|
on Experimental Economics |
| By: | Shoji, Masahiro |
| Abstract: | This study conducted a lab-in-the-field experiment in rural Bangladesh to disentangle motives for conformity in antisocial behavior. In a take-away game, the previous participants’ choice is revealed before a decision is made. Conformism is measured by the correlation between the information and own choice. This design allows conformism via learning about social norms, changing social preference, and changing the belief about the opponent’s expected amount of take-away. To disentangle the effect of belief, the participants in the treatment group are also informed about the opponent’s expected amount to be taken away. The results show conformism only in the control group, suggesting the channel through the belief. These results are consistent with the broken windows theory and also support the relevance of belief-dependent social preference in decision making. |
| Keywords: | Conformism; guilt aversion; belief-dependent preference; antisocial behavior; broken windows theory |
| JEL: | C91 K42 |
| Date: | 2020–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:100735&r=all |
| By: | Kamei, Kenju; Nesterov, Artem |
| Abstract: | Exogenously given reputational information is known to improve cooperation. This paper experimentally studies how people create such information through reporting of partner’s action choices, and whether the endogenous monitoring helps sustain cooperation, in an indefinitely repeated prisoner’s dilemma game. The experiment results show that most subjects report their opponents’ action choices, thereby successfully cooperating with each other, when reporting does not involve a cost. However, subjects are strongly discouraged from reporting when doing so is costly. As a result, they fail to achieve strong cooperation norms when the reported information is privately conveyed only to their next-round interaction partner. Costly reporting occurs only occasionally, even when there is a public record whereby all future partners can check the reported information. However, groups can then foster cooperation norms aided by the public record, because reported information gets gradually accumulated and becomes more informative over time. These findings suggest that the efficacy of endogenous monitoring depends on the quality of platforms that store reported information. |
| Keywords: | experiment, cooperation, prisoner’s dilemma game, reputation, reporting, infinitely repeated game. |
| JEL: | C73 C92 D70 H41 |
| Date: | 2020–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:100712&r=all |
| By: | Matthaei, Eva Kristina; Kiesewetter, Dirk |
| Abstract: | This paper investigates the dynamics of group decisions regarding risky tax avoidance strategies using a laboratory experiment. To identify the causes of risk taking by groups, we compare individual to group decisions in three scenarios. The first scenario allocates payoffs from group decisions equally to all members of a group. The second and third scenario introduce intra-group payoff conflict as a new influential factor in group dynamics. Hereby, we separate intra-group payoff conflicts in the distribution of costs and profits. This manipulation allows us to disentangle group discussion effects resulting from the competing theories of polarization and diversification of opinions. Our overall findings support a predominant diversification of opinions effect. When group members share all payoffs equally, this effect overcomes polarization in 100% of the cases where outstanding individuals are risk averse, while group polarization appears to be more likely towards outstanding risk loving subjects. Intra-group payoff conflict shifts these likelihoods, supporting the importance of rational arguments in group polarization. Consequently, our experimental results support a strong increase in the level of average tax avoidance following group decisions in case of all or negative outcomes being shared equally by group members. Intra-group payoff in the distribution of costs, however, removes this difference and shifts, both individual and group preferences, towards safety. |
| Keywords: | group,tax avoidance,risk,intra-group payoff conflict,polarization,diversification of opinions |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:258&r=all |
| By: | Potters, Jan; Suetens, Sigrid |
| Abstract: | We examine whether optimization incentives --- incentives to best-respond --- have an effect on behavior in finitely repeated two-player dilemma games with strategic complements. We run an experiment in which we increase optimization incentives in two different ways compared to a baseline treatment. In the first treatment, the increase in optimization incentives is created by an increase in payoffs on the best-response curve, while its slope remains unchanged. In the second treatment, the increase in optimization incentives takes the form of an increase in the slope of the best-response curve, while best-response payoffs remain unchanged. We find that the impact of optimization incentives is overshadowed by the effect of the slope of the best-response curve. Although an increase in optimization incentives leads subjects to best-respond more frequently when the best-response curve is relatively flat, it leads to more cooperative behavior if it is accompanied by an increase in the slope of the best-response function. |
| Keywords: | Cooperation; Experiments; optimization incentives; repeated game; strategic complementarity |
| JEL: | C91 D01 D74 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14595&r=all |
| By: | Mamadou Gueye (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Nicolas Quérou (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, CNRS - Centre National de la Recherche Scientifique); Raphaël Soubeyran (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | In this paper, we use a laboratory experiment to analyze the relationship between equity and coordination success in a game with Pareto ranked equilibria. Equity is decreased by increasing the coordination payoffs of some subjects while the coordination payoffs of others remain unchanged. Theoretically, in this setting, difference aversion may lead to a positive relationship between equity and coordination success, while social welfare motivations may lead to a negative relationship. Using a within-subject experimental design, we find that less equity unambiguously leads to a higher level of coordination success. Moreover, this result holds even for subjects whose payoffs remain unchanged. Our results suggest that social welfare motivations drives the negative relationship between equity and coordination success found in this experiment. Moreover, our data suggest that the order of treatment matters. Groups facing first the treatment with high inequality in coordination payoffs, then the treatment with low inequality in coordination payoffs, reach the Pareto dominant equilibrium more often in both treatments compared to groups playing first the treatment with low inequality in coordination payoffs, then the treatment with high inequality in coordination payoffs. |
| Keywords: | equity, effciency,difference aversion,social welfare motivation,coordination game |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02790603&r=all |
| By: | Scott E. Carrell; Michal Kurlaender |
| Abstract: | Despite a growing body of literature that instructors “matter” in higher education, there is virtually no evidence about how their actions influence student outcomes. We provide experimental evidence on the impact of specific faculty behaviors aimed at increasing student success. We test the effect of professor feedback on student success in higher education classrooms though a "light-touch" randomized intervention. We present results from a small pilot in an introductory-level microeconomics course at a comprehensive research university, and the scale-up conducted in over 43 classrooms and nearly 4,000 students at a large broad-access university. The intervention consisted of several strategically-timed E-mails to students from the professor indicating keys to success in the class, the students’ current standing in the course, and a reminder of when the professor is available. Results from the pilot show that students in the treatment group scored higher on exams, homework assignments, and final course grade. Results from the scaled-up experiment are more mixed—we find significant positive effects on student perceptions of the professor and course for all students. However, we only find positive achievement effects for our target population, first year students from underrepresented minority groups. Finally, we replicated the pilot to test the robustness of these results and again find positive effects on student achievement. We conclude that in certain settings and with some students, targeted feedback from professors can lead to meaningful gains in achievement. |
| JEL: | I20 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27312&r=all |
| By: | Ronayne, David (University of Oxford and Nuffield College); Sgroi, Daniel (University of Warwick, ESRC CAGE Centre and IZA Bonn); Tuckwell, Anthony (University of Warwick, ESRC CAGE Centre and the Alan Turing Institute) |
