nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒08‒13
34 papers chosen by

  1. Social Preferences and Social Curiosity By Weiwei Tasch; Daniel Houser
  2. Defaults and donations: Evidence from a field experiment By Altmann, Steffen; Falk, Armin; Heidhues, Paul; Jayaraman, Rajshri; Teirlinck, Marrit
  3. Risky Choices and Solidarity: Why Experimental Design Matters By Conny Wunsch; Renate Strobl
  4. Does response time predict withdrawal decisions? Lessons from a bank-run experiment By Hubert Janos Kiss; Ismael Rodriguez-Lara; Alfonso Rosa-Garcia
  5. Public Statements of Good Conduct Promote Pro-Social Behavior By Koessler, Ann-Kathrin; Page, Lionel; Dulleck, Uwe
  6. Social Image Concerns and Welfare Take-Up By Jana Friedrichsen; Tobias König; Renke Schmacker
  7. Sanctioning and Trustworthiness Across Ethnic Groups By Levely, Ian; Bartos, Vojtech
  8. An Experimental Test of the Validity of Survey-Measured Political Ideology By Maite D. Laméris; Richard Jong-A-Pin; Rasmus Wiese
  9. Tax Morale and the Role of Social Norms and Reciprocity. Evidence from a Randomized Survey Experiment By Philipp Dörrenberg; Andreas Peichl
  10. Voting rules in multilateral bargaining: using an experiment to relax procedural assumptions By Tremewan, James; Vanberg, Christoph
  11. Gender Bias in Job Referrals: An Experimental Test By Beugnot, Julie; Peterlé, Emmanuel
  12. Paying for what kind of Performance? Performance Pay and Multitasking in Mission-Oriented Jobs By Daniel Jones; Mirco Tonin; Michael Vlassopoulos
  13. Communication and behavior in organizations: An experiment By Barron, Kai; Gravert, Christina
  14. Can a Bonus Overcome Moral Hazard? Experimental Evidence from Markets for Expert Services By Vera Angelova; Tobias Regner
  15. Experimentally validated general risk attitude among different ethnic groups in Vietnam By Pham, Huong Dien; Liebenehm,Sabine; Waibel, Hermann
  16. Testing the Waters: Behavior across Participant Pools By Erik Snowberg; Leeat Yariv
  17. Cognitive sophistication and deliberation times By Carlos Alós-Ferrer; Johannes Buckenmaier
  18. Bringing Tax Avoiders to Light: Moral Framing and Shaming in a Public Goods Experiment By Tsikas, Stefanos A.; Wagener, Andreas
  19. Liquidity Requirements and the Interbank Loan Market: An Experimental Investigation By Davis, Douglas; Korenok, Oleg; Lightle, John; Prescott, Edward Simpson
  20. Equity and the willingness to pay for green electricity in Germany By Andor, Mark Andreas; Frondel, Manuel; Sommer, Stephan
  21. When Does Advice Impact Startup Performance? By Aaron Chatterji; Solène Delecourt; Sharique Hasan; Rembrand M. Koning
  22. Attitudes towards Euro Area Reforms: Evidence from a Randomized Survey Experiment By Mathias Dolls; Nils Wehrhöfer
  23. Nudging businesses to pay their taxes: Does timing matter? By Gillitzer, Christian; Sinning, Mathias
  24. Identification of Causal Mechanisms Based on Between-Subject Double Randomization Design By Conny Wunsch; Renate Strobl
  25. Immigration and Redistribution By Alesina, Alberto F; Miano, Armando; Stantcheva, Stefanie
  26. Insights into the Impact of Bankruptcy's Public Record on Entrepreneurial Activity: Evidence from Economic Experiments By Dulleck, Uwe; Howell, Nicola J.; Koessler, Ann-Kathrin; Mason, Rosalind F.
