nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒12‒10
24 papers chosen by

  1. Social Norm Perception in Economic Laboratory Experiments: Inexperienced versus Experienced Participants By Schmidt, Robert J.; Schwieren, Christiane; Sproten, Alec N.
  2. Analysing Group Contract Design Using a Lab and a Lab-in-the-Field Threshold Public Good Experiment By Bouma, J.A.; Nguyen, Binh; van der Heijden, Eline; Dijk, J.J.
  3. Explaining market behavior of farmers - Findings from an experimental beauty contest game with different contexts By Hohler, J.; Muller, J.; Kuhl, R.
  4. Intra-household Inequality, Fairness and Productivity. Evidence from A Real Effort Experiment By Faith Masekesa; Munro Alistair
  5. Physicians’ incentives to adopt personalized medicine: experimental evidence By Bardey, David; Kembou Nzalé, Samuel; Ventelou, Bruno
  6. Altruism, Fast and Slow? Evidence from a Meta-Analysis and a New Experiment By Hanna Fromell; Daniele Nosenzo; Trudy Owens
  7. Awareness and Demand for Sanitary Pads: Evidence from a Randomized Experiment in Communities of Nepal By Vinish Shrestha; Rashesh Shrestha
  8. Competing on the Holodeck: The Effect of Virtual Peers and Heterogeneity in Dynamic Tournaments By Graff, Frederik; Grund, Christian; Harbring, Christine
  9. Who runs first to the bank? By Hubert Janos Kiss; Ismael Rodriguez-Lara; Alfonso Rosa-Garcia
  10. Improving Drinking Water Quality in South Korea: A Choice Experiment By Gschwandtner, A.
  11. Which Two Heads are Better than One? Uncovering the Positive Effects of Diversity in Creative Teams By Dutcher, E. Glenn; Rodet, Cortney S.
  12. Managing Self-organization of Expectations through Monetary Policy: a Macro Experiment By Assenza, Tiziana; Heemeijer, P.; Hommes, C.H.; Massaro, D.
  13. Comparing the productive effects of cash and food transfers in a crisis setting: Evidence from a randomized experiment in Yemen. By Schwab, B.
  14. High-Capacity Donors’ Preferences for Charitable Giving By Mackenzie Alston; Catherine Eckel; Jonathan Meer; Wei Zhan
  15. Behavioral & experimental macroeconomics and policy analysis: a complex systems approach By Hommes, Cars
  16. Unblurring the Market for Vision Correction: A Willingness to Pay Experiment in Rural Burkina Faso By Grimm, Michael; Hartwig, Renate
  17. Gaining Experience as Principal or Agent. An Experimental Study By Giovanni Ponti; Marcello Sartarelli; Iryna Sikora; Zhukova Vita
  18. High-Powered Performance Pay and Crowding out of Non-Monetary Motives By Huffman, David B.; Bognanno, Michael L.
  19. The Causal Effect of Trust By Bartling, Björn; Fehr, Ernst; Huffman, David B.; Netzer, Nick
  20. Experimental Estimates of the Student Attendance Production Function By Tran, Long; Gershenson, Seth
  21. How Do Households Allocate Risk? By Christoph Engel; Alexandra Fedorets; Olga Gorelkina
  22. Repayment Flexibility and Risk Taking: Experimental Evidence from Credit Contracts By Gulesci, Selim
  24. Wrongful Conviction, Persuasion and Loss Aversion By Robertson, Matthew J.

  1. By: Schmidt, Robert J.; Schwieren, Christiane; Sproten, Alec N.
    Abstract: We study whether social norm perception in economic laboratory experiments differs between subjects that participate for the first time and subjects that already participated many times. Consistent with previous studies, inexperienced subjects pronounce egalitarianism, while experienced subjects pronounce efficiency and the maximization of their own earnings. Moreover, experienced subjects evaluate exploitation and deception of other individuals in the lab as more appropriate than inexperienced subjects. Field norms also slightly differ between the two groups, but to a lower extent than lab norms. We therefore conclude that learning effects are more important than selection effects for explaining differences between inexperienced and experienced participants. We also conduct exploratory analyses on the relation between lab and field norms and find that behaving unsocial in the lab is considered substantially more appropriate than in the field. This appears inconsistent with the hypothesis that social preferences measured in economic experiments are inflated and indicates a distinction between revealed social preferences and the elicitation of normatively appropriate behavior.
