|
on Experimental Economics |
|
Issue of 2020‒11‒30
forty-six papers chosen by |
| By: | Petrishcheva, Vasilisa; Riener, Gerhard; Schildberg-Hörisch, Hannah |
| Abstract: | We conduct a laboratory experiment to explore whether loss aversion applies to social image concerns. First, subjects are ranked publicly in a social image relevant domain, an IQ test, to establish own rank as a within-subject reference point. We then induce an exogenous change in within-subject rank and offer scope for lying about it to test whether subjects whose rank exogenously deteriorates (loss in social image) lie more than those who experience an equally-sized gain in rank (gain in social image). We find evidence for loss aversion in social image concerns, however, only for subjects who strongly care about their social image and have reputation to lose (high initial reference point). |
| Keywords: | loss aversion,social image concerns,lying behavior,laboratory experiment |
| JEL: | C91 D91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224581&r=all |
| By: | Adam Zylbersztejn; Zakaria Babutsidze (Observatoire français des conjonctures économiques); Nobuyuki Hanaki (Université Côte d'Azur (UCA)) |
| Abstract: | We experimentally investigate how much value people put in observable information about others in strategic interactions. The incentivized experimental task is to predict an unknown target player’s trustworthiness in an earlier hidden action game. In Experiment 1, we vary the source of information about the target player (neutral picture, neutral video, video containing strategic content). The observed prediction accuracy rates then serve as an empirical measure of the objective value of information. In Experiment 2, we elicit the subjective value of information using the standard stated preferences method (“willing- ness to accept”). While the elicited subjective values are ranked in the same manner as the objective ones, subjects attach value to information which does not help predict target behavior, and exaggerate the value of helpful information. |
| Keywords: | Prediction; Observable information; Individual characteristics; Stated preferences; Willingness to accept; Experiment |
| JEL: | C72 D83 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/3r19808hvq8dlb97k36cbcqihj&r=all |
| By: | Christoph Buehren (Clausthal University of Technology); Astrid Dannenberg (University of Kassel) |
| Abstract: | We use an experiment to test the hypothesis that groups consisting of like-minded cooperators are able to cooperate irrespective of punishment and therefore have a lower demand for a costly punishment institution than groups of like-minded free riders, who are unable to cooperate without punishment. We also predict that the difference in the demand for punishment is particularly large when members know about the composition of their group. The experimental results confirm these hypotheses. However, the information about the composition of the group turns out to be even more important than we expected. It helps cooperative groups to avoid wasting resources for an unneeded punishment institution. In uncooperative groups, it helps members to recognize the need for punishment early on and not to follow an uncooperative path that produces a persistently competitive attitude. These findings highlight the role of group composition and information for institution formation and that lessons learned by one group cannot be readily transferred to other groups. |
| JEL: | C91 H41 D23 C72 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202044&r=all |
| By: | Prissé, Benjamin; Brañas-Garza, Pablo |
| Abstract: | The original standard for measuring time preferences was Multiple Price List (MPL), where subjects are asked to choose between an amount of money in the present and a larger amount of money in the future. Convex Time Budget (CTB) was later introduced, allowing subjects to differentially allocate money between present and future. It improved precision of measurement but also increased the complexity of the task. In this paper we introduce the Visual Convex Time Preferences (VCTP), a new measure of time preferences synthesizing simplicity of MPL and precision of CTB. Results from the lab suggest that VCTP is robust and improves precision of time preferences measurement compared to the MPL. Same results are replicated in the field of Honduras, especially when the experiment is run with the help of enumerators. Experiments with teenagers show that younger population exhibit high level of inconsistency although older participants perform better. |
| Keywords: | Time Preferences, MPL, Experiments |
| JEL: | C91 C93 D91 |
| Date: | 2021–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:104174&r=all |
| By: | Evan Munro |
| Abstract: | There is increasing interest in using observed individual-level data to formulate personalized policy. Examples of this include heterogeneous pricing, individualized credit offers, and targeted social programs. This paper provides a general model of how personalized policy creates incentives for individuals to modify their behavior to obtain a better treatment. For a given planner objective, we show that standard estimators based on repeated risk minimization produce a suboptimal policy. We propose a dynamic experiment that estimates the optimal treatment allocation function when agents are strategic and has regret that decays at a linear rate. A key insight is that random variation in how treatment assignment depends on observed characteristics is required, and that randomized treatment assignment alone is not sufficient to identify the optimal policy. We show this experimental method outperforms alternative methods that do not learn strategic effects in simulations and in a small MTurk experiment. |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2011.06528&r=all |
| By: | Jeongbin Kim; Wooyoung Lim; Sebastian Schweighofer-Kodritsch |
| Abstract: | We generalize the Rubinstein (1982) bargaining model by disentangling payoff delay from bargaining delay. We show that our extension is isomorphic to generalized discounting with dynamic consistency and characterize the unique equilibrium. Using a novel experimental design to control for various confounds, we then test comparative statics predictions with respect to time discounting. All bargaining takes place within a single experimental session, so bargaining delay is negligible and dynamic consistency holds by design, while payoff delay per disagreement round is significant and randomized transparently at the individual level (week/month, with/without front-end delay). In contrast to prior experiments, we obtain strong behavioral support for the basic predictions that hold regardless of the details of discounting. Testing differential predictions of different forms of discounting, we strongly reject exponential discounting in favor of present-biased discounting. |
| Keywords: | alternating-offers bargaining, time preferences, present bias, laboratory experiments |
