|
on Experimental Economics |
| By: | Stanton Hudja (Krannert School of Management, Purdue University); Brian Roberson (Krannert School of Management, Purdue University); Yaroslav Rosokha (Krannert School of Management, Purdue University) |
| Abstract: | We investigate the role of performance feedback, in the form of a public leaderboard, in innovation competition that features sequential search activity and a range of possible innovation qualities. We find that in the subgame perfect equilibrium of contests with a fixed ending date (i.e., finite horizon), providing public performance feedback results in lower equilibrium effort and lower innovation quality. We conduct a controlled laboratory experiment to test the theoretical predictions and find that the experimental results largely support the theory. In addition, we investigate how individual characteristics affect competitive innovation activity. We find that risk aversion is a significant predictor of behavior both with and without leaderboard feedback and that the direction of this effect is consistent with the theoretical predictions. |
| Keywords: | Innovation Competitions, Experiments, Contests |
| JEL: | D90 O31 C90 D83 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-34&r=all |
| By: | Zuzana Brokesova (University of Economics in Bratislava); Cary Deck (University of Alabama; Economic Science Institute, Chapman University); Jana Peliova (University of Economics in Bratislava) |
| Abstract: | The newsvendor problem is a workhorse model in operation management research. We introduce a related game that operates in the price dimension rather than the inventory dimension: the price gouging game. Using controlled laboratory experiments, we compare news vending and price gouging behavior. We replicate the standard pull-to-center effect for news vending and find that the equivalent pattern occurs with price gouging. Further, we find that the pull-to-center is asymmetric both for newsvendors and price gougers. More broadly, the experimental results reveal that choices are similar across the theoretically isomorphic games, suggesting that observed behavior in newsvendor experiments is representative of a broader class of games and not driven by the operations context that is often used in newsvendor experiments. Finally, we do not find evidence that behavior in these games is systemically affected by sex, risk attitude, or cognitive reflection. |
| Keywords: | Behavioral Operations; Price Gouging; Newsvendor Game; Inventory; Pull-to-Center Effect |
| JEL: | C9 D2 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:20-09&r=all |
| By: | Robert J., Schmidt; Christiane, Schwieren; Martin, Vollmann |
| Abstract: | Depending on the context at hand, people’s preference for receiving feedback might differ. Especially in allocation decisions that directly concern another individual, feedback from the affected person can have positive or negative value. We study such preferences in a laboratory experiment by eliciting the willingness-to-pay to receive or to avoid verbal feedback from subjects that were previously affected by an allocation decision. We find that most decision makers exhibit a positive willingness-to-pay for having control about whether feedback occurs or not. Specifically, decision makers that equally shared their endowment with the recipient revealed a positive willingness-to-pay for receiving, but not for avoiding feedback. By contrast, among decision makers that behaved selfishly, we identify both: subjects that were willing to pay for receiving and subjects that were willing to pay for avoiding feedback. The stated motivations indicate that curiosity, the desire to receive social approval and giving the recipient the chance to express his/her feelings are the main reasons for feedback acquisition, while shame and fear of negative feedback are the main reasons for avoidance. |
| Keywords: | feedback; communication; non-instrumental information; social preferences; information avoidance; curiosity |
| Date: | 2020–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0677&r=all |
| By: | Kieran Marray (Mathematical Institute, University of Oxford; Institute for New Economic Thinking at the Oxford Martin School, University of Oxford); Nikhil Krishna (Trinity College, University of Oxford); Jarel Tang (The Queen's College, University of Oxford) |
| Abstract: | Individuals' output often depends not just on their ability and actions, but also on external factors or fundamentals, whose effect they cannot separately identify. At the same time, many individuals have incorrect beliefs about their own ability. Heidhues et al. (2018) characterise overconfident and underconfident individuals' equilibrium beliefs and learning process in these situations. They argue overconfident individuals will act sub-optimally because of how they learn. We carry out the first experimental test their theory. Subjects take incorrectly marked tests, and we measure how they learn about the marker's accuracy over time. We use machine learning to identify heterogeneous effects. Overconfident subjects have lower beliefs about the fundamental, as Heidhues et al. predict, and thus would make sub-optimal decisions. But we find no evidence it is because of how they learn. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2002.07229&r=all |
