|
on Experimental Economics |
|
Issue of 2019‒09‒16
twenty-six papers chosen by |
| By: | Chun-Fang Chiang (National Taiwan Univ); Semin Kim (Yonsei Univ); SunTak Kim (National Taiwan Univ); Chien-Hsun Lin (Univ. of California, Santa Barbara); Ming-Jen Lin (National Taiwan Univ) |
| Abstract: | We conduct a field experiment to investigate the elects of partisan news on the 2016 Taiwan Presidential and Legislative Elections. Sub- jects are divided into four groups: rightist (KMT), leftist (DPP), new third-party and control, and provided with distinct partisan news ar- ticles. To ensure readership of assigned newspapers, subjects join multiple experimental sessions in which they are asked to solve quiz questions about the news articles and rewarded according to their quiz scores. We measure the elects of partisan news by comparing the reported vote choices in the 2016 Elections with subjects' initial political preferences. We find that the leftist news articles have signif- icantly increased the support for the DPP candidate Tsai by reinforc- ing the existing preferences. The articles about the third-parties have changed subjects' voting intentions to support the new party GSD. We also find that the estimated baseline and reinforcement treatment elects are driven by undecided subjects or swing voters. |
| Keywords: | partisan news, media e ect, swing voter, persuasion rate, voting, election, field experiment |
| JEL: | D72 L82 C92 C93 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:yon:wpaper:2019rwp-147&r=all |
| By: | Carlos A. Chávez (Universidad de Talca); James J. Murphy (Department of Economics, University of Alaska Anchorage); John K. Stranlund (University of Massachusetts Amherst) |
| Abstract: | This work presents the results of framed field experiments designed to study the co-enforcement of access to common pool resources. The experiments were conducted in the field with participants in the territorial use rights in fisheries (TURFs) management scheme that regulates access to nearshore fisheries along the coast of Chile. In the experiments, TURF members not only decided on harvest but also invested in monitoring to deter poaching by outsiders. Treatments varied whether the monitoring investment was an individual decision or determined by a group vote. Per-unit sanctions for poaching were exogenous as if provided by a government authority, and we varied the sanction level. Our results suggest that co-enforcement, in which monitoring for poaching is provided by resource users and sanctions are levied by the government, can reduce poaching levels. Monitoring investments were not high enough to lift the expected marginal penalty for poaching above the marginal gain from poaching when the sanction for poaching was low, but expected marginal penalties were higher than the marginal gain from poaching when the sanction was high. Despite this, poaching levels were not sensitive to changes in monitoring levels and sanctions. While co-enforcement did not eliminate poaching, it did eliminate the gains from poaching in all but one treatment. |
| Keywords: | experimental economics, Common pool resources; enforcement; field experiments; poaching; territorial use rights fisheries; social dilemma; fisheries management; development economics; co-enforcement |
| JEL: | C72 C90 C93 D70 K42 Q22 Q28 Q56 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2019-01&r=all |
| By: | Carlos A. Chávez (Universidad de Talca); James J. Murphy (Department of Economics, University of Alaska Anchorage); John K. Stranlund (University of Massachusetts Amherst) |
| Abstract: | This work presents the results of framed field experiments designed to study the joint problem of managing harvests from a common pool resource and protecting the resource from poaching. The experiments were conducted both in the field with TURF users and in the lab with university students. Our study has two objectives. First, we designed our experiments to study the effects of poaching on the ability of common pool resource users to coordinate their harvests when encroachment by outsiders is unrestricted and when the government provides weak enforcement. Second, we examine the ability of common pool resource users to simultaneously coordinate their harvests and investments in monitoring to deter poaching with and without government assistance in monitoring. Weak external monitoring that was predicted to have no effect actually led to significantly lower poaching relative to unrestricted poaching. However, neither giving sole responsibility for monitoring to resource users nor combining user and government monitoring affected poaching levels much. Our results suggest that users of a common pool resource may have difficulties coordinating their efforts to deter poachers, even with help from government authorities. We find no important qualitative differences in the behavior of TURF users and university students. |
| Keywords: | experimental economics, Common pool resources; economic experiments; enforcement; field experiments; poaching; territorial use rights fisheries; social dilemma; fisheries management; development economics |
| JEL: | C72 C90 C93 D70 K42 Q22 Q28 Q56 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2018-07&r=all |
| By: | Cary Deck (University of Alabama; Chapman University); James J. Murphy (Department of Economics, University of Alaska Anchorage) |