  27. Identification of causal mechanisms based on between-subject double randomization designs By Strobl, Renate; Wunsch, Conny
  28. Willing to share? Tax compliance and gender in Europe and America By D’Attoma, John; Volintiru, Clara; Steinmo, Sven
  29. Narratives, Imperatives, and Moral Reasoning By Roland Bénabou; Armin Falk; Jean Tirole
  30. Future Design: Bequeathing Sustainable Natural Environments and Sustainable Societies to Future Generations By Tatsuyoshi Saijo
  31. Financial Inclusion and Contract Terms: Experimental Evidence From Mexico By Sara G. Castellanos; Diego Jiménez Hernández; Aprajit Mahajan; Enrique Seira
  32. Using behavioural experiments to pre-test policy By Lunn, Pete; Robertson, Deirdre
  33. Using behavioural experiments to pre-test policy By Regan, Mark; Keane, Claire; Walsh, John R
  34. Buyer-Optimal Robust Information Structures By Stefan Terstiege; Cédric Wasser

  1. By: Weiwei Tasch; Daniel Houser
    Abstract: Over the last two decades social preferences have been implicated in a wide variety of key economic behaviors. Here we investigate connections between social preferences and the demand for information about others’ economic decisions and outcomes, which we denote “social curiosity.” Our analysis is within the context of the inequality aversion model of Fehr and Schmidt (1999). Using data from laboratory experiments with sequential public goods games, we estimate social preferences at the individual level, and then correlate social preferences with one’s willingness to pay to make visible others’ contribution decisions. Our investigation enables us to shed light on how costs to knowing others’ economic decisions and outcomes impact decisions among people with different social preferences, and in particular the extent to which such costs impact the willingness for groups to cooperate.
    Keywords: laboratory experiment, curiosity, inequality aversion, sequential public goods game
    JEL: C91 H41
    Date: 2018
  2. By: Altmann, Steffen; Falk, Armin; Heidhues, Paul; Jayaraman, Rajshri; Teirlinck, Marrit
    Abstract: We study how defaults affect charitable donations. In a field experiment that was conducted on a large online platform for charitable giving, we exogenously vary the default options in the donation form in two distinct choice dimensions. The first pertains to the primary donation decision, namely, how much to contribute to the charitable cause. The second relates to a "codonation" decision of how much to contribute to supporting the online platform itself. We find a strong impact of defaults on individual behavior: in each of our treatments, the modal positive contributions in both choice dimensions invariably correspond to the specified default amounts. Defaults, nevertheless, have no significant effects on average donation levels. This is because defaults in the donation domain induce some people to donate more and others to donate less. In contrast, higher defaults in the secondary choice dimension unambiguously induce higher average contributions to the online platform. We complement our experimental results by setting up and estimating a structural model that explores whether personalizing defaults based on individuals' donation histories can help the online platform to increase donation revenues.
    Keywords: Default Options,Online Platforms,Charitable Giving,Field Experiment
    JEL: D03 D01 D64 C93
    Date: 2018
  3. By: Conny Wunsch; Renate Strobl
    Abstract: Negative income shocks can either be the consequence of risky choices or random events. A growing literature analyzes the role of responsibility for neediness for informal financial support of individuals facing negative income shocks based on randomized experiments. In this paper, we show that studying this question involves a number of challenges that existing studies either have not been aware of, or have been unable to address satisfactorily. We show that the average effect of free choice of risk on sharing, i.e. the comparison of mean sharing across randomized treatments, is not informative about the behavioural effects and that it is not possible to ensure by the experimental design that the average treatment effect equals the behavioural effect. Instead, isolating the behavioural effect requires conditioning on risk exposure. We show that a design that measures subjects preferred level of risk in all treatments allows isolating this effect without additional assumptions. Another advantage of our design is that it allows disentangling changes in giving behaviour due to attributions of responsibility for neediness from other explanations. We implement our design in a lab experiment we conducted with slum dwellers in Nairobi that measures subjects’ transfers to a worse-off partner both in a setting where participants could either deliberately choose or were randomly assigned to a safe or a risky project. We find that free choice matters for giving and that the effects depend on donors’ risk preferences but that attributions of responsibility play a negligible role in this context.