    Keywords: laboratory experiments; selection effects; learning; generalizability; methodology
    Date: 2018–11–28
  2. By: Bouma, J.A. (Tilburg University, Center For Economic Research); Nguyen, Binh (Tilburg University, Center For Economic Research); van der Heijden, Eline (Tilburg University, Center For Economic Research); Dijk, J.J.
    Abstract: This paper presents the results of a threshold public goods game experiment with heterogeneous players. The experiment is designed in close collaboration with the Dutch association of agri-environmental farmer collectives. Subjects are recruited at a university (“the lab”) and a farm management training centre (“lab-in-the-field”). The treatments have two different distribution rules which are varied in a within-subjects manner. After subjects have experienced both, they can vote for one of the two rules: either a differentiated bonus that results in equal payoff for all, or an undifferentiated, equal share of the group bonus. In a between-subjects manner, subjects can vote for a (minimum or average) threshold or are faced with an exogenous threshold. The results indicate that exogenous thresholds perform better, possibly because the focal point they provide facilitates coordination. With regard to the two distribution rules, the results are mixed: average contributions and payoffs are higher in the lab under the ‘equal-payoff’ rule, but there is no significant difference between the two in the lab-in-the-field, possibly because contributions in the lab-in-the-field are much less efficient. Overall, our results suggest that environmental payment schemes should not only consider farmer heterogeneity in the design of group contracts, but pay explicit attention to coordination problems as well.
    Keywords: Threshold public good games; endogenous choice; lab-in-the-field; collective agri-envorenmental management; group contracts; distribution rules; heterogeneous subjects
    JEL: H41 C92 C93 D70 Q57
    Date: 2018
  3. By: Hohler, J.; Muller, J.; Kuhl, R.
    Abstract: The supply in a market can be interpreted as a result of expectations of market participants about the behavior of other market participants and about the demand. Thus, a production decision has the character of a beauty contest problem. In addition, society s expectations may play a role in the production decision. We want to examine the decision-making behavior of farmers in three different, realistic scenarios: fungicide use, wheat production, and production of animal welfare-friendly meat. With an incentive-compatible beauty contest experiment, we show if and how farmers consider the behavior of other farmers in their own decisions. In addition, in an initial exploratory analysis, we examine the impact of different contexts and influencing factors on decision-making behavior. Initial results show that farmers take into account the behavior of other farmers, but seemingly misinterpret the other participants impact on their own outcome. Acknowledgement :
    Keywords: Marketing
    Date: 2018–07
  4. By: Faith Masekesa (National Graduate Institute for Policy Studies, Tokyo, Japan); Munro Alistair (National Graduate Institute for Policy Studies, Tokyo, Japan)
    Abstract: This paper investigates experimentally how changes in wage rates and entitlements affect individual productivity in lab-in-the-field experiments run with married couples from rural regions in Uganda. We design a game in which the production task itself is straightforward, but where the rules governing payment vary across subjects and between rounds. In some cases, all the value of output goes to the husband; in other cases all goes to the wife; in other cases the value of output is shared equally and finally in some cases each spouse receives income according to only their own output. To consider the effects of wage inequality we vary the price paid for each completed item so that the ratio of male to female wages varies from 0.5 to 2. All this is done transparently so that both partners know the rules of the game. The results generally indicate that a rise in relative wages lowers relative effort, a result that is contrary to the most straightforward interpretation of standard models of the household, but compatible with some models of fairness. Men do not generally respond strongly to treatment. In contrast, women fs labour supply is strongly backward bending when all income goes to the husband, but effort rises with wages when each spouse gets to keep their own earnings. The results therefore suggest that the effects of reforming or removing one inequality may depend critically on the existence of other inequalities.
