nep-exp New Economics Papers
on Experimental Economics
Issue of 2020‒05‒04
24 papers chosen by
Daniel Houser
George Mason University

  1. Cooperation in a Company: A Large-Scale Experiment By Marvin Deversi; Martin G. Kocher; Christiane Schwieren
  2. When Do Teachers Respond to Student Feedback? Evidence from a Field Experiment By Margaretha Buurman; Josse Delfgaauw; Robert Dur; Robin Zoutenbier
  3. Effects of front-of-pack labels on the nutritional quality of supermarket food purchases: evidence from a large-scale randomized controlled trial By Dubois, Pierre; Albuquerque, Paulo; Allais, Oliver; Bonnet, Céline; Bertail, Patrice; Compris, P.; Lahlou, Saadi; Rigal, Nathalie; Ruffieux, Bernard; Chandon, Pierre
  4. Procedural Preferences, Self-Interest, and Communication. Evidence from a Laboratory Experiment By Philipp Harms; Claudia Landwehr; Maximilian Lutz; Markus Tepe
  5. Neither Punishments nor Rewards: Fostering Tax Compliance through the Rawlsian Veil of Ignorance in a Laboratory Experiment By Klaudijo Klaser; Luigi Mittone
  6. Viral Social Media Videos Can Raise Pro-Social Behaviours When an Epidemic Arises By Youting Guo; Jason Shachat; Matthew J. Walker; Lijia Wei
  7. Contests for Shares of an Uncertain Resource By Cary Deck; Lance Howe; Matthew Reimer; Jonathan Alevy; Kyle Borash
  8. Financial Education Affects Financial Knowledge and Downstream Behaviors By Tim Kaiser; Annamaria Lusardi; Lukas Menkhoff; Carly Urban
  9. Climate Change and Intergenerational Social Contract: Insights From a Laboratory Experiment in Rawlsian Perspective By Klaudijo Klaser; Lorenzo Sacconi; Marco Faillo
  10. Compound Games, focal points, and the framing of collective and individual interests. By Stefan Penczynski; Stefania Sitzia; Jiwei Zheng
  11. Do People Have a Bias for Low-Deductible Insurance? By Howard Kunreuther; Mark Pauly
  12. The Value of Bad Ratings: An Experiment on the Impact of Distortions in Reputation Systems By Claudia Keser; Maximilian Späth
  13. Shaking Things Up: On the Stability of Risk and Time Preferences By Michel Beine; Gary Charness; Arnaud Dupuy; Majlinda Joxhe
  14. Can Early Intervention have a Sustained Effect on Human Capital? By Orla Doyle
  15. The direct and spillover effects of a nationwide socio-emotional learning program for disruptive students By Cl\'ement de Chaisemartin; Nicol\'as Navarrete H.
  16. Judging Without Knowing: How people evaluate others based on phenotype and country of origin – Technical Report By Veit, Susanne; Yemane, Ruta
  17. In Praise of Moderation: Suggestions for the Scope and Use of Pre-Analysis Plans for RCTs in Economics By Esther Duflo; Abhijit Banerjee; Amy Finkelstein; Lawrence F. Katz; Benjamin A. Olken; Anja Sautmann
  18. Observability, Social Proximity, and the Erosion of Norm Compliance By Cristina Bicchieri; Eugen Dimant; Simon Gaechter; Daniele Nosenzo
  19. Banknote verification relies on vision, feel and a single second By Frank van der Horst; Jelle Miedema; Joshua Snell; Jan Theeuwes
  20. A test of the Modigliani-Miller theorem, dividend policy and algorithmic arbitrage in experimental asset markets By Tibor Neugebauer; Jason Shachat; Wiebke Szymczak
  21. Isolating the "Tech" from EdTech: Experimental Evidence on Computer Assisted Learning in China By Yue Ma; Robert W. Fairlie; Prashant Loyalka; Scott Rozelle
  22. Measuring efficiency and risk preferences in dynamic portfolio choice By Jacopo Magnani; Jean Paul Rabanal; Olga A. Rud; Yabin Wang
  23. Homo oeconomicus at the café: A Field Experiment on 'Suspended Coffee' By Federica D’Isanto; Salvatore Di Martino
  24. Reversing Reserves By Parag A. Pathak; Alex Rees-Jones; Tayfun Sönmez

  1. By: Marvin Deversi; Martin G. Kocher; Christiane Schwieren
    Abstract: We analyze cooperation within a company setting in order to study the relationship between cooperative attitudes and financial as well as non-financial rewards. In total, 910 employees of a large software company participate in an incentivized online experiment. We observe high levels of cooperation and the typical conditional contribution patterns in a modified public goods game. When linking experiment and company record data, we observe that cooperative attitudes of employees do not pay off in terms of financial rewards within the company. Rather, cooperative employees receive non-financial benefits such as recognition or friendship as the main reward medium. In contrast to most studies in the experimental laboratory, sustained levels of cooperation in our company setting relate to non-financial values of cooperation rather than solely to financial incentives.
