nep-exp New Economics Papers
on Experimental Economics
Issue of 2020‒10‒12
thirty papers chosen by

  1. Gambling in Risk-Taking Contests: Experimental Evidence By Matthew Embrey; Christian Seel; J. Philipp Reiss
  2. Robust Inference in Risk Elicitation Tasks By Andersson, Ola; Holm, Håkan J.; Tyran, Jean-Robert; Wengström, Erik
  3. Audits, Audit Effectiveness, and Post-audit Tax Compliance By Matthias Kasper; James Alm
  4. Strength in Numbers: A Field Experiment in Gender, Influence, and Group Dynamics By Stoddard, Olga B.; Karpowitz, Christopher F.; Preece, Jessica
  5. Delegation and public pressure in a threshold public goods game By İriş, D.; Lee, J.; Tavoni, A.
  6. 40 Years of Tax Evasion Games: A Meta-Analysis By James Alm; Antoine Malézieux
  7. Nudging Demand for Academic Support Services: Experimental and Structural Evidence from Higher Education By Pugatch, Todd; Wilson, Nicholas
  8. Large Losses from Little Lies: Randomly Assigned Opportunity to Misrepresent Substantially Lowers Later Cooperation and Worsens Income Inequality By Michalis Drouvelis; Jennifer Gerson; Nattavudh Powdthavee; Yohanes E. Riyanto
  9. The terminator of social welfare? The economic consequences of algorithmic discrimination By Bauer, Kevin; Pfeuffer, Nicolas; Abdel-Karim, Benjamin M.; Hinz, Oliver; Kosfeld, Michael
  10. How People Know Their Risk Preference By Arslan, Ruben C.; Brümmer, Martin; Dohmen, Thomas; Drewelies, Johanna; Hertwig, Ralph; Wagner, Gert G.
  11. How people know their risk preference By Ruben C.; Martin Brümmer; Thomas Dohmen; Johanna Drewelies; Ralph Hertwig; Gert G. Wagner
  12. Does Access to Microcredit Lead to Technology Adoption by Smallholder Farmers? Experimental Evidence from Rural Bangladesh By Chowdhury, Shyamal; Smits, Joeri; Sun, Qigang
  13. Public Discourse and Socially Responsible Market Behavior By Björn Bartling; Vanessa Valero; Roberto A. Weber; Yao Lan
  14. Who Responds? Disentangling the Effects of Audits on Individual Tax Compliance Behavior By James Alm; Ali Enami; Michael McKee
  15. Profession and deception: Experimental evidence on lying behavior among business and medical students By Damien Besancenot; Radu Vranceanu
  16. Cognitive Flexibility or Moral Commitment? Evidence of Anticipated Belief Distortion By Silvia Saccardo; Marta Serra-Garcia
  17. Do Recruiters Select Workers with Different Personality Traits for Different Tasks? A Discrete Choice Experiment By Wehner, Caroline; de Grip, Andries; Pfeifer, Harald
  18. Laboratory Experiments By James Alm; Matthias Kasper
  19. Committee Decision-Making under the Threat of Leaks By Fehrler, Sebastian; Hahn, Volker
  20. The power of close relationships and audiences: Interpersonal closeness and payment observability as determinants of voluntary payments By Elisa Hofmann
  21. Experts and Epidemics By Klaus Gründler; Niklas Potrafke
  22. Small change, big change – Increasing attention with product package variations By S. Lacoste-Badie; J. Yu; Olivier Droulers
  23. Evolutionary Implementation in Aggregative Games By Ratul Lahkar; Saptarshi Mukherjee
  24. Exposure to ethnic minorities changes attitudes to them By Sabina Albrecht; Riccardo Ghidoni; Elena Cettolin; Sigrid Suetens
  25. The Taste of Milk: Experimental Evidence from Germany By Kresova, Svetlana; Gutjahr, Daijana; Hess, Sebastian
  26. Hate Trumps Love: The Impact of Political Polarization on Social Preferences By Eugen Dimant
  27. Strategic incentives undermine gaze as a signal of prosocial motives By Urs Fischbacher; Jan Hausfeld; Baiba Renerte
  28. Bargaining with a Residual Claimant: An Experimental Study By Matthew Embrey; Kyle Hyndmanz; Arno Riedl
  29. Unhappy is the land without symbols - Group symbols in infinitely repeated public good games By Tom Potoms; Tom Truyts
  30. Pension Information and Women's Awareness By Marta Angelici; Daniela Del Boca; Noemi Oggero; Paola Profeta; Maria Cristina Rossi; Claudia Villosio

  1. By: Matthew Embrey (Department of Economics, University of Sussex); Christian Seel (Maastricht University); J. Philipp Reiss (Karlsruhe Institute of Technology)
    Abstract: This paper investigates whether contest schemes induce excessive risk-taking by implementing in the laboratory a novel stopping task based on the contest model of Seel and Strack (2013). In this stylized setting, managers who face contest payoffs have an incentive to delay halting projects with negative drift, with the induced inefficiency being highest for a moderately negative expectation. The experimental design systematically varies the negative drift (between-subjects) and the payoff incentives (within-subject). We find evidence for excessive risk-taking in all our treatment conditions, with the non-monotonicity being at least as problematic as predicted. Contrary to the theoretical predictions, this aggregate pattern of behaviour is seen even without contest incentives. Further analysis suggests that many subjects display behaviour consistent with some intrinsic motivation for taking risk in the stopping task. This intrinsic motive and the strategic motive for excessive risk-taking appear to reinforce the non-monotonicity in subtly different ways. The experiment uncovers an interesting behavioural nuance in which contest incentives might crowd out an intrinsic inclination to gamble.
