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on Experimental Economics |
| By: | Alves, Guillermo (Development Bank of Latin America); Blanchard, Pablo (IECON, Universidad de la República); Burdín, Gabriel (Leeds University Business School); Chávez, Mariana (IECON, Universidad de la República); Dean, Andres (IECON, Universidad de la República) |
| Abstract: | A growing body of research has been investigating the role of management practices and managerial behaviour in conventional private firms and public sector organizations. However, little is known about managers' behavioural profile in noninvestor-owned firms. This paper aims to fill this gap by providing a comprehensive behavioural characterization of managers employed in cooperatives.We gathered incentive-compatible measures of risk preferences, time preferences, reciprocity, altruism, and trust from 196 Uruguayan managers (half of them employed in worker cooperatives) and 92 first-year undergraduate students. To do this, we conducted a high-stakes lab-in-the-field experiment in which participants played a series of online experimental games and made incentivised decisions. The average payoff in the experiment was approximately 2.5 times higher than the average local managerial wage in the private sector. Our key findings are that (1) the fraction of risk loving subjects is lower among co-op managers compared to conventional managers, and (2) co-op managers appear to be more altruistic than their conventional counterparts. Interestingly, we do not observe significant differences between the two groups across other preference domains, such as impatience, trust, and reciprocity. |
| Keywords: | risk-aversion, time preferences, altruism, reciprocity, trust, lab-in-the-field experiment, managers, cooperatives |
| JEL: | C90 D81 J54 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12330&r=all |
| By: | Harrison, Glenn W.; Lau, Morten I. (Department of Economics, Copenhagen Business School); Yoo, Hong Il |
| Abstract: | Longitudinal experiments allow one to evaluate the temporal stability of latent preferences, but raise concerns about sample selection and attrition that may confound inferences about temporal stability. We evaluate the hypothesis of temporal stability in risk preferences using a remarkable data set that combines socio-demographic information from the Danish Civil Registry with information on risk attitudes from a longitudinal field experiment. Our experimental design builds in explicit randomization on the incentives for participation. The results show that the use of different participation incentives can affect sample response rates and help identify the effects of selection. Correcting for endogenous sample selection and panel attrition changes inferences about risk preferences in an economically and statistically significant manner. Estimates of risk preferences change with these corrections. In general we find evidence consistent with temporal stability of risk preferences when one corrects for selection and attrition. † |
| Keywords: | Preferences; Risk Attitudes |
| JEL: | D81 D90 |
| Date: | 2019–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2019_002&r=all |
| By: | Stephan Huber (University of Regensburg and UAS Augsburg); Jochen Model (UAS Augsburg); Silvio Städter (UAS Augsburg) |
| Abstract: | Alliances often provide a collective good among their allies. This article offers laboratory experimental evidence that the possibility to vote for the exclusion of non-cooperating allies, i.e. ostracism, can be a powerful negative referendum to increase allies’ contributions to the collective good. However, it is found that ostracism does not necessarily increase earnings in a public goods game. In particular, it is shown that the ostracism mechanism is used differently by individuals. While ostracism increases contributions irrespective of the game is played with a alliances of individuals or teams as the decision makers, the earnings do not statistically significant increase in alliances of individuals. This result can be explained with different voting patterns. Compared to individuals, teams vote and in turn exclude significantly less in early periods but more in later periods of the game. Thus, negative earnings effects of ostracism, i.e., excluded players can neither contribute to the collective good nor receive from the collective good, are found to be less severe in alliances of teams. |
| Keywords: | alliances, team decision, public good, collective good, ostracism, exclusion, experiment |
| JEL: | C91 C92 H41 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:dpaper:201901&r=all |
| By: | Jordi Brandts; Isabel Busom; Cristina Lopez-Mayan; Judith Panadés |
| Abstract: | False beliefs about natural, health and socio-economic issues are pervasive in society. Many persist even when contradicted by scientific evidence. We conduct a classroom field and a laboratory experiment to investigate the effect of a particular communication strategy, the refutation text, previously used in the natural sciences and psychology, on a widespread economic misconception: the belief that rent controls make housing available to more people. Our interests are in successfully communicating social science results to the general public and promoting deep learning in economics courses. We find that in the field and in the laboratory a refutation text induces a substantial belief change in the direction of expert knowledge. In the field its impact is significantly larger than that of the natural control, whereas in the laboratory the impact is larger than that of an appropriate control, but not significantly so. The persuasiveness of the refutation text is higher for less reflective participants when the refutation text is read individually, whereas team discussion enhances the positive effect of the text independently of cognitive ability. |
