nep-exp New Economics Papers
on Experimental Economics
Issue of 2021‒03‒01
fifty-one papers chosen by
Daniel Houser
George Mason University

  1. Lab-Sophistication: Does Repeated Participation in Laboratory Experiments Affect Pro-Social Behaviour? By Medda, Tiziana; Pelligra, Vittorio; Reggiani, Tommaso
  2. Reference Dependent Prices in Bargaining: An Experimental Examination of Precise First Offers By Erik O. Kimbrough; David Porter; Mark Schneider
  3. Reflective Goal-Setting Improves Academic Performance in Teacher and Business Education: A Large-Scale Field Experiment By Dekker, I.; Schippers, M.C.; van Schooten, E.
  4. In-group versus Out-group Preferences in Intergroup Conflict: An Experiment By Subhasish M. Chowdhury; Anwesha Mukherjee; Roman M. Sheremeta
  5. The Effect of Goal-Setting Prompts in a Blended Learning Environment – Evidence from a Field Experiment By Erwin Amann; Sylvi Rzepka
  6. Disguising Prejudice: Popular Rationales as Excuses for Intolerant Expression By Leonardo Bursztyn; Ingar Haaland; Aakaash Rao; Christopher Roth
  7. Honesty in the City By Dufwenberg, Martin; Servátka, Maroš; Tarrasó, Jorge; Vadovič, Radovan
  8. The $100 Million Nudge: Increasing Tax Compliance of Businesses and the Self-Employed using a Natural Field Experiment By Justin E. Holz; John A. List; Alejandro Zentner; Marvin Cardoza; Joaquin Zentner
  9. Does gender affect medical decisions? Results from a behavioral experiment with physicians and medical students By Godager, Geir; Hennig-Schmidt, Heike; Li, Jing Jing; Wang, Jian; Yang, Fan
  10. Financial Reporting and Moral Sentiments By Radhika Lunawat; Timothy W. Shields; Gregory B. Waymire
  11. The Leniency Rule Revisited: Experiments on Cartel Formation with Open Communication By Maximilian Andres; Lisa Bruttel; Jana Friedrichsen
  12. Is Attention Produced Rationally? By Erin T. Bronchetti; Judd B. Kessler; Ellen B. Magenheim; Dmitry Taubinsky; Eric Zwick
  13. Eliciting and utilizing willingness to pay: evidence from field trials in northern Ghana By Berry, James; Fischer, Gregory; Guiteras, Raymond
  14. Can ?s Change Minds? Social Media Endorsements and Policy Preferences By Pierluigi Conzo; Laura K. Taylor; Juan S. Morales; Margaret Samahita; Andrea Gallice
  15. Behavioral Consequences of Religious Education By Abu Siddique
  16. Adverse Effects of Monitoring: Evidence from a field experiment By Herz, Holger; Zihlmann, Christian
  17. National Pride and Tax Compliance: A Laboratory Experiment Using a Physiological Marker By Alison Macintyre; Ho Fai Chan; Markus Schaffner; Benno Torgler
  18. Do truth-telling oaths improve honesty in crowd-working? By Nicolas Jacquemet; Alexander James; Stéphane Luchini; James Murphy; Jason Shogren
  19. Recruitment, effort, and retention effects of performance contracts for civil servants: Experimental evidence from Rwandan primary schools By Clare Leaver; Owen Ozier; Pieter Serneels; Andrew Zeitlin
  20. Moral Hypocrisy in Social Preferences By Abhinash Borah
  21. Institutional conditions for the up-take of governance experiments - A comparative case study By Feser, Daniel; Winkler-Portmann, Simon; Bischoff, Thore Sören; Bauknecht, Dierk; Bizer, Kilian; Führ, Martin; Heyen, Dirk Arne; Proeger, Till; von der Leyen, Kaja; Vogel, Moritz
  22. The Social Side of Early Human Capital Formation: Using a Field Experiment to Estimate the Causal Impact of Neighborhoods By John A. List; Fatemeh Momeni; Yves Zenou
  23. Are risk preferences consistent across elicitation procedures? A field experiment in Congo basin countries. By Marielle Brunette; Jonas Ngouhouo-Poufoun
  24. The Role of the Gender Composition of Performance Feedback on Peers in Shaping Persistence and Performance By Sandor Katona; Anna Lovasz
  25. The Unintended Side Effects of Regulating Charities: Donors Penalise Administrative Burden Almost as Much as Overheads By Margaret Samahita; Leonhard K. Lades
  26. Introducing CogX: A New Preschool Education Program Combining Parent and Child Intervention By Roland Fryer; Steven Levitt; John A. List; Anya Samek
  27. Nudges and Threats: Soft vs Hard Incentives for Tax Compliance By Andersson, Henrik; Engström, Per; Nordblom, Katarina; Wanander, Susanna
  28. Economics students: self-selected in preferences and indoctrinated in beliefs By Antonio M. Espín; Manuel Correa; Alberto Ruiz-Villaverde
  29. Do Financial Concerns Make Workers Less Productive? By Supreet Kaur; Sendhil Mullainathan; Suanna Oh; Frank Schilbach
  30. Does a company’s origin matter in moral judgment? By Hind Dib-Slamani; Gilles Grolleau; Naoufel Mzoughi
  31. The Conservatism Principle and Asymmetric Preferences Over Reporting Errors By Jivas Chakravarthy; Timothy W. Shields
  32. Survival Pessimism and the Demand for Annuities By Cormac O'Dea; David Sturrock
  33. Promotions and productivity: The role of meritocracy and pay progression in the public sector By Erika Deserranno; Philipp Kastrau; Gianmarco León-Ciliotta
  34. Efficient Institutions and Effective Deterrence: On Timing and Uncertainty of Formal Sanctions By Johannes Buckenmaier; Eugen Dimant; Ann-Christin Posten; Ulrich Schmidt
  35. The benefits of being misinformed By Marcus Roel; Manuel Staab
  36. An Experiment on the Nash Program: Comparing two Mechanisms Implementing the Shapley Value By Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada
  37. Trading Frictions and the Post-Earnings-Announcement Drift By Josef Fink; Stefan Palan; Erik Theissen
  38. Making sense of monkey business: Re-examining tests of animal rationality By Pawel Dziewulski; Roy Allen; John Rehbeck
  39. How Do People Trade Off Resources Between Quick and Slow Learners? By Falch, Ranveig
  40. Learning to Persuade on the Fly: Robustness Against Ignorance By You Zu; Krishnamurthy Iyer; Haifeng Xu
  41. Rethinking how risk aversion and impatience are linked with cognitive ability: Experimental findings from agricultural students and farmers By Gruener, Sven
  42. Reservation Wages and Workers’ Valuation of Job Flexibility: Evidence from a Natural Field Experiment By Kuan-Ming Chen; Ning Ding; John A. List; Magne Mogstad
  43. Seeds of Learning: Uncertainty and Technology Adoption in an Ecosystem-Based Adaptation Game By Babtunde Abidoye; Sahan Dissanayake; Sarah Jacobson
  44. Discriminatory Lending : Evidence from Bankers in the Lab By Brock, J. Michelle; de Haas, Ralph
  45. No Man is an Island - Trust, Trustworthiness, and Social Capital among Syrian Refugees in Germany By El-Bialy, Nora; Fraile Aranda, Elisa; Nicklisch, Andreas; Saleh, Lamis; Voigt, Stefan
  46. Do sex hormones at birth predict later-life economic preferences? Evidence from a pregnancy birth cohort study By Boris van Leeuwen; Paul Smeets; Jeanne Bovet; Gideon Nave; Jonathan Stieglitz; Andrew Whitehouse
  47. Resolving the Disparate Impact of Uncertainty: Affirmative Action vs. Affirmative Information By Claire Lazar Reich
  48. Some Questions of Ethics in RCTs By Khera, Reetika
  49. Artificial Intelligence, Teacher Tasks and Individualized Pedagogy By Ferman, Bruno; Lima, Lycia; Riva, Flávio
  50. Does Policy Communication During COVID Work? By Olivier Coibion; Yuriy Gorodnichenko; Michael Weber
  51. Cheap Talk is not Cheap: Free versus Costly Communication By Hamid Aghadadashli; Georg Kirchsteiger; Patrick Legros

  1. By: Medda, Tiziana; Pelligra, Vittorio; Reggiani, Tommaso (Cardiff Business School)
    Abstract: Experimental social scientists working at research-intensive institutions deal inevitably with subjects who have most likely participated in previous experiments. It is an important methodological question to know whether participants that have acquired a high level of lab-sophistication show altered pro-social behavioral patterns. In this paper, we focus both on the potential effect of the subjects’ lab-sophistication, and on the role of the knowledge about the level of lab-sophistication of the other participants. Our main findings show that while lab-sophistication per se does not significantly affect pro-social behaviour, for sophisticated sub-jects the knowledge about the counterpart’s level of (un)sophistication may systematically alter their choices. This result should induce caution among experimenters about whether, in their settings, information about labsophistication can be inferred by the participants, due to the characteristics of the recruitment mechanisms, the management of the experimental sessions or to other contextual clues.
