|
on Experimental Economics |
|
Issue of 2021‒03‒29
twenty-two papers chosen by |
| By: | Le Maux, Benoît; Masclet, David; Necker, Sarah |
| Abstract: | We analyze both theoretically and empirically how monetary incentives and information about others' behavior affect dishonesty. We run a laboratory experiment with 560 participants, each of whom observes a number from one to six with there being a payoff associated with each number. They can either truthfully report the number they see or lie about it in order to increase their payoff. We vary both the size of the payoff (Low, High, and Very High) and the amount of information about others' dishonesty (With and Without Information). We first find that dishonesty falls in the Very High treatment. Second, while social information has on average at most a weak positive effect, there is a strong effect if the accuracy of individuals' beliefs is accounted for. Third, social information and payoffs do not interact with each other. |
| Keywords: | Laboratory experiment,theory,cheating,monetary incentives,information on others' behavior,lying costs |
| JEL: | C91 D03 D78 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:aluord:2103&r=all |
| By: | Matteo M. Marini (Department of Economics and Management, University of Florence, Italy) |
| Abstract: | This paper is a meta-analysis of experimental studies dealing with the impact of incidental emotions on risky choices, so as to explain traditional heterogeneity of outcomes in the literature. After devising a standard search strategy and filtering out studies that do not comply with a list of eligibility criteria, we include 24 articles from which 109 observations are drawn at the treatment level. At this point, we code a set of moderator variables representing experimental protocols and adopt Hedges’s g as comparable metric. Subgroup analysis and metaregressions find causal impact of both sadness and fear on risk aversion, albeit to a small extent, as well as highly contrasting patterns depending on the nature of incentives offered in the experiments. The use of monetary incentives turns out to reduce data variability and affects information processing by making subjects more susceptible to emotions. When studies provide real stakes, our results also show that emotions lead to take more risks in individualist countries than in collectivist societies. We discuss possible interpretations of our findings. |
| Keywords: | meta-analysis, experimental design, emotions, risky decision making, monetary incentives |
| JEL: | C90 C91 D81 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2021/04&r=all |
| By: | Cloos, Janis; Greiff, Matthias; Rusch, Hannes (RS: GSBE other - not theme-related research, Microeconomics & Public Economics) |
| Abstract: | We examine scientific quality and editorial favoritism in the field of experimental economics. We use a novel data set containing all original research papers (N=569) that exclusively used laboratory experiments for data generation and were published in the American Economic Review (AER), Experimental Economics (EE), or the Journal of the European Economic Association (JEEA) between 1998 and 2018. Several proxies for scientific quality indicate that experiments conducted in Europe are of higher quality than experiments conducted in the US: European experiments rely on larger numbers of participants as well as participants per treatment and receive more citations. For the AER and the JEEA, but not for EE, we find that papers authored by economists with social ties to the editors receive significantly fewer citations in the years following publication. Detailed analyses using a novel dynamic and continuous measure of the co-authorship distance between editors and authors imply that authors at longer distances to editors have to write papers of higher quality in order to get published in the AER and the JEEA. We find no evidence that this ‘uphill battle’ is associated with geographical distance. |
| JEL: | A11 A14 C90 I23 |
| Date: | 2021–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2021005&r=all |
| By: | Li, Wenhui; Wilde, Christian |
| Abstract: | The pricing of an ambiguous asset, whose cash flow stream is uncertain, may be affected by three factors: the belief regarding the realization likelihood of cash flows, the subjective attitude towards risk, and the attitude towards ambiguity. While previous literature looks at the total price discount under ambiguity, this paper investigates with laboratory experiments how much effect each factor can induce. We apply both non-parametric and parametric methods to cleanly separate the belief effects, the risk premiums, and the ambiguity premiums from each other. Both methods lead to similar results: Overall, subjects have substantial ambiguity aversion, and ambiguity premiums account for the largest price deviation component when the degree of ambiguity is high. As information accumulates, ambiguity premiums decrease. We also find that beliefs do influence prices under ambiguity. This is not because beliefs are biased towards either good or bad scenarios per se, but because subjects display sticky belief updating as new information becomes available. The clear separation performed in this paper between belief and attitude also enables a more accurate estimation of the parameter of ambiguity aversion compared to previous studies, since the effect of beliefs is partialled out. Overall, we find empirically that both factors, belief and attitude towards ambiguity, are important factors in pricing under ambiguity. |