    Keywords: solidarity, risk taking, experimental design
    JEL: C91 D63 D81 O12
    Date: 2018
  4. By: Hubert Janos Kiss (Research fellow in the Momentum (LD-004/2010) Game Theory Research Group, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences Department of Economics, Eötvös Loránd University, Budapest, Hungary.); Ismael Rodriguez-Lara (Department of Economics, Middlesex University London, UK); Alfonso Rosa-Garcia (Facultad de Ciencias Jurídicas y de la Empresa, Universidad Católica San Antonio, Murcia, Spain)
    Abstract: We study how response time in a laboratory experiment on bank runs affects withdrawal decisions. In our setup, the bank has no fundamental problems, depositors decide equentially (if to keep the money in the bank or to withdraw) and may observe previous decisions depending on the information structure. We consider two levels of difficulty of decisionmaking conditional on the presence of strategic dominance and strategic uncertainty. We posit that i) decisions in information sets characterized by the lack of strategic dominance are more difficult than in those with strategic dominance; ii) in the latter group, decisions are more difficult when there is strategic uncertainty. We investigate how response time associates with the difficulty and optimality of withdrawal decision. We hypothesize that a) the more difficult the decision, the longer the response time; b) the predictive power of response time depends on difficulty. We find that response time is longer in information sets with strategic uncertainty compared to those without (as expected), but we do not find such relationship when considering strategic dominance (contrary to our hypothesis). Response time correlates negatively with optimal decisions in information sets with a dominant strategy (contrary to our expectation) and also when decisions are obvious in the absence of strategic uncertainty (in line with our hypothesis). When there is strategic uncertainty, we find suggestive evidence that response time predicts optimal decisions. Thus, freezing deposits for some time may be beneficial and help to avoid massive withdrawals as it engthens response times.
    Keywords: bank run, cognitive abilities, coordination games, dominant strategy, experiment, response time, sequential rationality, strategic uncertainty
    JEL: C72 C91 D80 G21
    Date: 2018–05
  5. By: Koessler, Ann-Kathrin; Page, Lionel; Dulleck, Uwe
    Abstract: Voluntary and compulsory public statements of good conduct are frequently observed in the real world, such as the codes of good conduct for professionals or the requirements of academic journals to affirm that research was carried out ethically. In this study, we investigate what effect public statements of good conduct have on contribution behavior in a public goods experiment. Using a 'between-within subjects design' we identify three channels by which non-enforceable statements of intent are associated with higher levels of contributions to the public good. First, in a selection effect, socially-oriented participants are more likely in the experiment to make a public statement. Second, in a commitment effect, participants who make a public statement are contributing more to the public good. Third, in a coordination effect, aggregate contributions are higher when 'Statement-Makers' observe that also other group members make the statement. The latter explains why compulsory statements of good conduct are in our experiment more effective over time.
    Keywords: social dilemma,public good,pro-social behavior,commitment,compliance,pledges,policy making
    JEL: A13 C72 C91 H41
    Date: 2018
  6. By: Jana Friedrichsen; Tobias König; Renke Schmacker
    Abstract: Using a laboratory experiment, we present first evidence that social image concerns causally reduce the take-up of an individually beneficial transfer. Our design manipulates the informativeness of the take-up decision by varying whether transfer eligibility is based on ability or luck, and how the transfer is financed. We find that subjects avoid the inference both of being low-skilled (ability stigma) and of being willing to live o_ others (free-rider stigma). Using a placebo treatment, we exclude other explanations for the observed stigma effects. Although stigma reduces take-up, elicitation of political preferences reveals that only a minority of \taxpayers" vote for the public transfer.
    Keywords: Stigma, signaling, redistribution, non take-up, welfare program
    JEL: C91 D03 H31 I38
    Date: 2018
  7. By: Levely, Ian (Wageningen University); Bartos, Vojtech (University of Munich)
    Abstract: We show how sanctioning is more effective in increasing cooperation between groups than within groups. We study this using a trust game among ethnically diverse subjects in Afghanistan. In the experiment, we manipulate i) sanctioning and ii) ethnic identity. We find that sanctioning increases trustworthiness in cross-ethnic interactions, but not when applied by a co-ethnic. While we find higher in-group trustworthiness in the absence of sanctioning, the availability and use of the sanction closes this gap. This has important implications for understanding the effect of institutions in developing societies where ethnic identity is salient. Our results suggest that formal institutions for enforcing cooperation are more effective when applied between, rather than within, ethnic groups, due to behavioral differences in how individuals respond to sanctions.