    Keywords: Lab-sophistication; Experimental Methodology; External Validity; Pro-social behaviour; Cooperation
    JEL: D03 D83 C91 C9
    Date: 2021–02
  2. By: Erik O. Kimbrough (Smith Institute for Political Economy & Philosophy, Chapman University); David Porter (Economic Science Institute, Chapman University); Mark Schneider (University of Alabama)
    Abstract: Evidence from psychology and marketing suggests that those who make a "precise" first offer in bargaining get a better deal than those who make a "round" first offer. We report on a series of experiments designed to test for and improve our understanding of the "precise first offer" (PFO) effect in bargaining and whether it likely reflects rational optimizing or equilibrium behavior. Our experimental treatments vary whether decisions are incentivized and whether the PFO effect can emerge as an equilibrium of a cheap-talk signaling game. We find evidence of a PFO effect when subjects read a vignette and make unincentivized individual decisions. When monetary incentives are added to the vignette, we still find the PFO effect, but it is not robust. In a bilateral bargaining situation with a cheap-talk equilibrium, we can not find the PFO effect, which is inconsistent with the equilibrium predictions. Moreover, the PFO effect reemerges in a setting in which initial offers are generated by a random device and thus provides a strong refutation of the signaling model. Our evidence suggests that optimizing and equilibrium accounts of the PFO effect are inadequate. Understanding initial offers as reference points, which subtly change perceptions about the kinds of acceptable counteroffers, provides a plausible account of a new finding on which prior explanations are silent: precise offers induce more precise counteroffers.
    Keywords: bargaining, precise first offers, reference points
    JEL: C7 C9 D9
    Date: 2020
  3. By: Dekker, I.; Schippers, M.C.; van Schooten, E.
    Abstract: Students often have trouble adjusting to higher education and this affects their performance, retention, and well-being. Scholars have suggested applying reflective goal- setting interventions, and most have found positive effects on academic performance and retention. However, one study found no effect at all, stressing the need for understanding the underlying mechanisms, as they could explain when the intervention works and why. Thus, we assessed these mechanisms through a rigorous effect test, using an experimental design and repeated measures. We measured engagement, self-regulated learning, resilience, grit, wellbeing, academic performance, and retention at three points in a large scale randomized controlled trial involving first-year teacher and business education students (N = 1,134). The treatment group earned significantly more course credits and had lower drop out rates. Contrary to previous findings, these effects were independent of gender or ethnicity. Grit, self-regulated learning, resilience, or engagement did not mediate the effects. This study confirmed reflective goal-setting’s small and direct effect on academic performance, but no mediating or moderating effects. Differences in implementation fidelity could explain previous studies’ varying effect-sizes.
    Keywords: academic performance, academic achievement, goal setting, well-being, intervention, field experiment, self-regulated learning, engagement
    Date: 2021–02–03
  4. By: Subhasish M. Chowdhury (School of Economics, University of Bath); Anwesha Mukherjee (School of Management, Technische Universitat München); Roman M. Sheremeta (Weatherhead School of Management, Case western Reserve University and Economic Science Institute, Chapman University)
    Abstract: Individuals participating in a group conflict have different preferences, e.g., maximizing their own payoff, maximizing the group’s payoff, or defeating the rivals. When such preferences are present simultaneously, it is difficult to distinctly identify the impact of those preferences on conflict. In order to separate in-group and out-group preferences, we conduct an experiment in which human in-group or out-group players are removed while keeping the game strategically similar. Our design allows us to study (i) how effort in a group conflict vary due to in-group and out-group preferences, and (ii) how the impact of these preferences vary when the two groups have explicitly different social identities. The results of our experiment show that the presence of in-groups enhances concern about individual payoffs. A further presence of outgroups moderates the concern for individual payoffs through an additional concern for own group payoffs. The negative effect of the in-group preferences and the positive effect of the out-group preferences are weaker when group members have a common social identity.
    Keywords: Group conflict; Contest; Identity; Social preferences
    JEL: C91 C92 D74 D91
    Date: 2021
  5. By: Erwin Amann (University Duisburg-Essen); Sylvi Rzepka (University of Potsdam)
    Abstract: We investigate how inviting students to set task-based goals affects usage of an online learning platform and course performance. We design and implement a randomized field experiment in a large mandatory economics course with blended learning elements. The low-cost treatment induces students to use the online learning system more often, more intensively, and to begin earlier with exam preparation. Treated students perform better in the course than the control group: they are 18.8% (0.20 SD) more likely to pass the exam and earn 6.7% (0.19 SD) more points on the exam. There is no evidence that treated students spend significantly more time, rather they tend to shift to more productive learning methods. The heterogeneity analysis suggests that higher treatment effects are associated with higher levels of behavioral bias but also with poor early course behavior.
    Keywords: natural field experiment, blended learning, behavioral economics, goal-setting
    JEL: I21 I23 C93 D91
    Date: 2021–02
  6. By: Leonardo Bursztyn (University of Chicago - Department of Economics; NBER); Ingar Haaland (University of Bergen - Department of Economics; CESifo); Aakaash Rao (Harvard University - Department of Economics); Christopher Roth (University of Warwick - Department of Economics; briq; CEPR; CESifo; CAGE)
    Abstract: We study the use of excuses to justify socially stigmatized actions, such as opposing minority groups. Rationales to oppose minorities change some people’s private opinions, leading them to take anti-minority actions even if they are not prejudiced against minorities. When these rationales become common knowledge, prejudiced people who are not persuaded by the rationale can pool with unprejudiced people who are persuaded. This decreases the stigma associated with anti-minority expression, increasing public opposition to minority groups. We examine this mechanism through several large-scale experiments in the context of anti-immigrant behavior in the United States. In the first main experiment, participants learn about a study claiming that immigrants increase crime rates and then choose whether to authorize a publicly observable donation to an anti-immigrant organization. Informing participants that others will know that they learned about the study substantially increases donation rates. In the second main experiment, participants learn that a previous respondent authorized a donation to an anti-immigrant organization and then make an inference about the respondent’s motivations. Participants who are informed that the respondent learned about the study prior to authorizing the donation see the respondent as less intolerant and more easily persuadable.
    Keywords: Social image, excuses, persuasion, media, propaganda, political attitudes
    Date: 2020
  7. By: Dufwenberg, Martin; Servátka, Maroš; Tarrasó, Jorge; Vadovič, Radovan
    Abstract: Lab evidence on trust games involves more cooperation than conventional economic theory predicts. We explore whether this pattern extends to a field setting where (much like in a lab) we are able to control for (lack of) repeat-play and reputation: cab drivers in Mexico City. We find a remarkably high degree of trustworthiness, also with price-haggling, which is predicted to reduce trustworthiness.
