nep-exp New Economics Papers
on Experimental Economics
Issue of 2020‒07‒27
27 papers chosen by

  1. Learning Management Through Matching: A Field Experiment Using Mechanism Design By Abebe, Girum; Fafchamps, Marcel; Koelle, Michael; Quinn, Simon
  2. Betting on the Lord: Lotteries and Religiosity in Haiti By Auriol, Emmanuelle; Diego, Delissaint; fourati, maleke; Miquel-Florensa, Josepa; Seabright, Paul
  3. Institutions, Opportunism and Prosocial Behavior: Some Experimental Evidence By Antonio Cabrales; Irma Clots-Figueras; Roberto Hernán-González; Praveen Kujal
  4. How Research Affects Policy: Experimental Evidence from 2,150 Brazilian Municipalities By Hjort, Jonas; Moreira, Diana; Rao, Gautam; Santini, Juan Francisco
  5. Randomized Double Auctions: Gains from Trade, Trader Roles, and Price Discovery By Katerina Sherstyuk; Krit Phankitnirundorn; Michael J. Roberts
  6. Intelligence, Errors and Strategic Choices in the Repeated Prisoners' Dilemma By Proto, Eugenio; Rustichini, Aldo; Sofianos, Andis
  7. Forecasting Skills in Experimental Markets: Illusion or Reality? By Brice Corgnet; Cary Deck; Mark DeSantis; David Porter
  8. Cognitive load in economic decisions By Anja Achtziger; Carlos Alós-Ferrer; Alexander Ritschel
  9. The Simulated Group Response Paradigm: A new approach to the study of opinion change in Delphi and other structured-group techniques By Bolger, Fergus; Rowe, Gene; Belton, Ian; Crawford, Megan M; Hamlin, Iain; Sissons, Aileen; Taylor Browne Lūka, Courtney; Vasilichi, Alexandrina; Wright, George
  10. Physician performance pay: Experimental evidence By Brosig-Koch, Jeannette; Hennig-Schmidt, Heike; Kairies-Schwarz, Nadja; Kokot, Johanna; Wiesen, Daniel
  11. Reservation Wages and Labor Supply By Iris Kesternich; Heiner Schumacher; Bettina Siflinger; Franziska Valder
  12. The Use of Experimental Methods by IS Scholars: An Illustrated Typology By Marta Ballatore; Lise Arena; Agnès Festré
  13. Do Negative Economic Shocks Affect Cognitive Function, Adherence to Social Norms and Loss Aversion? By Bogliacino, Francesco; Montealegre, Felipe
  14. Discriminatory Lending: Evidence from Bankers in the Lab By Brock, Michelle; de Haas, Ralph
  15. Economic preferences across generations and family clusters: A large-scale experiment By Chowdhury, Shyamal; Sutter, Matthias; Zimmermann, Klaus F.