| By: | Noemí Herranz-Zarzoso (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Gerardo Sabater-Grande (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | In this paper, we examine a potential self-selection bias in different samples of subjects depending on the payment scheme offered in the recruiting process. We ran four field experiments in which students enrolled in a microeconomics course were invited to set their own goal for the final exam of the course. Subjects were informed that they could be given a monetary reward if their grade were higher than or equal to their self-chosen goal. We aim to study whether subjects’ willingness to participate depends on their expected performance under diverse announced reward criteria, like a rank-order tournament and piece-rate pay. Given that judgments about future performance are closely tied to previous performance, the midterm exam scores from the current academic course are compared between participants and non-participants in order to analyze sample-sorting effects. We find that only when a rank-order tournament is offered, either exclusively or in combination with another type of payment mechanism, are high-performing students more likely to participate in the experiment than low-performing ones. |
| Keywords: | self-selection bias, piece-rate, rank-order tournament |
| JEL: | C81 C93 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2020/13&r=all |
| By: | Ruiz-Buforn, Alba; Camacho-Cuena, Eva; Morone, Andrea; Alfarano, Simone |
| Abstract: | We experimentally study the information aggregation process in a laboratory financial market when a public signal is released. The public disclosure crowds out information demand and reduces price informativeness. The latter effect is primarily caused by the overweighting of public information into prices. We are the first in providing evidence that strategic pricing concerns trigger the overweighting effect and the consequent market overreaction to public disclosures. From an economic policy perspective, we give support that, when deciding their communication strategy, the regulator can mitigate the market overreaction by properly setting the level of information transparency. |
| Keywords: | Experimental asset markets; public information; information acquisition; asymmetric information |
| JEL: | C92 D82 G14 |
| Date: | 2020–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:98472&r=all |
| By: | Brice Corgnet (Emlyon Business School and Economic Science Institute, Chapman University); Brian C. Gunia (Carey Business School, Johns Hopkins University); Roberto Hernán González (Burgundy School of Business, Université Bourgogne Franche-Comté and Economic Science Institute, Chapman University) |
| Abstract: | We study several solutions to shirking in teams that trigger social incentives by reshaping the workplace social context. Using an experimental design, we manipulate social pressure at work by varying the type of workplace monitoring and the extent to which employees engage in social interaction. This design allows us to assess the effectiveness as well as the popularity of each solution. Despite similar effectiveness in boosting productivity across solutions, only organizational systems involving social interaction (via chat) were at least as popular as a baseline treatment. This suggests that any solution based on promoting social interaction is more likely to be embraced by workers than monitoring systems alone. |
| Keywords: | Social Incentives; Social Pressure; Moral Hazard in Teams; Laboratory Experiments |
| JEL: | C92 D23 D91 M5 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:20-05&r=all |
| By: | Victor Gonzalez-Jimenez; Patricio S. Dalton; Charles N. Noussair |
| Abstract: | To incentivize workers and boost performance, firms often offer monetary bonuses for the achievement of production goals. Such bonuses appeal to two types of motivations of the worker. On the one hand, the existence of a goal, on its own, triggers an intrinsic motivation associated with the desire to not fall short of the goal. On the other hand, the money paid to achieve the goal constitutes an extrinsic motivation. This paper studies the possibility that these two effects are substitutes when workers set their own goals. We develop a theoretical model that predicts that if the worker is sufficiently loss averse and faces uncertainty about reaching a production goal, offering a monetary payment contingent on reaching such a goal is counterproductive. This is because under the presence of monetary bonuses, the loss averse worker prefers setting lower goals, which yield lower but more likely bonus payments. Lower goals, in turn, negatively affect subsequent performance. Results from a laboratory experiment corroborate this prediction. This paper highlights the limits of monetary bonuses as an effective incentive when workers are loss averse. |
| JEL: | J41 D90 C91 D81 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:1909&r=all |
| By: | Gesiarz, Filip; De Neve, Jan-Emmanuel; Sharot, Tali |