    Keywords: trust, honesty, reciprocity, field experiment, haggling, taxis
    JEL: C72 C90 C93
    Date: 2021–02–22
  8. By: Justin E. Holz (University of Chicago - Harris School of Public Policy); John A. List (University of Chicago - Department of Economics; NBER); Alejandro Zentner (University of Texas at Dallas - Naveen Jindal School of Management); Marvin Cardoza (Direccion General de Impuestos Internos); Joaquin Zentner (Inter-American Development Bank)
    Abstract: This paper uses a natural field experiment to examine the effectiveness of specific nudges on tax compliance amongst firms and the self-employed in the Dominican Republic. In collaboration with the Dominican Republic’s tax authority, we designed messages for more than 28,000 self-employed workers and over 56,000 firms. Leveraging administrative tax data, we find evidence that our nudges (increasing the salience of prison sentences or public disclosure of tax evaders) have large effects on increasing tax compliance, primarily working through the channel of decreasing claimed tax exemptions. Interestingly, we find that firms are more impacted than the self-employed, and that firm size is critically linked to nudge effectiveness: larger firms are considerably more influenced by nudges than smaller firms. We find this latter result noteworthy given the paucity of evidence showing significant behavioral impacts of nudges amongst the largest players in a market. Overall, our messages increased tax revenue by $193 million (roughly 0.23% of the Dominican Republic’s GDP in 2018), with over $100 million constituting income that the government would not have received without our field experimental nudges.
    JEL: C93 H2 H26
    Date: 2020
  9. By: Godager, Geir (Department of Health Management and Health Economics); Hennig-Schmidt, Heike (BonnEconLab, University of Bonn, Germany); Li, Jing Jing (Shandong Provincial Hospital Affiliated to Shandong First Medical University, Jinan, Shandong, China); Wang, Jian (Dong Fureng Institute of Economic and Social Development, Wuhan University, China); Yang, Fan (Department of Health Management and Health Economics)
    Abstract: It is rarely the case that differences in behaviors of females and males are described under a ceteris paribus condition, and behaviors can potentially be influenced by the environment in which decisions are made. In the case of medical decisions, physicians are expected to account for patient characteristics as well as observed and unobserved contextual factors, such as whether the patient has a healthy lifestyle. Since one usually do not randomize physicians to context, reported gender differences in medical practice can have several alternative interpretations. <p> A key question is whether the medical treatment of a given patient is expected to depend on the gender of the physician. To address this question, we quantify gender effects using data from an incentivized laboratory experiment, where Chinese medical doctors and Chinese medical students choose medical treatment under different payment schemes. We estimate preference parameters of females and males assuming decision-makers have patient-regarding preferences. We cannot reject the hypothesis that gender differences in treatment choices are absent. Preference parameters of females and males are not statistically different in a log-likelihood ratio test, and there is no evidence that the degree of randomness in choices differs between genders. <p> The absence of gender effects in the laboratory, where choice context is fixed, provides nuance to previous findings on gender differences, and highlights the general difficulty of separating individuals’ behavior from the context they are in.
    Keywords: Gender; Laboratory experiment; Bounded rationality; Physician behavior
    JEL: C92 D82 H40 I11 J33
    Date: 2021–02–22
  10. By: Radhika Lunawat (University of California, Irvine); Timothy W. Shields (Chapman University and Economic Science Institute); Gregory B. Waymire (Emory University and Economic Science Institute;
    Abstract: Dating back at least to Adam Smith (1790), philosophers and researchers expect that people will behave differently when they know their actions are observable to others. We hypothesize that financial reporting reveals managers’ actions and leads them to take different actions that are better aligned with investor interests. We posit that the reason why is the activation of our internal mental self-evaluation that Smith refers to as an “Impartial Spectator.†We test this hypothesis with an experiment in which we manipulate the availability of a financial report that makes managerial actions transparent. Our evidence shows that financial reporting leads a manager to choose reinvestment and resource sharing actions that are better aligned with investor interests, even in a sparse experimental setting where the investor can impose no cost or confer no reward on the manager. This same effect holds in a setting where the investor can shut down the firm at any point and take a sizable portion of the assets. Our evidence is important because it suggests that part of financial reporting’s economic value comes from its enabling moral evaluation by the manager in addition to its traditional contracting function
    Keywords: Financial reporting, Blameworthy, Praiseworthy, Moral sentiments, Selfregulation
    JEL: C92 D82 D91 M40
    Date: 2020
  11. By: Maximilian Andres (University of Potsdam); Lisa Bruttel (University of Potsdam); Jana Friedrichsen (WZB, Humboldt-Universität zu Berlin, DIW Berlin)
    Abstract: The experimental literature on antitrust enforcement provides robust evidence that communication plays an important role for the formation and stability of cartels. We extend these studies through a design that distinguishes between innocuous communication and communication about a cartel, sanctioning only the latter. To this aim, we introduce a participant in the role of the competition authority, who is properly incentivized to judge communication content and price setting behavior of the firms. Using this novel design, we revisit the question whether a leniency rule successfully destabilizes cartels. In contrast to existing experimental studies, we find that a leniency rule does not affect cartelization. We discuss potential explanations for this contrasting result.
    Keywords: cartel, judgment of communication, corporate leniency program, price competition, experiment
    JEL: C92 D43 L41
    Date: 2021–02
  12. By: Erin T. Bronchetti (Swarthmore College - Department of Economics); Judd B. Kessler (University of Pennsylvania - The Wharton School; NBER); Ellen B. Magenheim (Swarthmore College - Department of Economics); Dmitry Taubinsky (University of California, Berkeley; NBER); Eric Zwick (University of Chicago - Booth School of Business; NBER)
    Abstract: A large and growing literature shows that attention-increasing interventions, such as reminders and planning prompts, can promote important behaviors. This paper develops a method to investigate whether people value attention-increasing tools rationally. We characterize how the demand for attention improvements must vary with the pecuniary incentive to be attentive and develop quantitative tests of rational inattention that we deploy in two experiments. The first is an experiment with an online education platform run in the field (n=1,373), in which we randomize incentives to complete course modules and incentives to make plans to complete the modules. The second is an online survey-completion experiment (n=944), in which we randomize incentives to complete a survey three weeks later and the price of reminders to complete the survey. In both experiments, as incentives to complete a task increase, demand for attention-improving technologies also increases. However, our tests suggest that the increase in demand for attention improvements is too small relative to the null of full rationality, indicating that people underuse attention-increasing tools. In our second experiment, we estimate that individuals undervalue the benefits of reminders by 59%.
    JEL: C91 C93 D91
    Date: 2020
  13. By: Berry, James; Fischer, Gregory; Guiteras, Raymond
    Abstract: We use the Becker-DeGroot-Marschak (BDM) mechanism to estimate willingness to pay (WTP) for and heterogeneous impacts of clean water technology through a field experiment in Ghana. Although WTP is low relative to cost, demand is inelastic at low prices. Short-run treatment effects are positive throughout the WTP distribution. After 1 year, use and benefits are both increasing in WTP, with negative effects on low-WTP households. Combining estimated treatment effects with house-holds’ WTP implies valuations of health benefits much smaller than typically used by policy makers. We explore differences between BDM and take-it-or-leave-it valuations and make recommendations for implementing BDM in the field.