    Keywords: sanctions; cooperation; crowding out; moral incentives; ethnicity; afghanistan;
    JEL: D01 D02 C93 J41
    Date: 2018–07–24
  8. By: Maite D. Laméris; Richard Jong-A-Pin; Rasmus Wiese
    Abstract: We examine the predictive validity of survey-measured left-right political ideology by testing whether this measure is able to explain observed choices regarding equality versus efficiency. We study this in a real-effort distribution experiment, in which decision-makers allocate money equally or efficiently. We distinguish between decision-makers that receive ‘manna-from-heaven’ and decision-makers that have earned the money to be distributed in a real effort task. We find that, conditional on entitlement concerns, self-reported right-wing ideology significantly predicts preferences for efficiency. Reported left-wing ideology does not have predictive value in explaining preferences for equality.
    Keywords: political ideology, survey measurement, predictive validity, distribution experiment, real effort
    JEL: C91 D31
    Date: 2018
  9. By: Philipp Dörrenberg; Andreas Peichl
    Abstract: We present the first randomized survey experiment in the context of tax compliance to assess the role of social norms and reciprocity for intrinsic tax morale. We find that participants in a social-norm treatment have lower tax morale relative to a control group while participants in a reciprocity treatment have significantly higher tax morale than those in the social-norm group. This suggests that a potential backfire effect of social norms is outweighed if the consequences of violating the social norm are made salient. We further document the anatomy of intrinsic motivations for tax compliance and present first evidence that previously found gender effects in tax morale are not driven by differences in risk preferences.
    Keywords: tax compliance, tax evasion, intrinsic motivations, tax morale, social norms, reciprocity
    JEL: H20 H32 H50 C93
    Date: 2018
  10. By: Tremewan, James; Vanberg, Christoph
    Abstract: Experiments can be used to relax technical assumptions that are made by necessity in theoretical analysis, and further test the robustness of theoretical predictions. To illustrate this point we conduct a three-person bargaining experiment examining the effect of different decision rules (unanimity and majority rule). Our experiment implements the substantive assumptions of the Baron-Ferejohn model but imposes no structure on the timing of proposals and votes. We compare our results to those obtained from an earlier experiment which implemented the specific procedural assumptions of the model. Our results are in many ways very similar to those from the more structured experiment: we find that most games end with the formation of a minimum winning coalition, and unanimity rule is associated with greater delay. However, the earlier finding of "proposer power" is reversed. While some important patterns are robust to the less stringent implementation of procedural assumptions, our less structured experiment provides new insights into how multilateral bargaining may play out in real world environments with no strict procedural rules on timing of offers and agreements.
    Date: 2018–07–18
  11. By: Beugnot, Julie; Peterlé, Emmanuel
    Abstract: Employee referral programs, while efficient for the employer, have been shown to amplify sex-based occupational segregation in the labour markets. We present evidence from a laboratory experiment designed to shed light on same-gender bias in job referrals within gender-balanced networks. Our data suggest that women tend to favor women in their referral choice, whereas men do not attach much importance to the gender of potential candidates. Our experimental design allows us to disentangle between statistical discrimination, preferences, and pure same-gender bias. Our findings add to the existing literature by highlighting that gendered networks alone do not explain the observed gender homophily in referred-referrer pairs.
    Keywords: Same-gender bias, job referral, laboratory experiment
    JEL: C91 J16 J21 J71 M51
    Date: 2018–05
  12. By: Daniel Jones; Mirco Tonin; Michael Vlassopoulos
    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
  13. By: Barron, Kai; Gravert, Christina
    Abstract: We design a laboratory experiment to study behavior in a multidivisional organization facing a trade-off between coordinating its decisions across the divisions and meeting division-specific needs that are known only to the division managers. The managers communicate their private information through cheap talk. While the results show close to optimal communication, we also find systematic deviations from optimal behavior in how the communicated information is used. Specifically, subjects' decisions show worse than predicted adaptation to the needs of the divisions in decentralized organizations and worse than predicted coordination in centralized organizations. We show that the observed deviations disappear when uncertainty about the divisions' local needs is removed and discuss the possible underlying mechanisms.
