nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒07‒30
thirty papers chosen by
Daniel Houser
George Mason University

  1. Information sharing is not always the right option when it comes to CPR extraction management:experimental findings By Dimitri Dubois; Stéfano Farolfi; Phu Nguyen-Van; Juliette Rouchier
  2. Cultural values and behavior in dictator, ultimatum and trust games: an experimental study By Sun-Ki Chai; Dolgorsuren Dorj; Katerina Sherstyuk
  3. The Heaven Dictator Game: Costless taking or giving By Aurora García-Gallego; Nikolaos Georgantzis; María José Ruiz-Martos
  4. How do bonus cap and malus affect risk and effort choice Insight from a lab experiment By Harris, Qun; Mercieca, Analise; Soane, Emma; Tanaka, Misa
  5. Multitasking and Subjective Performance Evaluations: Theory and Evidence from a Field Experiment in a Bank By Manthei, Kathrin; Sliwka, Dirk
  6. The Big Robber Game By Carlos Alós-Ferrer; Jaume García-Segarra; Alexander Ritschel
  7. Replication in experimental economics: A historical and quantitative approach focused on public good game experiments By Nicolas Vallois; Dorian Jullien
  8. Paying for what kind of performance? Performance pay and multitasking in mission-oriented jobs By Daniel Jones; Mirco Tonin; Michael Vlassopoulos
  9. Long Term Care Risk Misperceptions By M. Martin Boyer; Philippe De Donder; Claude Fluet; Marie-Louise Leroux; Pierre-Carl Michaud
  10. Caseworker's discretion and the effectiveness of welfare-to-work programs By Bolhaar, Jonneke; Ketel, Nadine; van der Klaauw, Bas
  11. Who benefits from universal child care? Estimating marginal returns to early child care attendance By Cornelissen, Thomas; Dustmann, Christian; Raute, Anna; Schönberg, Uta
  12. A community based program promotes sanitation By María Laura Alzúa; Habiba Djebbari; Amy J. Pickering
  13. Conditional Cooperation and the Effect of Punishment By Oliver Kirchkamp; Wladislaw Mill
  14. Experiments on macroeconomics: methods and applications By Camille Cornand; Frank Heinemann
  15. Nudging Businesses to Pay Their Taxes: Does Timing Matter? By Gillitzer, Christian; Sinning, Mathias
  16. Copy Trading By Apesteguia, Jose; Oechssler, Jörg; Weidenholzer, Simon
  17. Inequality, Fairness and Social Capital By Fehr, Dietmar; Rau, Hannes; Trautmann, Stefan; Xu, Yilong
  18. Sorting or Steering: Experimental Evidence on the Economic Effects of Housing Discrimination By Peter Christensen; Christopher Timmins
  19. Generic machine learning inference on heterogenous treatment effects in randomized experiments By Victor Chernozhukov; Mert Demirer; Esther Duflo; Ivan Fernandez-Val
