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on Experimental Economics |
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Issue of 2019‒04‒01
39 papers chosen by |
| By: | Dimitri Dubois (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Stefano Farolfi (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - AgroParisTech - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Phu Nguyen-Van (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique); Juliette Rouchier (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We experimentally investigate the impact of information sharing in a common pool resource game. More precisely, we test whether the voluntary disclosure of the decision by a player has a positive impact on the extraction level exhibited by the group compared to the level observed when decisions are compulsory disclosed. We design an experiment composed by three treatments: a mandatory disclosure treatment and two treatments where players are free to choose whether or not to disclose their decisions. The latter differ by the degree of freedom given to players. In the treatment « Voluntary Free Disclosure » players are also free to choose the extraction level that is displayed, while in the treatment « Voluntary Binary Disclosure » if the player discloses h(is)er decision the value displayed is the effective extraction level. We observe that the voluntary disclosure has a positive effect in the social dilemma, measured by lower average extraction levels. However the disclosure mechanism should not allow to self-declare extraction: here it reveals a large tendency to lie leading to an increase in extraction. |
| Date: | 2018–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01947419&r=all |
| By: | Mamadou Gueye (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Nicolas Querou (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Raphaël Soubeyran (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | In this paper, we use a laboratory experiment to analyze the relationship between equity and coordination success in a game with Pareto ranked equilibria. Equity is decreased by increasing the coordination payoffs of some subjects while the coordination payoffs of others remain unchanged. Theoretically, in this setting, difference aversion may lead to a positive relationship between equity and coordination success, while social welfare motivations may lead to a negative relationship. Using a within-subject experimental design, we find that less equity unambiguously leads to a higher level of coordination success. Moreover, this result holds even for subjects whose payoffs remain unchanged. Our results suggest that social welfare motivations drives the negative relationship between equity and coordination success found in this experiment. Moreover, our data suggest that the order of treatment matters. Groups facing first the treatment with high inequality in coordination payoffs, then the treatment with low inequality in coordination payoffs, reach the Pareto dominant equilibrium more often in both treatments compared to groups playing first the treatment with low inequality in coordination payoffs, then the treatment with high inequality in coordination payoffs. |
| Keywords: | effciency,social welfare motivation,equity,coordination game,difference aversion |
| Date: | 2018–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01947414&r=all |
| By: | Edward Cartwright; Abhijit Ramalingam |
| Abstract: | We disentangle the effects of choice (give vs. take) and externality (positive vs. negative) framing of decisions in isomorphic and payoff-equivalent experimental public good games. We find that, at the aggregate level, neither frame affects group contributions. At the individual level, the Take choice frame leads to greater free-riding, and also to somewhat higher contributions, i.e., to more extreme contribution behaviour. Key Words: isomorphic; public goods; experiment; cooperation; choice frame; externality frame |
| JEL: | C72 C91 C92 D02 H41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:19-07&r=all |
| By: | Hubert J. Kiss (Centre for Economic and Regional Studies Hungarian Academy of Sciences and Department of Economics, Eötvös Loránd University); Laszlo A. Koczy (Centre for Economic and Regional Studies Hungarian Academy of Sciences, and Faculty of Economic and Social Sciences, Budapest University of Technology and Economics); Agnes Pinter (Department of Economic Analysis, Universidad Autónoma de Madrid); Balazs R. Sziklai (Centre for Economic and Regional Studies Hungarian Academy of Sciences, and Faculty of Economics, Corvinus University Budapest) |
| Abstract: | A recent stream of experimental economics literature studies the factors that contribute to the emergence of financial bubbles. We consider a setting where participants sorted according to their degree of risk aversion trade in experimental asset markets. We show that risk sorting is able to explain bubbles partially: Markets with the most risk-tolerant traders exhibit larger bubbles than markets with the most risk averse traders. In our study risk aversion does not correlate with gender or cognitive abilities, so it is an additional factor that helps understand bubbles. |
| Keywords: | experiment, risk sorting, asset bubble |
| JEL: | C91 G12 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1905&r=all |
| By: | Elisabeth Grewenig; Philipp Lergetporer; Katharina Werner; Ludger Wößmann |