| Keywords: | misconceptions; biases; rent control; economic communication; persuasion |
| JEL: | A12 A2 D9 I2 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1096&r=all |
| By: | Oliver Kirchkamp; Wladislaw Mill |
| Abstract: | In this paper we use an experiment to compare a theory of risk aversion and a theory of spite as an explanation for overbidding in auctions. As a workhorse we use the second-price all-pay and the first-price winner-pay auction. Both risk and spite can be used to rationalize deviations from risk neutral equilibrium bids in auctions. We exploit that equilibrium predictions in the second-price all-pay auctions for spiteful preferences are different than those for risk averse preferences. Indeed, we find that spite is a more convincing explanation for bidding behavior for the second-price all-pay auction. Not only can spite rationalize observed bids, also our measure for spite is consistent with observed bids. |
| Keywords: | auction, overbidding, spite, risk, experiment |
| JEL: | C91 C72 D44 D91 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7631&r=all |
| By: | Francesca Cornaglia (Queen Mary University of London); Michalis Drouvelis (Department of Economics, University of Birmingham); Paolo Masella (Department of Economics, University of Bologna) |
| Abstract: | The emergence of competition is a defining aspect of human nature and characterizes many important social environments. However, its relationship with how social groups are formed has received little attention. We design an experiment to analyze how individuals’ willingness to compete is affected by group identity. We find that individuals display substantially stronger competitiveness in within group (ingroup) matchings than in between group (outgroup) matchings or in a control setting where no group identity is induced. We also find that the effect of group identity is stronger for subjects who participated more actively in the team-building task. |
| Keywords: | competition; social distance; group identity; laboratory experiment |
| JEL: | C92 D03 |
| Date: | 2019–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:886&r=all |
| By: | Loukas Balafoutas (University of Innsbruck); Matthias Sutter (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | Tournament incentives prevail in labor markets. Yet, the number of tournament winners is often unclear to competitors. While it is hard to measure how this uncertainty affects work performance and willingness to compete in the field, it can be studied in a controlled lab experiment. We present a novel experiment where subjects can compete against each other, but the number of winners is either uncertain (but with known probabilities) or ambiguous (with unknown probabilities for different numbers of winners). We compare these two conditions to a control treatment with a known number of winners. We find that ambiguity induces a significant increase in the performance of men who choose to compete, while we observe no change for women. Men also increase their willingness to enter competition in the presence of ambiguity. Overall, both effects contribute to men winning the tournament significantly more often than women under uncertainty and ambiguity. These findings suggest that management should make tournament conditions transparent and information available in order to prevent gender disparities from increasing under uncertainty and ambiguity. |
| Keywords: | Gender, competition, uncertainty, ambiguity, experiment |
| JEL: | C91 D03 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2019_09&r=all |
| By: | Charness, Gary (University of California, Santa Barbara); Feri, Francesco (University of Innsbruck); Meléndez-Jiménez, Miguel A. (University of Malaga); Sutter, Matthias (Max Planck Institute for Research on Collective Goods) |
| Abstract: | The effectiveness of social interaction depends strongly on an ability to coordinate actions efficiently. In large networks, such coordination may be very difficult to achieve and may depend on the communication technology and the network structure. We examine how pre-play communication and clustering within networks affect coordination in a challenging experimental game on eight-person networks. Free-form chat is enormously effective in achieving the nonequilibrium efficient outcome in our game, but restricted communication (where subjects can only indicate their intended action) is almost entirely ineffective. We can rationalize this result with a novel model about the credibility of cheap-talk messages. This credibility is much larger with freeform message communication than with restricted communication. We are the first to model this credibility and show, both theoretically and experimentally, an interaction effect of network structure and communication technologies. We also provide a model of message diffusion, which indeed predicts that diffusion will be more rapid without clustering and is consistent with our data. |
| Keywords: | networks, clustering, communication, credibility, cheap talk, experiment |
| JEL: | C71 C91 D03 D85 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12347&r=all |
| By: | Gary Charness (University of California at Santa Barbara, IZA Bonn, and CESifo Munich); Francesco Feri (Royal Holloway University of London and University of Trieste); Miguel A. Meléndez-Jiménez (Universidad de Málaga); Matthias Sutter (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | The effectiveness of social interaction depends strongly on an ability to coordinate actions efficiently. In large networks, such coordination may be very difficult to achieve and may depend on the communication technology and the network structure. We examine how pre-play communication and clustering within networks affect coordination in a challenging experimental game on eight-person networks. Free-form chat is enormously effective in achieving the non-equilibrium efficient outcome in our game, but restricted communication (where subjects can only indicate their intended action) is almost entirely ineffective. We can rationalize this result with a novel model about the credibility of cheap-talk messages. This credibility is much larger with free-form message communication than with restricted communication. We are the first to model this credibility and show, both theoretically and experimentally, an interaction effect of network structure and communication technologies. We also provide a model of message diffusion, which indeed predicts that diffusion will be more rapid without clustering and is consistent with our data. |
