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on Experimental Economics |
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Issue of 2018‒08‒20
43 papers chosen by |
| By: | Davies, Elwyn; Fafchamps, Marcel |
| Abstract: | Experimental evidence to date supports the double theoretical prediction that parties transacting repeatedly punish bad contractual performance by reducing future offers, and that the threat of punishment disciplines opportunistic breach. We conduct a repeated gift-exchange experiment with university students in Ghana and the UK. The experiment is framed as an employment contract. Each period the employer makes an irrevocable wage offer to the worker who then chooses an effort level. UK subjects behave in line with theoretical predictions and previous experiments: wage offers reward high effort and punish low effort; this induces workers to choose high effort; and gains from trade are shared between workers and employers. We do not find such evidence among Ghanaian subjects: employers do not reduce wage offers after low effort; workers often choose low effort; and employers earn zero payoffs on average. These results also hold if we use a strategy method to elicit wage offers. Introducing competition or reputation does not significantly improve workers' effort. Using a structural bounds approach, we find that the share of selfish workers in Ghana is not substantially different from the UK or earlier experiments. We conclude that strategic punishment in repeated labor transactions is not a universally shared heuristic. |
| Keywords: | conditional reciprocity; Ghana; gift-exchange game; punishment strategies; relational contracting |
| JEL: | C71 D2 D86 E24 O16 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13057&r=exp |
| By: | Wunsch, Conny (University of Basel); Strobl, Eric (Aix-Marseille University) |
| 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: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11641&r=exp |
| By: | Friedrichsen, Jana; König, Tobias; Schmacker, Renke |
| 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 of 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 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2016208r&r=exp |
| By: | Sandra Polania Reyes |
| Abstract: | This economic lab in the field experiment tests the effects of recognition on voluntary contributions to a public good at the onset of a behavioral intervention. Using a within-subjects design to look at the behavioral differences between no recognition, group and private recognition, three hundred employees of a large Colombian corporation participated in an online public goods game before the intervention. After the intervention, a new selected sample was part of the same design. Recognition has a sizable effect on contributions. The intervention improves the response to private recognition but, strikingly, it has a distributional effect on the cooperative response to the group recognition. |
| Keywords: | lab in the field experiments, recognition, social innovation, cooperation |
| JEL: | C92 D70 D78 Z13 |
| Date: | 2018–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:col:000416:016452&r=exp |
| By: | Atasoy, Ayse Tugba (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Harmsen-van Hout, Marjolein (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | Despite the efforts of restructuring power markets over the last decades, the lack of demand response in the retail electricity markets remains a significant concern. Possible demand response would help to reduce prices and volatility by better matching supply and demand through improved price signals. In this paper we develop a laboratory tool to experimentally investigate the demand response in the electricity market. The baseline treatment constitutes a two-period ‘wait-or-buy’ game with an exogenous first period, an automated supplier, and twenty subject buyers. While the seller offers a fixed number of a product in the market, consumers decide on purchasing the product immediately or waiting until the next period, taking (i) price uncertainty and (ii) inventory risk into account. This treatment captures demand response in the retail market with scarce products. We design an additional treatment by removing the inventory constraint and introducing a devaluation rule, where consumers only bear the price risk – thus mimicking the demand response in the electricity market. We find that in both retail and electricity market treatments consumers play on average the equilibrium predictions and buy strategically. However, there are systematic deviations from rationality in both settings, i.e., consumers buy too soon or wait too long. |
| Keywords: | Demand Response; Electricity; Dynamic Pricing; Strategic Behavior |
| JEL: | C92 D01 D81 M11 Q31 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2018_005&r=exp |
| By: | Serhiy Kandul; Bruno Lanz |
| Abstract: | Social comparison feedback, i.e. informing people about the behavior of others, has been shown to influence prosocial behavior in many domains, including tax compliance and energy conservation. We argue that heterogeneity in consumers' (un)willingness to consult the corresponding information mitigates the effect of these interventions, and hypothesize that self-image concerns can induce people to deliberately ignore feedback about own behavior. We substantiate this idea by introducing social comparison feedback in a standard public good game, and study conditions in which subjects can elect to consult or deliberately avoid feedback information. Our results show that information avoidance is three times higher for feedback on own contributions as compared to feedback on group-level contributions. Our overall findings suggest that the effectiveness of informational intervention leveraging preferences for conformism with social norms could be enhanced by mitigating self-image costs associated with individual feedback interventions. |
| Keywords: | Social norms; Social comparison feedback; Deliberate ignorance; Public good game; Self-image concerns; Prosocial behavior; Externalities; Energy use |