| Abstract: | A large literature studies subjective beliefs about economic facts using unincentivized survey questions. We devise randomized experiments in a representative online survey to investigate whether incentivizing belief accuracy affects stated beliefs about average earnings by professional degree and average public school spending. Incentive provision does not impact earnings beliefs, but improves school-spending beliefs. Response patterns suggest that the latter effect likely reflects increased online-search activity. Consistently, an experiment that just encourages search-engine usage produces very similar results. Another experiment provides no evidence of experimenter-demand effects. Overall, results suggest that incentive provision does not reduce bias in our survey-based belief measures. |
| Keywords: | beliefs, incentives, online search, survey experiment |
| JEL: | D83 C83 C90 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7556&r=all |
| By: | Sylvain Chabé-Ferret (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Philippe Le Coent (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Arnaud Reynaud (TSE - Toulouse School of Economics - Toulouse School of Economics); Julie Subervie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Daniel Lepercq (CACG - Compagnie d'aménagement des côteaux de Gascogne - Compagnie d'aménagement des côteaux de Gascogne - CACG) |
| Abstract: | Improving water efficiency is a growing challenge for the Common Agricultural Policy. In this article, we test whether social comparison nudges can promote water-saving behavior among farmers. We report on a pilot Randomized Controlled Trial, in which information on individual and group water consumption were sent every week to farmers equipped with smartmeters. We do not detect an effect of nudges on average water consumption. We however find that the nudge decreases water consumption at the top of the distribution while it increases consumption at the bottom. This study highlights the potential of nudges as an agricultural policy tool. |
| Keywords: | nudges,behavioral economics,government policy,irrigation water use |
| Date: | 2018–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01947420&r=all |
| By: | Nobuyuki Hanaki (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); Yukio Koriyama (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique); Angela Sutan (BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | Recent experimental studies have shown that observed outcomes deviate significantly morefrom the Nash equilibrium when actions are strategic complements than when they are strategic substitutes. This "strategic environment effect" offers promising insights into the aggregate consequences of interactions among heterogeneous boundedly rational agents, but its macroeconomic implications have been questioned because the underlying experiments involve a small number of agents. We studied beauty contest games with a unique interior Nash equilibrium to determine the critical group size for triggering the strategic environment effect, and we use both theory and experiments to shed light on its effectiveness. Based on cognitive hierarchy and level-K models, we show theoretically that the effect is operative for interactions among three or more agents. Our experimental results show a statistically significant strategic environment effect for groups of five or more agents, establishing its robustness against the increase in the population size. Our results bolster other experimental ndings on the strategic environment effects that are relevant for macroeconomic issues such as price fluctuations and nominal rigidity. |
| Keywords: | strategic complementarity,strategic substitutability,beauty contest games,iterative reasoning |
| Date: | 2018–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954922&r=all |
| By: | Cary Deck (University of Alabama and Chapman University); Maroš Servátka (Macquarie Graduate School of Management and University of Economics in Bratislava); Steven Tucker (University of Waikato) |
| Abstract: | The bubble and burst pattern in asset market experiments is among the most replicable results in experimental economics. Numerous studies have searched for means to reduce this mispricing. Using controlled laboratory experiments, we compare mispricing in standard double auction markets to prices in two clock auctions. The double Dutch auction, shown to be more efficient than the double auction in commodity market experiments, does not eliminate bubbles. However, the English Dutch auction does yield prices reflective of underlying fundamentals and succeeds in taming bubbles even with inexperienced traders in the common declining fundamental value environment. |
| Keywords: | Asset Markets, Experimental Economics, Institutional Design |
| JEL: | C91 D02 D14 G12 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-06&r=all |
| By: | Cantoni, Davide; Yang, David Y; Yuchtman, Noam; Zhang, Y Jane |
| Abstract: | Social scientists have long viewed the decision to protest as strategic, with an individual’s participation a function of their beliefs about others’ turnout. We conduct a framed field experiment that recalibrates individuals’ beliefs about others’ protest participation, in the context of Hong Kong’s ongoing antiauthoritarian movement. We elicit subjects’ planned participation in an upcoming protest and their prior beliefs about others’ participation, in an incentivized manner. One day before the protest, we randomly provide a subset of subjects with truthful information about others’ protest plans and elicit posterior beliefs about protest turnout, again in an incentivized manner. After the protest, we elicit subjects’ actual participation. This allows us to identify the causal effects of positively and negatively updated beliefs about others’ protest participation on subjects’ own turnout. In contrast with the assumptions of many recent models of protest participation, we consistently find evidence of strategic substitutability. We provide guidance regarding plausible sources of strategic substitutability that can be incorporated into theoretical models of protests. |