| Abstract: | We provide experimental evidence of behavior consistent with the sunk cost effect. Subjects who earned a lottery via a real-effort task were given an opportunity to switch to a dominant lottery; yet 23% chose to stick with their dominated lottery. The endowment effect accounts for roughly only one third of the effect. Subjects’ capacity for cognitive reflection is a significant determinant of sunk cost behavior. We also find stocks of knowledge or experience (crystallized intelligence) predict sunk cost behavior, rather than algorithmic thinking (fluid intelligence) or the personality trait of openness. We construct and validate a scale, the “SCE-8”, which encompasses many resources individuals can spend, and offers researchers an efficient way to measure susceptibility to the sunk cost effect. |
| Keywords: | sunk cost effect, sunk cost fallacy, endowment effect, cognitive ability, fluid intelligence, crystallized intelligence, reflective thinking, online experiment, online survey, psychological scales, scale validation, Raven’s progressive matrices, international cognitive ability resource, cognitive reflection test, openness. JEL Classification: D91, C83, C90 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:475&r=all |
| By: | Andrej Angelovski; Jordi Brandts; Werner Güth |
| Abstract: | We model the competitive striving for high-level positions in firms by letting experimental participants compete in bidding for prizes of different sizes in a hierarchy. Our set-up includes both a flat hierarchy and a steep hierarchy. We mainly focus on whether men and women behave differently with respect to bidding for higher and lower positions, but also consider other possible sources of heterogeneity in behavior. On average, women bid higher than men, but not significantly so, except for the top position of the flat hierarchy. For lower positions, bids are generally close to optimal bidding whereas they are relatively lower for higher positions. Women do win the top positions significantly more often, but there are no significant gender differences in earnings, the difference between prizes and bids. Our results suggest that the strong gender differences in attitudes towards competition that were found in numerous previous studies based on competition in tournaments with real-effort tasks may be specific to that environment. An implication of our results thus is that a particular phenomenon should be studied using more than one experimental design. |
| Keywords: | experiments, gender differences, competition |
| JEL: | C91 J16 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1185&r=all |
| By: | Fries, Tilman; Parra, Daniel |
| Abstract: | This paper studies, theoretically and experimentally, whether the entitlement effect created by deservingness affects the willingness to lie. In a laboratory experiment, we compare the lying behavior of high-endowment participants with low-endowment participants. In one treatment, the allocation of the endowment is decided by participants' effort, and in the other, it is determined by a random draw. When participants lie to keep money directly determined by their effort, those who receive the high endowment lie more than those who receive the low endowment. In contrast, when income is determined by a random draw, lying is the same regardless of the endowment. These findings are consistent with our model of relative entitlement concerns where less deserving individuals are discouraged from lying because they believe that other individuals are more deserving than themselves. |
| Keywords: | Lying,Dishonesty,Deservingness,Reference points,Psychological game theory |
| JEL: | C91 D02 D90 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbebe:spii2020401&r=all |
| By: | James Andreoni; Nikos Nikiforakis; Simon Siegenthaler |
| Abstract: | The ability to predict when societies will replace one social norm for another can have significant implications for welfare, especially when norms are detrimental. A popular theory poses that the pressure to conform to social norms creates tipping thresholds which, once passed, propel societies toward an alternative state. Predicting when societies will reach a tipping threshold, however, has been a major challenge due to the lack of experimental data for evaluating competing models. We present evidence from a large-scale lab experiment designed to test the theoretical predictions of a threshold model for social tipping. In our setting, societal preferences change gradually, forcing individuals to weigh the benefit from deviating from the norm against the cost from not conforming to the behavior of others. We show that the model predicts accurately social tipping and norm change in 96% of experimental societies. Strikingly, when individuals determine the cost for non-conformity themselves, they set it too high, causing the persistence of detrimental norms. We also show that instigators of change tend to be more risk tolerant and to dislike conformity more. Our findings demonstrate the value of threshold models for understanding social tipping in a broad range of social settings and designing policies to promote welfare. |
| JEL: | D03 D91 H00 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27310&r=all |
| By: | Sabrina Teyssier (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique); Fabrice Etilé (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique); Pierre Combris (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique) |
| Abstract: | Can social interactions be used to favor the consumption of fair-trade products? Social interactions can alter purchase behaviors by triggering either self-image concerns (when one observes others' decisions without being observed) or social-image concerns (when everybody observes everyone). A laboratory experiment is designed to identify separately the role of these motivators, using real auctions for a standard and a fair-trade chocolate, and controlling carefully for taste and package differences. The willingness-to-pay (WTP) for the chocolates and the premium that the subjects grant to the fair-trade variety are analyzed. The results reveal that both social and self-image matter: the subjects give a higher premium to the fairtrade chocolate when their decisions are made public; the premium is adjusted according to the information that is received about the premium granted by other subjects, even when decisions remain private. However, the higher premium in public auctions is obtained through a decrease in the WTP for the standard chocolate, rather than an increase in the WTP for the fair-trade chocolate. In addition, the subjects are much more sensitive to information about others' choices that relax the moral or social norm constraining their own choices. We thus conclude that social interactions cannot be used to nudge consumers into fair-trade consumption, at least for ordinary products such as chocolate. |
| Keywords: | fair-trade, image motivation, willingness-to-pay, experiment, chocolate |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02800408&r=all |
| By: | Sylvain Chabe-Ferret (TSE - Toulouse School of Economics - EHESS - École des hautes études en sciences sociales - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UT1 - Université Toulouse 1 Capitole); Philippe Le Coent (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Arnaud Reynaud (TSE - Toulouse School of Economics - EHESS - École des hautes études en sciences sociales - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UT1 - Université Toulouse 1 Capitole); Subervie Julie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Daniel Lepercq (CACG - Compagnie d'Aménagement des Côteaux de Gascogne) |
| Abstract: | Improving water efficiency is a growing challenge for the Common Agricultural Policy. In this article, we test whether social comparison nudges can promote water-saving behavior among farmers. We report on a pilot Randomized Controlled Trial, in which information on individual and group water consumption were sent every week to farmers equipped with smartmeters. We do not detect an effect of nudges on average water consumption. We however find that the nudge decreases water consumption at the top of the distribution while it increases consumption at the bottom. This study highlights the potential of nudges as an agricultural policy tool. |
| Keywords: | nudges,behavioral economics,irrigation water use,government policy |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02791612&r=all |
| By: | Sophie Clot (Department of Economics, University of Reading); Marina Della Giusta (Department of Economics, University of Reading); Giovanni Razzu (Department of Economics, University of Reading) |
| Abstract: | We use a controlled experiment widely adopted in the literature to assess the extent of gender differences in attitudes towards competition in a sample of UK professionals working in two different companies. We find no gender differences in attitudes towards competition nor in performance under a competitive reward scheme. This results qualifies the findings of a large number of experimental studies that show that women are more likely than men to shy away from competition. We also find that, in our sample of professionals, women’s performance under competitive schemes does not decline. We conclude that it is important to avoid generalisations on the presence of gender gaps in attitudes towards competition. This being the first field study with professional workers in relatively competitive sectors, we think more needs to be carried out. |
| Keywords: | Gender, competition, field experiment |
| JEL: | C93 J16 J71 |
| Date: | 2020–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2020-15&r=all |
