nep-exp New Economics Papers
on Experimental Economics
Issue of 2020‒04‒20
27 papers chosen by

  1. New Ecological Paradigm meets behavioral economics: On the relationship between environmental values and economic preferences By Andreas Ziegler
  2. Uncertain Penalties and Compliance By Marcelo Caffera; Carlos Chávez; Carol Luengo
  3. Flexible work arrangements and precautionary behaviour: Theory and experimental evidence By Orland, Andreas; Rostam-Afschar, Davud
  4. Bandit with similarity information By Benjamin Radoc
  5. The Relative Effectiveness of Teachers and Learning Software: Evidence from a Field Experiment in El Salvador By Konstantin Büchel; Martina Jakob; Christoph Kühnhanss; Daniel Steffen; Aymo Brunetti
  6. Bad bankers no more? Truth-telling and (dis)honesty in the finance industry By Huber, Christoph; Huber, Juergen
  7. To buy or not to buy? Price salience in an online shopping field experiment By Dertwinkel-Kalt, Markus; Köster, Mats; Sutter, Matthias
  8. Requiem for a Nudge: Framing Effects in Nudging Honesty By Eugen Dimant; Gerben A. van Kleef; Shaul Shalvi
  9. Is there a link between wealth inequality and deception? – An experimental analysis of different subject pools By Gruener, Sven; Khassine, Ilia
  10. Cognitive Biases: Mistakes or Missing Stakes? By Benjamin Enke; Uri Gneezy; Brian Hall; David Martin; Vadim Nelidov; Theo Offerman; Jeroen van de Ven
  11. Gender discriminatory taxes, fairness perception, and labor supply By Hundsdoerfer, Jochen; Matthaei, Eva Kristina
  12. Risk Taking with Left- and Right-Skewed Lotteries By Bougherara, Douadia; Friesen, Lana; Nauges, Céline
  13. The value of bad ratings: An experiment on the impact of distortions in reputation systems By Keser, Claudia; Späth, Maximilian
  14. A Test of Information Aversion By Kops, Christopher; Pasichnichenko, Illia
  15. Spoken Words Fly Away, Written Words Remain: Employment Contracts between Farmers and Farm Workers By Jäckering, Lisa; Meemken, Eva-Marie; Sellare, Jorge; Qaim, Matin
  16. Manipulation-Proof Machine Learning By Daniel Bj\"orkegren; Joshua E. Blumenstock; Samsun Knight
  17. Incentive to squeal: an experiment on leniency programs for antitrust violators By Benjamin Radoc; Philip Amadeus Libre; Shanti Aubren Prado
  18. Public Information is an Incentive for Politicians: Experimental Evidence from Delhi Elections By Abhijit Banerjee; Nils T. Enevoldsen; Rohini Pande; Michael Walton
  19. Gender and the beauty contest game By Qin, Botao
  20. Increasing Financial Inclusion in the Muslim World : Evidence from an Islamic Finance Marketing Experiment By Karlan,Dean S.; Osman,Adam Mohamed; Shammout,Nour Musallam
  21. Strategic Bidding in Product-Mix, Sequential, and Simultaneous Auctions By Simon Finster
  22. The limits of transparency as a means of reducing corruption By Parra, Daniel; Muñoz-Herrera, Manuel; Palacio, Luis
  23. How Political Insiders Lose Out When International Aid Underperforms: Evidence from a Participatory Development Experiment in Ghana By Kate Baldwin; Dean Karlan; Christopher R. Udry; Ernest Appiah
  24. MCC Indonesia Nutrition Project Impact Evaluation Final Report By Amanda Beatty; Evan Borkum; William Leith; Marisa Henry; Margo Berends; Clair Null; Nicholas Ingwersen
  25. Applications of the Coase Theorem By Tatyana Deryugina; Frances Moore; Richard S. J. Tol
  26. Household Behavioral Preferences and the Child Labor-Education Trade-off: Framed Field Experimental Evidence from Ethiopia By Basu, Arnab K.; Dimova, Ralitza
  27. Decision-making biases in animals: A critical review By Watzek, Julia; Brosnan, Sarah

  1. By: Andreas Ziegler (University of Kassel)