| JEL: | D80 D74 P00 |
| Date: | 2019–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100316&r=all |
| By: | Basil Halperin; Benjamin Ho; John A. List; Ian Muir |
| Abstract: | We use a theory of apologies to design a nationwide field experiment involving 1.5 million Uber ridesharing consumers who experienced late rides. Several insights emerge from our field experiment. First, apologies are not a panacea: the efficacy of an apology and whether it may backfire depend on how the apology is made. Second, across treatments, money speaks louder than words – the best form of apology is to include a coupon for a future trip. Third, in some cases sending an apology is worse than sending nothing at all, particularly for repeated apologies. For firms, caveat venditor should be the rule when considering apologies. |
| JEL: | C9 C93 D80 D91 Z13 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25676&r=all |
| By: | Tristan Roger (DRM-Finance - DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique); Wael Bousselmi (CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz]); Patrick Roger (LARGE - Laboratoire de recherche en gestion et économie - UNISTRA - Université de Strasbourg - L'europe en mutation : histoire, droit, économie et identités culturelles - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | Conventional finance models indicate that the magnitude of stock prices should not influence portfolio choices or future returns. This view is contradicted, however, by empirical evidence. In this paper, we report the results of an experiment showing that trading prices, in experimental markets, are processed differently by participants, depending on their magnitude. Our experiment has two consecutive treatments. One where the fundamental value is a small number (the small price market) and a second one where the fundamental value is a large number (the large price market). Small price markets exhibit greater mispricing than large price markets. We obtain this result both between-participants and within-participants. Our findings show that price magnitude influences the way people perceive the distribution of future returns. This result is at odds with standard finance theory but is consistent with: (1) a number of observations in the empirical finance and accounting literature; and (2) evidence in neuropsychology on the use of different mental scales for small and large numbers. |
| Keywords: | number perception,mental scales,behavioral bias,experimental markets,stock price magnitude |
| Date: | 2018–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954921&r=all |
| By: | Kyung Hwan Baik; Subhasish M. Chowdhury; Abhijit Ramalingam |
| Abstract: | We experimentally investigate the effects of conflict budget on conflict intensity. We run a between-subjects Tullock contest in which we vary the contest budget from Low to Medium to High, while keeping the risk-neutral Nash equilibrium bid the same. We find a non-monotonic relationship: bids increase when the budget increases from Low to Medium, but decrease when the budget further increases from Medium to High. This can happen for players with concave utility, if a high budget has a wealth effect that reduces the marginal utility of winning resulting in lower bids. To test this, we run a Wealth treatment in which the budget remains the Medium, but contestants receive a fixed payment (as wealth) independent of the contest outcome. The bids in the Wealth treatment are lower than the Medium treatment, but are not different from the High treatment, supporting the hypothesis of a wealth effect. We then support this empirical observation by a theoretical model with risk-aversion. Key Words: Conflict; Experiment; Budget constraint; Wealth effect |
| JEL: | C72 C91 D72 D74 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:19-06&r=all |
| By: | Hinnosaar, Marit; Hinnosaar, Toomas; Kummer, Michael; Slivko, Olga |
| Abstract: | Do contributions to online content platforms induce a feedback loop of ever more user-generated content or will they discourage future contributions? To assess this, we use a randomized field experiment which added content to some pages in Wikipedia while leaving similar pages unchanged. We find that adding content has a negligible impact on the subsequent long-run growth of content. Our results have implications for information seeding and incentivizing contributions, implying that additional content does not generate sizable externalities, neither by inspiring nor by discouraging future contributions. |
| Keywords: | knowledge accumulation,user-generated content,Wikipedia |
| JEL: | C93 L17 L86 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19007&r=all |
| By: | D'Adda, Giovanna; Dufwenberg, Martin; Passarelli, Francesco; Tabellini, Guido |
| Abstract: | We consider an expanded notion of social norms that render them belief-dependent and partial, formulate a series of related testable predictions, and design an experiment based on a variant of the dictator game that tests for empirical relevance. Main results: Normative beliefs influence generosity, as predicted. Degree of partiality leads to more dispersion in giving behavior, as predicted. |
| Keywords: | Consensus; Experiment; normative expectations; partial norms; Social norms |
| JEL: | C91 D91 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13593&r=all |