    Date: 2018–11
  5. By: Bardey, David; Kembou Nzalé, Samuel; Ventelou, Bruno
    Abstract: We study physicians’ incentives to use personalized medicine techniques, replicating the physician’s trade-offs under the option of personalized medicine information. In a laboratory experiment where prospective physicians play a dual-agent real-effort game, we vary both the information structure (free access versus paid access to personalized medicine information) and the payment scheme (pay-for-performance (P4P), capitation (CAP) and fee-for-service (FFS)) by applying a within-subject design. Our results are threefold. i) Compared to FFS and CAP, the P4P payment scheme strongly impacts the decision to adopt personalized medicine. ii) Although expected to dominate the other schemes, P4P is not always efficient in transforming free access to personalized medicine into higher quality patient care. iii) When it has to be paid for, personalized medicine is positively associated with quality, suggesting that subjects tend to make better use of information that comes at a cost. We conclude that this last result can be considered a “commitment device”. However, quantification of our results suggests that the positive impact of the commitment device observed is not strong enough to justify generalizing paid access to personalized medicine.
    Keywords: Personalized medicine; fee-for-service; capitation; pay-for-performance; physician altruism and laboratory experiment
    JEL: C91 I11
    Date: 2018–11
  6. By: Hanna Fromell (Department of Economics, Econometrics, and Finance, University of Groningen); Daniele Nosenzo (Luxembourg Institute of Socio-Economic Research (LISER) and School of Economics, University of Nottingham); Trudy Owens (University of Nottingham)
    Abstract: Can we use the lens of dual-system theories to explain altruistic behavior? In recent years this question has attracted the interest of both economists and psychologists. We contribute to this emerging literature, by reporting both the results of a meta-study of the literature and a new experiment. Our meta-study is based on 19 experimental studies conducted with nearly 11,000 subjects. We show that the overall effect of manipulating cognitive resources to promote the “intuitive†system at the expense of the 'deliberative' system is very close to zero. We argue that this null result could be because the interventions used in the existing literature to manipulate cognitive resources are vulnerable to the presence of heterogeneity in the direction of the effect of the intervention. We design a new experiment that is not vulnerable to this potential heterogeneity. We still fail to find support for the notion that altruistic choices are the result of a conflict between the intuitive and deliberative systems. Taken together, the findings of our meta-study and the new experiment offer little support for dual-system theories of altruistic behavior.
    Keywords: altruism; giving; dictator game; dual-system model; intuition; deliberation; selfcontrol; willpower; depletion; Stroop task
    Date: 2018
  7. By: Vinish Shrestha (Department of Economics, Towson University); Rashesh Shrestha (Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Improving management of menstrual health by using modern but relatively costlier sanitary products can improve female’s health and schooling outcomes. However, menstruation is heavily stigmatized and managed using traditional practices in some developing nations. Price subsidies can potentially increase take-up, but its cost-effectiveness depends on the underlying demand elasticity. To understand whether awareness can increase demand in one such setting in Nepal, we conduct a field experiment in which treatment group was provided awareness regarding women’s health, including menstrual hygiene. In addition, both treatment and control groups received randomly allocated levels of discount on sanitary pad. Using information on redemption, we estimate the demand curves for treatment and control groups. Demand is downward sloping for both groups and there is a rightward-shift in the demand of treatment group. The effect of awareness treatment is largest at 50% discount level, with coupon redemption increasing by 23-26 percentage points due to awareness. We also estimate spillover effects of our awareness treatment, which turn out to be modest but yet economically relevant. The findings suggest that subsidies coupled with awareness program increases take-up of a relatively more advanced menstrual health technology and can promote cost-savings in a longer term.
    Keywords: Demand for health products, awareness, estimating elasticity, menstrual health.
    JEL: I15 D12 O33
    Date: 2018–11
  8. By: Graff, Frederik (RWTH Aachen University); Grund, Christian (RWTH Aachen University); Harbring, Christine (RWTH Aachen University)
    Abstract: We propose experiments in virtual reality (VR) as a new approach to examining behavior in an economic context, e.g., heterogeneity in dynamic tournaments. We simulate a realistic working situation in a highly immersive environment. Implementing a tournament in VR, we are able to mitigate the reflection problem, which usually undermines research on dynamic interaction. Moreover, VR allows us to ceteris paribus control for the performance of the virtual peer (humanoid avatar), and thus to get an understanding of the reaction of the subject to the avatar in a really dynamic setting, as the subject is constantly able to observe the avatar's performance. Based on a first experimental phase, we match our subjects with an avatar yielding a specific output. We observe that the subjects' performance is highest in a homogeneous tournament, i.e., when they compete against an avatar achieving the same output as they did in the preceding phase. Interestingly, these results are particularly driven by peer effects rather than by tournament incentives. We extensively track the behavior of subjects and the particular situation and, e.g., examine the role of intermediate score differences and the degree of the subjects' movements.