| Keywords: | Networks, Clustering, Communication, Credibility, Cheap talk, Experiment |
| JEL: | C71 C91 D03 D85 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2019_08&r=all |
| By: | Zhang, Yinjunjie; Xu, Zhicheng; Palma, Marco |
| Abstract: | The rapid development and diffusion of new technologies such as automation and artificial intelligence make life more convenient. At the same time, people may develop overdependence on technology to simplify everyday tasks or to reduce the level of effort required to accomplish them. We conduct a two-phase real-effort laboratory experiment to assess how external assistance affects subsequently revealed preferences for the convenience of a lower level of effort versus monetary rewards requiring greater effort. The results suggest that men treated with external help in the first phase tend to choose more difficult options with potentially higher monetary rewards. In contrast, after being treated with external help, women exhibit a stronger propensity to utilize the convenience of an easier task and are less likely to choose a more difficult option that carries higher potential earnings. |
| Keywords: | Gender difference, Reaction to help, Real effort |
| JEL: | C91 D81 J16 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93899&r=all |
| By: | Francisco Gomez Martinez (BI Norwegian Business School); Sander Onderstal (University of Amsterdam); Maarten Pieter Schinkel (University of Amsterdam) |
| Abstract: | Competition has been argued to erode socially responsible behavior in markets, suggesting that allowing cartel agreements among firms may promote public interest objectives. We test this idea in a laboratory experiment. Participants playing the role of firms choose between offering a ‘fair’ and an ‘unfair’ good to a consumer participant. When the unfair good is traded, a negative externality is imposed on a third party. We vary whether or not the firms are allowed to coordinate on the type of good they sell. We find that the opportunity to coordinate has no significant impact on the fraction of fair goods traded on the market, but polarizes: more of the same good, fair or unfair, is offered. Consumer surplus and profit are, on average, not affected. Irrespective of whether coordination between firms is allowed, participants are more likely to trade the fair good, the stronger their third-party preferences are. These findings suggest that both consumer and managerial values are more important drivers of socially responsible behavior than opportunities for firms to coordinate their CSR activities. We highlight implications for competition policy, where cartels may be exempted on CSR grounds. |
| Keywords: | Collusion, Corporate social responsibility, Public interest, Laboratory experiment, Competition policy |
| JEL: | L41 C92 M14 |
| Date: | 2019–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20190034&r=all |
| By: | Nicolas Jacquemet (Paris School of Economics,Université Paris1 Panthéon-Sorbonne, Centre d'Economie de la Sorbonne); Stéphane Luchini (Aix-Marseille University - Aix-Marseille School of Economics, CNRS and EHESS); Jason F. Shogren (Department of Economics - University of Wyoming); Verity Watson (University of Aberdeen - Health Economics Research Unit University (HERU)) |
| Abstract: | Using discrete choices to elicit preferences is a major tool to help guide public policy. Although Discrete Choice Experiment (DCE) remains by far the most popular mechanism used to elicit preferences, its reliability still is questionable. Using an induced value experimental design, we show that standard benchmarks achieve no more than 56% (hypothetical answers with no monetary incentives) to 60% (real monetary incentives) of payoff maximizing choices. Herein we demonstrate that having respondents sign a the truth-telling oath reduces non-payoff maximizing choices by nearly 50% relative to these benchmarks. The explicit and voluntary commitment to honesty improved decisions. Further, we show that it is the explicit commitment to honesty induced by the truth-telling oath improves choices, not just any oath mechanism, i.e., an oath to task or to duty did not improve choices |
| Keywords: | Discrete Choice Experiments; Stated Preferences; Oath; Truth-telling; External validity; Welfare |
| JEL: | C9 H4 Q5 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:19007&r=all |
| By: | Hubert J. Kiss (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Department of Economics, Eötvös Loránd University); Alfonso Rosa-Garcia (Department of Business, Universidad Católica San Antonio de Murcia); Vita Zhukova (Department of Business, Universidad Católica San Antonio de Murcia) |