| JEL: | C91 D12 D62 D91 H41 Q41 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:irn:wpaper:18-06&r=exp |
| By: | Azzolini, Davide (FBK-IRVAPP); Martini, Alberto (University of Piemonte Orientale); Rettore, Enrico (University of Trento); Romano, Barbara (ASVAPP); Schizzerotto, Antonio (IRVAPP); Vergolini, Loris (IRVAPP) |
| Abstract: | This paper presents the results of a randomized controlled trial aimed at testing the effectiveness of an innovative intervention of asset building (Percorsi) on high school students' transition to the university. Contrary to most traditional forms of financial aid, the tested intervention is expected to enhance an active involvement of the families and imposes a strong conditionality in the use of the benefits. The experiment, called ACHAB (Affording College with the Help of Asset Building) has been carried out in the province of Torino (Northwest Italy) between 2014 and 2017. For the evaluation purpose, an ad hoc survey has been carried out to collect longitudinal information on enrolment decisions and academic performances (number of exams and persistence) during the first semester and at the beginning of the second year. External data and applicant baseline information were used to perform a multidimensional targeting strategy aimed at identifying the 'target population', i.e. those students who were at risk of giving up their university enrolment decisions because of economic reasons. The experimental results point to the existence of positive and significant effects of the program on university enrolment and sizeable and significant positive effects on academic performance and university persistence. The effects of the program are significantly larger for students coming from vocational schools than for students who completed technical or general secondary schools. |
| Keywords: | higher education, social inequality, financial aid, asset building, randomized controlled trial |
| JEL: | C90 D04 I22 I24 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11625&r=exp |
| By: | Chiara Aina; Pierpaolo Battigalli; Astrid Gamba |
| Abstract: | In social dilemmas, choices may depend on belief-dependent motivations enhancing the credibility of promises or threats at odds with personal gain maximization. We address this issue theoretically and experimentally in the context of the Ultimatum Minigame, assuming that the choice of accepting or rejecting an unfair proposal is affected by a combination of frustration, due to unfulfilled expectations, and inequity aversion. We increase the responder's payoff from the default allocation (the proposer's outside option) with the purpose of increasing the responder's frustration due to the unfair proposal, and thus his willingness to reject it. In addition, we manipulate the method of play, with the purpose of switching on (direct response method) and off (strategy method) the responder's experience of anger. We found overwhelming evidence in support of belief-dependent preferences: in the direct method, the higher the responders' initial expectations of the default allocation, the more likely they are to reject the unfair proposal. In line with our predictions, the direct method increases the frequency of rejections. Instead, against our predictions, the payoff increase does not have such effect. Interestingly, the distribution of actions of male subjects is in line with the theory, but not that of females. Keywords: Experiments, psychological games, ultimatum minigame, frustration, anger, non-equilibrium analysis. JEL classification: C72, C91, D03 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:628&r=exp |
| By: | Amanda E. Kowalski |
| Abstract: | A fundamental concern for researchers who analyze and design experiments is that the experimental result might not be externally valid for all policies. Researchers often attempt to assess external validity by comparing data from an experiment to external data. In this essay, I discuss approaches from the treatment effects literature that researchers can use to begin the examination of external validity internally, within the data from a single experiment. I focus on presenting the approaches simply using figures. |
| JEL: | C9 C93 H0 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24834&r=exp |
| By: | Andreas Fuster; Ricardo Perez-Truglia; Basit Zafar |
| Abstract: | Information frictions play an important role in many theories of expectation formation and macroeconomic fluctuations. We use a survey experiment to generate direct evidence on how people acquire and process information, in the context of national home price expectations. We let consumers buy different pieces of information that could be relevant for the formation of their expectations about the future median national home price. We use an incentive-compatible mechanism to elicit their maximum willingness to pay. We also introduce exogenous variation in the value of information by randomly assigning individuals to rewards for the ex-post accuracy of their expectations. Consistent with rational inattention, individuals are willing to pay more for information when they stand to gain more from it. However, underscoring the importance of limits on information processing capacity, individuals disagree on which signal they prefer to buy. Individuals with lower education and financial numeracy are less likely to demand information that has ex-ante higher predictive power, independently of stakes. As a result, lowering the information acquisition cost does not decrease the cross-sectional dispersion of expectations. Our findings have implications for models of expectation formation and for the design of information interventions. |
| JEL: | C81 C93 D80 D83 D84 E27 E3 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24767&r=exp |
| By: | Filomena Garcia; Andrea Vezzulli; Rafael Marques; Luca David Opromolla |