| By: | Cabrales, Antonio (University College London); Clots-Figueras, Irma (University of Kent); Hernán-González, Roberto (Burgundy School of Business); Kujal, Praveen (Middlesex University Business School, London) |
| Abstract: | Formal or informal institutions have long been adopted by societies to protect against opportunistic behavior. However, we know very little about how these institutions are chosen and their impact on behavior. We experimentally investigate the demand for different levels of institutions that provide low to high levels of insurance and its subsequent impact on prosocial behavior. We conduct a large-scale online experiment where we add the possibility of purchasing insurance to safeguard against low reciprocity to the standard trust game. We compare two different mechanisms, the private (purchase) and the social (voting) choice of institutions. Whether voted or purchased, we find that there is demand for institutions in low trustworthiness groups, while high trustworthiness groups always demand lower levels of institutions. Lower levels of institutions are demanded when those who can benefit from opportunistic behavior, i.e. low trustworthiness individuals, can also vote for them. Importantly, the presence of insurance crowds out civic spirit even when subjects can choose the no insurance option: trustworthiness when formal institutions are available is lower than in their absence. |
| Keywords: | institutions, trust, trustworthiness, voting, insurance |
| JEL: | C92 D02 D64 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13270&r=all |
| By: | William G. Morrison (Department of Economics, Wilfrid Laurier University, Canada); Bradley J. Ruffle (Department of Economics, McMaster University, Canada; Rimini Centre for Economic Analysis) |
| Abstract: | We design a series of laboratory experiments to investigate the effects of purchasing insurance and of pre-filled claim forms on dishonesty in loss reporting. In our experiment, participants report the outcome of privately rolling two dice where the numbers rolled map to a payoff distribution with the possibility of losses in earned income. Prior to this reporting task, participants bid for a limited number of insurance contracts which issue an indemnity payment equal to each insured individual’s reported loss. We find that dishonest reporting is significantly more prevalent among insured individuals relative to the uninsured, consistent with an ‘entitlement bias’. Further we find that prefilling the reporting form with the most probable outcome only modestly constrains dishonest reporting among both insured and uninsured individuals. We explore reasons why pre-filled forms should be applied with caution. |
| Keywords: | experimental economics, pre-filled forms, pre-populated fields, insurance, dishonesty, claim build-up |
| JEL: | C91 D82 G22 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:20-18&r=all |
| By: | Dubois, Pierre; Albuquerque, Paulo; Allais, Olivier; Bonnet, Céline; Bertail, Patrice; Combris, Pierre; Lahlou, Saadi; Rigal, Natalie; 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 1266 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: | field experiment; food; labelling; nutrition; policy; RCT; supermarket |
| JEL: | L81 |
| Date: | 2020–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:104335&r=all |
| By: | Leonardo Bursztyn; Ingar K. Haaland; Aakaash Rao; Christopher P. Roth |
| Abstract: | We study the use of excuses to justify socially stigmatized actions, such as opposing minority groups. Rationales to oppose minorities change some people’s private opinions, leading them to take anti-minority actions even if they are not prejudiced against minorities. When these rationales become common knowledge, prejudiced people who are not persuaded by the rationale can pool with unprejudiced people who are persuaded. This decreases the stigma associated with anti-minority expression, increasing public opposition to minority groups. We examine this mechanism through several large-scale experiments in the context of anti-immigrant behavior in the United States. In the first main experiment, participants learn about a study claiming that immigrants increase crime rates and then choose whether to authorize a publicly observable donation to an anti-immigrant organization. Informing participants that others will know that they learned about the study substantially increases donation rates. In the second main experiment, participants learn that a previous respondent authorized a donation to an anti-immigrant organization and then make an inference about the respondent’s motivations. Participants who are informed that the respondent learned about the study prior to authorizing the donation see the respondent as less intolerant and more easily persuadable. |
| JEL: | C90 D03 D72 D83 P16 Z10 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27288&r=all |
| By: | Brassiolo, P; Estrada, R; Fajardo, G; Vargas, J. F |
| Abstract: | We study whether opportunities to extract rents in a job affect the type of individuals who are attracted to it in terms of their underlying integrity. We do so in a laboratory experiment in which participants choose between two contracts that involve different tasks. We experimentally introduce the possibility of graft in one of them and study the sorting of subjects across contracts based on an incentivized measure of honesty. We find that the corruptible contract changes the composition of subjects because it attracts the most dishonest individuals and repels the most honest ones. In addition, we observe extensive graft when the opportunity is available. We introduce a double randomization strategy to disentangle the extent of which stealing responds to the aforementioned negative selection or to pure incentives (net of selection). We find that, in this setting, selection is the main driver of graft. Our results have clear policy implications to curb corruption. |
| Keywords: | Corruption, selection, rent extraction opportunities, personnel economics |
| JEL: | C91 D73 M5 |
| Date: | 2020–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:018179&r=all |
| By: | Bradley J. Ruffle (Department of Economics, McMaster University, Canada; Rimini Centre for Economic Analysis); Arie Sherman (Department of Economics and Management, Ruppin Academic Center, Israel); Zeev Shtudiner (Department of Economics and Business Administration, Ariel University, Israel) |
| Abstract: | We design a field experiment to test for price discrimination at seemingly highly competitive Israeli produce markets. We trained 90 buyers and sent them to produce markets across Israel. After verifying a product’s posted price, they asked for a discount on a one-kilogram or one-unit purchase. Vendors employ third-degree price discrimination: women are offered larger and more frequent discounts than men, and the more attractive the female buyer, the larger and more frequent the discount offered. Male buyers do not benefit from this beauty discount. No other buyer characteristic is a significant predictor of the likelihood or size of a discount. To understand our findings, we provide a more nuanced view of these markets that includes search costs and considerable vendor price-setting discretion. |
| Keywords: | experimental economics, beauty, price discrimination, negotiation, price discounts, search costs |
| JEL: | C91 D01 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:20-17&r=all |
| By: | Stefan, Matthias (University of Innsbruck); Huber, Jürgen; Kirchler, Michael (University of Innsbruck); Sutter, Matthias (Max Planck Institute for Research on Collective Goods); Walzl, Markus (University of Innsbruck) |
| Abstract: | Rankings are prevalent information and incentive tools in labor markets with strong competition for talent. In a dynamic model of multi-tasking and an accompanying experiment with financial professionals, we identify hidden ranking costs when performance in one task is incentivized and ranked while another prosocial task is not: (i) a ranking influences behavior if individuals lag behind: they spend more total effort and substitute effort in the prosocial task with effort in the ranked task; (ii) those ahead in the ranking spend less total effort and lower relative effort in the ranked task. Implications for incentive schemes are discussed. |
| Keywords: | multi-tasking decision problem, rank incentives, framed field experiment, finance professionals |
| JEL: | C93 D02 D91 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13345&r=all |
| By: | Plamen Nikolov |
| Abstract: | Attitudes toward risk underlie virtually every important economic decision an individual makes. In this experimental study, I examine how introducing a time delay into the execution of an investment plan influences individuals' risk preferences. The field experiment proceeded in three stages: a decision stage, an execution stage and a payout stage. At the outset, in the Decision Stage (Stage 1), each subject was asked to make an investment plan by splitting a monetary investment amount between a risky asset and a safe asset. Subjects were informed that the investment plans they made in the Decision Stage are binding and will be executed during the Execution Stage (Stage 2). The Payout Stage (Stage 3) was the payout date. The timing of the Decision Stage and Payout Stage was the same for each subject, but the timing of the Execution Stage varied experimentally. I find that individuals who were assigned to execute their investment plans later (i.e., for whom there was a greater delay prior to the Execution Stage) invested a greater amount in the risky asset during the Decision Stage. |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2006.02143&r=all |