| By: | Mickaël Beaud (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Mathieu Lefebvre (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique); Julie Rosaz (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper investigates if and how other-regarding preferences governing giving decisions in dictator games are affected in risky environments in which the payoff of the recipient is random. We demonstrate that, whenever the risk is actuarially neutral, the donation of dictators with a purely ex post view of fairness should, in general, be affected by the riskyness of the recipient's payoff, while dictators with a purely ex ante view should not be. Our experimental data show no statistically significant impact of the recipient's risk exposure on dictators' giving decisions and, therefore, give weak empirical support to the purely ex post view of fairness. This result appears to be robust to both the experimental design (within or between subjects) and to the origin of the recipient's risk exposure (chosen by the recipient or imposed to the recipient). |
| Keywords: | inequality aversion,impure altruism,background risk,ex ante and ex post views of fairness,laboratory experiments dictator games,otherregarding preferences |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954928&r=all |
| By: | d’Adda , Giovanna; Gao , Yu; Golman, Russell; Tavoni, Massimo |
| Abstract: | Environmental policies based on information provision are widespread, but have often proven ineffective. One possible explanation for information’s low effectiveness is that people actively avoid it. We conduct an online field experiment on air conditioning usage to test the theory of moral wiggle room, according to which people avoid information that would compel them to act morally, against the standard theory of information acquisition, and identify conditions under which each theory applies. In the experiment, we observe how exogenously imposing a feeling of moral obligation to reduce air conditioning usage and exploiting natural variation in the cost of doing so, given by outside temperature, influences subjects’ avoidance of information about their energy use impacts on the environment. Moral obligation increases information avoidance when it is hot outside, consistent with the moral wiggle room theory, but decreases it when outside temperature is low. Avoiding information positively correlates with air conditioning usage. These findings provide guidance about tailoring the use of nudges and informational tools to the decision environment. |
| Keywords: | Environmental Economics and Policy |
| Date: | 2018–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemci:269535&r=all |
| By: | Zvonimir Bašic (Max Planck Institute for Research on Collective Goods); Armin Falk (University of Bonn); Fabian Kosse (University of Bonn) |
| Abstract: | The equal division of goods is a long-existing social norm present in societies around the world. In order to ensure that the egalitarian norm is followed, people engage in costly enforcement of norm-violating behavior. Despite its importance, little is known about the emergence of this enforcement and how it develops over time. Therefore, we take the most commonly-used third-party punishment game where a third party is added to a dictator game, adapt it for children and run an experiment with 9-18 year-old children and adolescents. We show that already at 9-10 years of age, a small but non-negligible proportion of subjects are costly enforcing the egalitarian norm. We find that this behavior then strongly develops in the following years: The proportion of egalitarian norm enforcers increases, becoming the most common behavioral type with 11-12 years of age, and the punishers' behavior fully develops until 13-14 years of age. Following those developmental changes, the enforcing behavior remains stable until adulthood. We find that some norm enforcers do not only punish selfish, but also generous deviations from the egalitarian norm. Looking at the dictators' behavior, we observe that they increase their transfer in the direction of the egalitarian norm primarily in the same period as we observe developmental changes on the punishers' side. |
| Keywords: | third-party punishment, norm enforcement, egalitarian norm, Formation of preferences, children |
| JEL: | C91 C93 D63 D90 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-018&r=all |
| By: | Moradi, Homayoon |
| Abstract: | We use a range of dictator game experiments to investigate whether people avoid information altruistically. After learning about a product with positive externalities, a consumer may avoid learning the cost of the product so that she does not hesitate to act altruistically. We find that although a few altruistic people avoid information about their own costs, this does not change the overall rate of altruistic behavior. The result suggests that although concealing costs upfront might make a few people let go of learning them, it does not increase the rate of altruistic behavior. |
| Keywords: | Pro-social behavior,Self-Image,Information Avoidance,Moral Wiggle Room |
| JEL: | C91 D64 D83 D01 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2018208&r=all |
| By: | Sébastien Duchêne (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Eric Guerci (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); Nobuyuki Hanaki (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); Charles N. Noussair (University of Arizona) |
| Abstract: | This paper studies the influence of allowing borrowing and short selling on market prices and traders' forecasts in an experimental asset market. We verify, although not statistically significantly so, that borrowing tends to increase asset overvaluation and price orecasts, while short selling tends to reduce these measures. We also show that a number of results on beliefs, traders' types, cognitive sophistication, and earnings obtained in earlier experimental studies in which borrowing and short selling are not possible, generalize to markets with borrowing and short sales. |