  16. Workplace Knowledge Flows By Sandvik, Jason; Saouma, Richard; Seegert, Nathan; Stanton, Christopher
  17. CSI in the tropics Experimental evidence of improved public service delivery through coordination By Daniela Collazos; Leopoldo Fergusson; Miguel La Rota; Daniel Mejía; Daniel Ortega
  18. Competition and Gender in the Lab vs Field: Experiments from off-grid Renewable Energy Entrepreneurs in Rural Rwanda By Rebecca A. Klege; Martine Visser
  19. CSI in the tropics: Experimental evidence of improved public service delivery through coordination By Daniela Collazos; Leopoldo Fergusson; Miguel La Rota; Daniel Mejía; Daniel Ortega
  20. Treatment Effects and the Measurement of Skills in a Prototypical Home Visiting Program By James J. Heckman; Bei Liu; LU Mai; Jin Zhou
  21. How does Information about Inequality Shape Voting Intentions and Preferences for Redistribution? Evidence from a Randomized Survey Experiment in Indonesia By Christopher Hoy; Russell Toth; Nurina Merdikawati
  22. Flexible Microcredit: Effects on Loan Repayment and Social Pressure By Kristina Czura; Anett John; Lisa Spantig
  23. Double overreaction in beauty contests with information acquisition: theory and experiment By Romain Baeriswyl; Kene Boun My; Camille Cornand
  24. Building Resilient Health Systems: Experimental Evidence from Sierra Leone and the 2014 Ebola Outbreak By Darin Christensen; Oeindrila Dube; Johannes Haushofer; Bilal Siddiqi; Maarten J. Voors
  25. Legitimizing Policy By Chen, Daniel L.; Michaeli, Moti; Spiro, Daniel
  26. Sorting and wage premiums in immoral work By Florian H. Schneider; Fanny Brun; Roberto A. Weber
  27. Algorithm for Computing Approximate Nash equilibrium in Continuous Games with Application to Continuous Blotto By Sam Ganzfried

  1. By: Abebe, Girum; Fafchamps, Marcel; Koelle, Michael; Quinn, Simon
    Abstract: We place young professionals into established firms to shadow middle managers. Using random assignment into program participation, we find positive average effects on wage employment, but no average effect on the likelihood of self-employment. We match individuals to firms using a deferred-acceptance algorithm, and show how this allows us to identify heterogeneous treatment effects by firm and intern characteristics. We find striking heterogeneity in self-employment effects, and show that some assignment mechanisms can substantially outperform random matching in generating employment and income effects. These results demonstrate the potential for matching algorithms to improve the design of field experiments.
    Keywords: causal inference; field experiments; Management Practices; Propensity score; Self-employment
    Date: 2020–01
  2. By: Auriol, Emmanuelle; Diego, Delissaint; fourati, maleke; Miquel-Florensa, Josepa; Seabright, Paul
    Abstract: We conducted an experimental study in Haiti testing for the relationship between religious belief and individual risk taking behavior. 774 subjects played lotteries in a standard neutral protocol and subsequently with reduced endowments but in the presence of religious images of Catholic, Protestant and Voodoo tradition. Subjects chose between paying to play a lottery with an image of their choice, and saving their money to play with no image. Those who chose the former are defined as image buyers and those who chose the latter as non-buyers. Image buyers, who tend to be less educated, more rural, and to exhibit greater religiosity, bet more than non-buyers in all games. In addition, in the presence of religious images all participants took more risk, and buyers took more risk when playing in the presence of their chosen images than when playing with other images. We develop a theoretical model calibrated with our experimental data to explore the channels through which religious images might affect risk-taking. Our results suggest that the presence of images tends to increase individuals' subjective probability of winning the lottery, and that subjects therefore believe in a god who intervenes actively in the world in response to their requests.
    Keywords: field experiment; religion; risk preferences
    JEL: C93 D81 Z12
    Date: 2019–12
  3. By: Antonio Cabrales; Irma Clots-Figueras; Roberto Hernán-González; Praveen Kujal
    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
  4. By: Hjort, Jonas; Moreira, Diana; Rao, Gautam; Santini, Juan Francisco
    Abstract: This paper investigates if research findings change political leaders' beliefs and cause policy change. Collaborating with the National Confederation of Municipalities in Brazil, we work with 2,150 municipalities and the mayors who control their policies. We use experiments to measure mayors' demand for research information and their response to learning research findings. In one experiment, we find that mayors and other municipal officials are willing to pay to learn the results of impact evaluations, and update their beliefs when informed of the findings. They value larger-sample studies more, while not distinguishing on average between studies conducted in rich and poor countries. In a second experiment, we find that informing mayors about research on a simple and effective policy (reminder letters for taxpayers) increases the probability that their municipality implements the policy by 10 percentage points. In sum, we provide direct evidence that providing research information to political leaders can lead to policy change. Information frictions may thus help explain failures to adopt effective policies.