| JEL: | C78 C91 D03 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8683&r=all |
| By: | Tonke, Sebastian |
| Abstract: | Individuals often desire to achieve certain outcomes, but potentially lack the procedural knowledge on how to do so. This study provides causal evidence that imperfect procedural knowledge is a severe obstacle to efficient behavior, but can be overcome by providing low-cost information. I conduct a large-scale field experiment with a public water utility to encourage water conservation during a drought. Providing mass-targeted conservation strategies via text message decreases consumption by 5.2 percent. Additional treatments encouraging individuals to develop own strategies are ineffective and rule out alternative explanations such as reminders, awareness of water scarcity, or being asked to reduce consumption. |
| Keywords: | Field experiment,information provision,resource conservation |
| JEL: | C93 D91 Q25 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224536&r=all |
| By: | Pol Campos-Mercade (Department of Economics, University of Copenhagen) |
| Abstract: | People are less likely to make moral decisions when they are in groups. I study when this phenomenon makes groups less likely to produce a morally desirable outcome than one individual alone. I formulate and test a model in which a moral outcome occurs if at least one individual makes a costly decision. Using a lab experiment and data from field experiments on the bystander effect, I show that if most individuals are moral, the moral outcome is more likely to be produced by one individual, whereas if most individuals are immoral, it is more likely to be produced by a group. This rule is not only useful for reconciling previous mixed evidence on moral decisions in groups, but may also be applied to better design organizations and institutions. |
| Keywords: | moral behavior, group size, bystander effect, social preferences |
| JEL: | C92 D64 D90 |
| Date: | 2020–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kucebi:2026&r=all |
| By: | Fortuna Casoria (Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France); Ernesto Reuben (New York University Abu Dhabi, Center for Behavioral Institutional Design; Luxembourg Institute of Socio-Economic Research); Christina Rott (Vrije Universiteit Amsterdam, 1081HV Amsterdam, The Netherlands) |
| Abstract: | We investigate the effects of group identity on hiring decisions with adverse selection problems. We run a laboratory experiment in which employers cannot observe a worker's ability nor verify the veracity of the ability the worker claims to have. We evaluate whether sharing an identity results in employers discriminating in favor of ingroup workers, and whether it helps workers and employers overcome the adverse selection problem. We induce identities using the minimal group paradigm and study two settings: one where workers cannot change their identity and one where they can. Although sharing a common identity does not make the worker's claims more honest, employers strongly discriminate in favor of ingroup workers when identities are fixed. Discrimination cannot be explained by employers' beliefs and hence seems to be taste-based. When possible, few workers change their identity. However, the mere possibility of changing identities erodes the employers' trust towards ingroup workers and eliminates discrimination. |
| Keywords: | Labor, Discrimination, Identity, Economics: Game Theory and Bargaining Theory, Hiring |
| JEL: | C9 D82 J71 M51 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2033&r=all |
| By: | Shaun P. Hargreaves Hep; Eugenio Levi; Abhijiit Ramalingam |
| Abstract: | Using a dictator game experiment, we investigate if a policy of introducing material incentives to favour one’s own group members will be effective in raising the in-group bias in behaviour. It is not: the introduction of the material incentives in our experiment crowds-out the in-group bias in our subjects’ social preferences. Specifically, we find evidence that is consistent with the social identification with own group members weakening through the introduction of material incentives towards the in-group bias. This result potentially creates a nationalist policy paradox whereby policies like tariffs and discriminatory employment regulations designed to encourage materially the employment of home rather than foreign workers will, on the evidence of this experiment, weaken individuals’ preferences for favouring home over foreign workers. Key Words: experiment, dictator game, social identification, in-group bias, incentives, crowding-out |
| JEL: | C72 C91 D31 D63 D91 J70 Z18 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:20-14&r=all |
| By: | A. Stefano Caria |
| Abstract: | We introduce a novel adaptive targeted treatment assignment methodology for field experiments. Our Tempered Thompson Algorithm balances the goals of maximizing the precision of treatment effect estimates and maximizing the welfare of experimental participants. A hierarchical Bayesian model allows us to adaptively target treatments. We implement our methodology in Jordan, testing policies to help Syrian refugees and local jobseekers to find work. The immediate employment impacts of a small cash grant, information and psychological support are close to zero, but targeting raises employment by 1 percentage-point (20%). After four months, cash has a sizable effect on employment and earnings of Syrians. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2020-20&r=all |
| By: | Werthschulte, Madeline |
| Abstract: | When consuming goods provided by public utilities, such as telecommunication, water, gas or electricity, the predominant payment scheme is pay-later billing. This paper identifies one potential consequence of pay-later schemes, present-biased overconsumption of the respective good, and tests the effectiveness of pay-as-you-go schemes in reducing consumption. Specifically, I run a lab experiment which mimics an energy consumption choice and randomizes the timing of when consumption costs are paid: Either immediately ('pay-as-you-go') or one-week after consumption ('pay-later'). Results show that pay-as-you-go billing significantly decreases consumption, and in particular wasteful consumption. As the design controls for contaminating effects, these results can be solely attributed to present-biased discounting under the pay-later scheme. These results imply that pay-as-you-go schemes will be welfare improving both from agent's own perspective and from a social perspective if externalities are involved. In contrast, classic price-based polices will need correctives to account for present bias arising under pay-later schemes. |
| Keywords: | payment schemes,present bias,discounting,lab experiment,energy |
| JEL: | C91 D15 D91 Q49 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:121&r=all |
