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on Experimental Economics |
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Issue of 2019‒04‒22
25 papers chosen by |
| By: | Cars Hommes (University of Amsterdam); Anita Kopányi-Peuker (University of Amsterdam); Joep Sonnemans (University of Amsterdam) |
| Abstract: | We study the emergence of bubbles in a laboratory experiment with large groups of individuals. The realized price is the aggregation of the forecasts of a group of individuals, with positive expectations feedback through speculative demand. When prices deviate from fundamental value, a random selection of participants receives news about overvaluation. Our findings are: (i) large asset bubbles occur in large groups, (ii) information contagion through news affects behaviour and may break the coordination on a bubble, (iii) time varying heterogeneity provides an accurate explanation of bubble formation and crashes, and (iv) bubbles are strongly amplified by coordination on trend-extrapolation. |
| Keywords: | Experimental finance, expectation formation, learning to forecast, financial bubbles |
| JEL: | C91 C92 D53 D83 D84 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20190016&r=all |
| By: | Morrison, William G. (Wilfrid Laurier University); Oxoby, Robert J. (University of Calgary) |
| Abstract: | We report on a laboratory experiment testing for the presence of loss aversion, as separate from risk aversion, utilizing an asset integration protocol designed to ensure that a loss of cash provided by the experimenter is viewed as a real loss by experimental participants. Our experimental design augments the Holt-Laury risk preference elicitation methodology to assess how individuals choose between a safe option and a riskier lottery. When the money at stake is viewed as the individual's own money, one of the lottery outcomes is in the domain of losses. Our results confirm that individuals display an additional reluctance to participate in a mixed domain lottery beyond that predicted by risk aversion. We show that only preference functions incorporating loss aversion are able to generate predicted behaviour that matches our results. |
| Keywords: | risk taking, experiments |
| JEL: | C91 D81 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12268&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: | 2019–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:19/04&r=all |
| By: | Bose, Neha (University of Warwick); Sgroi, Daniel (University of Warwick) |
| Abstract: | In a laboratory experiment, 338 participants were asked to communicate in pairs and then play two games with their partners: the 11-20 money request game (a tool for assessing level-k reasoning) and a public goods game. The communication occurred prior to any knowledge of what was to follow but played an important rolein allowing them to develop theories or mental models of their partners (“theory of mind”) which proved to be crucial explanatory factors for decision-making. We examine the players’ beliefs about the personality and intelligence of their partner, how they play in the games and analysed the language used during communication. The results indicate that beliefs about partner’s type is biased by own-type. In particular, extraverts, characterised by positive affect, projected their positivity onto their partners. The level-k strategy chosen in the 11-20 game increased with the perceived similarity between players and in the public goods game, players cooperated more when they believed their partners to be extraverted. An analysis of the text used during communication explains how it was possible for participants to draw inferences about other’s type: for instance, use of more words and more dominant words were associated with being an extravert. |
| Keywords: | theory of mind, cheap talk, communication, level-k reasoning, public goods game, cooperation, extraversion, perceived similarity, self-projection bias, laboratory experiment, text analysis. JEL Classification: D91, D83, C92. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:409&r=all |
| By: | Becker, Sascha O. (University of Warwick); Fernandes, Ana (Bern University of Applied Sciences); Weichselbaumer, Doris (Johannes Kepler University Linz) |
| Abstract: | Due to conventional gender norms, women are more likely to be in charge of childcare than men. From an employer’s perspective, in their fertile age they are also at “risk” of pregnancy. Both factors potentially affect hiring practices of firms. We conduct a largescale correspondence test in Germany, Switzerland, and Austria, sending out approx. 9,000 job applications, varying job candidate’s personal characteristics such as marital status and age of children. We find evidence that, for part-time jobs, married women with older kids, who likely finished their childbearing cycle and have more projectable childcare chores than women with very young kids, are at a significant advantage vis-àvis other groups of women. At the same time, married, but childless applicants, who have a higher likelihood to become pregnant, are at a disadvantage compared to single, but childless applicants to part-time jobs. Such effects are not present for full-time jobs, presumably, because by applying to these in contrast to part-time jobs, women signal that they have arranged for external childcare. |