    Keywords: cooperation, social dilemma, field experiment, company
    JEL: C93 D23 H41 J31 J32 M52
    Date: 2020
  2. By: Margaretha Buurman; Josse Delfgaauw; Robert Dur; Robin Zoutenbier
    Abstract: We ran a field experiment at a large Dutch school for intermediate vocational education to examine whether the response of teachers to student feedback depends on the content of the feedback. Students evaluated all teachers, but only a randomly selected group of teachers received feedback. Additionally, we asked all teachers before as well as a year after the experiment to assess their own performance on the same items. We find a precisely estimated zero average treatment effect of receiving student feedback on student evaluation scores a year later. However, teachers whose self-assessment before the experiment is much more positive than their students. evaluations do improve significantly in response to receiving feedback. We also find that pro-vision of feedback reduces the gap between teachers. self-assessment and students. assessment, but only to a limited extent. All of these results are driven by the female teachers in our sample; male teachers appear to be unresponsive to student feedback.
    Keywords: field experiment, feedback, teachers, student evaluations, self-assessment, gender differences
    JEL: C93 I20 M50
    Date: 2020
  3. By: Dubois, Pierre; Albuquerque, Paulo; Allais, Oliver; Bonnet, Céline; Bertail, Patrice; Compris, P.; Lahlou, Saadi; Rigal, Nathalie; Ruffieux, Bernard; Chandon, Pierre
    Abstract: To examine whether four pre-selected front-of-pack nutrition labels improve food purchases in real-life grocery shopping settings, we put 1.9 million labels on 1,266 food products in four categories in 60 supermarkets and analyzed the nutritional quality of 1,668,301 purchases using the FSA nutrient profiling score. Effect sizes were 17 times smaller on average than those found in comparable laboratory studies. The most effective nutrition label, Nutri-Score, increased the purchases of foods in the top third of their category nutrition-wise by 14%, but had no impact on the purchases of foods with medium, low, or unlabeled nutrition quality. Therefore, Nutri-Score only improved the nutritional quality of the basket of labeled foods purchased by 2.5% (-0.142 FSA points). Nutri-Score’s performance improved with the variance (but not the mean) of the nutritional quality of the category. In-store surveys suggest that Nutri-Score’s ability to attract attention and help shoppers rank products by nutritional quality may explain its performance.
    Keywords: Nutrition; labelling; supermarket; RCT; food; Field experiment; policy
    Date: 2020–04
  4. By: Philipp Harms (Johannes Gutenberg-University Mainz, Germany); Claudia Landwehr (Johannes Gutenberg-University Mainz, Germany); Maximilian Lutz (University of Oldenburg); Markus Tepe (University of Oldenburg)
    Abstract: What determines individuals’ preferences over alternative decision-making procedures – the potential gain from these procedures or the intrinsic value assigned to them? This study tests an income redistribution game, in which subjects can endogenously determine whether to decide upon redistribution by majority voting or to delegate the decision to a randomly selected member of the group (a “random decider”). Subjects are assigned to groups of three and receive an initial endowment, the sum of endowments being common knowledge. After a choice of the decision procedure to be applied, they can choose to either redistribute endowments equally or to maintain the original allocation. We find that the share of rational egoistic procedural choices increases when the distribution of endowments is common knowledge, compared to a situation in which subjects only know their own endowment. However, a substantive share of subjects reveals a persistent preference for majority voting, regardless of their distributional interest. Support for majority voting is strongest when common knowledge of initial endowments is combined with a chat option. These findings not only suggest that majority voting is a normative default when the rational egoistic procedural choice is limited by a lack of information, but also that support for majority voting, even where it is costly to the individual, is promoted through communication.