| Abstract: | There are situations in which competitors ally to pursue a common objective. This simultaneous presence of cooperation and competition is called coopetition and we study it theoretically and experimentally in a group contest setup. More concretely, we analyze a group contest with a new sharing rule, that we call inverse proportional. This rule embodies the idea that the more a member of a group contributes to win the contest, the less this member is able to capture the potential posterior prize, introducing thus a competitive element into group decision-making. We compare the effects of this rule with a standard, the egalitarian sharing rule. While in the egalitarian case theoretically the optimal individual contribution is positive, with the inverse proportional rule zero contribution represents the individual (and also the social) optimum. We find that participants in our experiment contribute more with the egalitarian than with the inverse proportional rule. We also document over-expenditure with the inverse proportional sharing rule, suggesting that group contest generates inefficient behavior even when individuals are extremely penalized for their contributions. We also explore the drivers of decision in the group contest, and find that contribution in a public goods game is positively associated with contribution in the group contest and that competitiveness explains part of the behavior with the inverse proportional rule but not with the egalitarian sharing. Neither social value orientation, risk attitudes, nor personal traits appear as significant predictors of behavior. |
| Keywords: | competitiveness, egalitarian sharing rule, group contest, inverse proportional sharing rule, public goods game, risk attitudes, social value orientation |
| JEL: | C72 C92 D70 D72 H41 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1911&r=all |
| By: | Stefano DellaVigna; Devin Pope |
| Abstract: | How robust are experimental results to changes in design? And can researchers anticipate which changes matter most? We consider a specific context, a real-effort task with multiple behavioral treatments, and examine the stability along six dimensions: (i) pure replication; (ii) demographics; (iii) geography and culture; (iv) the task; (v) the output measure; (vi) the presence of a consent form. We use rank-order correlation across the treatments as measure of stability, and compare the observed correlation to the one under a benchmark of full stability (which allows for noise), and to expert forecasts. The academic experts expect that the pure replication will be close to perfect, that the results will differ sizably across demographic groups (age/gender/education), and that changes to the task and output will make a further impact. We find near perfect replication of the experimental results, and full stability of the results across demographics, significantly higher than the experts expected. The results are quite different across task and output change, mostly because the task change adds noise to the findings. The results are also stable to the lack of consent. Overall, the full stability benchmark is an excellent predictor of the observed stability, while expert forecasts are not that informative. This suggests that researchers' predictions about external validity may not be as informative as they expect. We discuss the implications of both the methods and the results for conceptual replication. |
| JEL: | C9 C91 C93 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25858&r=all |
| By: | Cappelen, Alexander W. (FAIR at the Norwegian School of Economics); Möllerström, Johanna (Interdisciplinary Center for Economic Science (ICES)); Reme, Bjørn-Atle (Telenor Research); Tungodden, Bertil (FAIR at the Norwegian School of Economics) |
| Abstract: | The meritocratic fairness ideal implies that inequalities in earnings are regarded as fair only when they reflect differences in performance. Consequently, implementation of the meritocratic fairness ideal requires complete information about individual performances, but in practice, such information is often not available. We study redistributive behavior in the common, but previously understudied, situation where there is uncertainty about whether inequality is reflecting performance or luck. We show theoretically that meritocrats in such situations can become very egalitarian in their behavior, and that the degree to which this happens depends on how they trade off the probability of making mistakes and the size of mistakes that they risk making when redistributing under uncertainty. Our laboratory experiments show, in line with our model, that uncertainty about the source of inequality provides a strong egalitarian pull on the behavior of meritocrats. In addition, the external validity of our framework, and the results from the laboratory, are supported in two general population surveys conducted in the United States and Norway. |
| Keywords: | Inequality; Fairness; Redistribution; Responsibility; Performance; Luck; Experiment; Survey |
| JEL: | C91 D63 D81 H23 |
| Date: | 2019–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1277&r=all |
| By: | De Neve, Jan-Emmanuel (University of Oxford); Imbert, Clement (University of Warwick); Spinnewijn, Johannes (London School of Economics); Tsankova, Teodora (University of Warwick); Luts, Maarten (FPS Finance) |
| Abstract: | We study the impact of deterrence, tax morale, and simplifying information on tax compliance. We ran five experiments spanning the tax process which varied the communication of the tax administration with all income taxpayers in Belgium. A consistent picture emerges across experiments: (i) simplifying communication increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective. Even tax morale messages that improve knowledge and appreciation of public services do not raise compliance. In fact, heterogeneity analysis with causal forests shows that tax morale treatments backfire for most taxpayers. In contrast, simplification has large positive effects on compliance, which diminish over time due to follow-up enforcement. A discontinuity in enforcement intensity, combined with the experimental variation, allows us to compare simplification with standard enforcement measures. Simplification is far more cost-effective, allowing for substantial savings on enforcement costs, and also improves compliance in the next tax cycle |