| Keywords: | Fertility; Discrimination; Experimental economics. JEL Classification: C93; J16; J71. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:412&r=all |
| By: | Jason A. Aimone; Brittany Ward; James E. West |
| Abstract: | Economic agents face many different types of economic incentives when making financial and moral decisions. We provide experimental data from a population that uniquely responds to incentives to lie compared to previously studied populations. We conduct a standard 6-sided die rolling lying study within a population that believes that God has knowledge of all their actions. Within this population, we find that those who attend church frequently appear to refrain from lying while those that do not frequently attend church do lie, but do not disguise their lies like more secular populations. We further explain how our data fits into the theoretical work on lying. |
| JEL: | C91 D91 Z12 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25746&r=all |
| By: | Lorko, Matej; Servátka, Maroš; Zhang, Le |
| Abstract: | The success of a business project often relies on the accuracy of its schedule. Inaccurate and overoptimistic schedules can lead to significant project failures. In this paper, we explore whether the presence of anchors, such as relatively uninformed suggestions or expectations of the duration of project tasks, play a role in the project estimating and planning process. Our laboratory experiment contributes to the methodology of investigating the robustness and persistence of the anchoring effect in the following ways: (1) we investigate the anchoring effect by comparing the behavior in low and high anchor treatments with a control treatment where no anchor is present; (2) we provide a more accurate measurement by incentivizing participants to provide their best duration estimates; (3) we test the persistence of the anchoring effect over a longer horizon; (4) we evaluate the anchoring effect also on retrospective estimates. We find strong anchoring effects and systematic estimation biases that do not vanish even after the task is repeatedly estimated and executed. In addition, we find that such persisting biases can be caused not only by externally provided anchors, but also by the planner’s own initial estimate. |
| Keywords: | project management, project planning, time management, anchors, anchoring effect, task duration, duration estimation, time estimation, anchoring bias |
| JEL: | C91 D83 D92 O21 O22 |
| Date: | 2019–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93322&r=all |
| By: | Snehalkumar (Neil); S. Gaikwad; Durim Morina; Adam Ginzberg; Catherine Mullings; Shirish Goyal; Dilrukshi Gamage; Christopher Diemert; Mathias Burton; Sharon Zhou; Mark Whiting; Karolina Ziulkoski; Alipta Ballav; Aaron Gilbee; Senadhipathige S. Niranga; Vibhor Sehgal; Jasmine Lin; Leonardy Kristianto; Angela Richmond-Fuller; Jeff Regino; Nalin Chhibber; Dinesh Majeti; Sachin Sharma; Kamila Mananova; Dinesh Dhakal; William Dai; Victoria Purynova; Samarth Sandeep; Varshine Chandrakanthan; Tejas Sarma; Sekandar Matin; Ahmed Nasser; Rohit Nistala; Alexander Stolzoff; Kristy Milland; Vinayak Mathur; Rajan Vaish; Michael S. Bernstein |
| Abstract: | Paid crowdsourcing platforms suffer from low-quality work and unfair rejections, but paradoxically, most workers and requesters have high reputation scores. These inflated scores, which make high-quality work and workers difficult to find, stem from social pressure to avoid giving negative feedback. We introduce Boomerang, a reputation system for crowdsourcing that elicits more accurate feedback by rebounding the consequences of feedback directly back onto the person who gave it. With Boomerang, requesters find that their highly-rated workers gain earliest access to their future tasks, and workers find tasks from their highly-rated requesters at the top of their task feed. Field experiments verify that Boomerang causes both workers and requesters to provide feedback that is more closely aligned with their private opinions. Inspired by a game-theoretic notion of incentive-compatibility, Boomerang opens opportunities for interaction design to incentivize honest reporting over strategic dishonesty. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1904.06722&r=all |
| By: | Koessler, Ann-Kathrin |