    Keywords: Contests; Relative performance pay; Risk-taking Behaviour; Laboratory Experiment
    JEL: C72 C92 D81
    Date: 2020–08
  2. By: Andersson, Ola (Department of Economics, Uppsala University); Holm, Håkan J. (Department of Economics, Lund University); Tyran, Jean-Robert (University of Vienna); Wengström, Erik (Department of Economics, Lund University, and)
    Abstract: Recent experimental evidence suggests that noisy behavior correlates strongly with personal characteristics. Since decision noise leads to bias in most elicitation tasks, there is a risk of falsely interpreting noise-driven relationships as preference driven. This puts previous studies that found a negative relation between personality measures and risk aversion into perspective and in particular raises the question of how to achieve robust inference in this domain. This paper shows, by way of an economic experiment with subjects from all walks of life, that using structural estimation that models heterogeneity of noise in combination with a balanced design allows us to mitigate the bias problem. Our estimations show that cognitive ability is related to noisy behavior rather than risk preferences. We also find age and education to be strongly related to noise, but the personality characteristics obtained using the Big Five inventory are less related to noise and more robustly correlated to risk preferences.
    Keywords: Risk preference; Cognitive ability; Experiment; Noise
    JEL: C81 C91 D12 D81
    Date: 2020–09–28
  3. By: Matthias Kasper (Tulane Economics and University of Vienna); James Alm (Tulane Economics)
    Abstract: This study uses a laboratory experiment to investigate the effect of tax audits on post-audit tax compliance. An important feature of our experimental design is the addition of audit ”effectiveness” to our audit mechanism, where effectiveness is defined as the share of undeclared income that the tax agency detects in an audit. This addition allows us to examine the effects of audit effectiveness on post-audit compliance. We also study whether tax audits have differential effects on different types of taxpayers, as distinguished by their prior reporting behavior. Contrary to theoretical predictions, we find that tax audits have differential effects on post-audit compliance and that the effectiveness of audits determines these responses; that is, while effective audits increase post-audit tax compliance, ineffective audits have the opposite effect. We also find that tax audits (whether effective or not) increase subsequent compliance of noncompliant taxpayers while they reduce compliance among individuals who have been found to report their income correctly. Finally, we find no evidence that tax audits crowd out the intrinsic motivation to comply of honest individuals. Our findings suggest that the specific deterrent effect of tax audits is more ambiguous than much previous analysis suggests, with these effects dependent on the effectiveness of the audit process and on the taxpayer’s prior reporting behavior.
    Keywords: Tax compliance; Audit effectiveness; Specific deterrence; General deterrence; Laboratory experiments.
    JEL: C9 H26 H83
    Date: 2020–09
  4. By: Stoddard, Olga B. (Brigham Young University); Karpowitz, Christopher F. (Brigham Young University); Preece, Jessica (Brigham Young University)
    Abstract: Policy interventions to increase women's presence in the workforce and leadership positions vary in their intensity, with some including a lone or token woman and others setting higher quotas. However, little is known about how the resulting group gender compositions influence individuals' experiences and broader workplace dynamics. In this paper, we investigate whether token women are disadvantaged compared to women on majority-women mixed-gender teams. We conducted a multi-year field experiment with a top-10 undergraduate accounting program that randomized the gender composition of semester-long teams. Using laboratory, survey, and administrative data, we find that even after accounting for their proportion of the group, token women are seen as less influential by their peers and are less likely to be chosen to represent the group than women on majority-women teams. Token women also participate slightly less in group discussions and receive less credit when they do. Women's increased authority in majority-women teams is driven primarily by men's behavior, not homophily or self-assessment. We find that over time, the gap in general assessments of influence between token and other women shrinks, but this improvement does not carry over to task-specific assessments. Finally, predictors of future grades are different for token women than for other participants, and regardless of treatment condition, women's task expertise is incorporated into group decisions less often than men's. Our findings have implications for team assignments in male-dominated settings and cast significant doubt on the idea that token women can solve influence gaps by "leaning in."