    Keywords: reflection problem, tournament, peer effects, real effort, virtual reality, avatar, heterogeneity
    JEL: C91 D9 J33 M52
    Date: 2018–10
  9. By: Hubert Janos Kiss (Momentum (LD-004/2010) Game Theory Research Group Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Department of Economics, Eötvös Loránd University, Budapest, Hungary); Ismael Rodriguez-Lara (Departamento de Teoría e Historia Económica Universidad de Granada); Alfonso Rosa-Garcia (Facultad de Ciencias Jurídicas y de la Empresa, Universidad Católica San Antonio, Murcia, Spain)
    Abstract: We study how lines form endogenously in front of banks when depositors differ in their liquidity needs. Our model has two stages. In the first one, depositors choose the level of costly effort they want to exert to arrive early at the bank which determines the order of decisions. In the second stage, depositors decide whether to withdraw or to keep the funds deposited. We consider two different informational environments (simultaneous and sequential) that differ in whether or not depositors can observe the decision of others during the second stage of the game. We show theoretically that the informational environment affects the emergence of bank runs and thus should influence the willingness to rush to the bank. We test the predictions in the lab, where we gather extensive data on individual traits to account for depositors' heterogeneity; e.g. socio-demographics, uncertainty attitudes or personality traits. We find no significant differences in the costly effort to arrive early at the bank neither across the informational environments, nor according to the liquidity needs of the depositors. In the sequential environment, some depositors rush to the bank because they are irrational and do not recognize the benefits of observability in fostering the coordination on the no-bank run outcome. There is also evidence that some depositors rush to keep their funds deposited and to facilitate coordination on the efficient outcome. Finally, we document that loss aversion is an important factor in the formation of the line.
    Keywords: bank runs, coordination problems, endogenous formation of lines, loss aversion, risk aversion, experimental economics, game theory, sequential games, simultaneous games
    JEL: C91 D03 D8 G02 J16
    Date: 2018–10
  10. By: Gschwandtner, A.
    Abstract: Increased pollution leads to a constant decrease of drinking water quality worldwide. Due to safety concerns, unpleasant taste and odour only about 3% of the population in South Korea is drinking untreated tap water. The present study uses choice experiments and cost-benefit analysis to investigate the feasibility of installing advanced water treatments in Cheongju waterworks in South Korea. The waterworks is situated in the middle of the country and is providing more than half a million people with drinking water. The study shows that the lower bound of the median WTP for installing a new advanced water treatment system is about $ 2 US/month, which is similar to the average expenditures for bottled water per household in South Korea. Scenarios under which the instalment of the advanced water treatments is feasible are discussed together with environmental solutions in the long-run. Acknowledgement : The authors would like to thank Rob Fraser for setting the road map for this research. They would also like to thank Iain Fraser for his help with the design of the choice experiment and Korea-Water for sponsoring this project.
    Keywords: Resource/Energy Economics and Policy
    Date: 2018–07
  11. By: Dutcher, E. Glenn; Rodet, Cortney S.
    Abstract: Creative teams drive the idea-economy, yet the determinants of a team's ability to create new ideas are not universally agreed upon. Group-level diversity has gained the most traction as an explanation, where a team's performance is usually attributed to diversity over observed characteristics such as race, gender, or functional expertise. Most agree that these characteristics are not especially important, but rather serve as an indicator of diversity in experiences, which is the actual mechanism that improves team ability. We formalize and test if experientially diverse groups produce more ideas. Because group assignment to projects in the field is rarely exogenous, and experiential diversity is not measured in observational data, we use a laboratory experiment to test our proposal. We find that experientially diverse teams create more ideas and also find no additional effect for gender, racial, socioeconomic, or personality diversity. Our general finding for why diversity may be important indicates that if a correlation exists between characteristic diversity and experiential diversity, the characteristically diverse team will have a higher ability. This generalization can be used to unify divergent results from prior studies and can help explain how dissimilar corporate diversity policies could be equally successful.