| By: | Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Yang Yang (Lingnan College, Sun Yat-sen University) |
| Abstract: | We develop a method for random assignment of language to participants in a controlled laboratory experiment, and use this to test the hypothesis that languages are learned more quickly when they can be identified with fewer number of observations. While the theory based on this hypothesis has generated substantial attention since being advanced by Blume (2005), evidence on its empirical validity has been elusive. Here we develop a novel extension of coordination games within which languages emerge endogenously. We show, first, that one can control features of an emergent language by varying the game’s incentives. This enables us to compare speed of learning across participants randomly assigned to different languages. Our data provide cogent evidence supporting the above hypothesis and Blume’s (2005) theory: Languages with compositional structures can be identified with fewer observations and are learned more quickly, and in this sense are efficient. Despite this, we find inefficient languages to sometimes emerge when they can be expressed using simple rules. |
| Keywords: | testing the efficiency theory of language, random assignment of language, laboratory experiment |
| JEL: | C91 D83 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1079&r=all |
| By: | Pedro C. Vicente; Ines Vilela |
| Abstract: | Violence perpetrated by radicalized Muslims is a major problem around the world. We collaborated with the main Islamic authority in Mozambique, which sponsored two randomized interventions to prevent violence related to youth radicalization: a religious campaign against extremist views of Islam, targeting change in beliefs; and a training module on entrepreneurship and employment, aiming to increase the opportunity cost of conflict. Our measurement focuses on anti-social behavior in a Joy-of-destruction lab game. We find that only the religious treatment decreased the propensity to destroy payoffs of others. Consistently, surveys show increased trust in state and decreased support for extremism. |
| Keywords: | Islamic radicalization, violence, conflict, political economy, experiment, joy-of-destruction game, Mozambique, Africa |
| JEL: | D74 O55 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:unl:novafr:wp2008&r=all |
| By: | Christoph Drobner (Technical University of Munich) |
| Abstract: | When do people update beliefs about ego-relevant information optimistically? Based on previous empirical and theoretical work, I postulate that optimistic belief updating is only activated when subjects expect no immediate resolution of uncertainty because subjects cannot savor direct belief utility from inflated beliefs when they anticipate the resolution of uncertainty. I test this hypothesis in a laboratory experiment, where subjects update beliefs about their relative performance in an IQ test, by manipulating subjects' expectations about uncertainty resolution. The results show that subjects in fact only engage in optimistic belief updating when they expect no immediate resolution of their true performance. This finding highlights an important dimension of the supply side of motivated beliefs and contributes to resolve the puzzling evidence on optimistic belief updating. Moreover, I document that subjects ex-post rationalize information by manipulating their stated beliefs about the ego-relevance of the IQ test depending on the valence of information. This result suggests an additional channel that subjects use to protect their ego utility, which goes beyond biases in information processing. |
| Keywords: | Motivated beliefs, Optimistic belief updating, Ex-post rationalization, Bayes' rule, Expectations about uncertainty resolution |
| JEL: | C91 D83 D84 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:aiw:wpaper:07&r=all |
| By: | Francis J. DiTraglia (Department of Economics University of Oxford); Camilo Garcia-Jimeno (Federal Reserve Bank of Chicago); Rossa O'Keeffe-O'Donovan (Department of Economics University of Oxford); Alejandro Sanchez-Becerra (University of Pennsylvania) |
| Abstract: | This paper shows how to use a randomized saturation experimental design to identify and estimate causal effects in the presence of social interactions--one person's treatment may affect another's outcome--and one-sided non-compliance--subjects can only be offered treatment, not compelled to take it up. Two distinct causal effects are of interest in this setting: direct effects quantify how a person's own treatment changes her outcome, while indirect effects quantify how her peers' treatments change her outcome. We consider the case in which social interactions occur only within known groups, and take-up decisions do not depend on peers' offers. In this setting we point identify local average treatment effects, both direct and indirect, in a flexible random coefficients model that allows for both heterogenous treatment effects and endogeneous selection into treatment. We go on to propose a feasible estimator that is consistent and asymptotically normal as the number and size of groups increases. |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2011.07051&r=all |
| By: | Werner, Tobias; Hillenbrand, Adrian; Winter, Fabian |
| Abstract: | Volunteering is a widespread allocation mechanism at the workplace and emerges naturally in open-source software development, the generation of online knowledge platforms, and to some extent in "agile" work environments. Using a field experiment with 8 treatments and close to 2,800 workers on an online labor market, we study the effect of team size on volunteering at the workplace under incomplete information. In stark contrast to the theoretical predictions, we find no effect of team size on volunteering behavior. With the use of our control treatments, we can show that workers react to free-riding incentives provided by the volunteering setting in general, but do not react strategically to the team size. We show that the result is robust to several further factors. |
| JEL: | C93 C72 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224519&r=all |
| By: | Daniela Del Boca; Chiara Daniela Pronzato; Lucia Schiavon |
| Abstract: | This paper investigates the impact of parenting courses on fragile families’ time use with their children. Courses aimed at raising parental awareness of the importance of educational activities are offered in four Italian cities (Naples, Reggio Emilia, Teramo and Palermo) within the framework of the social program “FA.C.E. Farsi Comunità Educanti†and with the cooperation of the program “Con i Bambini†2. To conduct the impact evaluation3, we designed a randomized controlled trial involving random assignment of the families (mostly mothers). At the end of the intervention, we administered an assessment questionnaire both to the treatment group, which took the course, and to the control group, which did not. Comparing the outcomes, we find attending the course increased families' awareness of the importance of educational activities for children, the frequency with which they read to the child, and their desire to spend more time with the child. |