    Keywords: procedural preferences, endogenous institutional choice, majority voting, delegation, laboratory experiment
    Date: 2020–04–23
  5. By: Klaudijo Klaser; Luigi Mittone
    Abstract: It is well known that different deterministic mechanisms (like formal audits and material punishments) can stem free riding behaviour in social dilemmas. The behaviouralist literature identified then several other environmental and psychological variables which can influence agents’ attitude to cooperate. By means of a repeated tax compliance game run in an experimental laboratory, our study measures the effects of a Rawlsian veil of ignorance on cooperation over time. In particular we found that in our experimental design the (laboratory) veil of ignorance has an effect both on the ex-ante distribution of votes concerning the adoption of a specific tax regime and on the ex-post tax compliance level between treatments, but not on compliance across rounds, which shows to be decreasing.
    Keywords: Experimental Economics, Inequality, John Rawls, Tax Compliance, Veil of Ignorance
    JEL: D63 C91 H26
    Date: 2020
  6. By: Youting Guo (School of Economics and Management, Wuhan University, China); Jason Shachat (School of Economics and Management, Wuhan University, China; Department of Economics and Finance, Durham University Business School, United Kingdom); Matthew J. Walker (Department of Economics and Finance, Durham University Business School, United Kingdom); Lijia Wei (School of Economics and Management, Wuhan University, China)
    Abstract: At the onset of an epidemic, can viral social media videos induce the high levels of trust and pro-sociality required for a successful community response? Shortly after the outbreak of the COVID-19 virus in Wuhan, China, we conducted an experiment assessing the impact of viral videos on individual preferences and pro-social behaviour. Prior to the experiment, participants viewed one of three videos culled from Chinese social media: a central government leader visiting a local hospital and supermarket, health care volunteers transiting to Wuhan, or an emotionally neutral video unrelated to the emergency. Viewing one of the first two videos leads to higher levels of prosociality and increased ambiguity aversion relative to the third video. The leadership video, however, induces lower levels of trust. Our results suggest ways to craft more effective crisis response efforts and provide insights into how the direction of information in hierarchies influences trust in community members.
    Keywords: Viral Social Media; Pro-Sociality; Risk Attitude; Health Communications; Experiment
    JEL: C93 H12 I12
    Date: 2020
  7. By: Cary Deck (University of Alabama); Lance Howe (University of Alaska Anchorage); Matthew Reimer (University of Alaska Anchorage); Jonathan Alevy (University of Alaska Anchorage); Kyle Borash (University of Alaska Anchorage)
    Abstract: The process of allocating rights to resources can be viewed as a contest: parties compete with each other for the right to claim a larger allocation. In some situations, the amount of the resource that is available to allocate may be unknown when parties are competing for shares and perhaps not realized until contestants actually attempt to claim their shares of the resource. For example, fishing quotas may be awarded based on estimated fish populations, but if there are fewer fish than anticipated, those who are last to harvest may not be able to fill their quota. We model contests of this form and test the predictions of the model using a controlled laboratory experiment. The general result is that participants compete less intensively for shares of the resource when uncertainty regarding the size of the prize is resolved later in the process.
