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on Experimental Economics |
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Issue of 2018‒04‒02
seventeen papers chosen by |
| By: | William Gilje Gjedrem; Ola Kvaløy |
| Abstract: | Between and within firms, work teams compete against each other and receive feedback on how well their team is performing relative to their benchmarks. In this paper we investigate experimentally how teams respond to relative performance feedback (RPF) at team level. We find that when subjects work under team incentives, then RPF on team performance increases the teams’ average performance by almost 10 percent. The treatment effect is driven by higher top performance, as this is almost 20% higher when the teams receive RPF compared to when the teams only receive absolute performance feedback (APF). The experiment suggests that top performers are particularly motivated by the combination of team incentives and team RPF. In fact, team incentives motivate significantly higher top performance than individual incentives when the team is exposed to RPF. We also find notable gender differences. Females respond negatively to individual RPF, but even more positively than males to team RPF. |
| Keywords: | teams, performance feedback, performance pay, experiment |
| JEL: | C91 M50 M52 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6871&r=exp |
| By: | Johannes Becker (University of Muenster); Jonas Fooken (School of Economics, The University of Queensland); Melanie Steinhoff (University of Muenster) |
| Abstract: | Income tax collection in most advanced economies uses third-party reporting and withholding at the employer level before the employee receives her wage income. Since withholding taxes do not necessarily reflect the true effective tax burden, they may give false signals on the net-of-tax pay. We report results of laboratory experiments in which labor supply effects of such misperceptions are tested. Withholding taxes (and resulting tax refunds) should be behaviorally neutral in the experiment, but our results suggest that withholding taxes reduce effort and tax adjustments lead to adjustments of effort for our most relevant group of participants, those motivated by monetary incentives. This indicates that withholding taxes may be behaviorally relevant and deserve attention of policy-makers |
| Keywords: | Withholding taxes; experiment; tax perceptions |
| JEL: | H25 M41 G32 |
| Date: | 2018–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:589&r=exp |
| By: | Leigh, Gweneth (Independent Researcher); Leigh, Andrew (Australian National University) |
| Abstract: | We design a new field experiment to test pro-social behaviour: will a household return a letter that has been incorrectly addressed? On average, we find that half of all letters were returned. Return rates do not vary significantly according to the gender, race or ethnicity of the fictitious addressee. However, return rates are higher in more affluent neighbourhoods. |
| Keywords: | field experiments, discrimination, altruism |
| JEL: | J71 C93 D64 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11315&r=exp |
| By: | Morone, Andrea; Nemore, Francesco; Nuzzo, Simone |
| Abstract: | While a basic theoretical principle in public economics assumes that individuals optimize fully with respect to the introduction of a tax, a growing body of research is proving that several heuristics are in place when people take decisions. We re-examine the well-known Liability Side Equivalence principle in the light of the concept of salience. While these two topics have been extensively investigated in isolation, this paper innovates on the previous literature in that it focuses on their joint effects. Is tax incidence dependent on whether the subjects face a salient rather than a non-salient tax? Does the salience of a tax exert a different effect depending on who is legally committed to bear the tax burden? We address these questions through a laboratory experiment in which one unit of a fictitious good is being traded through a double-auction market institution. Based on a panel data analysis, our contribution shows that point of collection matter and determine the economic incidence of tax. Additionally we found that the joint effect of salience and statutory incidence does not alter the informative efficiency, but has a positive effect on buyers’ allocational efficiency when the tax is levied on sellers. |
| Keywords: | Tax incidence, Tax salience, Liability Side Equivalence, choice behaviour, laboratory. |
| JEL: | C91 D41 D44 H22 |
| Date: | 2018–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:85044&r=exp |
| By: | Guber, Raphael (Munich Center for the Economics of Aging, Max Planck Society, Germany); Kocher, Martin G. (Department of Economics, University of Vienna, Austria, and Institute for Advanced Studies, Vienna, Austria, and Department of Economics, University of Gothenburg, Sweden); Winter, Joachim (Department of Economics, University of Munich, Germany) |
| Abstract: | Recent research in contract theory on the effects of behavioral biases implicitly assumes that they are stable, in the sense of not being affected by the contracts themselves. In this paper, we provide evidence that this is not necessarily the case. We show that in an insurance context, being insured against losses that may be incurred in a real-effort task changes subjects' self-confidence. Our novel experimental design allows us to disentangle selection into insurance from the effects of being insured by randomly assigning coverage after subjects revealed whether they want to be insured or not. We find that uninsured subjects are underconfident while those that obtain insurance have well-calibrated beliefs. Our results suggest that there might be another mechanism through which insurance affects behavior than just moral hazard. |