| Abstract: | The administration of tax policy has shifted its focus from enforcement to complementary instruments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of the dissemination of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where, for given levels of audit probabilities, fines and tax rates, subjects have to declare their income after receiving either a communication of the official average tax evasion rate or a private message from a group of randomly matched peers about their tax behavior. We use the experimental data to estimate a dynamic econometric model of tax evasion. The econometric model extends the Allingham–Sandmo–Yitzhaki tax evasion model to include self-consistency and endogenous social interactions among taxpayers. We find four main results. First, tax compliance is very persistent. Second, the higher the official past tax evasion rate the higher the degree of persistence: evaders are more likely to evade again, and compliant individuals are more likely to comply again. Third, when all peers communicate to have evaded (complied) in the past, both evaders and compliant individuals are more likely to evade (comply). Fourth, while both treatments, and especially the unofficial information treatment, are associated, in the context of our experiment, with a significantly larger growth in evasion intensity, the aggregate effect depends on the characteristics of the population. In countries with inherently low levels of tax evasion, official information can have beneficial effects by consolidating the behavior of compliant individuals. However, in countries with inherently high levels of tax evasion, official information can have detrimental effects by intensifying the behavior of evaders. In both cases, the impact of official information is magnified in the presence of strong peer effects. |
| JEL: | C24 C92 D63 H26 Z13 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201809&r=exp |
| By: | Marcella Alsan; Owen Garrick; Grant C. Graziani |
| Abstract: | We study the effect of diversity in the physician workforce on the demand for preventive care among African-American men. Black men have the lowest life expectancy of any major demographic group in the U.S., and much of the disadvantage is due to chronic diseases which are amenable to primary and secondary prevention. In a field experiment in Oakland, California, we randomize black men to black or non-black male medical doctors and to incentives for one of the five offered preventives — the flu vaccine. We use a two-stage design, measuring decisions about cardiovascular screening and the flu vaccine before (ex ante) and after (ex post) meeting their assigned doctor. Black men select a similar number of preventives in the ex-ante stage, but are much more likely to select every preventive service, particularly invasive services, once meeting with a doctor who is the same race. The effects are most pronounced for men who mistrust the medical system and for those who experienced greater hassle costs associated with their visit. Subjects are more likely to talk with a black doctor about their health problems and black doctors are more likely to write additional notes about the subjects. The results are most consistent with better patient-doctor communication during the encounter rather than differential quality of doctors or discrimination. Our findings suggest black doctors could help reduce cardiovascular mortality by 16 deaths per 100,000 per year — leading to a 19% reduction in the black-white male gap in cardiovascular mortality. |
| JEL: | C93 I12 I14 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24787&r=exp |
| By: | Tobias Regner (FSU Jena); Astrid Matthey (Max Planck Institute of Economics, Jena) |
| Abstract: | Self-signaling models predict less selfish behavior in a probabilistic giving setting as individuals are expected to invest in a pro-social identity. However, there is also substantial evidence that people tend to exploit situational excuses for selfish choices (for instance, uncertainty) and behave more selfishly. We contrast these two motivations experimentally in order to test which one is more prevalent in a reciprocal giving setting. Trustees' back transfer choices are elicited for five different transfer levels of the trustor. Moreover, we ask trustees to provide their back transfer schedule for different scenarios that vary the implementation probability of the back transfer. This design allows us to identify subjects who reciprocate and analyze how these reciprocators respond when self-image relevant factors are varied. Our results indicate that self-deception is prevalent when subjects make the back transfer choice. Twice as many subjects seem to exploit situational excuses than subjects who appear to invest in a pro-social identity. |
| Keywords: | social preferences, pro-social behavior, experiments, reciprocity, moral wiggle room, self-image concerns, self-signaling |
| JEL: | C72 C91 D80 D91 |
| Date: | 2017–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2017-018&r=exp |
| By: | Fabian Paetzel (Department of Economics & FOR 2104, Helmut-Schmidt-University); Rupert Sausgruber (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | We study the role of performance differences in a task requiring cognitive effort on in-group bias. We show that the in-group bias is strong in groups consisting of high-performing members, and it is weak in low-performing groups. This holds although high-performing subjects exhibit no in-group bias as members of minimal groups, whereas low-performing subjects strongly do. We also observe instances of low-performing subjects punishing the in-group favoritism of low-performing peers. The same does not occur in high-performing or minimal groups where subjects generally accept that decisions are in-group biased. |
| Keywords: | cognitive ability, group identity, entitlements, social preferences, minimal groups, punishment, social norms, social status |
| JEL: | C92 D31 D63 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp265&r=exp |
| By: | Enikolopov, Ruben |