    Abstract: This paper empirically examines whether environmental values are correlated with economic preferences from behavioral economics and considers possible consequences when independence is assumed. The data for this analysis stem from a large-scale computer-based survey among more than 3700 German citizens. Our indicators for environmental values are based on the New Ecological Paradigm (NEP), which is a standard instrument in social and behavioral sciences and increasingly common in economic studies. The econometric analysis with Generalized Poisson regression models reveals strong correlations between two NEP scales and several economic preferences, which are based on established experimental measures: While social preferences (measured in an incentivized dictator game) and positive reciprocity are significantly positively correlated, trust and (less robust) negative reciprocity are significantly negatively correlated with the NEP scales, respectively. Only risk and time preferences (also measured in an incentivized experiment) are not robustly significantly correlated with the NEP scales. These estimation results strongly recommend the additional inclusion of economic preferences in econometric analyses that use a NEP scale as explanatory factor of main interest for environmentally relevant behavior. In particular, not considering social preferences, trust, and positive and negative reciprocity can lead to strong distortions due to omitted variable biases. This conclusion is illustrated in an empirical example that reveals biased estimation results for the effect of a NEP scale on donation activities if not all relevant economic preferences are included as control variables.
    Keywords: Environmental values, New Ecological Paradigm (NEP), economic prefer-ences, individual behavior, artefactual field experiments
    JEL: Q50 D01 D91 Q57 A13
    Date: 2020
  2. By: Marcelo Caffera; Carlos Chávez; Carol Luengo
    Abstract: We present the results of a series of laboratory economic experiments designed to study compliance behavior of polluting firms when information on the penalty is uncertain. The experiments consist of a regulatory environment in which university students face emission standards and an enforcement mechanism composed of audit probabilities and penalties (conditional on detection of a violation). We examine how uncertainty on the penalty affects the compliance decision and the extent of violation under two enforcement levels: one in which the regulator induces perfect compliance and another one in which it does not. Our results suggest that in the first case, uncertain penalties increase the extent of the violations of those firms with higher marginal benefits. When enforcement is not sufficient to induce compliance, the uncertain penalties do not have any statistically significant effect on compliance behavior. Overall, the results suggest that a cost-effective design of emission standards should consider including public and complete information on the penalties for violations.
    Keywords: uncertainty, penalty, emission standard, economic experiment
    JEL: C91 L51 Q58 K42
    Date: 2019
  3. By: Orland, Andreas; Rostam-Afschar, Davud
    Abstract: In the past years, work time in many industries has become increasingly flexible opening up a new channel for intertemporal substitution. To study this, we set up a two-period model with wage uncertainty. This extends the standard saving model by allowing a worker to allocate a fixed time budget between two work-shifts or to save. To test the existence of these channels, we conduct laboratory consumption/saving experiments. A novel feature of our experiments is that we tie them to a real-effort style task. In four treatments, we turn on and off the two channels for consumption smoothing: saving and time allocation. Our four main findings are: (i) subjects exercise more effort under certainty than under risk; (ii) savings are strictly positive for at least 85 percent of subjects (iii) a majority of subjects uses time allocation to smooth consumption; (iv) saving and time shifting are substitutes, though not perfect substitutes.