| Keywords: | Overconfidence, insurance choice, underplacement |
| JEL: | D84 D82 C91 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:338&r=exp |
| By: | Julie Beugnot Marie Claire Villeval; Bernard Fortin; Guy Lacroix; Marie Claire Villeval |
| Abstract: | We investigate whether peer effects at work differ by gender and whether gender differences in peer effects -if any- depend on work organization. We develop a social network model with gender heterogeneity that we test in a real-effort laboratory experiment. We compare sequential networks in which information flows from peers to the worker and simultaneous networks where it disseminates bi-directionally. We identify strong gender differences as females disregard their peers’ performance in simultaneous networks, while males are influenced by peers in both networks. Females may perceive the environment in simultaneous networks as being more competitive than in sequential networks. |
| Keywords: | Gender, Peer effects, Social Networks, Work effort, Experiments |
| JEL: | C91 J16 J24 J31 M52 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:crrecr:1803&r=exp |
| By: | Fiala, Lenka (Tilburg University, School of Economics and Management); Suetens, Sigrid (Tilburg University, School of Economics and Management) |
| Abstract: | We use data from experiments on finitely repeated dilemma games with fixed matching to investigate the effect of different types of information on cooperation. The data come from 71 studies using the voluntary contributions paradigm, covering 122 data points, and from 18 studies on decision-making in oligopoly, covering another 50 data points. We find similar effects in the two sets of experimental games. We find that transparency about what everyone in a group earns reduces contributions to the public good, as well as the degree of collusion in oligopoly markets. In contrast, transparency about choices tends to lead to an increase in contributions and collusion, although the size of this effect varies somewhat between the two settings. Our results are potentially useful for policy making, because they provide guidance on the type of information to target in order to stimulate or limit cooperation. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:488b4229-edff-4302-860d-d4b50a35b73d&r=exp |
| By: | Robert W. Fairlie; Peter Riley Bahr |
| Abstract: | This paper provides the first evidence on the earnings, employment and college enrollment effects of computers and acquired skills from a randomized controlled trial providing computers to entering college students. We matched confidential administrative data from California Employment Development Department (EDD)/Unemployment Insurance (UI) system earnings records, the California Community College system, and the National Student Clearinghouse to all study participants for seven years after the random provision of computers. The experiment does not provide evidence that computer skills have short- or medium-run effects on earnings. These null effects are found along both the extensive and intensive margins of earnings (although the estimates are not precise). We also do not find evidence of positive or negative effects on college enrollment. A non-experimental analysis of CPS data reveals large, positive and statistically significant relationships between home computers, and earnings, employment and college enrollment, raising concerns about selection bias in non-experimental studies. |
| Keywords: | computer skills, earnings, employment, college enrollment, experiment |
| JEL: | I20 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6860&r=exp |
| By: | Vringer, Kees; Heijden, Eline Van Der (Tilburg University, School of Economics and Management); Soest, Daan Van (Tilburg University, School of Economics and Management); Vollebergh, Herman (Tilburg University, School of Economics and Management); Dietz, Frank |
| Abstract: | To examine which considerations play a role when individuals make decisions to purchase sustainable product varieties or not, we have conducted a large scale field experiment with more than 600 participating households. Households can vote on whether the budgets they receive should only be spent on purchasing the sustainable product variety, or whether every household in a group is free to spend their budget on any product variety. By conducting several treatments, we tested whether people tend to view sustainable consumption as a social dilemma or as a moral dilemma. We find little support for the hypothesis that social dilemma considerations are the key drivers of sustainable consumption behaviour. Participants seem to be caught in a moral dilemma in which they not only weigh their individual financial costs with the sustainable benefits but they also consider the consequences of restricting other people’s freedom of choice. Complementary survey results further substantiate this claim and show that many people are reluctant to impose restrictions on their peers, but, at the same time, our results also suggest substantial support for the government to regulate the availability of unsustainable product varieties. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:d683e2ed-c465-468e-b537-01a0a0069d76&r=exp |