    Keywords: gender, field experiment
    JEL: J16
    Date: 2020–09
  5. By: İriş, D.; Lee, J.; Tavoni, A.
    Abstract: Many public goods cannot be provided directly by interested parties (e.g. citizens), as they entail decision-making at nested hierarchical scales: at a lower level individuals elect a representative, while at a higher scale elected delegates decide on the provision level, with some degree of scrutiny from their constituency. Furthermore, many such decisions involve uncertainty about the magnitude of the contribution that is needed for the good to be provided (or bad to be avoided). In such circumstances delegates can serve as important vehicles for coordination by aggregating societal preferences for provision. Yet, the role of delegation in threshold public goods games is understudied. We contrast the behavior of delegates to that of self-representing individuals in the avoidance of a public bad in an experimental setting. We randomly assign twelve subjects into four teams and ask each team to elect a delegate via majority voting. The elected delegates play several variants of a one-shot public goods game in which losses can ensue if the sum of their contributions falls short of a threshold. We find that when delegation is coupled with a mild form of public pressure, it has a significantly negative effect on contributions, even though the non-delegates can only signal their preferred levels of public good contributions. The reason is that delegates give more weight to the least cooperative suggestion: they focus on the lower of the two public good contributions recommended by their teammates.
    Keywords: delegation; cooperation; threshold public goods game; climate experiment
    JEL: C72 C92 D81 H40 Q54
    Date: 2019–11–01
  6. By: James Alm (Tulane Economics); Antoine Malézieux (Burgundy School of Business)
    Abstract: We collect individual participant data from 70 papers that use laboratory experiments to examine individual tax evasion behavior (or "Tax Evasion Games"), in order to use meta-analysis to estimate the impacts of different public policy, experimental design and individual level variables on tax evasion choices. Our results show that standard enforcement variables like audits (including audit rules) and fines perform differently on the extensive and intensive margins. We find that other fiscal variables like a flat tax system, tax rates, and tax amnesties have unambiguous negative impacts on tax compliance, and that specific features of the experimental setting, such as how subjects are directed to report income, or whether taxes are redistributed to the participants or to a real life public good, have significant impacts on tax compliance. Our results also indicate that the demographic characteristics of the subjects (e.g., gender, experimental income, occupation, risk attitude) affect compliance.
    Keywords: Tax evasion, Tax compliance, Meta-Analysis.
    JEL: C9 H0 H3
    Date: 2020–08
  7. By: Pugatch, Todd (Oregon State University); Wilson, Nicholas (Reed College)
    Abstract: More than two of every five students who enroll in college fail to graduate within six years. Prior research has identified ineffective study habits as a major barrier to success. We conducted a randomized controlled advertising experiment designed to increase demand for academic support services among more than 2,100 students at a large U.S. public university. Our results reveal several striking findings. First, the intervention shifted proxies of student attention, such as opening emails and self-reported awareness of service availability. However, the experimental variation indicates that approximately one-third of students are never attentive to student services. Second, advertising increased the use of extra practice problems, but did not affect take-up of tutoring and coaching, the other two services. Structural estimates suggest that transaction costs well in excess of plausible opportunity costs explain the differences in service use. Third, the characteristics of advertising messages matter. Several common nudging techniques—such as text messages, lottery-based economic incentives, and repeated messages—either had no effect or in some cases reduced the effectiveness of messaging.
    Keywords: email, higher education, incentives, nudges, text, randomized control trial
    JEL: A22 D91 I23 M31
    Date: 2020–09
  8. By: Michalis Drouvelis; Jennifer Gerson; Nattavudh Powdthavee; Yohanes E. Riyanto
    Abstract: Social media has made anonymized behavior online a prevalent part of many people’s daily interactions. The implications of this new ability to hide one’s identity information remain imperfectly understood. Might it be corrosive to human cooperation? This paper investigates the possibility that a small deceptive act of misrepresenting some information about one’s real identity to others – a social media-related behavior commonly known as ‘catfishing’ – increases the likelihood that the individual will go on to behave uncooperatively in an otherwise anonymous prisoner’s dilemma game. In our intention-to-treat analysis, we demonstrated that randomly allowing people to misrepresent their gender identity information reduced the aggregate cooperation level by approximately 12-13 percentage points. Not only that the average catfisher was substantially more likely to go on to defect than participants in the control and the true gender groups, those who were paired with a potential catfisher also defected significantly more often as well. Participants also suffered a significant financial loss from having been randomly matched with a catfisher; 64% of those who played against someone who chose to misrepresent information about their gender received a payoff of zero from the prisoner’s dilemma game. Our results suggest that even small short-term opportunities to misrepresent one’s identity to others can potentially be extremely harmful to later human cooperation and the economic well-being of the victims.
