nep-exp New Economics Papers
on Experimental Economics
Issue of 2021‒04‒26
38 papers chosen by

  1. Evaluating the Sunk Cost Effect By Ronayne, David; Sgroi, Daniel; Tuckwell, Anthony
  2. The Influence of Food Recommendations: Evidence from a Randomized Field Experiment By Kamal Bookwala; Caleb Gallemore; Joaquín Gómez-Miñambres
  3. The Effect of Self-Awareness and Competition on Dishonesty By Çıbık, Ceren Bengü; Sgroi, Daniel
  4. Homophily, Peer Effects, and Dishonesty By Liza Charroin; Bernard Fortin; Marie Villeval
  5. High incentives without high cost: The role of (perceived) stake sizes in dictator games By Hopp, Daniel
  6. Experimental Bank Runs By Hubert J. Kiss; Ismael Rodriguez-Lara; Alfonso Rosa-Garcia
  7. Using Survey Questions to Measure Preferences: Lessons from an Experimental Validation in Kenya By Bauer, Michal; Chytilová, Julie; Miguel, Edward
  8. Free Neighborhood Choice Boosts Socially Optimal Outcomes in Stag-Hunt Coordination Problem By Arno Riedl; Ingrid M. T. Rohde; Martin Strobel
  9. NGOs and the effectiveness of interventions By Usmani, Faraz; Jeuland, Marc; Pattanayak, Subhrendu
  10. Managerial Behavior in the Lab: Information Disclosure, Decision Process and Leadership Style By Sutan, Angela; Vranceanu, Radu
  11. Social Norms or Enforcement? A Natural Field Experiment to Improve Traffic and Parking Fine Compliance By Sinning, Mathias; Zhang, Yinjunjie
  12. What Are the Priorities of Bureaucrats? Evidence from Conjoint Experiments with Procurement Officials By Janne Tukiainen; Sebastian Blesse; Albrecht Bohne; Leonardo M. Giuffrida; Jan Jäässkeläinen; Ari Luukinen; Antti Sieppi
  13. Concentration Bias in Intertemporal Choice By Markus Dertwinkel-Kalt; Holger Gerhardt; Gerhard Riener; Frederik Schwerter; Louis Strang
  14. When Face Masks Signal Social Identity: Explaining the Deep Face-Mask Divide During the COVID-19 Pandemic By Powdthavee, Nattavudh; Riyanto, Yohanes Eko; Wong, Erwin C. L.; Xiong-Wei, Jonathan Yeo; Qi-Yu, Chan
  15. Peacekeeping and the Enforcement of Intergroup Cooperation: Evidence from Mali By Nomikos, William George
  16. Environmental valuation using bargaining games: an application to water By Gáfaro, Margarita; Mantilla, Cesar
  17. Pledges as a Social Influence Device: Experimental Evidence By Damien, Besancenot; Radu, Vranceanu
  18. Experimental Evidence on Adoption and Impact of the System of rice Intensification By Barrett, Christopher B.; Islam, Asad; Pakrashi, Debayan; Ruthbah, Ummul
  19. Legitimizing Policy By Daniel L. Chen; Moti Michaeli; Daniel Spiro
  20. CATE meets ML - The Conditional Average Treatment Effect and Machine Learning By Daniel Jacob
  21. Do Financial Incentives Aimed at Decreasing Interhousehold Inequality Increase Intrahousehold Inequality? By Amanda Chuan; John List; Anya Samek
  22. Cognitive Biases: Mistakes or Missing Stakes? By Benjamin Enke; Uri Gneezy; Brian Hall; David C. Martin; Vadim Nelidov; Theo Offerman; Jeroen van de Ven
  23. "Good Politicians'': Experimental Evidence on Motivations for Political Candidacy and Government Performance By Gulzar, Saad; Khan, Muhammad Yasir
  24. A Necessary Condition for Semiparametric Efficiency of Experimental Designs By Hisatoshi Tanaka
  25. Consumer Sentiment during the Covid-19 Pandemic: The Role of Others' Beliefs By Dzung Bui; Lena Dräger; Bernd Hayo; Giang Nghiem
  26. Removing Welfare Traps: Employment Responses in the Finnish Basic Income Experiment By Kari Hämäläinen; Jouko Verho; Ohto Kanninen
  27. Does Household Electrification Supercharge Economic Development? By Lee, Kenneth; Miguel, Edward; Wolfram, Catherine
  28. Auswirkungen von Referenzzeiträumen auf die Selbstangaben zum freiwilligen Engagement: Ergebnisse einer experimentellen Studie By Nadiya Kelle; Luise Burkhardt; Corinna Kausmann; Julia Simonson; Jürgen Schupp; Clemens Tesch-Römer
  29. The Comparative Legitimacy of Arms Exports - A Conjoint Experiment in Germany and France By Rudolph, Lukas; Freitag, Markus; Thurner, Paul
  30. Diversity and Team Performance in a Kenyan Organization By Benjamin Marx; Vincent Pons; Tavneet Suri
  31. Trying to Make a Good First Impression: A Natural Field Experiment to Engage New Entrants to the Tax System By Dong, Sarah; Sinning, Mathias
  32. How Serious is the Measurement-Error Problem in a Popular Risk-Aversion Task? By Fabien, Perez; Guillaume, Hollard; Radu, Vranceanu; Delphine, Dubart
  33. Advances in the Agent-Based Modeling of Economic and Social Behavior By Steinbacher, Mitja; Raddant, Matthias; Karimi, Fariba; Camacho-Cuena, Eva; Alfarano, Simone; Iori, Giulia; Lux, Thomas
  34. Market Concentration and Incentives to Collude in Cournot Oligopoly Experiments By Nobuyuki Hanaki; Aidas Masiliunas
  35. Can Nudges Increase Take-up of the EITC?: Evidence from Multiple Field Experiments By Linos, Elizabeth; Prohofsky, Allen; Ramesh, Aparna; Rothstein, Jesse; Unrath, Matt
  36. Conserving rhinos by legal trade: Insights from a choice experiment on rhino horn consumers By Dang Vu, Hoai Nam; Nielsen, Martin Reinhardt; Jacobsen, Jette Bredahl
  37. Out of the shadow: Encouraging online registration of micro and small businesses through a randomized controlled trial By Sarah Xue Dong; Dewi Meisari; Banu Rinaldi
