nep-exp New Economics Papers
on Experimental Economics
Issue of 2020‒11‒02
thirty-one papers chosen by

  1. Still in search of the sunk cost bias By Negrini, Marcello; Riedl, Arno; Wibral, Matthias
  2. Paid and hypothetical time preferences are the same: Lab, field and online evidence By Brañas-Garza, Pablo; Jorrat, Diego; Espín, Antonio M.; Sanchez, Angel
  3. To segregate, or to discriminate – that is the question: experiment on identity and social preferences By Blanco, M; Guerra, J. A.
  4. The Perverse Costly Signaling Effect on Cooperation under the Shadow of the Future By Kamei, Kenju
  5. Cooperation and Norm-Enforcement under Impartial vs. Competitive Sanctions By Jan Philipp Krügel; Nicola Maaser
  6. Assessing Selection Bias in Non-Experimental Estimates of the Returns to Workplace Training By Sauermann, Jan; Stenberg, Anders
  7. Effect of Longevity on Saving Behavior: An Experimental Study on the Simple Intertemporal Life-Cycle Problem By Tetsuo Yamamori; Kazuyuki Iwata; Akira Ogawa
  8. Beliefs, learning, and personality in the indefinitely repeated prisoner’s dilemma By Gill, David; Rosokha, Yaroslav
  9. Cultural Identity and Social Capital in Italy By Sgroi, Daniel; Redoano, Michela; Liberini, Federica; Lockwood, Ben; Bracco, Emanuele; Porcelli, Francesco
  10. Search Costs and the Determinants of Job Search By Beam, Emily A.
  11. Designing Information Provision Experiments By Haaland, Ingar; Roth, Christopher; Wohlfart, Johannes
  12. Social Framing Effects in Leadership: Preferences or Beliefs? By Edward Cartwright; Michalis Drouvelis
  13. Using reminders with different reward opportunities to reduce no-show behavior: Empirical evidence from a large-scale field experiment in professional sport By Dominik Schreyer; Sascha L. Schmidt; Benno Torgler
  14. Strategic Interdependence in Political Movements and Countermovements By Hager, Anselm; Hensel, Lukas; Hermle, Johannes; Roth, Christopher
  15. The Effect of Self-Awareness on Dishonesty By Cibik, Ceren Bengu; Sgroi, Daniel
  16. Contagion in sequential financial markets: an experimental analysis By Vorstaz, Marc; Lopes Moreira Da Veiga, María Helena; Peeters, Ronald
  17. How People Know Their Risk Preference By Ruben C. Arslan; Martin Brümmer; Thomas Dohmen; Johanna Drewelies; Ralph Hertwig; Gert G. Wagner
  18. To Buy or Not to Buy? Price Salience in an Online Shopping Field Experiment By Dertwinkel-Kalt, Markus; Köster, Mats; Sutter, Matthias
  19. She Could Not Agree More: The Role of Failure Attribution in Shaping the Gender Gap in Competition Persistence By Manar Alnamlah; Christina Gravert
  20. Inequality, institutions, and cooperation By Thomas Markussen; Smriti Sharma; Saurabh Singhal; Finn Tarp
  21. Exposure to the Covid-19 pandemic and generosity By Brañas-Garza, Pablo; Jorrat, Diego; Alfonso-Costillo, Antonio; Espín, Antonio M.; Garcia, Teresa; Kovářík, Jaromír
  22. Ethnic bias, economic success and trust: Findings from large sample experiments in Germany and the United States through the Trustlab platform By Sophie Cetre; Yann Algan; Gianluca Grimalda; Fabrice Murtin; Louis Putterman; Ulrich Schmidt; Vincent Siegerink
  23. Morals in multi-unit markets By Andreas Ziegler; Giorgia Romagnoli; Theo Offerman
  24. Does Party Competition Affect Political Activism? By Hager, Anselm; Hensel, Lukas; Hermle, Johannes; Roth, Christopher
  25. Syrian Civil War Victims Trust Each Other, but Punish When and Whomever They Can By El-Bialy, Nora; Fraile Aranda, Elisa; Nicklisch, Andreas; Saleh, Lamis; Voigt, Stefan
  26. Nudging and Subsidizing Farmers to Foster Smart Water Meter Adoption By Benjamin Ouvrard; Raphaële Préget; Arnaud Reynaud; Laetitia Tuffery
  27. Product‐harm science communication: The halo effect and its moderators By Olga Untilov; Stéphane Ganassali
  28. Risk elicitation through the S-GG lottery panel task: Implementation note By Iván Barreda-Tarrazona; Gerardo Sabater-Grande; Nikolaos Georgantzis
  29. Selecting the Best of Us? Politician Quality in Village Councils in West Bengal, India By Ananish Chaudhuri; Vegard Iversen; Francesca R. Jensenius; Pushkar Maitra
  30. Why are open ascending auctions popular? The role of information aggregation and behavioral biases By Theo Offerman; Giorgia Romagnoli; Andreas Ziegler
  31. Savage's response to Allais as Broomean reasoning By Franz Dietrich; Antonios Staras; Robert Sugden