| Abstract: | Factors beyond a person’s control, such as demographic characteristics at birth, often influence the availability of rewards an individual can expect for their efforts. We know surprisingly little how such pay-gaps due to random differences in opportunities impact human motivation. To test this we designed a study in which we arbitrarly varied the reward offered to each participant in a group for performing the same task. Participants then had to decide whether or not they were willing to exert effort to receive their reward. Unfairness reduced participants’ motivation to pursue rewards even when their relative position in the distribution was high, despite the decision being of no benefit to others and reducing reward for oneself. This relationship was partially mediated by participants’ feelings. In particular, large disparity was associated with greater unhappiness, which was associated with lower willingness to work – even when controlling for absolute reward and its relative value, both of which also affected decisions to pursue rewards. Our findings suggest pay-gaps can trigger psychological dynamics that hurt productivity and well-being of all involved. |
| Keywords: | inequality; pay-gaps; motivation; effort; affect; reward |
| JEL: | D31 D91 J22 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:103451&r=all |
| By: | Matthew Lowe |
| Abstract: | I estimate the effects of collaborative and adversarial intergroup contact. I randomly assigned Indian men from different castes to participate in cricket leagues or to serve as a control group. League players faced variation in collaborative contact, through random assignment to homogeneous-caste or mixed-caste teams, and adversarial contact, through random assignment of opponents. Collaborative contact increases cross-caste friendships and efficiency in trade, and reduces own-caste favoritism. In contrast, adversarial contact generally reduces cross-caste interaction and efficiency. League participation reduces intergroup differences, suggesting that the positive aspects of intergroup contact more than offset the negative aspects in this setting. |
| Keywords: | contact hypothesis, caste, social interactions, India, field experiment |
| JEL: | C93 D90 D91 O12 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8089&r=all |
| By: | Alex Rees-Jones; Ran Shorrer; Chloe J. Tergiman |
| Abstract: | A growing body of evidence suggests that decision-makers fail to account for correlation in signals that they receive. We study the relevance of this mistake in students' interactions with school-choice matching mechanisms. In a lab experiment presenting simple and incentivized school-choice scenarios, we find that subjects tend to follow optimal application strategies when schools' admissions decisions are determined independently. However, when schools rely on a common priority—inducing correlation in admissions—decision making suffers: application strategies become substantially more aggressive and fail to include attractive “safety” options. We document that this pattern holds even within-subject, with significant fractions of participants applying to different programs when correlation is varied but all payoff-relevant elements are held constant. We provide a battery of tests suggesting that this phenomenon is at least partially driven by correlation neglect, and we discuss implications that arise for the design and deployment of student-to-school matching mechanisms. |
| JEL: | C91 D01 D03 M21 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26734&r=all |
| By: | Lehberger, Mira; Gruener, Sven |
| Abstract: | We investigate consumers’ willingness to pay for plants protected by biological insects and those protected by pesticides, respectively, as well as the influence of message framing on willingness to pay. We use basil, heather, and orchids as experimental objects and find evidence from two experiments that consumers prefer plants protected by biological insects. Moreover, we find that message framing affects consumers’ willingness to pay, where gain framing produces greater overall willingness to pay. To check for the robustness of our results, we implemented instruments to mitigate concerns for social desirability and hypothetical bias, finding that our results are robust in terms of our key findings. This is the first comprehensive experimental study specifically on consumer’s willingness to pay for plants protected by beneficial insects. Our findings are also valuable for practitioners, as the use of biological insects in under-glass production systems is already common. Following our results, this information could be successfully used for marketing purposes. |
| Date: | 2020–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:5zc62&r=all |
| By: | Tobias Salz; Emanuel Vespa |
| Abstract: | We evaluate dynamic oligopoly estimators with laboratory data. Using a stylized en-try/exit game, we estimate structural parameters under the assumption that the data are generated by a Markov-perfect equilibrium (MPE) and use the estimates to predict counterfactual behavior. The concern is that if the Markov assumption was violated one would mispredict counterfactual outcomes. The experimental method allows us to compare predicted behavior for counterfactuals to true counterfactuals implemented as treatments. Our main finding is that counterfactual prediction errors due to collusion are in most cases only modest in size. |