| By: | Maoliang Ye; Jie Zheng; Plamen Nikolov; Sam Asher |
| Abstract: | This study investigates a potential mechanism to promote coordination. With theoretical guidance using a belief-based learning model, we conduct a multi-period, binary-choice, and weakest-link laboratory coordination experiment to study the effect of gradualism - increasing the required levels (stakes) of contributions slowly over time rather than requiring a high level of contribution immediately - on group coordination performance. We randomly assign subjects to three treatments: starting and continuing at a high stake, starting at a low stake but jumping to a high stake after a few periods, and starting at a low stake while gradually increasing the stakes over time (the Gradualism treatment). We find that relative to the other two treatments, groups coordinate most successfully at high stakes in the Gradualism treatment. We also find evidence that supports the belief-based learning model. These findings point to a simple mechanism for promoting successful voluntary coordination. |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2006.01386&r=all |
| By: | Alejandro Caparrós (Institute for Public Goods and Policies, Spanish National Research Council); Michael Finus (University of Graz, Austria) |
| Abstract: | We argue that the incentive structure of all individual and coordinated measures across countries to contain the Corona-pandemic is that of a weakest-link public good game. We discuss a selection of theoretical and experimental key results of weakest-link games and interpret them in the light of the Corona-pandemic. First, we highlight that experimental evidence does not support the assumption that coordination can be trivially solved, even among symmetric players. Second, we argue that for asymmetric countries the weakest-link game does not only pose a problem of coordination, but also a problem of cooperation. Third, we show how and under which conditions self-enforcing treaties can foster cooperation. We account for the possibility that countries make mistakes when choosing their actions. Finally, we provide a list of research gaps. |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2020-10&r=all |
| By: | Akerlof, Robert (University of Warwick); Li, Hongyi (UNSW Business School); Yeo, Jonathan (University of Warwick) |
| Abstract: | This paper uses a laboratory experiment to study competitions for power — and the role of patronage in such competitions. We construct and analyze a new game — the “chicken-and-egg game” — in which chickens correspond to positions of power andeggsarethegame’scurrency. We find that power tends to accumulate, through a “power begets power” dynamic, in the hands of “lords.” Other subjects behave like their vassals in the sense that they take lords’ handouts rather than compete against them. We observe substantial wealth inequality as well as power inequality. There are also striking gender differences in outcomes — particularly in rates of lordship. In a second treatment, where we eliminate patronage by knocking out the ability to transfer eggs, inequality is vastly reduced and the “power begets power” dynamic disappears. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:457&r=all |
| By: | Nils K\"obis; Luca Mossink |
| Abstract: | The release of openly available, robust text generation algorithms has spurred much public attention and debate, due to algorithm's purported ability to generate human-like text across various domains. Yet, empirical evidence using incentivized tasks to assess human behavioral reactions to such algorithms is lacking. We conducted two experiments assessing behavioral reactions to the state-of-the-art Natural Language Generation algorithm GPT-2 (Ntotal = 830). Using the identical starting lines of human poems, GPT-2 produced samples of multiple algorithmically-generated poems. From these samples, either a random poem was chosen (Human-out-of-the-loop) or the best one was selected (Human-in-the-loop) and in turn matched with a human written poem. Taking part in a new incentivized version of the Turing Test, participants failed to reliably detect the algorithmically-generated poems in the human-in-the-loop treatment, yet succeeded in the Human-out-of-the-loop treatment. Further, the results reveal a general aversion towards algorithmic poetry, independent on whether participants were informed about the algorithmic origin of the poem (Transparency) or not (Opacity). We discuss what these results convey about the performance of NLG algorithms to produce human-like text and propose methodologies to study such learning algorithms in experimental settings. |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2005.09980&r=all |
| By: | Fetscher, Verena (University of Hamburg) |
| Abstract: | Why is support for income redistribution among the rich higher in some Western European welfare states than in others? The argument I propose builds on structural differences in the social insurance design. Flat-rate systems provide social benefits in equal amounts to everyone in need, while earnings-related systems provide benefits in relation to previous earnings. These differences in the configuration of the welfare state historically go back to Bismarck and Beveridge and have implications for questions of distributive justice and fairness. If individual incomes have fair and unfair components, earnings-related systems maintain both components during periods of economic hardship, while flat-rate systems equalize fair and unfair income differences. With a combination of observational and experimental data, I show that average support for redistribution among the better-off is higher in earnings-related systems and participants in a laboratory experiment increase transfer shares in allocation problms which maintain given endowment differences |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:463&r=all |
| By: | Itzhak Rasooly; Carlos Gavidia-Calderon |
| Abstract: | While auction theory views bids and valuations as continuous variables, real-world auctions are necessarily discrete. In this paper, we use a combination of analytical and computational methods to investigate whether incorporating discreteness substantially changes the predictions of auction theory, focusing on the case of uniformly distributed valuations so that our results bear on the majority of auction experiments. In some cases, we find that introducing discreteness changes little. For example, the first-price auction with two bidders and an even number of values has a symmetric equilibrium that closely resembles its continuous counterpart and converges to its continuous counterpart as the discretisation goes to zero. In others, however, we uncover discontinuity results. For instance, introducing an arbitrarily small amount of discreteness into the all-pay auction makes its symmetric, pure-strategy equilibrium disappear; and appears (based on computational experiments) to rob the game of pure-strategy equilibria altogether. These results raise questions about the continuity approximations on which auction theory is based and prompt a re-evaluation of the experimental literature. |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2006.03016&r=all |
| By: | Banerjee, Abhijit (MIT); Finkelstein, Amy (MIT); Hanna, Rema (Harvard University); Olken, Benjamin (MIT); Ornaghi, Arianna (University of Warwick); Sumarto, Sudarno (TNP2K and SMERU) |
| Abstract: | To assess ways to achieve widespread health insurance coverage with financial solvency in developing countries, we designed a randomized experiment involving almost 6,000 households in Indonesia who are subject to a nationally mandated government health insurance program. We assessed several interventions that simple theory and prior evidence suggest could increase coverage and reduce adverse selection : substantial temporary price subsidies (which had to be activated within a limited time window and lasted for only a year), assisted registration, and information. Both temporary subsidies and assisted registration increased initial enrollment. Temporary subsidies attracted lowercost enrollees, in part by eliminating the practice observed in the no subsidy group of strategically timing coverage for a few months during health emergencies. As a result, while subsidies were in effect, they increased coverage more than eightfold, at no higher unit cost ; even after the subsidies ended, coverage remained twice as high, again at no higher unit cost. However, the most intensive (and effective) intervention – assisted registration and a full one-year subsidy – resulted in only a 30 percent initial enrollment rate, underscoring the challenges to achieving widespread coverage |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:454&r=all |
| By: | De Neve, Jan-Emmanuel (University of Oxford); Imbert, Clement (University of Warwick); Spinnewijn, Johannes (London School of Economics); Tsankova, Teodora (University of Warwick); Luts, Maarten (FPS Finance) |