    Date: 2020–01
  5. By: Katerina Sherstyuk (University of Hawaii at Manoa, Department of Economics); Krit Phankitnirundorn (University of Hawaii at Manoa, Department of Economics); Michael J. Roberts (University of Hawaii at Manoa, Department of Economics)
    Abstract: Experimental double-auction commodity markets are known to exhibit robust convergence to competitive equilibria under stable or cyclical supply and demand conditions, but little is known about their performance in truly random environments. We provide a comprehensive study of double auctions in a stochastic setting where the equilibrium prices, trading volumes and gains from trade are highly variable across periods, and with commodity traders who may buy or sell their goods depending on market conditions and their individual outcomes. We find that performance in this stochastic environment is sensitive to underlying market conditions. Efficiency is higher and convergence to the competitive equilibrium stronger when the potential gains from trade are high and when the equilibrium spans a wide range of quantities, implying a large number of marginal trades. Speculative re-trading is prevalent, especially for individual traders who have little to gain under equilibrium pricing, leading to some redistribution of gains from high to low expected earners. Those with the largest expected gains typically earn far less than predicted, while those with little or no predicted earnings gain modestly from speculation. Excessive trading volumes are associated with negative efficiencies in markets with low gains from trade, but not in the high-gains markets, where zero-sum trading and re-trading appear not to obstruct and possibly enforce efficiency and near-equilibrium pricing. Buyers earn more relative to their competitive equilibrium benchmark than sellers do. Introducing trader specialization leads to fewer trading errors and higher market efficiency, but it does not eliminate zero-sum trading and re trading.
    Keywords: economic experiments; double auction markets; gains from trade; speculation
    JEL: C92 D02 D41
    Date: 2020–07
  6. By: Proto, Eugenio; Rustichini, Aldo; Sofianos, Andis
    Abstract: A large literature in behavioral economics has emphasized in the last decades the role of individual differences in social preferences (such as trust and altruism) and in influencing behavior in strategic environments. Here we emphasize the role of attention and working memory, and show that social interactions among heterogeneous groups are likely to be mediated by differences in cognitive skills. Our design uses a Repeated Prisoner's Dilemma, and we compare rates of cooperation in groups of subjects grouped according to their IQ, with those in combined groups. While in combined groups we observe higher cooperation rates and profits than in separated groups (with consistent gains among lower IQ subjects and relatively smaller losses for higher IQ subjects), higher IQ subjects become less lenient when they are matched with lower IQ subjects than when they play separately. We argue that this is an instance of a general phenomenon, which we demonstrate in an evolutionary game theory model, where higher IQ among subjects determines -- through better working memory -- a lower frequency of errors in strategy implementation. In our data, we show that players indeed choose less lenient strategies in environments where subjects have higher error rates. The estimations of errors and strategies from the experimental data are consistent with the hypothesis and the predictions of the model.
    Keywords: Cooperation; Error in Transition; Intelligence; IQ; Repeated Prisoner's Dilemma; Strategy
    Date: 2020–01
  7. By: Brice Corgnet (Univ Lyon, emlyon business school, GATE UMR 5824, F-69130 Ecully, France); Cary Deck (University of Alabama); Mark DeSantis (Chapman University); David Porter (Chapman University)
    Abstract: Using experimental asset markets, we study the situation of a financial analyst who is trying to infer the fundamental value of an asset by observing the market’s history. We find that such capacity requires both standard cognitive skills (IQ) as well as social and emotional skills. However, forecasters with high emotional skills tend to perform worse when market mispricing is high as they tend to give too much emphasis to the noisy signals from market data. By contrast, forecasters with high social skills perform especially well in markets with high levels of mispricing in which their skills could help them detect possible manipulation attempts. Finally, males outperform females in the forecasting task after controlling for a large number of relevant individual characteristics such as risk attitudes, cognitive skills, emotional intelligence, and personality traits.