| JEL: | L10 L13 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26765&r=all |
| By: | Camille Cornand (Université de Lyon, CNRS, Gate OFCE, Sciences Po, Paris, France); Julien Pillot (Université Paris Saclay) |
| Abstract: | Establishing the external validity of laboratory experiments in terms of inflation forecasts is crucial for policy initiatives to be valid outside the laboratory. Our contribution is to document whether different measures of inflation expectations based on various categories of agents (participants to experiments, households, industry forecasters, professional forecasters, financial market participants and central bankers) share common patterns by analyzing: the forecasting performances of these different categories of data; the information rigidities to which they are subject; the determination of expectations. Overall, the different categories of forecasts exhibit common features: forecast errors are comparably large and autocorrelated, forecast errors and forecast revisions are predictable from past information, which suggests the presence of information frictions. Finally, the standard lagged inflation determinant of inflation expectations is robust to the data sets. There is nevertheless some heterogeneity among the six different sets. If experimental forecasts are relatively comparable to survey and financial market data, central bank forecasts seem to be superior. |
| Keywords: | Inflation expectations, experimental forecasts, survey forecasts, market based forecasts, central bank forecasts |
| JEL: | E3 E5 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1903&r=all |
| By: | Noemí Herranz-Zarzoso (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Gerardo Sabater-Grande (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | In this paper, we analyze students’ overconfidence bias regarding potential and actual academic performance under both hypothetical and real monetary incentives. Students enrolled in a Microeconomics course were offered the possibility to set their own goal before performing different types of exams and, immediately after completing them, to postdict their own grade. Controlling for potential driving factors of students’ overconfidence such as their cognitive abilities, academic record, risk preferences, and self-reported academic confidence, we find that real monetary incentives mitigate overestimation of potential achievements and eliminate overestimation of actual achievements. This finding is compelling, given the common interpretation of overconfidence as a conscious bias: if monetary incentives can eliminate subjects’ overconfidence, as our results indicate, it might suggest that overconfidence is not a psychological bias at all. Moreover, the use of real money does not reduce but instead enhances the presence of the Dunning-Kruger bias when we use students’ academic records to measure their actual skill. |
| Keywords: | overconfidence bias, Dunning-Kruger cognitive bias, self-chosen goals, prediction, postdiction, real monetary incentives |
| JEL: | C93 D03 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2020/14&r=all |
| By: | Joshua Graff Zivin; Elizabeth Lyons |
| Abstract: | Successful innovation is essential for the survival and growth of organizations but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative performance in a field experiment run in partnership with a large life sciences company. We find that a winner-takes-all compensation scheme generates significantly more novel innovation relative to a compensation scheme that offers the same total compensation, but shared across the ten best innovations. Moreover, we find that the elasticity of creativity with respect to compensation schemes is much larger for teams than individual innovators. |
| JEL: | J24 M54 O32 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26737&r=all |
| By: | Hardy,Morgan L.; Mbiti,Isaac Mulangu; Mccasland,Jamie Lee; Salcher,Isabelle |
| Abstract: | This paper examines the effects of a government-sponsored apprenticeship training program designed to address high levels of youth unemployment in Ghana. The study exploits randomized access to the program to examine the short-run effects of apprenticeship training on labor market outcomes. The results show that apprenticeships shift youth out of wage work and into self-employment. However, the loss of wage income is not offset by increases in self-employment profits in the short run. In addition, the study uses the randomized match between apprentices and training providers to examine the causal effect of characteristics of trainers on outcomes for apprentices. Participants who trained with the most experienced trainers or the most profitable ones had higher earnings. These increases more than offset the program's negative treatment effect on earnings. This suggests that training programs can be made more effective through better recruitment of trainers. |
| Date: | 2019–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8851&r=all |
| By: | James Berry; Rebecca Dizon-Ross; Maulik Jagnani |
