nep-exp New Economics Papers
on Experimental Economics
Issue of 2020‒04‒13
28 papers chosen by

  1. Game of Prejudice: Experiments at the Extensive and Intensive Margin By Dasgupta, Utteeyo; Mani, Subha; Vecci, Joseph; Želinský, Tomáš
  2. Choice overload and contextual inference: An experimental test By Irene Maria Buso
  3. An economist and a psychologist form a line: What can imperfect perception of length tell us about stochastic choice? By Duffy, Sean; Smith, John
  4. Bad bankers no more? Truth-telling and (dis)honesty in the nance industry By Christoph Huber; Jürgen Huber
  5. Zero-Intelligence vs. Human Agents: An Experimental Analysis of the Efficiency of Double Auctions and Over-the-Counter Markets of Varying Sizes. By Giuseppe Attanasi; Samuele Centorrino; Elena Manzoni
  6. Mind your Ps and Qs! An Experiment on Variable Allowance Supply in the US Regional Greenhouse Gas Initiative By Lana Friesen; Lata Gangadharan; Peyman Khezr; Ian A. MacKenzie
  7. Risk Taking with Left- and Right-Skewed Lotteries By Douadia Bougherara; Lana Friesen; Céline Nauges
  8. Reversing Reserves By Parag A. Pathak; Alex Rees-Jones; Tayfun Sönmez
  9. z-Tree unleashed: A novel client-integrating architecture for conducting z-Tree experiments over the Internet By Matthias L. Duch; Max R. P. Grossmann; Thomas Lauer
  10. Market Design, Human Behavior, and Management By Yan Chen; Peter Cramton; John A. List; Axel Ockenfels
  11. The effect of ethical responsibility on performance By Stein, Caroline; Untertrifaller, Anna
  12. When choosing is painful: anticipated regret and psychological opportunity cost By Emmanuelle GABILLON
  13. Do Workers Discriminate against Their Out-group Employers? Evidence from the Gig Economy By Asad, Sher Afghan; Banerjee, Ritwik; Bhattacharya, Joydeep
  14. Behavioral Aspects of Communication in Organizations By Casoria, Fortuna; Riedl, Arno; Werner, Peter
  15. Shaking Things Up: On the Stability of Risk and Time Preferences By Beine, Michel; Charness, Gary; Dupuy, Arnaud; Joxhe, Majlinda
  16. How the reification of merit breeds inequality: theory and experimental evidence By Accominotti, Fabien; Tadmon, Daniel
  17. Two-worker competition in gift-exchange: assessing intention-based reciprocity and inequity aversion By Bogliacino, Francesco; Rodríguez González, Nicolás
  18. Can Mentoring Help Female Assistant Professors in Economics? An Evaluation by Randomized Trial By Donna K. Ginther; Janet Currie; Francine D. Blau; Rachel Croson
  19. Why Do We Procrastinate? Present Bias and Optimism By Breig, Zachary; Gibson, Matthew; Shrader, Jeffrey G.
  20. Isolating the "Tech" from EdTech: Experimental Evidence on Computer Assisted Learning in China By Ma, Yue; Fairlie, Robert W.; Loyalka, Prashant; Rozelle, Scott
  21. Entropy-Norm space for geometric selection of strict Nash equilibria in n-person games By A. B. Leoneti; G. A. Prataviera