| Abstract: | Using data from a field experiment across 500 villages in Afghanistan, we study how electoral accountability of local institutions affects the quality of governance. In villages with newly created elected councils, food aid distributed by local leaders is more likely to reach needy villagers. However, this effect is observed only if the council is mandated to be the entity responsible for managing the distribution. In the absence of such a mandate the presence of elected councils increases embezzlement without improving aid targeting. Thus, while elected councils can improve governance, unclear and overlapping mandates may increase rent-seeking and worsen governance outcomes. |
| Keywords: | democratization; field experiment; governance quality; Political Institutions |
| JEL: | D7 O1 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13053&r=exp |
| By: | Jose Apesteguia; Jörg Oechssler; Simon Weidenholzer |
| 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, imitatio, experiment. |
| JEL: | C91 D81 G12 G20 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1048&r=exp |
| 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. |
| JEL: | B41 C80 C90 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24781&r=exp |
| By: | Ali al-Nowaihi; Sanjit Dhami; Mengxing Wei |
| Abstract: | We formulate a simple quantum decision model of the Ellsberg paradox. We report the results of an experiment we performed to test the matching probabilities predicted by this model using an incentive compatible method. We find that the theoretical predictions of the model are in conformity with our experimental results. We compare the predictions of our quantum model with those of probably the most successful non-quantum model of ambiguity, namely, the source dependent model. The predictions of our quantum model are not statistically significantly different from those of the source dependent model. The source dependent model requires the specification of probability weighting functions in order to fit the evidence. On the other hand, our quantum model makes no recourse to probability weighting functions. This suggests that much of what is normally attributed to probability weighting may actually be due to quantum probability. |
| Keywords: | quantum probability, the Ellsberg paradox, the source dependent model, the law of total probability, the law of reciprocity, the Feynman rules, projective expected utility, bounded rationality, Diebold-Mariano forecasting tests |
| JEL: | D03 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7158&r=exp |
| By: | Paetzel, Fabian; Sausgruber, Rupert |
| Abstract: | We study the role of performance differences in a task requiring cognitive effort on in-group bias. We show that the in-group bias is strong in groups consisting of high-performing members, and it is weak in low-performing groups. This holds although high-performing subjects exhibit no in-group bias as members of minimal groups, whereas low-performing subjects strongly do. We also observe instances of low-performing subjects punishing the in-group favoritism of low-performing peers. The same does not occur in high-performing or minimal groups where subjects generally accept that decisions are in-group biased. |
| Keywords: | cognitive ability, group identity, entitlements, social preferences, minimal groups, punishment, social norms, social status |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:6448&r=exp |
| By: | Alberto Alesina; Armando Miano; Stefanie Stantcheva |
| 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. |
| JEL: | D71 D72 H2 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24733&r=exp |
| By: | Abhijit Banerjee; Emily Breza; Arun G. Chandrasekhar; Benjamin Golub |
| Abstract: | How should policymakers disseminate information: by broadcasting it widely (e.g., via mass media), or letting word spread from a small number of initially informed “seed” individuals? While conventional wisdom suggests delivering information more widely is better, we show theoretically and experimentally that this may not hold when people need to ask questions to fully comprehend the information they were given. In a field experiment during the chaotic 2016 Indian demonetization, we varied how information about demonetization’s official rules was delivered to villages on two dimensions: how many were initially informed (broadcasting versus seeding) and whether the identity of the initially informed was publicly disclosed (common knowledge). The quality of information aggregation is measured in three ways: the volume of conversations about demonetization, the level of knowledge about demonetization rules, and choice quality in a strongly incentivized decision dependent on understanding the rules. Our results are consistent with four predictions of a model in which people need others’ help to make the best use of announced information, but worry about signaling inability or unwillingness to correctly process the information they have access to. First, if who is informed is not publicized, broadcasting improves all three outcomes relative to seeding. Second, under seeding, publicizing who is informed improves all three outcomes. Third, when broadcasting, publicizing who is informed hurts along all three dimensions. Finally, when who is informed is made public, telling more individuals (broadcasting relative to seeding) is worse along all three dimensions. |
| JEL: | D8 O33 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24679&r=exp |
| By: | Leonardo Bursztyn; Alessandra L. González; David Yanagizawa-Drott |
| Abstract: | Through the custom of guardianship, husbands typically have the final word on their wives’ labor supply decisions in Saudi Arabia, a country with very low female labor force participation (FLFP). We provide incentivized evidence (both from an experimental sample in Riyadh and from a national sample) that the vast majority of young married men in Saudi Arabia privately support FLFP outside of home from a normative perspective, while they substantially underestimate the level of support for FLFP by other similar men – even men from their same social setting, such as their neighbors. We then show that randomly correcting these beliefs about others increases married men’s willingness to let their wives join the labor force (as measured by their costly sign-up for a job-matching service for their wives). Finally, we find that this decision maps onto real outcomes: four months after the main intervention, the wives of men in our original sample whose beliefs about acceptability of FLFP were corrected are more likely to have applied and interviewed for a job outside of home. Together, our evidence indicates a potentially important source of labor market frictions, where job search is underprovided due to misperceived social norms. |