| Abstract: | We conduct a lab-in-the-field experiment to identify parents' preferences for investing in their children. The experiment exogenously varied the short-run returns to educational investments to identify how much parents care about maximizing total household earnings, minimizing cross-sibling inequality in "outcomes" (child-level earnings), and minimizing cross-sibling inequality in "inputs" (child-level investments). We show that while parents place some weight on maximizing earnings, they also display a strong preference for equality in inputs, forgoing roughly 40% of their potential earnings or 90% of a day’s wage to equalize inputs. We find no evidence that parents care about equalizing outcomes. |
| JEL: | I20 J13 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26732&r=all |
| By: | Nas Ozen,Selin Efsan; Hut,Stefan; Levin,Victoria; Munoz Boudet,Ana Maria |
| Abstract: | A vast literature shows the importance of socioemotional skills in earnings and employment, but whether they matter in getting hired remains unanswered. This study seeks to address this question and further investigates whether socioemotional skill signals in job applicants'resumes have the same value for male and female candidates. In a large-scale randomized audit study, an online job portal in Turkey is used to send fictitious resumes to real job openings, collecting a unique data set that enables investigating different stages of candidate screening. The study finds that socioemotional skills appear to be valued only when an employer specifically asks for such skills in the vacancy ad. When not asked for, however, candidates can face a penalty in the form of lower callback rates. A significant penalty is only observed for women, not for men. The study does not find evidence of other gender differences in the hiring process. |
| Date: | 2020–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9154&r=all |
| By: | Olivier Coibion; Dimitris Georgarakos; Yuriy Gorodnichenko; Michael Weber |
| Abstract: | We compare the causal effects of forward guidance communication about future interest rates on households’ expectations of inflation, mortgage rates, and unemployment to the effects of communication about future inflation in a randomized controlled trial using more than 25,000 U.S. individuals in the Nielsen Homescan panel. We elicit individuals’ expectations and then provide 22 different forms of information regarding past, current and/or future inflation and interest rates. Information treatments about current and next year’s interest rates have a strong effect on household expectations but treatments beyond one year do not have any additional impact on forecasts. Exogenous variation in inflation expectations transmits into other expectations. The richness of our survey allows us to better understand how individuals form expectations about macroeconomic variables jointly and the non-response to long-run forward guidance is consistent with models in which agents have constrained capacity to collect and process information. |
| Keywords: | expectations management, inflation expectations, surveys, communication, randomized controlled trial |
| JEL: | E31 C83 D84 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8118&r=all |
| By: | Saraf,Priyam; Rahman,Tasmia; Jamison,Julian C |
| Abstract: | Mental health, well-being, and lasting economic outcomes are intimately connected. However, in geographies marked by fragility, conflict, and violence (FCV), entrepreneurs of small and medium size enterprises (SMEs) experience chronic stress and poor mental health on a regular basis. These issues can hamper performance and quality of life for the entrepreneurs, and can dampen the benefits of existing financial and business assistance programs. Few proven rigorous interventions are known. This study tests the hypothesis that a five-week group Cognitive Behavioral Therapy (CBT) training called Problem Management Plus for Entrepreneurs (PM E), in combination with financial assistance, could be more effective at reducing psychological stressors of SME entrepreneurs in FCV contexts than financial assistance alone. Meaningful and statistically significant improvements in mental health were achieved, with improvements persisting and increasing beyond the immediate post-intervention period. Based on analysis of pooled data across two follow-up rounds (at five weeks and three months post-intervention), entrepreneurs in the treatment group experienced statistically significant reduction in the intensity and prevalence of depression and anxiety symptoms (measured by the Patient Health Questionnaire Anxiety and Depression Scale) and higher levels of well-being (measured by the World Health Organization Well-Being Index) compared with the control group. The effect was marked for those experiencing mild/moderate levels of depression and anxiety, suggesting the clinical value of such low touch interventions. Overall, the study demonstrates that empirical research through Randomized Control Trials (RCTs) can be conducted in challenging, FCV settings through appropriate rapid training of local researchers and non-specialist providers (NSPs) at a low cost, yielding scalable programmatic and policy level lessons. |