  22. Norm Compliance in an Uncertain World By Toke Fosgaard; Lars Gårn Hansen; Erik Wengström
  23. Double Machine Learning Based Program Evaluation under Unconfoundedness By Knaus, Michael C.
  24. Early Childhood Education and Life-cycle Health By García, Jorge Luis; Heckman, James J.
  25. The Separation and Reunification of Germany: Rethinking a Natural Experiment Interpretation of the Enduring Effects of Communism By Becker, Sascha O.; Mergele, Lukas; Woessmann, Ludger
  26. Cash Transfer Programs and Household Labor Supply By Daniela Del Boca; Chiara Pronzato; Giuseppe Sorrenti
  27. Motivating social distancing during the COVID-19 pandemic: An online experiment By Lunn, pete; Timmons, Shane; Belton, Cameron; Barjaková, Martina; Julienne, Hannah; Lavin, Ciarán
  28. Early Childhood Education and Life-cycle Health By Jorge Luis García; James J. Heckman

  1. By: Dasgupta, Utteeyo (Fordham University); Mani, Subha (Fordham University); Vecci, Joseph (University of Gothenburg); Želinský, Tomáš (Technical University of Košice)
    Abstract: In an unique lab-in-the-field experiment we design a novel labor market environment, the Game of Prejudice, to elicit preferences for discrimination towards the largest minority group in Europe (the Roma) at the intensive margins as well as at the extensive margins. Our unique experiment design allows us to separate taste-based discrimination from statistical discrimination and examine the impacts of raising the costs of discrimination in such situations. We find discrimination to be commonplace at both margins, with stronger incidence at the extensive margin. We also find higher incidence of taste-based discrimination compared to statistical discrimination. Importantly, we find that when the cost of taste-based discrimination is made sufficiently high, such behavior disappears at the intensive and extensive margins, providing support for labor market policies that make discrimination very costly for the employer.
    Keywords: discrimination, extensive margin, intensive margin, lab-in-the field experiment, Slovakia
    JEL: C9 D3 I1 O1
    Date: 2020–03
  2. By: Irene Maria Buso
    Abstract: The paradoxical finding of the preference for small sets of products (Iyengar and Lepper; 2000) has been explained with cognitive costs and regret. Instead, Kamenica (2008) suggests that the set size conveys a payoff relevant information about the popularity of the products in a set: in small set there are the most popular products. The present experimental analysis aims to test if the contextual inference theory can explain the increased willingness to take a product from small sets; the experiment relies on the standard framework in experiments on choice overload: it is a between-subjects experiment where the willingness to purchase a product rather than accept a fixed monetary payment is compared in the two experimental conditions, that is when an extensive or a small choice set is provided to the participants. The new element with respect to previous studies on this topic is that the participants do not see the options in the set: the items are presented inside bags. The subjects can choose to take one product at random from the set or a fixed monetary fee; the choice is offered sequentially on three products: chocolate, yoghurt and crisps. This design rules out alternative explanations as cognitive costs and regret since the only information given is the set size. The results show that in two of the three product categories the proportion of people that prefer to take whatever product from the small set is higher than from the large one.
    Keywords: Contextual inference theory; Experimental economics
    JEL: C9 D11
    Date: 2020–03
  3. By: Duffy, Sean; Smith, John
    Abstract: Standard choice experiments are hampered by the fact that utility is either unknown or imperfectly measured by experimenters. As a consequence, the inferences available to researchers are limited. By contrast, we design a choice experiment where the objects are valued according to only a single attribute with a continuous measure and we can observe the true preferences of subjects. Subjects have an imperfect perception of the choice objects but can improve the precision of their perception with cognitive effort. Subjects are given a choice set involving several lines of various lengths and are told to select one of them. They strive to select the longest line because they are paid an amount that increases with the length of their choice. Our design allows us to observe the search history, the response times, and make unambiguous conclusions about the optimality of choices. We find a negative relationship between the demanding nature of the choice problems and the likelihood that subjects select the optimal lines. We also find a positive relationship between the demanding nature of the choice problems and the response times. However, we find evidence that suboptimal choices are associated with longer response times than are optimal choices. This result appears to be consistent with Fudenberg, Strack, and Strzalecki (2018). Additionally, our experimental design permits a multinomial discrete choice analysis. Our results suggest that the errors in our data are better described as having a Gumbel distribution rather than a normal distribution. We also observe effects consistent with memory decay and attention. Finally, we find evidence that choices in our experiment exhibit the independence from irrelevant alternatives (IIA) property.