    Keywords: communication,coordination,decentralization,experiment
    JEL: C70 D03 C92
    Date: 2018
  14. By: Vera Angelova (Technische Universität Berlin, Department of Economics and Management); Tobias Regner (FSU Jena)
    Abstract: Interactions between players with private information and opposed interests are often prone to bad advice and inefficient outcomes, e.g. markets for financial or health care services. In a deception game we investigate experimentally which factors could improve advice quality. Besides advisor competition and identifiability, we add the possibility for clients to make a voluntary payment, a bonus, after observing advice quality. While the combination of competition and reputation concerns achieves the highest rate of truthful advice, we observe a similar effect, when the bonus is combined with one of them. Thus, our results suggest that a voluntary component can act as a substitute for either competition or reputation, decreasing moral hazard.
    Keywords: asymmetric information, principal-agent, expert services, deception game, sender-receiver game, reciprocity, reputation, experiments, voluntary payment, competition
    JEL: C91 D03 D82 G20 I11
    Date: 2018–07–26
  15. By: Pham, Huong Dien; Liebenehm,Sabine; Waibel, Hermann
    Abstract: In this paper, we compare experimentally measured individual risk attitudes and survey-based risk items for rural households in the province of Dak Lak in Southern Vietnam. In particular, we test whether the survey-based measure can be validated by a risk experiment among different ethnic groups. Albeit we find that ethnic minorities are on average more risk averse than the ethnic majority, our results show similar correlations between risk attitudes and socio-economic characteristics among the two ethnic groups. Testing the explanatory power of the survey-based risk item shows the validity of this measure among different ethnic groups. Our findings have potentially important implications. First, the survey-based item is effective to measure risk attitudes of a multiethnic community. Second, our findings also suggest that the assumption of a “self-reinforcing culture of poverty†which is often attributed to minority group of Vietnam should be challenged in the light of these results.
    Keywords: Ethnic minorities, Survey risk items, Risk experiments
    JEL: C83 C93 Z19
    Date: 2017–10
  16. By: Erik Snowberg; Leeat Yariv
    Abstract: We leverage a large-scale incentivized survey eliciting behaviors from (almost) an entire university student population, a representative sample of the U.S. population, and Amazon Mechanical Turk (MTurk) to address concerns about the external validity of experiments with student participants. Behavior in the student population offers bounds on behaviors in other populations, and correlations between behaviors are largely similar across samples. Furthermore, non-student samples exhibit higher measurement error. Adding historical lab participation data, we find a small set of attributes over which lab participants differ from non-lab participants. Using an additional set of lab experiments, we see no evidence of observer effects.
    Keywords: lab selection, external validity, experiments
    JEL: B41 C80 C90
    Date: 2018
  17. By: Carlos Alós-Ferrer; Johannes Buckenmaier
    Abstract: Behavioral heterogeneity arising from cognitive differences among economic agents plays a fundamental role in the economy. To explain this heterogeneity, models of iterative thinking assume that certain choices indicate higher cognitive effort. That is, choices are used to infer the cognitive process behind the choices themselves. To establish this link choice data is insufficient, thus an individually-measurable correlate of cognitive effort is required. We argue that deliberation times provide this missing link. We present a simple model of heterogeneous cognitive depth, incorporating stylized facts from the psychophysical literature, which makes predictions on the relation between choices, cognitive effort, incentives, and deliberation times. In an experimental test, the predicted relations are readily observed in the data, but only when the features leading to iterative thinking are salient enough. Hence, the predicted relations become a tool to uncover the limits of models of iterative thinking.
    Keywords: Heterogeneity, level-k reasoning, cognitive sophistication, deliberation times, depth of reasoning, cognitive effort
    JEL: C72 C91 D80 D91
    Date: 2018–07
  18. By: Tsikas, Stefanos A.; Wagener, Andreas
    Abstract: With a series of public goods games in a 2x2-design, we analyze two channels that might moderate social dilemmas and increase cooperation without using pecuniary incentives: moral framing and shaming. Cooperation increases when non-contributing to a public good is framed as morally debatable and socially harmful tax avoidance. However, cooperation is only durable when free-riders are "shamed" by disclosing their misdemeanor. We find shaming effects to be strong enough to make appeals to morality redundant for participants' decisions.
