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on Experimental Economics |
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Issue of 2021‒02‒08
27 papers chosen by |
| By: | Jennifer Kee; Melinda Knuth; Joanna Lahey; Marco A. Palma |
| Abstract: | Eye-tracking is becoming an increasingly popular tool for understanding the underlying behavior driving economic decisions. However, an important unanswered methodological question is whether the use of an eye-tracking device itself induces changes in the behavior of experiment participants. We study this question using eight popular games in experimental economics. We implement a simple design where participants are randomly assigned to either a control or an eye-tracking treatment condition. In seven of the eight games, eye-tracking did not produce different outcomes. In the Holt and Laury risk assessment (HL), subjects with multiple calibration attempts behave like outliers under eye-tracking conditions, skewing the overall results. Further exploration shows that poor calibrators also show marginally higher levels of negative emotion, which is correlated with higher risk aversion in both HL and in the Eckel and Grossman gambling tasks. Because difficulty calibrating is correlated with eye-tracking data quality, the standard practice of removing participants who did not have good eye-tracking data quality resulted in no difference between the treatment and control groups in HL. Our results suggest that experiments may incorporate eye-tracking equipment without inducing changes in the economic behavior of participants, particularly after observations with low eye-tracking quality are removed. |
| JEL: | C9 D03 D8 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28223&r=all |
| By: | Kai A. Konrad; Tim Lohse; Sven A. Simon |
| Abstract: | We study self-selection into earning money in an honest or dishonest fashion based on individuals' attitudes toward truthful reporting. We propose a decision-theoretic framework where individuals' willingness to pay for honest earnings is determined by their (behavioral) lying costs. Our laboratory experiment identifies lying costs as the decisive factor causing self-selection into honest earning opportunities for individuals with high costs and into cheating opportunities for those prepared to misreport. Our experimental setup allows us to recover individual lying costs and their distribution in the population. |
| Keywords: | lying behavior, lying costs, misreporting, honest earnings, self-selection, laboratory experiment |
| JEL: | C91 D81 D91 K42 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2020-14_2&r=all |
| By: | Nesterov, Artem |
| Abstract: | Both peer-to-peer punishments and rewards can be effective in increasing cooperation in dilemma situations. We follow Kamei’s experimental design [2014, Economics Letters 124, pp.199-202], except we use a reward option instead of a punishment one. Consistent with Kamei (2014), decisions to reward are on average positively proportional to the others’ reward to the same recipient. We classify the rewarding types in a similar fashion and find fewer anti-social types. |
| Keywords: | experiment, dilemma, cooperation, rewarding |
| JEL: | C70 C92 D70 H41 |
| Date: | 2020–12–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:104944&r=all |
| By: | Tam Kiet Vuong; Ho Fai Chan; Benno Torgler |
| Abstract: | We conducted a framed field experiment to explore a situation where individuals have potentially competing social identities to understand how group identification and socialization affect in- group favoritism and out-group discrimination. The Dictator Game and the Trust Game were conducted in Vietnams Ho Chi Minh City on two groups of high school students with different backgrounds, i.e., French bilingual and monolingual (Vietnamese) students. We find strong evidence for the presence of these two phenomena: our micro-analysis of within- and between- school effects show that bilingual students exhibit higher discriminatory behavior toward non- bilinguals within the same school than toward other bilinguals from a different school, implying that group identity is a key factor in the explanation of intergroup cooperation and competition. |
| Keywords: | socialization; in-group favouritism; out-group discrimination; cooperation; trust; trustworthiness; fairness; altruism; risk preference |
| JEL: | C93 C70 D74 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2021-02&r=all |
| By: | Shohei Yamamoto (Hitotsubashi University Business School); Shotaro Shiba (Waseda University); Nobuyuki Hanaki (Osaka University) |
| Abstract: | Present-biased preferences in intertemporal decisions have been actively investigated. While these preferences have been elicited through incentivized experiments in the gain domain to avoid potential hypothetical bias, they have been elicited only through hypothetical experiments in the loss domain. We conducted a two-stage experiment that enabled us to elicit these preferences in the gain and loss domains in an incentive-compatible way. We found that present bias, which is exhibited in both domains, is more severe in the loss domain. |
| Keywords: | Intertemporal choice; Present bias; Gains and losses |