| Keywords: | parenting, use of time, randomized controlled trial |
| JEL: | J13 D1 I26 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:628&r=all |
| By: | Guido Friebel (Department of Management and Microeconomics, Goethe-University Frankfurt, 60323 Frankfurt/Main, Germany); Matthias Heinz (Department of Management, University of Cologne, 50923 Cologne, Germany); Nikolay Zubanov (Department of Economics, University of Konstanz, 78464 Konstanz, Germany) |
| Abstract: | In an RCT, a large retail chain’s CEO sets new goals for the managers of the treated stores by asking them “to do what they can” to reduce the employee quit rate. The treatment decreases the quit rate by a fifth to a quarter, lasting nine months before petering out, but reappearing after a reminder. There is no treatment effect on sales. Further analysis reveals that treated store managers spend more time on HR and less on customer service. Our findings show that middle managers are instrumental in reducing personnel turnover, but they face a tradeoff between investing in different activities in a multitasking environment with limited resources. The treatment does produce efficiency gains. However, these occur only at the firm level. |
| Keywords: | organizations, randomized controlled trial (RCT), insider econometrics, goal-setting, communication, HR, personnel turnover and firm performance |
| JEL: | L2 M1 M12 M5 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:039&r=all |
| By: | Collins, Sean M.; James, Duncan; Servátka, Maroš; Vadovič, Radovan |
| Abstract: | We examine equilibration in a market where Marshallian path adjustment can be enforced, or not, as a treatment: a posted offer market either with buyer queueing via value order, or random order, respectively. We derive equilibrium predictions, and run experiments crossing queueing rules with either human or deterministically optimizing robot buyers under both locally stationary and nonstationary marginal cost. Results on rate of convergence to competitive equilibrium are obtained, and Marshallian path adjustment is established as conducive to attaining competitive equilibrium. |
| Keywords: | laboratory experiment, Marshallian path adjustment, equilibration, markets |
| JEL: | C4 C9 C91 |
| Date: | 2020–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:104103&r=all |
| By: | Treich, Nicolas; Espinosa, Romain |
| Abstract: | NGOs often vary in terms of how radical they are. In this paper, we explore the effectiveness of NGO discourses in bringing about social change. We focus on animal advocacy: welfarist NGOs primarily seek to improve the conditions in which animals are raised and reduce meat consumption, while abolitionist NGOs categorically reject animal use and call for a vegan society. We design an experiment to study the respective impact of welfarist and abolitionist discourses on participants’ beliefs regarding pro-meat justifications and their actions, namely their propensity to engage in the short-run in animal welfare (charity donation, petition against intensive farming)and plant-based diets (subscription to a newsletter promoting plant-based diets, petition supporting vegetarian meals). We first show that both welfarist and abolitionist discourses significantly undermine participants’ pro-meat justifications. Second, the welfarist discourse does not significantly affect participants’ actions, while we detect a potential backlash effect of the abolitionist discourse. We show that the NGOs’ positive standard effect on actions through the change in beliefs is outweighed by a negative behavioral response to the discourses (reactance effect). Last, greater public-good contributions are associated with greater engagement in animal welfare in the presence of an NGO discourse. |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:124912&r=all |
| By: | Loukas Balafoutas; Helena Fornwagner; Rudolf Kerschbamer; Matthias Sutter; Maryna Tverdostup |
| Abstract: | Credence goods markets – like for health care or repair services – with their informational asymmetries between sellers and customers are prone to fraudulent behavior of sellers and resulting market inefficiencies. We present the first model that considers both diagnostic uncertainty of sellers and the effects of insurance coverage of consumers in a unified framework. We test the model’s predictions in a laboratory experiment. Both in theory and in the experiment diagnostic uncertainty decreases the rate of efficient service provision and leads to less trade. In theory, insurance also decreases the rate of efficient service provision, but at the same time it also increases the volume of trade, leading to an ambiguous net effect on welfare. In the experiment, the net effect of insurance coverage on efficiency turns out to be positive. We also uncover an important interaction effect: if consumers are insured, experts invest less in diagnostic precision. We discuss policy implications of our results. |
| Keywords: | credence goods, diagnostic uncertainty, insurance coverage, welfare, model, experiment |
| JEL: | C91 C72 D82 G22 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8681&r=all |
| By: | Silvia Angerer; Daniela Glätzle-Rützler; ChristianWaibel |
| Abstract: | This paper investigates the impact of monitoring institutions on market outcomes in health care. Health care markets are characterized by asymmetric information. Physicians have an information advantage over patients with respect to the appropriate treatment for the patient and may exploit this informational advantage by over- and underprovision as well as by overcharging. We introduce two types of costly monitoring, endogenous and exogenous. When monitoring detects misbehavior, physicians have to pay a fine. Endogenous monitoring can be requested by patients, whereas exogenous monitoring is performed randomly by a third party. We present a toy model that enables us to derive hypotheses and to test them in a laboratory experiment. Our results show that introducing endogenous monitoring reduces the level of undertreatment and overcharging. Even under high monitoring costs, the threat of patient monitoring is sufficient to discipline physicians. Introducing exogenous monitoring also reduces undertreatment and overcharging when it is performed sufficiently frequently. Market efficiency increases when endogenous monitoring is introduced as well as when exogenous monitoring is implemented with sufficient frequency. Our results, therefore, suggest that monitoring may be a feasible instrument to improve outcomes in health care markets. |
| Keywords: | Credence goods, physician behavior, undertreatment, overtreatment, overcharging, monitoring, laboratory experiment |
| JEL: | C91 D82 I11 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2020-32&r=all |