    Keywords: Diversity, Creativity, Group Production, Experimental Economics
    JEL: C90 C92 J24 M50 O30 O31 O34
    Date: 2018–11–11
  12. By: Assenza, Tiziana; Heemeijer, P.; Hommes, C.H.; Massaro, D.
    Abstract: The New Keynesian theory of inflation determination is tested in this paper by means of laboratory experiments. We find that the Taylor principle is a necessary condition to ensure convergence to the inflation target, but it is not sufficient. Using a behavioral model of expectation formation, we show how heterogeneous expectations tend to self-organize on different forecasting strategies depending on monetary policy. Finally, we link the central bank ability to control inflation to the impact that monetary policy has on the type of feedback {positive or negative{ between expectations and realizations of aggregate variables and in turn on the composition of subjects with respect to the type of forecasting rules they use.
    Keywords: Laboratory Experiments; Monetary Policy; Expectations; Taylor principle
    JEL: C91 C92 D84 E52
    Date: 2018–11
  13. By: Schwab, B.
    Abstract: The productive impacts of transfer programs have received increased attention. However, little is known about such effects in emergency and crisis settings. Even less is known about whether transfer type a food basket or cash grant influences the productive potential of such transfers. Theory suggests that while cash transfers can relieve liquidity constraints associated with investments, subsidized food provision may prevent households from retreating to conservative income generating strategies by acting as a type of insurance during volatile periods. Using a randomized field experiment in Yemen, we contrast the effects of transfer modality. The results demonstrate a modest productive impact of both modalities, and suggest a role for both liquidity and price risk channels. Cash transfer recipients invested relatively more in activities with higher liquidity requirements (livestock), while food recipients incorporated higher return crops into their agricultural portfolio. Acknowledgement :
    Keywords: Food Security and Poverty
    Date: 2018–07
  14. By: Mackenzie Alston; Catherine Eckel; Jonathan Meer; Wei Zhan
    Abstract: How can charities solicit high-capacity donors to provide the funds for matching grants and leadership gifts? In conjunction with one of Texas A&M University’s fundraising organizations, we conducted a field experiment to study whether high-income donors respond to non-personal solicitations, as well as the effect of allowing for directed giving on high-income donors and their willingness to direct their donations towards overhead costs. We found that high-income donors are not responsive to letters or e-mails. The option to direct giving had no effect on the probability of donating or the amount donated. Our results suggest that motivating high-income donors requires more personal communication.
    JEL: D64 H41
    Date: 2018–11
  15. By: Hommes, Cars
    Abstract: This survey discusses behavioral and experimental macroeconomics emphasizing a complex systems perspective. The economy consists of boundedly rational heterogeneous agents who do not fully understand their complex environment and use simple decision heuristics. Central to our survey is the question under which conditions a complex macro-system of interacting agents may or may not coordinate on the rational equilibrium outcome. A general finding is that under positive expectations feedback (strategic complementarity) – where optimistic (pessimistic) expectations can cause a boom (bust) – coordination failures are quite common. The economy is then rather unstable and persistent aggregate fluctuations arise strongly amplified by coordination on trend-following behavior leading to (almost-)self-fulfilling equilibria. Heterogeneous expectations and heuristics switching models match this observed micro and macro behaviour surprisingly well. We also discuss policy implications of this coordination failure on the perfectly rational aggregate outcome and how policy can help to manage the self-organization process of a complex economic system. JEL Classification: D84, D83, E32, C92
    Keywords: almost self-fulfilling equilibria, coordination failure, expectations feedback, experimental & behavioral macro-economics, learning, simple heuristics
    Date: 2018–11
  16. By: Grimm, Michael (University of Passau); Hartwig, Renate (University of Namur)
    Abstract: We assess the willingness to pay (WTP) for eyeglasses in an adult population in rural Burkina Faso using a variant of the Becker-DeGroot-Marschak (BDM) method. We combine the BDM approach with video and deferred payment options to analyze the role of information and liquidity constraints. Furthermore, we exploit variation in reservation and transaction prices to study potential screening and sunk cost effects. Our main results show that, consistent with the over-exclusion perspective documented for essential health products, the willingness to pay for glasses is low, amounting to 20% of the current market price. Information provided through a video raises the willingness to pay for corrective glasses by 16%. In contrast, deferred payment does not affect the willingness to pay. Finally, we find no evidence of screening or sunk cost effects. Overall our results lend support to subsidization of eyeglasses in a resource poor setting.