    Keywords: price mechanism; heterogeneous treatment effects; health behavior; Becker- DeGroot-Marschak; field experiments
    JEL: C93 D12 L11 L31 O12 Q51
    Date: 2020–04–01
  14. By: Pierluigi Conzo; Laura K. Taylor; Juan S. Morales; Margaret Samahita; Andrea Gallice
    Abstract: We investigate the effect of social media endorsements (likes, retweets, shares) on individuals’ policy preferences. In two online controlled experiments (N=1,384), we exposed participants to non-neutral policy messages about the COVID-19 pandemic (emphasizing either public health or economic activity as a policy priority) while varying the level of endorsements of these messages. Our experimental treatment significantly shifted the policy views of active social media users by about 0.12 standard deviations. The treatment effect for these users is heterogeneous depending on their pre-existing views. Specifically, message endorsements reinforce pre-existing attitudes, thereby increasing opinion polarization. The effect appears concentrated on a minority of individuals who correctly answered a factual manipulation check regarding the endorsement metrics. This evidence suggests that though only a fraction of individuals pay conscious attention to these metrics, they may be easily influenced by these social cues.
    Keywords: Social media; Social conformity; Political polarization; COVID-19 economic effects; COVID-19; Coronavirus
    JEL: D83 L82 L86 O33
    Date: 2021–02
  15. By: Abu Siddique (Technical University of Munich)
    Abstract: I investigate how long-term exposure to religious education affects economic behavior of children. To identify the effect of religious education, I exploit residential schools for orphans in Bangladesh that differ in terms of religious curriculum and social environment, limits transmission of beliefs and preferences from parents to children following being orphaned, makes social learning by children limited after school enrolment, and mitigates issues concerning endogenous school choice by parents. Using a lab-in-the-field experiment in this natural setting, I measure children's behavior and find that (i) children receiving religious education are more altruistic and honest relative to children receiving secular education; (ii) religious education does not affect risk aversion, cooperation, trust, and trustworthiness of children; and, (iii) behavioral differences are driven by children who are around puberty and completed primary education. My findings provide useful insights into how long-term exposure to religious education can affect behavior - possibly by shifting preferences - during childhood and adolescence.
    Keywords: Economic behavior, preference formation, religious education, selection bias, lab-in-the-field experiment, Bangladesh.
    JEL: C9 D91 I21 Z12
    Date: 2021–02
  16. By: Herz, Holger; Zihlmann, Christian
    Abstract: We conduct a field experiment with remote workers to assess potential adverse effects of monitoring. We find that monitoring reduces the average performance of workers, in particular among the intrinsically motivated workforce. Moreover, monitoring cultivates the average worker: There are fewer high performers and the variance in performance is significantly reduced. Importantly, we show that performance reductions primarily occur among challenging tasks. These performance reductions significantly increase unit costs in our setting. This effect is particularly severe when challenging tasks have high marginal value, as in high-performance work systems or when tasks are complementary inputs into the production function.
    Keywords: Monitoring; Hidden Costs of Control; Remote work; Field experiment
    JEL: C93 D21 J24 M5
    Date: 2021–02–26
  17. By: Alison Macintyre; Ho Fai Chan; Markus Schaffner; Benno Torgler
    Abstract: This paper reports on a laboratory experiment designed specifically to test the influence of national pride on tax honesty while using a physiological marker to observe emotional responses to patriotic priming. Participants were exposed to one of three framing videos before earning income in a real effort task, and at each of 20 rounds (years) were given the chance to declare their taxable income. We find that psychological priming through exposure to symbols of Australian national pride and national identity had a positive effect on the level of tax compliance among Australian but not non- Australians. In addition, non-Australians report lower tax compliance ratios in the treatment groups than in the control group which may indicate an outgroup effect. When exploring the potential of a physiological marker of national pride we observe two different types of physiological responses to the activation and effects of national pride and its impact on tax compliance among Australians. Iconic images activate the parasympathetic nervous system while sports scenes activate the sympathetic nervous system, but both types of images and responses are positively associated with tax compliance. In addition, we find that non-Australians resident in the country for more than a year report a higher level of tax compliance, and that there are some similarities in heart rate variability (HRV) responses between Australian citizens born in the country and those born overseas who have been in Australia for a longer period. Overall, the results support the proposition that identifying with an ingroup at a national level is important for tax compliance.
    Keywords: National pride; Tax compliance; Heart rate variability; Laboratory experiment
    JEL: C91 H26 D91 C88
    Date: 2021–02
  18. By: Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 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); Alexander James (University of Alaska [Anchorage]); Stéphane Luchini (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); James Murphy (University of Alaska [Anchorage]); Jason Shogren (UW - University of Wyoming)
    Abstract: This study explores whether an oath to honesty can reduce both shirking and lying among crowd-sourced internet workers. Using a classic coin-flip experiment, we first confirm that a substantial majority of Mechanical Turk workers both shirk and lie when reporting the number of heads flipped. We then demonstrate that lying can be reduced by first asking each worker to swear voluntarily on his or her honor to tell the truth in subsequent economic decisions. Even in this online, purely anonymous environment, the oath significantly reduced the percent of subjects telling "big" lies (by roughly 27%), but did not affect shirking. We also explore whether a truth-telling oath can be used as a screening device if implemented after decisions have been made. Conditional on flipping response, MTurk shirkers and workers who lied were significantly less likely to agree to an ex-post honesty oath. Our results suggest oaths may help elicit more truthful behavior, even in online crowd-sourced environments
    Keywords: Experimental Economics,Honesty,Solemn Oath,Mechanical Turk,Lying,Shirking
    Date: 2021–01
  19. By: Clare Leaver (Blavatnik School of Government University College); Owen Ozier (Williams College); Pieter Serneels (University of East Anglia); Andrew Zeitlin (Georgetown University)
    Abstract: This paper reports on a two-tiered experiment designed to separately identify the selection and effort margins of pay-for-performance (P4P). At the recruitment stage, teacher labor markets were randomly assigned to a pay-for-percentile or fixed-wage contract. Once recruits were placed, an unexpected, incentive compatible, school-level re-randomization was performed, so that some teachers who applied for a fixed-wage contract ended up being paid by P4P, and vice versa. By the second year of the study, the within-year effort effect of P4P was 0.16 standard deviations of pupil learning, with the total effect rising to 0.20 standard deviations after allowing for selection.
    Keywords: pay-for-performance, selection, incentives, teachers, field experiment
    JEL: C93 I21 J45 M52 O15
    Date: 2021–01–27
  20. By: Abhinash Borah (Ashoka University)
    Abstract: We propose and axiomatize a decision model of social preferences under risk that highlights moral hypocrisy, which we think of as the motivation to appear moral while avoiding the cost of acting morally to the extent possible (Batson et al., 1997). Our model considers a setup with a decision maker (DM) and one other individual. It highlights how the presence of risk enables the DM to exploit the distinction between the other individual's ex post outcome and his ex-ante opportunity in a self-serving manner and perceive herself as more moral than what her choices warrant. In turn, this allows her to behave more selfishly in the presence of risk than under certainty and, further, be more risk loving over the other individual's risks than her own. Our axiomatization highlights that the DM acts like a motivated Bayesian when assessing risk faced by the other individual, specifically, she underweights the probabilities of unfavorable outcomes that the other individual may receive in her assessments. We show that our model can explain a wide array of experimental evidence on generous behavior under risk.
    Keywords: social preferences under risk, moral hypocrisy, motivated Bayesian reasoning, ex post outcomes and ex ante opportunities
    Date: 2021–02
  21. By: Feser, Daniel; Winkler-Portmann, Simon; Bischoff, Thore Sören; Bauknecht, Dierk; Bizer, Kilian; Führ, Martin; Heyen, Dirk Arne; Proeger, Till; von der Leyen, Kaja; Vogel, Moritz
    Abstract: Experiments are an important governance instrument to support niche development, promote niche-regime interaction, challenge existing regimes and manage transition pathways for sustainable development. However, policy and regulatory learning of experiments are under-explored in the transition experimentation literature. Thus, this paper examines the following research question: How is the up-take of regulatory experiments for sustainability transitions influenced by their design elements and what role do institutional dynamics play in their up-take? The paper uses comparative qualitative content analysis to examine 27 international cases of regulatory experiments. We analyze the up-take of experiment results towards the three dimensions of scalability, transferability and unintended consequences. The analysis demonstrates that the timeframe, timing, political support, regulatory context, geographical particularities, selection processes, evaluation procedures, test of different design options, heterogeneity of participants and communication processes are important influencing factors for the up-take of experiment results.