    Keywords: Contests with Uncertain Prizes, Fisheries, Experimental Economics
    JEL: C7 C9 D7 Q2
    Date: 2020–03
  8. By: Tim Kaiser; Annamaria Lusardi; Lukas Menkhoff; Carly Urban
    Abstract: We study the rapidly growing literature on the causal effects of financial education programs in a meta-analysis of 76 randomized experiments with a total sample size of over 160,000 individuals. The evidence shows that financial education programs have, on average, positive causal treatment effects on financial knowledge and downstream financial behaviors. Treatment effects are economically meaningful in size, similar to those realized by educational interventions in other domains and are at least three times as large as the average effect documented in earlier work. These results are robust to the method used, restricting the sample to papers published in top economics journals, including only studies with adequate power, and accounting for publication selection bias in the literature. We conclude with a discussion of the cost-effectiveness of financial education interventions.
    Keywords: Financial education, financial literacy, financial behavior, RCT, meta- analysis
    JEL: D14 I21
    Date: 2020
  9. By: Klaudijo Klaser; Lorenzo Sacconi; Marco Faillo
    Abstract: Many actions we take today will show some of their consequences in the future. Therefore future generations, although they cannot have a real voice, should be considered as direct stakeholders of some of our present decisions. As far as this intertemporal misalignment between actions and outcomes is concerned, climate change is the most evident example we have of negative externality towards the future. This paper looks at the climate change problem and the related international agreements on the reduction of greenhouse gas emission through the social contract perspective.. We apply John Rawls’s veil of ignorance decision-making model within an experimental setting. In particular, we implement a sequential group dictator game where generations (groups of players) are located on a chain representing the time line. The (laboratory) veil of ignorance induces a fair ex-ante perspective regarding the distribution of resources between generations, however ex-post compliance to the agreement remains an open issue.
    Keywords: Experimental Economics, Climate Change, Intergenerational Allocation of Resources, Veil of Ignorance, Social Contract Theory
    JEL: D63 D64 F64 Q54
    Date: 2020
  10. By: Stefan Penczynski (School of Economics and CBESS, University of East Anglia, Norwich.); Stefania Sitzia (School of Economics and CBESS, University of East Angle, Norwich.); Jiwei Zheng (School of Economics and CBESS, University of East Anglia, Norwich.)
    Abstract: This study introduces the game theoretical concept of “compound games†and investigates whether the decomposition of a game influences behaviour. Specifically, we investigate whether separating battle of the sexes games into a pure coordination component and the remaining battle of the sexes component changes coordination success. The literature attributes high coordination rates in pure coordination games with focal points to team reasoning and low coordination rates in related battle of the sexes games to level-k reasoning. We find that coordination success in compound games depends on the decomposition and order of component games, suggesting that collective interests are fragile in the presence of opposing individual interests. Our results show that compound games are empirically relevant; we discuss a wide range of possible applications for compound games.
    Keywords: Compound games, focal points, framing, collective interest
    JEL: C72 C91 D90
    Date: 2020–04
  11. By: Howard Kunreuther; Mark Pauly
    Abstract: Do consumers show a strong bias toward low deductible insurance plans, as many field studies imply? This paper reports on a controlled experiment intended to see whether subjects have a predisposition toward such plans and whether that preference is consistent when their default plan and premiums are changed. Subjects were presented with a scenario where they had to make a decision on whether to purchase a plan with a low deductible (LD) or high deductible (HD) when faced with an illness having a specified probability and cost. Participants had to choose between these plans in two rounds with the identical risk of an illness and specified premiums. If their default option was an LD plan in Round 1, then it was an HD plan in Round 2. The experiment did not show a strong bias toward low deductible health plans. Only slightly more than half of the respondents chose an LD plan even when it was optimal for them to do so. When faced with a default option that was switched in Round 2, 58% of the respondents chose the same plan as they did in Round 1, implying that some but not all subjects resisted the default option in their decision process. Subject choices were correlated with their responses to questions about risk aversion and a desire for peace of mind.