| Abstract: | We study the impact of simplification, deterrence and tax morale on tax compliance. We ran five natural field experiments varying the communication of the tax administration with the universe of income taxpayers in Belgium throughout the tax process. A consistent picture emerges across experiments : (i) simplifying communication substantially increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective, and often backfires. A discontinuity in enforcement intensity, combined with the experimental variation, allows us to compare simplification with standard enforcement measures. We find that simplification is far more cost-effective, allowing for substantial savings on enforcement costs |
| Keywords: | Tax Compliance ; Field Experiments ; Simplification ; Enforcement JEL Classification: C93 ; D91 ; H20 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:458&r=all |
| By: | Gilles Grolleau (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier - INRA - Institut National de la Recherche Agronomique - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - UM1 - Université Montpellier 1 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques, Département Sciences Economiques, Sociales et de Gestion - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques, Laboratoire d'Expérimentation en Sciences Sociales et Analyse des Comportements (LESSAC) - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Guillermo Mateu (Laboratoire d'Expérimentation en Sciences Sociales et Analyse des Comportements (LESSAC) - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Angela Sutan (Laboratoire d'Expérimentation en Sciences Sociales et Analyse des Comportements (LESSAC) - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Radu Vranceanu (Business School - UAB - University of Alabama at Birmingham [ Birmingham], THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - UCP - Université de Cergy Pontoise - Université Paris-Seine) |
| Abstract: | This paper builds an experiment to investigate whether asking people to state how much they will donate to a charity (to pledge) can increase their actual donation. Individuals' endowment is either certain or a random variable. We study different types of pledges, namely private, public and irrevocable ones, which differ in individual cost of not keeping a promise. Public pledges appear to be associated to lower donation levels. Irrevocable pledges ensure an amount of donations equal to donations in absence of pledges. Moreover, a significant number of individuals keep their promises, in presence of either private or public pledges. A higher risk attached to the endowment increases donations. |
| Keywords: | charity giving,commitment,communication,experiments,pledge |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02799567&r=all |
| By: | Bindra, Parampreet Christopher (University of Innsbruck); Kerschbamer, Rudolf (University of Innsbruck); Neururer, Daniel (University of Innsbruck); Sutter, Matthias (Max Planck Institute for Research on Collective Goods) |
| Abstract: | Credence goods markets with their asymmetric information between buyers and sellers are prone to large inefficiencies. In theory, poorly informed consumers can protect themselves from maltreatment through sellers by asking for second opinions from other sellers. Yet, empirical evidence whether this is a successful strategy is scarce. Here we present a natural field experiment in the market for computer repairs. We find that revealing a second opinion from another expert to the seller does neither increase the rate of successful repairs nor decrease the average repair price. We assess under which conditions gathering a second opinion can be valuable. |
| Keywords: | credence goods, expert services, second opinions, natural field experiment |
| JEL: | C93 D82 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13344&r=all |
| By: | Antinyana, A.; Bertoni, M.; Corazzinic, L. |
| Abstract: | Over the last decades, the implementation of effective screening programs has starkly reduced cervical cancer mortality in High-Income Countries (HICs). As a result, roughly 90 percent of cervical cancer deaths nowadays occurs in low- and middle-income countries (LMICs), where nationwide cancer screening programs are nearly absent because of infrastructural barriers. In LMICs that have the capability to implement such programs, participation is often low because of information gaps, cultural, and socio-economic barriers. In this paper, we report results of a field experiment that we conducted within the national screening program of the Republic of Armenia to test whether the screening invitation strategies usually employed in high-income countries (HICs) could enhance screening uptake even in LMICs, despite the aforementioned barriers. We find that the dispatch of invitation letters significantly enhances participation, especially when followed by reminders. Different message frames have no impact. Our empirical results suggest that the implementation of invitation strategies employed in HICs could help to overcome commonly perceived barriers towards screening in LMICs and enhance screening participation. |
| Keywords: | cervical cancer screening; randomized controlled trials; invitation letters; reminders; framing; |
| JEL: | I12 I15 I18 C93 D91 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:20/13&r=all |
| By: | Siddique, Abu (University of Southampton); Vlassopoulos, Michael (University of Southampton); Zenou, Yves (Monash University) |
| Abstract: | This paper studies the effect of competition on ethnic discrimination by carrying out a field experiment in the context of the rice market in Bangladesh. We recruit professional rice buyers (middlemen) to act as judges in a rice competition by providing a quality rating and a price quote for rice samples that we randomly associate with farmers bearing ethnic majority or minority names. First, we find that there is no ethnic difference in buyers' evaluation of rice quality. Second, we find that local buyers, who have local monopsony power, discriminate against ethnic minority farmers by quoting a lower price for their rice relative to that of ethnic majority farmers. Third, we find that wholesale buyers, who face fierce competition in the marketplace, do not price discriminate against ethnic minority farmers. A second lab-in-the-field experiment and survey information indicate that local and wholesale buyers do not have different tastes for discrimination. This suggests that market competition can eliminate the discrimination of wholesale buyers. |
| Keywords: | discrimination, market competition, ethnicity, rice market, Bangladesh, field experiments |
| JEL: | C93 J15 J43 J71 Q13 Z13 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13269&r=all |
| By: | Francesco Fallucchi (Luxembourg Institute of Socio-Economic Research (LISER), Luxembourg); Daniele Nosenzo (Department of Economics and Business Economics, Aarhus University) |
| Abstract: | A popular empirical technique to measure norms uses coordination games to elicit what subjects in an experiment consider appropriate behavior in a given situation (Krupka and Weber, 2013). The Krupka-Weber method works under the assumption that subjects use their normative expectations to solve the coordination game. However, subjects might use alternative focal points to coordinate, in which case the method may deliver distorted measurements of the social norm. We test the vulnerability of the Krupka-Weber method to the presence of alternative salient focal points. We find that the method is robust as long as there are clear normative expectations about what constitutes appropriate behavior. In settings where there is a less clear consensus about the social norm, the method is more vulnerable. |
| Keywords: | Social norms, Krupka-Weber method, Coordination, Focal point, Saliency, Dictator game |
| JEL: | C72 C91 |
| Date: | 2020–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2020-06&r=all |
| By: | J. James Reade (Department of Economics, University of Reading); Dominik Schreyer (Wissenschaftliche Hochschule für Unternehmensführung (WHU)); Carl Singleton (Department of Economics, University of Reading) |
| Abstract: | We use a series of natural experiments in association football (soccer) to test whether the lack of social pressure from spectators affected behaviour and outcomes. We observe that the normal advantage to the home team from playing in their own stadium was on average eroded when they played behind closed doors, with no supporters. Among the various effects from no fans being present, visiting players were cautioned significantly less often by referees. This suggests that closed doors matches are different because referees favour the home team less in their decision making. We discuss these findings in the light of the Covid-19 pandemic that has led to the remainder of the 2019/20 European football season playing out in empty stadiums. |
| Keywords: | Home Advantage, Referee Bias, Social Pressure, Attendance, Natural Experiments, Sports Economics, Coronavirus |
| JEL: | C90 D91 L83 Z20 |
| Date: | 2020–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2020-14&r=all |
| By: | Ahmed, Firoz; Hodler, Roland; Islam, Asadul |
| Abstract: | Many governments in weak democracies countries "manage" the electoral process to make their defeat very unlikely. We aim to understand why citizens decide to vote or abstain in managed elections. We focus on the 2018 general election in Bangladesh and randomize the salience of the citizens' views (i) that election outcomes matter for policy outcomes and (ii) that high voting participation increases the winning party's legitimacy. These treatments increase voting participation in government strongholds and decrease participation in opposition strongholds. The legitimacy treatment has stronger effects. These results have important implications for get-out-the-vote and information campaigns in weak democracies. |