  1. By: Negrini, Marcello (General Economics 0 (Onderwijs), RS: GSBE Theme Human Decisions and Policy Design, Microeconomics & Public Economics); Riedl, Arno (RS: GSBE Theme Human Decisions and Policy Design, Microeconomics & Public Economics); Wibral, Matthias (RS: GSBE Theme Human Decisions and Policy Design, Microeconomics & Public Economics)
    Abstract: Evidence from hypothetical scenarios strongly suggests the existence of a sunk cost bias, the tendency to ‘throw good money after bad money.’ However, the few studies using incentives are inconclusive. In addition, evidence on potential psychological channels underlying such a bias is scarce. We present a laboratory experiment designed to investigate the sunk cost bias and to test some prominent psychological mechanisms. Inspired by the hypothetical scenarios, we use a two-stage investment task in which an initial investment needs to be made to start a project. In the initial investment stage, the size of the investment and the responsibility of the investor are exogenously varied. In the second investment stage, participants can either decide to terminate the project or to make an additional investment to finish the project. We do not find evidence for the sunk cost bias. To the contrary, we observe a robust reverse sunk cost bias. That is, the larger the initial investment, the lower the likelihood to continue investing in a project. Moreover, whether or not subjects are responsible for the initial investment, does not affect their additional investment. More waste averse individuals also do not react more strongly to sunk cost whereas being in the loss domain decreases additional investment. Importantly, we replicate the sunk cost bias when using hypothetical scenarios. Surprisingly, the reverse sunk cost bias also holds for those participants who exhibit a strong sunk cost bias in the hypothetical scenarios.
    JEL: C91 D01 D90 D91
    Date: 2020–10–13
  2. By: Brañas-Garza, Pablo; Jorrat, Diego; Espín, Antonio M.; Sanchez, Angel
    Abstract: The use of hypothetical instead of real decision-making incentives remains under debate after decades of economic experiments. Standard incentivized experiments involve substantial monetary costs due to participants’ earnings and often logistic costs as well. In time preferences experiments, which involve future payments, real payments are particularly problematic. Since immediate rewards frequently have lower transaction costs than delayed rewards in experimental tasks, among other issues, (quasi)hyperbolic functional forms cannot be accurately estimated. What if hypothetical payments provide accurate data which, moreover, avoid transaction cost problems? In this paper, we test whether the use of hypothetical - versus real - payments affects the elicitation of short-term and long-term discounting in a standard multiple price list task. One-out-of-ten participants probabilistic payment schemes are also considered. We analyze data from three studies: a lab experiment in Spain, a well-powered field experiment in Nigeria, and an online extension focused on probabilistic payments. Our results indicate that paid and hypothetical time preferences are mostly the same and, therefore, that hypothetical rewards are a good alternative to real rewards. However, our data suggest that probabilistic payments are not.
    Keywords: Time preferences, hypothetical vs real payoffs, lab, field, online experiments, BRIS
    JEL: C91 C93
    Date: 2020–10–19
  3. By: Blanco, M; Guerra, J. A.
    Abstract: How do various sources of social identity affect segregation and discrimination decisions? In our laboratory experiment, social identity originates either from similar preferences, income, ability, randomly or from shared socioeconomic status. For the latter, we exploit Colombia’s unique (public information) stratification system which assigns households to socioeconomic strata based on its residential block amenities. Subjects decide with whom to interact in a Dictator and Trust Game. We find high socioeconomic status senders segregate against out-group receivers in the Dictator Game, while low socioeconomic ones do so in the Trust Game. This segregation pattern is partly explained by payoff-maximizing behavior. In the Trust Game, we gather evidence for statistical discrimination. In the Dictator Game, evidence points to a taste for redistribution when identity originates from socioeconomic status or income level. No matter the source of identity, our subjects expect being segregated but not discriminated against.