    Keywords: Forecasting, experimental asset markets, theory of mind, personality traits, cognitive skills
    JEL: C92 G17 D91
    Date: 2020
  8. By: Anja Achtziger; Carlos Alós-Ferrer; Alexander Ritschel
    Abstract: Intuitive decision making has a large and often negative impact in economic decisions, but its measurement and quantification remains challenging. Following research from psychology, behavioral economists have often attempted to causally manipulate the balance of intuition and deliberation by relying on experimental manipulations as cognitive load. However, these attempts have resulted in mixed success, with many null results and no clear general pattern. We explain the possible reasons behind these developments and offer avenues for improvement. First, we show that a very simple formal model of decision processes offers a straightforward test to determine whether cognitive load has been successfully induced, hence disentangling failed inductions and true null results. Specifically, cognitive load in economically-relevant tasks must result in shorter response times. Second, we show that the intuitive arguments on the behavioral implications of cognitive load do not hold on closer, formal examination, unless strong assumptions are made that may or may not hold in typical economic experiments. We then report on seven economic experiments (joint N = 628) using different cognitive load manipulations and confirm the implications of the model. While the effect on response times is strong and pervasive, behavioral effects are weak and elusive. Our research serves as a warning on the differences between economic tasks and psychological experiments and the difficulties associated with importing methods uncritically.
    Keywords: Cognitive load, intuition, response times, economics and psychology
    JEL: C90 D03 D87
    Date: 2020–07
  9. By: Bolger, Fergus; Rowe, Gene; Belton, Ian; Crawford, Megan M (University of Strathclyde); Hamlin, Iain; Sissons, Aileen; Taylor Browne Lūka, Courtney; Vasilichi, Alexandrina; Wright, George
    Abstract: Groups provide several benefits over individuals for judgment and decision making, but they suffer from problems too. Structured-group techniques, like Delphi, use strictly controlled information exchange between individuals to retain positive aspects of group interaction, while ameliorating negative. These methods regularly use ‘nominal’ groups that interact in a remote, distributed, and often anonymous manner, thus lending themselves to internet applications, with a consequent recent increase in popularity. However, evidence for the utility of the techniques is scant, major reasons for which being difficulties maintaining experimental control and logistical problems in recruiting sufficient empirical ‘groups’ to produce statistically meaningful results. As a solution, we present the Simulated Group Response Paradigm, where individual responses are first elicited in a pre-study – or created by the experimenter – then subsequently fed back to highly-controlled simulated groups. This paradigm facilitates investigation of factors leading to virtuous opinion change in groups, and subsequent development of structured-group techniques.
    Date: 2020–06–27
  10. By: Brosig-Koch, Jeannette (University of Duisburg-Essen and Health Economics Research Center); Hennig-Schmidt, Heike (University of Bonn, Department of Economics); Kairies-Schwarz, Nadja (University of Duisburg-Essen and CINCH Essen); Kokot, Johanna (University of Hamburg and Hamburg Center for Health Economics); Wiesen, Daniel (University of Cologne, Department of Health Care Management)
    Abstract: We analyze the causal effect of performance pay on physicians’ medical service provision and the quality of care. To address this effect, which is difficult to study in the field we conducted an online experiment with primary care physicians randomly drawn from a representative resident physician sample in Germany. Linking individual physicians’ behavioral data with administrative data enables us to identify how practice charac teristics account for the heterogeneity in individual physicians’ responses to performance incentives, which field data do not allow in general. We find that performance pay reduces underprovision of medical care compared to lump-sum capitation. The effect increases with patients’ severities of ill ness. Already small incentives are effective in enhancing the quality of care. Our results further indicate that physicians in high-profit practices and practicing in cities are most responsive to incentives.
    Keywords: pay for performance; behavioral experiment; practice charac teristics
    JEL: C93 I11
    Date: 2020–07–09
  11. By: Iris Kesternich; Heiner Schumacher; Bettina Siflinger; Franziska Valder
    Abstract: Survey measures of the reservation wage reflect both the consumption-leisure trade-off and job search concerns (the arrival rate of job offers and the wage distribution). We examine what a survey measure of the reservation wage reveals about labor supply when search concerns are absent. To this end, we combine the reservation wage measure from a large labor market survey with the reservation wage for a one-hour job that we elicit in an online experiment. The two measures show a strong positive association. For unemployed individuals, the experimental reservation wage increases on average by around one Euro for every Euro increase in the survey measure. For employed individuals, the association between the two measures is weaker, but still positive and statistically significant. We show that these results are robust to selection into the experiment, and that demographic variables have a similar influence on both reservation wage measures.