    Keywords: Governance Experiments,Up-take,Scalability,Transferability,Unintended Consequences,Institutional Conditions
    JEL: L51 O31 Q56 Q58
    Date: 2021
  22. By: John A. List (University of Chicago - Department of Economics; NBER); Fatemeh Momeni (University of Chicago - Crime and Education Labs); Yves Zenou (Monash University - Department of Economics)
    Abstract: The behavioral revolution within economics has been largely driven by psychological insights, with the sister sciences playing a lesser role. This study leverages insights from sociology to explore the role of neighborhoods on human capital formation at an early age. We do so by estimating the spillover effects from a large-scale early childhood intervention on the educational attainment of over 2,000 disadvantaged children in the United States. We document large spillover effects on both treatment and control children who live near treated children. Interestingly, the spillover effects are localized, decreasing with the spatial distance to treated neighbors. Perhaps our most novel insight is the underlying mechanisms at work: the spillover effect on non-cognitive scores operate through the child's social network while parental investment is an important channel through which cognitive spillover effects operate. Overall, our results reveal the importance of public programs and neighborhoods on human capital formation at an early age, highlighting that human capital accumulation is fundamentally a social activity.
    JEL: C93 I21 I24 I26 I28 R1
    Date: 2020
  23. By: Marielle Brunette (BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jonas Ngouhouo-Poufoun (BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: We compare individual risk preferences elicited through a classic Ordered Lottery Selection (OLS) procedure with five gambles, and an extended procedure composed of nine gambles. The research question is about the stability of the risk preferences across these two elicitation variants. We implemented a field experiment with 1002 rural households in the Congo Basin from December 2013 to July 2014. We show that 1/3 of the sample is extremely risk averse regardless of the procedure. We found inconsistencies in risk preferences elicited across procedures. Indeed, 45.71% are characterized by instability of preferences, either weak (34.53%) or strong (11.18%); 42.81% of the sample exhibits stable preferences and the remaining 11.48% of the sample-initially risk neutral in the classic procedure-is classified as risk loving in the extended procedure. Undereducation can be seen as the main driver of the strong instability since the incremental change brought about by the attainment of secondary school on the likelihood to remain stable is ten times greater than the other considered drivers.
    Keywords: Farmers,Preferences,Ordered lottery selection,Risk aversion,Field experiment
    Date: 2021
  24. By: Sandor Katona (Centre for Economic and Regional Studies, Toth Kalman u. 4. Budapest, 1097 Hungary and Eotvos Lorand University, Pazmany Peter setany 1/a, Budapest, 1117 Hungary); Anna Lovasz (Centre for Economic and Regional Studies, Toth Kalman u. 4. Budapest, 1097 Hungary and University of Washington Tacoma, 1900 Commerce Street, Tacoma, WA 98402-3100, USA)
    Abstract: We study the impact of the gender composition of a scoreboard on the persistence and performance of players in an online game. Players were randomly selected into eight groups, defined along two dimensions: they saw high or average scores on a scoreboard (score level), and within each of these, they saw either 3 male, 2 male and one female, 1 male and 2 female, or 3 female names associated with the scores (gender composition). Based on 1140 participants, we find that males are generally less responsive to performance information on other participants. Compared to the baseline of all male names on the scoreboard, females play fewer games when they see only female names, but more games when they see mixed gender names with high scores. Their performance (best score) increases significantly when they see at least one female name and high scores. This result is in line with the importance of female-specific reference points – or role models - in encouraging females’ participation and higher performance in competitive settings. It supports the use of policies aimed at providing these, such as the introduction of female role models and the public acknowledgement of high performing females.
    Keywords: Gender Gaps, Competition, Performance Feedback, Gender Composition, Reference Point
    JEL: I20 J16 J24 M54
    Date: 2021–01
  25. By: Margaret Samahita; Leonhard K. Lades
    Abstract: Recent experimental evidence suggests that donors are averse to giving to charities with high overhead ratios. This paper asks whether donors are also averse to giving to charities spending a high share of the donations on unavoidable administrative expenses. The results of an experiment with a nationally representative sample (n = 1, 032) suggest that donors dislike paying for administrative burden almost as much as for overhead. While donors care primarily about how much of their donations are used for program-related services, donors seem to have a weak preference for charities to spend their donations on administrative burden rather than on overheads. Government subsidies that help alleviate charities’ administrative burden can reduce donors’ aversion to give to charities with high administrative expenses. Overall, we show that regulations that aim to increase transparency and accountability in the charity sector can have the unintended side effect of reducing charitable giving.
    Keywords: Charitable giving; Administrative burden; Overhead aversion; Information; Dictator game; Online experiment
    JEL: C99 D64 L31
    Date: 2021–02
  26. By: Roland Fryer (Harvard University - Department of Economics; NBER); Steven Levitt (University of Chicago - Department of Economics; NBER); John A. List (University of Chicago - Department of Economics; NBER); Anya Samek (University of California, San Diego - Rady School of Management; NBER)
    Abstract: We present the results of a novel early childhood intervention in which disadvantaged 3-4-year-old children were randomized to receive a new preschool and parent education program focused on cognitive and non-cognitive skills (CogX) or to a control group that did not receive preschool education. In addition to a typical academic year (9 month) program, we also evaluated a shortened summer version of the program (2 months) in which children were treated immediately prior to the start of Kindergarten. Both programs, including the shortened version, significantly improved cognitive test scores by about one quarter of a standard deviation relative to the control group at the end of the year. The shortened version of the program was equally as effective as the academic-year program because most of the gains in the academic-year program occurred within the first few months.
    Keywords: Preschool education, human capital, field experiments
    JEL: J24 C93
    Date: 2020
  27. By: Andersson, Henrik (Uppsala University); Engström, Per (Uppsala University); Nordblom, Katarina (Department of Economics, School of Business, Economics and Law, Göteborg University); Wanander, Susanna (The Swedish Tax Agency)
    Abstract: We study what induces delinquent taxpayers to pay their taxes due. We use high quality administrative data from the Swedish Tax Agency. We find a strong effect of the standard enforcement regime: a threat of having the debt handed over to the Enforcement Agency increases payments by roughly 10 percentage points. When including actual enforcement, payment increases by around 20 percentage points compared to those who do not risk enforcement. In a field experiment, we compare these effects of standard enforcement to those of much milder nudges, consisting of letters reminding tax delinquents to pay their taxes due. We find that a “pure nudge”, i.e., the inclusion of an extra piece of paper with no valuable information, has an effect of 7-8 percentage points for those who do not risk enforcement upon non-payment. However, the same nudge has no detectable effect for the group at risk of enforcement. Social-norm messages in turn increase payments both for those who risk enforcement and for those who do not, but to a much smaller degree. We also find that a pure nudge works much better for those who receive a physical letter than for those who receive information electronically, while the reaction to the social-norm nudge is significant for those who get the electronic information.
    Keywords: tax compliance; RCT; nudge; quasi-experiment; regression discontinuity
    JEL: C21 D03 D91 H24 H26
    Date: 2021–02
  28. By: Antonio M. Espín (Department of Social Anthropology, University of Granada); Manuel Correa (Department of Applied Economics, University of Granada); Alberto Ruiz-Villaverde (Department of Applied Economics, University of Granada)
    Abstract: There is much debate as to why economics students display more self-interested behavior than other students: whether homo economicus self-select into economics or students are instead “indoctrinated†by economics learning, and whether these effects impact on preferences or beliefs about others’ behavior. Using a classroom survey (n>500) with novel behavioral questions we show that, compared to students in other majors, econ students report being: (i) more self-interested (in particular, less compassionate or averse to advantageous inequality) already in the first year and the difference remains among more senior students; (ii) more likely to think that people will be unwilling to work if unemployment benefits increase (thus, assuming others are motivated primarily by self-interest), but only among senior students. These results suggest self-selection in preferences and indoctrination in beliefs.