  38. Beyond Ostrom: Randomized Experiment of the Impact of Individualized Tree Rights on Forest Management in Ethiopia By Ryo Takahashi; Keijiro Otsuka

  1. By: Ronayne, David (European School of Management and Technology (ESMT)); Sgroi, Daniel (University of Warwick); Tuckwell, Anthony (University of Warwick)
    Abstract: We provide experimental evidence of behavior consistent with the sunk cost effect. Subjects who earned a lottery via a real-effort task were given an opportunity to switch to a dominant lottery; 23% chose to stick with their dominated lottery. The endowment effect accounts for roughly only one third of the effect. Subjects' capacity for cognitive reflection is a significant determinant of sunk cost behavior. We also find stocks of knowledge or experience (crystallized intelligence) predict sunk cost behavior, rather than algorithmic thinking (fluid intelligence) or the personality trait of openness. We construct and validate a scale, the "SCE-8", which encompasses many resources individuals can spend, and offers researchers an efficient way to measure susceptibility to the sunk cost effect.
    Keywords: sunk cost effect, sunk cost fallacy, endowment effect, cognitive ability, fluid intelligence, crystallized intelligence, reflective thinking, randomized controlled trial, online experiment, online survey, psychological scales, scale validation, Raven’s progressive matrices, international cognitive ability resource, cognitive reflection test, openness
    JEL: D91 C83 C90
    Date: 2021–04
  2. By: Kamal Bookwala (niversity of California Irvine, Department of Economics); Caleb Gallemore (Lafayette College, Department of International Affairs); Joaquín Gómez-Miñambres (Lafayette College, Department of Economics and Chapman University, Economic Science Institute.)
    Abstract: We report results from a randomized field experiment conducted at two food festivals. Our primary aim is to assess the impact of two types of recommendations commonly observed in food settings: most popular and chef’s choice. Subjects select a cupcake from a binary menu. The two options, offered by the same bakery, are the best seller in the bakery and the baker’s recommended cupcake. Our treatments manipulate whether the recommendation is disclosed in tandem with the cupcakes in the menu. We find that the most popular is the only recommendation that statistically significantly increased consumers’ demand relative to a baseline without recommendations. Furthermore, we find that this effect only holds for subjects from outside the local region. Our results are consistent with laboratory studies indicating information on peers’ choices is a powerful influence on consumers’ decisions, especially in the absence of prior knowledge.
    Keywords: Recommendations; Social learning; Herd behavior; Peer effects
    JEL: C93 D12 D83
    Date: 2021
  3. By: Çıbık, Ceren Bengü (University of Warwick); Sgroi, Daniel (University of Warwick)
    Abstract: We provide the first investigation of the relationship between self-awareness and dis- honesty in a multi-wave pre-registered experiment with 1,260 subjects. In the first wave we vary the level of awareness of subjects' past dishonesty and explore the impact on behaviour in tasks that include the scope to lie. In the second wave we vary the degree of competitiveness in one of our core tasks to further explore the interactions between self-awareness, (dis)honesty and competition. We also test for the experimental demand effect in order to rule it out. Our results suggest that in non-interactive tasks, self-awareness helps to lower dishonesty in the future. However, in tasks that are competitive in nature becoming more aware of past dishonesty raises the likelihood of dishonesty in the future. In other words, we show when making people aware of their own past dishonesty can help to reduce dishonesty and when it might back-fire.
    Keywords: lying, honesty, truth-telling, cognitive dissonance, social norms, competition, experiment
    JEL: D03 D82 C91 C92
    Date: 2021–04
  4. By: Liza Charroin (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne); Bernard Fortin (Département d'Economique, Université Laval - ULaval - Université Laval [Québec], CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi [Montréal] - UQAM - Université du Québec à Montréal = University of Québec in Montréal, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics); Marie Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics)
    Abstract: If individuals tend to behave like their peers, is it because of conformity, that is, the preference of people to align behavior with the behavior of their peers; homophily, that is, the tendency of people to bond with similar others; or both? We address this question in the context of an ethical dilemma. Using a peer effect model allowing for homophily, we designed a real-effort laboratory experiment in which individuals could misreport their performance to earn more. Our results reveal a preference for conformity and for homophily in the selection of peers, but only among participants who were cheating in isolation. The size of peer effects is similar when identical peers were randomly assigned and when they were selected by individuals. We thus jointly reject the presence of a self-selection bias in the peer effect estimates and of a link strength effect.