| Abstract: | Sustainability pledges are en vogue. In the business sector, but also in climate negotiations, pledges are used to signal actors’ intention to act pro-environmentally. Laboratory experiments testify to the potential effectiveness of these public declarations. Previous work has examined under which conditions subsequent trust and cooperation can flourish. In this study, I postulate that also conformity is an important determinant for the effectiveness of pledges. In specific, I examine what role social influence plays in the decision to pledge. In a public good game, subjects can make prior play a pledge to contribute to the public good in the socially optimal way. Across treatment conditions, I vary the way in which the pledges are elicited. Hence, the degree of social influence on pledge making is manipulated and its impact can be examined. I find that when individuals are aware that the majority of other subjects decided to pledge, they are likely to conform and also make the pledge. The emergence of such a critical mass can be stimulated when the elicitation of pledges is based on previous contribution behavior. Overall, this commitment nudge is effective. Both socially-oriented and previously not socially-oriented subjects modify their behavior after the pledge. |
| Keywords: | voluntary approaches,environmental policy,pledge,social dilemma,public good,commitment,conformism |
| JEL: | A13 C72 C91 H41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:195048&r=all |
| By: | Cacault, Maria Paula; Hildebrand, Christian; Laurent-Lucchetti, Jérémy; Pellizzari, Michele |
| Abstract: | Using a randomized experiment in a public Swiss university, we study the impact of online live streaming of lectures on student achievement and attendance. We find that (i) students use the live streaming technology only punctually, apparently when random events make attending in class too costly; (ii) attending lectures via live streaming lowers achievement for low-ability students and increases achievement for high-ability ones and (iii) offering live streaming reduces in-class attendance only mildly. These findings have important implications for the design of education policies. |
| Keywords: | distance learning; EduTech; live streaming |
| JEL: | I20 I21 I23 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13666&r=all |
| By: | Fügener, A.; Grahl, J.; Gupta, A.; Ketter, W. |
| Abstract: | A defining question of our age is how AI will influence the workplace of the future and, thereby, the human condition. The dominant perspective is that the competition between AI and humans will be won by either humans or machines. We argue that the future workplace may not belong exclusively to humans or machines. Instead, it is better to use AI together with humans by combining their unique characteristics and abilities. In three experimental studies, we let humans and a state of the art AI classify images alone and together. As expected, the AI outperforms humans. Humans could improve by delegating to the AI, but this combined effort still does not outperform AI itself. The most effective scenario was inversion, where the AI delegated to a human when it was uncertain. Humans could in theory outperform all other configurations if they delegated effectively to the AI, but they did not. Human delegation suffered from wrong self-assessment and lack of strategy. We show that humans are even bad at delegating if they put effort in delegating well; the reason being that despite their best intentions, their perception of task difficulty is often not aligned with the real task difficulty if the image is hard. Humans did not know what they did not know. Because of this, they do not delegate the right images to the AI. This result is novel and important for human-AI collaboration at the workplace. We believe it has broad implications for the future of work, the design of decision support systems, and management education in the age of AI. |
| Keywords: | Future of Work, Artificial Intelligence, Augmented Decision Environment, Deep Learning, Human-AI Collaboration, Machine Learning, Intelligent Software Agents |
| Date: | 2019–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureri:115830&r=all |
| By: | Bohnet, Iris (Harvard Kennedy School); Saidi, Farzad (Stockholm School of Economics and CEPR) |
| Abstract: | In labor markets, some individuals have, or believe to have, less data on the determinants of success than others, e.g., due to differential access to technology or role models. We provide experimental evidence on when and how informational differences translate into performance differences. In a laboratory tournament setting, we varied the degree to which individuals were informed about the effort-reward relationship, and whether their competitor received the same or a different amount of information. We find performance is adversely affected only by worse relative, but not absolute, informedness. This suggests that inequity aversion applies not only to outcomes but also to information that helps achieve them, and stresses the importance of inequality in initial information conditions for performance-dependent outcomes. |
| JEL: | D81 D82 M50 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp19-008&r=all |