    Keywords: reservation wage, labor supply, search, validation of survey measures
    JEL: C83 C91 J22
    Date: 2020
  12. By: Marta Ballatore (GREDEG CNRS; Université Côte d'Azur, France); Lise Arena (GREDEG CNRS; Université Côte d'Azur, France); Agnès Festré (GREDEG CNRS; Université Côte d'Azur, France)
    Abstract: This article aims at making an updated typology of recent experimental studies in the IS literature on the period 1999-2019. Based on a full-text search within the Association for Information Systems (AIS) “basket” of eight top IS journals (EJIS, ISR, JAIS, ISJ, JIT, JMIS, JSIS and MISQ), this research gathered 392 articles and highlights the use of 5 different types of experiments in IS, mainly: artificial simulations, laboratory experiments, field experiments, online experiments (scenario simulation game-based; brainstorming-based. . . ) and natural experiments. Each category is discussed through the perspective of its degree of control, and technological realism. Results show the significant predominance of laboratory experiments over field and natural experiments on the period. This, in turn, stresses the preferred tendency followed by IS scholars to perceive experimental methods as a way to control the source of variations of variables under study. In addition, this paper provides a better understanding of the context of use of a specific experimental method. Overall, it is shown that laboratory experiments (including scenario-based lab experiments) are mainly used, in a deterministic manner, to assess or test the impact of an IS on human decision-making or behaviour. By contrast, artificial simulations experiments are more appropriate to study emergent phenomena and to make predictions, often providing key insights about quality and effectiveness of IS.
    Keywords: Methodology, IS, Meta-research, Experimental method, Behavioural Science, Experimental Economics
    Date: 2020–06
  13. By: Bogliacino, Francesco (Universidad Nacional de Colombia); Montealegre, Felipe (Universidad Nacional de Colombia)
    Abstract: Households are frequently subject to income and asset shocks. We performed a lab experiment, inducing losses on a real effort task, after which we measured cognitive performance, loss aversion and cheating behavior. We found that asset losses, but not income losses, act as a cognitive load, by decreasing accuracy and increasing response times. We did not detect any change in dishonesty or loss aversion.
    Date: 2020–06–30
  14. By: Brock, Michelle; de Haas, Ralph
    Abstract: We implement a lab-in-the-field experiment with 334 Turkish loan officers to test for the presence, and learn about the mechanisms, of gender discrimination in small business lending. Each officer reviews multiple real-life loan applications in which we randomize the applicant's gender. While provisional approval rates are the same for male and female applicants, we detect a more subtle form of discrimination. Loan officers are 30 percent more likely to make approval conditional on the presence of a guarantor when we present an application as coming from a female instead of a male entrepreneur. This discrimination is concentrated among young, inexperienced, and gender-biased loan officers. Discrimination is also most pronounced for loans that performed well in real life, making it costly to the bank.
    Keywords: banks; Gender Discrimination; guarantors; Implicit bias; lab-in-the-field
    JEL: D81 D83 D91 G21
    Date: 2020–01
  15. By: Chowdhury, Shyamal (University of Sydney, IZA Bonn); Sutter, Matthias (Max Planck Institute for Research on Collective Goods Bonn, University of Cologne and University of Innsbruck); Zimmermann, Klaus F. (Maastricht University, UNU-MERIT and GLO)
    Abstract: Economic preferences are important for lifetime outcomes such as educational achievements, health status, or labour market success. We present a holistic view of how economic preferences are related within families. In an experiment with 544 families (and 1,999 individuals) from rural Bangladesh we find a large degree of intergenerational persistence of economic preferences. Both mothers’ and fathers’ risk, time and social preferences are significantly (and largely to the same degree) positively correlated with their children’s economic preferences, even when controlling for personality traits and socio-economic background data. We discuss possible transmission channels for these relationships within families and find indications that there is more than pure genetics at work. Moving beyond an individual level analysis, we are the first to classify a whole family into one of two clusters, with either relatively patient, risk-tolerant and pro-social members or relatively impatient, risk averse and spiteful members. Socio-economic background variables correlate with the cluster to which a family belongs to.