| JEL: | C91 D91 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:2012&r=all |
| By: | Subhasish M. Chowdhury (Department of Economics, University of Bath); Joo Young Jeon (Department of Economics, University of Reading); Chulyoung Kim (School of Economics, Yonsei University); Sang-Hyun Kim (School of Economics, Yonsei University) |
| Abstract: | We investigate gender difference in lying behavior when the opportunity to tell lies is repeated. In specific, we distinguish the situations in which such an opportunity can be planned versus when it comes as a surprise. We use data from an existing study (Chowdhury et al., 2021) and show that when the opportunity to tell a lie comes as a surprise, then on the first occasion, males lie more than females. However, when telling lies can be planned, there is no gender difference in telling a lie. When planning is possible, females tell more lies in the first occasion than when it is not. Males do not show such behavior. On the second and final occasion, males lie more than females only when they either could not plan but had an opportunity to lie before or could plan but did not have to tell a lie before. |
| Keywords: | Dishonesty, Lying, Pre-planning, Gender |
| JEL: | C91 D01 D91 J16 |
| Date: | 2021–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2021-05&r=all |
| By: | Yana Gallen (University of Chicago and IZA); Melanie Wasserman (UCLA and CEPR) |
| Abstract: | This paper estimates gender differences in access to informal information regarding the labor market. We conduct a large-scale field experiment in which real college students seek information from 10,000 working professionals about various career paths, and we randomize whether a professional receives a message from a male or a female student. We focus the experimental design and analysis on two career attributes that prior research has shown to differentially affect the labor market choices of women: the extent to which a career accommodates work/life balance and has a competitive culture. When students ask broadly for information about a career, we find that female students receive substantially more information on work/life balance relative to male students. This gender difference persists when students disclose that they are concerned about work/life balance. In contrast, professionals mention workplace culture to male and female students at similar rates. After the study, female students are more dissuaded from their preferred career path than male students, and this difference is in part explained by professionals’ greater emphasis on work/life balance when responding to female students. Finally, we elicit students’ preferences for professionals and find that gender differences in information provision would remain if students contacted their most preferred professionals. |
| Keywords: | career information, gender, discrimination, correspondence study |
| JEL: | C93 J16 J24 J71 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:21-340&r=all |
| By: | Yoichi Hizen (School of Economics and Management, Kochi University of Technology); Kengo Kurosaka (Hiroshima Shudo University) |
| Abstract: | Monetary incentives are widely used to reproduce various voting environments in the laboratory. In actual elections, however, non-monetary opportunity costs play a role in voter turnout. Our research question was two-fold; whether the effect of opportunity costs on voter turnout differs from the effect of monetary costs, and if so, to what extent they differ. To generate opportunity costs, we asked participants to work on tasks for two minutes; they were rewarded for successful task completions but lost thirty seconds if they chose to vote. Our regression analysis suggested that nearly half of the participants’ decisions took account of opportunity costs as well as monetary costs, and that for such decisions, the effect of opportunity costs on voter turnout was about one-third of the effect of monetary costs. These observations attribute the “paradox of voter turnout†to the misperception and/or depreciation of voting costs. |
| Keywords: | Laboratory experiment, Monetary incentives, Opportunity cost, Paradox of voter turnout, Finite mixture model |
| JEL: | C92 D72 D90 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2021-1&r=all |
| By: | Lydia Mechtenberg (University of Hamburg); Grischa Perino (University of Hamburg); Nicolas Treich (University Toulouse Capitole, INRAE, Toulouse School of Economics); Jean-Robert Tyran (University of Vienna, University of Copenhagen and CEPR (London)); Stephanie Wang (University of Pittsburgh) |
| Abstract: | This paper presents a two-wave survey experiment on self-image concerns in moral voting. We elicit votes on the so-called Horncow Initiative. This initiative required subsidization of farmers who refrain from dehorning. We investigate how non-consequentialist and non-deontological messages changing the moral self-signaling value of a Yes vote affect selection and processing of consequentialist information, and reported voting behavior. We find that a message enhancing the self-signaling value of a Yes vote is effective: voters agree more with arguments in favor of the initiative, anticipate more frequently voting in favor, and report more frequently having voted in favor of the initiative. |