| Keywords: | Tax Compliance ; Field Experiments ; Simplification ; Enforcement |
| JEL: | C93 D91 H20 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1194&r=all |
| By: | Raymond Fisman (Boston University); Ilyana Kiziemko; Silvia Vannutelli (Boston University, PhD Candidate) |
| Abstract: | We study distributional preferences in “large†groups. While most prior experi- ments have focused on exploring attitudes toward inequality in two- or three-person groups, we field a series of experiments via Mechanical Turk in which subjects choose between two income distributions, each with seven (or nine) individuals, with hypo- thetical incomes that aim to approximate the actual distribution of income in the U.S. Our setting thus provides a more direct comparison to the redistributive choices faced by society. Consistent with standard maximin (Rawlsian) preferences, subjects select distributions in which the bottom individual’s income is higher (but show little regard for lower incomes above the bottom ranking). In contrast to standard models, however, we find that subjects select distributions that lower the top individual’s income, but not other high incomes. Finally, we provide tentative evidence of “locally competitive†preferences—in most experimental sessions, subjects select distributions that lower the income of the individual directly above them, while the income of the individual two positions above has little effect on subjects’ decisions. Our findings suggest that the- ories of inequality aversion should be enriched to account for individuals’ aversion to “topmost†and “local†disadvantageous inequality. |
| Keywords: | Inequality aversion; Envy; Redistribution |
| JEL: | C91 D63 H23 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:bos:iedwpr:dp-301&r=all |
| By: | Tetsuo Yamamori; Kazuyuki Iwata |
| Abstract: | In this study, we explore the impact of the endogenous nature of social preferences in bargaining on contract enforcement. For this purpose, we conduct laboratory experiments based on a one-shot gift exchange game in the context of firm-worker relationships. Our design admits two types of worker proposals on the contracts to his/her firm, defined as cheap talk. One contains only the desirable wage of the worker, while the other additionally contains his/her future effort. We find that worker preferences become biased in a more self-serving direction by making proposals in bargaining. That is, both types of worker cheap talk undermine reciprocity, thus deteriorating efficiency in an incomplete contract. Additional experiments show that the negative effect of cheap talk in bargaining is robust even for repeated interactions. By contrast, worker proposals including future efforts lead to successful coordination, which outweigh the negative effect on reciprocal behaviors. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e134&r=all |
| By: | Schmidt, Robert J. |
| Abstract: | We propose a method to identify the ranking of focal points (Schelling, 1960) on the individual level. By contrast to conventional coordination, where subjects bet on only one alternative, subjects coordinate by the distribution of points. This allows them to invest in multiple alternatives and to weigh their choices. As a result, subjects not only reveal which alternative appears most focal to them, but the ranking of the available alternatives with regard to the degree of focality. In an experiment on the elicitation of social norms (Krupka and Weber, 2013), we compare the proposed mechanism with conventional coordination. The data confirms the theoretical predictions regarding coordination behavior and demonstrates that the proposed technique is suited to identify the heterogeneity of focal points on the individual level. Moreover, using Monte Carlo simulations, we find that the proposed mechanism identifies focal points on the group level significantly more efficiently than ordinary coordination. Finally, we point to the possibility to use the mechanism as a simple and direct tool to measure the degree of strategic uncertainty on the individual level. |
| Keywords: | coordination; focal points; game theory; methodology; social norms |
| Date: | 2019–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0660&r=all |
| By: | Stefan Palan (Department of Banking and Finance, University of Graz; Department of Banking and Finance, University of Innsbruck); Jürgen Huber (Department of Banking and Finance, University of Innsbruck); Larissa Senninger (Department of Banking and Finance, University of Innsbruck) |
| Abstract: | When the information of many individuals is pooled, the resulting aggregate often is a good predictor of unknown quantities or facts (“wisdom of crowds†). This aggregate predictor frequently outperforms the forecasts of experts or even the best individual forecast included in the aggregation process. However, an appropriate aggregation mechanism is considered crucial to reaping the benefits of a “wise crowd†. Of the many possible ways to aggregate individual forecasts, we compare (uncensored and censored) mean and median, continuous double auction market prices and sealed bid-offer call market prices in a controlled experiment. We use an asymmetric information structure where subjects know different subsets of the total information needed to exactly calculate the asset value to be estimated. We find that prices from continuous double auction markets clearly outperform all alternative approaches for aggregating dispersed information and that information is only useful to the best-informed subjects. |
| Date: | 2019–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpsses:2019-01&r=all |
| By: | Patrick Button; Brigham Walker |