| Keywords: | experimental asset market,bubble,margin buying,short sales |
| Date: | 2018–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954924&r=all |
| By: | Pedro Bordalo; Katherine Coffman; Nicola Gennaioli; Frederik Schwerter; Andrei Shleifer |
| Abstract: | We explore the idea that judgment by representativeness reflects the workings of episodic memory, especially interference. In a new laboratory experiment on cued recall, participants are shown two groups of images with different distributions of colors. We find that i) decreasing the frequency of a given color in one group significantly increases the recalled frequency of that color in the other group, ii) for a fixed set of images, different cues for the same objective distribution entail different interference patterns and different probabilistic assessments. Selective retrieval and interference may offer a foundation for the representativeness heuristic, but more generally for understanding the formation of probability judgments from experienced statistical associations. |
| JEL: | D03 D81 D83 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25692&r=all |
| By: | Frederik Schwerter; Florian Zimmermann |
| Abstract: | Social interactions pervade daily life and thereby create an abundance of social experiences. Such personal experiences likely shape what we believe and who we are. In this paper, we ask if and how personal experiences from social interactions determine individuals’ inclination to trust others? We implement an experimental environment that allows us to manipulate prior social experiences—either being paid or not being paid by a peer subject for a task—and afterwards measure participant’s willingness to trust others. We contrast this situation with a control condition where we keep all aspects of the prior experiences identical, except that we remove the social dimension. Our key finding is that after positive social experiences, subjects’ willingness to trust is substantially higher relative to subjects who made negative social experiences. No such effect is obtained in the control condition where we removed the social aspect of experiences. Findings from a difference-in-difference analysis confirm this pattern. Our results cannot be explained by rational learning, income effects, pay or social comparison related mood, disappointment aversion and expectations-based or social reference points. Delving into the underlying mechanisms, we provide evidence that non-standard belief patterns are an important driver of experience effects. |
| Keywords: | determinants of trust, experiences, beliefs, non-standard learning, experiments |
| JEL: | C91 D03 D81 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7545&r=all |
| By: | Sophie Clot (UOR - University of Reading); Gilles Grolleau (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Lisette Ibanez (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | Rather than just examining moral licensing and cleansing at an aggregate level, we investigate experimentally the moral dynamics at an individual level. We also propose a formal definition of moral consistency or inconsistency (i.e., moral licensing and/or moral cleansing). We found that half our sample present inconsistent pro-environmental behaviour, independently of the way behavior is elicited (positive or negative framing). Men seem to behave more consistently over time, but when they compensate, they license (respectively cleanse) in a higher (respectively lesser) extent than women. We suggest that policies can improve their performances by avoiding a ‘one size fits all approach' and take into account this heterogeneity of moral dynamics. |
| Keywords: | taking game,dictator game,moral in(consistency),licensing,cleansing |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954925&r=all |
| By: | Isamaël Rafaï (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); Sébastien Duchêne (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Eric Guerci (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); Ariane Lambert-Mogiliansky (PSE - Paris School of Economics); Fabien Mathy (BCL, équipe Langage et Cognition - BCL - Bases, Corpus, Langage (UMR 7320 - UNS / CNRS) - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | In this paper, we will put forward an original experiment to reveal empirical "anomalies" in the process of acquisition, elaboration and retrieval of information in the context of reading economic related content. Our results support the existence of the memory dual process suggested in the Fuzzy Trace Theory: acquisition of information leads to the formation of a gist representation which may be incompatible with the exact verbatim information stored in memory. We give to subjects complex and complete information and evaluate their cognitive ability. To answer some specific questions, individuals used this gist representation rather than processing verbatim information appropriately. |
| Keywords: | Fuzzy Trace Theory,memory,Bounded rationality,Dual Process,Cognitive reflection test |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954930&r=all |
| By: | Nicolas Querou (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | We consider a setting where agents are subject to two types of collective action problems, any group user's individual extraction inducing an externality on others in the same group (intra-group problem), while aggregate extraction in one group induces an externality on each agent in other groups (intergroup problem). One illustrative example of such a setting corresponds to a case where a common-pool resource is jointly extracted in local areas, which are managed by separate groups of individuals extracting the resource in their respective location. The interplay between both types of externality is shown to affect the results obtained in classical models of common-pool resources. We show how the fundamentals affect the individual strategies and welfare compared to the benchmark commons problems. Finally, different initiatives (local cooperation, inter-area agreements) are analyzed to assess whether they may alleviate the problems, and to understand the conditions under which they do so. |