    Keywords: cooperation, misrepresentation, social media, social dilemma, experiment
    JEL: C92 D91
    Date: 2020
  9. By: Bauer, Kevin; Pfeuffer, Nicolas; Abdel-Karim, Benjamin M.; Hinz, Oliver; Kosfeld, Michael
    Abstract: Using experimental data from a comprehensive field study, we explore the causal eects of algorithmic discrimination on economic eciency and social welfare. We harness economic, game-theoretic, and state-of-the-art machine learning concepts allowing us to overcome the central challenge of missing counterfactuals, which generally impedes assessing economic downstream consequences of algorithmic discrimination. This way, we are able to precisely quantify downstream eciency and welfare ramifications, which provides us a unique opportunity to assess whether the introduction of an AI system is actually desirable. Our results highlight that AI systems' capabilities in enhancing welfare critically depends on the degree of inherent algorithmic biases. While an unbiased system in our setting outperforms humans and creates substantial welfare gains, the positive impact steadily decreases and ultimately reverses the more biased an AI system becomes. We show that this relation is particularly concerning in selective-labels environments, i.e., settings where outcomes are only observed if decision-makers take a particular action so that the data is selectively labeled, because commonly used technical performance metrics like the precision measure are prone to be deceptive. Finally, our results depict that continued learning, by creating feedback loops, can remedy algorithmic discrimination and associated negative eects over time.
    Date: 2020
  10. By: Arslan, Ruben C. (Max Planck Institute for Human Development); Brümmer, Martin (University of Leipzig); Dohmen, Thomas (University of Bonn and IZA); Drewelies, Johanna (Humboldt University Berlin); Hertwig, Ralph (Max Planck Institute for Human Development); Wagner, Gert G. (Max Planck Institute for Human Development)
    Abstract: People differ in their willingness to take risks. Recent work found that revealed preference tasks (e.g., laboratory lotteries)—a dominant class of measures—are outperformed by survey-based stated preferences, which are more stable and predict real-world risk taking across different domains. How can stated preferences, often criticised as inconsequential "cheap talk," be more valid and predictive than controlled, incentivized lotteries? In our multimethod study, over 3,000 respondents from population samples answered a single widely used and predictive risk-preference question. Respondents then explained the reasoning behind their answer. They tended to recount diagnostic behaviours and experiences, focusing on voluntary, consequential acts and experiences from which they seemed to infer their risk preference. We found that third- party readers of respondents' brief memories and explanations reached similar inferences about respondents' preferences, indicating the intersubjective validity of this information. Our results help unpack the self perception behind stated risk preferences that permits people to draw upon their own understanding of what constitutes diagnostic behaviours and experiences, as revealed in high-stakes situations in the real world.
    Keywords: risk preferences, self-report, self-perception
    JEL: D80 D81 D91 D01
    Date: 2020–09
  11. By: Ruben C. (Center for Adaptive Rationality, Max Planck Institute for Human Development, Berlin, Germany); Martin Brümmer (University of Leipzig, Germany); Thomas Dohmen (Institute for Applied Microeconomics, University of Bonn, Germany; Institute of Labor Economics (IZA), Bonn, Germany; Maastricht University, The Netherlands; German Institute for Economic Research, Berlin, Germany; CESifo, Munich, Germany); Johanna Drewelies (Humboldt University of Berlin, Germany); Ralph Hertwig (Center for Adaptive Rationality, Max Planck Institute for Human Development, Berlin, Germany); Gert G. Wagner (Center for Adaptive Rationality, Max Planck Institute for Human Development, Berlin, Germany; Institute of Labor Economics (IZA), Bonn, Germany; German Institute for Economic Research, Berlin, Germany; CESifo, Munich, Germany)
    Abstract: People differ in their willingness to take risks. Recent work found that revealed preference tasks (e.g., laboratory lotteries)—a dominant class of measures—are outperformed by survey-based stated preferences, which are more stable and predict real-world risk taking across different domains. How can stated preferences, often criticised as inconsequential “cheap talk,” be more valid and predictive than controlled, incentivized lotteries? In our multimethod study, over 3,000 respondents from population samples answered a single widely used and predictive risk preference question. Respondents then explained the reasoning behind their answer. They tended to recount diagnostic behaviours and experiences, focusing on voluntary, consequential acts and experiences from which they seemed to infer their risk preference. We found that third-party readers of respondents’ brief memories and explanations reached similar inferences about respondents’ preferences, indicating the intersubjective validity of this information. Our results help unpack the self-perception behind stated risk preferences that permits people to draw upon their own understanding of what constitutes diagnostic behaviours and experiences, as revealed in high-stakes situations in the real world.