    Keywords: self-selection, indoctrination, self-interest, inequality aversion, beliefs
    JEL: A11 A13 A22 D31 D63 D9 I22
    Date: 2021
  29. By: Supreet Kaur (University of California, Berkeley - Department of Economics; NBER); Sendhil Mullainathan (University of Chicago - Booth School of Business; NBER); Suanna Oh (Paris School of Economics); Frank Schilbach (Massachusetts Institute of Technology - Department of Economics; NBER)
    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: 2020
  30. By: Hind Dib-Slamani (University of International Business and Economics [Beijing, China], MDI Algiers Business School); Gilles Grolleau (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UMR 5211 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Naoufel Mzoughi (ECODEVELOPPEMENT - Unité de recherche d'Écodéveloppement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: We blend the institutional and social identity theories to explain why foreign companies may endure a differentiated treatment compared to domestic ones. We extend the "liability of foreignness" (LOF) reasoning to the moral domain. Using a survey experiment in Algeria and France, we examine whether observers judge similarly or differently the same ethical and unethical practices by manipulating the doers' origin. Each treatment corresponds to a specific combination of company behavior (ethical vs. unethical) and company origin (no origin mentioned vs. domestic origin vs. foreign origin). We found that company origin matters for the ethical and some unethical scenarios. However, the foreignness consequences in the moral domain are not always consistent with a simplistic application of LOF-based arguments, leading us to consider a more complex picture than initially expected. In the Algerian sample, we found that foreign companies can even benefit from an advantage compared to domestic ones.
    Keywords: CSR,liability of foreignness (LOF),business ethics,moral judgment,experimental survey
    Date: 2021
  31. By: Jivas Chakravarthy (University of Texas, Arlington); Timothy W. Shields (Argyros School of Business and Economics, Chapman University)
    Abstract: At present, accounting conservatism is generally viewed from a measurement or reporting perspective. In contrast, we consider whether it relates to a moral rule of conduct. Conservatism has been described as deriving from a preference for reporting errors to be in the direction of understatement rather than overstatement. We experimentally pair Reporters who provide information with Users who rely on the information. We posit that under misaligned incentives that motivate aggressive reporting, Users view an aggressive report as reflecting Reporters’ exploitative intent and expect that a social norm prohibiting aggressive reporting applies. We predict that Users use noisy reporting errors to gauge Reporters’ norm compliance. Consistent with this we find that, ceteris paribus, Users prefer not to be paired with Reporters who produce overstatement errors that are likely to reflect aggressive reporting. This preference, revealed through Users’ incentivized actions, is both inconsistent with neoclassical economic models and cannot be explained by loss aversion. Alternatively, when Reporters’ motives are aligned with Users’, we find no such preference. While our evidence is indirect, it opens the possibility that conservatism emerged from a norm that enhances trust and cooperation among economic agents. We believe this insight can open new possibilities for conservatism research.
    Keywords: accounting conservatism; experimental economics; intentions; moral hazard
    JEL: B52 D81 D82 M41
    Date: 2020
  32. By: Cormac O'Dea (Cowles Foundation, Yale University); David Sturrock (University College London and Institute for Fiscal Studies)
    Abstract: The “annuity puzzle†refers to the fact that annuities are rarely purchased despite the longevity insurance they provide. Most explanations for this puzzle assume that individuals have accurate expectations about their future survival. We provide evidence that individuals misperceive their mortality risk, and study the demand for annuities in a setting where annuities are priced by insurers on the basis of objectively-measured survival probabilities but in which individuals make purchasing decisions based on their own subjective survival probabilities. Subjective expectations have the capacity to explain signiï¬ cant rates of non-annuitization, yielding a quantitatively important explanation for the annuity puzzle.
    Keywords: Annuity Puzzle, Subjective Expectations, Survival Probabilities
    JEL: D14 D84 D91 J14
    Date: 2021–02
  33. By: Erika Deserranno; Philipp Kastrau; Gianmarco León-Ciliotta
    Abstract: We study promotion incentives in the public sector by means of a field experiment with the Ministry of Health in Sierra Leone. The experiment creates exogenous variation in meritocracy by linking promotions to performance and variation in perceived pay progression among the lowest tier of health workers. We find that meritocratic promotions lead to higher productivity, and more so when workers expect a steep pay increase. However, when promotions are not meritocratic, increasing the pay gradient reduces productivity through negative morale effects. The findings highlight the importance of taking into account the interactions between different tools of personnel policy.
    Keywords: promotions, meritocracy, pay progression, worker productivity
    JEL: M51 M52 J31 D73
    Date: 2021–02
  34. By: Johannes Buckenmaier (University of Zurich); Eugen Dimant (University of Pennsylvania & CESifo); Ann-Christin Posten (University of Cologne); Ulrich Schmidt (Kiel Institute for the World Economy)
    Abstract: Economic theory suggests that the deterrence of deviant behavior is driven by a combination of severity and certainty of punishment. This paper presents the first controlled experiment to study a third important factor that has been mainly overlooked: the swiftness of formal sanctions. We consider two dimensions: the timing at which the uncertainty about whether one will be punished is dissolved and the timing at which the punishment is actually imposed, as well as the combination thereof. By varying these dimensions of delay systematically, we find a surprising non-monotonic relation with deterrence: either no delay (immediate resolution and immediate punishment) or maximum delay (both resolution and punishment as much as possible delayed) emerge as most effective at deterring deviant behavior and recidivism. Our results yield implications for the design of institutional policies aimed at mitigating misconduct and reducing recidivism.
    Keywords: Deterrence; Institutions; Punishment; Swiftness; Uncertainty
    JEL: C91 D02 D81 K42
    Date: 2021–02
  35. By: Marcus Roel (Beijing Normal University); Manuel Staab (Aix-Marseille University, CNRS, AMSE)
    Abstract: In the spirit of Blackwell (1951), we analyze how two fundamental mistakes in information processing-incorrect beliefs about the world and misperception of information-affect the expected utility ranking of information experiments. We explore their individual and combined influence on welfare and provide necessary and sufficient conditions when mistakes alter and possibly reverse the ranking of information experiments. Both mistakes by themselves reduce welfare in a model where payoff relevant actions also generate informative signals. This is true for naive decisionmakers, unaware of any errors, as well as for sophisticated decision-makers, who account for the possibility of mistakes. However, mistakes can interact in non-obvious ways and an agent might be better off suffering from both, rather than just one. We provide a characterization when such positive interactions are possible. Surprisingly, this holds true only for naive decision-makers and thus naivete can be beneficial. We discuss implications for information acquisition and avoidance, welfare-improving belief manipulation, and policy interventions in general.
    Keywords: ranking of experiments, information acquisition, misperception, confirmation bias, overconfidence, underconfidence
    JEL: D03 D81 D83
    Date: 2021–02
  36. By: Michela Chessa (Université Côte d'Azur, France; GREDEG CNRS); Nobuyuki Hanaki (Osaka University,); Aymeric Lardon (GATE Lyon Saint-Etienne,); Takashi Yamada (Yamaguchi University, Japan)
    Abstract: We experimentally compare two well-known mechanisms inducing the Shapley value as an ex ante equilibrium outcome of a noncooperative bargaining procedure: the demand-based Winter's demand commitment bargaining mechanism and the offer-based Hart and Mas-Colell bidding procedure. Our results suggest that, on the one hand, the offer-based Hart and Mas-Colell mechanism better induces players to cooperate and to agree on an efficient outcome; on the other hand, the demand-based Winter mechanism better implements allocations that reflect players' effective bargaining power.