| Keywords: | moral bias, voting, multi-wave field experiment, information avoidance |
| JEL: | C93 D72 D91 |
| Date: | 2021–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:2101&r=all |
| By: | Emanuel Vespa; Taylor Weidman; Alistair J. Wilson |
| Abstract: | In repeated-game applications where both the collusive and non-collusive outcomes can be supported as equilibria, researchers must resolve underlying selection questions if theory will be used to understand counterfactual policies. One guide to selection, based on clear theoretical underpinnings, has shown promise in predicting when collusive outcomes will emerge in controlled repeated-game experiments. In this paper we both expand upon and experimentally test this model of selection, and its underlying mechanism: strategic uncertainty. Adding an additional source of strategic uncertainty (the number of players) to the more-standard payoff sources, we stress test the model. Our results affirm the model as a tool for predicting when tacit collusion is likely/unlikely to be successful. Extending the analysis, we corroborate the mechanism of the model. When we remove strategic uncertainty through an explicit coordination device, the model no longer predicts the selected equilibrium. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2101.05900&r=all |
| By: | Ryo Takahashi (Graduate School of Economics, Waseda University); Kenta Tanaka (FFaculty of Economics, Musashi University) |
| Abstract: | Given the outbreak of Covid-19 most countries have adopted prevention policies that restrict economic and social activities to curb the spread. This has led to increased vigilantism and violence; for instance, Japan reported many cases of stores and firms experiencing harassment for breaching the restrictions during the state of emergency. Accordingly, this study empirically investigates the hostility toward the violation of restriction policy (breaching behavior) by stores in Japan and provides policy suggestions for efficient strategies to reduce the hostility level. We conducted an online randomized experiment of 1,600 individuals in Japan and measured their level of hostility by implementing joy-of-destruction minigames. Our results suggest that participants' average level of hostility toward industries that breach restrictions increased by 29%. However, after providing information on guideline adherence for preventing COVID-19 and sending moral suasion messages, participants significantly reduced their hostility level by 19% and 15%, respectively. Both interventions successfully reduced the probability of the most harmful behavior by approximately 8 percentage points. |
| Keywords: | hostility; online randomized experiment; COVID-19; Japan |
| JEL: | C91 D91 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:2007&r=all |
| By: | Emily Breza; Martin Kanz; Leora F. Klapper |
| Abstract: | How do inexperienced consumers learn to use a new financial technology? We present results from a field experiment that introduced payroll accounts in a population of largely unbanked factory workers in Bangladesh. In the experiment, workers in a treatment group received monthly wage payments into a bank or mobile money account while workers in a control group continued to receive wages in cash, with a subset also receiving an account without automatic wage payments. We find that exposure to payroll accounts leads to increased account use and consumer learning. Those receiving accounts with automatic wage payments learn to use the account without assistance, begin to use a wider set of account features, and learn to avoid illicit fees, which are common in emerging markets for consumer finance. The treatments have real effects, leading to increased savings and improvements in the ability to cope with unanticipated economic shocks. We conduct an additional audit study and find suggestive evidence of market externalities from consumer learning: mobile money agents are less likely to overcharge inexperienced customers in areas with higher levels of payroll account adoption. This suggests potentially important equilibrium effects of introducing accounts at scale. |
| JEL: | G21 G5 O16 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28249&r=all |
| By: | Supreet Kaur; Sendhil Mullainathan; Suanna Oh; Frank Schilbach |
| Abstract: | We test whether increasing cash-on-hand raises the productivity of poor workers. Our motivation is psychological. Concerns about money can create mental burdens such as worry, stress, or sadness. These in turn could interfere with the ability to work effectively. We empirically test for this possibility using a field experiment with piece-rate manufacturing workers in India. We randomize the timing of income receipt, so that on a given day some workers have more cash-on-hand than others. This manipulation holds constant wages and piece rates, as well as human and physical capital. On cash-rich days, average productivity increases by 0.11 standard deviations (6.2%); this effect is concentrated among relatively poorer workers. Mistakes also decline on these days --- an effect that is again concentrated among poorer workers. Having more cash-on-hand thus enables workers to work faster while making fewer errors, suggesting improved cognition. We argue that mechanisms such as gift exchange, trust, and nutrition cannot account for our findings. Instead, our results suggest a range of psychological mechanisms wherein alleviating financial concerns allows workers to be more attentive and productive at work. |