    Keywords: shaming; framing; tax avoidance; public goods experiment
    JEL: E62 H26 H30
    Date: 2018–07
  19. By: Davis, Douglas (Virginia Commonwealth University); Korenok, Oleg (Virginia Commonwealth University); Lightle, John (Virginia Commonwealth University); Prescott, Edward Simpson (Federal Reserve Bank of Cleveland)
    Abstract: We develop a stylized interbank market environment and use it to evaluate with experimental methods the effects of liquidity requirements. Baseline and liquidity-regulated regimes are analyzed in a simple shock environment, which features a single idiosyncratic shock, and in a compound shock environment, in which the idiosyncratic shock is followed by a randomly occurring second-stage shock. Interbank trading of the illiquid asset follows each shock. In the simple shock environment, we find that liquidity regulations reduce the incidence of bankruptcies, but at a large loss of investment efficiency. In the compound shock environment, liquidity regulations not only impose a loss of investment efficiency but also fail to reduce bankruptcies.
    Keywords: Interbank market; liquidity regulation; market experiments;
    JEL: C9 G21
    Date: 2018–07–31
  20. By: Andor, Mark Andreas; Frondel, Manuel; Sommer, Stephan
    Abstract: The production of electricity on the basis of renewable energy technologies is a classic example of an impure public good. It is often discriminatively financed by industrial and household consumers, such as in Germany, where the energy-intensive sector benefits from a far-reaching exemption rule, while all other electricity consumers are forced to bear a higher burden. Based on randomized information treatments in a stated-choice experiment among about 11,000 German households, we explore whether this coercive payment rule affects households' willingness-to-pay (WTP) for green electricity. Our central result is that reducing inequity by abolishing the exemption for the energyintensive industry raises households' WTP substantially.
    Keywords: stated-choice experiment,behavioral economics,fairness
    JEL: D03 D12 H41 Q20 Q50
    Date: 2018
  21. By: Aaron Chatterji; Solène Delecourt; Sharique Hasan; Rembrand M. Koning
    Abstract: Why do some entrepreneurs thrive while others fail? We explore whether the advice entrepreneurs receive about people management influences their firm's performance. We conducted a randomized field experiment in India with 100 high-growth technology firms whose founders received in-person advice from other entrepreneurs who varied in their managerial style. We find that entrepreneurs who received advice from peers with an active approach to managing people–instituting regular meetings, setting goals consistently, and providing frequent feedback to employees–grew 28% larger and were 10 percentage points less likely to fail than those who got advice from peers with a passive people-management approach two years after our intervention. Entrepreneurs with MBAs or accelerator experience did not respond to this intervention, suggesting that formal training can limit the spread of peer advice.
    JEL: M1 M12 M13 O32
    Date: 2018–07
  22. By: Mathias Dolls; Nils Wehrhöfer
    Abstract: We present the first evidence on public attitudes towards two prominent euro area reform proposals (European Unemployment Benefit Scheme and Sovereign Insolvency Procedure) and assess potential impediments to their implementation by means of a randomized survey experiment in Germany. We find that there is a low willingness among German voters to accept fiscal risk-sharing through common unemployment insurance, while a sovereign insolvency procedure aimed at strengthening market discipline is supported by a majority of the electorate. Our randomized treatments confronting survey participants with potential adverse effects of the reforms lead to significant downward shifts in approval rates. Altruism, cosmopolitanism, political preferences and income are important predictors of support for the reform proposals. We also show that there is a striking contrast between the low level of support for transfers to other euro area member states and a broad acceptance of inner German transfers.
    Keywords: public attitudes, euro area reforms, European unemployment insurance, sovereign insolvency procedure
    JEL: H55 H24 J26 D14
    Date: 2018
  23. By: Gillitzer, Christian; Sinning, Mathias
    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
  24. By: Conny Wunsch; Renate Strobl
    Abstract: Understanding the mechanisms through which treatment effects come about is crucial for designing effective interventions. The identification of such causal mechanisms is challenging and typically requires strong assumptions. This paper discusses identification and estimation of natural direct and indirect effects in so-called double randomization designs that combine two experiments. The first and main experiment randomizes the treatment and measures its effect on the mediator and the outcome of interest. A second auxiliary experiment randomizes the mediator of interest and measures its effect on the outcome. We show that such designs allow for identification based on an assumption that is weaker than the assumption of sequential ignorability that is typically made in the literature. It allows for unobserved confounders that do not cause heterogeneous mediator effects. We demonstrate estimation of direct and indirect effects based on different identification strategies that we compare to our approach using data from a laboratory experiment we conducted in Kenya.