    Keywords: risk preferences, self-report, self-perception
    JEL: D80 D81 D91 D01
    Date: 2020–09
  12. By: Chowdhury, Shyamal; Smits, Joeri; Sun, Qigang
    Abstract: Agricultural productivity in many developing countries remains low owing mostly to the low adoption of readily available modern technologies such as modern seeds, chemical fertilisers and mechanized irrigation. To understand if relaxing credit constraints increases the adoption of agricultural technologies, we use results from a field experiment designed to estimate the effect of access to microcredit on agricultural technology adoption. We find mere offering of microcredit to smallholder farmers does not lead to the adoption of agricultural technologies. Nevertheless, there is strong evidence of a heterogeneous treatment effects: borrowers with medium-sized farms are 13.3 per cent more likely to adopt modern technologies. In addition, less-risk averse borrowers, and present-biased borrowers are 13.1 per cent and 12.3 per cent more likely to adopt modern technologies.
    Keywords: Research and Development/Tech Change/Emerging Technologies
    Date: 2020–09–16
  13. By: Björn Bartling; Vanessa Valero; Roberto A. Weber; Yao Lan
    Abstract: We investigate the causal impact of public discourse on socially responsible market behavior. We conduct laboratory market experiments with products that differ in their production costs and social impact, and provide market actors and impacted third parties with the opportunity to discuss appropriate market behavior. Across two studies that vary characteristics of the discourse, the external impact and the participants, we find that public discourse substantially increases market social responsibility. Our findings suggest that discussions and campaigns focusing on appropriate market behavior can be powerful tools for shaping responsible norms governing market conduct and addressing inefficiencies due to market failures.
    Keywords: public discourse, market failure, externalities, social responsibility, social norms, experiment, communication
    JEL: C92 D62 D83 M14
    Date: 2020
  14. By: James Alm (Tulane Economics); Ali Enami (The University of Akron); Michael McKee (Appalachian State University)
    Abstract: How does individual tax compliance respond to a change in the audit rate? Most all empirical evidence suggests that an increase in the audit rate increases the compliance rate, a result that is also consistent with standard theoretical analysis of the individual compliance decision. However, this empirical evidence is typically based on estimating an average response across all taxpayers, and an average response may conceal much heterogeneity in individual responses. This paper collects individual- level data from identical laboratory experiments across five separate studies with a total of 278 student subjects that generated 8340 individual observations, in which only audit rates are varied, in order to disentangle individual responses to audit rate changes. As with most previous empirical work, our results indicate that the average response across all taxpayers is to increase (decrease) compliance when audit rates increase (decrease). However, this average response conceals enormous heterogeneity in individual responses. When the individual responses are examined in more detail, our data show that many individuals do in fact respond to higher (lower) audit rates by increasing (decreasing) their compliance. However, these individuals represent only about 2/3 of all subjects. In fact, our data also show that many individuals do not respond at all to audit rate changes. Surprisingly, our data further show that some individuals actually decrease their compliance when audit rates increase, and vice versa. All of these different individual responses indicate that government policy interventions must consider the “full house” of individual behaviors when devising appropriate policies.
    Keywords: Tax evasion, Tax compliance, Behavioral economics, Experimental economics.
    JEL: H26 C91
    Date: 2020–09
  15. By: Damien Besancenot (LIRAES - EA 4470 - Laboratoire Interdisciplinaire de Recherche Appliquée en Economie de la Santé - UPD5 - Université Paris Descartes - Paris 5); Radu Vranceanu (ESSEC Business School - Essec Business School, THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université)
    Abstract: This paper reports data from a sender-receiver experiment that compares lying behavior between two groups of students, one in business administration and the other in medicine. We use a modified version of the sender-receiver deception game introduced by Erat and Gneezy (2012) to collect data on 393 subjects. The results show that both groups of students respond to incentives as expected: the frequency of lying is higher, the higher the benefit for the sender, and the lower the loss for the receiver is. For given payoffs, there is little difference between the two groups in the domain of white lies; however, business students resort to selfish lies more frequently than do medical students. Furthermore, the analysis does not confirm differences in altruism between the two groups.