| Keywords: | ambiguity,belief estimation,belief effect,ambiguity premium,laboratory experiments |
| JEL: | D81 D83 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:311&r=all |
| By: | Tomoki Fujii (Singapore Management University); Christine Ho (Singapore Management University); Rohan Ray (Singapore Management University); Abu S. Shonchoy (Department of Economics, Florida International University) |
| Abstract: | Conditional cash transfers (CCTs) have become one of the most common policy interventions to increase school attendance, but the cost-effectiveness of such interventions has not attracted the attention it deserves. Hence, in addition to a standard CCT implementation, our rich unique dataset on daily attendance allows us to experimentally study two potential ways to improve the cost-effectiveness of school attendance interventions: (i) SMS information nudges and (ii) loss framing in CCTs. The former provides school attendance information to parents and the latter exploits the endowment effect. Consistent with the existing literature, CCT intervention significantly increases school attendance. Though the difference between gain and loss framing is not statistically significant, the point estimate of the Loss treatment is consistently higher than that of the Gain treatment.The SMS treatment has a modest impact on school attendance but the overall cost of treatment is low. We also find diminishing marginal impact of cash transfer amount on attendance, indicating that the intensive margin matters. Thus, both loss framing and SMS nudges can be considered as alternative cost-effective approaches to promote attendance in schools in developing and less developed economies where resources are typically limited. |
| Keywords: | conditional cash transfers, loss aversion, peer effect, information treatment, Bangladesh |
| JEL: | D91 H75 I21 I28 O22 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:2109&r=all |
| By: | Pierluigi Conzo; Andrea Gallice; Juan S. Morales; Margaret Samahita; Laura K. Taylor |
| 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. |
| JEL: | D83 L82 L86 O33 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:641&r=all |
| By: | Koichiro Ito; Takanori Ida; Makoto Tanaka |
| Abstract: | We study a problem in which policymakers need to screen self-selected individuals by unobserved heterogeneity in social welfare gains from a policy intervention. In our framework, the marginal treatment effects and marginal treatment responses arise as key statistics to characterize social welfare. We apply this framework to a randomized field experiment on electricity plan choice. Consumers were offered socially efficient dynamic pricing with randomly assigned take-up incentives. We find that price-elastic consumers—who generate larger welfare gains—are more likely to self-select. Our counterfactual simulations quantify the optimal take-up incentives that exploit observed and unobserved heterogeneity in selection and welfare gains. |
| JEL: | L94 Q41 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28413&r=all |
| By: | Michèle Belot (Cornell University); Noémi Berlin (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique); Jonathan James (University of Bath [Bath]); Valeria Skafida (University of Edinburgh) |
| Abstract: | We conduct a field experiment to evaluate the extent to which dietary habits are malleable early on in childhood and later in life. We implement two treatments one that targets what people eat, the other that targets the timing and frequency of food intake. 285 low income families with young children were recruited and assigned either to a control group or one of the two treatments, each of them lasting for 12 consecutive weeks. In one treatment, families received food groceries at home for free for 12 weeks and were asked to prepare five specific healthy meals per week. In the other treatment, families were simply asked to reduce snacking and eat at regular times. We collected a range of measures of food preferences, dietary intake, as well as BMI and biomarkers based on blood samples. We find evidence that children's BMI distribution shifted significantly relative to the control group, i.e. they became relatively "thinner". We also find some evidence that their preferences have been affected by both treatments. On the other hand, we find little evidence of effects on parents. We conclude that exposure to a healthy diet and regularity of food intake possibly play a role in shaping dietary habits, but influencing dietary choices later on in life remains a major challenge. |
| Date: | 2021–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03157557&r=all |
| By: | Arthur Ribaillier (Université Côte d'Azur, France; GREDEG CNRS); Ismaël Rafaï (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro; Université Côte d'Azur, France; GREDEG CNRS); Dorian Jullien (Centre d’Economie de la Sorbonne; Université Paris I - Panthéon Sorbonne) |