    Keywords: eyeglasses, information constraint, liquidity constraint, willingness to pay, Burkina Faso
    JEL: D11 D12 D83 I15
    Date: 2018–10
  17. By: Giovanni Ponti (Universidad de Alicante); Marcello Sartarelli (Dpto. Fundamentos del Análisis Económico); Iryna Sikora (KPMG España); Zhukova Vita (Dpto. Fundamentos del Análisis Económico)
    Abstract: We study experimentally whether decisions in a principal-agent model differ when subjects gain experience by changing roles rather being in a ¿xed role over time. In addition, we examine whether increasing principals’ pro¿t opportunities has an impact on their decisions. To this aim, we use a stylised labour market where multiple principals compete to hire teams of two agents by o¿ering wage contracts and claiming residual pro¿ts after paying agents. Players’ roles, either assigned randomly every round or ¿xed, and principals’ pro¿t opportunities, either high or low, vary in a between-subject design. We ¿nd that both changing roles and facing high pro¿t opportunities leads principals to o¿er more frequently e¿cient contracts in inducing both agents to put e¿ort and to higher payo¿s for everyone, with some complementarity between role changes and pro¿t opportunities.
    Keywords: direct-response method, experience, ¿xed role, laboratory experiment, principal-agent, pro¿t opportunities, role change, stakes size
    JEL: C91 C92 D8 J41
    Date: 2018–11
  18. By: Huffman, David B. (University of Pittsburgh); Bognanno, Michael L. (Temple University)
    Abstract: A previous literature cautions that paying workers for performance might crowd out non-monetary motives to work hard. Empirical evidence from the field, however, has been based on between-subjects designs that are best suited for detecting crowding out due to low-powered incentives. High-powered incentives in the workplace tend to increase output, but it is unknown whether this masks crowding out. This paper uses a within-subject experimental design and finds evidence that crowding out also extends to high-powered incentives, in a real work setting with paid workers. There is individual heterogeneity, however, with a minority of workers report crowding in of motivation. Thus, the impact of performance pay might depend on the mix of worker types.
    Keywords: intrinsic motivation, incentives, non-cognitive skills, experiment
    JEL: D03 J22 J33
    Date: 2018–10
  19. By: Bartling, Björn (University of Zurich); Fehr, Ernst (University of Zurich); Huffman, David B. (University of Pittsburgh); Netzer, Nick (University of Zurich)
    Abstract: Trust affects almost all human relationships – in families, organizations, markets and politics. However, identifying the conditions under which trust, defined as people's beliefs in the trustworthiness of others, has a causal effect on the efficiency of human interactions has proven to be difficult. We show experimentally and theoretically that trust indeed has a causal effect. The duration of the effect depends, however, on whether initial trust variations are supported by multiple equilibria. We study a repeated principal-agent game with multiple equilibria and document empirically that an efficient equilibrium is selected if principals believe that agents are trustworthy, while players coordinate on an inefficient equilibrium if principals believe that agents are untrustworthy. Yet, if we change the institutional environment such that there is a unique equilibrium, initial variations in trust have short-run effects only. Moreover, if we weaken contract enforcement in the latter environment, exogenous variations in trust do not even have a short-run effect. The institutional environment thus appears to be key for whether trust has causal effects and whether the effects are transient or persistent.