    Keywords: Peer Effects,Homophily,Dishonesty,Self-Selection Bias,Experiment
    Date: 2021–04
  5. By: Hopp, Daniel
    Abstract: The external validity of dictator games conducted in a lab is often questioned due to the use of small stake sizes that do not correspond to real-world settings. A potential solution to this problem is based on how participant perceptions of stake sizes are affected by their numerical representation. In this paper, I vary the stake size and its numerical representation to examine whether the illusion of large stakes can be created convincingly by implementing inflated numbers through an experimental currency. The share allocated to the recipient does not differ across treatments in this large-sample online experiment. This finding demonstrates that neither an increase in stake size nor a change in its numerical representation influence the share allocated to the recipient in a dictator game.
    Keywords: dictator game,stake size,numerosity
    JEL: C99 D64 D91
    Date: 2021
  6. By: Hubert J. Kiss (Department of Economics, Eotvos Lorand University.); Ismael Rodriguez-Lara (Department of Economic Theory and Economic History, University of Granada.); Alfonso Rosa-Garcia (Department of Economics, University of Murcia.)
    Abstract: This chapter on experimental bank runs first covers the different sources of bank runs studied in the laboratory; fundamental problems, coordination issues, and panic behavior. We assess which individual characteristics (especially risk and loss aversion, gender and cognitive abilities) shape the willingness to withdraw. We also discuss depositors’ behavior when there is more than one bank. The different policies suggested in the literature to prevent bank runs are reviewed as well. Finally, we point out relevant issues that have not been studied yet and deserve further investigation.
    Keywords: bank run, experiment, observability, panic, withdrawal decision.
    Date: 2021–04–17
  7. By: Bauer, Michal; Chytilová, Julie; Miguel, Edward
    Abstract: Can a short survey instrument reliably measure a range of fundamental economic preferences across diverse settings? We focus on survey questions that systematically predict behavior in incentivized experimental tasks among German university students (Becker et al. 2016) and were implemented among representative samples across the globe (Falk et al. 2018). This paper presents results of an experimental validation conducted among low-income individuals in Nairobi, Kenya. We find that quantitative survey measures -- hypothetical versions of experimental tasks -- of time preference, attitude to risk and altruism are good predictors of choices in incentivized experiments, suggesting these measures are broadly experimentally valid. At the same time, we find that qualitative questions -- self-assessments -- do not correlate with the experimental measures of preferences in the Kenyan sample. Thus, caution is needed before treating self-assessments as proxies of preferences in new contexts.
    Keywords: Social and Behavioral Sciences
    Date: 2019–09–06
  8. By: Arno Riedl; Ingrid M. T. Rohde; Martin Strobel
    Abstract: Situations where independent agents need to align their activities to achieve individually and socially beneficial outcomes are abundant, reaching from everyday situations like fixing a time for a meeting to global problems like climate change agreements. Often such situations can be described as stag-hunt games, where coordinating on the socially efficient outcome is individually optimal but also entails a risk of losing out. Previous work has shown that in fixed interaction neighborhoods agents’ behavior mostly converges to collectively inefficient outcome. However, in the field, interaction neighborhoods often can be self-determined. Theoretical work investigating such circumstances is ambiguous in whether the efficient or inefficient outcome will prevail. We performed an experiment with human subjects exploring how free neighborhood choice affects coordination. In a fixed interaction treatment, a vast majority of subjects quickly coordinates on the inefficient outcome. In a treatment with neighborhood choice, the outcome is dramatically different: behavior quickly converges to the socially desirable outcome leading to welfare gains 2.5 times higher than in the environment without neighborhood choice. Participants playing efficiently exclude those playing inefficiently who in response change their behavior and are subsequently included again. Importantly, this mechanism is effective despite that only few exclusions actually occur.
    Keywords: stag-hunt, neighborhood choice, coordination, social welfare, exclusion
    JEL: C72 C90 D03
    Date: 2021
  9. By: Usmani, Faraz; Jeuland, Marc; Pattanayak, Subhrendu
    Abstract: Interventions led by non-governmental organizations (NGOs) are often more effective than comparable efforts by other actors, yet relatively little is known about how implementer identity drives final outcomes. Combining a stratified field experiment in India with a triple-differences estimation strategy, we show that a local development NGO's prior engagement with target communities increases the effectiveness of a technology-promotion intervention implemented by it by at least 30 percent. This "NGO effect" has implications for the generalizability and scalability of evidence from experimental research conducted with local implementation partners.