    Keywords: judgment, memory, response times, independence from irrelevant alternatives
    JEL: C91 D03
    Date: 2020–04–02
  4. By: Christoph Huber; Jürgen Huber
    Abstract: Worries about unethical behavior are a recurring issue in the finance industry, which has inspired a number of recent studies. We contribute to this ongoing discussion by investigating preferences for truthfulness within the finance industry in a controlled experiment with 415 financial professionals (and 270 students as a control group). Participants have to report one of two numbers, of which one is true, the other false, and where truth-telling is costly. In three main treatments we vary the situational context of subjects' decisions (abstract, neutral, finance context) by applying differently framed instructions. We find that contexts matter for financial professionals: they act more honestly in a financial context, while for a control group we find no such differences. Further variations on the financial decision situation do not worsen financial professionals' honesty. As driver of the observed behavior we find reputational concerns to play a major role in financial professionals' decisions.
    Keywords: dishonesty; cheating; financial professionals; framing, context-dependence; experiment
    JEL: A13 C91 D90
    Date: 2020–03
  5. By: Giuseppe Attanasi; Samuele Centorrino; Elena Manzoni
    Abstract: We study two well-known electronic markets: an over-the-counter (OTC) market, in which each agent looks for the best counterpart through bilateral negotiations, and a double auction (DA) market, in which traders post their quotes publicly. We focus on the DA-OTC efficiency gap and show how it varies with different market sizes (10, 20, 40, and 80 traders). We compare experimental results from a sample of 6,400 undergraduate students in Economics and Management with zero-intelligent (ZI) agent-based simulations. Simulations with ZI traders show that the traded quantity (with respect to the e cient one) increases with market size under both DA and OTC. Experimental results with human traders confrm the same tendency under DA, while the share of periods in which the traded quantity is higher (lower) than the efficient one decreases (increases) with market size under OTC, ultimately leading to a DA-OTC efficiency gap increasing with market size. We rationalize these results by putting forward a novel game-theoretical model of OTC market as a repeated bargaining procedure under incomplete information on buyers' valuations and sellers' costs, showing how efficiency decreases slightly with size due to two counteracting e ects: acceptance rates in earlier periods decrease with size, and earlier offers increase, but not always enough to compensate for the decreasein acceptance rates.
    Date: 2020
  6. By: Lana Friesen (School of Economics, University of Queensland); Lata Gangadharan (Department of Economics, Monash University, Australia); Peyman Khezr (School of Economics, University of Queensland); Ian A. MacKenzie (School of Economics, University of Queensland)
    Abstract: Using an experimental approach, we investigate the new institutional design for the US Regional Greenhouse Gas Initiative (RGGI). The proposed scheme incorporates two allowance reserves that adjust the initial supply of allowances in the event of unexpectedly high or low allowance demand. In particular, allowance supply is increased when the initial clearing price is above a pre-determined upper trigger price, and decreased when the initial clearing price is below a pre-determined lower trigger price. We provide evidence that these two trigger prices act as focal points: the distribution of clearing prices is bimodal and aligns with the trigger prices. We also show that decreasing the range between the two trigger prices increases total revenue but decreases allocative efficiency. Importantly, we find the regulation is more sensitive to changes in trigger prices than reserve quantities.
    Keywords: supply reserve; pollution allowances; experiment.