    Keywords: precautionary saving,labor supply,intertemporal substitution,experiment
    JEL: D14 E21 J22 C91 D81
    Date: 2020
  4. By: Benjamin Radoc (Philippine Competition Commission and Department of Economics, Ateneo de Manila University)
    Abstract: In problem situations, it is unlikely that a decision maker possesses knowledge on all states of the world so that use of information gathered from past similar experience is plausible. This analogical thinking is formalised by case-based decision theory (CBDT) which suggests that under uncertainty, a decision maker acts based on her memory of past actions and the associated outcomes in past similar situations. A unique experimental setting that makes similarity information in the problem situation salient was created, while providing a fair chance for either Bayesian or case-based decisions to emerge. Consider a two-armed bandit with similarity information. If the similarity cue offers irrelevant information on the payoff distribution of the two arms, it is easy for a Bayesian decision maker to ignore the cue and recognise that the distribution of payoffs of the two arms are identical. But if the similarity cue triggers a decision maker to perceive the two arms as separate, there are two possibilities: (i) more frequent positive payoffs on one arm may be used to put a higher valuation on a similar arm consistent with the prediction of CBDT, or (ii) given past positive payoffs on one arm, the other arm may be valued lower if the subsequent likelihood of success is perceived as lower. The experiment results suggest that although participants in general correctly updated their expectation of a positive payoff based on past experience, the pattern in the decisions shows that participants systematically used the irrelevant similarity cue in a manner that cannot be explained by CBDT but consistent with the gambler’s fallacy or the biased belief that the pattern of past outcomes will reverse.
    Keywords: Bayesian reasoning, case-based decisions, gambler’s fallacy, expectation, similarity
    JEL: C91 D9 D81
    Date: 2020–03
  5. By: Konstantin Büchel; Martina Jakob; Christoph Kühnhanss; Daniel Steffen; Aymo Brunetti
    Abstract: This study provides novel evidence on the relative effectiveness of computer-assisted learning (CAL) software and traditional teaching. Based on a randomized controlled trial in Salvadoran primary schools, we evaluate three interventions that aim to improve learning outcomes in mathematics: (i) teacher-led classes, (ii) CAL classes monitored by a technical supervisor, and (iii) CAL classes instructed by a teacher. As all three interventions involve the same amount of additional mathematics lessons, we can directly compare the productivity of the three teaching methods. CAL lessons lead to larger improvements in students' mathematics skills than traditional teacher-centered classes. In addition, teachers add little to the effectiveness of learning software. Overall, our results highlight the value of CAL approaches in an environment with poorly qualified teachers.
    Keywords: computer-assisted learning, productivity in education, primary education, teacher content knowledge
    JEL: C93 I21 J24 O15
    Date: 2020–04–08
  6. By: Huber, Christoph (University of Innsbruck); Huber, Juergen
    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.
    Date: 2020–04–10
  7. By: Dertwinkel-Kalt, Markus; Köster, Mats; Sutter, Matthias
    Abstract: We examine whether shrouding or partitioning of a surcharge raises demand in online shopping. In a field experiment with more than 34,000 consumers, we find that consumers in the online shop of a cinema initiate a purchase process for a 3D movie more often when the 3D surcharge is shrouded, but they also drop out more often when the overall price is shown at the check-out. In sum, the demand distribution is independent of the price presentation. This result qualifies previous findings on the effectiveness of shrouding surcharges and can be rationalized through low cancellation costs.
    Keywords: Salience,Inattention,Shrouding,Price partitioning,Field experiment
    JEL: D81 C93
    Date: 2020
  8. By: Eugen Dimant; Gerben A. van Kleef; Shaul Shalvi
    Abstract: We examine framing effects in nudging honesty, in the spirit of the growing norm-nudge literature, by utilizing a high-powered and pre-registered study. Across four treatments, participants received one random truthful norm-nudge that emphasized ‘moral suasion’ based on either what other participants previously did (empirical message) or approved of doing (normative message) and varied in the framing (positive or negative) in which it was presented. Subsequently, participants repeatedly played the ‘mind game’ in which they were first asked to think of a number, then rolled a digital die, and then reported whether the two numbers coincide, in which case a bonus was paid. Hence, whether or not the report was truthful remained unobservable to the experimenters. We find compelling null effects with tight confidence intervals showing that none of the norm-nudge interventions worked. A follow-up experiment reveals the reason for these convincing null-effects: the information norm-nudges did not actually change norms. Notably, our secondary results suggest that a substantial portion of individuals misremembered norm-nudges such that they conveniently supported deviant behavior. This subset of participants indeed displayed significantly higher deviance levels, a behavior pattern in line with literature on motivated misremembering and belief distortion. We discuss the importance of this high-powered null finding for the flourishing norm-nudge literature and derive policy implications.