| Keywords: | Mental Health,Health Care Services Industry,Educational Sciences,Marketing,Private Sector Economics,Private Sector Development Law |
| Date: | 2019–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8872&r=all |
| By: | Conti, Gabriella (University College London); Poupakis, Stavros (University of Oxford); Sandner, Malte (Institute for Employment Research (IAB), Nuremberg); Kliem, Sören (Criminological Research Institute of Lower Saxony (KFN)) |
| Abstract: | Background: Home visiting programs constitute an important policy to support vulnerable families with young children. They mainly aim to improve infant-parent relationships, however evidence on their effectiveness based on observational measures is relatively scarce. The present study provides the rare opportunity to directly examine the effects of a home visiting program, the Pro Kind, on mother-child interactions in a randomized controlled trial (RCT). Methods: A sample of 109 mother-child dyads was videotaped during a 3-min typical play situation at the participants' homes when the child was aged 25 months. We use a novel micro-coding system which allows us to examine how the intervention affected the dynamic feedback responses of both mothers and children in three key measures of behavior: orientation, positive contingency, and negative/lack of contingency. The study is registered in the German Clinical Trial Register (trial ID: DRKS00007554, date of registration: 11 June 2015). Results: The intervention significantly improved the interactions between girls and their mothers, both in strongly stable and partly unstable situations. Mixed impacts were detected for boys. Conclusions: These results have important implications for the analysis of mother-child interactions data and the design of home visiting programs. |
| Keywords: | home visiting, mother-child interactions, randomized controlled trial |
| JEL: | I14 J13 J24 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12937&r=all |
| By: | Klonner, Stefan; Pal, Sumantra; Schwieren, Christiane |
| Abstract: | Can gender-balanced social norms mitigate the gender differences in competitiveness that are observed in traditional patriarchic as well as in modern societies? We experimentally assess men's and women's preferences to compete in a traditional society where women and men have similar rights and entitlements alongside a patriarchic and a matrilineal society which have previously been studied. We find that, unlike in the patriarchic society, there is no significant gender difference in the inclination to compete in the gender-balanced society. We also find that women's decisions in our experiment are optimal more often than men's in the gender-balanced society - opposite to the pattern encountered in the patriarchic society. Our results highlight the importance of culture and socialization for gender differences in competitiveness and suggest that the large gender-differences in competitiveness documented for modern societies are a long-term consequence of a patriarchic heritage. |
| Keywords: | gender economics; competition; social norms; traditional societies; lab-in-the-field experiment |
| Date: | 2020–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0675&r=all |
| By: | Johannes Buckenmaier; Eugen Dimant; Ann-Christin Posten; Ulrich Schmidt |
| Abstract: | Economic theory suggests that the deterrence of deviant behavior is driven by a combination of severity and certainty of punishment. This paper presents the first controlled experiment to study a third important factor that has been mainly overlooked: the swiftness of formal sanctions. We consider two dimensions: the timing at which the uncertainty about whether one will be punished is dissolved and the timing at which the punishment is actually imposed, as well as the combination thereof. By varying these dimensions of delay systematically, we find a surprising non-monotonic relation with deterrence: either no delay (immediate resolution and immediate punishment) or maximum delay (both resolution and punishment as much as possible delayed) turn out equally effective at deterring deviant behavior and recidivism in our context. Our results yield implications for the design of institutional policies aimed at mitigating misconduct and reducing recidivism. |
| Keywords: | deterrence, institutions, punishment, swiftness, uncertainty |
| JEL: | C91 D02 D81 K42 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8113&r=all |
| By: | Garcia Moreno,Vicente A.; Gertler,Paul J.; Patrinos,Harry Anthony |
| Abstract: | A school-based management program was implemented Mexico in 2001 and continued until 2014. This national program, Programa Escuelas de Calidad, was considered a key intervention to improve learning outcomes. In 2006, the national program was evaluated in the Mexican state of Colima, being the first experimental evaluation of the national program. All schools were invited to participate in the program; a random selection was performed to select the treatment and control groups among all the applicants. An intent-to-treat approach did not detect any impact on learning outcomes; a formal school-based management intervention plus a monetary grant was not enough to improve learning outcomes. First, the schools in the evaluation sample, control and treatment, were schools with high learning outcomes. Second, these schools had experienced some years of regular school-based management practices before the evaluation. A difference-in-difference design is used to identify heterogeneous effects of the program on learning outcomes. The difference-in-difference approach shows that the intensity of treatment increased test scores during the first year of the intervention. |