| JEL: | D03 D14 D31 J24 O1 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28338&r=all |
| By: | Victor Klockmann; Alicia von Schenk; Ferdinand von Siemens |
| Abstract: | Following Garicano (2000), we consider groups whose members decide what knowledge to acquire and how to use this knowledge in production. If efficient production requires common knowledge, all group members should become workers and acquire common knowledge. But if efficient production requires diverse knowledge, one group member should become manager, acquire rare knowledge, and stand ready to help the other workers. In our laboratory experiment, we find that most groups eventually manage to coordinate on an efficient division of labor. Still, we find substantial adoption frictions. Coordination takes time, and some groups coordinate on an inefficient division of labor, probably because they do not understand what organization of knowledge is most efficient. |
| Keywords: | knowledge, division of labor, organizational economics |
| JEL: | C72 C92 D20 L23 M20 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8822&r=all |
| By: | Kazumi Shimizu (School of Political Science and Economics, Waseda University); Yoshio Kamijo (School of Political Science and Economics, Waseda University); Hiroki Ozono (Faculty of Law, Economic and Humanities, Kagoshima University); Akira Goto (School of Information and Communication, Meiji University) |
| Abstract: | Although the disparity of wealth is one of the most important topics in the modern world, our literature review shows little empirical or theoretical study examining its cause at the micro level. In the present study, by designing an economic experiment based on the investment (private goods provision) game, we focus on the effect of various economic information on the wealth accumulation by manipulating its visibility. Our main findings follow: first, when participants' wealth distribution is visible, and the endowment of investment is carried over, people, especially the disadvantaged, are more likely to invest; second, the active investment enables people to move frequently in the economic hierarchy of the group; and finally, people are less satisfied with their final results or wealth when the 2 wealth distribution is visible. It may follow that an important tradeoff between social mobility and wealth satisfaction is caused by the information visibility: the more transparent the people's economic performance, the more active the investment; the more fluidly people move in social layers, the less satisfied they are with their economic position. |
| Keywords: | Disparity; Wealth; Investment game; Experiment; Information |
| JEL: | C72 C91 C92 M54 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:2017&r=all |
| By: | Ho Fai Chan; Uwe Dulleck; Jonas Fooken; Naomi Moy; Benno Torgler |
| Abstract: | Increasing the tax compliance of self-employed business owners (particularly of trade- specific service providers) remains an ongoing challenge for tax authorities. From a compliance point of view, cash transactions are particularly problematic when services are paid for on the spot, as such exchanges are difficult to audit. As a novelty we present experimental evidence testing 11 different policy strategies in a setting that allows for cash transactions. Our sample includes both students and non-students active in service industries characterised by the opportunity to engage in cash transactions. While our results offer a positive outlook for the interventions reporting a significant effect, they particularly speak to the potential of moral suasion to increase compliance, as it may be implemented at relatively low cost. However, a carrot (offering support in tax declarations) as well as a stick (increasing the threat of audits) approach may be promising for increased compliance, especially where there is an evasion opportunity in cash-for-service payments between small businesses and individual customers who may share a common benefit from tax evasion. A stick approach is particularly efficient for those inclined to use cash transactions. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2021-01&r=all |
| By: | Valeria Burdea; Jonathan Woon |
| Abstract: | We evaluate the quality of beliefs elicited from online respondents, comparing several characteristics of two widely used elicitation mechanisms (the Binarized Scoring Rule - BSR - and a stochastic variation of the Becker-deGroot-Marshak mechanism -BDM) against a flat fee baseline for a variety of beliefs (induced probabilities, first-order factual knowledge, second-order knowledge of others). We find the flat-fee method is the most time-efficient, the BDM is the most difficult to understand, and there are no differences in the average accuracy of induced beliefs across conditions. However, the methods are significantly different in terms of the frequency of first-order and second-order beliefs reported at exactly 50%: the flat-fee method leads to the most mass on this belief, followed by BDM and BSR. We also find that incentives increase accuracy for less-educated participants, and that attention, numeracy, and education are positively associated with the quality of induced beliefs across methods. Our results suggest that the quality of beliefs elicited in online environments may depend less on the formal incentive compatibility properties of the elicitation procedure (whether the procedure prevents “dishonest” reporting) than on the difficulty of comprehending the task and how well incentives induce cognitive effort (thereby inducing subjects to quantify or construct their beliefs). |