    Keywords: norm-nudges, nudge, social information, social norms
    JEL: B41 D01 D90
    Date: 2020
  9. By: Gruener, Sven; Khassine, Ilia
    Abstract: This paper investigates experimentally the relationship between inequality in initial wealth and deception. Our basic design is adopted from Gneezy (2005): two players interact in a deception game. It is common knowledge that player 1 has private information about the payoffs for both players of two alternative ac-tions. Player 1 sends a message to player 2, indicating which alternative putatively will end up in a higher payoff for player 2. The message, which can either be true or false, does not affect the payoffs of the play-ers. Player 2 has no information about the payoffs. However, player 2 selects one of the two alternatives A or B, which is payoff-relevant for both players. We extend Gneezy (2005) by two elements. First, we sys-tematically vary the initial wealth of the players 1 and 2 (common knowledge to both of them). Second, we do not limit ourselves to the standard population of university students but also recruit chess players that are not enrolled in any degree program. Doing so, we want to find out if our results remain robust over a non-standard subject population which is known to be experienced to some extent in strategic interactions. Our main findings are: (i) non-students behave more honestly than students, (ii) students are more likely to strive for egalitarian outcomes by forgoing money and are more likely to trust messages from their counterparts, and (iii) students and non-students seem to react differently to some extent to differences in initial wealth.
    Date: 2020–04–06
  10. By: Benjamin Enke; Uri Gneezy; Brian Hall; David Martin; Vadim Nelidov; Theo Offerman; Jeroen van de Ven
    Abstract: Despite decades of research on heuristics and biases, empirical evidence on the effect of large incentives – as present in relevant economic decisions – on cognitive biases is scant. This paper tests the effect of incentives on four widely documented biases: base rate neglect, anchoring, failure of contingent thinking, and intuitive reasoning in the Cognitive Reflection Test. In pre-registered laboratory experiments with 1,236 college students in Nairobi, we implement three incentive levels: no incentives, standard lab payments, and very high incentives that increase the stakes by a factor of 100 to more than a monthly income. We find that cognitive effort as measured by response times increases by 40% with very high stakes. Performance, on the other hand, improves very mildly or not at all as incentives increase, with the largest improvements due to a reduced reliance on intuitions. In none of the tasks are very high stakes sufficient to de-bias participants, or come even close to doing so. These results contrast with expert predictions that forecast larger performance improvements.
    Keywords: cognitive biases, incentives
    JEL: D01
    Date: 2020
  11. By: Hundsdoerfer, Jochen; Matthaei, Eva Kristina
    Abstract: In this paper, we examine the gender specific impact of discriminatory taxation on fairness perception and individual labor supply decisions. Using the controlled environment of an experimental laboratory, we manipulate both distributional as well as procedural justice of taxation between subjects. We violate distributional fairness through the random application of tax rates, while procedural justice is broken by levying discriminatory tax rates based on taxpayer gender. For both inequality in outcome as well as discrimination, we find strong differences in reactions between male and female participants. Male participants perceived gender discriminatory taxation as unfair in and of itself. Female participants perceived random taxation as well as gender discriminatory taxation to be unfair, as long as they ended up with the higher tax rate. The perceived fairness strongly drove (did not affect) male (female) participants' labor supply. Taken both subgroups together, while mere outcome inequality did not influence labor supply decisions significantly, we find evidence of a negative effect of gender-based discrimination on labor supply.
    Keywords: Tax,labor supply,distributional justice,procedural justice,discrimination
    Date: 2020
  12. By: Bougherara, Douadia; Friesen, Lana; Nauges, Céline
    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
    Date: 2020–04
  13. By: Keser, Claudia; Späth, Maximilian
    Abstract: We study the robustness of reputation management systems against distortions in rating behavior. In a laboratory trust experiment with reputation management, we mimic a positive bias by exclusively offering the option to rate positively or to give no rating. As predicted by theoretical considerations, this bias leads to significantly less trust than a system that additionally offers a negative rating option. A system relying solely on negative ratings does not have such an adverse effect. This highlights the importance of negative ratings for the effectiveness of reputation systems.