    Keywords: Lies,Deception,Communication,Medicine,Business administration,Survey data
    Date: 2020–09
  16. By: Silvia Saccardo; Marta Serra-Garcia
    Abstract: Do people anticipate the conditions that enable them to manipulate their beliefs when confronted with unpleasant information? We investigate whether individuals seek out the “cognitive flexibility” needed to distort beliefs in self-serving ways, or instead attempt to constrain it, committing to unbiased judgment. Experiments with 6500 participants, including financial and legal professionals, show that preferences are heterogeneous: over 40% of advisors prefer flexibility, even if costly. Actively seeking flexibility does not preclude belief distortion. Individuals anticipate the effects of cognitive flexibility and their choice to pursue it responds to incentives, suggesting some sophistication about the cognitive constraints to belief distortion.
    Keywords: belief distortion, morality, sophistication, commitment, experiments
    JEL: D83 D91 C91
    Date: 2020
  17. By: Wehner, Caroline (BIBB); de Grip, Andries (ROA, Maastricht University); Pfeifer, Harald (BIBB)
    Abstract: This paper explores whether firms recruit workers with different personality traits for different tasks. For our analysis, we used data from a discrete choice experiment conducted among recruiters of 634 firms in Germany. Recruiters were asked to choose between job applicants who differed in seven aspects: professional competence, the 'big five' personality traits and the prospective wage level. We found that all personality traits affect the hiring probability of the job applicant; among them, conscientiousness and agreeableness have the strongest effects. However, recruiters' preferences differed for different job tasks. For analytical tasks, recruiters prefer more open and conscientious applicants, whereas they favour more open, extraverted, and agreeable workers for interactive tasks.
    Keywords: recruitment, personality traits, tasks, discrete choice experiment
    JEL: J23 D91 M51
    Date: 2020–09
  18. By: James Alm (Tulane Economics); Matthias Kasper (Tulane University and University of Vienna)
    Abstract: In this chapter we assess the use of laboratory experiments in tax compliance research. We first discuss the reasons for using laboratory experiments, and we then describe the basic design of most experiments, including their main limitations. We also summarize some of the main results of these studies, and we discuss how the insights obtained from experimental research can help shape better tax policies. We conclude with some suggestions on new areas of research on tax compliance in which laboratory experiments may be usefully applied in the future.
    Keywords: Tax evasion; Behavioral economics; Laboratory experiments.
    JEL: H2 H26 D03 C9
    Date: 2020–09
  19. By: Fehrler, Sebastian (University of Bremen); Hahn, Volker (University of Konstanz)
    Abstract: Leaks are pervasive in politics. Hence, many committees that nominally operate under secrecy de facto operate under the threat that information might be passed on to outsiders. We study theoretically and experimentally how this possibility affects the behavior of committee members and the decision-making accuracy. Our theoretical analysis generates two major predictions. First, a committee operating under the threat of leaks is equivalent to a formally transparent committee in terms of the probabilities of project implementation as well as welfare (despite differences in individual voting behavior). Second, the threat of leaks causes a committee to recommend rejection of a project whenever precise information has been shared among committee members. As a consequence, a status-quo bias arises. Our laboratory results confirm these predictions despite subjects communicating less strategically than predicted.
    Keywords: committee decision-making, strategic communication, voting, leaks, transparency, monetary policy committees, information aggregation
    JEL: C92 D71 D82 J45
    Date: 2020–09
  20. By: Elisa Hofmann (International Max Planck Research School "Adapting Behavior in a Fundamentally Uncertain World", Friedrich Schiller University Jena)
    Abstract: Individual decision-making in Pay-What-You-Want settings is prone to social influence. Es pecially payment observability and the social relationship with other buyers during the payment decision are two important components of social influence. In practical applications of Pay-What-You-Want both phenomena often occur together while not being investigated yet for more than two types of social relationships. Thus, it is not clear how the presence of various types of social relationships influence voluntary payments and how they relate to payment observability. This study examines both drivers of social influence and investigates how payment observability (audience effect) and different types of social relationships (closeness effect) affect voluntary payments at the American Museum of Natural History. 1034 subjects participated in the study. I find that both, payment observability and interpersonal closeness, significantly increase payments. Voluntary payments are significantly higher if observed by other buyers and if visitors are surrounded by interpersonally close others. A high level of consistency between beliefs and behavior with increasing interpersonal closeness is discussed as potential explanation of the closeness effect. The study results are robustly confirmed in a replication study with 995 subjects.