| Abstract: | This paper examines two previously unexplored techniques for increasing charitable giving, both motivated by the contest literature. One is a fixed bonus that is paid to the organization receiving the most donations, akin to an all-pay auction. The other is a raffle-based bonus, akin to a Tullock contest. These two techniques are compared to a one-to-one matching program and a baseline condition in a within-subject laboratory experiment. The results reveal that all three bonus techniques lead to similar increases in donations to organizations eligible for the promotion. However, when only some organizations are eligible, the increases in giving to eligible organizations are primarily driven by a reallocation of donations away from ineligible organizations. |
| Keywords: | experimental economics, Charitable Giving, Contests, All-pay Auction, Donation Matching, Laboratory Experiment, philanthropy |
| JEL: | C9 D6 D7 D9 L3 H4 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2018-06&r=all |
| By: | Bruno Deffains (Centre de Recherches en Droit et Economie (CRED) - Université Panthéon Assas (Paris 2)); Romain Espinosa (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Claude Fluet (Laval University [Québec]) |
| Abstract: | We conduct an experiment where participants choose between actions that provide private benefits but may also impose losses on others. Three legal environments are compared: no law, strict liability for harm caused to third parties, and an efficiently designed negligence rule where damages are paid only when the harmful action generates a net social loss. Legal obligations are either perfectly enforced (Severe Law) or only weakly so (Mild Law), i.e., expected sanctions are then nondeterrent. We find that behavior can be rationalized in terms of individuals trading-off private benefits, net of legal liability, against the net uncompensated losses caused to others. The weight associated with non incentivized efficiency concerns is increased by the introduction of a liability rule, whether deterrent or not, and there is evidence that the effect is stronger under strict liability than under the negligence rule. |
| Keywords: | Behavioral law and economics,liability rules,social norms,social preferences,legal norms |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02276435&r=all |
| By: | Wu, Hanxiao; Qin, Botao |
| Abstract: | Hypothetical bias is the gap between the hypothetical willingness to pay and the real economic payment. Subjects may overstate or understate their willingness to pay due to strategic behaviour. This bias is common in contingent valuation studies. In this study, we attempt to use a commitment device to correct the bias, in order to elicit sincere preferences. We use a solemn oath in second-price auctions, using both induced valuations and homegrown valuations. Using a random effect panel data model, we draw three conclusions: (1) there is a gap between subjects' bids and their true willingness to pay due to the violation of both the budget constraint and the participation constraint; (2) oaths in the induced value experiment can increase subjects' bids towards the induced value only given real monetary incentives; (3) oaths can modestly correct the hypothetical bias in the homegrown valuation experiment. |
| Keywords: | Preference elicitation, Oath, Second-price auction, Induced-value experiment, Homegrown valuation |
| JEL: | C90 D44 Q51 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95913&r=all |
| By: | Felix Holzmeister; Matthias Stefan |
| Abstract: | With the rise of experimental research in the social sciences, numerous methods to elicit and classify people's risk attitudes in the laboratory have evolved. However, evidence suggests that people's attitudes towards risk may change considerably when measured with different methods. Based on a with-subject experimental design using four widespread risk preference elicitation methods, we find that different procedures indeed give rise to considerably varying estimates of individual and aggregate level risk preferences. Conducting simulation exercises to obtain benchmarks for subjects' behavior, we find that the observed heterogeneity in risk preference estimates across methods looks qualitatively similar to the heterogeneity arising from independent random draws from choices in the experimental tasks, despite significantly positive correlations between tasks. Our study, however, provides evidence that subjects are surprisingly well aware of the variation in the riskiness of their choices. We argue that this calls into question the common interpretation of variation in revealed risk preferences as being inconsistent. |
| Keywords: | Risk preference elicitation, inconsistent behavior, risk attitudes |
| JEL: | C91 D81 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2019-19&r=all |
| By: | Fabio Galeotti (Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France); Valeria Maggian (Ca' Foscari University of Venice, Department of Economics. Cannaregio 873, Fondamenta San Giobbe, 30121 Venice, Italy); Marie Claire Villeval (Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France; IZA, Schaumburg-Lippe-Strasse 5-9, 53113 Bonn, Germany) |
| Abstract: | Deterrence institutions are widely used in modern societies to discourage rule violations but whether they have an impact beyond their immediate scope of application is usually ignored. Using a natural field experiment, we show that they affect intrinsic honesty across contexts. We identified fraudsters and non-fraudsters in public transport who were or not exposed to ticket inspections by the transport company. We then measured the intrinsic honesty of the same persons in a new unrelated context where they could misappropriate money. Instead of having an educative effect across contexts, the exposure to deterrence practices increases unethical behavior of fraudsters but also of non-fraudsters. |