| JEL: | C90 D83 D91 J22 Z10 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24736&r=exp |
| By: | Strobl, Renate (University of Basel); Wunsch, Conny (University of Basel) |
| 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: | C31 |
| Date: | 2018–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2018/19&r=exp |
| By: | Tristan Le Cotty (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Elodie Maitre d'Hotel (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - CIHEAM - Centre International des Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Raphael Soubeyran (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Julie Subervie (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | This paper investigates whether Burkinabe maize farmers' fertilizer-use decisionsare correlated with their risk and time preferences. We conducted a survey and a se-ries of hypothetical experiments on a sample of 1,500 farmers. We find that morepatient farmers do use more fertilizer, but it is only because they plant more maize (afertilizer-intensive crop) rather than because they use more fertilizer per hectare ofmaize planted. Conversely, we find no statistically significant link between risk aver-sion and fertilizer use. We use a simple two-period model, which suggests that riskaversion may indeed have an ambiguous effect on fertilizer use. |
| Keywords: | agriculture,risk aversion,time preferences,agricultural price,western africa,fertilizer,aversion au risque,prix agricole,burkina faso,afrique occidentale,engrais |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01429099&r=exp |
| By: | Tsvetkova, Milena; Wagner, Claudia; Mao, Andrew |
| Abstract: | From small communities to entire nations and society at large, inequality in wealth, social status, and power is one of the most pervasive and tenacious features of the social world. What causes inequality to emerge and persist? In this study, we investigate how the structure and rules of our interactions can increase inequality in social groups. Specifically, we look into the effects of four structural conditions—network structure, network fluidity, reputation tracking, and punishment institutions—on the distribution of earnings in network cooperation games. We analyze 33 experiments comprising 96 experimental conditions altogether. We find that there is more inequality in clustered networks compared to random networks, in fixed networks compared to randomly rewired and strategically updated networks, and in groups with punishment institutions compared to groups without. Secondary analyses suggest that the reasons inequality emerges under these conditions may have to do with the fact that fixed networks allow exploitation of the poor by the wealthy and clustered networks foster segregation between the poor and the wealthy, while the burden of costly punishment falls onto the poor, leaving them poorer. Surprisingly, we do not find evidence that inequality is affected by reputation in a systematic way but this could be because reputation needs to play out in a particular network environment in order to have an effect. Overall, our findings suggest possible strategies and interventions to decrease inequality and mitigate its negative impact, particularly in the context of mid- and large-sized organizations and online communities. |
| JEL: | J1 |
| Date: | 2018–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:89716&r=exp |
| By: | Bénabou, Roland; Falk, Armin; Tirole, Jean |
| 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. |
| Keywords: | consequentialism; deontology; imperatives; moral behavior; narratives; norms; organizations; prosocial behavior; rules |
| JEL: | D62 D64 D78 D83 D85 D9 H4 K42 L14 Z13 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13056&r=exp |
| By: | Amodio, Francesco; De Giorgi, Giacomo; Rahman, Aminur |
| Abstract: | Firms in developing countries often avoid paying taxes by making informal payments to tax officials. These bribes may raise the cost of operating a business, and the price charged to consumers. To decrease these costs, we designed a feedback incentive scheme for business tax inspectors that rewards them according to the anonymous evaluation submitted by inspected firms. We show theoretically that feedback incentives decrease the equilibrium bribe amount, but make firms with more inelastic demand more attractive for inspectors. A tilted scheme that attaches higher weights to the evaluation of smaller firms limits the scope for targeting and decreases the bribe amount to a lesser extent. We evaluate both schemes in a field experiment in the Kyrgyz Republic and find evidence that is consistent with the model predictions. By decreasing bribes, our intervention reduces the average cost for firms and the price they charge to consumers. Since fewer firms substitute bribes for taxes, tax revenues increase. Our study highlights the role of firm heterogeneity and market structure in shaping the relationship between firms and tax inspectors, and provides clear evidence of pass-through of bribes to consumers. |
| Keywords: | business tax; demand elasticity; incentives; market structure |
| JEL: | D22 D40 H26 H71 O12 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13055&r=exp |
| By: | Gill, David (Department of Economics, Purdue University); Prowse, Victoria (Department of Economics, Purdue University) |