    Keywords: NGOs,field experiments,external validity
    JEL: L31 C93 O12 O17
    Date: 2021
  10. By: Sutan, Angela (University Bourgogne Franche-Comte, Burgundy School of Business-); Vranceanu, Radu (ESSEC Research Center, ESSEC Business School)
    Abstract: This paper reports the results from a lab experiment in which subjects playing the manager role can implement either an efficient / inegalitarian allocation or an inefficient / egalitarian allocation of payoffs. The experiment simulates a stylized managerial context by allowing the manager to manipulate information and select the decision process and by allowing the stakeholders to retaliate against the manager given different choices in the decision process. We found that the inefficient allocation is often selected and that this choice depends on whether the employees can retaliate against the manager and on whether the manager can hide information about the payoffs. The social preferences of the manager also explain the choice of the option. However, the decision process and the managerial style based on self-reported attitudes have little influence on the choice of allocation. This is consistent with employee satisfaction essentially depending on the payoff and not being sensible to the process.
    Keywords: Management style; Managerial decision; Decision process; Asymmetric information; Communication strategy
    JEL: C92 D39 M12
    Date: 2019–09
  11. By: Sinning, Mathias (Australian National University); Zhang, Yinjunjie (Australian National University)
    Abstract: Very little is known about the efficient collection of fines despite their indispensable contribution to local government budgets. This paper fills an important gap in the literature by studying the effectiveness of deterrence (enforcement) and non-deterrence (social norms) letters that aim to improve the collection of traffic and parking fines. We discuss potential mechanisms through which these letters may affect fine compliance and present results from a natural field experiment that was implemented in collaboration with the government of the Australian Capital Territory (ACT). We find that both letters increase fine payments significantly relative to a control group that did not receive a letter. The effect of the enforcement letter is stronger than that of the social norms letter. Our analysis of heterogenous treatment effects indicates that addressing social norms does not change the behavior of young offenders, those who committed a speeding offence, those with a long outstanding debt and those with a debt above the median. In contrast, the enforcement letter is generally effective across subgroups.
    Keywords: fine compliance, natural field experiment, nudges, enforcement, social norms
    JEL: H26 K42 C93
    Date: 2021–04
  12. By: Janne Tukiainen; Sebastian Blesse; Albrecht Bohne; Leonardo M. Giuffrida; Jan Jäässkeläinen; Ari Luukinen; Antti Sieppi
    Abstract: A well-functioning bureaucracy is a precondition for efficient public goods provision. However, bureaucratic decision-making is still largely seen as a black box. We provide novel insights into the preferences of bureaucrats regarding their work outcomes. We focus on a major public sector activity and survey more than 900 real-life procurement officials in Finland and Germany. The questionnaire includes hypothetical choice experiments to study the relative importance of multiple features in tender outcomes. First, bureaucrats state to have substantial discretion at work but no important incentives. Second, our experimental results show that procurers are particularly worried about avoiding negative risks concerning prices and supplier reputation. Third, an avoidance of bidders with prior bad performance appears to be an extremely important factor. Fourth, procurers value a certain degree of competition, while litigation concerns and regional favoritism play only a small role. The striking lack of heterogeneous effects points towards the role of intrinsic motivation among public buyers in countries with high public sector capacity.
    Date: 2021
  13. By: Markus Dertwinkel-Kalt; Holger Gerhardt; Gerhard Riener; Frederik Schwerter; Louis Strang
    Abstract: Many intertemporal trade-offs are unbalanced: while the advantages of options are concentrated in a few periods, the disadvantages are dispersed over numerous periods. We provide novel experimental evidence for “concentration bias”, the tendency to overweight advantages that are concentrated in time. Subjects commit to too much overtime work that is dispersed over multiple days in exchange for a bonus that is concentrated in time: concentration bias increases subjects’ willingness to work by 22.4% beyond what standard discounting models could account for. In additional conditions and a complementary experiment involving monetary payments, we study the mechanisms behind concentration bias and demonstrate the robustness of our findings.
    Keywords: attention, focusing, bounded rationality, intertemporal choice, future bias, present bias, framing
    JEL: D01
    Date: 2021
  14. By: Powdthavee, Nattavudh; Riyanto, Yohanes Eko; Wong, Erwin C. L.; Xiong-Wei, Jonathan Yeo; Qi-Yu, Chan
    Abstract: With the COVID-19 pandemic still raging and the vaccination program still rolling out, there continues to be an immediate need for public health officials to better understand the mechanisms behind the deep and perpetual divide over face masks in America. Using a random sample of Americans (N=615), following a pre-registered experimental design and analytic plan, we first demonstrated that mask wearers were not innately more cooperative as individuals than non-mask wearers in the Prisoners’ Dilemma (PD) game when information about their own and the other person’s mask usage was not salient. However, we found strong, revealed preference evidence of in-group favoritism among both mask and non-mask wearers when information about the other partner’s mask usage was known. Holding other things constant, non-mask wearers were 23 percentage points less likely to cooperate than mask wearers when facing a mask-wearing partner, and 26 percentage points more likely to cooperate than mask wearers when facing a non-mask wearing partner. Our analysis suggests social identity effects to be one of the main drivers of people’s decision whether to wear or shun face masks during the pandemic. Policy makers should therefore take social perception of face masks into account when designing not only what public messages to deliver, but also who to deliver these messages.