| By: | Albrecht, Sabina; Ghidoni, Riccardo (Tilburg University, Center For Economic Research); Cettolin, Elena (Tilburg University, Center For Economic Research); Suetens, Sigrid (Tilburg University, Center For Economic Research) |
| Keywords: | prejudice; ethnic diversity; attitudes to immigrants; discrimination; intergroup contact; refugee crisis; individual-level fixed-effects regressions; lab-in-the-field experiment |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:bdd5091e-5b0a-4e82-b374-6f143517f9df&r=all |
| By: | Han Bleichrodt (Erasmus Research Institute of Management); Jurgen Eichberger (University of Heidelberg); Simon Grant (Australian National University); David Kelsey (University of Nottingham); Chen Li (Erasmus University, Rotterdam) |
| Abstract: | Accounting for ambiguity aversion in dynamic decisions generally implies that either dynamic consistency or consequentialism must be given up. To gain insight into which of these principles better describes people’s preferences we tested them using a variation of Ellsberg’s three-color urn experiment. Subjects were asked to make a choice both before and after they received a signal. We found that most ambiguity neutral subjects satisfied both dynamic consistency and consequentialism and behaved consistent with subjective expected utility with Bayesian updating. The majority of ambiguity averse subjects violated at least one of the principles and they were more likely to satisfy consequentialism than dynamic consistency. |
| Keywords: | ambiguity, three-color Ellsberg paradox, consequentialism, dynamic consistency |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2020-17&r=all |
| By: | Antonio Alfonso-Costillo (Department of Economics, Universidad Pablo de Olavide;); Rafael Morales-Sánchez (Department of Business Organization and Marketing, Universidad Pablo de Olavide;); Dunia López-Pintado (Department of Economics) |
| Abstract: | We study the benefits of doing volunteer work when seeking employment opportunities. We do so by sending 2000 fictitious curricula to a large online platform of job offers in the United States. Half of these curricula are randomly assigned volunteer activities. We find that people who do volunteer work receive 45 percent more callbacks for interviews. The volunteering premium is not uniform across economic sectors. In retailing and real estate, it is significant, whereas in the other sectors we have studied (animal service, technology and automobile) it is not. |
| Keywords: | job market, volunteering, field experiment. |
| JEL: | C93 J71 J64 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:20.08&r=all |
| By: | Alfonso-Costillo, Antonio; Morales-Sánchez, Rafael; López-Pintado, Dunia |
| Abstract: | We study the benefits of doing volunteer work when seeking employment opportunities. We do so by sending 2000 fictitious curricula to a large online platform of job offers in the United States. Half of these curricula are randomly assigned volunteer activities. We find that people who do volunteer work receive 45 percent more callbacks for interviews. The volunteering premium is not uniform across economic sectors. In retailing and real estate, it is significant, whereas in the other sectors we have studied (animal service, technology and automobile) it is not. |
| Keywords: | job market, volunteering, field experiment. |
| JEL: | C93 J64 J71 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103976&r=all |
| By: | d'Amato, Alessio; Goeschl, Timo; Lorè, Luisa; Zoli, Mariangela |
| Abstract: | We provide causal evidence on how date marking policies influence consumers' valuation of perishable food products through three consecutive research steps. In a preparatory in-store survey (n = 100), we identify perishable food items that can be experimentally manipulated to overcome core challenges for causal identification. A modified in-store multiple price list (MPL) experiment (n = 200) then tests consumers' valuation of perishable food of varying shelf-life (expiry date) in a two-by-two design that varies date mark type(use-by versus best-before) and information status while preventing free disposal censoring. We find that expiry dates affect consumer valuation, but not differences in date mark type. Educating consumers about date mark meaning turns out to be conducive to discarding potentially unsafe food, but not to preventing food waste. An attentiveness experiment (n = 160) tests whether these treatment effects plausibly result from the nature of consumers' knowledge and finds that the existing asymmetry in consumers' understanding of current date marks can explain the evidence from the modified MPL experiment. |
| Keywords: | date marking; food waste; consumer valuation; information-based policies; multiple price list experiment; in-store experiment |
| Date: | 2020–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0693&r=all |
| By: | Lea Heursen; Eva Ranehill; Roberto A. Weber |
| Abstract: | We study whether one reason behind female underrepresentation in leadership is that female leaders are less effective at coordinating action by followers. Two experiments using coordination games investigate whether female leaders are less successful than males in persuading followers to coordinate on efficient equilibria. Group performance hinges on higher-order beliefs about the leader’s capacity to convince followers to pursue desired actions, making beliefs that women are less effective leaders potentially self-confirming. We find no evidence that such bias impacts actual leadership performance, identifying a precisely-estimated null effect. We show that this absence of an effect is surprising given experts’ priors. |
| Keywords: | Gender, coordination games, leadership, experiment |
| JEL: | D23 C72 C92 J1 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:368&r=all |
| By: | Seemanti Ghosh |
| Abstract: | Poverty has a significant negative impact on perseverance, it has a psychological influence on people that make people give up sooner. This study conjectures that this impact is mediated by locus of control. In this article, I evaluate a lab-in-the-field experiment conducted with at-risk adolescents in India, where the impact of poverty is emulated through priming, and it is shown that simply shifting one’s consciousness of the generalized expectation of reinforcements towards more internal to self, the negative impact of poverty on perseverance can be mitigated. However, enough shift in locus of control to mitigate the impact of poverty priming in a lab setting happens effectively only when the intervention is delivered by a relatable role model. |
| Keywords: | experiment, non-cognitive, grit, perseverance, locus of control, poverty, inequality |
| JEL: | C91 C93 D91 I24 I28 I31 J24 O12 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2020_22&r=all |
| By: | Géraldine Bocquého; Julien Jacob; Marielle Brunette |