| Keywords: | Deterrence Institutions, Intrinsic Honesty, Spillovers, Field Experiment |
| JEL: | C93 K42 D02 D91 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1924&r=all |
| By: | Serhiy Kandul; Apshara Naguleswaran |
| Abstract: | Dealing with temptations requires self-control. If lying for money constitutes a temptation, restricting people's self-control resources would enhance unethical behavior. We argue that the effect of the self-control on lying depends on two things: 1) easiness to grasp the opportunity to lie, and 2) the amount of time available to decide. In an incentivized online experiment, we manipulate participants' self-control resources through an ego depletion task and allow participants to misreport the outcome of a dice-roll with and without time pressure. We find evidence that ego depletion increases the fraction of truth-tellers under time pressure. Our findings suggest that when discovering the opportunities to lie is not trivial and people are constrained with the time, self-control depletion enhances people's ethical behavior. |
| Keywords: | Lying, Ego depletion, Self-control, Ethical behavior,Time pressure. |
| JEL: | C91 D91 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:irn:wpaper:19-05&r=all |
| By: | Danijela Vuletiæ Èugalj |
| Abstract: | This paper provides the first evidence of the existence of gender-based favoritism in life saving decisions to donate blood. We conduct a field experiment among blood donors from Bosnia and Herzegovina where we exogenously manipulate the signal of a blood recipient’s gender by adding his/her name, and photograph, to a letter soliciting blood donation. Motivated by the literature on identity, we test the influence on donation behavior of two dimensions of shared identity between donor and recipient – gender and age. 74% more blood donors donate if the potential blood recipient is of the same gender. This result is mostly driven by male donors donating to a male recipient. In contrast to gender identity being an important determinant in fostering donors’ participation rates, being of similar age to the blood recipient has relatively little effect. By identifying an important factor that influences willingness to give blood, our results have implications for better targeting of campaigns to increase blood donations. |
| Keywords: | field experiment; blood donation; identity theory; |
| JEL: | A13 C93 D91 I12 I18 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp639&r=all |
| By: | John K. Stranlund (University of Massachusetts Amherst); James J. Murphy (Department of Economics, University of Alaska Anchorage); John M. Spraggon (University of Massachusetts Amherst); Nikolaos Zirogiannis (Indiana University Bloomington) |
| Abstract: | We present results from laboratory emissions permit markets designed to investigate the transmission of abatement cost risk to firms’ compliance behavior and regulatory enforcement strategies. With a fixed expected marginal penalty, abatement cost shocks produced significant violations and emissions volatility as predicted. Tying the monitoring probability to average permit prices effectively eliminated noncompliance, but transmitted abatement cost risk to monitoring effort. Tying the penalty to average prices reduced violations, but did not eliminate them. Some individuals in these treatments sold permits at low prices, presumably in an attempt to weaken enforcement. While tying sanctions directly to prevailing permit prices has theoretical and practical advantages over tying monitoring to prices, our results suggest that this strategy may not be as effective as predicted without additional modifications. |
| Keywords: | experimental economics, Emissions markets, risk and uncertainty, incomplete information, permit markets, compliance, enforcement, laboratory experiments. |
| JEL: | C92 L51 Q58 D62 H23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2018-05&r=all |
| By: | Fernandes, Ana (University of Applied Sciences); Huber, Martin; Plaza, Camila (University of Basel) |
| Abstract: | The apprenticeship market is the earliest possible entry into the workforce in developed economies. Since early labor market shocks are likely magnified throughout professional life, avoiding mismatches between talent and occupations e.g. due to gender- or status-based discrimination appears crucial. This experimental study investigates the effects of applicant gender and its interaction with parental occupation on callback rates in the Swiss apprenticeship market, i.e. invitations to an interview, assessment center, or trial apprenticeship. Our correspondence test consists of sending out fictitious job applications with randomized gender and parental occupation to apprenticeship vacancies in four Swiss regions. We by and large find no robust evidence of differential treatment by employers, as gender and parental occupation do not affect callback rates in a statistically significant way in most cases. |
| Keywords: | Field Experiment; Correspondence Test; Discrimination; Gender; Parental Occupation |
| JEL: | C93 J16 J71 |
| Date: | 2019–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:fri:fribow:fribow00506&r=all |
| By: | Tim Lohse; Sven A. Simon |