  20. The Timing of Discretionary Bonuses: Effort, Signals, and Reciprocity By Boosey, Luke; Goerg, Sebastian J.
  21. A Theory of Auctions with Endogenous Valuations By Benny Moldovanu; Alex Gershkov; Philipp Strack
  22. Behavioral Effects of Student Loan Repayment Plan Options on Borrowers’ Career Decisions: Theory and Experimental Evidence By Katharine G. Abraham; Emel Filiz-Ozbay; Erkut Y. Ozbay; Lesley J. Turner
  23. The Risks and Benefits of School Integration for Participating Students: Evidence from a Randomized Desegregation Program By Bergman, Peter
  24. Ambiguity preferences for health By Arthur E. Attema; Han Bleichrodt; Olivier L'Haridon
  25. Do Voters Prefer Gender Stereotypic Candidates? Evidence from a conjoint survey experiment in Japan By ONO Yoshikuni; YAMADA Masahiro
  26. Does The Financial Situation affect Cheating Behavior? An Investigation through Financial Literacy By Martina Manfre'; Viola Angelini
  27. Rank Concerns, Peer Effects, and Ability Tracking in University. Evidence from a Randomized Experiment By Marco Bertoni; Roberto Nisticò
  28. Rationalizations and mistakes: optimal policy with normative ambiguity By Goldin, Jacob; Reck, Daniel
  29. Testing at Length If It Is Cognitive or Non-Cognitive By Brunello, Giorgio; Crema, Angela; Rocco, Lorenzo
  30. Too little or too much? Actionable Advice in an Early-Childhood Text Messaging Experiment By Kalena E. Cortes; Hans Fricke; Susanna Loeb; David S. Song

  1. By: Dimitri Dubois; Stéfano Farolfi; Phu Nguyen-Van; Juliette Rouchier
    Abstract: We experimentally investigate the impact of information sharing in a common pool resource game. More precisely, we test whether the voluntary disclosure of the decision by a player has a positive impact on the extraction level exhibited by the group compared to the level observed when decisions are compulsory disclosed. We design an experiment composed by three treatments: a mandatory disclosure treatment and two treatments where players are free to choose whether or not to disclose their decisions. The latter differ by the degree of freedom given to players. In the treatment « Voluntary Free Disclosure » players are also free to choose the extraction level that is displayed, while in the treatment « Voluntary Binary Disclosure » if the player discloses h(is)er decision the value displayed is the effective extraction level. We observe that the voluntary disclosure has a positive effect in the social dilemma, measured by lower average extraction levels. However the disclosure mechanism should not allow to self-declare extraction: here it reveals a large tendency to lie leading to an increase in extraction.
    Date: 2018–06
  2. By: Sun-Ki Chai (Department of Sociology, University of Hawaii at Manoa); Dolgorsuren Dorj (Department of Economics, National Academy of Governance); Katerina Sherstyuk (Department of Economics, University of Hawaii at Manoa)
    Abstract: Culture is a central concept broadly studied in social anthropology and sociology. It has been gaining increasing attention in economics in relation to research on discrimination in a labor market, identity, gender, and social preferences. Most experimental economics research on culture studies cross-national or cross-ethnic differences in economic behavior. These studies reveal clear behavioral differences across different ethnic groups, yet do not provide a general deductive framework for specifying the underlying preferences behind these differences. We explain laboratory behavior in the dictator, ultimatum, and trust games based on two cultural dimensions adopted from a prominent general cultural framework in contemporary social anthropology: group commitment and grid control. Group-ness measures the extent to which individual identity is incorporated into group or collective identity; grid-ness measures the extent to which social and political prescriptions intrinsically influence individual behavior. One objective of this paper is to show that the grid-group framework, despite its origins in comparative ethnography, is adaptable to an experimental setting and indeed provides a parsimonious framework for generating testable behavioral predictions across a variety of experimental games. Another is to test the predictions of the grid- group framework on a number of simple games widely employed by experimental economists. Grid-group characteristics are measured for each individual using selected items from the World Values Survey. We find that these attributes allow us to systematically predict behavior in a way that discriminates among multiple forms of social preferences using a simple, parsimonious deductive model. Based on the implications of the theory, we hypothesize that subjects with higher group scores will tend to offer more in dictator and ultimatum games and entrust more in trust games. When responding in ultimatum games, those with high grid scores are hypothesized to reject more often and divide less, and to tie acceptance and amount divided more closely to the amount offered. When responding in trust games, those with low group scores are hypothesized to return less, and those with high grid scores to tie the amount returned more closely to the amount entrusted. These theoretical predictions are confirmed overall for most experimental games, although the strength of empirical support varies across games. We conclude that grid-group cultural theory is a viable predictor of people’s economic behavior, and further discuss potential limitations of the current approach and the ways to improve it.