| Abstract: | In the original specification of cumulative prospect theory, distinct sets of parameters control for the curvature of the value function and the shape of the probability weighting function. There is one for the gain domain and one for the loss domain. However, in most estimations, behaviour over losses is assumed to perfectly reflect behaviour over gains, through a unique set of parameters. We examine the consequences of relaxing this simplifying assumption in the context of Tanaka et al.’s (2010) risk-experiment procedure. On the one hand, we show that subjects’ behaviour for gains is mostly reflected for losses at the aggregate and individual levels, and is consistent with the cumulative prospect theory fourfold pattern. However reflection is partial as the mean curvature of the value function is slightly less convex for losses than it is concave for gains. These results are robust to a high-stake context. Then, we demonstrate that assuming reflection when measuring loss aversion is innocuous neither at the aggregate nor at the individual level. On the other hand, we highlight the existence of a strong, negative and persistent framing effect on values elicited for loss aversion. |
| Keywords: | risk preferences, Tanaka-Camerer-Nguyen method, probability weighting, loss aversion, reflected behaviour. |
| JEL: | C91 D81 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2020-44&r=all |
| By: | Fehr, Dietmar; Vollmann, Martin |
| Abstract: | Most people tend to equate success with merit, a tendency that is particularly pronounced among conservatives. However, in practice it is exceedingly difficult to discern the relative impact of luck and effort to economic success. Based on a large-scale online study that samples the general US population, we investigate whether individuals misperceive the importance of luck for success, and how this mediates their meritocratic beliefs and acceptance of inequality. We randomly assign participants in pairs to compete in an easy or hard work assignment. The tasks are structured such that working on the easy work assignment almost certainly results in better performance and economic success. We show that economically successful participants overweight the role of effort in their success, perceiving high income as more deserved than unsuccessful participants. Subsequently, they demand less redistributive taxation, and they also show little interest in receiving information about the true determinants of their success. These general findings hold true regardless of political orientation. Successful liberals are as meritocratic as conservatives are, sharing the same beliefs in deservingness and preferences for low redistributive taxes. |
| Keywords: | inequality; deservedness; political views; cognitive dissonance; Fairness; Kognitive Dissonanz |
| Date: | 2020–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0695&r=all |
| By: | Mosenhauer, Moritz |
| Abstract: | This paper investigates tools to counter excessive stock trading and increase profits for private households participating in the stock market. Creating a stylised hold or trade-scenario in a computer laboratory experiment, I find that by solely changing the information the participants receive, trading activity can be reduced by roughly 30%, increasing trading profits by more than 0.55 percentage points on monthly net returns. In particular, I consider two information treatments. First, I provide the participants with additional information by giving detailed feedback on their actions and outcomes at every turn. Second, when considering whether to hold a given stock or trade it for another one, I restrict participants' information on the recent performance of their allocated stock. Both interventions lead to significant changes in behaviour. Additionally, the 2 × 2 experimental design reveals that the effects stack. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224549&r=all |
| By: | Jana Friedrichsen; Katharina Momsen; Stefano Piasenti |
| Abstract: | Intentions play a fundamental role in many situations characterized by nonsimultaneous interaction from principal-agent settings in firms to the international task of protecting the environment and the climate. We experimentally investigate how decision makers (DMs) respond to perceived intentions of a matched partner and a stochastic, imperfectly informative outcome when choosing a reciprocating action. We vary if the DM observes their partner's action or only the outcome before taking their own decision. Observing no evidence of an outcome bias, we find that the DM reciprocates good intentions under full information. However, reciprocity of DMs is lower in the treatment where information on the partner's action is hidden. Our analysis suggests that this is driven by the partners? behavior. DMs select into being informed or uninformed based on their inclination to behave more or less prosocially. While information avoidance is frequent, we do not find evidence for moral wiggling. In line with the absence of moral wiggling, an analysis of subjects' beliefs speaks against strategic cynicism. |
| Keywords: | information avoidance, dictator game, public good game, moral wiggle room, intentions, reciprocity |
| JEL: | D91 C91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2020-31&r=all |
| By: | Christoph K. Becker; Tigran Melkonyan; Eugenio Proto; Andis Sofianos; Stefan T. Trautmann |
| Abstract: | Bayesian Updating is the dominant theory of learning in economics. The theory is silent about how individuals react to events that were previously unforeseeable or unforeseen. Recent theoretical literature has put forth axiomatic frameworks to analyze the unknown. In particular, we test if subjects update their beliefs in a way that is consistent “reverse Bayesian”, which ensures that the old information is used correctly after an unforeseen event materializes. We find that participants do not systematically deviate from reverse Bayesianism, but they do not seem to expect an unknown event when this is reasonably unforeseeable, in two pre-registered experiments that entail unforeseen events. We argue that participants deviate less from the reverse Bayesian updating than from the usual Bayesian updating. We provide further evidence on the moderators of belief updating. |
| Keywords: | reverse Bayesianism, unforeseen, unawareness, Bayesian updating |
| JEL: | C11 C91 D83 D84 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8662&r=all |
| By: | Cristina Cattaneo (RFF-CMCC); Daniela Grieco (University of Milan) |