| Keywords: | externalities,common-pool resource,collective action |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:halshs-01936007&r=all |
| By: | Balcombe, Kelvin; Fraser, Iain; Williams, Louis; McSorley, Eugene |
| Abstract: | We investigate the relationship between visual attention and attendence with the rate of "preference reversals" in a discrete choice experiment (DCE) that employed eyetracking. We nd that visual attention and attendance, counter to our initial expectations, is positively related to the rate of preference reversal. Our results indicate that moderately low levels of visual attention should not be used as a way of identifying individuals with low levels of engagement, nor should preference reversals necessarily be assumed to indicate low levels of participant engagement. We nd that those reversing preferences do not substantively di¤er from the rest of the population in terms of their underlying preferences. Rather, these respondents spend longer looking at tasks that are similar in terms of utility, so more complex, and as a result these respondents are more uncertain of the choice to make. |
| Keywords: | Research and Development/Tech Change/Emerging Technologies |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare19:285050&r=all |
| By: | Sarwosri, Arieska |
| Abstract: | Even though oil palm is not a native cash crop in Indonesia, the cultivation of oil palm is rapidly developed by smallholder farmers. This study examines if the adoption of oil palm is reasoned in underlying economic preferences. We utilized an incentivized field experiment to elicit smallholders’ risk attitude and discount rate and estimated both preferences jointly. The field experiments included 636 smallholders from Sumatra Island, Indonesia. We compared the risk attitude and discount rate of the oil palm adopters to non-adopters, i.e., rubber smallholders which is the main alternative cash crop of oil palm. We found that adopters are more risk-averse compared to non-adopters. Furthermore, the finding also confirms that risk-averse farmers diversify cultivated crops to mitigate income risks from agriculture. However, we do not find statistically significant differences in the discount rates between the two groups. |
| Keywords: | Risk and Uncertainty |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare19:285091&r=all |
| By: | Xiliang Lin; Harikesh S. Nair; Navdeep S. Sahni; Caio Waisman |
| Abstract: | When multiple firms are simultaneously running experiments on a platform, the treatment effects for one firm may depend on the experimentation policies of others. This paper presents a set of causal estimands that are relevant to such an environment. We also present an experimental design that is suitable for facilitating experimentation across multiple competitors in such an environment. Together, these can be used by a platform to run experiments "as a service," on behalf of its participating firms. We show that the causal estimands we develop are identified nonparametrically by the variation induced by the design, and present two scalable estimators that help measure them in typical high-dimensional situations. We implement the design on the advertising platform of JD.com, an eCommerce company, which is also a publisher of digital ads in China. We discuss how the design is engineered within the platform's auction-driven ad-allocation system, which is typical of modern, digital advertising marketplaces. Finally, we present results from a parallel experiment involving 16 advertisers and millions of JD.com users. These results showcase the importance of accommodating a role for interactions across experimenters and demonstrates the viability of the framework. |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1903.11198&r=all |
| By: | Alison Booth; Xin Meng; Elliott Fan; Dandan Zhang |
| Abstract: | Social scientists have long been interested in the effects of social-political upheavals on a society subsequently. A priori, we would expect that, when traumas are brought about by outsiders, within-group behaviour would become more collaborative, as society unites against the common foe. Conversely, we would expect the reverse when the conflict is generated within-group. In our paper we are looking at this second form of upheaval, and our measure of within-group conflict is the 1966-1976 Cultural Revolution (CR) that seriously disrupted many aspects of Chinese society. In particular, we explore how individuals' behavioural preferences are affected by within-group traumatic events experienced by their parents or grandparents. Using data from a laboratory experiment in conjunction with survey data, we find that individuals with parents or grandparents affected by the CR are less trusting, less trustworthy, and less likely to choose to compete than their counterparts whose predecessors were not direct victims of the CR. |
| Keywords: | Preferences, Behavioural Economics, Cultural Revolution |
| JEL: | C91 N4 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:074&r=all |