    Keywords: laboratory experiment, two-person games, survey, culture
    JEL: C72 C91 Z13
    Date: 2018–05
  3. By: Aurora García-Gallego (LEE & Economics Department, Universitat Jaume I, Castellón-Spain); Nikolaos Georgantzis (Burgundy School of Wines and Spirits Business, Dijon, France); María José Ruiz-Martos (Dept. de Teoría e Historia Económica, University of Granada, Spain)
    Abstract: We present experimental data from the Heaven-Dictator game, a generalization of the dictator game that investigates the overstatement of inequality reduction in the motivation of social preferences. In this game, two players start with equal endowments and the heaven-dictator player, without incurring in any pecuniary cost or profit, chooses among increasing, decreasing or maintaining the earnings of the passive player. Thus, any choice except for the status quo generates unequal payoffs. The design avoids the experimenter demand effect of the standard “give only” version while simultaneously allowing participants to manifest antisocial preferences, inequity aversion or retaliation cannot be called for as motives. We find that the overwhelming majority of subjects, 75.4%, choose to increase their partners’ earnings; however, there is a non-negligible 24.6% of subjects that either choose the status quo (11.9%) or to decrease (12.7%) their partners’ earnings. Based on the psychological literature on music as a mood-inducing stimulus and on the effects of mood on helping behavior, we study the effect of exposure to different types of music on the heaven-dictator choices. Overall, observed preferences are independent of the music condition.
    Keywords: experiment, behavior, other-regarding preferences, music, dictator game
    JEL: C72 C91
    Date: 2018
  4. By: Harris, Qun (Bank of England); Mercieca, Analise (Bank of England); Soane, Emma (Bank of England); Tanaka, Misa (Bank of England)
    Abstract: We conducted a lab experiment to examine how bonus caps and malus affect individuals’ choices of risk and effort. We find that a bonus structure that rewards individuals proportionally to realised investment returns, but does not penalise negative returns, encourages risk-taking; while a bonus cap and malus mitigate risk-taking. However, the difference in risk-taking between the bonus cap and malus treatment groups and the proportional bonus group weakened significantly when the participants’ bonus was conditional on hitting an absolute or relative performance target. We also find some evidence that the bonus cap discourages project search effort relative to the proportional bonus, whereas the difference in the levels of effort between the malus treatment group and the proportional bonus group was not statistically significant.
    Keywords: Bonus cap; bonus regulation; incentive pay
    JEL: C91 G28 J33 M52
    Date: 2018–07–06
  5. By: Manthei, Kathrin (University of Cologne); Sliwka, Dirk (University of Cologne)
    Abstract: We study the incentive effects of grating supervisors access to objective performance information when agents work on multiple tasks. We first analyze a formal model showing that incentives are lower powered when supervisors have no access to objective measures but assess performance subjectively by gathering information. This incentive loss is more pronounced when the span of control is larger and incentives are distorted towards more profitable tasks. We then investigate a field experiment conducted in a bank. In the treatment group managers obtained access to objective performance measures which raised efforts and profits. We find that the effects are driven by larger branches and lower margin products.
    Keywords: incentives, subjective performance evaluation, multitasking, field experiment, bank
    JEL: M52 J33 D23
    Date: 2018–06
  6. By: Carlos Alós-Ferrer; Jaume García-Segarra; Alexander Ritschel
    Abstract: We present a novel design measuring a correlate of social preferences in a high-stakes setting. In the Big Robber Game, a "robber" can obtain large personal gains by appropriating the gains of a large group of "victims" as seen in recent corporate scandals. We observed that more than half of all robbers take as much as possible. At the same time, participants displayed standard, prosocial behavior in the Dictator, Ultimatum, and Trust games. That is, prosocial behavior in the small is compatible with highly selfish actions in the large, and the essence of corporate scandals can be reproduced in the laboratory even with a standard student sample. We show that this apparent contradiction is actually consistent with received social-preference models. In agreement with this view, in the experiment more selfish robbers also behaved more selfishly in other games and in a donation question. We conclude that social preferences are compatible with rampant selfishness in high-impact decisions affecting a large group.
    Keywords: Big Robber Game, social preferences, corporate scandals, incentives
    JEL: C72 C92 D03
    Date: 2018–06
  7. By: Nicolas Vallois (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Dorian Jullien (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We propose a historical perspective on replication in experimental economics focused on public good games. Our intended contribution is twofold: in terms of method and in terms of object. Methodologically, we blend traditional qualitative history of economics with a less traditional quantitative approach using basic econometric tools to detect unnoticed historical patterns of replication. In terms of our object, we highlight a type of replication that we call " baseline replication " , which is not present in explicit methodological discussions, yet central in the specificity of experimental economics regarding replication in economics.