    Keywords: Economic preferences within families, intergenerational transmission of preferences, time preferences, risk preferences, social preferences, family clusters, socio-economic status, Bangladesh, experiment
    JEL: C90 D1 D90 D81 D64 J13 J24 J62
    Date: 2020–07–06
  16. By: Sandvik, Jason; Saouma, Richard; Seegert, Nathan; Stanton, Christopher
    Abstract: What prevents the spread of information among coworkers, and which management practices facilitate workplace knowledge flows? We conducted a field experiment in a sales company, addressing these questions with three active treatments. (1) Encouraging workers to talk about their sales techniques with a randomly chosen partner during short meetings substantially lifted average sales revenue during and after the experiment. The largest gains occurred for those matched with high-performing coworkers. (2) Worker-pairs given incentives to increase joint output increased sales during the experiment but not afterward. (3) Worker-pairs given both treatments had little improvement above the meetings treatment alone. Managerial interventions providing structured opportunities for workers to initiate conversations with peers resulted in knowledge exchange; incentives based on joint output gains were neither necessary nor sufficient for knowledge transmission.
    Date: 2020–01
  17. By: Daniela Collazos; Leopoldo Fergusson; Miguel La Rota; Daniel Mejía; Daniel Ortega
    Abstract: This paper evaluates the impacts of increased coordination, accountability, and leadership among teams of responsible public officials, with evidence from homicide investigations in Colombia. We randomly assigned the investigations of 66% of the 1,683 homicides occurring in Bogotá, Colombia, during 2016 to a new investigation procedure emphasizing these features. We find a statistically signi ficant 30% increase in the conviction rate in the treatment group relative to the control group. Indicators of the quality of the investigative process also improve, as well as the rate at which a formal accusation is presented before a court. Complementary findings suggest that the treatment produces well-coordinated teams that can communicate more uently. Also, a survey of investigative team members reveal that work motivation, the extent to which they receive feedback on their performance, the pertinence and effectiveness of their roles, and the perceived quality and coordination of the team all improve under the new scheme.
    Keywords: Crime, Homicides, Team work, Public sector.
    JEL: C93 D73 J45 K14 K42
    Date: 2020–06–16
  18. By: Rebecca A. Klege; Martine Visser
    Abstract: We fill the gap by examining how gender attitudes and performance under competitive situations in the lab, reflects microenterprise outcomes in the renewable energy sector of Rwanda. — a country with progressive gender policies despite its traditional patriarchal set-up. We use the standard Niederle and Vesterlund (2007) experimental design in addition to a unique dataset from off-grid microenterprises, managed by entrepreneurs who have been working in mixed and single-sex teams since 2016. Our findings show that the gender composition of teams does not affect decisions to compete in the lab. Instead returns to education and risk-taking are more valuable to single-sex teams than for mixed gender teams. We also show that under competitive situations, women perform as well as men. Findings from the field strongly support findings in the lab that female-owned enterprises do not underperform in competitive settings, which corroborates the external validity of our lab results. Given that lab and field findings suggest no significant differentials in terms of competitiveness or performance of females, there exist ample scope to increase women involvement in the renewabe energy sector of Rwanda.