    Date: 2021–04–09
  15. By: Nomikos, William George
    Abstract: Despite the abundance of evidence that peacekeeping works, we know little about what actually makes peacekeepers effective. Recent work suggesting that local agendas are central to modern conflicts make this omission particularly problematic. The article demonstrates that the presence of peacekeepers makes individuals more optimistic about the risks of engagement and the likelihood that members of outgroups will reciprocate cooperation. I use data from a lab-in-the-field experiment conducted in Mali, a West African country with an active conflict managed by troops from France and the United Nations (UN), to show that UN peacekeepers increase the willingness of individuals to cooperate relative to control and French enforcers. Moreover, I find that UN peacekeepers are especially effective among those participants who hold other groups and institutions in low esteem as well as those who have more frequent contact with peacekeepers. Follow-up interviews and surveys suggest that perceptions of the UN as unbiased rather than other mechanisms account for its effectiveness.
    Date: 2021–04–20
  16. By: Gáfaro, Margarita; Mantilla, Cesar
    Abstract: We characterize a general bargaining game useful for environmental valuation purposes. In this game, a jointly endowed asset is divisible into smaller units of two types: those with and without an associated costly attribute. Bargaining parties can use monetary transfers to their counterpart in exchange for accruing more units of the jointly endowed asset. We show that the cost of the attribute is perfectly absorbed by the transfer in a broad set of game solutions. Outcomes differing in the allocation of the units with the costly attribute allows us to identify whether the players' valuation of the attribute corresponds to its value induced in the game (i.e., its cost) or whether this attribute is over-or under-valued. We show an application to the valuation of water in a lab-in-the-field experiment conducted with Colombian farmers. We find evidence that the players' valuation of in-plot access to water dwells between 2.1 and 3.5 times its induced cost in the experiment.
    Date: 2021–04–19
  17. By: Damien, Besancenot (Université de Paris Descartes); Radu, Vranceanu (ESSEC Research Center, ESSEC Business School)
    Abstract: This paper reports the results from a two-person "pledge and give" experiment. Each persons endowment is private information available only to him. In the first stage, each agent informs the other about the amount he intends to give, or makes a pledge. In the second stage, each agent makes a contribution to the joint donation. A simple theoretical model shows that in this game the equilibrium pledge function is linear in the endowment of each agent. Furthermore, if agents have a strong taste for conformity, the optimal gift is positively related to one's own endowment and to the pledge of his partner. Data from the lab experiment show that, indeed, subjects pledge approximately 60% of their endowment. Also, pledges have an important social influence role: an agent will increase his donation by 20 cents on average if his partner pledges one more euro.
    Keywords: Charity giving; Conformity; Strategic pledges; Social influence
    JEL: C92 D64 D83
    Date: 2019–06–24
  18. By: Barrett, Christopher B.; Islam, Asad; Pakrashi, Debayan; Ruthbah, Ummul
    Abstract: We report the results of a large-scale, multi-year experimental evaluation of the System of Rice Intensification (SRI), an innovation that first emerged in Madagascar in the 1980s and has now diffused to more than 50 countries. Using a randomized training saturation design, we find that greater cross-sectional or intertemporal intensity of direct or indirect training exposure to SRI has a sizable, positive effect on Bangladeshi farmers’ propensity to adopt (and not to disadopt) SRI. We find large, positive and significant impacts of SRI training on rice yields and profits, as well as multiple household well-being indicators, for both trained and untrained farmers in training villages. Despite the significant farm-level impacts on rice productivity and labor costs, we find no evidence of significant general equilibrium effects on rice prices or wage rates. We also find high rates of disadoption, and clear indications of non-random selection into technology adoption conditional on randomized exposure to training, such that adopters and non-adopters within the same treatment arm experience similar outcomes. Rice yields, profits and household well-being outcomes do not, however, vary at the intensive margin with intensity of training exposure, a finding consistent with multi-object learning models.
    Keywords: Agricultural Finance
    Date: 2021–01–20
  19. By: Daniel L. Chen (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); Moti Michaeli (University of Haifa [Haifa]); Daniel Spiro (Uppsala University)
    Abstract: In many settings of political bargaining over policy, agents care not only about getting their will but also about having others approve the chosen policy thus giving it more weight. What is the effect on the bargaining outcome when agents care about such legitimacy of the policy? We study this question theoretically and empirically. We show that the median-voter theorem holds in groups that are ideologically very cohesive and in groups with extreme ideological disagreement. However, in groups with intermediate ideological disagreement, the median-voter theorem does not hold. This is since, on the individual level, ideological disagreement with the median has a non-monotonic effect on the policy. We test our model in a natural experimental setting—U.S. appeals courts—where causal identification is based on random assignment of judges into judicial panels, each consisting of three judges who rule on a case. Here judges care about legitimacy of the policy they write because a norm of consensus prevails and because increased legitimacy reduces the likelihood of the judicial case to be heard by the Supreme Court. The predicted pattern of how policies depend on the participants' ideologies are corroborated by our empirical tests.