| Abstract: | In today’s business environment, team work is omnipresent. But might teams be more prone toward non-compliance with laws and regulations than single individuals despite imminent neg-ative consequences of uncovering misconduct? The recent prevalence of corporate delinquencies gives rise to this concern. In our laboratory experiment, we investigate the determinants of teams’ compliance behavior. In particular, we disentangle the effect of deciding jointly as a team of two from sharing the economic consequences among both team members. Our findings provide evidence that teams are substantially less compliant than individuals are. This drop in compliance is driven by the joint, rather than the individual, liability of team members. In contrast, whether subjects make their decisions alone or together does not influence the overall compliance rate. When coordinating their compliance decision teams predominately discuss the risk of getting caught in an audit, and team decision-making is characterized by behavioral spillovers between team members. Holding each team member fully liable is a promising means to deter them from going astray. |
| Keywords: | compliance, lying, team decision, shared liability, audit, communication, laboratory experiment |
| JEL: | C92 D91 K42 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7807&r=all |
| By: | Nicolas Jacquemet (Paris School Of Economics); Alexander James (Department of Economics, University of Alaska Anchorage); Stéphane Luchini (Aix-Marseille University); James J. Murphy (Department of Economics, University of Alaska Anchorage); Jason F. Shogren (University Of Wyoming) |
| Abstract: | This study explores whether an oath to honesty can reduce both shirking and lying among crowd-sourced internet workers. Using a classic coin-flip experiment, we first show that a substantial majority of Mechanical Turk workers both shirk and lie when reporting the number of heads flipped. We then demonstrate lying can be reduced by first asking each worker to swear voluntarily on his or her honor to tell the truth in subsequent economic decisions. The oath, however, did not reduce shirking as measured by time-at-coin-flip-task, although it did increase the time they spent answering a demographic survey. Conditional on response, MTurk shirkers and liars were less likely to agree to an ex post honesty oath. Our results suggest oaths may help elicit more truthful behavior in on-line crowd-sourced environments. |
| Keywords: | experimental economics, Honesty, Intrinsic Costs, Field Experiment, Solemn Oath, Mechanical Turk, MTurk, lying, shirking, labor economics |
| JEL: | C81 C90 C93 D01 D82 J20 J30 J40 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2019-02&r=all |
| By: | Daniel Hedblom; Brent R. Hickman; John A. List |
| Abstract: | We develop theory and a tightly-linked field experiment to explore the supply side implications of corporate social responsibility (CSR). Our natural field experiment, in which we created our own firm and hired actual workers, generates a rich data set on worker behavior and responses to both pecuniary and CSR incentives. Making use of a novel identification framework, we use these data to estimate a structural principal-agent model. This approach permits us to compare and contrast treatment and selection effects of both CSR and financial incentives. Using data from more than 1100 job seekers, we find strong evidence that when a firm advertises work as socially-oriented, it attracts employees who are more productive, produce higher quality work, and have more highly valued leisure time. In terms of enhancing the labor pool, for example, CSR increases the number of applicants by 25 percent, an impact comparable to the effect of a 36 percent increase in wages. We also find an economically important complementarity between CSR and wage offers, highlighting the import of using both to hire and motivate workers. Beyond lending insights into the supply side of CSR, our research design serves as a framework for causal inference on other forms of non-pecuniary incentives and amenities in the workplace, or any other domain more generally. |
| JEL: | C14 C93 J3 J33 J44 L21 M52 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26222&r=all |
| By: | Mohamed Gomaa; Kiridaran Kanagaretnam; Stuart Mestelman; Mohamed Shehata |
| Abstract: | Our objective is to test-bed the new Expected Credit Loss (ECL) and Current Expected Credit Loss (CECL) models for bank credit loss accounting to identify the potential consequences of their implementation. In particular, whether and how ECL and CECL approaches could lead to divergence in credit loss accounting practices in the U.S. relative to the rest of the world is an unanswered question. To do this, we develop a stylized bank-loan setting in a controlled laboratory environment with eight different secured personal-loan portfolios. Fifty-six senior accounting students take the role of loan managers responsible for making annual loan-loss reserve decisions in a between-subjects design under the rules of either the ECL or CECL models. We examine the effects of mandating the ECL or CECL model in terms of their impacts on the adequacy of loan-loss reserves, the comparability and predictability of loan-loss reserves and the volatility of reported profit. |
| Keywords: | Credit-Loss Rule Changes; Test-bedding; Adequacy of Reserves; Excess of Reserves; Accounting Comparability; Accounting Predictability |
| JEL: | M48 C63 C91 M52 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2019-10&r=all |
| By: | Tobias Cagala; Ulrich Glogowsky; Veronika Grimm; Johannes Rincke; Amanda Tuset-Cueva |