    Keywords: Experimental Economics, Replication, History of Economic Thought,Methodology, Public Good Experiments
    Date: 2017–11–28
  8. By: Daniel Jones (University of Pittsburgh, Graduate School of Public and International Affairs); Mirco Tonin (Free University of Bolzano‐Bozen, Faculty of Economics and Management); Michael Vlassopoulos (University of Southampton)
    Abstract: How does pay-for-performance (P4P) impact productivity, multitasking, and the composition of workers in mission-oriented jobs? These are central issues in sectors like education or healthcare. We conduct a laboratory experiment, manipulating compensation and mission, to answer these questions. We find that P4P has positive effects on productivity on the incentivized dimension of effort and negative effects on the non-incentivized dimension for workers in non-mission-oriented treatments. In mission-oriented treatments, P4P generates minimal change on either dimension. Participants in the non-mission sector – but not in the mission-oriented treatments – sort on ability, with lower ability workers opting out of the P4P scheme.
    Keywords: Prosocial motivation, Performance pay, Multitasking, Sorting
    JEL: C91 M52 J45
    Date: 2018–07
  9. By: M. Martin Boyer; Philippe De Donder; Claude Fluet; Marie-Louise Leroux; Pierre-Carl Michaud
    Abstract: This paper reports survey evidence on long-term care (LTC) risk misperceptions and demand for long-term care insurance (LTCI) in Canada. LTC risk misperceptions is divided into three different risks: needing help for at least one activity of daily life, needing access to a nursing home, and living to be 85 years old. We contrast subjective (i.e. stated) probabilities with actual probabilities for these three dimensions. We first provide descriptive statistics of how objective and subjective probabilities differ and correlate to each other. Second, we study cross-correlations between different types of risks. We then study how risk misperceptions correlate with individual characteristics, and evaluate how misperceptions affect intentions and actual purchase of LTCI. Our conclusions are two-fold. First, we find that most subjects are not well informed about their individual LTC risks, making it difficult for them to take the correct LTCI decisions. Second, and even though misperceptions explain an individuals actual or his intentions to take-up LTCI, misperceptions are unlikely to explain the poor take-up rate of LTCI in our sample.
    Keywords: Long-term care insurance puzzle, disability, misperceptions, subjective probability
    JEL: D91 I13
    Date: 2018
  10. By: Bolhaar, Jonneke; Ketel, Nadine; van der Klaauw, Bas
    Abstract: In this paper we focus on the role of caseworkers in the assignment and take-up of welfare-to-work programs. We conduct a field experiment that generates exogenous variation in the assignment to different policy regimes to caseworkers. The experiment allows us to provide evidence on the effectiveness of welfare-to-work programs and to study how caseworkers exploit their discretion in assigning these programs to welfare recipients. We find substantial heterogeneity in how caseworkers assign welfare-to-work programs. Participation in the experiment and learning about the effectiveness of the different programs does not induce caseworkers to focus more on the effective programs. This implies that obtaining knowledge about welfare-to-work programs is not enough to improve policy, also effort on implementation is required.
    Keywords: caseworkers; field experiment; welfare-to-work
    JEL: C93 I38 J08 J64
    Date: 2018–07
  11. By: Cornelissen, Thomas; Dustmann, Christian; Raute, Anna; Schönberg, Uta
    Abstract: In this paper, we examine the heterogeneous treatment effects of a universal child care (preschool) program in Germany by exploiting the exogenous variation in attendance caused by a reform that led to a large staggered expansion across municipalities. Drawing on novel administrative data from the full population of compulsory school entry examinations, we find that children with lower (observed and unobserved) gains are more likely to select into child care than children with higher gains. This pattern of reverse selection on gains is driven by unobserved family background characteristics: children from disadvantaged backgrounds are less likely to attend child care than children from advantaged backgrounds but have larger treatment effects because of their worse outcome when not enrolled in child care.
    Keywords: child development; marginal treatment effects; Universal child care
    JEL: I28 J13 J15
    Date: 2018–07
  12. By: María Laura Alzúa (CEDLAS-FCE-UNLP, CONICET.); Habiba Djebbari (Aix Marseille University (Aix Marseille School of Economics) EHESS & CNRS.); Amy J. Pickering (Civil and Environmental Engineering, Tufts University.)
