying the current loan to qualify for future ones. We compare loan repayment rates between high and low risk borrowing groups, with and without the option of entering into binding ex ante agreements to revenue share. For high risk borrowers, we further test the effect of allowing them to renege on revenue sharing agreements once individual business outcomes are known. We are able to capture the result that loan repayment rates are lower for higher risk borrowers than for lower risk borrowers. We also find that introducing the option of binding revenue sharing agreements modestly but significantly increases loan repayment rates. Most of this gain is lost, however, when successful individuals can renege on commitments to revenue share after learning individual business outcomes. |
| Keywords: | Micro finance; Revenue sharing; Profit sharing; Risk |
| JEL: | G21 O16 O17 O43 |
| Date: | 2017–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:17/20&r=exp |
| By: | Abel,Simon Martin; Burger,Rulof Petrus; Carranza,Eliana; Piraino,Patrizio |
| Abstract: | The paper tests the effects of plan-making on job search and employment. In a field experiment with unemployed youths, participants who complete a detailed job search plan increase the number of job applications submitted (by 15 percent) but not the time spent searching, consistent with intention-behavior gaps observed at baseline. Job seekers in the plan-making group diversify their search strategy and use more formal search channels. This greater search efficiency and effectiveness translate into more job offers (30 percent) and employment (26 percent). Weekly reminders and peer-support sub-treatments do not improve the impacts of plan-making, suggesting that limited attention and accountability are unlikely mechanisms. |
| Keywords: | Rural Labor Markets |
| Date: | 2017–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8181&r=exp |
| By: | Vincent Somville; Lore Vandewalle |
| Abstract: | Access to formal banking is spreading across the world. Obtaining a bank account may transform how people manage their finances, and affect their savings and consumption. We report from a field experiment that randomly provides access to a bank account to a representative sample of villagers in rural India. The treated keep relatively important savings on their account, but reduce their other savings by a similar amount. Their household’s overall savings and expenditures do not change. We identify several barriers that may constraint total savings. |
| Keywords: | banking bank accounts villages rural savings |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:chm:wpaper:wp2017-1&r=exp |
| By: | Benjamin Radoc (Ateneo de Manila University); Robert Sugden (University of East Anglia); Theodore L. Turocy (University of East Anglia) |
| Abstract: | We test the conjecture that case-based reasoning may be used, not only when state spaces are undefined, but also when relevant probabilities can be derived by Bayesian inference from observations of random processes. Our experiment elicits participants' valuations of a lottery after observing realisations of this and another lottery. Depending on the treatment, participants know that the two lotteries are independent, positively correlated, or negatively correlated. We find no evidence of correlation neglect indicative of case-based reasoning. However, in the negative correlation treatment, valuations cannot be explained by Bayesian reasoning, while stated qualitative judgements about chances of winning can. |
| Keywords: | case-based decision, correlation, experiment |
| JEL: | C91 D03 D81 |
| Date: | 2017–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:17-11&r=exp |
| By: | Cristina Bicchieri; Alessandro Sontuoso (Philosophy, Politics and Economics, University of Pennsylvania) |
| Abstract: | This is a draft of a chapter in a planned book on behavioral game theory. Social norms and social preferences have increasingly become an integral part of the economics discourse. After disentangling the two notions, this paper focuses on social norms, which we stipulate as group-specific solutions to strategic problems. More precisely, we define social norms as behavioral regularities emerging in mixed-motive games, as a result of preferences for conformity conditional on an endogenous set of beliefs and expectations. To that end, we review models that explicitly feature normative expectations, as well as models that account for category-specific prescriptions. We finally survey some relevant experimental evidence. |
| Keywords: | social norms, social preferences, social dilemmas |
| JEL: | C72 C92 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:ppc:wpaper:0011&r=exp |
| By: | Vincenzina Caputo (Michigan State University); Riccardo Scarpa (University of Waikato); Rodlofo M. Nayga (University of Arkansas); David L. Ortega (Michigan State University) |
| Abstract: | We empirically question the commonly employed distributional assumption of normality of taste distribution in mixed logit models with continuous random parameters. We use a WTP-space random utility discrete choice model with flexible distributions (Train 2016) on data from two choice experiments regarding beef with nested set of quality attributes. We specifically address distributional features such as asymmetry, multi-modality and range of variation, and find little support for normality. Our results are robust to attribute dimensionality in experimental design. Implications of our results for practitioners in the field are discussed. |
| Keywords: | flexible taste distributions; mixed logit; logit mixed logit; food preferences; preference heterogneity |
| Date: | 2017–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:17/27&r=exp |
| By: | Francisco B. Galarza (Universidad del Pacifico); Gabriella Wong (Innovations for Poverty Action) |
| Abstract: | We conduct blind tests to examine the connection between consumer’s choices and price differentials, for two goods with different levels of observable quality, bottled spring water and toilet paper (we pose that toilet paper’s quality is more easily observable). We gave subjects two samples of those goods, with no labels for their brands, but with two different prices. Given that the samples were exactly the same, we aimed at testing whether the price differentials influenced their perceptions of quality, for a given level of quality observability. The most striking result is that quality information inferred via price differentials have significant effects on consumer choices, when such difference is relatively high and quality is not easy to observe. Moreover, in such a case, prices shape the perceptions of quality: "If it is expensive, it tastes good". In contrast, when quality is easy to observe, we find no significant relationship between price differentials and perceived quality. |
| Keywords: | Price-quality, Experimental Economics, behavioral pricing, placebo effect, consumer decision-making |
| JEL: | C91 D03 D81 D89 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:2017-106&r=exp |