| By: | Dominique Ami (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Frédéric Aprahamian (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Olivier Chanel (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Stephane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Stated preference surveys are usually carried out in one session, without any follow-up interview after respondents have had the opportunity to experience the public goods or policies they were asked to value. Consequently, a stated preference survey needs to be designed so as to provide respondents with all the relevant information, and to help them process this information so they can perform the valuation exercise properly. In this paper, we study experimentally an elicitation procedure in which respondents are provided with a sequence of different types of information (social cues and objective information) that allows them to sequentially revise their willingness-to-pay (WTP) values. Our experiment was carried out in large groups using an electronic voting system which allows us to construct social cues in real time. To analyse the data, we developed an anchoring-type structural model that allows us to estimate the direct effect (at the current round) and the indirect effect (on subsequent rounds) of information. Our results shed new light on the interacted effect of social cues and objective information: social cues have little or no direct effect on WTP values but they have a strong indirect effect on how respondents process scientific information. Social cues have the most noticeable effect on respondents who initially report a WTP below the group average but only after receiving additional objective information about the valuation task. We suggest that the construction and the provision of social cues should be added to the list of tools and controls for stated preference methods. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01897065&r=all |
| By: | Jipeng Zhang; Elizabeth Brown; Huan Xie |
| Abstract: | In this paper, we study the behavioural impact of religious priming by showing participants religious words in a scrambled sentence task before a dictator game and a joy-of-destruction game. We also elicited data on individual religiosity and religious affiliation using a questionnaire. Priming religious words significantly increased pro-social behaviour in the dictator game, and the effect was especially striking among those reporting no religion, atheists and agnostics. The religious prime has no significant effect in mitigating destructive behaviour or own expectations of the other's destruction choice, but both destructive behaviour and expectations correlate positively with the multi-dimensional religiosity measure. |
| Keywords: | Religious Priming,Pro-Social Behaviour,Dictator Game,Joy-of-Destruction Game, |
| JEL: | D64 C91 Z12 |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2019s-06&r=all |
| By: | James Alm (Tulane University) |
| Abstract: | In this paper, I review and assess what we have learned about what motivates individuals to pay - or to not pay - their legally due tax liabilities. I focus on three specific questions. First, what does theory say about what motivates tax compliance? Second, what does the evidence show? Third, how can government use these insights to improve compliance? I conclude with some suggestions - and some predictions - for future research. |
| Keywords: | Tax evasion; behavioural economics; controlled field experiments; laboratory experiments. |
| JEL: | H2 H26 D03 C9 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1903&r=all |
| By: | Ruiz-Buforn, Alba; Alfarano, Simone; Camacho-Cuena, Eva |
| Abstract: | This paper studies the effects on the asset price of the introduction of a public signal in the presence of asymmetric private information in a decentralized market. We introduce an artificial market model populated by boundedly rational agents with heterogeneous levels of reasoning: sophisticated and naive traders. The model captures the main impacts of public information analyzed in the laboratory experiments reported by Ruiz-Buforn et al. (2019). Public information, when correct, coordinates market activity, improving price convergence to the fundamentals. By contrast, unwarranted public information pushes prices away from fundamentals. This strong influence of public information on prices is primarily driven by its common knowledge property. |
| Keywords: | Public information; asset markets; asymmetric information |
| JEL: | C90 D80 D82 G10 |
| Date: | 2019–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93288&r=all |
| By: | Prateek Bansal; Yang Liu; Ricardo Daziano; Samitha Samaranayake |
| Abstract: | We formalize one aspect of reliability in the context of Mobility-on-Demand (MoD) systems by acknowledging the uncertainty in the pick-up time of these services. This study answers two key questions: i) how the difference between the stated and actual pick-up times affect the propensity of a passenger to choose an MoD service? ii) how an MoD service provider can leverage this information to increase its ridership? We conduct a discrete choice experiment in New York to answer the former question and adopt a micro-simulation-based optimization method to answer the latter question. In our experiments, the ridership of an MoD service could be increased by up to 10\% via displaying the predicted wait time strategically. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1904.07987&r=all |