| Abstract: | The aim of this article is to better understand how judgments of nudges’ acceptability are formed and whether they can be manipulated. We conduct a randomized experiment to test whether acceptability judgments can be (i) enhanced when the decision to implement the nudges have been made following a consultation with the targeted population and (ii) influenced by the joint framing of the goal and effectiveness of the nudge (in terms of an increase in desirable behaviour vs. decrease in undesirable behaviour). We test those hypotheses for various nudges’ scenarios and obtain mixed results that do not clearly support our hypotheses. A surprising result that calls for further work is that mentioning that a nudge has been implemented through a consultation with the targeted population can lower its acceptability. |
| Keywords: | behavioural public policies, nudges, acceptability, framing, consultation |
| JEL: | C91 D90 D04 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2021-12&r=all |
| By: | Jean N. Lee (World Bank); Jonathan Morduch (Robert F. Wagner Graduate School of Public Service, New York University); Saravana Ravindran (Lee Kuan Yew School of Public Policy, National University of Singapore); Abu S. Shonchoy (Department of Economics, Florida International University) |
| Abstract: | Mobile banking and related digital financial technologies can make financial services cheaper and more widely accessible in low-income economies, but gender gaps persist. We present evidence from two connected field experiments in Bangladesh designed to encourage the adoption and use of mobile banking by poor, illiterate households. We show that training can dramatically increase adoption and usage by women. At the same time, women on average persist in using mobile banking at a lower rate than men. The study focuses on migrants and their families in Bangladesh. Despite large differences between female and male migrants in income and education, the first experiment shows that a training program led to a similarly large, positive impact on mobile banking usage by female and male migrants, increasing usage rates for both by about 45 percentage points. That led to increases in remittances sent to rural areas, reduced rural poverty, and increased rural consumption. Both female and male migrants in the treatment group, however, reported worse physical and emotional health, adding to health challenges reported by women across treatment and control groups. A second experiment explores whether the way that the technology was introduced and explained made an additional difference in narrowing gender gaps. Despite the lack of statistical power to detect small treatment impacts, we find suggestive evidence that the treatment increased mobile banking adoption by female migrants. |
| Keywords: | gender, financial inclusion, digital money, migration, field experiment, Bangladesh |
| JEL: | R23 O33 O16 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:2108&r=all |
| By: | Michalis Drouvelis; Martin G. Kocher |
| Abstract: | Our results from a laboratory experiment offer new evidence for the detrimental effects that cheating behaviour in the workplace may have on the degree of reciprocity between firms and workers. First, we replicate existing findings showing that in the absence of monitoring (cheating is possible) workers cheat on their actual performance in a real-effort task. The extent of cheating influences how firms (managers) decide to set their wages in a subsequent gift-exchange game. Specifically, firms offer higher wages to workers who cheat and interestingly, workers expect such behaviour by firms. These higher wages are not matched by workers’ performance in the gift-exchange game, where cheating is not possible, resulting in a flat wage-effort relationship. In contrast, in the presence of monitoring (cheating is not possible), we find a positive relationship between wages offered and effort provided by the workers. Our findings have implications for adopting measures at the workplace that eliminate workers’ opportunities to cheat on their performance. |
| Keywords: | cheating, gift-exchange, labour market, experiment |
| JEL: | C72 C91 D21 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8942&r=all |
| By: | Erwin Bulte; John List; Daan van Soest |
| Abstract: | Incomplete contracts are the rule rather than the exception, and any incentive scheme faces the risk of improving performance on incented aspects of a task at the detriment of performance on non-incented aspects. Recent research documents the effect of loss-framed versus gain-framed incentives on incentivized behavior, but how do such incentives affect overall performance? We explore potential trade-offs by conducting field experiments in an artificial "workplace". We explore two types of incentive spillovers: those contemporaneous to the incented task and those subsequent to the incented task. We report three main results. First, consonant with the extant literature, a loss aversion incentive induces greater effort on the incented task. Second, offsetting this productivity gain, we find that the quality of work decreases if quality is not specified in the incentive contract. Third, we find no evidence of harmful spillover effects to subsequent tasks; if anything, the loss aversion incentive induces more effort in subsequent tasks. Taken together, our results highlight that measuring and accounting for incentive spillovers are important when considering their overall impact. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:feb:framed:00727&r=all |