| By: | Luc Behaghel (PSE - Paris School of Economics); Karen Macours, (PSE - Paris School of Economics); Julie Subervie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | We illustrate how randomized controlled trials (RCTs) could be used as a learning tool to shed light on various aspects of the Common Agricultural Policy (CAP). RCTs are quasi-absent from the CAP evaluation toolbox, despite their frequent use to evaluate other European Union policies, or agricultural policies in developing countries. We draw upon existing debates on the role of RCTs in policy-making to derive a list of points of attention. We then consider four specific examples of evaluation questions for the CAP, and based on examples drawn from agricultural and social policies in developing and developed countries, argue that the RCT toolbox has the potential to significantly add to existing approaches to evaluating and designing components of the CAP. |
| Keywords: | field experiments,policy design,impact evaluation,Common agricultural policy |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01974425&r=all |
| By: | Tristan Roger (DRM-Finance - DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique); Wael Bousselmi (CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz]); Patrick Roger (LARGE - Laboratoire de recherche en gestion et économie - UNISTRA - Université de Strasbourg - L'europe en mutation : histoire, droit, économie et identités culturelles - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | Recent research in finance shows that the magnitude of stock prices influences analysts' price forecasts (Roger et al., 2018). In this paper, we report the results o fa novel experiment where some of the participants in a continuous double auction market act as analysts and forecast future prices. Participants engage in two successive markets: one in which the fundamental value is a small price and one in which the fundamental value is a large price. Our results indicate that analysts' forecasts are more optimistic in small price markets compared to large price markets. We also find that analysts strongly anchor on past price trends when building their price forecasts. Overall, our findings support the existence of a small price bias. |
| Date: | 2018–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954919&r=all |
| By: | Marta Serra-Garcia; Nora Szech |
| Abstract: | We investigate the elasticity of moral ignorance with respect to monetary incentives and social norm information. We propose that individuals suffer from higher moral costs when rejecting a certain donation, and thus pay for moral ignorance. Consistent with our model, we find significant willingness to pay for ignorance, which we calibrate against morally neutral benchmark treatments. We show that the demand curve for moral ignorance exhibits a sharp kink, of about 50 percent, when moving from small negative to small positive monetary incentives. By contrast, while social norms strongly favor information acquisition, they have little impact on curbing moral ignorance. |
| Keywords: | information avoidance, morality, unethical behavior, social norms |
| JEL: | D83 D91 C91 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7555&r=all |
| By: | Thomas Dohmen; Simone Quercia; Jana Willrodt |
| Abstract: | We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of personality, and that it predicts real-life risk taking. The general risk question captures this disposition alongside pure risk preference. This likely contributes to the predictive power of the general risk question across domains. Our results also rationalize why risk taking is related to optimism. |
| Keywords: | Risk taking behavior,optimism,preference measure,risk conception |
| JEL: | D91 C91 D81 D01 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1026&r=all |
| By: | James Andreoni; Amalia Di Girolamo; John List; Claire Mackevicius; Anya Samek |
| Abstract: | We conduct experiments eliciting risk preferences with over 1,400 children and adolescents aged 3-15 years old. We complement our data with an assessment of cognitive and executive function skills. First, we find that adolescent girls display significantly greater risk aversion than adolescent boys. This pattern is not observed among young children, suggesting that the risk gap in risk preferences emerges in early adolescence. Second, we find that at all ages in our study, cognitive skills (specifically math ability) are positively associated with risk taking. Executive functions among children, and soft skills among adolescents, are negatively associated with risk taking. Third, we find that greater risk-tolerance is associated with higher likelihood of disciplinary referrals, which provides evidence that our task is equipped to measure a relevant behavioral outcome. For academics, our research provides a deeper understanding of the developmental origins of risk preferences and highlights the important role of cognitive and executive function skills to better understand the association between risk preferences and cognitive abilities over the studied age range. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00668&r=all |
| By: | Jeffrey R. Kling; Sendhil Mullainathan; Eldar Shafir; Lee C. Vermeulen; Marian V. Wrobel |
| Abstract: | We examine the extent of comparison friction in the market for Medicare Part D prescription drug plans in the United States. |
| Keywords: | Medicare Drug Plans , Medicare Part D , Health |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:b5b408501b0147b89b7d124e831011e5&r=all |
| By: | Hart, Jarrett |