| Keywords: | Bangladesh; Electoral authoritarianism; field experiment; managed/authoritarian elections; voting behavior |
| JEL: | C93 D72 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14608&r=all |
| By: | michel Beine (Department of Economics and Management, Université du Luxembourg); Gary Charness (Department of Economics, University of California, Santa Barbara, USA); Anaud Dupuy (Department of Economics and Management, Université du Luxembourg); Majlinda Joxhe (Department of Economics and Management, Université du 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 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 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:20-09&r=all |
| By: | Telle, Ingrid Ovidia (University of Bergen); Tjøtta, Sigve (University of Bergen, Department of Economics) |
| Abstract: | Spectators act as a third party, and their decisions affect the payoff for other subjects but not for themselves; there is no trade-off between “one’s own” and “others’” payoff. This feature has caused spectator design to emerge as tool to measure spectators’ inequality preferences as redistribution among “others.” Here, we conducted a spectator experiment in which we fixed the redistribution choice set and varied the salience of the “no distribution” choice. We found a strong effect from this; in the more salience treatment, the inequality that the spectators implemented increased from medium, at 0.34, to very high, at 0.62. After the spectators made their redistribution choice, we asked them what motivated their choice. Analyzing the answers gave support that non-distributive norms matters in the spectator situations. |
| Keywords: | Spectator game; measurement of inequality; salience; exit option |
| JEL: | D63 D90 |
| Date: | 2020–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2020_003&r=all |
| By: | Eliot Abrams; Jonathan Libgober; John A. List |
| Abstract: | The past few decades have ushered in an experimental revolution in economics whereby scholars are now much more likely to generate their own data. While there are virtues associated with this movement, there are concomitant difficulties. Several scientific disciplines, including economics, have launched research registries in an effort to attenuate key inferential issues. This study assesses registries both empirically and theoretically, with a special focus on the AEA registry. We find that over 90% of randomized control trials (RCTs) in economics do not register, only 50% of the RCTs that register do so before the intervention begins, and the majority of these preregistrations are not detailed enough to significantly aid inference. Our empirical analysis further shows that using other scientific registries as aspirational examples is misguided, as their perceived success in tackling the main issues is largely a myth. In light of these facts, we advance a simple economic model to explore potential improvements. A key insight from the model is that removal of the (current) option to register completed RCTs could increase the fraction of trials that register. We also argue that linking IRB applications to registrations could further increase registry effectiveness. |
| JEL: | B41 C9 C91 C92 C93 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27250&r=all |
| By: | Heath,Rachel; Mansuri,Ghazala; Rijkers,Bob; Seitz,William Hutchins; Sharma,Dhiraj |
| Abstract: | Using a randomized survey experiment in urban Ghana, this paper demonstrates that the length of the reference period and the interview modality (in person or over the phone) affect how people respond in labor surveys, with impacts varying markedly by job type. Survey participants report significantly more self-employment spells when the reference period is shorter than the traditional one week, with the impacts concentrated among those in home-based and mobile self-employment. In contrast, there is no impact of the reference period on the incidence of wage employment. The wage employed report working fewer days and hours when confronted with a shorter reference period. Finally, interviews conducted on the phone yield lower estimates of employment, hours worked, and days worked among the self-employed who are working from home or a mobile location as compared with in-person interviews. |
| Keywords: | Rural Labor Markets,Employment and Unemployment,Labor Markets |
| Date: | 2020–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9263&r=all |
| By: | Jordi Galí; Giovanni Giusti |
| Abstract: | Advocates of a Leaning-Against-the-Wind monetary policy have claimed that such a policy can moderate asset price bubbles. On the other hand, there are compelling theoretical arguments that the policy would have the opposite effect. We study the effect of monetary policy on asset prices in a laboratory experiment with an overlapping generations structure. Participants in the role of the young generation allocate their endowment between two investments: a risky asset and a one-period riskless bond. The risky asset pays no dividend and thus capital gains are its only source of value. Consequently, its price is a pure bubble. We study how variations in the interest rate affect the evolution of the bubble in an experiment with three treatments. One treatment has a fixed low interest rate, another a fixed high interest rate, and the third has a Leaning-Againstthe-Wind interest rate policy in effect. We observe that the bubble increases (decreases) when interest rates are lower (higher) in the period of a policy change. However, the opposite effect is observed in the following period, when higher (lower) interest rates are associated with greater (smaller) bubble growth. Direct measurement of expectations reveals a Trend-Following component. |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1184&r=all |
| By: | Jordi Galí; Giovanni Giusti; Charles N. Noussair |
| Abstract: | Advocates of a Leaning-Against-the-Wind monetary policy have claimed that such a policy can moderate asset price bubbles. On the other hand, there are compelling theoretical arguments that the policy would have the opposite effect. We study the effect of monetary policy on asset prices in a laboratory experiment with an overlapping generations structure. Participants in the role of the young generation allocate their endowment between two investments: a risky asset and a one-period riskless bond. The risky asset pays no dividend and thus capital gains are its only source of value. Consequently, its price is a pure bubble. We study how variations in the interest rate affect the evolution of the bubble in an experiment with three treatments. One treatment has a fixed low interest rate, another a fixed high interest rate, and the third has a Leaning-Againstthe-Wind interest rate policy in effect. We observe that the bubble increases (decreases) when interest rates are lower (higher) in the period of a policy change. However, the opposite effect is observed in the following period, when higher (lower) interest rates are associated with greater (smaller) bubble growth. Direct measurement of expectations reveals a Trend-Following component. |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1726&r=all |
| By: | Berger, Eva M. (University of Mainz); Fehr, Ernst (University of Zurich); Hermes, Henning (NHH Bergen,Norway); Schunk, Daniel (University of Mainz); Winkel, Kirsten (University of Mainz) |
| Abstract: | Working memory capacity is thought to play an important role for a wide range of cognitive and noncognitive skills such as fluid intelligence, math, reading, the inhibition of pre-potent impulses or more general self-regulation abilities. Because these abilities substantially affect individuals' life trajectories in terms of health, education, and earnings, the question of whether working memory (WM) training can improve them is of considerable importance. However, whether WM training leads to improvements in these far-transfer skills is contested. Here, we examine the causal impact of WM training embedded in regular school teaching by a randomized educational intervention involving a sample of 6–7 years old first graders. We find substantial immediate and lasting gains in working memory capacity. In addition, we document relatively large positive effects on geometry skills, reading skills, Raven's fluid IQ measure, the ability to inhibit pre-potent impulses and self-regulation abilities. Moreover, these far-transfer effects emerge over time and only become fully visible after 12-13 months. Finally, we document that 3–4 years after the intervention, the children who received training have a roughly 16 percentage points higher probability of entering the academic track in secondary school. |
| Keywords: | field experiment, academic outcomes, noncognitive skills, cognitive skills, working memory, education |
| JEL: | J24 I2 C93 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13338&r=all |
| By: | Barron, Kai (Wissenschaftszentrum Berlin); Harmgart, Heike (European Bank for Reconstruction and Development); Huck, Steffen (University College London); Schneider, Sebastian (Max Planck Institute for Research on Collective Goods); Sutter, Matthias (Max Planck Institute for Research on Collective Goods) |