| Abstract: | We conducted a resume correspondence experiment to measure discrimination in hiring faced by Indigenous Peoples in the United States (Native Americans, Alaska Natives, and Native Hawaiians). We sent employers realistic 13,516 resumes for common jobs (retail sales, kitchen staff, server, janitor, and security) in 11 cities and compared callback rates. We signaled Indigenous status in one of four different ways. We almost never find any differences in callback rates, regardless of the context. These findings hold after numerous robustness checks, although our checks and discussions raise multiple concerns that are relevant to audit studies generally. |
| JEL: | C93 J15 J7 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25849&r=all |
| By: | Omar Al-Ubaydli; John A. List; Dana Suskind |
| Abstract: | Policymakers are increasingly turning to insights gained from the experimental method as a means of informing public policies. Whether—and to what extent—insights from a research study scale to the level of the broader public is, in many situations, based on blind faith. This scale-up problem can lead to a vast waste of resources, a missed opportunity to improve people’s lives, and a diminution in the public’s trust in the scientific method’s ability to contribute to policymaking. This study provides a theoretical lens to deepen our understanding of the science of how to use science. Through a simple model, we highlight three elements of the scale-up problem: (1) when does evidence become actionable (appropriate statistical inference); (2) properties of the population; and (3) properties of the situation. We argue that until these three areas are fully understood and recognized by researchers and policymakers, the threats to scalability will render any scaling exercise as particularly vulnerable. In this way, our work represents a challenge to empiricists to estimate the nature and extent of how important the various threats to scalability are in practice, and to implement those in their original research. |
| JEL: | C9 C90 C91 C92 C93 D03 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25848&r=all |
| By: | Vanberg, Christoph |
| Abstract: | In experiments which measure subjects’ beliefs, both beliefs about others’ behavior and beliefs about others’ beliefs, are often correlated with a subject’s own choices. Such phenomena have been interpreted as evidence of a causal relationship between beliefs and behavior. An alternative explanation attributes them to what psychologists refer to as a ‘false consensus effect’. It is my impression that the latter explanation is often prematurely dismissed because it is thought to be based on an implausible psychological bias. The goal of this note is to show that the false consensus effect does not rely on such a bias. I demonstrate that rational belief formation implies a correlation of behavior and beliefs of all orders whenever behaviorally relevant traits are drawn from an unknown common distribution. Thus, if we assume that subjects rationally update beliefs, correlations of beliefs and behavior cannot support a causal relationship. |
| Keywords: | beliefs; behavioral economics; experimental economics |
| Date: | 2019–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0662&r=all |
| By: | Marielle Brunette (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); Julien Jacob (UNISTRA - Université de Strasbourg) |
| Abstract: | We characterize the individual's attitude towards risk, prudence and temperance in the gain and loss domains. We analyze the links between the three features of preferences for a given domain and between domains for each feature of preferences. Consequently, the reflection effect, the mixed risk aversion and the risk apportionment, are key concepts of our study. We also display some determinants for risk aversion, prudence and temperance in each domain. To do this, we conducted a lab experiment with students eliciting risk aversion, prudence and temperance in the two domains, and collected information about each subject's characteristics. |
| Keywords: | risk aversion,prudence,temperance,experiment,correlations,determinant |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02114762&r=all |
| By: | Hsiao, Yu Chin; Kemp, Simon; Servátka, Maroš |
| Abstract: | We experimentally investigate whether framing an individual-choice decision in a market setting results in a different outcome than when the decision is described in a context-free frame. We further explore whether the context effect is triggered by the frame itself or whether a richer descriptive content is required to establish familiarity with the decision-making environment. Understanding what constitutes context is central to formulating practical recommendations aiming to improve the quality of individual decisions. Our results show that framing a sequential search problem as selling houses leads to better decisions than a context-free frame. Manipulating whether or not the framed decision-making scenario includes a description of the house, which would be naturally available in a real estate market, does not impact the length of search or the total earnings. |
| Keywords: | Schema Activation, Secretary Problem, Sequential Search, Context, Framing, Decision-Making |
| JEL: | C91 D83 |
| Date: | 2019–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94027&r=all |
| By: | Brice Corgnet (Emlyon Business School); Cary Deck (University of Alabama & Chapman University); Mark DeSantis (Chapman University); Kyle Hampton (Chapman University); Erik O. Kimbrough (Chapman University) |
| Abstract: | The ability of markets to aggregate diverse information is a cornerstone of economics and finance, and empirical evidence for such aggregation has been demonstrated in previous laboratory experiments. Most notably Plott and Sunder (1988) find clear support for the rational expectations hypothesis in their Series B and C markets. However, recent studies have called into question the robustness of these findings. In this paper, we report the result of a direct replication of the key information aggregation results presented in Plott and Sunder. We do not find the same strong evidence in support of rational expectations that Plott and Sunder report suggesting information aggregation is a fragile property of markets. |