    JEL: C91 C92 Q58
    Date: 2020–03–31
  7. By: Douadia Bougherara (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro, Montpellier, France); Lana Friesen (School of Economics, University of Queensland); Céline Nauges (Toulouse School of Economics, INRAE, University of Toulouse Capitole, Toulouse, France)
    Abstract: While much literature has focused on preferences regarding risk, preferences over skewness also have significant economic implications. An important and understudied aspect of skewness preferences is how they affect risk taking. In this paper, we design a novel laboratory experiment that elicits certainty equivalents over lotteries where the variance and skewness of the outcomes are orthogonal to each other. This design enables us to cleanly measure both skewness seeking/avoiding and risk taking behavior, and their interaction, without needing to make parametric assumptions. Our experiment includes both left- and right-skewed lotteries. The results reveal that the majority of subjects are skewness avoiding risk takers who correspondingly also take more risk when facing less skewed lotteries. Our second contribution is to link these choices to individual rank-dependent utility preference parameters estimated using a separate lottery choice protocol. Using a latent-class model, we are able to identify two classes of subjects: skewness avoiders with the classic inverse s-shaped probability weighting function and skewness neutral subjects that do not distort probabilities. Our results thus demonstrate the link between probability distortion and skewness seeking/avoidance choices. They also highlight the importance of accounting for individual heterogeneity.
    Keywords: Risk; Skewness; Laboratory Experiment; Probability Weighting
    JEL: C91 D81
    Date: 2020–04–02
  8. By: Parag A. Pathak (MIT); Alex Rees-Jones (Cornell University); Tayfun Sönmez (Boston College)
    Abstract: Affirmative action policies are often implemented through reserve systems. We contend that the functioning of these systems is counterintuitive, and that the consequent misunderstanding leads individuals to support policies that ineffectively pursue their goals. We present 1,013 participants in the Understanding America Study with incen- tivized choices between reserve policies that vary in all decision-relevant parameters. Many subjects’ choices are rationalized by a nearly correct decision rule, with errors driven solely by the incorrect belief that reversing the processing order has no effect. The prevalence of this belief helps to explain otherwise surprising decisions made in field applications of reserve systems.
    Keywords: affirmative action, reserve systems, experimental economics, behavioral market design
    JEL: C9 D9 D47
    Date: 2020–04–01
  9. By: Matthias L. Duch; Max R. P. Grossmann; Thomas Lauer
    Abstract: We present z-Tree unleashed, a novel approach and set of scripts to aid the implementation of experimental economics laboratory experiments outside of the laboratory. z-Tree unleashed enables subjects to join the experiment using a web portal that requires no additional software. Experimenters are likewise enabled to administer their experiments from anywhere in the world. Except for z-Tree itself, z-Tree unleashed is entirely based on free and open source software. In this paper, we firstly outline the motivation. Secondly, we give a highlevel overview of z-Tree unleashed's advantages and its design. We then proceed to show how to set up the server and demonstrate the steps required for conducting an entire experiment. We subsequently explain how to leverage the security and routing features of a virtual private network with z-Tree unleashed, enabling servers to securely run behind routers.
    Date: 2020–04–03
  10. By: Yan Chen; Peter Cramton; John A. List; Axel Ockenfels
    Abstract: We review past research and discuss future directions on how the vibrant research areas of market design and behavioral economics have influenced and will continue to impact the science and practice of management in both the private and public sectors. Using examples from various auction markets, reputation and feedback systems in online markets, matching markets in education, and labor markets, we demonstrate that combining market design theory, behavioral insights, and experimental methods can lead to fruitful implementation of superior market designs in practice.
    JEL: C91 C93 D4 D47 D9
    Date: 2020–03
  11. By: Stein, Caroline; Untertrifaller, Anna
    Abstract: In a laboratory real-effort experiment, we study the effect of responsibility on performance. Specifically, we analyze whether being responsible for an ethical or unethical work environment affects workers’ performance. Using a specific randomization technique, we can separate the responsibility effect from a possible selection effect. We find that workers who prefer to work in an ethical work environment perform better if they are also responsible for it, compared to a situation where it was imposed on them. We do not find this positive incentive effect of responsibility for workers that prefer an unethical work environment. Moreover, we observe that if an unethical environment was imposed, workers who prefer an ethical environment perform worse than those whose preference are aligned with the environment.