| Date: | 2019–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8874&r=all |
| By: | Brice Corgnet (Emlyon Business School and Economic Science Institute, Chapman University); Simon Gaechter (Nottingham University); Roberto Hernán González (Burgundy School of Business, Université Bourgogne Franche-Comté) |
| Abstract: | People are generally assumed to shy away from activities generating stochastic rewards, thus requiring extra compensation for handling any additional risk. In contrast with this view, neuroscience research with animals has shown that stochastic rewards may act as a powerful motivator. Applying these ideas to the study of work addiction in humans, and using a new experimental paradigm, we demonstrate how stochastic rewards may lead people to continue working on a repetitive and effortful task even after monetary compensation becomes saliently negligible. In line with our hypotheses, we show that persistence on the work task is especially pronounced when the entropy of stochastic rewards is high, which is also when the work task generates more stress to participants. We discuss the economic and managerial implications of our findings. |
| Keywords: | Incentives; Work Addiction; Occupational Health; Experiments |
| JEL: | C92 D87 D91 M54 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:20-04&r=all |
| By: | Iacovone,Leonardo; Maloney,William F.; Mckenzie,David J. |
| Abstract: | Differences in management quality are an important contributor to productivity differences across countries. A key question is how to best improve poor management in developing countries. This paper tests two different approaches to improving management in Colombian auto parts firms. The first uses intensive and expensive one-on-one consulting, while the second draws on agricultural extension approaches to provide consulting to small groups of firms at approximately one-third of the cost of the individual approach. Both approaches lead to improvements in management practices of a similar magnitude (8-10 percentage points), so that the new group-based approach dominates on a cost-benefit basis. Moreover, the paper finds some evidence that the group-based intervention led to increases in firm size over the next three years, while the impacts on firm outcomes are smaller and statistically insignificant for the individual consulting. The results point to the potential of group-based approaches as a pathway to scaling up management improvements. |
| Date: | 2019–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8854&r=all |
| By: | Wieser,Christina; Bruhn,Miriam; Kinzinger,Johannes Philipp; Ruckteschler,Christian Simon; Heitmann,Soren |
| Abstract: | This paper studies the effect of rolling out mobile money agents in rural Northern Uganda. In a randomized experiment, 168 areas were randomly selected to receive an agent in 2017, with another 163 areas serving as a control group. Administrative data on mobile money transactions suggest that the agent rollout increased the probability of sending and receiving peer-to-peer transfers. Data from a 2018 survey of more than 4,500 households show that the agent rollout led to cost-savings for remittance transactions. It also doubled the nonfarm self-employment rate, from 3.4 to 6.4 percent, and reduced the fraction of households with very low food security from 62.9 to 47.2 percent, in areas far from a bank branch. The analysis finds no effect on savings, agricultural outcomes, or poverty. Overall, the findings add new evidence that mobile money can improve livelihoods even in poor and remote settings. |
| Keywords: | ICT Economics,Inequality,Employment and Unemployment,Transport Services,Nutrition,Food Security |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8913&r=all |
| By: | Yash Kanoria; Hamid Nazerzadeh |
| Abstract: | A large fraction of online advertisement is sold via repeated second price auctions. In these auctions, the reserve price is the main tool for the auctioneer to boost revenues. In this work, we investigate the following question: Can changing the reserve prices based on the previous bids improve the revenue of the auction, taking into account the long-term incentives and strategic behavior of the bidders? We show that if the distribution of the valuations is known and satisfies the standard regularity assumptions, then the optimal mechanism has a constant reserve. However, when there is uncertainty in the distribution of the valuations, previous bids can be used to learn the distribution of the valuations and to update the reserve price. We present a simple, approximately incentive-compatible, and asymptotically optimal dynamic reserve mechanism that can significantly improve the revenue over the best static reserve. The paper is from July 2014 (our submission to WINE 2014), posted later here on the arxiv to complement the 1-page abstract in the WINE 2014 proceedings. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2002.07331&r=all |