    Keywords: social influence, interpersonal closeness, social image concerns, experiments, Pay-What-You-Want
    JEL: C90 D01 D91 L11
    Date: 2020–09–26
  21. By: Klaus Gründler; Niklas Potrafke
    Abstract: Do experts adjust their policy recommendations when the facts change? We conduct a large-scale randomized experiment among 1,224 economic experts across 109 countries that includes two treatments. The first treatment is the geographic and temporal variation in the initial spread of Covid-19 during March 2020, which we use as a natural experiment. The second is a randomly assigned information treatment that informs experts about the past macroeconomic performance of their country. We find that greater exposure to Covid-19 decreases the probability to recommend contractionary fiscal policies. A better macroeconomic performance increases the probability to implement contractionary policies and reduces the exposure effect to Covid-19. While our results show that experts adjust their policy recommendations to changing environments, sentiment analyses of open-ended questions asked after the treatment suggest that these adjustments are caused by Bayesian information updating and not by a change in preferences.
    Keywords: epidemics, Covid-19, health, experts, fiscal preferences, randomized experiment
    JEL: A11 E62 H60 H63
    Date: 2020
  22. By: S. Lacoste-Badie (LEM - Lille économie management - LEM - UMR 9221 - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); J. Yu (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Olivier Droulers (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The purpose of this paper is to investigate the influence of front-of-pack (FOP) variations on consumer attention. In a laboratory experiment using an eye-tracking method, the authors exposed 165 respondents to planograms containing target products displaying identical FOPs or FOPs with variations. Attention was measured by fixation duration and fixation counts, and eye movements were recorded at 250 Hz. The findings showed that FOP variations catch respondents' attention. Visual saliency has often been defined as a physical property of an object (such as color, shape, motion). In the current study, we show the importance of also taking into account the interaction of one stimulus with other stimuli. To our knowledge, this is the first time that the effects of FOP variations have been investigated. On a managerial level, the current study offers a simple and low-priced solution to cut through the clutter and catch consumers' attention, which is the first step to a product purchase.
    Keywords: Attention,Eye-tracking,FOP variation,Product package
    Date: 2020
  23. By: Ratul Lahkar (Ashoka University); Saptarshi Mukherjee (IIT, Delhi)
    Abstract: Due to externalities, the equilibrium behavior in aggregative games is not efficient in the sense of maximizing aggregate payoff. We characterize conditions such that efficiency can be globally implemented in such games under evolutionary dynamics. If payoffs satisfy certain important concavity conditions, then the aggregate payoff function of these games has a unique maximizer. Once the planner imposes a transfer equal to the externality generated by agents, we obtain a new externality adjusted game. This is a potential game with the aggregate payoff function of the original game being its potential function. Evolutionary dynamics converge globally to the maximizer of this potential function, thereby implementing efficiency in the original game. Our earlier paper on public goods (Lahkar and Mukherjee [16]) emerges as an example of the present general analysis. Two new applications are public bads and the tragedy of the commons.
    Keywords: Aggregative Games; Externalities; Potential Games; Implementation
    Date: 2020–09
  24. By: Sabina Albrecht; Riccardo Ghidoni; Elena Cettolin; Sigrid Suetens
    Abstract: Does exposure to ethnic minorities change the majority’s attitudes towards them? We investigate this question using novel panel data on attitudes from a general-population sample in the Netherlands matched to geographical data on refugees. We find that people who live in neighborhoods of refugees for a sufficiently long time acquire a more positive attitude. Instead, people living in municipalities hosting refugees, but not in their close neighborhood, develop a more negative attitude. The positive neighborhood effect is particularly strong for groups that are likely to have personal contact with refugees suggesting that contact with minorities can effectively reduce prejudice.
    Keywords: prejudice, ethnic diversity, attitudes to immigrants, discrimination, intergroup contact, refugee crisis, individual-level fixed-effects regressions, lab-in-the-field experiment
    JEL: J15 R23 D91 C23
    Date: 2020–08
  25. By: Kresova, Svetlana; Gutjahr, Daijana; Hess, Sebastian
    Keywords: Food Consumption/Nutrition/Food Safety, Marketing
    Date: 2020–09–18
  26. By: Eugen Dimant (University of Pennsylvania; CESifo, Munich; Identity and Conflict Lab)
    Abstract: Political polarization has ruptured the fabric of U.S. society. The focus of this paper is to examine various layers of (non-)strategic decision-making that are plausibly affected by political polarization through the lens of one's feelings of hate and love for Donald J. Trump. In several pre-registered experiments, I document the behavioral-, belief-, and norm-based mechanisms through which perceptions of interpersonal closeness, altruism, and cooperativeness are affected by polarization, both within and between political factions. To separate ingroup-love from outgroup-hate, the political setting is contrasted with a minimal group setting. I find strong heterogeneous effects: ingroup-love occurs in the perceptional domain (how close one feels towards others), whereas outgroup-hate occurs in the behavioral domain (how one helps/harms/cooperates with others). In addition, the pernicious outcomes of partisan identity also comport with the elicited social norms. Noteworthy, the rich experimental setting also allows me to examine the drivers of these behaviors, suggesting that the observed partisan rift might be not as forlorn as previously suggested: in the contexts studied here, the adverse behavioral impact of the resulting intergroup conflict can be attributed to one's grim expectations about the cooperativeness of the opposing faction, as opposed to one's actual unwillingness to cooperate with them.