    Keywords: Judicial decision making,Group decision making,Legitimacy,Ideology,Bargaining
    Date: 2021–03–31
  20. By: Daniel Jacob
    Abstract: For treatment effects - one of the core issues in modern econometric analysis - prediction and estimation are two sides of the same coin. As it turns out, machine learning methods are the tool for generalized prediction models. Combined with econometric theory, they allow us to estimate not only the average but a personalized treatment effect - the conditional average treatment effect (CATE). In this tutorial, we give an overview of novel methods, explain them in detail, and apply them via Quantlets in real data applications. We study the effect that microcredit availability has on the amount of money borrowed and if 401(k) pension plan eligibility has an impact on net financial assets, as two empirical examples. The presented toolbox of methods contains meta-learners, like the Doubly-Robust, R-, T- and X-learner, and methods that are specially designed to estimate the CATE like the causal BART and the generalized random forest. In both, the microcredit and 401(k) example, we find a positive treatment effect for all observations but conflicting evidence of treatment effect heterogeneity. An additional simulation study, where the true treatment effect is known, allows us to compare the different methods and to observe patterns and similarities.
    Date: 2021–04
  21. By: Amanda Chuan; John List; Anya Samek
    Abstract: Research has shown that giving disadvantaged families financial incentives to invest in their children could decrease socioeconomic inequality by enhancing human capital formation. Yet, within the household how are such gains achieved? We use a field experiment to investigate how parents allocate time when they receive financial incentives. We find that incentives increase investment in the target child. But, parents achieve these gains by substituting away from time spent with the child's sibling(s). An unintended consequence is that intrahousehold inequality increases and aggregate gains from the program are overstated when focusing only on target children.
    Date: 2021
  22. By: Benjamin Enke; Uri Gneezy; Brian Hall; David C. Martin; Vadim Nelidov; Theo Offerman; Jeroen van de Ven
    Abstract: Despite decades of research on heuristics and biases, empirical evidence on the effect of large incentives – as present in relevant economic decisions – on cognitive biases is scant. This paper tests the effect of incentives on four widely documented biases: base rate neglect, anchoring, failure of contingent thinking, and intuitive reasoning in the Cognitive Reflection Test. In laboratory experiments with 1,236 college students in Nairobi, we implement three incentive levels: no incentives, standard lab payments, and very high incentives that increase the stakes by a factor of 100 to more than a monthly income. We find that response times – a proxy for cognitive effort – increase by 40% with very high stakes. Performance, on the other hand, improves very mildly or not at all as incentives increase, with the largest improvements due to a reduced reliance on intuitions. In none of the tasks are very high stakes sufficient to de-bias participants, or come even close to doing so.
    JEL: D01 D03
    Date: 2021–04
  23. By: Gulzar, Saad; Khan, Muhammad Yasir
    Abstract: How can we motivate `good' politicians -- those that will carry out policy that is responsive to citizens' preferences -- to enter politics? In a field experiment in Pakistan, we vary how political office is portrayed to ordinary citizens. We find that emphasizing pro-social motives for holding political office instead of personal returns -- such as the ability to help others versus enhancing one's own respect and status -- raises the likelihood that individuals run for office and that voters elect them. It also better aligns subsequent policies with citizens' preferences. The candidacy decisions are explained by social influence, and not information salience -- we find that social versus personal messaging matters only when randomly delivered in a public setting but not in private. Results also show that changes in political supply, not citizen preferences or behavior, explain policy alignment. Taken together, the results demonstrate that non-financial motivations for political entry shape how politicians perform in office.
    Date: 2021–04–15
  24. By: Hisatoshi Tanaka (School of Political Science and Economics, Waseda University)
    Abstract: Efficiency of estimation depends not only on a method of the estimation, but also on the distribution of data. In statistical experiments, statisticians can at least partially design the data generating process to obtain high performance of the estimation. In this paper, a necessary condition for the semiparametrically efficient experimental design is proposed. A formula to determine the efficient distribution of input variables is derived. An application to the optimal bid design problem of contingent valuation survey experiments is presented.
    Keywords: Optimal Design Semiparametric Efficiency Binary Response Model Contingent Valuation Survey Experiments
  25. By: Dzung Bui; Lena Dräger; Bernd Hayo; Giang Nghiem
    Abstract: This paper investigates the direct and indirect effects of others’ beliefs on respondents’ own beliefs and consumer sentiment. Conducting consumer surveys with randomized control trials (RCTs) in Thailand and Vietnam during the COVID-19 pandemic, we implement two information treatments. Both treatments contain cross-country information about others’ beliefs about the appropriateness of the government’s or the general public’s reaction to the pandemic. The first treatment is asymmetric across our sample countries, as it shows opposite appropriateness ratings of the governments’ reaction in Vietnam and Thailand, whereas the second treatment is rather symmetric. We find that the information treatments affect consumer sentiment only in Vietnam, where the sign of the effect suggests that the treatments are viewed as positive news. Moreover, consumer sentiment in Vietnam is strongly affected by both treatments when the information goes against respondents’ prior beliefs.