| Keywords: | Aggregation, Efficient Markets, Rational Expectations, Experiments, Replication |
| JEL: | C9 D8 G1 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-11&r=all |
| By: | Barbieri, Stefano; Konrad, Kai A.; Malueg, David A. |
| Abstract: | We consider a preemption game between groups where the first agent to take a costly action wins the prize on behalf of his group. We describe the equilibrium solution of this problem when players differ in their own costs of action and these costs are private information. The equilibrium is typically characterized by delay. The nature of the equilibrium depends on key parameters such as the number of groups and their size. More competition between groups reduces delay, whereas in larger groups members of a given cost type are more reluctant to act but may yield an earlier resolution of the conflict. We analyze asymmetries across groups, focusing on group size and strength of the externalities within groups. |
| Keywords: | dynamic conflict; free riding; incomplete information; inter-group conflict; preemption; waiting |
| JEL: | D74 H41 L13 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13738&r=all |
| By: | Yasushi Asako; Yukihiko Funaki; Kozo Ueda; Nobuyuki Uto |
| Abstract: | Asymmetric information has explained the existence of a bubble in extant theoretical models. This study experimentally analyzes traders' choices, with and without asymmetric information, based on the riding-bubble model. We show that traders tend to hold a bubble asset for longer, thereby expanding the bubble in a market with symmetric, rather than asymmetric, information. However, when traders are more experienced, the size of the bubble decreases, in which case, bubbles do not arise with symmetric information. In contrast, the size of the bubble is stable in a market with asymmetric information. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e133&r=all |
| By: | Florent Bédécarrats (AFD - Agence française de développement); Isabelle Guérin (CESSMA UMRD 245 - Centre d'études en sciences sociales sur les mondes africains, américains et asiatiques - IRD - Institut de Recherche pour le Développement - Inalco - Institut National des Langues et Civilisations Orientales - UPD7 - Université Paris Diderot - Paris 7); François Roubaud (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine) |
| Abstract: | Randomized control trials (RCTs) have a narrow scope, restricted to basic intervention schemes. Experimental designs also display specific biases and political uses when implemented in the real world. Despite these limitations, the method has been advertised as the gold standard to evaluate development policies. This article adopts a political economy approach to explore this paradox. It argues that the success of RCTs is driven mainly by a new scientific business model based on a mix of simplicity and mathematical rigour, media and donor appeal, and academic and financial returns. This in turn meets current interests and preferences in the academic world and the donor community. |
| Keywords: | O10,Randomized control trials,methodology,epistemology,Impact evaluation,Randomised control trials,Experimental method,Political economy,Development JEL codes: A11,B41,C18,C93,D72 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:ird-02112849&r=all |
| By: | Bergolo, Marcelo (IECON, Universidad de la República); Ceni, Rodrigo (IECON, Universidad de la República); Cruces, Guillermo (CEDLAS-UNLP); Giaccobasso, Matias (University of California, Los Angeles); Perez-Truglia, Ricardo (University of California, Los Angeles) |
| Abstract: | The canonical model of Allingham and Sandmo (1972) predicts that firms evade taxes by optimally trading off between the costs and benefits of evasion. However, there is no direct evidence that firms react to audits in this way. We conducted a large-scale field experiment in collaboration with Uruguay's tax authority to address this question. We sent letters to 20,440 small- and medium-sized firms that collectively paid more than 200 million dollars in taxes per year. Our letters provided exogenous yet nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measured the effect of these signals on their subsequent perceptions about the auditing process, based on survey data, as well as on the actual taxes paid, based on administrative data. We find that providing information about audits had a significant effect on tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972). Our findings are consistent with an alternative model, risk-as-feelings, in which messages about audits generate fear and induce probability neglect. According to this model, audits may deter tax evasion in the same way that scarecrows frighten off birds. |
| Keywords: | tax, evasion, audits, penalties, frictions |
| JEL: | C93 H26 K34 K42 Z13 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12335&r=all |
| By: | De Neve, Jan-Emmanuel; Imbert, Clement; Luts, Maarten; Spinnewijn, Johannes; Tsankova, Teodora |