    Keywords: real-effort experiment, responsibility, decision rights, incentive, ethical behavior
    JEL: C91 M59
    Date: 2020–03
  12. By: Emmanuelle GABILLON
    Abstract: This paper is a contribution to regret theory, which we generalize in two ways. Since the intensity of regret depends on the information the decision-maker has about the results of the foregone strategies (feedback), we build a model of choice which accommodates any feedback structure. We also show that the reference point, which characterizes the regret utility function introduced by Quiggin (1994), does not always represent an anticipated feeling of regret. It can also correspond to another negative feeling related to the act of choosing, which we call psychological opportunity cost (POC), borne at the very moment of choosing. We find behavioral deviations from the predictions of the classical Expected Utility Theory. We obtain correlation loving, greater reluctance to take on risk, and information avoidance at decision time. Our model also offers a theoretical framework for experimental studies about inaction inertia.
    Keywords: Choice; Correlation loving; Inaction inertia; Information; Regret; Risk aversion
    JEL: D80 D81 D91
    Date: 2020
  13. By: Asad, Sher Afghan (Iowa State University); Banerjee, Ritwik (Indian Institute of Management); Bhattacharya, Joydeep (Iowa State University)
    Abstract: We study possible worker-to-employer discrimination manifested via social preferences in an online labor market. Specifically, we ask, do workers exhibit positive social preferences for an out-race employer relative to an otherwise-identical, own-race one? We run a well-powered, model-based experiment wherein we recruit 6,000 workers from Amazon's M-Turk platform for a real-effort task and randomly (and unobtrusively) reveal to them the racial identity of their non-fictitious employer. Strikingly, we find strong evidence of race-based altruism – white workers, even when they do not benefit personally, work relatively harder to generate more income for black employers. Self-declared white Republicans and Independents exhibit significantly more altruism relative to Democrats. Notably, the altruism does not seem to be driven by race-specific beliefs about the income status of the employers. Our results suggest the possibility that pro-social behavior of whites toward blacks, atypical in traditional labor markets, may emerge in the gig economy where associative (dis)taste is naturally muted due to limited social contact.
    Keywords: discrimination, worker-to-employer, social preferences, taste-based discrimination, Gig Economy, mechanical turk, Structural Behavioral Economics
    JEL: J71 D91 C93
    Date: 2020–02
  14. By: Casoria, Fortuna (GATE, University of Lyon); Riedl, Arno (Maastricht University); Werner, Peter (Maastricht University)
    Abstract: This paper reviews experimental studies that investigate the effects of communication on behavior in organizational settings. Two main classes of studies are identified: (a) studies on coordination and competition, which include experimental research that tests whether communication can help to overcome coordination failure within organizations, and (b) studies that analyze the role of communication in alleviating problems arising from information asymmetries at the workplace. The evidence from these studies indicates that communication is suited to improve efficient coordination within firms and to mitigate information problems in employer-employee relationships. In addition, studies are presented that focus on the interaction between communication and monetary incentive schemes in companies.
    Keywords: communication, organization, experiment, behavior
    JEL: C90 D82 D83 J53
    Date: 2020–02
  15. By: Beine, Michel (University of Luxembourg); Charness, Gary (University of California, Santa Barbara); Dupuy, Arnaud (University of Luxembourg); Joxhe, Majlinda (University of Luxembourg)
    Abstract: We conduct a survey and incentivized lab-in-the-field experimental tasks in Tirana, Albania. While the original purpose of our study was to examine whether and how deep parameters such as time and risk preferences affect the intention to migrate, our study was transformed into a natural experiment owing to two large earthquakes that shook the Tirana area during our data-collection period. These events provide us with a rare opportunity to gather evidence (including a preearthquake control) on the effect of natural disasters on time and risk preferences. We find unambiguous effects towards more risk aversion and impatience for affected individuals. Moreover, as it turns out, the second earthquake amplified the effect of the first one, suggesting that experiences cumulate in their influence on these preferences.