    Keywords: consumer sentiment, Covid-19, randomized control trial (RCT), survey experiment, second-order beliefs, belief updating, government trust, macroeconomic expectations, Thailand, Vietnam
    JEL: E21 E37 E71 D84 D83
    Date: 2021
  26. By: Kari Hämäläinen; Jouko Verho; Ohto Kanninen
    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.
    Date: 2021
  27. By: Lee, Kenneth; Miguel, Edward; Wolfram, Catherine
    Abstract: In recent years, electrification has re-emerged as a key priority in low-income countries, with a particular focus on electrifying households. Yet the microeconomic literature examining the impacts of electrifying households on economic development has produced a set of conflicting results. Does household electrification lead to measurable gains in living standards or not? Focusing on grid electrification, we discuss how the divergent conclusions across the literature can be explained by differences in methods, interventions, potential for spillovers, and populations. We then use experimental data from Lee, Miguel, and Wolfram (2019) — a field experiment that connected randomly-selected households to the grid in rural Kenya— to show that impacts can vary even across individuals in neighboring villages. Specifically, we show that households that were willing to pay more for a grid electrification may gain more from electrification compared to households that would only connect for free. We conclude that access to household electrification alone is not enough to drive meaningful gains in development outcomes. Instead, future initiatives may work better if paired with complementary inputs that allow people to do more with power.
    Keywords: Social and Behavioral Sciences
    Date: 2019–12–12
  28. By: Nadiya Kelle; Luise Burkhardt; Corinna Kausmann; Julia Simonson; Jürgen Schupp; Clemens Tesch-Römer
    Abstract: In der vorliegenden Studie wird untersucht, inwiefern sich der Einsatz eines spezifischen Zeitfensters bei Survey-Abfragen zum ehrenamtlichen und freiwilligen Engagement – im Vergleich zu Survey-Abfragen mit unspezifischen Zeitfenstern – auf die Selbstangaben von Befragten auswirkt. Die Grundlage der Untersuchung bildet ein Experiment, welches zu diesem Zweck im Rahmen des SOEP-Innovationssamples (SOEP-IS) 2018 durchgeführt wurde. Unter Anwendung eines Split-Ballot Designs wurde die Stichprobe des SOEP-IS in zwei randomisierte Teilstichproben unterteilt. Eine Gruppe von Befragten erhielt Fragen zum Engagement mit einem spezifischen Zeitfenster von zwölf Monaten, eine andere Gruppe erhielt diese Fragen zum Engagement ohne ein solches spezifisches Zeitfenster. Die Fragen zum Engagement stammen aus zwei etablierten Umfragestudien in Deutschland, dem Deutschen Freiwilligensurvey (FWS) 2014 und Sozio-oekonomischen Panel (SOEP) 2017. Es wird erwartet, dass die Einführung eines Zwölf-Monats-Zeitfensters die Wahrscheinlichkeit dafür erhöht, dass Befragte ein Engagement angeben. Da in der SOEP-Abfrage Häufigkeiten des Engagements erfasst werden (jede Woche, jeden Monat, seltener oder nie), die einen zeitlichen Bezug vorgeben, wird erwartet, dass der Effekt der Einführung eines Zwölf-Monats-Zeitfensters in der FWS-Abfrage stärker als in der SOEP-Abfrage ausfällt. Diese Annahmen werden bestätigt. Im FWS führte die Einführung eines Zwölf-Monats-Zeitfensters für die Engagementabfrage zu einem statistisch signifikanten durchschnittlichen Marginaleffekt (AME) von etwas über drei Prozentpunkten. Für die Engagementabfrage aus dem SOEP zeigt sich dieser Effekt nicht. Insgesamt lässt sich festhalten, dass es sich lohnt, Frageformulierungen zu reflektieren und zu optimieren. Dabei sollten mögliche Auswirkungen bedacht werden, die diese Änderungen auf das Antwortverhalten der Befragten haben könnten.
    Keywords: experimental study, time frames, survey questions, volunteering, SOEP-IS
    JEL: C18 C83 C93
    Date: 2021
  29. By: Rudolph, Lukas (LMU Munich); Freitag, Markus; Thurner, Paul
    Abstract: Despite fierce politicization and heated public debates in arms-exporting democracies, systematic research on mass public preferences on arms trade is lacking. Combining political economy models of arms trade with the literatures on trade preferences and foreign policy attitudes, we argue that citizens trade off economic incentives, strategic interests and moral considerations when assessing arms trade and that deeply rooted `strategic cultures’ lead to differences in citizen preferences between countries. To derive the implicit weighting of different features of arms trade, we draw on population-representative conjoint survey experiments (N=6,617), fielded in November/December 2020 in two of the global top-5 exporting countries of major arms: Germany and France. We find that both country populations show structured preferences towards arms exports which predominantly center around their moral repercussions. However, German respondents place more weight on moral consequences and, compared to French respondents, a larger share is in fundamental opposition. We conclude that these diverging preferences potentially conflict with plans of a common European defense and security policy.