    Keywords: Socioeconomic status, stratification, segregation, discrimination, laboratory experiment
    JEL: C91 D91 J15 Z13
    Date: 2020–09–10
  4. By: Kamei, Kenju
    Abstract: A literature in the social sciences proposes that humans can promote cooperation with strangers by signaling their generosity through investment in unrelated pro-social activities. This paper studied this hypothesis by conducting a laboratory experiment with an infinitely repeated prisoner’s dilemma game under random matching. A novel feature of the experiment is that each player first decided how much to donate to a charitable organization, the British Red Cross, and then this donation information was conveyed to the player’s matched partner. Surprisingly, the donation activities significantly undermined cooperation. This negative effect of charitable-giving was consistently observed regardless of whether players had a post-interaction opportunity to punish the partners. A detailed analysis suggests that the negative effect (a) resulted from the transmission of the charitable-giving information, not from the fact that subjects engaged in the charitable-giving, and (b) was caused by mis-coordination between the two parties who can both costly signal their generosity. This suggests that letting players have an implicit costly signaling opportunity has damaging unintended consequences for their interactions among strangers. Possible ways to encourage players to use costly signaling for mutual cooperation, such as partner choice, are also discussed in the paper.
    Keywords: experiment; cooperation; prisoner’s dilemma; charitable-giving; costly signaling
    JEL: C73 C9 D91
    Date: 2020–09–26
  5. By: Jan Philipp Krügel (Helmut-Schmidt University Hamburg); Nicola Maaser (Department of Economics and Business Economics, Aarhus University)
    Abstract: The willingness of mere bystanders, or “third parties,” to incur costs to sanction non-cooperators in social dilemma situations has been documented in numerous studies. It is, however, not clear yet how different forms of higher-order punishment affect third party behavior and the level of cooperation. This paper experimentally studies incentives for third parties to enforce contribution norms in public-good games. We compare two treatments where the third party is embedded in different stylized institutions to a baseline treatment where this is not the case. In our treatments, the third party is, first, evaluated by another uninvolved individual ("fourth party"), and second, faces competition by another potential third party punisher. We find that third parties punish free-riding public good players more severely if they have to fear negative payoff consequences for themselves. Importantly, our results point to substantial qualitative differences between the institutional arrangements: When the third party is under scrutiny of a fourth party, punishment is more balanced, but also high compared to the other treatments. By contrast, competition between two third party candidates leads to strategic and partial punishment, generating the most profitable outcomes for public good players.
    Keywords: Third party punishment, Higher-order punishment, Cooperation, Public goods game, Experiments
    JEL: C92 D02 H41
    Date: 2020–10–26
  6. By: Sauermann, Jan (IFAU); Stenberg, Anders (SOFI, Stockholm University)
    Abstract: We assess selection bias in estimated returns to workplace training by exploiting a field experiment with random assignment of workers to a one-week training program. We compare experimental estimates of this program with non-experimental estimates that are estimated by using a sample of agents who were selected by management not to participate in the experiment. Our results show that non-experimental estimates are biased, yielding returns about twice as large as the causal effect. When controlling for pre-treatment performance or individual fixed effects, only about one tenth of this bias remains and is even further reduced when applying common support restrictions.
    Keywords: returns to training, selection bias, field experiment
    JEL: J24 C93 M53
    Date: 2020–10
  7. By: Tetsuo Yamamori; Kazuyuki Iwata; Akira Ogawa
    Abstract: To examine how the length of retirement life affects people's mistakes in choosing a saving plan, a laboratory experiment was conducted in which subjects face a simple life-cycle consumption/saving problem without interest rate, price and income volatilities, and any uncertainty. Lifetime is divided into working periods with a certain and constant amount of income and retirement periods with no income. We compared three treatment groups: the retirement periods are the last 5 periods out of 25 life periods (SR), these are the last 16 periods out of 36 life periods (LL), and these are the last 16 periods out of 25 life periods (SW). In all treatments, the subject's lifetime income was the same. Our main findings are twofold. First, the magnitude of misconsumption (i.e., the deviation from conditional optimal consumption) is significantly positive for each treatment. Thus, people cannot find an optimal saving plan even in our simple life-cycle problem. Second, the subjects overreacted to both the long life and large income, which caused over-saving behavior in LL and under-saving behavior in SW, whereas there is no particular trend for mistakes in SR.