    Keywords: time preferences, risk preferences, natural disaster, Albania, migration
    JEL: B49 C90 D91 F22
    Date: 2020–03
  16. By: Accominotti, Fabien; Tadmon, Daniel
    Abstract: In a variety of social contexts, measuring merit or performance is a crucial step toward enforcing meritocratic ideals. At the same time, workable measures – such as ratings – are bound to obfuscate the intricacy inherent to any empirical occurrence of merit, thus reifying it into an artificially crisp and clear-cut thing. This article explores how the reification of merit breeds inequality in the rewards received by the winners and losers of the meritocratic race. It reports the findings of a large experiment (n = 2,844) asking participants to divide a year- end bonus among a set of employees based on the reading of their annual performance reviews. In the experiment’s non-reified condition, reviews are narrative evaluations. In the reified condition, the same narrative evaluations are accompanied by a crisp rating of the employees’ performance. We show that participants reward employees more unequally when performance is reified, even though employees’ levels of performance do not vary across conditions: most notably, the bonus gap between top- and bottom-performing employees increases by 20% between our non-reified and reified conditions, and it rises by another 10% when performance is presented as a quantified score. Further analyses suggest that reification fuels inequality both by reinforcing the authoritativeness of evaluation and by making observers more accepting of the idea that individuals can be meaningfully sorted into a merit hierarchy. This has direct implications for understanding the rise of legitimate inequality in societies characterized by the proliferation of reifying forms of evaluation.
    Keywords: Evaluation; inequality; reification; quantification; performance; meritocracy
    JEL: J30 M10 M50 Z10
    Date: 2020–03
  17. By: Bogliacino, Francesco; Rodríguez González, Nicolás
    Abstract: In this article, we study a three-person gift exchange, where two workers compete for a bonus. We derive the equilibrium properties of the models of sequential reciprocity and inequity aversion. We then prove a comparative statics theorem, when one worker becomes more productive. We show that compared with the predictions of outcome based model, those of the intention based model contrast sharply. This creates an ideal setting in which to perform a controlled experiment to test them. Our results largely support sequential reciprocity.
    Keywords: Gift exchange; sequential reciprocity; inequity aversion
    JEL: A13 C72 C91 D63
    Date: 2020–03
  18. By: Donna K. Ginther; Janet Currie; Francine D. Blau; Rachel Croson
    Abstract: Women continue to be underrepresented in academic ranks in the economics profession. The Committee on the Status of Women in the Economics Profession of the American Economics Association established the CeMENT mentoring workshop to support women in research careers. The program was designed as a randomized controlled trial. This study evaluates differences between the treatment and control groups in career outcomes. Results indicate that relative to women in the control group, treated women are more likely to stay in academia and more likely to have received tenure in an institution ranked in the top 30 or 50 in economics in the world.
    JEL: A11 J7
    Date: 2020–03
  19. By: Breig, Zachary (University of Queensland); Gibson, Matthew (Williams College); Shrader, Jeffrey G. (Columbia University)
    Abstract: Research has shown that procrastination has signicant adverse effects on individuals, including lower savings and poorer health. Procrastination is typically modeled as resulting from present bias. In this paper we study an alternative: excessively optimistic beliefs about future demands on an individual's time. The models can be distinguished by how individuals respond to information on their past choices. Experimental results refute the hypothesis that present bias is the sole source of dynamic inconsistency, but they are consistent with optimism. These findings offer an explanation for low takeup of commitment and suggest that personalized information on past choices can mitigate procrastination.