    Keywords: Trust,Trustworthiness,Reputation System,Experiment
    JEL: C91 L14 C73
    Date: 2020
  14. By: Kops, Christopher; Pasichnichenko, Illia
    Abstract: The standard Bayesian model implies that information can never have a negative value. We put this implication to the proof. Our paper provides the first test of the value (positive or negative) of information under uncertainty. We show that the “Bayesian implication” stands in conflict with the information-averse behavior that is revealed in our experiment. This behavior demonstrates that the value of truthful and unambiguous information may indeed be negative. Our findings complement predictions from recent theoretical work in showing that negative value of information correlates with ambiguity aversion. This highlights the importance of counseling for decision-making under uncertainty.
    Keywords: value of Information; ambiguity aversion; Ellsberg paradox; Ellsberg urn
    Date: 2020–04–17
  15. By: Jäckering, Lisa; Meemken, Eva-Marie; Sellare, Jorge; Qaim, Matin
    Abstract: Farm workers in developing countries often belong to the poorest of the poor. They typically face low wages, informal working arrangements, and inadequate social protection. Written employment contracts with clearly defined rights and obligations could possibly help, but it is not clear how such contracts could be introduced and promoted in traditional peasant environments. To address this question, we develop and implement a randomized controlled trial with farmers in Côte d’Ivoire. We evaluate whether an awareness campaign about possible features and benefits of employment contracts can influence farmers’ preferences and willingness to sign a contract with their workers. Choice experimental results show that – in comparison to the control group – farmers who were randomly assigned to the awareness campaign have a stronger preference for written contracts and a higher willingness to include contractual features with social benefits for workers. We also analyze treatment effects on farmers’ knowledge and behavior. Farmers in the treatment group are more informed about the procedure of initiating and signing a contract. They are also significantly more likely to have started this procedure by talking with their workers about a contract and making an appointment with the local authorities. Effects on actually signing a contract as the last step of this procedure are not significant, possibly because the time frame of the research was relatively short. Nevertheless, results suggest that information and awareness campaigns may help to improve farm workers’ employment conditions in traditional peasant environments.
    Keywords: Institutional and Behavioral Economics, International Development, Labor and Human Capital, Teaching/Communication/Extension/Profession
    Date: 2020–04
  16. By: Daniel Bj\"orkegren; Joshua E. Blumenstock; Samsun Knight
    Abstract: An increasing number of decisions are guided by machine learning algorithms. In many settings, from consumer credit to criminal justice, those decisions are made by applying an estimator to data on an individual's observed behavior. But when consequential decisions are encoded in rules, individuals may strategically alter their behavior to achieve desired outcomes. This paper develops a new class of estimator that is stable under manipulation, even when the decision rule is fully transparent. We explicitly model the costs of manipulating different behaviors, and identify decision rules that are stable in equilibrium. Through a large field experiment in Kenya, we show that decision rules estimated with our strategy-robust method outperform those based on standard supervised learning approaches.
    Date: 2020–04
  17. By: Benjamin Radoc (Philippine Competition Commission and Department of Economics, Ateneo de Manila University); Philip Amadeus Libre (Asian Development Bank (Consultant)); Shanti Aubren Prado (World Bank Group (Consultant))
    Abstract: Competition authorities around the world have adopted leniency programs creating incentives for cartel members to come forward and provide information sufficient for cartel prosecution. We conducted a laboratory experiment simulating an infinitely repeated 4-player Bertrand game with homogeneous goods. The experiment allowed us to determine the effect of detection rate, penalty discount, and penalty rate on cartel formation and leniency application. Similar to past studies, we find that imposing a leniency program effectively deters cartel formation. However, surviving cartels quickly learn to cooperate. Leniency application is dependent on the immunity incentive (full penalty discount) and the risk of cartel detection, but not on the penalty rate.