    JEL: C90 C91 D03 D12 D3 D81 G22 I11 I18
    Date: 2020–04
  12. By: Claudia Keser; Maximilian Späth
    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: 2020–04–23
  13. By: Michel Beine; Gary Charness; Arnaud Dupuy; Majlinda Joxhe
    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 pre-earthquake 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
  14. By: Orla Doyle (School of Economics & Geary Institute for Public Policy, University College Dublin)
    Abstract: Evidence on the sustained effect of early intervention is inconclusive, with many studies experiencing a dissolution of treatment effects once the program ends. Using a randomized trial, this paper examines the impact of Preparing for Life (PFL), a pregnancy to age five home visiting and parenting program, on outcomes in middle childhood. We find little evidence of cognitive fade-out at age nine, with significant treatment effects on cognitive skills (0.67SD) and school achievement tests (0.47-0.74SD) that are of a similar magnitude to those observed at the end of the program. There is no impact on other school outcomes and earlier effects for socio-emotional skills are no longer evident. While about 50 percent of the sample is retained at age nine, the treatment groups are still balanced on all key baseline characteristics and the results are robust to inverse probability weighting. Mediation analysis suggests that ~46 percent of the treatment effect on cognitive skills is explained by improvements in early parental investment. This study demonstrates that boosting children’s early cognitive skills can reduce school-age inequalities five years after program completion, yet continued investment may be needed to break long-standing inequalities in other dimensions of skills.
    Keywords: Early childhood intervention; cognitive skills; socio-emotional and behavioral skills; randomized control trial; school-age inequalities.
    JEL: C93 D13 I26 J13
    Date: 2020–04–20
  15. By: Cl\'ement de Chaisemartin; Nicol\'as Navarrete H.
    Abstract: Social and emotional learning (SEL) programs teach disruptive students to improve their classroom behavior. Small-scale programs in high-income countries have been shown to improve treated students' behavior and academic outcomes. Using a randomized experiment, we show that a nationwide SEL program in Chile has no effect on eligible students. We find evidence that very disruptive students may hamper the program's effectiveness. ADHD, a disorder correlated with disruptiveness, is much more prevalent in Chile than in high-income countries, so very disruptive students may be more present in Chile than in the contexts where SEL programs have been shown to work.
    Date: 2020–04
  16. By: Veit, Susanne; Yemane, Ruta
    Abstract: This report describes the design, data, and main results of an online survey (i.e., the "Judging Without Knowing" survey) that was conducted between October 2017 and June 2018 with more than 2,000 registered members on Clickworker (a commercial survey company in Germany). The survey was conducted in order to provide a post-hoc test of the stimulus material (photos) that was used in two correspondence tests on labor market discrimination (i.e., the ADIS and GEMM studies) and to enable further analyses on the role of ethnic stereotypes for ethnic discrimination in hiring. The survey consisted of two parts. The first part of the survey was a post-hoc validation study that aimed at providing an empirical test of the comparability of the photos (phenotype stimuli) from the ADIS and GEMM studies with regard to attractiveness, (ascribed) competence, and sympathy. The second part of the survey studied the stereotypes Germans have about different immigrant groups in Germany. In contrast to previous studies, we asked respondents to rate in how far a range of bipolar adjectives that belong to different stereotype content models (i.e., SCM, 2d-ABC model, and facet model) fit for 38 different ethnic origin groups. In addition, we randomly varied whether respondents had to provide their personal view ("I think …") or their view of the nationally shared stereotype ("Germans think …"). Overall, our findings show that respondents evaluated the photos from the ADIS and GEMM studies differently - but most differences were not substantial. Evaluations differed more strongly between respondents than between photos, and more strongly between photos of males and females and photos series (i.e., original photos and photos that were adjusted with image processing software) than between phenotype groups. The stereotype survey suggests that instruction matters. Respondents rate the different origin groups more positively when asked to express their own opinion than when asked to state the opinion of the Germans. Second, our results raise doubts as for whether Communion is the primary dimension when it comes to stereotypes about immigrant groups in Germany. Ascribed Capacity, Beliefs, and Power seem more important than ascribed Communion. Finally, there seems to be a main divide between the (poor) global south and the (wealthy) global north. Stereotypes about immigrant groups from the global south are generally more negative than stereotypes about immigrants from the global north.