    Keywords: Competition, Gender differences, Entrepreneurs, Performance, renewable energy
    JEL: C91 C92 J16 Q49
    Date: 2020–01
  19. By: Daniela Collazos; Leopoldo Fergusson; Miguel La Rota; Daniel Mejía; Daniel Ortega
    Abstract: This paper evaluates the impacts of increased coordination, accountability, and leadership among teams of responsible public officials, with evidence from homicide investigations in Colombia. We randomly assigned the investigations of 66% of the 1,683 homicides occurring in Bogotá, Colombia, during 2016 to a new investigation procedure emphasizing these features. We find a statistically significant 30% increase in the conviction rate in the treatment group relative to the control group. Indicators of the quality of the investigative process also improve, as well as the rate at which a formal accusation is presented before a court. Complementary findings suggest that the treatment produces well-coordinated teams that can communicate more fluently. Also, a survey of investigative team members reveal that work motivation, the extent to which they receive feedback on their performance, the pertinence and e effectiveness of their roles, and the perceived quality and coordination of the team all improve under the new scheme.
    Keywords: Crime, Homicides, Teamwork, Public sector
    JEL: C93 D73 J45 K14 K42
    Date: 2020–07–02
  20. By: James J. Heckman (The University of Chicago); Bei Liu (China Development Research Foundation); LU Mai (China Development Research Foundation); Jin Zhou (Columbia University)
    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, measurement
    JEL: J13 Z18
    Date: 2020–06
  21. By: Christopher Hoy (AFFILIATION); Russell Toth (The University of Sydney); Nurina Merdikawati (Australian National University)
    Date: 2020–01
  22. By: Kristina Czura; Anett John; Lisa Spantig
    Abstract: Flexible repayment schedules allow borrowers to invest in profitable yet risky projects, but practitioners fear they erode repayment morale. We study repayment choices in rigid and flexible loan contracts that allow discretion in repayment timing. To separate strategic repayment choices from repayment capacity given income shocks, we conduct a lab-in-the-field experiment with microcredit borrowers in the Philippines. Our design allows us to observe social pressure, which is considered both central to group lending, and excessive in practice. In our rigid benchmark contract, repayment is much higher than predicted under simple payoff maximization. Flexibility reduces high social pressure, but comes at the cost of reduced loan repayment. We present theoretical and empirical evidence consistent with a strong social norm for repayment, which is weakened by the introduction of flexibility. Our results imply that cooperative behavior determined by social norms may erode if the applicability of these norms is not straightforward.
    Keywords: peer punishment, social norms, microfinance, flexible repayment
    JEL: O16 D90 G21
    Date: 2020
  23. By: Romain Baeriswyl; Kene Boun My; Camille Cornand
    Abstract: Central banks' disclosures, such as forward guidance, have a weaker effect on the economy in reality than that predicted in theoretical models. The present paper contributes to understanding how people pay attention and react to various sources of information. In a beauty contest with information acquisition, we show that strategic complementarities give rise to a double overreaction to public disclosures by increasing agents equilibrium level of attention, which, in turn, increases the weight assigned to the disclosures in agents' equilibrium action. A laboratory experiment provides evidence that the effect of strategic complementarities on participants' realised level of attention and realised action is qualitatively consistent with the theoretical predictions, although quantitatively weaker. Both the lack of attention to public disclosures and a limited level of reasoning by economic agents account for the weaker realised reaction. This suggests that for a central bank seeking to control the reaction to its public disclosures, it is just as important to influence information acquisition by recipients as it is to shape the information disclosures.