    Keywords: antitrust, cartel, experiment, leniency program
    JEL: K21 L13 L44
    Date: 2020–03
  18. By: Abhijit Banerjee; Nils T. Enevoldsen; Rohini Pande; Michael Walton
    Abstract: In 2010, we informed a random set of Delhi councilors, some ineligible for re-election in their current ward, that a newspaper would report on their performance shortly prior to the 2012 city elections. Using slum dwellers' spending preferences, we created a councilor-specific index of pro-poor spending. Treated councilors increased pro-poor spending in high-slum wards. Cross-cutting experiments suggest that the public nature of report cards, not access to information on public services per se, incentivized councilors. Data on party ticket allocation and electoral outcomes shows that, in low-information situations, credible public disclosures of politician achievements matters to both parties and voters.
    JEL: H4 O1 O12
    Date: 2020–04
  19. By: Qin, Botao
    Abstract: This paper uses a beauty contest game to test the gender differences in strategic reasoning. Using both a non-monetary incentive treatment and a monetary incentives treatment in China, I find there are differences in strategic reasoning.However, the differences disappear with the increase of stakes.
    Keywords: Gender; Beauty Contest Game
    JEL: C72 C91 J16
    Date: 2019–12–06
  20. By: Karlan,Dean S.; Osman,Adam Mohamed; Shammout,Nour Musallam
    Abstract: Low utilization of household credit in developing countries may be partially due to religious considerations. In a randomized marketing experiment in Jordan, this paper estimates the effect of sharia-compliant loan features on demand for credit. To comply with Islamic law, the sharia-compliant product uses a bank fee rather than an interest payment structure, while keeping the rest of the product features very similar. Sharia-compliance increased the application rate for loans from 18 percent to 22 percent, an increase in demand that is equivalent to a 10 percent decrease in interest rates. This study also randomly varied the price of the sharia-compliant loan and finds that less religious individuals are twice as elastic with respect to price as the more religious. By comparing reasons for refusal across treatment groups, this paper estimates that survey measures that try to assess the importance of religious objections to conventional credit overestimate the importance of this type of objection by a third.
    Date: 2020–04–02
  21. By: Simon Finster (Nuffield College and Department of Economics, University of Oxford)
    Abstract: We study equilibria in Product-Mix, sequential, and simultaneous auctions, which are used to sell differentiated, indivisible goods. A flexible bidder with unit demand, interested in buying any of the goods, competes against several inflexible bidders, each interested in only one specific good. For first-price and second-price payments, we obtain theoretical results on equilibrium bidding, and compare efficiency, revenue, and bidder surplus numerically. Differences in outcomes between Product-Mix and sequential auctions are small for a range of value distributions. The simultaneous auction performs worst in all dimensions, and differences in performance vary substantially with the degree of competition the flexible bidder faces.
    Keywords: multi-unit auctions, asymmetric auctions, market power, menu auctions, sequential auctions, simultaneous auctions
    JEL: C72 D44 D47 D61 D82
    Date: 2020–03–24
  22. By: Parra, Daniel; Muñoz-Herrera, Manuel; Palacio, Luis
    Abstract: We use a laboratory experiment to study the impact of transparency on reducing corruption in contexts where embezzlement and bribery can co-occur. These contexts are closely related to grand corruption settings, where different types of corruption occur and allow people in power to take advantage of their position. Transparency is expected to have a positive effect on reducing corruption. However, our results show that transparency decreases embezzlement by roughly 10 percentage points, while it has no significant effect on bribery. The observed differential impact of transparency could be attributed to strategic lying by the resource manager, who acts as if low public investment rates were a consequence of bad luck (low budget) instead of misappropriation. This suggests that the impact of transparency cannot be generalized to all types of corruption when different types co-exist.