    Date: 2020
  17. By: Esther Duflo; Abhijit Banerjee; Amy Finkelstein; Lawrence F. Katz; Benjamin A. Olken; Anja Sautmann
    Abstract: Pre-Analysis Plans (PAPs) for randomized evaluations are becoming increasingly common in Economics, but their definition remains unclear and their practical applications therefore vary widely. Based on our collective experiences as researchers and editors, we articulate a set of principles for the ex-ante scope and ex-post use of PAPs. We argue that the key benefits of a PAP can usually be realized by completing the registration fields in the AEA RCT Registry. Specific cases where more detail may be warranted include when subgroup analysis is expected to be particularly important, or a party to the study has a vested interest. However, a strong norm for more detailed pre-specification can be detrimental to knowledge creation when implementing field experiments in the real world. An ex-post requirement of strict adherence to pre-specified plans, or the discounting of non-pre-specified work, may mean that some experiments do not take place, or that interesting observations and new theories are not explored and reported. Rather, we recommend that the final research paper be written and judged as a distinct object from the “results of the PAP”; to emphasize this distinction, researchers could consider producing a short, publicly available report (the “populated PAP”) that populates the PAP to the extent possible and briefly discusses any barriers to doing so.
    JEL: A0
    Date: 2020–04
  18. By: Cristina Bicchieri; Eugen Dimant; Simon Gaechter; Daniele Nosenzo
    Abstract: We study how an individual‘s compliance with social norms is inuenced by other actors‘ norm compliance. In a repeated non-strategic Take-or-Give donation experiment we show that giving is considered socially appropriate while taking is socially inappropriate. Observing norm violations erodes an individual‘s own norm compliance. We show that the erosion of norm compliance is led by a change in norm-related beliefs. This change has a major effect on individuals who initially obey the norm, driving them to non-compliance, whereas initially non-compliant individuals do not change their taking behavior. Erosion is halted when individuals have even minimal social proximity to those they observe: individuals now also pay attention to norm followers.
    Keywords: norm compliance, social norms, social proximity
    JEL: C92 D64 D90
    Date: 2020
  19. By: Frank van der Horst; Jelle Miedema; Joshua Snell; Jan Theeuwes
    Abstract: Central banks incorporate various security features in their banknotes to enable the general public, retailers, professional cash handlers and central banks to detect counterfeits. In this study we conducted two field experiments to test the extent to which euro banknotes can be authenticated as a function of exposure time and perceptual modality. In addition we investigated if these effects are moderated by expertise. In both experiments, the counterfeit banknotes were actual counterfeits taken out of circulation. Experiment 1 showed that the public (i.e., non-experts) is only to a limited extent able to visually distinguish between genuine and counterfeit banknotes. Importantly, while being impacted by expertise, overall performance was not significantly affected by exposure time. Experiment 2 gauged haptic perception in addition to vision, taking into account the fact that in regular cash transactions, people might see only one side of the banknote, but will always feel both sides. Experiment 2 showed that a combination of sight and touch produced much better performance than touch alone. Unlike Experiment 1, exposure duration resulted in better performance in Experiment 2. The data of Experiment 1 and 2 indicate that banknote authentication is best when one can employ multiple sensory modalities. Moreover, as such, non-experts exhibit a very decent performance even with a one second exposure duration. Experts do an even better job. When being allowed to use only one perceptual modality, performance was equal for respectively haptic and visual perception when exposure time was long. In the short time condition it was more helpful to see than to feel. Our results are also inconsistent with the often expressed notion that people can instantly feel whether a banknote is fake or genuine. On the contrary, we found that exposure duration is important when participants could hold a banknote in their hands, with performance improving upon a longer exposure duration. The best performance in banknote authentication is realized by a combination of vision, feel and a few seconds. The study proposes a dual processing model for banknote authentication. As long as people have trust in the cash system, the situation in which the transaction takes place and the banknote itself, they authenticate quickly, effortless and automatically (Type 1 processing). If not, this mode will be overridden by Type 2 processing, and people will explicitly and deliberately authenticate banknotes. In this study, as they were asked to authenticate, the participants processed according to Type 2. Even though in everyday life people hardly ever deliberately check whether a banknote is counterfeit or not, the findings indicate that they are quite capable of doing this. The current findings suggest that when developing new series central banks should continue to address both senses. The good results for combined look and feel also suggest that in the development and evaluation of security features, future investigations should mimic real-life interactions rather than mere visual presentation on a computer screen. Lastly, the results of the study are consistent with the statement of the Eurosystem that it only takes a few seconds to authenticate a banknote.