| By: | Beutel, Johannes; Metiu, Norbert; Stockerl, Valentin |
| Abstract: | We study the effects of central bank communication about financial stability on individuals' expectations and risk-taking. Using a randomized information experiment, we show that communication causally affects individuals' beliefs and investment behavior, consistent with an expectations channel of financial stability communication. Individuals receiving a warning from the central bank expect a higher probability of a financial crisis and reduce their demand for risky assets. This reduction is driven by downward revisions in individuals' expected Sharpe ratios due to lower expected returns and higher perceived downside risks. In addition, these individuals deposit a smaller fraction of their savings at riskier banks. |
| Keywords: | central bank communication,financial stability,stock market expectations,randomized information experiment |
| JEL: | C11 D12 D83 D91 E58 G11 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:052021&r=all |
| By: | Jacob Goldin; Tatiana Homonoff; Rizwan Javaid; Brenda Schafer |
| Abstract: | Governments and non-profits devote substantial resources to increasing take-up of the Earned Income Tax Credit (EITC) through educational outreach. We study a different approach: policies that encourage tax filing. In a large field experiment, we find that IRS letters about free tax preparation modestly increased filing, with a large share of the new filers claiming the EITC. The results suggest policies that increase filing can be an effective way to increase take-up of tax-administered social benefits, even policies that do not raise awareness or directly target the benefit in other ways. |
| JEL: | H24 I38 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28398&r=all |
| By: | Verho, Jouko; Hämäläinen, Kari; Kanninen, Ohto |
| Abstract: | This paper provides evidence that replacing minimum unemployment benefits with a basic income of equal size has minor employment effects at best. We examine an experiment in Finland in which 2,000 benefit recipients were randomized to receive a monthly basic income. The experiment lowered participation tax rates by 23pp for full-time employment. Despite the considerable increase in work incentives, days in employment remained statistically unchanged in the first year of the experiment. Moreover, even though all job search requirements were waived, participation in reemployment services remained high. |
| Keywords: | Employment, Field experiment, Social insurance, Unemployment benefits, Social security, taxation and inequality, Labour markets and education, C93, H55, I38, J65, |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:142&r=all |
| By: | Gary Bolton (Managerial Economics, Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080); Kevin Breuer (Department of Economics, University of Cologne, D-50923 Cologne, Germany); Ben Greiner (Institute for Markets and Strategy, Vienna University of Economics and Business (WU Vienna), 1020 Vienna, Austria and University of New South Wales, Australia); Axel Ockenfels (Department of Economics, University of Cologne, D-50923 Cologne, Germany) |
| Abstract: | Feedback withdrawal mechanisms in online markets aim to facilitate the resolution of conflicts during transactions. Yet, frequently used online feedback withdrawal rules are flawed and may backfire by inviting strategic transaction and feedback behavior. Our laboratory experiment shows how a small change in the design of feedback withdrawal rules, allowing unilateral rather than mutual withdrawal, can both reduce incentives for strategic gaming and improve coordination of expectations. This leads to less trading risk, more cooperation, and higher market efficiency. |
| Keywords: | dispute resolution system, market design, reputation, trust |
| JEL: | C73 C9 D02 L14 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:070&r=all |
| By: | Erica M. Field; Elisa M. Maffioli |
| Abstract: | We experimentally evaluate the impact on child malnutrition of a maternal cash transfer program in Myanmar that was supplemented with Social Behavior Change Communication (SBCC) in a subset of villages. The combination of interventions significantly reduced the proportion of children stunted, while cash alone had no impact on stunting. SBCC appears to have worked in conjunction with cash to reduce stunting by encouraging mothers to increase children’s total calories and protein consumed. The findings provide evidence that information constraints contribute to low income-elasticity of calorie demand among malnourished populations, and underscore the importance of adding SBCC to cash transfer programs. |
| JEL: | I12 I15 I38 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28443&r=all |
| By: | Jann Spiess; Vasilis Syrgkanis |