    Abstract: Basic sanitation facilities are still lacking in large parts of the developing world, engendering serious environmental health risks. Interventions commonly deliver in-kind or cash subsidies to promote private toilet ownership. In this paper, we assess an intervention that provides information and behavioral incentives to encourage villagers in rural Mali to build and use basic latrines. Using an experimental research design and carefully measured indicators of use, we find a sizeable impact from this intervention: latrine ownership and use almost doubled in intervention villages, and open defecation was reduced by half. Our results partially attribute these effects to increased knowledge about cheap and locally available sanitation solutions. They are also associated with shifts in the social norm governing sanitation. Taken together, our findings, unlike previous evidence from other contexts, suggest that a progressive approach that starts with ending open defecation and targets whole communities at a time can help meet the new Sustainable Development Goal of ending open defecation.
    JEL: I12
    Date: 2018–05
  13. By: Oliver Kirchkamp; Wladislaw Mill
    Abstract: We study how punishment influences conditional cooperation. We ask two questions: 1) how does conditional cooperation change if a subject can be punished and 2) how does conditional cooperation change if a subject has the power to punish others. In particular, we disentangle the decision to be a conditional cooperator at all from the strength of conditional cooperation. We find that the possibility of being punished increases the strength of conditional cooperation. At the same time the possibility of being punished increases the number of free riders. In our study the net effect on cooperation still is positive. The possibility of punishing others has two effects: Substitution and responsibility. Players substitute conditional cooperation with punishment which leads to a decrease in conditional cooperation. The power to punish means more responsibility which leads to an increase in conditional cooperation. In our design the overall effect of responsibility is stronger than the effect of substitution. We conclude that the threat of being punished and the power to punish changes conditional cooperation behavior in several, unexpected, ways.
    Keywords: punishment, conditional cooperation, experiment, substitution, responsibility
    JEL: C91 C72 H41
    Date: 2018
  14. By: Camille Cornand (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Frank Heinemann (TUB - Technische Universität Berlin)
    Abstract: This chapter lays out in which respects laboratory experiments can be useful for macroeconomics and discusses some of the methods used in such experiments.
    Keywords: laboratory experiments, macroeconomics
    Date: 2018
  15. By: Gillitzer, Christian (University of Sydney); Sinning, Mathias (Australian National University)
    Abstract: This paper provides theoretical and empirical evidence on the implications of the timing of reminders by studying the effect of varying the timing of reminder letters to taxpayers on their payment behavior. The collection of unpaid tax debts constitutes a considerable challenge for tax authorities. We show that varying the timing of a reminder letter has a theoretically ambiguous effect on tax payments. We study the payment behavior of business taxpayers in a field experiment in Australia and find that a simple reminder letter increases the probability of payment by about 25 percentage points relative to a control group that does not receive a letter from the tax authority. However, variation over a three-week period in the timing of the reminder letter has no effect on the probability of payment within seven weeks of the due date. Our findings indicate that sending reminders early results in faster payment of debts with no effect on the ultimate probability of payment.
    Keywords: tax compliance, business taxation, natural field experiment, behavioral insights
    JEL: C93 H25 H26
    Date: 2018–06
  16. By: Apesteguia, Jose; Oechssler, Jörg; Weidenholzer, Simon
    Abstract: Copy trading allows traders in social networks to receive information on the success of other agents in financial markets and to directly copy their trades. Internet platforms like eToro, ZuluTrade, and Tradeo have attracted millions of users in recent years. The present paper studies the implications of copy trading for the risk taking of investors. Implementing an experimental financial asset market, we show that providing information on the success of others leads to a significant increase in risk taking of subjects. This increase in risk taking is even larger when subjects are provided with the option to directly copy others. We conclude that copy trading reduces ex-ante welfare, and leads to excessive risk taking.