| Abstract: | The U.S. and global beer industries include a great many smaller-scale craft breweries supplying numerous differentiated products as well as a few macro-breweries with less diverse beer portfolios. The craft and macro segments of this industry have become quite distinct, with little substitutability between the two types of beer. Furthermore, the craft segment has realized consistent growth whereas large breweries have seen a steady decline in sales since the early 2000s. Macro-breweries have responded by acquiring smaller breweries in an attempt to capture a share of the craft market. My other (ongoing) research has shown positive consumer preferences for local craft beer and mixed responses to acquisitions, but without controlling for consumer definitions of “local” or knowledge of acquisitions. This study implements an experimental approach to measure consumers’ willingness-to-pay (WTP) for locally produced and independently owned beer. During the month of January 2018, customers at a local beer bar were asked to participate in an experiment in which they compare their initial beer selection with ten other beer offerings from the bar, selected at random; they were given some information about location and ownership of the breweries for these selections, details varying among participants. To conclude the experiment, participants were tested for their knowledge of acquisitions. The result is a dataset consisting of consumer demographics and their WTP that is independent of supply side effects. Hedonic analysis clearly indicates that consumers prefer locally owned and independently produced beer, and how much they are willing to pay for those attributes. |
| Keywords: | Consumer/Household Economics |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare19:285088&r=all |
| By: | Mark Schneider (Economic Science Institute, Chapman University and University of Alabama); Jonathan W. Leland (National Science Foundation) |
| Abstract: | The axioms of expected utility and discounted utility theory have been tested extensively. In contrast, the axioms of social welfare functions have only been tested in a few questionnaire studies involving choices between hypothetical income distributions. In this note, we conduct a controlled experiment with 100 subjects in the role of social planners that tests ve fundamental properties of social welfare functions to provide a basic test of cardinal social choice theory. We nd that four properties of the standard social welfare functions tested are systematically violated, producing an Allais paradox, a common ratio eect, a framing eect, and a skewness eect in social choice. We also develop a model of salience based social choice which predicts these systematic deviations and highlights the close relationship between these anomalies and the classical paradoxes for risk and time. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-08&r=all |
| By: | Linda Kleemann (IfW Kiel, Germany); Marie-Catherine Riekhof (ETH Zurich, Switzerland) |
| Abstract: | Decisions involving risk are usually taken in the presence of other insurable or non-insurable risks, the latter type called background risk. We examine how changing background risk influences risk-taking based on panel data with monthly observations from Senegalese fishermen. Fishing income is volatile and income risk depends on weather conditions and on technologies employed. To measure risktaking, we use an incentivized investment task. To measure background risk, we consider long-run wind conditions and a measure based on comparing standardized monthly income deviations from the yearly individual mean. We find that the latter measure that controls for technology choices and thus takes conscious reduction of risk exposure into account has a significant impact when overall fishing income is below average. Then, higher income risk increases risk-taking, suggesting intemperate behavior in low-income situations. This effect is stronger for poorer fishermen, highlighting the need for safety nets. |
| Keywords: | risk-taking, background risk, temperance, investment, fisheries, Senegal |
| JEL: | C93 D81 O12 O13 Q22 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:18-301&r=all |
| By: | Sylvaine Lemeilleur (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); Subervie Julie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Anderson Edilson Presoto (USP - University of São Paulo); Roberta De Castro Souza (USP - University of São Paulo); Maria Sylvia Macchione Saes |
| Abstract: | The production of certified coffee has increased significantly in recent years. However, most stringent standards are least often chosen by farmers. We ran a choice experiment among 250 Brazilian coffee farmers in the state of Minas Gerais to investigate the barriers that affect participation in certification schemes that require improved agricultural practices. Our results suggest that non-cash payments such as long-term selling contracts or the provision of technical assistance to comply with the environmental requirements are likely to motivate farmers to participate in certification schemes. Farmers' preferences for these non-cash rewards, however, appear highly heterogeneous. Results moreover show that the minimum willingness-to-accept for compost adoption is twice as high as the average price premium for certified coffee in the current context, which may partly explain why most coffee farmers continue to be reluctant to enter the most stringent certification schemes such as the Organic standard. |
| Keywords: | choice experiment,coffee,certification,erosion,voluntary sustainability standards,pesticides,compost,Brazil |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-02018715&r=all |
| By: | Steven Glazerman |
| Abstract: | This article discusses the trade-offs associated with study designs that involve random assignment of students within schools and describes the experience from one such study of Teach For America (TFA). |
| Keywords: | Random Assignment , Teach For America , Education Programs , Students |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:3668a62f7eb445ffa8a68b909c0c5f40&r=all |