    Keywords: direct and indirect effects, causal inference, mediation analysis, identification
    JEL: C14 C31 C90
    Date: 2018
  25. By: Alesina, Alberto F; Miano, Armando; Stantcheva, Stefanie
    Abstract: We design and conduct large-scale surveys and experiments in six countries to investigate how natives' perceptions of immigrants influence their preferences for redistribution. We find strikingly large biases in natives' perceptions of the number and characteristics of immigrants: in all countries, respondents greatly overestimate the total number of immigrants, think immigrants are culturally and religiously more distant from them, and are economically weaker -- less educated, more unemployed, poorer, and more reliant on government transfers -- than is the case. While all respondents have misperceptions, those with the largest ones are systematically the right-wing, the non-college educated, and the low-skilled working in immigration-intensive sectors.Support for redistribution is strongly correlated with the perceived composition of immigrants -- their origin and economic contribution -- rather than with the perceived share of immigrants per se. Given the very negative baseline views that respondents have of immigrants, simply making them think about immigration in a randomized manner makes them support less redistribution, including actual donations to charities. We also experimentally show respondents information about the true i) number, ii) origin, and iii) ``hard work'' of immigrants in their country. On its own, information on the ``hard work'' of immigrants generates more support for redistribution. However, if people are also prompted to think in detail about immigrants' characteristics, then none of these favorable information treatments manages to counteract their negative priors that generate lower support for redistribution.
    Keywords: Fairness; Immigration; Online Experiment; Perceptions; race; redistribution; survey; taxation
    JEL: D72 D91 H21 H23 H24 H41
    Date: 2018–07
  26. By: Dulleck, Uwe; Howell, Nicola J.; Koessler, Ann-Kathrin; Mason, Rosalind F.
    Abstract: Many Anglo-American jurisdictions aim to provide debtors with a ‘fresh start’ after a personal bankruptcy. However, we query the extent to which debtors can achieve a fresh start if records of individual bankruptcies are publicly available, with no restrictions on their use. To inform the legal policy question of whether bankruptcy records should be publicly available, we study the effect of the availability of bankruptcy records, compared to their non-existence, in an economic experiment. The experiment allows us to identify empirically the effect that the exposure of bankruptcy history has on the behaviour of investors and debtors. Our exploratory research shows that the availability of bankruptcy records increases investment. Availability also increases repayment behaviour by debtors, but only if the debtor has no history of bankruptcy (non-return of payments). If, however, a debtor failed to return payments in the past, and this information is available, debtors show lower instances of return behaviour.
    Keywords: bankruptcy,investments,National Personal Insolvency Index,uncertainty,economic experiment,insolvency,public records
    JEL: K35 C90 K20
    Date: 2018
  27. By: Strobl, Renate; Wunsch, Conny
    Abstract: Understanding the mechanisms through which treatment effects come about is crucial for designing effective interventions. The identification of such causal mechanisms is challenging and typically requires strong assumptions. This paper discusses identification and estimation of natural direct and indirect effects in so-called double randomization designs that combine two experiments. The first and main experiment randomizes the treatment and measures its effect on the mediator and the outcome of interest. A second auxiliary experiment randomizes the mediator of interest and measures its effect on the outcome. We show that such designs allow for identification based on an assumption that is weaker than the assumption of sequential ignorability that is typically made in the literature. It allows for unobserved confounders that do not cause heterogeneous mediator effects. We demonstrate estimation of direct and indirect effects based on different identification strategies that we compare to our approach using data from a laboratory experiment we conducted in Kenya.