| By: | Dariel, Aurelie (new york university abu dhabi); Riedl, Arno (General Economics 1 (Micro)); Siegenthaler, Simon (university of texas at dallas) |
| Abstract: | Information asymmetries can prevent markets from operating efficiently. An important example is the labor market, where employers face uncertainty about the productivity of job candidates. We examine theoretically and with laboratory experiments three key questions related to hiring via referrals when employees have private information about their productivity. First, do firms use employee referrals when there are social ties between a current employee and a future employee? Second, does the existence of social ties and hiring through employee referrals indeed alleviate adverse selection relative to when social ties do not exist? Third, does the existence of social ties have spill-over effects on wages and hiring in competitive labor markets? The answers to all three questions are affirmative. However, despite the identified positive effect of employment referrals, hiring decisions fall short of the (second-best) efficient outcome. We identify risk aversion as a potential reason for this. |
| Keywords: | adverse selection, labor market, employee referrals, social networks |
| JEL: | C92 D82 D85 E20 |
| Date: | 2019–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2019009&r=all |
| By: | James Alm (Tulane University); William D. Schulze (Cornell University); Carrie Von Bose (Fors Marsh Group); Jubo Yan (Cornell University) |
| Abstract: | We use laboratory experiments to examine the impact of appeals to social norms on the compliance decisions of individuals. We test the effects of two main types of social norms: "descriptive norms", or the type of behavior that is typical or most frequently enacted, and "injunctive norms", or the type of behavior that "constitutes morally approved and disapproved conduct". In addition, for injunctive norms we introduce approval-framed and disapprovalframed injunctive norm messages. Our results indicate that normative appeals generally have a modest and positive impact on tax compliance, if not always statistically significant. The magnitude of both approval- and disapproval-framed injunctive norm messages is an increase of around 2 percent in reported taxes. |
| Keywords: | Tax compliance, social norms, experimental economics. |
| JEL: | H2 H26 H3 C91 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1902&r=all |
| By: | Paryavi, Maliheh (Harvard Kennedy School); Bohnet, Iris (Harvard Kennedy School); van Geen, Alexandra (Harvard Kennedy School) |
| Abstract: | Descriptive norms provide social information on others' typical behaviors and have been shown to lead to prescriptive outcomes by "nudging" individuals towards norm compliance in numerous settings. This paper examines whether descriptive norms lead to prescriptive outcomes in the gender domain. We examine whether such social information can influence the gender distribution of candidates selected by employers in a hiring context. We conduct a series of laboratory experiments where 'employers' decide how many male and female 'employees' they want to hire for male- and female-typed tasks and examine whether employers are more likely to hire more of one gender when informed that others have done so as well. In this set-up descriptive norms do not have prescriptive effects. In fact, descriptive norms do not affect female employers' hiring decisions at all and lead to norm reactance and backlash from male employers when informed that others have hired more women. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp19-007&r=all |
| By: | Meager, Rachael |
| Abstract: | Despite evidence from multiple randomized evaluations of micro- credit, questions about external validity have impeded consensus on the results. I jointly estimate the average effect and the heterogeneity in effects across seven studies using Bayesian hierarchical models. I find the impact on household business and consumption variables is unlikely to be transformative and may be negligible. I find reasonable external validity: true heterogeneity in effects is moderate, and approximately 60 percent of observed heterogeneity is sampling variation. Households with previous business experience have larger but more heterogeneous effects. Economic features of microcredit interventions predict variation in effects better than studies’ evaluation protocols. |
| JEL: | D14 G21 I38 O12 O16 P34 P36 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:88190&r=all |
| By: | Hugh Hoikwang Kim; Raimond Maurer; Olivia S. Mitchell |
| Abstract: | We investigate how cognitive ability and financial literacy shape older Americans’ demand for financial advice using an experimental module in the 2016 Health and Retirement Study. We show that cognitive ability and financial literacy strongly improve the quality, but not the quantity, of financial advice sought. Most importantly, the financially literate and more cognitively able tend to seek financial help from professionals rather than family members, and they are less likely to accept so-called ‘free’ financial advice that may entail conflicts of interest. Nevertheless, those with higher cognitive function also tend to distrust financial advisors, leading them to eschew their services. |