| Abstract: | We measure the prevalence of discrimination between Jordanian host and Syrian refugee children attending school in Jordan. Using a simple sharing experiment, we find only little discrimination. Among the Jordanian children, however, we see that those who descended from Palestinian refugees do not discriminate at all, suggesting that a family history of refugee status can generate solidarity with new refugees. We also find that parents' narratives about the refugee crisis are correlated with the degree of discrimination, suggesting that discriminatory preferences are being transmitted through parental attitudes. |
| Keywords: | discrimination, refugees, children, experiment, integration |
| JEL: | C91 D90 J15 C93 J13 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13337&r=all |
| By: | Sophie Clot (UOR - University of Reading); Gilles Grolleau (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Lisette Ibanez (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | The projection bias corresponds to the human tendency to project current preferences into the future as if present tastes remained unchanged. We apply the projection bias to the environmental domain and design a survey experiment to investigate its relevance on two environmentally friendly initiatives, namely solar panels and eco-friendly transport. We found that some attitudes and behavioral intentions are subject to positive change when individuals are solicited a day when the weather is congruent with the proposed changes. We draw several policy and managerial implications for ecological issues. |
| Keywords: | environment,experimental survey,projection bias,solar panels,transport. |
| Date: | 2020–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-02874044&r=all |
| By: | Heckman, James J. (University of Chicago); Liu, Bei (China Development Research Foundation); Lu, Mai (China Development Research Foundation); Zhou, Jin (University of Chicago) |
| Abstract: | This paper evaluates the causal impacts of an early childhood home visiting program for which treatment is randomly assigned. We estimate multivariate latent skill profiles for individual children and compare treatments and controls. We identify average treatment effects of skills on performance in a variety of tasks. The program substantially improves child language and cognitive, fine motor, and social-emotional skills development. Impacts are especially strong in the most disadvantaged communities. We go beyond reporting treatment effects as unweighted sums of item scores. Instead, we examine how the program affects the latent skills generating item scores and how the program affects the mapping between skills and item scores. We find that enhancements in latent skills explain at least 90% of conventional unweighted treatment effects on language and cognitive tasks. The program enhances some components of the function mapping latent skills into item scores. This can be interpreted as a measure of enhanced productivity in using given bundles of skills to perform tasks. This source explains at most 10% of the average estimated treatment effects. |
| Keywords: | experiment, scaling, mechanisms, home visiting programs, measurement |
| JEL: | J13 Z18 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13346&r=all |
| By: | Anders Bredahl Kock; David Preinerstorfer; Bezirgen Veliyev |
| Abstract: | We study the problem of a decision maker who must provide the best possible treatment recommendation based on an experiment. The desirability of the outcome distribution resulting from the policy recommendation is measured through a functional capturing the distributional characteristic that the decision maker is interested in optimizing. This could be its inherent inequality, welfare, level of poverty or its distance to a desired outcome distribution. If the functional of interest is not quasi-convex or if there are constraints, the policy maker must also consider mixtures of the available treatments. This vastly expands the set of recommendations that must be considered compared to the classic treatment problem in which one targets the mean. We characterize the difficulty of the problem by obtaining maximal expected regret lower bounds. Furthermore, we propose two regret-optimal policies. The first policy is static and thus applicable irrespectively of the the subjects arriving sequentially or not in the course of the experimental phase. The second policy can utilize that subjects arrive sequentially by successively eliminating inferior treatments and thus spends the sampling effort where it is most needed. |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2005.09717&r=all |
| By: | David Danz; Lise Vesterlund; Alistair J. Wilson |
| Abstract: | Belief elicitation is central to inference on economic decision making. The recently introduced Binarized Scoring Rule (BSR) is heralded for its robustness to individuals holding risk averse preferences and for its superior performance when eliciting beliefs. Consequently, the BSR has become the state-of-the-art mechanism. We study truth telling under the BSR and examine whether information on the offered incentives improves reports about a known objective prior. We find that transparent information on incentives gives rise to error rates in excess of 40 percent, and that only 15 percent of participants consistently report the truth. False reports are conservative and appear to result from a biased perception of the BSR incentives. While attempts to debias are somewhat successful, the highest degree of truth telling occurs when information on quantitative incentives is withheld. Consistent with incentives driving false reports, we find that slow release of information decreases truth telling. Perversely, our results suggest that information on the BSR incentives substantially distorts reported beliefs. |
| JEL: | C91 D82 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27327&r=all |
| By: | Rau, Holger A. |
| Abstract: | This paper analyzes in a within-subjects experiment time preferences when peopledecide for themselves and on behalf of others. The data show that subjects becomemore impatient when making decisions, which affect the payoff of others. Thechange can be explained by altruistic subjects who increase their focus on earlyconsumption when responsible for others' payoffs |
| Keywords: | Decisions fo rOthers,Experiment,Time Preferences |
| JEL: | C91 D14 D81 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:395&r=all |
| By: | Jesper Akesson; Sam Ashworth-Hayes; Robert Hahn; Robert D. Metcalfe; Itzhak Rasooly |
| Abstract: | Little is known about individual beliefs concerning the Coronavirus Disease 2019 (COVID-19). Still less is known about how these beliefs influence the spread of the virus by determining social distancing behaviors. To shed light on these questions, we conduct an online experiment (n = 3,610) with participants in the US and UK. Participants are randomly allocated to a control group, or one of two treatment groups. The treatment groups are shown upper- or lower-bound expert estimates of the infectiousness of the virus. We present three main empirical findings. First, individuals dramatically overestimate the infectiousness of COVID-19 relative to expert opinion. Second, providing people with expert information partially corrects their beliefs about the virus. Third, the more infectious people believe that COVID-19 is, the less willing they are to take social distancing measures, a finding we dub the “fatalism effect”. We estimate that small changes in people's beliefs can generate billions of dollars in mortality benefits. Finally, we develop a theoretical model that can explain the fatalism effect. |
| JEL: | I0 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27245&r=all |
| By: | Iossa, Elisabetta; Loertscher, Simon; Marx, Leslie; Rey, Patrick |
| Abstract: | Collusive schemes by suppliers often take the form of allocating customers or markets among cartel members. We analyze incentives for suppliers to initiate and sustain such a collusive schemes in a repeated procurement setting. We show that, contrary to some prevailing beliefs, staggered (versus synchronized) purchasing does not make collusion more difficult to sustain or initiate. Buyer defensive measures include synchronized rather than staggered purchasing, first-price rather than second-price auctions, more aggressive or secrete reserve prices, longer contract lengths, withholding information, and avoiding observable registration procedures. Inefficiency induced by defensive measures is an often unrecognized social cost of collusive conduct. |
| Keywords: | Coordinated effects; sustainability and initiation of collusion; synchronized vs staggered purchasing |
| JEL: | D44 D82 L41 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14563&r=all |
| By: | Trevor L. Davis; Mark C. Thurber; Frank A. Wolak |
| Abstract: | We report on an economic experiment that compares outcomes in electricity mar- kets subject to carbon-tax and cap-and-trade policies. Under conditions of uncertainty, price-based and quantity-based policy instruments cannot be truly equivalent, so we compared three matched carbon-tax/cap-and-trade pairs with equivalent emissions tar- gets, mean emissions, and mean carbon prices, respectively. Across these matched pairs, the cap-and-trade mechanism produced much higher wholesale electricity prices (38.5% to 52.6% higher) and lower total electricity production (2.5% to 4.0% lower) than the “equivalent” carbon tax, without any lower carbon emissions. Market participants who forecast a lower price of carbon in the cap-and-trade games ran their units more than those who forecast a higher price of carbon, which caused emissions from the dirtiest generating units (Coal and Gas Peakers) to be significantly higher (15.2% to 33.0%) than in the carbon tax games. These merit order “mistakes” in the cap-and-trade games suggest an important advantage of the carbon tax as policy: namely, that the cost of carbon can treated by firms as a known input to production. |