    Keywords: causal inference; Direct and indirect effects; identification; mediation analysis
    JEL: C31
    Date: 2018–07
  28. By: D’Attoma, John; Volintiru, Clara; Steinmo, Sven
    Abstract: Studies examining the effects of gender on honesty, deceptive behavior, pro-sociality, and risk aversion, often find significant differences between men and women. The present study contributes to the debate by exploiting one of the largest tax compliance experiments to date in a highly controlled environment conducted in the United States, the United Kingdom, Sweden, and Italy. Our expectation was that the differences between men’s and women’s behavior would correlate broadly with the degree of gender equality in each country. Where social, political and cultural gender equality is greater we expected behavioral differences between men and women to be smaller. In contrast, our evidence reveals that women are significantly more compliant than men in all countries. Furthermore, these patterns are quite consistent across countries in our study. In other words, the difference between men’s and women’s behavior is not significantly different in more gender neutral countries than in more traditional societies.
    Keywords: Tax compliance; gender; comparative political economy; institutions
    JEL: J1
    Date: 2017–04–01
  29. By: Roland Bénabou; Armin Falk; Jean Tirole
    Abstract: By downplaying externalities, magnifying the cost of moral behavior, or suggesting not being pivotal, exculpatory narratives can allow individuals to maintain a positive image when in fact acting in a morally questionable way. Conversely, responsibilizing narratives can help sustain better social norms. We investigate when narratives emerge from a principal or the actor himself, how they are interpreted and transmitted by others, and when they spread virally. We then turn to how narratives compete with imperatives (general moral rules or precepts) as alternative modes of communication to persuade agents to behave in desirable ways.
    JEL: D62 D64 D78 D83 D91 H41 K42 L14 Z13
    Date: 2018–07
  30. By: Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology)
    Abstract: “Future Design†poses the following question: what types of social systems are necessary if we are to leave future generations sustainable natural environments and sustainable societies. One such method is using an “imaginary future generation,†and I overview the theoretical background of this method, the results of relevant laboratory and field experiments, and the nature of relevant practical applications in cooperation with several local governments.
    Keywords: Future design, imaginary future generation, futurability, intergenerational sustainability dilemma, time inconsistency problem
    Date: 2018–07
  31. By: Sara G. Castellanos; Diego Jiménez Hernández; Aprajit Mahajan; Enrique Seira
    Abstract: This paper provides evidence on the difficulty of expanding access to credit through large institutions. We use detailed observational data and a large-scale countrywide experiment to examine a large bank's experience with a credit card that accounted for approximately 15% of all first-time formal sector borrowing in Mexico in 2010. Borrowers have limited credit histories and high exit-risk – a third of all study cards are defaulted on or canceled during the 26 month sample period. We use a large-scale randomized experiment on a representative sample of the bank's marginal borrowers to test whether contract terms affect default. We find that large experimental changes in interest rates and minimum payments do little to mitigate default risk. We also use detailed data on purchases and payments to construct a measure of bank revenue per card and find it is generally low and difficult to predict (using machine learning methods), perhaps explaining the bank's eventual discontinuation of the product. Finally, we show that borrowers generating a favorable credit history are much more likely to switch banks providing suggestive evidence of a lending externality. Taken together these facts highlight the difficulty of increasing financial access using large formal sector financial organizations.
    JEL: D14 D18 D82 G20 G21
    Date: 2018–07
  32. By: Lunn, Pete; Robertson, Deirdre
    Date: 2018–07
  33. By: Regan, Mark; Keane, Claire; Walsh, John R
    Date: 2018–07
  34. By: Stefan Terstiege; Cédric Wasser
    Abstract: We study buyer-optimal information structures under monopoly pricing. The information structure determines how well the buyer learns his valuation and affects, via the induced distribution of posterior valuations, the price charged by the seller. Motivated by the regulation of product information, we assume that the seller can disclose more if the learning is imperfect. Robust information structures prevent such disclosure, which is a constraint in the design problem. Our main result identifies a two-parameter class of information structures that implements every implementable buyer payoff. An upper bound on the buyer payoff where the social surplus is maximized and the seller obtains just her perfect-information payoff is attainable with some, but not all priors. When this bound is not attainable, optimal information structures can result in an inefficient allocation.
    Keywords: information design, monopoly, regulation
    JEL: D42 D82 D83 L51
    Date: 2018–07

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.