    Keywords: trust, causality, equilibrium selection, belief distortions, incomplete contracts, screening, institutions
    JEL: C91 D02 D91 E02
    Date: 2018–10
  20. By: Tran, Long (American University); Gershenson, Seth (American University)
    Abstract: Student attendance is both a critical input and intermediate output of the education production function. However, the malleable classroom-level determinants of student attendance are poorly understood. We estimate the causal effect of class size and observable teacher qualifications on student attendance rates by leveraging the random classroom assignments made by Tennessee's Project STAR (Student/Teacher Achievement Ratio) class size experiment. A ten-student increase in class size raises the probability of being chronically absent by about three percentage points (21%). For black students, random assignment to a black teacher reduces the probability of chronic absence by 3.1 percentage points (26%). These suggest that a small, but nontrivial, share (about 5%) of class-size and race-match effects on student achievement are driven by changes in students' attendance habits.
    Keywords: education production function, student attendance, chronic absence, class size
    JEL: I2
    Date: 2018–10
  21. By: Christoph Engel (Max Planck Institute for Research on Collective Goods); Alexandra Fedorets (German Institute for Economic Research (DIW Berlin)); Olga Gorelkina (University of Liverpool - Management School)
    Abstract: Individuals often have to decide to which degree of risk they want to expose others, or how much risk to accept if their choice has an externality on third parties. One typical application is a household. We run an experiment in the German Socio-Economic Panel with two members from 494 households. Participants have a good estimate of each other’s risk preferences, even if not explicitly informed. They do not simply match this preference when deciding on behalf of the other household member, but shy away from exposing others to risk. We model the situation, and we find four distinct types of individuals, and two distinct types of households.
    Date: 2018–11
  22. By: Gulesci, Selim
    Abstract: A widely-held view is that small firms in developing countries are prevented from making profitable investments by lack of access to credit and insurance markets. One solution is to provide repayment flexibility in credit contracts. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of fluctuations in income. In a field experiment among microcredit borrowers in Bangladesh, we randomly assign the option to delay up to 2 monthly repayments at any point during a 12-month loan cycle. The flexible contract leads to substantial (0.2 standard deviation) improvements in business outcomes and socio-economic status, combined with lower default rates. The results are driven by an increase in entrepreneurial risk taking, implying that the primary mechanism is insurance provision. Repayment flexibility also attracts less risk-averse borrowers. Our findings suggest that lack of insurance is an important constraint for small firms but that a simple financial product that increases repayment flexibility can be an effective tool for enabling enterprise growth.
    Keywords: credit; entrepreneurship; Insurance; Microfinance; Repayment flexibility
    Date: 2018–11
  23. By: Anna Yurchenko (National Research University Higher School of Economics); Anastasiya Lopukhina (National Research University Higher School of Economics); Olga Dragoy (National Research University Higher School of Economics)
    Abstract: Previous research showed that polysemous and homonymous words are processed differently. However, mechanisms underlying processing of ambiguous words are still unclear. The goal of the present study was to investigate comprehension of metonymies, metaphors, and homonyms using priming paradigm and the method of event-related potentials (ERPs). We asked participants to read two-word phrases with ambiguous words and make a sensicality judgement. The results demonstrated the difference between metonymic and metaphorical senses of polysemous words in the amount of priming for the literal sense. The priming effect between metonymic and literal senses supports the idea that these senses share a single representation in the mental lexicon. In contrast, metaphorical senses of polysemous words showed a very limited priming effect on literal senses of the same words. Similar results were observed for different meanings of homonymous words. We conclude that metaphorical senses should have separate representations in the mental lexicon similarly to homonyms
    Keywords: ambiguous words, metonymy, metaphor, homonymy, event-related potentials, the Russian language
    JEL: Z
    Date: 2018
  24. By: Robertson, Matthew J. (Coventry University)
    Abstract: When can a prosecutor persuade a loss-averse judge to increase her rate of conviction? Motivated by empirical evidence, I study a model of persuasion in which the loss a judge incurs from wrongful conviction looms larger than the gain from a just verdict. I show that, surprisingly, the prosecutor benefits from persuasion even when the judge is extremely loss-averse. However, a necessary condition is that the prosecutor does not underestimate the judge’s loss aversion. I draw on experimental findings to quantify the effectiveness of persuasion under loss aversion. JEL classification numbers: D72 ; D82 ; D91 ; K40
    Keywords: information design ; loss aversion ; wrongful conviction
    Date: 2018

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