    Date: 2020–09
  8. By: Gill, David (Purdue University); Rosokha, Yaroslav (Purdue University)
    Abstract: The indefinitely repeated prisoner’s dilemma (IRPD) captures the trade-off between the short-term payoff from exploiting economic partners and the long-term gain from building successful relationships. We aim to understand more about how people form and use beliefs about others in the IRPD. To do so, we elicit beliefs about the supergame strategies chosen by others. We find that initial beliefs match behavior quite well and that most subjects choose strategies that perform well given their beliefs. Motivated by belief clustering, we use beliefs to estimate a level-k model of boundedly rational thinking. We analyze how beliefs and behavior evolve with experience: beliefs become more accurate over time, and we use beliefs to provide new evidence about the mechanism that underlies learning from experience. Finally, we find that a survey measure of trust predicts cooperative behavior and optimism about others’ cooperation, which helps to explain how trust underpins successful economic exchanges.
    Keywords: Indefinitely repeated prisoner’s dilemma; infinitely repeated prisoner’s dilemma; cooperation; optimism; beliefs; belief elicitation; supergame strategies; level-k; bounded rationality; clustering; learning; best response; experimentation; strategy revision; personality; agreeableness; anxiety; cautiousness; kindness; manipulativeness; trust; factor analysis; Raven test; Quadratic Scoring Rule; game theory; experiment. JEL Classification: C72; C73; C91; D91
    Date: 2020
  9. By: Sgroi, Daniel (University of Warwick); Redoano, Michela (University of Warwick); Liberini, Federica (ETH Zurich); Lockwood, Ben (University of Warwick); Bracco, Emanuele (Lancaster University); Porcelli, Francesco (University of Warwick)
    Abstract: In a pre-registered experiment involving 1,547 subjects across three Italian cities we exploit regional variation in background, language and diet to investigate the relationship between cultural identity, trust and cooperation. Subjects with relatives (especially maternal grandmothers) who originate in the north of Italy, and who share common cultural characteristics, contributed 15% more in a public goods game, displayed greater "social capital" such as trust in the government and more willingness to pay taxes, than did those whose language and diet identified them as being from the south. On the other hand, self-reported identity, a mainstay of the survey literature, had no predictive power. This highlights the importance of identity but only when it is measured appropriately.
    Keywords: social capital, trust, identity, language, experiments
    JEL: Z13 D91 C83 C93
    Date: 2020–10
  10. By: Beam, Emily A. (University of Vermont)
    Abstract: This paper examines how individuals select into job search in terms of their individual qualifications and perceptions and measures how recruiting additional applicants with a modest job-search subsidy affects selection. I use experimental evidence to examine individuals' decisions to attend and participate in a job fair. Thirteen percent of invited but unsubsidized respondents attend the job fair, and they are positively selected from the overall distribution of respondents. While the subsidy attracts those who are less qualified and less confident in their ability to find work abroad, the least qualified do not search intensively. Although the subsidy does not lead to any additional offers, it induces individuals with a high degree of uncertainty about their likelihood of job-finding to apply with recruitment agencies. These results demonstrate the importance of imperfect information about the returns to search and highlight how reducing search costs can increase search effort among those most uncertain about their prospects.
    Keywords: recruitment, job search, perceived returns, migration, field experiment
    JEL: O15 J64 D83 C93
    Date: 2020–10
  11. By: Haaland, Ingar (University of Bergen and CESifo); Roth, Christopher (University of Warwick, briq, CESifo, CEPR, CAGE Warwick); Wohlfart, Johannes (Department of Economics and CEBI, University of Copenhagen, CESifo, Danish Finance Institute)
    Abstract: We review methodological questions relevant for the design of information provision experiments. We first provide a literature review of major areas in which information provision experiments are applied. We then outline key measurement challenges and design recommendations that may be of help for practitioners planning to conduct an information experiment. We discuss the measurement of subjective beliefs, including the role of incentives and ways to reduce measurement error. We also discuss the design of the information intervention, as well as the measurement of belief updating. Moreover, we describe ways to mitigate potential experimenter demand effects and numerical anchoring arising from the information treatment. Finally, we discuss typical effect sizes in information experiments.
    Keywords: Experimental Design, Beliefs, Information, Obfuscation JEL Classification: C90, D83, D91, L82
    Date: 2020
  12. By: Edward Cartwright; Michalis Drouvelis
    Abstract: We experimentally study the impact of framing effects in a repeated sequential social dilemma game. Our between-subjects design consists of two group level (“Wall Street” vs. “Community”) and two individual level (“First (Second) Movers” vs. “Leaders (Followers)”) frames. We find that average contributions are significantly higher when the game is called the Wall Street game than when it is called the Community game. However, the social framing effect disappears when we control for players’ first-order and second-order beliefs. Overall, our evidence indicates that social frames enter people’s beliefs rather than their preferences.