| JEL: | Q4 Q52 Q54 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27260&r=all |
| By: | Charles F. Manski; Aleksey Tetenov |
| Abstract: | As the COVID-19 pandemic progresses, researchers are reporting findings of randomized trials comparing standard care with care augmented by experimental drugs. The trials have small sample sizes, so estimates of treatment effects are imprecise. Seeing imprecision, clinicians reading research articles may find it difficult to decide when to treat patients with experimental drugs. Whatever decision criterion one uses, there is always some probability that random variation in trial outcomes will lead to prescribing sub-optimal treatments. A conventional practice when comparing standard care and an innovation is to choose the innovation only if the estimated treatment effect is positive and statistically significant. This practice defers to standard care as the status quo. To evaluate decision criteria, we use the concept of near optimality, which jointly considers the probability and magnitude of decision errors. An appealing decision criterion from this perspective is the empirical success rule, which chooses the treatment with the highest observed average patient outcome in the trial. Considering the design of recent and ongoing COVID-19 trials, we show that the empirical success rule yields treatment results that are much closer to optimal than those generated by prevailing decision criteria based on hypothesis tests. |
| JEL: | C44 I10 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27293&r=all |
| By: | Goette, L.; Han, H. J.; Leung, B. T. K. |
| Abstract: | We show that information overload contributes to confirmation bias. In an experiment, we vary the difficulty of information processing as subjects receive a sequence of signals of an unknown state. In the treatment condition, the preceding signal disappears as the next signal appears. In the control condition, the preceding signal remains visible. We find stronger confirmation bias among subjects in the treatment condition. Our results provide empirical support for models that emphasize the role of limited information processing in confirmation bias (Wilson (2014), Leung (2018), Jehiel and Steiner (2018)). |
| Keywords: | information overload, belief formation, confirmation bias |
| JEL: | D83 D91 |
| Date: | 2020–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2019&r=all |
| By: | Peter Bergman; Eric W. Chan; Adam Kapor |
| Abstract: | We randomized school quality information onto the listings of a nationwide housing website for low-income families. We use this variation and data on families' search and location choices to estimate a model of housing search and neighborhood choice that incorporates imperfect information and potentially biased beliefs. We find that imperfect information and biased beliefs cause families to live in neighborhoods with lower-performing, more segregated schools. Families underestimate school quality conditional on neighborhood characteristics. If we had ignored this information problem, we would have estimated that families value school quality relative to their commute downtown by half that of the truth. |
| JEL: | I0 I21 I24 I3 R0 R21 R31 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27209&r=all |
| By: | Géraldine Bocqueho (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UL - Université de Lorraine - UNISTRA - Université de Strasbourg); Marc Deschamps (UBFC - Université Bourgogne Franche-Comté [COMUE]); Jenny Helstroffer (UL - Université de Lorraine); Julien Jacob (UL - Université de Lorraine); Majlinda Joxhe (Uni.lu - Université du Luxembourg) |
| Abstract: | This paper uses the experimental setup of Tanaka et al. (2010) to measure refugees' risk preferences. A sample of 206 asylum seekers was interviewed in 2017-18 in Luxembourg. Contrary to studies which focus on risk aversion in gen- eral, we analyze its components using a cumulative prospect theory (CPT) frame- work. We show that refugees exhibit particularly low levels of risk aversion com- pared to other populations and that CPT provides a better fit for modelling risk at- titudes. Moreover, we include randomised temporary treatments provoking emo- tions and find a small significant impact on probability distortion. Robustness of the Tanaka et al. (2010) experimental framework is confirmed by including treat- ments regarding the embedding effect. Finally, we propose a theoretical model of refugee migration that integrates the insights from our experimental outcomes regarding the functional form of refugees' decision under risk and the estimated parameter values. The model is then simulated using the data from our study. |
| Keywords: | refugee migration,risk preferences,cumulative prospect theory,psychological priming,experimental economics |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02788767&r=all |
| By: | Frimpong, Jemima A.; Helleringer, Stephane |
| Abstract: | Contact tracing is a key approach for controlling the COVID–19 pandemic. Traditional tracing methods might however miss a number of contacts between infected and susceptible persons. Digital contact tracing apps have been developed to assist health departments in notifying individuals of recent exposures to SARS-CoV-2. These apps are used in several countries throughout the world, and some US states have either launched or are planning to launch such apps. The potential effects of digital contact tracing apps depend however on their widespread adoption. Most investigations of the determinants of adoption among potential users have focused on issues related to privacy features (e.g., who can access data, whether location is recorded) and the accuracy of the app in notifying users of exposures to SARS-CoV-2 (e.g., false notifications). In this paper, we investigate whether financial incentives might help further accelerate the adoption of digital contact tracing apps. We conducted a discrete choice experiment with an online sample of 394 US residents aged 18–69 years old. We asked participants to make a series of choices between two hypothetical versions of a digital contact tracing app characterized by several randomly selected attributes, including varying levels of financial cost or incentives to download. In this experiment, financial incentives were more than twice as important in the decision-making process about DCT app downloads than privacy and accuracy. In order to accelerate adoption, US States planning to launch digital contact tracing apps should consider offering financial incentives for download to potential users. |
| Date: | 2020–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:9vp7x&r=all |
| By: | Cahuc, Pierre; Hervelin, Jérémy |
| Abstract: | In France, two years after school completion and getting the same diploma, the employment rate of apprentices is about 15 percentage points higher than that of vocational students. Despite this difference, this paper shows that there is almost no difference between the probability of getting a callback from employers for unemployed youth formerly either apprentices or vocational students. This result indicates that the higher employment rate of apprentices does not rely, in the French context, on better job access of those who do not remain in their training firms. The estimation of a job search and matching model shows that the expansion of apprenticeship has very limited effects on youth unemployment if this is not accompanied by an increase in the retention of apprentices in their training firm. |
| Keywords: | Apprenticeship; field experiment; School-to-work transitions |
| JEL: | J24 M51 M53 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14621&r=all |
| By: | Levent Neyse; Magnus Johannesson; Anna Dreber |
| Abstract: | The digit ratio (2D:4D) is considered a proxy for testosterone exposure in utero, and there has been a recent surge of studies testing whether 2D:4D is associated with economic preferences. Although the results are not conclusive, previous studies have reported statistically significant correlations between 2D:4D and risk taking, altruism, positive reciprocity, negative reciprocity and trust. Many “researcher degrees of freedom” and small sample sizes are important limitations of previous studies. We present results from a pre-registered large sample study testing if 2D:4D is associated with economic preferences. Data were collected in a representative sample of adults in the German Socioeconomic Panel-Innovation Sample (SOEP-IS), in a sample of about 3,450 respondents (about 5 times larger than the previously largest study in this field). We find no statistically significant association between 2D:4D and economic preferences in the largest study to this date on the topic. |
| Keywords: | Economic behavior, prenatal hormones, testosterone, digit ratio |
| JEL: | D03 D87 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1086&r=all |