    Keywords: discounting, beliefs, dynamic inconsistency, real effort
    JEL: D90 D84 J22
    Date: 2020–03
  20. By: Ma, Yue (City University of Hong Kong); Fairlie, Robert W. (University of California, Santa Cruz); Loyalka, Prashant (Stanford University); Rozelle, Scott (Stanford University)
    Abstract: EdTech which includes online education, computer assisted learning (CAL), and remote instruction was expanding rapidly even before the current full-scale substitution for in-person learning at all levels of education around the world because of the coronavirus pandemic. Studies of CAL interventions have consistently found large positive effects, bolstering arguments for the widespread use of EdTech. However CAL programs, often held after school, provide not only computer-based instruction, but often additional non-technology based inputs such as more time on learning and instructional support by facilitators. In this paper, we develop a theoretical model to carefully explore the possible channels by which CAL programs might affect academic outcomes among schoolchildren. We isolate and test the technology-based effects of CAL and additional parameters from the theoretical model, by designing a novel multi-treatment field experiment with more than four thousand schoolchildren in rural China. Although we find evidence of positive overall CAL program effects on academic outcomes, when we isolate the technology-based effect of CAL (over and above traditional pencil-and-paper learning) we generally find small to null effects. Our empirical results suggest that, at times, the "Tech" in EdTech may have relatively small effects on academic outcomes, which has important implications for the continued, rapid expansion of technologies such as CAL throughout the world.
    Keywords: computer-assisted learning, EdTech, ICT, pencil effects, student learning, educational productivity, RCT
    JEL: I21 O15
    Date: 2020–03
  21. By: A. B. Leoneti; G. A. Prataviera
    Abstract: Motivated by empirical evidence that individuals within group decision making simultaneously aspire to maximize utility and avoid inequality we propose a criterion based on the entropy-norm pair for geometric selection of strict Nash equilibria in n-person games. For this, we introduce a mapping of an n-person set of Nash equilibrium utilities in an Entropy-Norm space. We suggest that the most suitable group choice is the equilibrium closest to the largest entropy-norm pair of a rescaled Entropy-Norm space. Successive application of this criterion permits an ordering of the possible Nash equilibria in an n-person game accounting simultaneously equality and utility of players payoffs. Limitations of this approach for certain exceptional cases are discussed. In addition, the criterion proposed is applied and compared with the results of a group decision making experiment.
    Date: 2020–03
  22. By: Toke Fosgaard (Department of Food and Resource Economics, University of Copenhagen); Lars Gårn Hansen (Department of Food and Resource Economics, University of Copenhagen); Erik Wengström (Department of Economics, Lund University; Department of Finance and Economics, Hanken School of Economics, Helsinki)
    Abstract: In many situations, social norms govern behavior. While the existence of a norm may be clear to someone entering the situation, it is often less clear precisely what behavior is required in order to comply with the norm. We investigate how people react to uncertainty about the prevailing norm using a modified version of the dictator game. Since the behavioral effects of social norms are tightly linked to the degree of anonymity in a situation, we also vary the extent to which subjects’ behavior is observable. We find that when behavior is anonymous, uncertainty about which norm guides partners reduces aggregate norm compliance. However, when others can observe behavior, introducing a small degree of norm uncertainty increases aggregate norm compliance. This implies that norm uncertainty may actually facilitate interaction as long as behavior is observable and uncertainty is sufficiently small. We also document that reactions to norm uncertainty are heterogeneous with one group of people reacting to norm uncertainty by increasing compliance (over-compliers), while another group reacts by reducing compliance (under-compliers). The main effect of increased observability operates through the intensive margin of the under-compliers; they reduce their negative reaction to norm uncertainty when their actions become more visible.
    Keywords: Social norms, Uncertainty, Audience
    JEL: C92 D9
    Date: 2020–03
  23. By: Knaus, Michael C. (University of St. Gallen)
    Abstract: This paper consolidates recent methodological developments based on Double Machine Learning (DML) with a focus on program evaluation under unconfoundedness. DML based methods leverage flexible prediction methods to control for confounding in the estimation of (i) standard average effects, (ii) different forms of heterogeneous effects, and (iii) optimal treatment assignment rules. We emphasize that these estimators build all on the same doubly robust score, which allows to utilize computational synergies. An evaluation of multiple programs of the Swiss Active Labor Market Policy shows how DML based methods enable a comprehensive policy analysis. However, we find evidence that estimates of individualized heterogeneous effects can become unstable.