| Keywords: | belief elicitation, incentives, online experiment |
| JEL: | C81 C89 D83 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8823&r=all |
| By: | Frans van Winden (University of Amsterdam) |
| Abstract: | This paper proposes and applies a formal theoretical model of an automatic (prosocial and antisocial) caring mechanism: the informational affective tie mechanism (iATM) model. Novel in the formalization is the factoring in of information extraction concerning the behavioral type of agents interacted with, jointly with the contexts of these interactions and the attention they attract. Empirical support comes from five very different data sources: experimental findings, econometric results, model-based brain scanning (fMRI) findings, additional neurobiological evidence, and translational and evolutionary evidence. Applications address: the impact of time pressure and cognitive load; the endogeneity of different behavioral response patterns (like tit-for-tat); social preference drift and tipping points in collective action; why behavioral survey questions can be problematic; spread of caring through affective networks, an uncertainty-based link between social-, risk- and time-preferences; happiness and identity; and, the neglected political economic role of communities (next to centralized authorities and markets). The endogeneity of caring preferences sharply contrasts with the standard assumption in economic theory of stable (mostly selfish) preferences. Moreover, the provision of a neurobiological underpinning moves the iATM model away from the standard as-if approach towards an as-is approach. Although the focus is on humans, some attention will be paid also to the model’s relevance for studying other species. |
| Keywords: | uncertainty-based caring, informational model, evidence, neurobiology, evolution, applications |
| JEL: | D9 A12 D8 |
| Date: | 2021–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20210012&r=all |
| By: | Akaichi, Faical; Costa-Font, Joan; Frank, Richard |
| Abstract: | We examine evidence from two unique discrete choice experiments (DCE) on long term care insurance and values several of its relevant attributes. More specifically, the experiments examine choices made by a large sample made of 15,298 individuals in the United States with and without insurance. We study the valuation of a number of insurance attributes, namely the daily insurance benefit, insurance coverage, the compulsory and voluntary nature of the insurance policy design, alongside the costs (insurance premium) and health requirements. This paper elicits both respondents’ preferences and willingness to pay (WTP) for these care insurance's attributes using a random parameter logit model, and assesses the heterogeneity of choice responses using demographic, socioeconomic and attitudinal motivations to segment response to insurance choices. We find that an increase in the insurance premium by an additional $100 would reduce insurance uptake by 1pp. Insurance policy uptake is higher when it provides benefits for the lifetime (the monthly marginal WTP being $178.64), and voluntary (the monthly marginal WTP increases by an extra $74.71) as opposed to universal, and when it forgoes health checks (the monthly marginal WTP increases by an extra 28US$). |
| Keywords: | long term care insurance; constrained choices; self-insurance; behavioural constraints; insurance design |
| JEL: | I18 I31 |
| Date: | 2020–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:101215&r=all |
| By: | Lukas Kiessling; Shyamal Chowdhury; Hannah Schildberg-Hörisch; Matthias Sutter |
| Abstract: | We study whether and how parents interfere paternalistically in their children’s intertemporal decision-making. Based on experiments with over 2,000 members of 610 families, we find that parents anticipate their children’s present bias and aim to mitigate it. Using a novel method to measure parental interference, we show that more than half of all parents are willing to pay money to override their children’s choices. Parental interference predicts more intensive parenting styles and a lower intergenerational transmission of patience. The latter is driven by interfering parents not transmitting their own present bias, but molding their children’s preferences towards more time-consistent choices. |
| Keywords: | parental paternalism, time preferences, convex time budgets, present bias, intergenerational transmission, parenting styles, experiment |
| JEL: | C90 D10 D91 D64 J13 J24 O12 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8829&r=all |