| Abstract: | Using real effort to implement costly activities increases the likelihood that the motivations that drive effort provision in real life carry over to the laboratory. However, unobserved differences between subjects in the cost of real effort make quantitative prediction problematic. In this paper we present the slider task, which was designed by us to overcome the drawbacks of real-effort tasks. The slider task allows the researcher to collect precise and repeated observations of effort provision from the same subjects in a short time frame. The resulting high-quality panel data allow sophisticated statistical analysis. We illustrate these advantages in two ways. First, we show how to use panel data from the slider task to improve precision by controlling for persistent unobserved heterogeneity. Second, we show how to estimate effort costs at the subject level by exploiting within-subject variation in incentives across repetitions of the slider task. We also provide z-Tree code and practical guidance to help researchers implement the slider task. |
| Keywords: | Experimental methodology ; real effort ; effort provision ; cost of effort ; slider task ; design of laboratory experiments ; unobserved heterogeneity JEL Classification: C91 ; C13 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:382&r=exp |
| By: | Zoë Cullen; Ricardo Perez-Truglia |
| Abstract: | We study how employees learn about the salaries of their peers and managers and how their beliefs about those salaries affect their own behavior. We conducted a field experiment with a sample of 2,060 employees from a multi-billion dollar corporation. We combine rich data from surveys and administrative records with data from the experiment, which provided some employees with accurate information about the salaries of others. First, we document large misperceptions about salaries and identify some of their sources. Second, we find that perceived peer and manager salaries have a significant causal effect on employee behavior. These effects are different for horizontal and vertical comparisons. While higher perceived peer salary decreases effort, output, and retention, higher perceived manager salary has a positive effect on those same outcomes. We provide suggestive evidence for the underlying mechanisms. We conclude by discussing implications for pay inequality and pay transparency. |
| JEL: | J31 J38 M12 M52 Z13 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24841&r=exp |
| By: | Ariella Kahn-Lang; Kevin Lang |
| Abstract: | We use the exchange between Kearney/Levine and Jaeger/Joyce/Kaestner on “16 and Pregnant” to reexamine the use of DiD as a response to the failure of nature to properly design an experiment for us. We argue that 1) any DiD paper should address why the original levels of the experimental and control groups differed, and why this would not impact trends, 2) the parallel trends argument requires a justification of the chosen functional form and that the use of the interaction coefficients in probit and logit may be justified in some cases, and 3) parallel trends in the period prior to treatment is suggestive of counterfactual parallel trends, but parallel pre-trends is neither necessary nor sufficient for the parallel counterfactual trends condition to hold. Importantly, the purely statistical approach uses pretesting and thus generates the wrong standard errors. Moreover, we underline the dangers of implicitly or explicitly accepting the null hypothesis when failing to reject the absence of a differential pre-trend. This paper was motivated by two NBER working papers: w19795 and w24856 . |
| JEL: | C18 C21 J13 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24857&r=exp |
| By: | Victor Chernozhukov; Mert Demirer; Esther Duflo; Iván Fernández-Val |
| 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. It does not rely on strong assumptions. In particular, we don’t require conditions for consistency of the machine learning 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. An empirical application to the impact of micro-credit on economic development illustrates the use of the approach in randomized experiments. |
| JEL: | C18 C21 D14 G21 O16 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24678&r=exp |
| By: | Zawojska, Ewa; Bartczak, Anna; Czajkowski, Mikotaj |
| Abstract: | Stated preference literature suggests that to be incentivised to reveal preferences truthfully in a survey, respondents need to believe that a response in favour of a policy project of providing a public good increases chances of actual provision of the good (policy consequentiality) and that the cost of conducing the policy project stated in a survey will be actually collected upon the policy implementation (payment consequentiality). We investigate the effects of the two aspects of consequentiality beliefs on stated preferences in a field survey concerning renewable energy development in Poland. Using a hybrid choice model to capture unobservable beliefs in consequentiality, we find that latent beliefs in policy consequentiality and in payment consequentiality affect stated preferences differently: respondents believing in policy consequentiality prefer the project implementation to the status quo more than those believing in payment consequentiality; respondents believing in payment consequentiality state significantly lower willingness to pay for the project than those believing in policy consequentiality. Respondents with no clear opinion on the degree of the survey’s consequentiality reveal substantially different preferences; they are much less interested in seeing the proposed project implemented. We also find that respondents’ risk attitudes do not impinge neither on their self-reported perceptions over the survey’s consequentiality nor on their preferences. |
| Keywords: | Institutional and Behavioral Economics, Resource /Energy Economics and Policy, Risk and Uncertainty |
| Date: | 2017–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ags:caes17:258602&r=exp |
| By: | Rachel Cassidy; Marije Groot Bruinderink; Wendy Janssens; Karlijn Morsink |