    Keywords: causal machine learning, conditional average treatment effects, optimal policy learning, individualized treatment rules, multiple treatments
    JEL: C21
    Date: 2020–03
  24. By: García, Jorge Luis (Clemson University); Heckman, James J. (University of Chicago)
    Abstract: This paper forecasts the life-cycle treatment effects on health of a high-quality early childhood program. Our predictions combine microsimulation using non-experimental data with experimental data from a midlife long-term follow-up. The follow-up incorporated a full epidemiological exam. The program mainly benefits males and significantly reduces the prevalence of heart disease, stroke, cancer, and mortality across the life-cycle. For men, we estimate an average reduction of 3.8 disability-adjusted years (DALYs). The reduction in DALYs is relatively small for women. The gain in quality-adjusted life years (QALYs) is almost enough to offset all of the costs associated with program implementation for males and half of program costs for women.
    Keywords: early childhood education, life-cycle health, long-term forecasts, program evaluation, randomized trials
    JEL: I10 J13 I28 C93
    Date: 2020–03
  25. By: Becker, Sascha O. (Monash University); Mergele, Lukas (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: German separation in 1949 into a communist East and a capitalist West and their reunification in 1990 are commonly described as a natural experiment to study the enduring effects of communism. We show in three steps that the populations in East and West Germany were far from being randomly selected treatment and control groups. First, the later border is already visible in many socio-economic characteristics in pre-World War II data. Second, World War II and the subsequent occupying forces affected East and West differently. Third, a selective fifth of the population fled from East to West Germany before the building of the Wall in 1961. In light of our findings, we propose a more cautious interpretation of the extensive literature on the enduring effects of communist systems on economic outcomes, political preferences, cultural traits, and gender roles.
    Keywords: political systems, communism, preferences, culture, Germany
    JEL: D72 H11 P26 P36 N44
    Date: 2020–03
  26. By: Daniela Del Boca (University of Turin and Collegio Carlo Alberto); Chiara Pronzato (University of Turin); Giuseppe Sorrenti (University of Amsterdam)
    Abstract: Employment helps reduce the risk of poverty. Through a randomized controlled trial, we evaluate the impact of a conditional cash transfer (CCT) program to low-income families with dependent children on household members' labor supply. Recipients are required to attend labor-market-oriented mentoring courses as a condition of the transfer. One year after admission to the program, fathers assigned to the CCT program are more likely to work (+14 percent) than fathers assigned to an unconditional cash transfer program or to a pure control group. No effect arises for mothers. Results seem to be explained by improved family networks and increased parental investments in activities that enhance labor market opportunities.
    Keywords: conditional cash transfers, poverty, household labor supply, mentoring courses
    JEL: I10 I20 J24 I31
    Date: 2020–04
  27. By: Lunn, pete; Timmons, Shane; Belton, Cameron; Barjaková, Martina; Julienne, Hannah; Lavin, Ciarán
    Date: 2020
  28. By: Jorge Luis García; James J. Heckman
    Abstract: This paper forecasts the life-cycle treatment effects on health of a high-quality early childhood program. Our predictions combine microsimulation using non-experimental data with experimental data from a midlife long-term follow-up. The follow-up incorporated a full epidemiological exam. The program mainly benefits males and significantly reduces the prevalence of heart disease, stroke, cancer, and mortality across the life-cycle. For men, we estimate an average reduction of 3.8 disability-adjusted years (DALYs). The reduction in DALYs is relatively small for women. The gain in quality-adjusted life years (QALYs) is almost enough to offset all of the costs associated with program implementation for males and half of program costs for women.
    JEL: C93 I10 I28 J13
    Date: 2020–03

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.