    Keywords: framing, public good, experiment, beliefs
    JEL: H41 C72 C92
    Date: 2020
  13. By: Dominik Schreyer; Sascha L. Schmidt; Benno Torgler
    Abstract: Because no-show behavior typically leads to operational inefficiencies and thus diminishing returns for service firms, a growing number of authors have demonstrated the potential of using reminders to reduce no-show rates. In this study, by examining the behavioral responses of 13,911 season ticket holders of a professional football team in Germany, we assess whether reminders containing different reward opportunities reduce no-show behavior in professional sports. According to the results of our large-scale field experiment, the reminders have only a short-term effect that operates most effectively through a monetary gift reward with no persistent behavioral change in subsequent games. As regards individual characteristics, spectators who attended the stadium more infrequently during the season under study, who had front row seats, or had seated rather than standing arrangements were also more likely to respond to the treatment.
    Keywords: attendance; field experiment; no-shows; probabilistic rewards; reminders
    JEL: C93 D12 L83 R22 Z20
    Date: 2020–10
  14. By: Hager, Anselm (Humboldt-Universit¨at zu Berlin); Hensel, Lukas (University of Oxford); Hermle, Johannes (University of California, Berkeley and IZA); Roth, Christopher (University of Warwick)
    Abstract: Collective action is the result of the efforts of groups consisting of many individuals. This gives rise to strategic interactions: the decision of an individual to participate in collective action may depend on the efforts of both like-minded and opposing activists. This paper causally studies such strategic interactions in the context of left- and right-wing protests in Germany. In an experiment, we investigated whether randomly varied information on turnout of both like-minded and opposing movements impacts activists’ willingness to protest. In response to information about high turnout of their own group, left-wing activists increased their willingness to protest, consistent with theories of conditional cooperation. In contrast, right-wing activists decreased their willingness to protest, consistent with instrumental accounts and free-riding motives. For both groups, there was no significant reaction to information about turnout of the opposing movement. The results highlight substantial heterogeneity in strategic interactions and motives across the political spectrum
    Keywords: Political rallies, field experiment, strategic behavior, beliefs JEL Classification:
    Date: 2020
  15. By: Cibik, Ceren Bengu (Department of Economics,University of Warwick); Sgroi, Daniel (Department of Economics,University of Warwick)
    Abstract: We investigate the relationship between self-awareness and dishonesty in a preregistered experiment with 1,260 subjects. In a first experiment, we vary the level of awareness of subjects' own past dishonesty and explore the impact on behaviour in tasks that include the scope to lie. We nd that in single-person non-interactive tasks, self-awareness of dishonesty helps to lower dishonesty in the future. However, in tasks that are competitive in nature becoming more aware of past dishonesty raises the likelihood of dishonesty. We argue that this behaviour is consistent with cognitive dissonance. In a second experiment we vary the degree of competitiveness in one of our core tasks to further explore the interactions between self-awareness, (dis)honesty and competition. Our results show when and why pointing out those who have been (dis)honest in the past can be an effective way to induce honesty in the future and when it might back- re badly, and perhaps also shed some light on perceived increases in dishonesty in politics, the media and everyday life
    Date: 2020
  16. By: Vorstaz, Marc; Lopes Moreira Da Veiga, María Helena; Peeters, Ronald
    Abstract: Within an experimental financial market, we study how information about the true dividend of an asset (that is either high or low), which is available to some traders, is absorbedin the asset's price when all traders have access to past trading prices of another assetthat was traded in a separate market. We consider two treatments: in one, the dividendsof the two assets are independent; in the other, they are positively correlated. Our mainresult is that market efficiency is worse in some instances in the correlated treatment,which highlights that the information linkage between markets can obstruct the information transmission from the informed to the uninformed traders. More specifically, ifthe dividend of the own asset is high, prices reasonably converge towards the rationalexpectations equilibrium but are too low in the correlated treatment if the dividend inthe other market is low. If the dividend of the own asset is low, asset prices are furtheraway from rational expectations equilibrium if dividends are correlated, which is mainlycaused by the instances where prices in the other market were high.