    Keywords: Identity, Norms, Political Polarization, Social Preferences, Trump
    JEL: B41 D01 D9
    Date: 2020–09
  27. By: Urs Fischbacher; Jan Hausfeld; Baiba Renerte
    Abstract: People often have to judge the social motives of others, for example, to distinguish truly prosocial people from those merely trying to appear prosocial. Gaze can reveal the motives underlying social decisions, as decision-makers dedicate more attention to motive-relevant information. So far, eye-tracking has mainly been used as a passive tool for the researcher; in contrast, we also provide (real -time) eye-tracking information to the participants. We extend the use of eye -tracking and apply it as a communication device to study social signaling. We find that untrained observers can judge the prosociality of decision -makers from their eye-tracked gaze alone, but only if there are no strategic incentives to appear prosocial. When gaze is strategic because decisionmakers have an incentive to appear prosocial, the cues of prosociality are invalidated, as both individualistic and prosocial decision -makers put effort into appearing more prosocial. Overall, we find th at gaze carries information about a person's prosociality, but also that gaze is malleable and affected by strategic considerations.
    Keywords: eye-tracking, signaling, social preferences, social cognition, type identification
    Date: 2020
  28. By: Matthew Embrey (Department of Economics, University of Sussex); Kyle Hyndmanz (Naveen Jindal School of Management, University of Texas at Dalls); Arno Riedl (Department of Economics, Maastricht University)
    Abstract: Many negotiations involve risks that are only resolved ex-post, and often these risks are not incurred equally by the parties involved. We experimentally investigate bargaining situations where a residual claimant faces ex-post risk, whereas a fixed-payoff player does not. In line with the predictions of a benchmark model, we find that residual claimants extract a risk premium, which increases in risk exposure, and that this premium can be high enough to make it beneficial to bargain over a risky rather than a risk-less pie. In contrast to the model’s predictions, we find that the comparatively less risk averse residual claimants benefit the most from risk exposure and this is driven by fixed-payoff players’ adoption of weak bargaining strategies when the pie is risky. We find evidence for a behavioral mechanism where asymmetric exposure to risk between the two parties creates a wedge between their fairness ideas, which shifts agreements in favor of residual claimants but also increases bargaining friction.
    Keywords: Bargaining, Ex-post Risk, Reference Points
    JEL: C71 C92 D81
    Date: 2020–08
  29. By: Tom Potoms (Department of Economics, University of Sussex); Tom Truyts (CEREC, Saint-Louis University)
    Abstract: How are group symbols (e.g. a flag, Muslim veil, clothing style) helpful in sustaining cooperation and social norms? We study the role of symbols in an infinitely repeated public goods game with random matching, endogenous partnership termination, limited information flows and endogenous symbol choice. We characterize an efficiently segregating equilbrium, in which players only cooperate with others bearing the same symbol. Players bearing a scarcer symbol face a longer expected search time to find a cooperative partner upon partnership termination, and can therefore sustain higher levels of cooperation. We compare this equilibrium to other equilibria in terms of Pareto dominance and robustness to (some form of) bilateral renegotiation.
    Keywords: Endogenous segregation, repeated games, random matching, public goods games
    JEL: C73 D83
    Date: 2020–09
  30. By: Marta Angelici; Daniela Del Boca; Noemi Oggero; Paola Profeta; Maria Cristina Rossi; Claudia Villosio
    Abstract: We explore the role of financial and pension information in increasing women’s knowledge and awareness of their future pension status, and consequently, in reducing the gender pension gap. A representative sample of 1249 Italian working women were interviewed to assess their knowledge about pensions and financial issues and about their own savings and personal wealth planned for retirement. The responses showed that their knowledge and awareness of retirement planning was limited. We then ran a randomized experiment to evaluate the effect of increased information regarding pensions on women’s awareness, knowledge, and behaviors. Women in the treated group were provided information in the form of three short online tutorials. A follow-up survey shows that these women became more interested and aware of pension schemes and retirement options after completing the tutorials and were more likely to be better informed and keen to obtain further information. When looking at changes in behavior, we find that treated women who are closer to retirement are more likely to believe that they would make different work-life decisions if they received specific pension information in a timely fashion. They are also more likely to have a supplementary pension fund if they are concerned about their standard of living after retirement.
    Keywords: women, pension, savings, financial education
    JEL: H31 J22
    Date: 2020

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