| Abstract: | We present controlled experimental evidence on how rent extraction by an administrator affects giving to non-profit associations. Holding the price of giving constant, we compare contributions between two conditions: a rent extraction condition, in which an administrator can expropriate a part of the contributions and a control condition without rent extraction. We find that rent extraction strongly reduces average contributions. Studying the channels through which this effect operates, we demonstrate that rent extraction has situational spillovers, suggesting that it undermines the contributors’ general preference for giving. In contrast, we do not find evidence for negative reciprocity towards the administrator. |
| Keywords: | rent extraction, donations, prosocial behavior |
| JEL: | D02 D03 H41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7808&r=all |
| By: | Katharina Momsen; Markus Ohndorf |
| Abstract: | We investigate if people exploit moral wiggle room in green markets when revelation is stochastic and the revealed information is potentially erroneous. In our laboratory experiment, subjects purchase products associated with co-benefits represented as a contribution to carbon o?sets purchased by the experimenters. Information on the size of this contribution is unobservable at first, but can be actively revealed by the consumer. In seven treatments, we alter the information structure as well as the perceived revelation costs. We find strong evidence of self-serving information avoidance in treatments with simple stochastic revelation and reduced reliability of the information, representing potentially 'fake' news. The propensity to avoid information increases with the introduction of nominal information costs, which are in fact not payo?-relevant. We conclude that, generally, self-serving information avoidance can arise in green market situations if specific situational excuses are present, which could explain the demand for products associated with 'greenwashing'. |
| Keywords: | Information avoidance, experiment, carbon o?sets, moral wiggle room, green consumption, fake news |
| JEL: | C91 D91 G11 J24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2019-18&r=all |
| By: | Michael Majerczyk (J. Mack Robinson College of Business, Georgia State University); Roman Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University); Yu Tian (Kenneth G. Dixon School of Accounting, University of Central Florida) |
| Abstract: | We examine theoretically and experimentally how combining between-team and within-team incentives affects behavior in team tournaments. Theory predicts that free-riding will occur when there are only between-team incentives, and offering within-team incentives may solve this problem. However, if individuals collude, then within-team incentives may not be as effective at reducing free-riding. Consistent with the theoretical predictions, the results of our experiment indicate that although between-team incentives are effective at increasing individual effort, there is substantial free-riding and declining effort over time. Importantly, a combination of between-team and within-team incentives is effective not only at generating effort but also at sustaining effort over time, mitigating free-riding problem, increasing cooperation and decreasing collusion within teams. |
| Keywords: | Individual incentive; Team incentive; Tournament; Free-riding; Collusion |
| JEL: | C70 D72 H41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-20&r=all |
| By: | Krishna Dasaratha; Kevin He |
| Abstract: | We conduct a sequential social learning experiment where subjects guess a hidden state after observing private signals and the guesses of a subset of their predecessors. A network determines the observable predecessors, and we compare subjects' accuracy on sparse and dense networks. Later agents' accuracy gains from social learning are twice as large in the sparse treatment compared to the dense treatment. Models of naive inference where agents ignore correlation between observations predict this comparative static in network density, while the result is difficult to reconcile with rational-learning models. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1909.02220&r=all |
| By: | Li-Fei Huang (Ming Chuan University) |
| Abstract: | The one-way ANOVA table is used to test whether the factor has some influence on the experimental result or not. The factor has at least two levels, and some uncontrollable block usually appears in the experiment. An engineering calculator can help computing different sum of squares, but the ANOVA table must be written or typed in somewhere else. By the way, a smart phone is more convenient than a calculator or a tablet. Rather than the traditional spreadsheet, the free MIT App Inventor is applied to create the one-way ANOVA table with blocks in the mobile computing environment in this paper. |
| Keywords: | App Inventor, one-way ANOVA, block, financial technique. |
| JEL: | Y10 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:8710559&r=all |
| By: | Kenju Kamei; Louis Putterman; Jean-Robert Tyran |