    Keywords: Contagion; Rational Expectations; Information Aggregation; Experimental Markets
    JEL: G12 D82 C92
    Date: 2020–10–16
  17. By: Ruben C. Arslan; Martin Brümmer; Thomas Dohmen; Johanna Drewelies; Ralph Hertwig; Gert G. Wagner
    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: 2020–10
  18. By: Dertwinkel-Kalt, Markus (Frankfurt School of Finance and Management); Köster, Mats (Heinrich Heine University Düsseldorf); Sutter, Matthias (Max Planck Institute for Research on Collective Goods)
    Abstract: We examine whether shrouding or partitioning of a surcharge raises demand in online shopping. In a field experiment with more than 34,000 consumers, we find that consumers in the online shop of a cinema are more likely to select tickets for a 3D movie when the 3D surcharge is shrouded, but they also drop out more often when the overall price is shown at the checkout. In sum, the demand distribution is independent of the price presentation. This result outlines the limits of the effectiveness of shrouding practices.
    Keywords: salience, inattention, shrouding, price partitioning, field experiment
    JEL: D81 C93
    Date: 2020–10
  19. By: Manar Alnamlah (Department of Strategy and Innovation, Copenhagen Business School); Christina Gravert (CEBI, Department of Economics, University of Copenhagen)
    Abstract: In competitive and high-reward domains such as corporate leadership and entrepreneurship, women are not only underrepresented but they are also more likely to drop-out after failure. In this study, we conducted a laboratory experiment to investigate the influence of attributing failure to one of the three causal attributions - luck, effort, and ability - on the gender difference in competition persistence. Participants compete in a real effort task and then their success or failure is attributed to one of three causal attributions. We find significant gender differences in competition persistence when failure is attributed to a lack of ability, with women dropping out more. On the contrary, when suggested that failure was due to lack of luck, women’s competition persistence after failure increases relative to men. We find no gender difference when failure is attributed to a lack of effort. Our findings have important implications for designing feedback mechanisms to reduce the gender gap in competitive domains.
    Keywords: decision analysis, competition, gender gap, performance feedback, laboratory experiment
    JEL: C91 D03 M50 J24
    Date: 2020–10–19
  20. By: Thomas Markussen; Smriti Sharma; Saurabh Singhal; Finn Tarp
    Abstract: We examine the effects of randomly introduced economic inequality on voluntary cooperation, and whether this relationship is influenced by the quality of local institutions, as proxied by corruption. We use representative data from a large-scale lab-in-the-field public goods experiment with over 1,300 participants across rural Vietnam. Our results show that inequality adversely affects aggregate contributions, and this is on account of high endowment individuals contributing a significantly smaller share than those with low endowments.
    Keywords: Inequality, Institutions, Corruption, Public goods, lab-in-field experiment
    Date: 2020
  21. By: Brañas-Garza, Pablo; Jorrat, Diego; Alfonso-Costillo, Antonio; Espín, Antonio M.; Garcia, Teresa; Kovářík, Jaromír
    Abstract: We report data from an online experiment, which allow us to study whether generosity has changed during the early Covid-19 pandemic. We have gathered data from Spanish participants over a six-day period in which Covid-19-associated deaths in Spain, one of the most affected countries, increased fourfold. In our experiment, participants could donate a fraction of a €100 prize to a charity. Our data are particularly rich in the age distribution and we complement them with daily public information about the Covid-19-related deaths, infections, and hospital admissions. We find that donations decreased in the period under study and scale down with the public information about the life and health impact of the pandemic. The effect is particularly pronounced among older subjects. Our analysis of the mechanisms behind the detected decrease in solidarity highlights the key—but independent—role of expectations about others’ behavior, perceived mortality risk, and (alarming) information in behavioral adaptation.
    Keywords: Generosity, Covid-19, Experiments, Social Preferences
    JEL: C93 D64
    Date: 2020–08
  22. By: Sophie Cetre (Sciences Po, Paris); Yann Algan (Sciences Po, Paris); Gianluca Grimalda (Kiel Institute for the World Economy); Fabrice Murtin (OECD); Louis Putterman (Brown university); Ulrich Schmidt (Kiel Institute for the World Economy); Vincent Siegerink (OECD)
    Abstract: This paper studies ethnic in-group bias in online trust games played by two large representative samples in the United States and Germany through the Trustlab platform, which was launched by the OECD and several research partners in 2017. The ethnic in-group bias, defined as the propensity to favour members of one’s own ethnic group in terms of monetary payoff, is significant in both countries. In the United States, members of the three largest ethnic groups trust people from their own ethnic group more than those from other groups. African Americans have a larger in-group bias than White Americans and Hispanics. Ethnic differentiation is not selective, as each group tends to have lower trust in the two other ethnic groups but at roughly the same rate. In contrast, ethnic differentiation is strongly selective in Germany: subjects of German parentage discriminate twice as much against Turkish descent participants as against Eastern European descent participants. Members of both ethnic minorities in Germany trust each other less than their own ethnic group, but do not discriminate against ones of German parentage. We also examine whether releasing information on the trustee being rich reduces ethnic differentiation, while conjecturing that this is a way to remove the stereotype that ethnic minorities are “undeserving poor”. We show that, in this case, discrimination by the ethnic majority is indeed reduced. People of Turkish descent who are rich tend to be more trusted than lower-income people of Turkish descent. However, releasing information on income can backfire, as it can increase mistrust within minorities. Finally, we show that group loyalty exists not only according to ethnicity but also according to income, as rich German parentage subjects trust other rich in-group members significantly more than do non-rich Germans.