| Abstract: | We study the impact of deterrence, tax morale, and simplifying information on tax compliance. We ran five experiments spanning the tax process which varied the communication of the tax administration with all income taxpayers in Belgium. A consistent picture emerges across experiments: (i) simplifying communication increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective. Even tax morale messages that improve knowledge and appreciation of public services do not raise compliance. In fact, heterogeneity analysis with causal forests shows that tax morale treatments backfire for most taxpayers. In contrast, simplification has large positive effects on compliance, which diminish over time due to follow-up enforcement. A discontinuity in enforcement intensity, combined with the experimental variation, allows us to compare simplification with standard enforcement measures. Simplification is far more cost-effective, allowing for substantial savings on enforcement costs, and also improves compliance in the next tax cycle. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13733&r=all |
| By: | Sanjit Dhami; Emma Manifold; Ali al-Nowaihi |
| Abstract: | We contribute to a growing literature on redistribution and identity. We propose a theoretical model that embeds social identity concerns, as in Akerlof and Kranton (2000), with inequity averse preferences, as in Fehr and Schmidt (1999). We conduct an artefactual ultimatum game experiment with registered members of British political parties for whom both identity and redistribution are salient. The empirical results are as follows. (1) Proposers and responders demonstrate ingroup-favoritism. (2) Proposers exhibit quantitatively stronger social identity effects relative to responders. (3) As redistributive taxes increase, offers by proposers and the minimum acceptable offers of responders (both as a proportion of income) decline by almost the same amount, suggesting a shared understanding that is characteristic of social norms. (4) Subjects experience more disadvantageous inequity from outgroup members relative to ingroup members. |
| Keywords: | Social identity, prosocial behaviour, ultimatum game, fiscal redistribution, entitlements |
| JEL: | D01 D03 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:19/04&r=all |
| By: | Willer, Robb (Department of Sociology, Stanford University); Voelkel, Jan G. (Department of Sociology, Stanford University) |
| Abstract: | While polls show progressive economic policies are popular, progressive candidates typically lose elections in the U.S. One explanation for this progressive paradox is that the opponents of progressive candidates often win through “symbolic politics,†successfully harnessing values and ideologies that receive broad support from the general public. Here we explore one solution to the progressive paradox, testing whether progressive candidates achieve greater support by framing their policy platforms in terms of values and ideologies that resonate beyond the progressive base. We tested this claim in two experiments (total N=4,138), including one pre-registered experiment conducted on a nationally representative sample. We found that a presidential candidate who framed his progressive economic platform to be consistent with more conservative value concerns like patriotism, family, and respect for tradition--as opposed to more liberal value concerns like equality and social justice--was supported significantly more by conservatives and, unexpectedly, by moderates as well. These effects were mediated by perceived value similarity with the candidate. Furthermore, a manipulation of how progressive the candidate’s platform was had weak and inconsistent effects, and did not interact with the framing of the platform. These findings indicate that in our experiments framing mattered more than policy, suggesting that moral reframing could be an effective alternative to policy centrism for candidates seeking broader support. Our results illustrate the important effects of value framing of economic policy, offering a solution to the longstanding puzzle regarding the gap between progressive policy and candidate support. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3782&r=all |
| By: | Gian Paolo Barbetta (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Paolo Canino; Stefano Cima |
| Abstract: | The availability of cheap wi-fi internet connections has stimulated schools to adopt Web 2.0 platforms for teaching. Using social networks and micro-blogs, teachers aim to stimulate students’ participation in school activities and their achievement. Although anecdotal evidence shows a high level of teacher satisfaction with these platforms, only a small number of studies has produced rigorous estimates of their effects on students’ achievement. We contribute to the knowledge in this field by analyzing the impact of using micro-blogs as a teaching tool on the reading and comprehension skills of students. Thanks to a large-scale randomized controlled trial, we find that using Twitter to teach literature has an overall negative effect on students’ average achievement, reducing performance on a standardized test score by about 25 to 40% of a standard deviation. The negative effect is heterogeneous with respect to some students’ characteristics. More specifically, the use of this Web 2.0 application appears to have a stronger detrimental effect on students who usually perform better. |
| Keywords: | ICT, education, literature performance, RCT. |
| JEL: | I21 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie1:def081&r=all |
| By: | Rodrigo A. Velez; Alexander L. Brown |
| Abstract: | We advance empirical equilibrium analysis (Velez and Brown, 2019) of the winner-bid and loser-bid auctions for the dissolution of a partnership. We show, in a complete information environment, that even though these auctions are essentially equivalent for the Nash equilibrium prediction, they can be expected to differ in fundamental ways when they are operated. Besides the direct policy implications, two general consequences follow. First, a mechanism designer who accounts for the empirical plausibility of equilibria may not be constrained by Maskin invariance. Second, a mechanism designer who does not account for the empirical plausibility of equilibria may inadvertently design biased mechanisms. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.08234&r=all |