    Keywords: attention; decision-making; change blindness; gist; sight; touch; authentication; banknotes; counterfeits
    JEL: E40 E41 E50 E58
    Date: 2020–04
  20. By: Tibor Neugebauer (University of Luxumbourg); Jason Shachat (Durham University and Wuhan University); Wiebke Szymczak (University of Hamburg)
    Abstract: Modigliani and Miller showed that the market value of the company is in- dependent of its capital structure, and suggested that dividend policy makes no di erence to this law of one price. We experimentally test the MM theorem in a complete market with two simultaneously traded assets, employing two experimental treatment variations. The first variation involves the dividend stream. According to this variation the dividend payout order is either identi- cal or independent. The second variation involves the market participation, or not, of an algorithmic arbitrageur. We find that Modigliani-Miller's law of one price can be supported on average with or without arbitrageur when dividends are identical. The law of one price breaks down when dividend payout order is independent unless the arbitrageur keeps the asset prices in balance.
    Keywords: Modigliani-Miller, arbitrage, dividends, experiment, asset market
    JEL: C92 G32 G35
    Date: 2020
  21. By: Yue Ma; Robert W. Fairlie; Prashant Loyalka; Scott Rozelle
    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
  22. By: Jacopo Magnani (EM Lyon); Jean Paul Rabanal (Monash University); Olga A. Rud (RMIT); Yabin Wang (Hong Kong Monetary Authority)
    Abstract: This paper uses non-parametric methods to study the efficiency (Dybvig, 1988) and risk-profile (Varian, 1988) of dynamic portfolio choices. We design an experiment which varies the number of states (complexity), and includes an equivalent static Arrow-Debreu problem. The results suggest that complexity reduces efficiency, as does lower cognitive ability. Efficiency is also lower in the static problem, and in the dynamic task it is mostly driven by a form of stop-loss strategy. Further, we find that a representative agent exhibits decreasing absolute risk aversion and constant relative risk aversion, despite significant individual heterogeneity.
    Date: 2020–04
  23. By: Federica D’Isanto; Salvatore Di Martino
    Abstract: Individuals engage in daily behaviours that are often at issue with self-interest and rationality. This paper supports the thesis of inadequacy of the homo oeconomicus model, providing results of a field experiment conducted in the city of Naples (Italy) on the practice of “suspended coffee†(caffè sospeso). The suspended coffee tradition was initially launched in Naples and consists in people purchasing two coffees, one to drink on the spot and one to be left “suspended†for someone else to drink for free. A convenience sample of café clients completed a self-administered questionnaire. Their answers were examined in relation to the declared choice and consequent purchase of a suspended coffee. The analysis of the data focuses on the impact that socio-demographic characteristics and motivations, such as consumer choices and adherence to social norms, have on the choice of purchasing a suspended coffee. Within the framework of Structural Equation Modelling, results from a series of latent Path Analyses reveal that being aware of the existence of the suspended coffee tradition has a direct effect on its purchase whilst also mediating the effect of variables such as social norms, café, nationality, and age of the respondents. Our study confirms the human beings’ capacity to act pro-socially and altruistically. Limitations and future directions are also discussed.
    Keywords: Prosocial behaviour, Social norms, Consumer behaviour, Altruism, Generosity
    JEL: A13 C38 C93 D64 D91
    Date: 2020
  24. By: Parag A. Pathak; Alex Rees-Jones; Tayfun Sönmez
    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 incentivized choices between reserve policies that vary in all decision-relevant parameters. Many 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.
    JEL: C9 D47 D9
    Date: 2020–04

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