| Abstract: | Use of technologies such as condoms must be agreed upon by both partners. In contexts where women have low bargaining power, many women may struggle to convince their partners to adopt. Introducing a version of the technology that is second-best from a social planner’s perspective, but more acceptable to men, may therefore improve adoption and welfare. We evaluate a field experiment introducing female condoms in the slums of Maputo, Mozambique. Female condoms offer marginally lower protection and higher unit cost than male condoms — which are already widely available — but lower discomfort and stigma to men. As predicted by our model, we find strongest adoption among women with low household bargaining power. The main margin of adoption is therefore from women previously having unprotected sex, rather than women substituting away from male condoms. We also observe an increase in the number of sex acts. A cost-benefit analysis shows how free provision of female condoms could be cost-effective. The findings highlight how policy should take into account the distribution of the costs and benefits of technology adoption, and of bargaining power, within the household. |
| JEL: | C78 J16 I12 O15 O3 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2018-08&r=exp |
| By: | Goel, Deepti; Deshpande, Ashwini |
| Abstract: | Economists are increasingly interested in subjective well-being, but the economic literature on perceptions of income adequacy, which is one of the factors that shapes subjective well-being, is small. Our paper fills this lacuna in the literature. We utilize nationally representative data on perceptions of amounts considered as remunerative earnings from self-employment in India, and examine how these are shaped by social identity, namely, caste. We also investigate if institutional change such as the introduction of an employment guarantee scheme alters these perceptions. Finally, we examine the relationship between caste identity and actual earnings. We find that caste identity does shape both perceptions of income adequacy as well as actual earnings: lower-ranked groups perceive lower amounts as being remunerative, and also earn lower amounts. Further, the employment guarantee scheme alters self-perceptions differentially for different caste groups, but in more nuanced ways than our ex-ante beliefs. |
| Keywords: | Caste,Perceptions,Income Adequacy,Discrimination,India |
| JEL: | J15 O15 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:232&r=exp |
| By: | Paul Pezanis-Christou (School of Economics, University of Adelaide); Werner Güth (Max Planck Institute for Research on Collective Goods (Bonn) and LUISS (Rome)) |
| Abstract: | We justify risk neutral equilibrium bidding in commonly known fair division games with incomplete information in an evolutionary setup by postulating (i) minimal common knowledge assumptions, (ii) optimally responding agents to conjectural beliefs about how others behave and (iii) evolution of conjectural beliefs with fitness measured by expected payoffs. We axiomatically justify the game forms, derive the evolutionary games for first- and second-price fair division and determine the evolutionarily stable conjectures. The latter coincide with equilibrium bidding, irrespectively of the number of bidders, i.e., heuristic belief adaptation implies the same bidding behavior as equilibrium analysis based on common knowledge and counterfactual bids. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2018-09&r=exp |
| By: | Jacobus Cilliers (McCourt School of Public Policy, Georgetown University); Brahm Fleisch (University of Witwatersrand’s School of Education, South Africa); Cas Prinsloo (University of Witwatersrand’s School of Education, South Africa); Stephen Taylor (Department of Basic Education, Government of South Africa and Research Associate of the Department of Economics, University of Stellenbosch) |
| Abstract: | We experimentally compare two modes of in-service professional development for South African public primary school teachers. In both programs teachers received the same learning material and daily lesson plans, aligned to the official home language literacy curriculum. Pupils exposed to two years of the program improved their reading proficiency by 0.12 standard deviations if their teachers received centralized training, compared to 0.24 if their teachers received in-class coaching. Classroom observations reveal that teachers were more likely to split pupils into smaller reading groups, which enabled individualized attention and more opportunities to practice reading. Results vary by class size and baseline pupil reading proficiency. |
| Keywords: | South African Education, Randomised Experiment, Teacher coaching and training, Early Grade Reading Study |
| JEL: | I20 I21 I28 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers308&r=exp |
| By: | Clement A. Tisdell |
| Abstract: | Provides a sketch of the development of the concept of bounded rationality in economic thought. The concept of rationality has several meanings. These different meanings are taken into account in considering the further development of economic thought. Different views of ecological rationality are critically examined in the light of these concepts. Whether or not various theories of behavioral economics can be classified as exhibiting bounded rationality is discussed. Satisficing behavior is commonly associated with bounded rationality but as demonstrated, it is not the only reason for adopting such behavior. The idea of some authors that optimization models under constraints are of little or no relevance to bounded rationality is rejected. Bounded rationality is an important contributor to the diversity of (economic) behaviors. This is stressed. Whether or not a behavior is rational depends to a considerable extent on the situation (the constraints) that decision-makers or actors face. The time-constraint is very important as an influence on the rationality of decisions. Aspects of this are covered. |
| Keywords: | Institutional and Behavioral Economics |
| Date: | 2017–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uqseet:264873&r=exp |
| By: | Gutierrez, Italo A. (RAND); Molina, Oswaldo (Universidad del Pacifico); Nopo, Hugo R. (GRADE) |