    Keywords: ethnic discrimination, in-group bias, income inequality, online experiment, trust
    JEL: C99 J71
    Date: 2020–10–26
  23. By: Andreas Ziegler (University of Amsterdam); Giorgia Romagnoli (University of Amsterdam); Theo Offerman (University of Amsterdam)
    Abstract: Recent work examines whether morals are eroded in single-unit markets (Falk & Szech, 2013; Bartling, Fehr & Ozdemir, 2020). These markets provide market power to individual traders, which limits the roles of two forces; (i) replacement logic, whereby immoral trading is justified by the belief that others would trade otherwise; (ii) market selection, by which the least moral trader determines quantities. In an experiment, we compare single-unit to (more common) multi-unit markets which may activate these forces. We find that, in contrast to single-unit markets, multi-unit markets show full erosion of morals. Especially the replacement logic drives this finding.
    Keywords: replacement logic, social responsibility, markets, externalities, competition, charity
    JEL: D62 C91 C92
    Date: 2020–10–13
  24. By: Hager, Anselm (Humboldt-Universit¨at zu Berlin); Hensel, Lukas (University of Oxford); Hermle, Johannes (University of California, Berkeley and IZA); Roth, Christopher (University of Warwick)
    Abstract: Does party competition affect political activism? This paper studies the decision of party supporters to join political campaigns. We present a framework that incorporates supporters’ instrumental and expressive motives and illustrates that party competition can either increase or decrease party activism. To distinguish between these competing predictions, we implemented a field experiment with a European party during a national election. In a seemingly unrelated party survey, we randomly assigned 1,417 party supporters to true information that the canvassing activity of the main competitor party was exceptionally high. Using unobtrusive, real-time data on party supporters’ canvassing behavior, we find that treated respondents are 30 percent less likely to go canvassing. To investigate the causal mechanism, we leverage additional survey evidence collected two months after the campaign. Consistent with affective accounts of political activism, we show that increased competition lowered party supporters’ political self-efficacy, which plausibly led them to remain inactive.
    Keywords: Party Activism, Electoral Competition, Field Experiment, Campaigns JEL Classification:
    Date: 2020
  25. By: El-Bialy, Nora; Fraile Aranda, Elisa; Nicklisch, Andreas; Saleh, Lamis; Voigt, Stefan
    Abstract: The civil war in Syria has been raging since 2011. We ask whether civil war experience affects voluntary cooperation and its coordination by means of peer punishment. To answer that question, we ran experiments with Syrians and Jordanians, and use a victimization index to measure the individual war exposure among Syrians. Despite being more trusting, severely victimized Syrians tend to be less cooperative when subsequent peer punishment is possible. Severely victimized participants punish whenever possible, not distinguishing between their opponent s decisions. Our findings show that experiencing extreme violence deteriorates the adequate use of sanctioning mechanisms.
    Keywords: Civil war,Victimization,Trust,Cooperation,Punishment
    JEL: C72 C93 D91 O15 Z13
    Date: 2020
  26. By: Benjamin Ouvrard (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Raphaële Préget (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 - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Arnaud Reynaud (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Laetitia Tuffery (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 - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: In a global context of increasing water scarcity, reducing water use in the agricultural sector is one of the spearheads of sustainable agricultural and environmental policies. New technologies such as smart water meters are promising tools for addressing this issue, but their voluntary adoption by farmers has been limited. Conducting a discrete choice experiment with randomized treatments, we test two policy instruments designed to foster the voluntary adoption of smart water meters: a conditional subsidy and green nudges. The conditional subsidy is offered to farmers who adopt a smart meter only if the rate of adoption in their geographic area is sufficiently high (25%, 50% or 75%). In addition, we implement informational nudges by providing farmers specific messages regarding water scarcity and water management. With the responses of 1,272 French farmers, we show that both policy instruments are effective tools for fostering smart water meter adoption. Surprisingly, our results show that the willingness to pay for the conditional subsidy does not depend on the collective adoption threshold. We also demonstrate that farmers who receive an informational nudge are more likely to opt for a smart water meter. This result calls for a careful joint design of these two policy instruments..