| Abstract: | The past years have seen seen the development and deployment of machine-learning algorithms to estimate personalized treatment-assignment policies from randomized controlled trials. Yet such algorithms for the assignment of treatment typically optimize expected outcomes without taking into account that treatment assignments are frequently subject to hypothesis testing. In this article, we explicitly take significance testing of the effect of treatment-assignment policies into account, and consider assignments that optimize the probability of finding a subset of individuals with a statistically significant positive treatment effect. We provide an efficient implementation using decision trees, and demonstrate its gain over selecting subsets based on positive (estimated) treatment effects. Compared to standard tree-based regression and classification tools, this approach tends to yield substantially higher power in detecting subgroups with positive treatment effects. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2103.07066&r=all |
| By: | Loïc Berger (CNRS - Centre National de la Recherche Scientifique, IÉSEG School Of Management [Puteaux], EIEE - European Institute on Economics and the Environment, CMCC - Centro Euro-Mediterraneo per i Cambiamenti Climatici [Bologna]) |
| Abstract: | This paper reflects on the notion of partial ambiguity. Using a framework decomposing ambiguity into distinct layers of analysis, among which are risk and model uncertainty, and allowing for different attitudes toward these layers, I show that partial ambiguity may prove less desirable than full ambiguity, even under ambiguity aversion. This observation poses difficulties for interpreting the notion of partial ambiguity in relation to the partial information available to determine the potential compositions of an ambiguous urn. Two Ellsberg-style thought experiments are described to challenge the meaning of partial ambiguity further, and an alternative interpretation, based on a more ambiguous relation, is discussed. |
| Keywords: | Ambiguity,model uncertainty,smooth ambiguity aversion,Ellsberg paradox |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03158580&r=all |
| By: | Yoichiro Tsuji (Graduate School of Economics, Kobe University, JAPAN); Junyi Shen (Research Institute for Economics and Business Administration, Kobe University, JAPAN and School of Economics, Shanghai University, China) |
| Abstract: | The intergenerational social dilemma is a social dilemma that sets up a decision-making process for resource allocation among generations. In principle, there is no future generation; thus, only the current generation can make decisions on resource allocation. Because the current generation is myopic and optimistic, problems due to not taking future generations into consideration arise. To address this dilemma, many experiments have been conducted based on the concept of future design to change thoughts and behaviors. In this context, a method is presented for assigning a person to play the role of the future generation (i.e., the imaginary future generation) in the decision-making process of the current generation, and having them participate in the discussion. The impact of this method is significant and effective. However, this imaginary future generation is set up as self-evident to participants in the discussion, and a clear reason for its existence is not given. After reviewing previous studies related to intergenerational social dilemmas and normative expectations, as well as those on future design, this paper proposes an experimental design that emphasizes one's internal free-will decision to accept this imaginary future generation, hypothesizing that it can become a shared understanding across generations, and that it will become a normative expectation for the next generation to accept the imaginary future generation. |
| Keywords: | Intergenerational social dilemma; Future design; Social norms; Normative expectation; Imaginary future generation |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2021-07&r=all |
| By: | Praveen Sugathan (Indian Institute of Management Kozhikode) |
| Abstract: | Extant research has examined the electronic word of mouth in different forms. This paper examines online reviews through experiments. The paper throws light at how reviews are used by customers. Customers use reviews in a disaggregate manner than in an aggregate manner. |
| Keywords: | Product Review, Customers, E-commerce |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:iik:wpaper:362&r=all |
| By: | Ebers, Axel; Thomsen, Stephan L. |
| Abstract: | Bitcoin is associated with different risks. We conduct an information experiment in the four largest European economies to analyze the effects of specific warnings and information on retail investors’ demand for Bitcoin. Our results indicate that the impact is strongest when warnings point to privacy issues. Information on the lack of guarantees or on CO2 emissions only affects particular subgroups. Knowledge of broad public acceptance increases overall demand. Warnings can therefore effectively prevent extreme market events while avoiding the costs of stricter regulation. Effect heterogeneity implies that regulators should use specific information and different communication channels to reach relevant investors. |
| Keywords: | survey experiment; warnings; Bitcoin; retail demand; regulation; cultural differences |
| JEL: | C93 D83 G40 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-683&r=all |