| Abstract: | Despite the growing evidence on the negative consequences of school bullying, there is no consensus regarding the most effective strategies to fight this problem. We study the impact of a randomized intervention to reduce school bullying in urban public schools in Peru, a country where violence re-mains a major challenge. The intervention consisted of two components: i) increasing awareness among students about the negative consequences of bullying and encouraging them to stand against this problem, and ii) facilitate students' ability to report violent incidents, by promoting the use of a new Government program for submitting online confidential reports. Our results indicate that the intervention reduced students' bystander behavior and increased their willingness to report violence. Using administrative data, we also find that the intervention reduced the likelihood of changing schools and of dropping out, and improved student achievement in standardized tests in the medium term. Importantly, we find that the intervention had a more limited impact among children that are exposed to violence at home. While depression and isolation were significantly reduced among non-exposed students, this effect disappears among children living in a violent environment. Overall, these findings are promising and reveal that encouraging students to stand up against bullying and providing them with the means to do it may have beneficial effects over their well-being and educational performance, even in violent settings. |
| Keywords: | school violence, anti-bullying programs, student achievement, school dropout, randomized control trial, Peru |
| JEL: | D04 I20 I28 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11623&r=exp |
| By: | Achyuta Adhvaryu; Anant Nyshadham; Teresa Molina; Jorge Tamayo |
| Abstract: | Can investing in children who faced adverse events in early childhood help them catch up? We answer this question using two orthogonal sources of variation – resource availability at birth (local rainfall) and cash incentives for school enrollment – to identify the interaction between early endowments and investments in children. We find that adverse rainfall in the year of birth decreases grade attainment, post-secondary enrollment, and employment outcomes. But children whose families were randomized to receive conditional cash transfers experienced a much smaller decline: each additional year of program exposure during childhood mitigated more than 20 percent of early disadvantage. |
| JEL: | I15 I25 O12 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24848&r=exp |
| By: | Martin Ravallion (Georgetown University) |
| Abstract: | The rising popularity of randomized controlled trials (RCTs) in development applications has come with continuing debates on the pros and cons of this approach. The paper revisits the issues. While RCTs have a place in the toolkit for impact evaluation, an unconditional preference for RCTs as the “gold standard” is questionable. The statistical case is unclear on a priori grounds; a stronger ethical defense is often called for; and there is a risk of distorting the evidence-base for informing policymaking. Going forward, pressing knowledge gaps should drive the questions asked and how they are answered, not the methodological preferences of some researchers. The gold standard is the best method for the question at hand. |
| Date: | 2018–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:492&r=exp |
| By: | Klaus Desmet; Joseph Gomes; Ignacio Ortuño-Ortín |
| Abstract: | This paper analyzes the importance of local interaction between individuals of different linguistic groups for the provision of public goods at the national level. The micro-founded conceptual framework we develop predicts that a country's public goods (i) decrease in its overall linguistic fractionalization, and (ii) either increase or decrease in its local learning multiplier, a measure of how local interaction affects antagonism towards other groups in the society at large. After constructing a 5 km by 5 km dataset on language use for 223 countries, we empirically explore these theoretical predictions. While overall fractionalization worsens public goods outcomes, we find a positive causal effect of local learning. Conditional on a country's overall diversity, public goods outcomes are maximized when there are a few large-sized groups and the diversity of each location mirrors that of the country as a whole. Our large-scale study, spanning the entire globe, confirms experimental micro-evidence in favor of contact theory. |
| JEL: | H4 O18 O57 R1 Z10 Z13 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24694&r=exp |
| By: | Guilhem Lecouteux (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, UCA - Université Côte d'Azur) |
| Date: | 2018–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01837218&r=exp |
| By: | Randall Akee; William Copeland; E. Jane Costello; John B. Holbein; Emilia Simeonova |
| Abstract: | Despite clear evidence of an income gradient in political participation, research has not been able to isolate the effects of income on voting from other household characteristics. We investigate how exogenous unconditional cash transfers affected voting in US elections across two generations from the same household. The results confirm that there is strong inter-generational correlation in voting across parents and their children. We also show—consistent with theory—that household receipt of unconditional cash transfers has heterogeneous effects on the civic participation of children coming from different socio-economic backgrounds. It increases children’s voting propensity in adulthood among those raised in initially poorer families. However, income transfers have no effect on parents, regardless of initial income levels. These results suggest that family circumstance during childhood—income in particular—plays a role in influencing levels of political participation in the United States. Further, in the absence of outside shocks, income differences are transmitted across generations and likely contribute to the intergenerational transmission of social and political inequality. |
| JEL: | D31 D72 H53 H75 I38 J15 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24770&r=exp |