    Keywords: embezzlement,bribery,grand corruption
    JEL: C91 D72 D73
    Date: 2019
  23. By: Kate Baldwin; Dean Karlan; Christopher R. Udry; Ernest Appiah
    Abstract: Participatory development is designed to mitigate problems of political bias in pre-existing local government but also interacts with it in complex ways. Using a five-year randomized controlled study in 97 clusters of villages (194 villages) in Ghana, we analyze the effects of a major participatory development program on participation in, leadership of and investment by preexisting political institutions, and on households’ overall socioeconomic well-being. Applying theoretical insights on political participation and redistributive politics, we consider the possibility of both cross-institutional mobilization and displacement, and heterogeneous effects by partisanship. We find the government and its political supporters acted with high expectations for the participatory approach: treatment led to increased participation in local governance and reallocation of resources. But the results did not meet expectations, resulting in a worsening of socioeconomic wellbeing in treatment versus control villages for government supporters. This demonstrates international aid’s complex distributional consequences.
    JEL: H4 H7 O12 O17 O19
    Date: 2020–04
  24. By: Amanda Beatty; Evan Borkum; William Leith; Marisa Henry; Margo Berends; Clair Null; Nicholas Ingwersen
    Abstract: This report presents findings from a 5-year randomized control trial of a $120 million maternal and child health project in Indonesia funded by the Millennium Challenge Corporation. The project sought to improve stunting, along with a host of other pre-, postnatal, and early childhood health outcomes.
    Keywords: Indonesia, nutrition, impact evaluation, RCT, breastfeeding, complementary feeding, stunting, sanitation, CLTS, training, posyandu, growth monitoring, Generasi, maternal and child health, open defecation, anthropometric
  25. By: Tatyana Deryugina; Frances Moore; Richard S. J. Tol
    Abstract: The Coase Theorem has a central place in the theory of environmental economics and regulation. But its applicability for solving real-world externality problems remains debated. In this paper, we first place this seminal contribution in its historical context. We then survey the experimental literature that has tested the importance of the many, often tacit assumptions in the Coase Theorem in the laboratory. We discuss a selection of applications of the Coase Theorem to actual environmental problems, distinguishing between situations in which the polluter or the pollutee pays. While limited in scope, Coasian bargaining over externalities offers a pragmatic solution to problems that are difficult to solve in any other way.
    Date: 2020–04
  26. By: Basu, Arnab K. (Cornell University); Dimova, Ralitza (University of Manchester)
    Abstract: Using data from the Rural Ethiopian Household Survey, which contains a behavioral module, we explore the link between adult risk and time preferences and the incidence and the intensity of child labor. While as expected child labor at both the extensive and the intensive margin is a result of high time discount rates, the narrative behind the positive relationship between adult risk aversion and child labor is more complex. While child labor is clearly the result of risk aversion, more risk averse parents react to their uncertain environments by combining child labor and work as opposed to substituting schooling for child labor.
    Keywords: risk and time preferences, education, child labor, Ethiopia
    JEL: C93 J43 O55
    Date: 2020–02
  27. By: Watzek, Julia; Brosnan, Sarah (Georgia State University)
    Abstract: Humans make thousands of decisions every day, and in some situations, we make reliably bad ones. Much research has explored the circumstances in which such irrational decision-making occurs, but the underlying mechanisms are often unclear. One approach that has recently gained traction is to study other species’ responses to similar scenarios to better understand our own decision-making strategies. Here we provide a critical discussion of experimental studies of decision-making biases in animals. We begin by demonstrating how comparative research can yield unique insights into our own decision-making that cannot be gained from studying humans alone. In particular, while comparative research helps us better understand how and why decision-making biases have evolved and which mechanisms underlie them, such studies often overlook how these behaviors vary, both within and between individuals. Methodological concerns and a lack in the diversity of species studied and the number of animals tested complicate this issue and can limit the inferences we can draw. We emphasize the need to study why and when some animals would be expected to show these biases while others would not. Further, rather than just assess whether a given bias is present, comparative research should measure the extent to which it is. We argue that studying how susceptibility to biases varies both within and between individuals is crucial to better understanding the nature of irrational decision-making. We suggest practical steps that open up exciting avenues for future comparative research in this area.
    Date: 2020–04–08

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