| By: | Philipp Harfst (TUD - Technische Universität Dresden); Damien Bol (King‘s College London); Jean-François Laslier (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Electoral systems in which voters can cast preference votes for individual candidates within a party list are increasingly popular. To the best of our knowledge, there is no research on whether and how the scale used to evaluate candidates can affect electoral behavior and results. In this paper, we analyze data from an original voting experiment leveraging real-life political preferences and embedded in a nationally representative online survey in Austria. We show that the scale used by voters to evaluate candidates makes differences. For example, the possibility to give up to two points advantages male candidates because male voters are more likely to give 'zero points' to female candidates. Yet this pattern does not exist in the system in which voters can give positive and negative points because male voters seem reluctant to actively withdraw points from female candidates. We thus encourage constitution makers to think carefully about the design of preference voting. |
| Keywords: | Electoral system,Proportional representation,Preference voting,Approval voting,experiment,Austria |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03033239&r=all |
| By: | Bertrand Jayles (Unknown); Ramon Escobedo (Unknown); Stéphane Cezera (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, INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Adrien Blanchet (IAST - Institute for Advanced Study in Toulouse); Tatsuya Kameda (Unknown); Clément Sire (Unknown); Guy Théraulaz (IAST - Institute for Advanced Study in Toulouse) |
| Abstract: | A major problem resulting from the massive use of social media is the potential spread of incorrect information. Yet, very few studies have investigated the impact of incorrect information on individual and collective decisions. We performed experiments in which participants had to estimate a series of quantities, before and after receiving social information. Unbeknownst to them, we controlled the degree of inaccuracy of the social information through ‘virtual influencers', who provided some incorrect information. We find that a large proportion of individuals only partially follow the social information, thus resisting incorrect information. Moreover, incorrect information can help improve group performance more than correct information, when going against a human underestimation bias. We then design a computational model whose predictions are in good agreement with the empirical data, and sheds light on the mechanisms underlying our results. Besides these main findings, we demonstrate that the dispersion of estimates varies a lot between quantities, and must thus be considered when normalizing and aggregating estimates of quantities that are very different in nature. Overall, our results suggest that incorrect information does not necessarily impair the collective wisdom of groups, and can even be used to dampen the negative effects of known cognitive biases. |
| Keywords: | human collective behaviour,incorrect information,social influence,computational modelling,wisdom of crowds |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03019820&r=all |
| By: | Björn Bartling; Ernst Fehr; David B. Huffmann; Nick Netzer; David B. Huffman |
| Abstract: | Under weak contract enforcement the trading parties’ trust, defined as their belief in the other party’s trustworthiness, appears important for realizing gains from trade. In contrast, under strong contract enforcement beliefs about the other party’s trustworthiness appear less important, suggesting that trust and contract enforcement are substitutes. Here, we show, however, that trust and contract enforcement are complements. We demonstrate that in a weak contract enforcement environment trust has no effect on the gains from trade, but when we successively improve contract enforcement, larger effects of trust emerge. We also document that improvements in contract enforcement lead to no, or only small, increases in gains from trade under low initial trust, but generate high increases in gains from trade when initial trust is high. Thus, the effect of improvements in contract enforcement is trust-dependent, and the effect of increases in trust is dependent on the strength of contract enforcement. We identify three key ingredients underlying this complementarity: (1) heterogeneity in trading partners’ trustworthiness; (2) strength of contract enforcement affecting the ability to elicit reciprocal behavior from trustworthy types, and screen out untrustworthy types; (3) trust beliefs determining willingness to try such strategies. |
| Keywords: | trust, contract enforcement, complementarity, equilibrium selection, causal effect, screening, belief distortions, institutions |
| JEL: | C91 D02 D91 E02 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8826&r=all |
| By: | Chandra, Anjali (Fordham University); Mani, Subha (Fordham University); Dolphin, Heather (Catholic Relief Services); Dyson, Meredith (UNICEF); Marah, Yembeh (Catholic Relief Services) |