    Keywords: Copy trading; Financial markets; Social networks; Imitation; Experiment
    Date: 2018–06–29
  17. By: Fehr, Dietmar; Rau, Hannes; Trautmann, Stefan (Tilburg University, Center For Economic Research); Xu, Yilong (Tilburg University, Center For Economic Research)
    Abstract: We study the impact of unjust inequality on social trust and trustworthiness, and its separate effect on the economically successful and the unsuccessful, in a controlled economic experiment. We find evidence for a negative effect of unfair economic inequality on social interactions. Probing the boundaries of this effect, we document that this erosion of social capital critically depends on the context: if a well-off person is not directly responsible for the outcome of the worse-off person, then we observe no negative effects on trust and trustworthiness in the aggregate. Moreover, our data do not support the view that higher status or wealth leads to an erosion of pro-social attitudes: the successful are always more generous; groups of unsuccessful persons are least efficient and least generous in the trust game.
    Keywords: inequality; fairness; social capital
    JEL: C91 D31 D63
    Date: 2018
  18. By: Peter Christensen; Christopher Timmins
    Abstract: Housing discrimination is illegal. However, paired-tester audit experiments have revealed evidence of discrimination in the interactions between potential buyers and realtors, raising concern about whether certain groups are systematically excluded from the beneficial effects of healthy neighborhoods. Using data from HUD's most recent Housing Discrimination Study and micro-level data on key attributes of neighborhoods in 28 US cities, we find strong evidence of discrimination in the characteristics of neighborhoods towards which individuals are steered. Conditional upon the characteristics of the house suggested by the audit tester, minorities are significantly more likely to be steered towards neighborhoods with less economic opportunity and greater exposures to crime and local pollutants. We find that holding locational preferences or income constant, discriminatory steering alone may contribute substantially to the disproportionate number of minority house- holds found in high poverty neighborhoods in the United States. The steering effect is also large enough to fully explain the differential in proximity to Superfund sites among African American mothers. These results have important implications for studies of “neighborhood effects” and confirm an important mechanism underlying observed correlations between race and pollution in the environmental justice literature. Our results also suggest that the basic utility maximization assumptions underlying hedonic and residential sorting models may often be violated, resulting in an important distortion in the provision of local public goods.
    JEL: Q51 Q53 R31
    Date: 2018–07
  19. By: Victor Chernozhukov (Institute for Fiscal Studies and MIT); Mert Demirer (Institute for Fiscal Studies); Esther Duflo (Institute for Fiscal Studies); Ivan Fernandez-Val (Institute for Fiscal Studies and Boston University)
    Abstract: We propose strategies to estimate and make inference on key features of heterogeneous effects in randomized experiments. These key features include best linear predictors of the effects using machine learning proxies, average effects sorted by impact groups, and average characteristics of most and least impacted units. The approach is valid in high dimensional settings, where the effects are proxied by machine learning methods. We post-process these proxies into the estimates of the key features. Our approach is generic, it can be used in conjunction with penalized methods, deep and shallow neural networks, canonical and new random forests, boosted trees, and ensemble methods. Our approach is agnostic and does not make unrealistic or hard-to-check assumptions; we don’t require conditions for consistency of the ML methods. Estimation and inference relies on repeated data splitting to avoid overfitting and achieve validity. For inference, we take medians of p-values and medians of confidence intervals, resulting from many different data splits, and then adjust their nominal level to guarantee uniform validity. This variational inference method is shown to be uniformly valid and quantifies the uncertainty coming from both parameter estimation and data splitting. The inference method could be of substantial independent interest in many machine learning applications. An empirical application to the impact of micro-credit on economic development illustrates the use of the approach in randomized experiments. An additional application to the impact of the gender discrimination on wages illustrates the potential use of the approach in observational studies, where machine learning methods can be used to condition flexibly on very high-dimensional controls.
    Keywords: Agnostic Inference, Machine Learning, Confidence Intervals, Causal Effects, Variational P-values and Confidence Intervals, Uniformly Valid Inference, Quantification of Uncertainty, Sample Splitting, Multiple Splitting, Assumption-Freeness
    Date: 2017–12–30
  20. By: Boosey, Luke (Florida State University); Goerg, Sebastian J. (Technische Universität München)
    Abstract: In a real-effort experiment, we investigate how the timing of discretionary bonuses affects the relationship between workers and managers. Average output is substantially higher if bonuses are paid in the middle rather than upfront or at the end, as workers increase first-period output to signal trustworthiness. In contrast, average output does not differ when the decision is made at the beginning or end. When the decision is made upfront, output increases after receiving a bonus but decreases substantially, if the bonus is not paid. This is consistent with negative reciprocity by workers who anticipate, but do not receive a bonus.