| JEL: | D14 G11 J26 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25750&r=all |
| By: | Christina Fong; Panu Poutvaara |
| Abstract: | Forty-two percent of Americans give different answers when asked, respectively, about the reasons for being rich and the reasons for being poor. We develop and test a theo-ry about support for redistribution in the presence of target-specific beliefs about the causes of low and high incomes. Our theory predicts that target-specific beliefs about the poor matter most for preferences about transfers to the poor, and target-specific beliefs about the rich matter most for preferences about taxation of the rich. Survey evidence from the United States and Germany and experimental evidence on giving money to real welfare recipients supports our theory. We also find, in theory, the ex-istence of a moral release equilibrium in which the rich choose high taxes on lower income classes to discourage effort and create an unworthy poor class, thereby escap-ing moral pressure to support the poor. |
| Keywords: | redistribution, fairness, taxation, political economy, moral release equilibrium, target-specific beliefs |
| JEL: | D63 D72 H21 H24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_297&r=all |
| By: | Victor Champonnois (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Olivier Chanel (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Khaled Makhloufi (SESSTIM - U1252 INSERM - Aix Marseille Univ - UMR 259 IRD - Sciences Economiques et Sociales de la Santé & Traitement de l'Information Médicale - IRD - Institut de Recherche pour le Développement - AMU - Aix Marseille Université - INSERM - Institut National de la Santé et de la Recherche Médicale) |
| Abstract: | The elicitation format is a crucial aspect of Contingent Valuation (CV) surveys and can impact their reliability. This paper contributes to the extensive debate on WTP (Willingness To Pay) elicitation formats by assessing whether the Circular Payment Card (CPC) can reduce anchoring on respondents' previous answers under multiple elicitation questions. This new format uses a visual pie-chart representation without start or end points: respondents spin the circular card in any direction until they find the section that best matches their WTP. We used a CV survey based on two ways of reducing risks associated with flooding, each randomly presented first to half of the respondents, to test the absolute performance of CPC. We presented a second survey on two social insurance schemes for subjects currently uninsured to respondents randomly split into three subgroups. Each group's WTP was elicited using one of three formats: Open-Ended (OE), standard Payment Card (PC) and the new CPC. The two insurance schemes were always proposed in the same order, and we assessed the relative performance of CPC by comparing anchoring across respondents. Our results provide evidence that CPC is likely to reduce anchoring in multiple elicitation questions and that respondents may rely on different heuristic decisions when giving WTP in the OE and in the two PC formats. |
| Keywords: | Willingness to pay,Elicitation format,Payment card,Circular payment card,Social insurance,Flood |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01890243&r=all |
| By: | Lollo, Niklas; O’Rourke, Dara |
| Abstract: | Factory worker pay in global value chains remains a contentious issue. In this paper, we evaluate a two-year field experiment in an apparel factory to analyze altered compensation systems designed to increase worker pay while supporting factory goals around productivity and profitability. Using a quasi-experimental design, with unique data on wages, hours, productivity, quality, and worker engagement, we estimate the impact of three altered compensation systems on pay, productivity, and factory profits. The compensation systems can be described as: 1) an improved productivity-based scheme, 2) a scheme that brings quality and waste reduction into the calculation; and 3) a “target wage†scheme. Overall, the treatments raised wages by 4.2-11.6% and increased productivity by 7-12%-points. Management reported significant financial benefits from the experiment, including increased profits for five of six lines, and avoided costs and productivity losses due to decreased turnover. The factory workers, through focus-group interviews before, during, and after the intervention, reported improved relations with team members and managers. This study demonstrates altered factory compensation can support better factory performance and a better paid workforce, indicating a path towards advanced supply chains with improved wages. |
| Keywords: | Social and Behavioral Sciences, LABOR MARKETS, LOW-WAGE WORK |
| Date: | 2018–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:qt31c4j2hz&r=all |