| Abstract: | We present findings from an integrated early childhood parenting program on stunting and wasting in Sierra Leone, West Africa. Importantly, where half the communities were randomly assigned to receive the parenting program and the remaining half served as a control that received standard nutritional counseling delivered through community meetings and home visits, keeping all social aspects of the intervention identical between the treatment and the control. We find that access to the intervention reduced the incidence of wasting by 3 percentage points and had no impact on stunting. We find improvements in parenting practices related to psychosocial stimulation and harsh discipline to be the primary mechanisms through which wasting declines. We find no differences in responsive parenting practices between the treatment and the control. These results suggest that integrated early childhood parenting programs when delivered alongside standard nutritional counseling via existing mother support groups have the potential to improve long-term well-being through reductions in wasting as well as improvements in parenting practices related to stimulation and harsh discipline. |
| Keywords: | early childhood development, nutrition, stimulation, randomized control trial, parenting intervention, Africa |
| JEL: | I24 I25 J13 J24 O15 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14054&r=all |
| By: | Michalis Drouvelis; Benjamin M. Marx |
| Abstract: | Charitable fundraisers frequently announce giving by others, and research shows that this can increase donations. However, this mechanism may not put information about peers to the most efficient use if it is costly to inform individuals who are indifferent to peer actions or causes some individuals to give less. We investigate whether a simple mechanism without incentives can predict heterogeneity in charitable responses to peer decisions. We elicit beliefs about donations in a baseline solicitation, and in subsequent solicitations we randomly assign information about others’ donations. We find that elicited beliefs are often logically inconsistent and that many subjects fail to update beliefs when treated. However, elicited beliefs can predict heterogeneous treatment effects if individuals are engaged and the information is salient. |
| Keywords: | charitable, donation, norm, social preferences, peer effects, experiment |
| JEL: | D01 D64 A13 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8855&r=all |
| By: | Chopra, Felix (University of Bonn); Eisenhauer, Philipp (University of Chicago); Falk, Armin (briq, University of Bonn); Graeber, Thomas W (Harvard Business School) |
| Abstract: | Standard consumption utility is linked in time to a consumption event, whereas the timing of prosocial utility flows is ambiguous. Prosocial utility may depend on the actual utility consequences for others – it is consequence-dated – or it may be related to the act of giving and is thus choice-dated. Even though most prosocial decisions involve intertemporal trade-offs, existing models of other-regarding preferences abstract from the time signature of utility flows, limiting their explanatory scope. Building on a canonical intertemporal choice framework, we characterize the behavioral implications of the time structure of prosocial utility. We conduct a high-stakes donation experiment that allows us to identify non-parametrically and calibrate structurally the different motives from their unique time profiles. We find that the universe of our choice data can only be explained by a combination of choice- and consequence-dated prosocial utility. Both motives are pervasive and negatively correlated at the individual level. |
| Keywords: | altruism, donation, intertemporal decision-making, time inconsistency |
| JEL: | C91 D12 D64 D90 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14059&r=all |
| By: | Krekel, Christian; De Neve, Jan-Emmanuel; Fancourt, Daisy; Layard, Richard |
| Abstract: | Although correlates of mental wellbeing have been extensively studied, relatively little is known about how to effectively raise mental wellbeing in local communities by means of intervention. We conduct a randomised controlled trial of the "Exploring What Matters" course, a scalable social-psychological intervention aimed at raising general adult population mental wellbeing and pro-sociality. The manualised course is run by non-expert volunteers in their local communities and to date has been conducted in more than 26 countries around the world. We find that it has strong, positive causal effects on participants' selfreported subjective wellbeing (life satisfaction increases by about 63% of a standard deviation) and prosociality (social trust increases by about 53% of a standard deviation) while reducing measures of mental ill health (PHQ-9 and GAD-7 decrease by about 50% and 42% of a standard deviation, respectively). Impacts seem to be sustained two months post-treatment. We complement self-reported outcomes with biomarkers collected through saliva samples, including cortisol and a range of cytokines involved in inflammatory response. These move consistently into the hypothesised direction but are noisy and do not reach statistical significance at conventional levels |
| Keywords: | international trade; export demand; import competition; productivity; allocative efficiency; misallocation |
| JEL: | C93 I12 I31 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:108226&r=all |