| By: | Victoria Baranov; Sonia Bhalotra; Pietro Biroli; Joanna Maselko |
| Abstract: | We evaluate the long-term impact of treating maternal depression on women’s financial empowerment and parenting decisions. We leverage experimental variation induced by a cluster-randomized control trial that provided psychotherapy to perinatally depressed mothers in rural Pakistan. It was one the largest psychotherapy interventions in the world, and the treatment was highly successful at reducing depression. We locate mothers seven years after the end of the intervention to evaluate its long-run effects. We find that the intervention increased women’s financial empowerment, increasing their control over household spending. Additionally, the intervention increased both time- and monetary-intensive parental investments, with increases in investments tending to favor girls. |
| Keywords: | mental health, maternal depression, women’s labor supply, empowerment, early life, parenting, child development, randomized controlled trial, Pakistan |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wchild:60&r=exp |
| By: | Penelope Buckley (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Daniel Llerena (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes) |
| Abstract: | The aim of demand response is to make energy consumption more flexible during peak periods. Using a contextualised CPR framework, we study energy consumption choices. Subjects decide the consumption level of five activities during 10 periods. The total consumption of these activities is the CPR contribution, and payoffs depend on own consumption and the amount consumed by the group. In the nudge treatment, subjects are nudged towards the socially optimal level of consumption using injunctive norms. The average consumption observed in the nudge treatment is used to calculate the price implemented in the price treatment. The objective is to quantify the nudge via an equivalent price. The main hypotheses are: consumption choices will be lower in the treatment groups compared to the control groups; when the price level is fixed according to the nudge result, consumption choices in the price treatment will be equivalent to those in the nudge treatment. Across all 10 periods, consumption is significantly lower in the nudge treatment, and higher for control groups. In the price treatment, consumption remains between the two at or slightly above the target. We conclude that the nudge treatment performs as well as an equivalent price without the implied loss of welfare. When comparing decisions under the nudge and price treatments to the control groups, the consumption decisions are significantly different from period 2 for the nudge and, consistently different from period 7 for the price. We conclude that the nudge is understood and integrated into subjects' decision making quicker than an equivalent price. |
| Keywords: | common pool resource, Demand Response, incentives, laboratory experiment, nudge, price |
| Date: | 2018–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01704457&r=exp |
| By: | Adena, Maja; Huck, Steffen |
| Abstract: | We provide the first field evidence for the role of pure self-image, independent of social image, in charitable giving. In an online fundraising campaign for a social youth project run on an opera ticket booking platform we document how individ-uals engage in self-deception to preserve their self-image. In addition, we provide evidence on stark adverse long-run effects of the fundraising campaign for ticket sales. “Avoiding the ask,” opera customers who faced more insistent online fund-raising buy fewer tickets in the following season. Our results suggest that fund-raising management should not decide in isolation about their campaigns, even if very successful. Rather broader operational concerns have to be considered. |
| Keywords: | online fundraising,quasi-experiment,self-image |
| JEL: | D64 D03 D12 C93 L31 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2016306r&r=exp |
| By: | Ioana Marinescu; Nadav Klein; Andrew Chamberlain; Morgan Smart |
| Abstract: | Online reviews are a powerful means of propagating the reputations of products, services, and even employers. However, existing research suggests that online reviews often suffer from selection bias—people with extreme opinions are more motivated to share them than people with moderate opinions, resulting in biased distributions of reviews. Providing incentives for reviewing has the potential to reduce this selection bias, because incentives can mitigate the motivational deficit of people who hold moderate opinions. Using data from one of the leading employer review companies, Glassdoor, we show that voluntary reviews have a different distribution from incentivized reviews. The likely bias in the distribution of voluntary reviews can affect workers’ choice of employers, because it changes the ranking of industries by average employee satisfaction. Because observational data from Glassdoor are not able to provide a measure of the true distribution of employer reviews, we complement our investigation with a randomized controlled experiment on MTurk. We find that when participants’ decision to review their employer is voluntary, the resulting distribution of reviews differs from the distribution of forced reviews. Moreover, providing relatively high monetary rewards or a pro-social cue as incentives for reviewing reduces this bias. We conclude that while voluntary employer reviews often suffer from selection bias, incentives can significantly reduce bias and help workers make more informed employer choices. |