    Keywords: Behavioural economics,Choice experiment,Nudges,French farmers,Smart water meters,Social norms.
    Date: 2020–10–06
  27. By: Olga Untilov (Audencia Business School); Stéphane Ganassali (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: Science communication on a product-harm situation aims to create awareness on the product's potential impacts for consumers. However, consumers tend to overestimate the information provided, due to possible halo effects. Here we designed a contextual model of halo development including individual and message characteristics detected in the literature as potential moderators. Our experimental study, based on a sample of 3,766 European respondents, evaluates these halo moderators in the context of a product-harm science communication. The results reveal a stronger halo effect on consumers' beliefs when the focal topic is considered as more important (health vs ethics) and simultaneously when the source of information is more credible (official vs non-official). Highly involved consumers are also subject to greater halo effects. Suggested implications mainly focus on the need to consider potential amplifying halo effects and on the importance of responding to a product-harm communication via a very accurate communication approach.
    Date: 2020–09
  28. By: Iván Barreda-Tarrazona (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Gerardo Sabater-Grande (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzis (Burgundy School of Wines and Spirits Business, Dijon, France and LEE and Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: In this note we describe the S-GG risk-elicitation task. This multiple-lottery allows for obtaining two factors describing a subject’s risk attitude with just four choices by this same subject. We describe the implementation of the task and also provide free zTree programs (in English and Spanish) to facilitate its integration into an experimental design. Some frequently asked questions highlighting the advantages and limitations of this task are also provided.
    Keywords: risk-elicitation task, multiple-lottery choices, implementation and programs
    JEL: C91 D81 D90
    Date: 2020
  29. By: Ananish Chaudhuri; Vegard Iversen; Francesca R. Jensenius; Pushkar Maitra
    Abstract: Who gets elected to political office? The negative selection hypothesis posits that the inherently dishonest run for office, expecting to earn political rent. Alternatively, the positive selection hypothesis suggests that individuals join politics to make a difference. Developing country politicians are frequently stereotyped as embodiments of the negative selection hypothesis. Using survey and experimental data covering village councils in rural West Bengal, we find that inexperienced village council politicians are less dishonest and more pro-social than ordinary citizens. Our findings also suggest that this idealism wears off with time.
    Keywords: selection into politics, politician quality, corruption, experiments, behavioural games
    JEL: C93 O12 O53 Z18
    Date: 2020
  30. By: Theo Offerman (University of Amsterdam); Giorgia Romagnoli (University of Amsterdam); Andreas Ziegler (University of Amsterdam)
    Abstract: The popularity of open ascending auctions is often attributed to the fact that openly observable bidding allows to aggregate dispersed information. Another reason behind the frequent utilization of open auction formats may be that they activate revenue enhancing biases. In an experiment, we compare three auctions that differ in how much information is revealed and in the potential activation of behavioral biases: (i) the ascending Vickrey auction, a closed format; and two open formats, (ii) the Japanese-English auction and (iii) the Oral Outcry auction. Even though bidders react to information conveyed in others’ bids, information aggregation fails in both open formats. In contrast, the Oral Outcry raises higher revenue than the other two formats, by stimulating bidders to submit unprofitable jump bids and triggering a quasi-endowment effect.
    Keywords: ascending auctions, information aggregation, jump bidding, auction fever
    JEL: C90 D44 D82
    Date: 2020–10–13
  31. By: Franz Dietrich (Centre d'Economie de la Sorbonne, Paris School of Economics); Antonios Staras (Institute of Economics - Cardiff University); Robert Sugden (School of Economics - University of East Anglia)
    Abstract: Leonard Savage famously contravened his own theory when first confronting the Allais Paradox, but then convinced himself that the had made an error. We examine the formal structure of Savage's ‘error-correcting’ reasoning in the light of (i) behavioural economists' claims to identify the latent preferences of individuals who violate conventional rationality requirements and (ii) John Broome's critique of arguments which presuppose that rationality requirements can be achieved through reasoning. We argue that Savage's reasoning is not vulnerable to Broome's critique, but does not provide support for the view that behavioural scientists can identify and counteract errors in people's choices
    Keywords: Savage; Allais Paradox; Broome; rationality; reasoning; behavioural economics
    JEL: B41 C18 D01 D81 D90
    Date: 2020–05

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.