    Keywords: experiment, timing, discretionary bonuses, reciprocity
    JEL: M5
    Date: 2018–06
  21. By: Benny Moldovanu; Alex Gershkov; Philipp Strack
    Abstract: We study the revenue maximizing allocation of m units among n symmetric agents that have unit demand and convex preferences over the probability of receiving an object. Such preferences are naturally induced by a game where the agents take costly actions that affect their values before participating in the mechanism. Both the uniform m + 1 price auction and the discriminatory pay-your-bid auction with reserve prices constitute symmetric revenue maximizing mechanisms. Contrasting the case with linear preferences, the optimal reserve price reacts to both demand and supply, i.e., it depends both on the number of objects m and on number of agents n. The main tool in our analysis is an integral inequality involving majorization, super-modularity and convexity due to Fan and Lorentz (1954).
    Keywords: revenue maximization, endogenous values , investments, majorization
    JEL: D44
    Date: 2018–07
  22. By: Katharine G. Abraham; Emel Filiz-Ozbay; Erkut Y. Ozbay; Lesley J. Turner
    Abstract: We study the effects of available student loan repayment plans on borrowers’ career choices. By removing the risk of loan default, income driven repayment (IDR) plans make higher-paying but riskier jobs more attractive to those with moderate skill levels. We present experimental evidence that student loan recipients consider the repayment plans offered to them as well as the plans available to other borrowers as a reference in their evaluations of loans and careers. Emotions such as regret over a choice that turns out to be suboptimal ex post and relief at being unburdened from having to make a choice that could turn out badly play significant roles in borrowers’ career choices. Compared to giving borrowers a choice between a standard loan repayment plan that requires a fixed amount to be repaid over a shorter period and an IDR plan that protects borrowers from default by linking payments to income, offering only the IDR plan generates notable benefits. Removing the standard plan from borrowers’ choice sets makes remunerative but risky careers more appealing to borrowers and raises their expected net income. Moreover, these effects are strongest when borrowers holding different plans coexist in the population, as in this environment relief from the possibility of being exposed to a regret-triggering situation is most salient.
    JEL: C91 D91 I22
    Date: 2018–07
  23. By: Bergman, Peter (Columbia University)
    Abstract: This paper studies the impact of a lottery-based desegregation program that allows minority students to transfer to seven school districts serving higher-income, predominantly-white families. While prior research has studied the impacts of such a program receiving students, this paper studies the effects on participating students. In the short run, students who receive an offer to transfer are more likely to be classified as requiring special education and their test scores increase in several subjects. In the medium run, college enrollment increases by 8 percentage points for these students. This is due to greater attendance at two-year colleges. There is no overall effect on the likelihood of voting. However, the offer to transfer significantly increases the likelihood of arrest. This is driven primarily by increases in arrests for non-violent offenses. Almost all of these effects - both the risks and the benefits - stem from impacts on male students. Male students have higher test scores, college enrollment rates, and are significantly more likely to vote, but they also experience nearly all of the effects on arrests.
    Keywords: desegregation, education, inequality
    JEL: I20 I21 I24 I28
    Date: 2018–06
  24. By: Arthur E. Attema (Erasmus School of Economics - Erasmus University Rotterdam); Han Bleichrodt (Erasmus School of Economics - Erasmus University Rotterdam); Olivier L'Haridon (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In most medical decisions probabilities are ambiguous and not objectively known.Empirical evidence suggests that people's preferences are affected by ambiguity. Health economic analyses generally ignore ambiguity preferences and assume that they are the same as preferences under risk. We show how health preferences can be measured under ambiguity and we compare them with health preferences under risk. We assume a general ambiguity model that includes many of the ambiguity models that have been proposed in the literature. For health gains, ambiguity preferences and risk preferences were indeed the same. For health losses they differed with subjects being more pessimistic in decision under ambiguity. Utility and loss aversion were the same for risk and ambiguity .