| By: | Nickolas Gagnon; Kristof Bosmans; Arno Riedl |
| Abstract: | Labor market opportunities and wages may be unfair for various reasons, and how workers respond to different types of unfairness can have major economic consequences. Using an online labor platform, where workers engage in an individual task for a piece-rate wage, we investigate the causal effect of neutral and gender-discriminatory unfair chances on labor supply. We randomize workers into treatments where we control relative pay and chances to receive a low or a high wage. Chances can be fair, unfair based on an unspecified source, or unfair based on gender discrimination. Unequal pay reduces labor supply of low-wage workers, irrespective of whether the low wage is the result of fair or unfair chances. Importantly, the source of unfair chances matters. When a low wage is the result of gender-discriminatory chances, workers matched with a high-wage worker substantially reduce their labor supply compared to the case of equal low wages (-22%). This decrease is twice as large as those induced by low wages due to fair chances or unfair chances coming from an unspecified source. In addition, exploratory analysis suggests that in response to unequal pay, low-wage male workers reduce labor supply irrespective of the source of inequality, whereas low-wage female workers reduce labor supply only if unequal pay is due to gender-discriminatory chances. Our results concerning gender discrimination indicate a new reason for the lower labor supply of women, which is a prominent explanation for the gender gap in earnings. |
| Keywords: | labor supply, wage inequality, procedural fairness, gender discrimination |
| JEL: | D90 E24 J22 J31 J71 M50 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8058&r=all |
| By: | Akshay Krishnamurthy; Thodoris Lykouris; Chara Podimata |
| Abstract: | Standard game-theoretic formulations for settings like contextual pricing and security games assume that agents act in accordance with a specific behavioral model. In practice however, some agents may not prescribe to the dominant behavioral model or may act in ways that are arbitrarily inconsistent. Existing algorithms heavily depend on the model being (approximately) accurate for all agents and have poor performance in the presence of even a few such arbitrarily irrational agents. \emph{How do we design learning algorithms that are robust to the presence of arbitrarily irrational agents?} We address this question for a number of canonical game-theoretic applications by designing a robust algorithm for the fundamental problem of multidimensional binary search. The performance of our algorithm degrades gracefully with the number of corrupted rounds, which correspond to irrational agents and need not be known in advance. As binary search is the key primitive in algorithms for contextual pricing, Stackelberg Security Games, and other game-theoretic applications, we immediately obtain robust algorithms for these settings. Our techniques draw inspiration from learning theory, game theory, high-dimensional geometry, and convex analysis, and may be of independent algorithmic interest. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2002.11650&r=all |
| By: | Lisa Barrow (Federal Reserve Bank of Chicago; University of Chicago; Woodrow Wilson School of Public and International Affairs); Cecilia Elena Rouse (Princeton University; Harvard University; Woodrow Wilson School of Public and International Affairs; Board of Governors of the Federal Reserve System (U.S.); National Bureau of Economic Research); Amanda McFarland |
| Abstract: | We evaluate the effect of performance-based scholarship programs for postsecondary students on student time use and effort and whether these effects are different for students we hypothesize may be more or less responsive to incentives. To do so, we administered a time-use survey as part of a randomized experiment in which community college students in New York City were randomly assigned to be eligible for a performance-based scholarship or to a control group that was only eligible for the standard financial aid. This paper contributes to the literature by attempting to get inside the “black box” of how students respond to a monetary incentive to improve their educational attainment. We find that students eligible for a scholarship devoted more time to educational activities, increased the quality of effort toward and engagement with their studies, and allocated less time to leisure. Additional analyses suggest that students who were plausibly more myopic—place less weight on future benefits—were more responsive to the incentives, but we find no evidence that students who are arguably more time constrained were less responsive to the incentives. |
| Keywords: | incentives; higher education; Financial aid; educational investment |
| JEL: | I22 I23 J24 |
| Date: | 2020–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:87507&r=all |