| JEL: | J2 J28 L14 L86 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24372&r=exp |
| By: | Kocher, Martin G. (University of Vienna, Austria, and Institute for Advanced Studies, Vienna, Austria, and University of Gothenburg, Sweden); Schindler, David (Tilburg University, The Netherlands); Trautmann, Stefan T. (University of Heidelberg, Germany and Tilburg University, The Netherlands); Xu, Yilong (University of Heidelberg, Germany) |
| Abstract: | Time pressure is a central aspect of economic decision making nowadays. It is therefore natural to ask how time pressure affects decisions, and how to detect individual heterogeneity in the ability to successfully cope with time pressure. In the context of risky decisions, we ask whether a person’s performance under time pressure can be predicted by measurable behavior and traits, and whether such measurement itself may be affected by selection issues. We find that the ability to cope with time pressure varies significantly across decision makers, leading to selected subgroups that differ in terms of their observed behaviors and personal traits. Moreover, measures of cognitive ability and intellectual efficiency jointly predict individuals’ decision quality and ability to keep their decision strategy under time pressure. |
| Keywords: | Risk, cognitive ability, selection, time pressure |
| JEL: | C91 D81 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:339&r=exp |
| By: | Fischer, Mira (University of Cologne); Sliwka, Dirk (University of Cologne) |
| Abstract: | Previous research has shown that feedback about past performance has ambiguous effects on subsequent performance. We argue that feedback affects beliefs in different dimensions – namely beliefs about the level of human capital and beliefs about the ability to learn – and this may explain some of the ambiguous effects. We experimentally study the causal effects of an exogenously administered change in beliefs in both of these dimensions on the motivation to learn. We find that confidence in the ability to learn raises incentives, while confidence in the level of human capital lowers incentives for individuals with high levels of human capital. |
| Keywords: | economic experiments, confidence, human capital investment, motivation |
| JEL: | C91 D83 I21 J24 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11327&r=exp |
| By: | Jesús Martín (Universidad de Granada); Pablo Brañas-Garza (Middlesex University); Antonio M. Espín (Universidad de Granada, Middlesex University); Juan F. Gamella (Universidad de Granada); Benedikt Herrmann (University of Nottingham) |
| Abstract: | Humans differ greatly in their tendency to discount future events, but the reasons underlying such inter-individual differences remain poorly understood. The evolutionary framework of Life History Theory predicts that the extent to which individuals discount the future should be influenced by socio-ecological factors such as mortality risk, environmental predictability and resource scarcity. However, little empirical work has been conducted to compare the discounting behavior of human groups facing different socio-ecological conditions. In a lab-in-the-field economic experiment, we compared the delay discounting of a sample of Romani people from Southern Spain (Gitanos) with that of their non-Romani neighbors (i.e., the majority Spanish population). The Romani-Gitano population constitutes the main ethnic minority in all of Europe today and is characterized by lower socio-economic status (SES), lower life expectancy and poorer health than the majority, along with a historical experience of discrimination and persecution. According to Life History Theory, Gitanos will tend to adopt “faster” life history strategies (e.g., earlier marriage and reproduction) as an adaptation to such ecological conditions and, therefore, should discount the future more heavily than the majority. Our results support this prediction, even after controlling for the individuals’ current SES (income and education). Moreover, group-level differences explain a large share of the individual-level differences. Our data suggest that human inter-group discrimination might shape group members’ time preferences through its impact on the environmental harshness and unpredictability conditions they face. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:beb:wpseet:201801&r=exp |
| By: | Gautam Bastian (World Bank); Iacopo Bianchi (World Bank); Markus Goldstein (World Bank); Joao Montalvao (World Bank) |
| Abstract: | This paper presents short-term results from an experiment randomizing the promotion and registration of a mobile savings account among women microentrepreneurs in Tanzania, with and without business training. Six months post-intervention, the results show that women save substantially more through the mobile account, and that the business training bolstered this effect. Women also obtain more microloans through the mobile account, an additional service provided by the product. The business training further led to an increase in the business practices of the women. We find no significant evidence that these impacts translate into greater investment, sales, and profits, but we see some evidence of increased business expansion through the creation of profitable secondary businesses, as well as improvements in women’s empowerment and subjective well-being. |
| Date: | 2018–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:478&r=exp |