    Keywords: Nash Program, Bargaining procedures, Shapley value, Experiments
    JEL: C71 C72 C90 D82
    Date: 2021–02
  37. By: Josef Fink (Institute of Banking and Finance, University of Graz); Stefan Palan (Institute of Banking and Finance, University of Graz); Erik Theissen (Finance Area, University of Mannheim)
    Abstract: We use laboratory experiments to analyze how the existence of trading frictions (a transaction fee and a ban on short selling and margin buying) affects occurrence and strength of the post-earnings-announcement drift. We find lower trading activity and higher asset prices in the presence of frictions. While the initial price reaction to earnings announcements is weaker, the strength of the PEAD is not materially affected. Trading strategies aimed at exploiting the PEAD are less profitable in the presence of frictions.
    Date: 2021–02–16
  38. By: Pawel Dziewulski (University of Sussex); Roy Allen (University of Western Ontario); John Rehbeck (Ohio State University)
    Abstract: This paper re-examines research that studies economic rationality using experimental data generated by nonhuman animals (e.g. rats, pigeons, monkeys, etc.). The standard experimental methodology to elicit choices from nonhuman animals allows a researcher to test three types of economic rationality: standard deterministic utility maximization, average choice rationality, and random utility maximization. Most of the research has evaluated whether animals satisfy average choice rationality. We describe the difference between these models and check each type of rationality on capuchin monkey data from Chen et al. (2006). We reject standard deterministic utility maximization, but cannot reject either average choice rationality or random utility maximization. This paper is the first to provide a statistical test for average choice rationality.
    Date: 2021–02
  39. By: Falch, Ranveig (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: How society invests in human capital is important for economic growth and social welfare. The paper reports from the first experiment designed to elicit people’s preferences for how to prioritize educational resources, where 2,000 Americans trade off educational resources between quick and slow learners. I find that they give strong priority to slow learners and assign two thirds of the educational resources to this group. Both cost efficiency and the motivation of the learners causally affect the resource allocation. The findings provide important insights for the present policy debate on how to distribute educational resources in society.
    Keywords: Human capital investment; preferences; inequality; experiment; education
    JEL: C91 D01 D30 D63 I24 I28
    Date: 2021–02–08
  40. By: You Zu; Krishnamurthy Iyer; Haifeng Xu
    Abstract: We study a repeated persuasion setting between a sender and a receiver, where at each time $t$, the sender observes a payoff-relevant state drawn independently and identically from an unknown prior distribution, and shares state information with the receiver, who then myopically chooses an action. As in the standard setting, the sender seeks to persuade the receiver into choosing actions that are aligned with the sender's preference by selectively sharing information about the state. However, in contrast to the standard models, the sender does not know the prior, and has to persuade while gradually learning the prior on the fly. We study the sender's learning problem of making persuasive action recommendations to achieve low regret against the optimal persuasion mechanism with the knowledge of the prior distribution. Our main positive result is an algorithm that, with high probability, is persuasive across all rounds and achieves $O(\sqrt{T\log T})$ regret, where $T$ is the horizon length. The core philosophy behind the design of our algorithm is to leverage robustness against the sender's ignorance of the prior. Intuitively, at each time our algorithm maintains a set of candidate priors, and chooses a persuasion scheme that is simultaneously persuasive for all of them. To demonstrate the effectiveness of our algorithm, we further prove that no algorithm can achieve regret better than $\Omega(\sqrt{T})$, even if the persuasiveness requirements were significantly relaxed. Therefore, our algorithm achieves optimal regret for the sender's learning problem up to terms logarithmic in $T$.
    Date: 2021–02
  41. By: Gruener, Sven
    Abstract: Dohmen et al. (2010) describe in their paper, which has been published in the American Economic Review, that risk aversion and impatience are negatively related to cognitive ability. This topic is important because controlling for cognitive ability might be necessary if someone is interested in the link of risk preferences or time preferences to real-world outcomes. We re-examine their key results by conducting an experimental study using two subject pools (agricultural students and farmers) and three levels of monetary incentives. Similar to Dohmen et al. (2010), our study finds the above-described negative correlations. However, the strength of the association is smaller and the p-values are quite large.
    Date: 2021–02–26
  42. By: Kuan-Ming Chen (University of Chicago - Department of Economics); Ning Ding (University of Chicago - Department of Economics); John A. List (University of Chicago - Department of Economics; NBER; IZA Institute of Labor Economics); Magne Mogstad (University of Chicago - Department of Economics; Statistics Norway; IFS; NBER)
    Abstract: Recent changes in labor arrangements have increased interest in estimating and understanding the value of job flexibility. We leverage a large natural ï¬ eld experiment at Uber to create exogenous variation in expected market wages across individuals and over time. Combining this experiment with high frequency panel data on wages and individual work decisions, we document how labor supply responds to exogenous changes in expected market wages in a setting with virtually no restrictions on driver labor allocation. We find that there is i) systematic heterogeneity in labor supply responses both across drivers and within a driver over time, ii) significant fixed costs of beginning a shift, and iii) high rider demand when it is costly for drivers to work. These three findings motivate a model of labor supply with heterogenous preferences over work schedules, adjustment costs, and statistical dependence between market wages and the costs of driving. We recover the labor supply elasticities and reservation wages of this dynamic labor supply model via a combination of experimental estimates and other data moments. We then perform counterfactual analyses that allow us to examine how preference heterogeneity and adjustment costs influence the responses of workers’ to wage incentives as well as infer drivers’ willingness to pay for the ability to customize and adjust their work schedule. We also show that a static approach to the driver’s dynamic problem delivers materially different estimates of workers’ labor supply elasticities and their value of job flexibility.
    Keywords: Adjustment costs, dynamic model of labor supply, job flexibility, labor supply elasticities, reservation wages, value of time
    Date: 2020
  43. By: Babtunde Abidoye (United Nations Development Programme); Sahan Dissanayake (Portland State University); Sarah Jacobson (Williams College)
    Abstract: We introduce an interactive game exploring ecosystem-based adaptation to climate change, with a focus on technology adoption and uncertainty. The game is useful in academic classes and trainings for policymakers and stakeholders. Participants play the role of small-scale farmers in a developing country where their farming practices cause erosion that pollutes waterways, while at the same time climate change is making farmers more vulnerable to natural threats like flooding. The game gives participants a series of opportunities to adopt ecosystem-based adaptation practices: for example, a riparian buffer strip, low-till farming, and agroforestry. The practices differ in the uncertainty surrounding their effects on yields. The game deploys three policies to encourage adoption: a flat payment, a conservation auction, and a flat payment with a pilot bonus for early adoption. Players observe each other’s choices and outcomes, which allows for social learning. Participants get a hands-on understanding of climate change’s impacts, adaptation, ecosystem services, payment for ecosystem service programs, choice under uncertainty, social learning, adoption of new technology, learning spillovers, cost-effective conservation, and conservation auctions. We provide all materials necessary to run the game, a list of suggested readings, and ideas for discussions and assignments.
    Keywords: classroom game, climate change adaptation, ecosystem-based adaptation, payments for ecosystem services, technology adoption, uncertainty
    JEL: A20 D80 Q16 Q54 Q56 Q58
    Date: 2021–01–18
  44. By: Brock, J. Michelle; de Haas, Ralph (Tilburg University, Center For Economic Research)
    Keywords: Gender bias; bank credit; implicit association test; lab-in-the-field; causal forest
    Date: 2021
  45. By: El-Bialy, Nora; Fraile Aranda, Elisa; Nicklisch, Andreas; Saleh, Lamis; Voigt, Stefan
    Abstract: We analyze possible links between both trust and trustworthiness among Syrian refugees in Germany in relation to the refugees' involvement in two different forms of social networking (forming bonding ties with other refugees vs. forming bridging ties between refugees and Germans). We implement treatment conditions in which Syrian refugees play a trust game either with another Syrian refugee or with a German participant. Our results show that Syrians who engage in bonding networks show higher levels of trust and (un)conditional trustworthiness when they interact with a Syrian compared to when interacting with a German participant. In turn, the negative discrimination refugees display towards Germans decreases regarding trust and conditional trustworthiness, and vanishes regarding unconditional trustworthiness, for refugees engaged in bridging networks. The type of social ties created by the refugees correlates with their living conditions: newly arrived Syrian refugees tend to engage in bonding networks, whereas both staying longer in Germany and having a private home in Germany coincide with increased engagement in bridging networks. Thus, residence in a refugee camp appears to be an important barrier to the proliferation of social networks between hosts and refugees.