| Abstract: | The way we collectively discuss migration shapes citizens’ perceptions of migrants and their influence on our society. This paper investigates whether a narrative about the positive impact of immigrants on the hosting economy affects natives’ behaviour towards migrants. To shed light on the underlying mechanism, we present a simple theoretical framework that models the relationship between beliefs, attitude and behaviour and identifies the sequential channels through which a narrative might be useful in changing attitude and behaviour. We test its predictions through an online survey experiment, where we deliver UK natives a favourable narrative about migrants. Treated subjects revise their beliefs about migrants and exhibit significantly more positive self-reported attitudes and more pro-migrant behaviour. Moreover, they update beliefs in a way that gives support to the existence of confirmation bias. |
| Keywords: | Immigration, Survey experiment, Narrative, Attitudes, Beliefs |
| JEL: | C90 D83 F22 J15 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2021&r=all |
| By: | H. R., Ganesha; Aithal, Sreeramana; P., Kirubadevi |
| Abstract: | Globalization of consumer brands and liberalization of the Indian retail sectors are enabling consumers to conveniently purchase their aspirational Global brands. India being one of the fast-developing countries with world’s second largest population and the majority of the retail market being serviced by unorganized retailers, many Global consumer brands are trying to penetrate into the Indian retail market through various routes viz, exclusive branded outlets, franchising and licensing. Ever since the penetration of Global consumer brands have started, the majority of Indian retailers’ and consumers’ perspective towards their own private/store brands is expected to have changed. This change in perspective has put the majority of retailers in India into a quandary and they think that this is surely leading to cannibalization and thereto impacting the store profitability along with losing out their market share slowly to Global brands. In this research, authors have carried out an experiment by introducing a reputed Global apparel brand abreast an existing Indian store apparel brand/private label to investigate; (a) proof, (b) pattern, (c) magnitude, (d) significance and (e) impact of cannibalization and transpired the outcomes of this experimentation into suggestions to enable brick-and-mortar retailers to design appropriate brand mix strategies. |
| Keywords: | Cannibalisation, Global Brand, Store Brand, Private Label, Bricks-and-mortar store, Offline store, Physical store, Store Profitability, Indian Retail |
| JEL: | M3 M31 M37 M39 |
| Date: | 2020–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:104028&r=all |
| By: | Laurent Ott; Mehdi Farsi; Sylvain weber |
| Abstract: | This paper investigates public opinion on the Swiss CO2 levy and its 2020 revision by using a discrete choice experiment answered by a sample of 586 respondents living in Switzerland. The experiment is designed to elicit citizen preferences among various taxation attributes and is followed by a referendum voting experiment on various CO2 levy proposals. Based on latent class modeling approaches, we find that the population is composed by two distinct but relatively preference profiles: Environmentalists and Neutrals. Respondents belonging to the first group tend to favor higher carbon tax rates and a redistribution of proceeds benefiting low-income individuals, whereas those in the second group prefer lower rates and a uniform redistribution of proceeds across all taxpayers. Findings from the voting experiment point to a general support among the Environmentalists, but an uncertain approval from the Neutral group. |
| Keywords: | Carbon tax, preference heterogeneity, public opinion, latent class, discrete choice experiment. |
| JEL: | C25 D72 D78 H23 Q48 Q54 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:irn:wpaper:20-11&r=all |
| By: | Daniel Schunk (Johannes Gutenberg University); Valentin Wagner (Johannes Gutenberg University) |
| Abstract: | Social norms govern human behavior and usually change slowly over time. While individuals’ willingness to sanction others is decisive for the enforcement of social norms and thus social stability, little is known about individual sanctioning behavior related to newly introduced social norms. During the COVID-19 pandemic, governments have used various tools to rapidly and actively introduce the new norm of wearing a face mask; this offers a unique setting to study the determinants of individuals’ willingness to enforce a cooperation norm. In a nationwide online survey in Germany, we find that higher levels of conscientiousness and neuroticism, but none of the economic preferences (time and risk), are significantly and robustly associated with higher norm enforcement behavior. Furthermore, there is a strong relationship behavior between supervisors’ and their subordinates’ norm enforcement, and we observe that females sanction less harshly than men. Our results shed light on the origins of individual compliance with and enforcement of newly introduced public policy measures that are meant to increase solidarity via the explicit shaping of new cooperation norms. |
| Keywords: | Social norm enforcement, personality traits, risk and time preferences, COVID-19 |
| JEL: | D81 D90 H12 H40 |
| Date: | 2020–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:2024&r=all |
| By: | Luis Oberrauch; Tim Kaiser |
| Abstract: | We study the role of financial literacy for inter-temporal decision-making using an adapted version of the Convex Time Budget Protocol (Andreoni and Sprenger 2012). While we find no evidence of dynamically inconsistent preferences in the aggregate, we document substantial heterogeneity in choice-patterns and estimated parameters at the individual-level: We find that subjects with higher levels of financial literacy are more likely to make patient inter-temporal choices, to allocate the entire budget to a single payment-date, allocate the entire budget to corner choices as interest rates increase, and to show individual discount factors which are in line with extra-experimental market rates. At the same time, financial literacy is uncorrelated with choice consistency and estimated individual error parameters. These results serve as suggestive evidence for inter-temporal arbitrage among financially literate respondents, thereby revealing a potential confound in time-preference elicitation tasks relying on time-dated monetary rewards. |
| Keywords: | Intertemporal choice, financial literacy, narrow bracketing, arbitrage |
| JEL: | D91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1912&r=all |
| By: | Yao Thibaut Kpegli (Univ Lyon, Université Lyon 2, GATE UMR 5824, F-69130 Ecully, France); Brice Corgnet (Univ Lyon, Emlyon Business School, GATE UMR 5824, F-69130 Ecully, France); Adam Zylbersztejn (Univ Lyon, Université Lyon 2, GATE UMR 5824, F-69130 Ecully, France) |
| Abstract: | Eliciting all the components of prospect theory –curvature of the utility function, weighting function and loss aversion– remains an open empirical challenge. We develop a semi-parametric method that keeps the tractability of parametric methods while providing more precise estimates. Using the data of Tversky and Kahneman (1992), we revisit their main parametric results. We reject the convexity of the utility function in the loss domain, find lower probability weighting, and confirm loss aversion. We also report that the probability weighting function does not exhibit duality and equality across domains, in line with cumulative prospect theory and in contrast with original prospect and rank dependent utility theories. |