| Abstract: | Effective states provide public goods by taxing their citizens and imposing penalties for non-compliance. However, accountable government requires that enough citizens are civically engaged. We study the voluntary cooperative underpinnings of the accountable state by conducting a two-level public goods experiment in which civic engagement can build a sanction scheme to solve the first-order public goods dilemma. We find that civic engagement can be sustained at high levels when costs are low relative to the benefits of public good provision. This cost-to-benefit differential yields what we call a “leverage effect” because it transforms modest willingness to cooperate into the larger social dividend from the power of taxation. In addition, we find that local social interaction among subgroups of participants also boosts cooperation. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bro:econwp:2019-8&r=all |
| By: | Aleksandr Alekseev (Economic Science Institute, Chapman University) |
| Abstract: | I study the effect of task difficulty on workers' effort and compare it to the effect of monetary rewards in an incentivized lab experiment. I find that task difficulty has an inverse-U effect on effort, and that this effect is quantitatively large when compared to the effect of conditional monetary rewards. Difficulty acts as a mediator of monetary rewards: conditional rewards are most effective at the intermediate or high levels of difficulty. I show that the inverse-U pattern of effort response to difficulty is not consistent with the Expected Utility model but is consistent with the Rank-Dependent Utility model that allows for non-linear probability weighting. I structurally estimate the model and find that it successfully captures the treatment effects observed in the data. I discuss the implications of my findings for the design of optimal incentive schemes for workers and modeling effort. |
| Keywords: | Incentives; Task difficulty; Monetary rewards; Effort Provision; Risk preferences; Probability weighting |
| JEL: | C91 D91 D81 J20 J33 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-21&r=all |
| By: | Abhijit Banerjee; Esther Duflo; Daniel Keniston; Nina Singh |
| Abstract: | Should police activity be narrowly focused and high force, or widely-dispersed but of moderate intensity? Critics of intense “hot spot” policing argue it primarily displaces, not reduces, crime. But if learning about enforcement takes time, the police may take advantage of this period to intervene intensively in the most productive location. We propose a multi-armed bandit model of criminal learning and structurally estimate its parameters using data from a randomized controlled experiment on an anti-drunken driving campaign in Rajasthan, India. In each police station, sobriety checkpoints were either rotated among 3 locations or fixed in the best location, and the intensity of the crackdown was cross-randomized. Rotating checkpoints reduced night accidents by 17%, and night deaths by 25%, while fixed checkpoints had no significant effects. In structural estimation, we show clear evidence of driver learning and strategic responses. We use these parameters to simulate environment-specific optimal enforcement policies. |
| JEL: | D83 K42 O18 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26224&r=all |
| By: | Alberto Chong (Department of Economics, Andrew Young School of Policy Studies, Georgia State University, USA); Joan J. Martínez (University of California, Berkeley, USA) |
| Abstract: | We provide empirical evidence that supports a causal link from education to risk aversion when using representative data from representative surveys and artefactual or lab-in-the field experiments in Lima, Peru. We employ three standard experimental measures of risk aversion and find that each of them is positively correlated with years of education. We suggest that this relationship may be causal as we take advantage of an identification strategy that exploits a national law enacted in order to incentivize the construction of new schools in Lima, which allows us to provide evidence that more education may increase risk aversion. Our findings are further confirmed when applying a broad set of robustness tests. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper1917&r=all |
| By: | Jean S. Clarke (emlyon business school); Joep P. Cornelissen; Mark Healey |
| Abstract: | A key challenge for entrepreneurs is to convince investors of their business ideas in a pitch. Although scholars have started to explore how entrepreneurs convey their passion and preparedness in a pitch, they have overlooked the possible variation that exists in the verbal and nonverbal expressions of entrepreneurs. We build on research in cognitive science and entrepreneurship to examine the nature and influence of specific forms of speech and gesturing used by entrepreneurs when pitching. In an initial qualitative field study we identify distinct pitching strategies entrepreneurs use, involving different combinations of verbal tactics (using literal and figurative language to frame a venture) and gesture (using different types of hand gestures to emphasize parts of their pitch and convey product and venture ideas). In an experimental study with samples of investors and students, we examine the impact of these strategies on the propensity to invest. We found that although variation in the type of language entrepreneurs used had limited effects, using gestures to depict and symbolize business ideas had strong positive effects. Our findings indicate that the skilled use of gestures by entrepreneurs helps potential investors imagine aspects of a new venture for themselves, enhancing perception of its investment potential. |
| Keywords: | research methods,qualitative orientation,quantitative orientation,entrepreneurship,topic areas,lab experiment |
| Date: | 2019–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02276704&r=all |