    Keywords: bonding,bridging,refugees,traumatic experience,trust,trustworthiness,social capital,experiments
    JEL: C93 D91 J15 Z13
    Date: 2021
  46. By: Boris van Leeuwen (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); Paul Smeets (Unknown); Jeanne Bovet (Unknown); Gideon Nave (Unknown); Jonathan Stieglitz (IAST - Institute for Advanced Study in Toulouse); Andrew Whitehouse (Unknown)
    Abstract: Economic preferences may be shaped by exposure to sex hormones around birth. Prior studies of economic preferences and numerous other phenotypic characteristics use digit ratios (2D : 4D), a purported proxy for prenatal testosterone exposure, whose validity has recently been questioned. We use direct measures of neonatal sex hormones (testosterone and oestrogen), measured from umbilical cord blood (n = 200) to investigate their association with later-life economic preferences (risk preferences, competitiveness, time preferences and social preferences) in an Australian cohort (Raine Study Gen2). We find no significant associations between testosterone at birth and preferences, except for competitiveness, where the effect runs opposite to the expected direction. Point estimates are between 0.05–0.09 percentage points (pp) and 0.003–0.14 s.d. We similarly find no significant associations between 2D : 4D and preferences (n = 533, point estimates 0.003–0.02 pp and 0.001–0.06 s.d.). Our sample size allows detecting effects larger than 0.11 pp or 0.22 s.d. for testosterone at birth, and 0.07 pp or 0.14 s.d. for 2D : 4D (α = 0.05 and power = 0.90). Equivalence tests show that most effects are unlikely to be larger than these bounds. Our results suggest a reinterpretation of prior findings relating 2D : 4D to economic preferences, and highlight the importance of future large-sample studies that permit detection of small effects.
    Keywords: Hormones,Economic preferences,Testosterone,Developmental origins
    Date: 2020–12
  47. By: Claire Lazar Reich
    Abstract: Algorithmic risk assessments hold the promise of greatly advancing accurate decision-making, but in practice, multiple real-world examples have been shown to distribute errors disproportionately across demographic groups. In this paper, we characterize why error disparities arise in the first place. We show that predictive uncertainty often leads classifiers to systematically disadvantage groups with lower-mean outcomes, assigning them smaller true and false positive rates than their higher-mean counterparts. This can occur even when prediction is group-blind. We prove that to avoid these error imbalances, individuals in lower-mean groups must either be over-represented among positive classifications or be assigned more accurate predictions than those in higher-mean groups. We focus on the latter condition as a solution to bridge error rate divides and show that data acquisition for low-mean groups can increase access to opportunity. We call the strategy "affirmative information" and compare it to traditional affirmative action in the classification task of identifying creditworthy borrowers.
    Date: 2021–02
  48. By: Khera, Reetika
    Abstract: Questions of ethics in Randomized Controlled Trials (RCTs) in development economics need greater attention and a wider perspective. RCTs are meant to be governed by the three principles laid out in the Belmont Report, but often violated them, e.g. when local laws are flouted. In other cases, the framework of the Belmont Report itself has proved inadequate: for instance, when there are unintended outcomes or adverse events for which no-one is held accountable. Primarily using RCTs conducted in India, this paper highlights eight areas of concern. RCTs also have a disproportionate influence on shaping research agendas and on policy. Though ethical issues have been raised, there has been little engagement from the RCT community – a manifestation of its power in the profession. As current safeguards (such as oversight by Institutional Review Boards) have failed to protect human subjects, the concluding section discusses possible ways to resolve these issues.
    Date: 2021–02–06
  49. By: Ferman, Bruno; Lima, Lycia; Riva, Flávio
    Abstract: This paper investigates how educational technologies that use different combinations of artificial and human intelligence are incorporated into classroom instruction, and how they ultimately affect learning. We conducted a field experiment to study two technologies that allow teachers to outsource grading and feedback tasks on writing practices of high school seniors. The first technology is a fully automated evaluation system that provides instantaneous scores and feedback. The second one uses human graders as an additional resource to enhance grading and feedback quality in aspects in which the automated system arguably falls short. Both technologies significantly improved students' essay scores in a large college admission exam, and the addition of human graders did not improve effectiveness in spite of increasing perceived feedback quality. Both technologies also similarly helped teachers engage more frequently on personal discussions on essay quality with their students. Taken together, these results indicate that teachers' task composition shifted toward nonroutine activities and this helped circumvent some of the limitations of artificial intelligence. More generally, our results illustrate how the most recent wave of technological change may relocate labor to analytical and interactive tasks that still remain a challenge to automation.
    Date: 2021–02–17
  50. By: Olivier Coibion (University of Texas at Austin - Department of Economics; NBER); Yuriy Gorodnichenko (University of California, Berkeley - Department of Economics; NBER); Michael Weber (University of Chicago - Booth School of Business; NBER)
    Abstract: Using a large-scale survey of U.S. households during the Covid-19 pandemic, we study how new information about fiscal and monetary policy responses to the crisis affects households’ expectations. We provide random subsets of participants in the Nielsen Homescan panel with different combinations of information about the severity of the pandemic, recent actions by the Federal Reserve, stimulus measures, as well as recommendations from health officials. This experiment allows us to assess to what extent these policy announcements alter the beliefs and spending plans of households. In short, they do not, contrary to the powerful effects they have in standard macroeconomic models.
    Keywords: Subjective expectations, fiscal policy, monetary policy, COVID-19, surveys
    JEL: E31 C83 D84 J26
    Date: 2020
  51. By: Hamid Aghadadashli; Georg Kirchsteiger; Patrick Legros
    Abstract: The paper studies the effectiveness of communication in a two-player two-sided asymmetric information context. Both players choose simultaneously between two actions, with action L leading to a lower payoff for the co-player than action H. There are two types of players: D-types for whom L is dominant, and C-types for whom the optimal action is the same as the one chosen by the co-player, with both player choosing H providing the C-type a higher payoff than both players choosing L. Before the actions are chosen, each player can signal his/her intention to choose H. We consider three communication environments: No communication (NC), cheap talk (CT), and an environment with extrinsic communication costs (FC). According to standard theory the range of equilibrium payoffs of both types is the same in NC and CT, while for C-types the equilibrium payoff is highest in FC due to the Spence mechanism (Spence 1973). When we tested these predictions experimentally, the C-type payoffs were the highest in CT. In this environment the average observed C-type Payoff was even higher than the maximum equilibrium payoff. In CT about half of the D-types did not mimic the communication behavior of C-types, and hence even cheap talk revealed some information to the C-types. This indicates that half of the D-types were reluctant to make promises they would break. We introduce a theoretical model with promise-keepers. When the probability of an agent being promise-keeper is around 50%, the signaling rate will be higher in CT than in FC. On the other hand, for the same signal structure C-types choose more often H in the FC than in CT. These predictions are confirmed by the experimental results. Overall, the effect of the higher signalling rate in CT dominates: Together with presence of promise-keepers the higher signalling rate allows the C-types to coordinate more often on the « good » (H;H) outcome in CT, resulting in higher C-type payoffs in CT than in FC.
    Keywords: credible communication, asymmetric information, coordination
    Date: 2021–02

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