    Keywords: Central bank communication, information acquisition, beauty contest, overreaction
    JEL: D82 E52 D58
    Date: 2020
  24. By: Darin Christensen; Oeindrila Dube; Johannes Haushofer; Bilal Siddiqi; Maarten J. Voors
    Abstract: Underuse of health systems and a lack of confidence in their quality contribute to high rates of mortality in the developing world. How individuals perceive health systems may be especially critical during epidemics, when they choose whether to cooperate with response efforts and frontline health workers. Can improving the perceived quality of healthcare promote community health and ultimately, help to contain epidemics? We leverage a field experiment to answer this question in the context of Sierra Leone and the 2014 West Africa Ebola crisis. Two years before the outbreak, we randomly assigned two accountability interventions to government-run health clinics – one focused on community monitoring and the other conferred non-financial awards to clinic staff. These interventions delivered immediate benefits under "normal" conditions. Even prior to the Ebola crisis, both interventions increased clinic utilization and satisfaction with healthcare, and community monitoring additionally improved child health, leading to 38 percent fewer deaths of children under five. Later, during the crisis, the interventions also increased reporting of Ebola cases by 62 percent, and significantly reduced Ebola-related deaths. Evidence on mechanisms suggests that the interventions improved confidence in the health system, encouraging patients to report Ebola symptoms and receive medical care. These results indicate that promoting accountability not only has the power to improve health systems during normal times, but can also make them more resilient to crises that emerge over the longer run.
    JEL: I18 J33 M52 O15
    Date: 2020–06
  25. By: Chen, Daniel L.; Michaeli, Moti; Spiro, Daniel
    Abstract: In many settings of political bargaining over policy, agents care not only about getting their will but also about having others approve the chosen policy thus giving it more weight. What is the effect on the bargaining outcome when agents care about such legitimacy of the policy? We study this question theoretically and empirically. We show that the median-voter theorem holds in groups that are ideologically very cohesive and in groups with extreme ideological disagreement. However, in groups with intermediate ideological disagreement, the median-voter theorem does not hold. This is since, on the individual level, ideological disagreement with the median has a non-monotonic effect on the policy. We test our model in a natural experimental setting—U.S. appeals courts—where causal identification is based on random assignment of judges into judicial panels, each consisting of three judges who rule on a case. Here judges care about legitimacy of the policy they write because a norm of consensus prevails and because increased legitimacy reduces the likelihood of the judicial case to be heard by the Supreme Court. The predicted pattern of how policies depend on the participants’ ideologies are corroborated by our empirical tests.
    JEL: D7 K0 Z1
    Date: 2020–07
  26. By: Florian H. Schneider; Fanny Brun; Roberto A. Weber
    Abstract: We use surveys, laboratory experiments and administrative labor-market data to study how heterogeneity in the perceived immorality of work and in workers’ aversion to acting immorally interact to impact labor market outcomes. Specifically, we investigate whether those individuals least concerned with acting morally select into jobs generally perceived as immoral and whether the aversion among many individuals to performing such acts contributes to immorality wage premiums, a form of compensating differential. We show that immoral work is associated with higher wages, both using correlational evidence from administrative labor-market data and causal evidence from a laboratory experiment. We also measure individuals’ aversion to performing immoral acts and show that those who find immoral behavior least aversive are more likely to be employed in immoral work in the lab and have a relative preference for work perceived as immoral outside the laboratory. We note that sorting by “immoral” types into jobs that can cause harm may be detrimental for society. Our study highlights the value of employing complementary research methods.
    Keywords: Wage premium, immoral behavior, sorting, experiments
    JEL: C92 J31 D03
    Date: 2020–06
  27. By: Sam Ganzfried
    Abstract: Successful algorithms have been developed for computing Nash equilibrium in a variety of finite game classes. However, solving continuous games---in which the pure strategy space is (potentially uncountably) infinite---is far more challenging. Nonetheless, many real-world domains have continuous action spaces, e.g., where actions refer to an amount of time, money, or other resource that is naturally modeled as being real-valued as opposed to integral. We present a new algorithm for computing Nash equilibrium strategies in continuous games. In addition to two-player zero-sum games, our algorithm also applies to multiplayer games and games of imperfect information. We experiment with our algorithm on a continuous imperfect-information Blotto game, in which two players distribute resources over multiple battlefields. Blotto games have frequently been used to model national security scenarios and have also been applied to electoral competition and auction theory. Experiments show that our algorithm is able to quickly compute very close approximations of Nash equilibrium strategies for this game.
    Date: 2020–06

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.