| Keywords: | Prospect theory, semi-parametric estimation, risk attitudes, weighting function, loss aversion |
| JEL: | D81 C91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2034&r=all |
| By: | Sam Sims (Centre for Education Policy and Equaliising Opportunities, UCL Institute of Education, University College London); Jake Anders (Centre for Education Policy and Equaliising Opportunities, UCL Institute of Education, University College London); Matthew Inglis (Centre for Mathematical Cognition, Loughborough University); Hugues Lortie-Forgues (Centre for Mathematical Cognition, Loughborough University) |
| Abstract: | Randomized controlled trials have proliferated in education, in part because they provide an unbiased estimator for the causal impact of interventions. It is increasingly recognized that many such trials in education have low power to detect an effect, if indeed there is one. However, it is less well known that low powered trials tend to systematically exaggerate effect sizes among the subset of interventions that show promising results. We conduct a retrospective design analysis to quantify this bias across 23 promising trials, finding that the estimated effect sizes are exaggerated by an average of 52% or more. Promising trials bias can be reduced ex-ante by increasing the power of the trials that are commissioned and guarded against ex-post by including estimates of the exaggeration ratio when reporting trial findings. Our results also suggest that challenges around implementation fidelity are not the only reason that apparently successful interventions often fail to subsequently scale up. Instead, the findings from the initial promising trial may simply have been exaggerated.Length: 19 pages |
| Keywords: | randomized controlled trials, education, promising trials bias |
| JEL: | I20 I21 C90 C93 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:ucl:cepeow:20-16&r=all |
| By: | Marie Boltz (BETA, University of Strasbourg, France); Bart Cockx (Department of Economics, Ghent University; IZA, Bonn; CESifo, Munich; IRES, Université catholique de Louvain; ROA, Maastricht University); Ana Maria Diaz (Departamento de Economía, Pontificia Universidad Javeriana); Luz Magdalena Salas (Departamento de Economía, Pontificia Universidad Javeriana) |
| Abstract: | We conducted an experiment in which we hired workers under different types of contracts to evaluate how flexible working time affects on-the-job productivity in a routine job. Our approach breaks down the global impact on productivity into sorting and behavioral effects. We find that all forms of working-time flexibility reduce the length of workers’ breaks. For part-time work, these positive effects are globally counterbalanced. Yet arrangements that allow workers to decide when to start and stop working increase global productivity by as much as 50 percent, 40 percent of which is induced by sorting. |
| Keywords: | Flexible work arrangements, part-time work, productivity, labor market flexibility, work–life balance |
| JEL: | J21 J22 J23 J24 J33 |
| Date: | 2020–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2020030&r=all |
| By: | Silvia Griselda |
| Abstract: | Standardized assessments are widely used to determine educational and economic opportunities. These standardized assessments exclusively, or in large part, use multiple-choice questions. But multiple-choice exams may not be adequate for comparing studentsâ competencies across genders. In this paper, I show that female students receive lower marks when randomly assigned to exams with a larger proportion of multiple-choice questions. Specifically, a 10 percentage point increase in the proportion of multiple-choice questions widens the gender difference in mathematics performance by 0.026 standard deviations in favor of men, an effect that represents about 50% of the overall gender gap. Moreover, a higher proportion of multiple-choice questions has negative spillovers to other open-ended questions on the same exam. Female students exert less effort than males on tests that contain a larger proportion of multiple-choice questions. I provide suggestive evidence that these results are driven by womenâs lower confidence and by the stereotypes that women face in traditionally male domains. |
| JEL: | I21 I24 J24 |
| Date: | 2020–11–12 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2020:pgr710&r=all |
| By: | Frijters, Paul; Islam, Asad; Pakrashi, Debayan |
| Abstract: | We study the effect of random dormitory assignment in a tertiary level educational institution in India on students’ subsequent academic achievements. We examine the importance of interactions between the characteristics of the student and his peers for educational outcomes, including non-linear peer-effects and the importance of different socio-economic and geographical backgrounds. We find that peer ability effects are around one-third the size of the effects of one's own ability, and students from non-urban and non-English backgrounds do particularly better when assigned to higher-ability peers. We find that all groups of ability students gain from being matched to high-ability peers, but that this gain is highest for students who are themselves of higher-ability. Our results suggest peer effects are stronger in the first year in dorm. In terms of mechanisms, we find no evidence for effects of peers via mental health, life satisfaction, or risk attitudes. We observe that a roommate's study times is highly correlated with a student's own study times, but we see only a weak positive association between study habits and grades. |
| Keywords: | Ability; Education; Peer effects; Social class |
| JEL: | C90 I23 |
| Date: | 2019–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100870&r=all |
| By: | Samantha Horn; Julian Jamison; Dean Karlan; Jonathan Zinman |
| Abstract: | Is financial knowledge change necessary for lasting savings behavior change? Or, akin to the canonical Friedman billiards player, can behavior persist “as if” such knowledge is held? We randomize 240 Ugandan young-adult clubs to financial education, savings account access, both, or neither. Each education arm, but not the account-only arm, increases financial knowledge and trust in banks at one-year. But at five-years the knowledge effects disappear, and the trust effects diminish. Savings activity, wealth, and income increase at both one-year and five-years for all treatment arms, suggesting that knowledge change is unnecessary for lasting impacts on behavior and outcomes. |
| JEL: | D12 D91 O12 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28011&r=all |