    Keywords: ambiguity, health
    Date: 2018
  25. By: ONO Yoshikuni; YAMADA Masahiro
    Abstract: The striking under-representation of women in Japan has been partly attributed to gender stereotypes and prejudice toward female leadership among voters. We examine whether and to what extent candidates get rewarded or punished when they deviate from the behavioral expectations associated with their gender roles and images. Our conjoint experiment results in Japan demonstrate that not only are female candidates disadvantaged compared to their male counterparts, but also that they could lose support when they diverge from gender-based behavioral expectations. Our findings suggest that female candidates face a difficult dilemma in that they must weigh the cost of losing support for failing to conform to gender-based expectations, against the general loss of support they would incur for conforming to these expectations.
    Date: 2018–06
  26. By: Martina Manfre' (Department of Economics (University of Verona)); Viola Angelini (University of Groningen)
    Keywords: Cheating behavior, Financial situation, Financial literacy
    JEL: A13 C26 D91 H26
    Date: 2018–07
  27. By: Marco Bertoni (Università di Padova); Roberto Nisticò (Università di Napoli Federico II and CSEF)
    Abstract: If relative rank within classes enhances student achievement, tracking will help low-ability students and may harm high achievers. Using data from a randomized experiment generating a wide range of support of group ability composition, we show that students with higher ordinal ability rank within groups have better academic outcomes. We use our flexible education production function and the ample support of the data to predict the effects of alternative grouping polices. When we unpack the mechanisms behind ability tracking, we show that rank and peer effects work in opposite directions in generating outcomes for low- and high-ability students.
    Keywords: ability tracking, rank concerns, peer effects.
    JEL: I21 I24 J24
    Date: 2018–07–27
  28. By: Goldin, Jacob; Reck, Daniel
    Abstract: Behavior that appears to violate neoclassical assumptions can often be rationalized by incorporating an optimization cost into decision-makers' utility functions. Depending on the setting, these costs may reflect either an actual welfare loss for the decision-maker who incurs them or a convenient (but welfare irrelevant) modeling device. We consider how the resolution of this normative ambiguity shapes optimal policy in a number of contexts, including default options, inertia in health plan selection, take-up of social programs, programs that encourage moving to a new neighborhood, and tax salience.
    JEL: J1
    Date: 2018–05
  29. By: Brunello, Giorgio (University of Padova); Crema, Angela (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: Using Italian data on standardized test scores, we show that the substantial heterogeneity in how performance changes with the position of questions can alter the rank of individuals and classes as the length of the test increases. We examine whether decomposing test scores into initial performance and performance decline allows to separate the influence of cognitive and non-cognitive skills and find that our measure of cognitive skills – the math grade before the test – not only has a dominant influence on initial performance but also affects substantially performance decline.
    Keywords: low stake tests, position of questions, cognitive and non-cognitive skills, Italy
    JEL: I21
    Date: 2018–06
  30. By: Kalena E. Cortes; Hans Fricke; Susanna Loeb; David S. Song
    Abstract: Text-message based parenting programs have proven successful in improving parental engagement and preschoolers’ literacy development. The tested programs have provided a combination of (a) general information about important literacy skills, (b) actionable advice (i.e., specific examples of such activities), and (c) encouragement. The regularity of the texts – each week throughout the school year – also provided nudges to focus parents’ attention on their children. This study seeks to identify mechanisms of the overall effect of such programs. It investigates whether the actionable advice alone drives previous study’s results and whether additional texts of actionable advice improve program effectiveness. The findings provide evidence that text messaging programs can supply too little or too much information. A single text per week is not as effective at improving parenting practices as a set of three texts that also include information and encouragement, but a set of five texts with additional actionable advice is also not as effective as the three-text approach. The results on children’s literacy development depend strongly on the child’s pre-intervention literacy skills. For children in the lowest quarter of the pre-treatment literacy assessments, only providing one example of an activity decreases literacy scores by 0.15 standard deviations relative to the original intervention. Literacy scores of children in higher quarters are marginally higher with only one tip per week. We find no positive effects of increasing to five texts per week.
    JEL: I21 I24 J18
    Date: 2018–07

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