    Date: 2021–04–19
  30. By: Benjamin Marx; Vincent Pons; Tavneet Suri
    Abstract: We present the results from a field experiment on team diversity. Individuals working as door-to-door canvassers for a non-profit organization were randomly assigned a teammate, a supervisor, and a list of individuals to canvass. This created random variation within teams in the degree of horizontal diversity (between teammates), vertical diversity (between teammates and their supervisor) and external diversity (between teams and the individuals they canvassed). We observe team-level measures of performance and find that horizontal ethnic diversity decreases performance, while vertical diversity often improves performance, and external diversity has no effect. The data on time use suggests that horizontally homogeneous teams organized tasks in a more efficient way, while vertically homogeneous teams exerted lower effort.
    JEL: D22 J24 L22 M54 O12
    Date: 2021–04
  31. By: Dong, Sarah (Australian National University); Sinning, Mathias (Australian National University)
    Abstract: Very little is known about the compliance behavior of first-time taxpayers although their tax paying habits may affect the long-run functioning of a tax system. This paper studies the compliance behavior of new entrants to the tax system using data from a large-scale natural field experiment that was implemented in collaboration with the Australian Taxation Office (ATO). We examine the effectiveness of a welcome letter from the tax authority that aims to nudge first-time taxpayers to lodge their first income tax return. We compare this letter to a standard letter that emphasizes the possibility of penalties and interest charges. We find that both letters have surprisingly similar effects on tax compliance, suggesting that the main channel through which the letters affect individual behavior is by providing information. By contrast, the type of messaging and the way in which information is presented to first-time taxpayers appear to be relatively unimportant. Our analysis of heterogeneous treatment effects indicates that both letters are most effective for young entrants to the tax system and, within this group, more effective for Australian citizens than for visa holders.
    Keywords: tax compliance, natural field experiment, behavioral insights
    JEL: C93 H25 H26
    Date: 2021–04
  32. By: Fabien, Perez (ENSAE); Guillaume, Hollard (Ecole Polytechnique); Radu, Vranceanu (ESSEC Research Center, ESSEC Business School); Delphine, Dubart (ESSEC Research Center, ESSEC Business School)
    Abstract: This paper uses the test/retest data from the Holt and Laury (2002) experiment to provide estimates of the measurement error in this popular risk-aversion task. Maximum likelihood estimation suggests that the variance of the measurement error is approximately equal to the variance of the number of safe choices. Simulations confirm that the coefficient on the risk measure in univariate OLS regressions is approximately half of its true value. Unlike measurement error, the discrete transformation of continuous riskaversion is not a major issue. We discuss the merits of a number of different solutions: increasing the number of observations, IV and the ORIV method developed by Gillen et al. (2019).
    Keywords: ORIV; Experiments; Measurement error; Risk-aversion; Test/retest
    JEL: C18 C26 C91 D81
    Date: 2019–09
  33. By: Steinbacher, Mitja; Raddant, Matthias; Karimi, Fariba; Camacho-Cuena, Eva; Alfarano, Simone; Iori, Giulia; Lux, Thomas
    Abstract: In this survey we discuss advances in the agent-based modeling of economic and social systems. We present the state of the art in the heuristic design of agents and the connections to the results from laboratory experiments on agent behavior. We further discuss how large-scale social and economic systems can be modeled and highlight novel methods and data sources. At last we present an overview of estimation techniques to calibrate and validate agent-based models.
    Keywords: agent-based models, heuristic design, model calibration, behavioral economics, computational social science, computational economics
    JEL: B41 C60 D90 G17 L20
    Date: 2021–01
  34. By: Nobuyuki Hanaki; Aidas Masiliunas
    Abstract: Multiple Cournot oligopoly experiments found more collusive behavior in markets with fewer firms (Huck et al., 2004; Hostmann et al., 2018). This result could be explained by a higher difficulty to coordinate or by lower incentives to collude in markets with more firms. We show that the Quantal Response Equilibrium can explain how the change in incentives alone could result in more collusive output in smaller markets. We propose a new method to manipulate the group size while keeping constant the locations of key outcomes, payoffs at these outcomes and the incentives to collude. Experiments using this normalized payoff function find that the number of firms has no direct effect on the average output or profit. We conclude that higher rates of aggregate collusion in markets with fewer firms are driven by the changes in incentives or focality rather than purely the number of firms. These findings imply that antitrust policies aimed at preventing collusion should focus on incentives rather than on the market concentration.
    Date: 2021–04
  35. By: Linos, Elizabeth; Prohofsky, Allen; Ramesh, Aparna; Rothstein, Jesse; Unrath, Matt
    Keywords: Social and Behavioral Sciences
    Date: 2020–01–01
  36. By: Dang Vu, Hoai Nam (University of Copenhagen); Nielsen, Martin Reinhardt; Jacobsen, Jette Bredahl
    Abstract: A legal rhino horn trade is suggested to reduce poaching. To examine this proposition we conducted a choice experiment with 345 rhino horn consumers in Vietnam investigating their preferences for legality, source, price and peer experience of medicinal efficacy as attributes in their decision to purchase rhino horn. We calculated consumers’ willingness to pay for each attribute level. Consumers preferred and were willing to pay more for wild than semi-wild and farmed rhino horn but showed the strongest preference for legal horn although higher-income consumers were less concerned about legality. The number of peers having used rhino horn without positive effect reduced preference for wild-sourced horn and increased preference for legality. Hence, a legal trade in rhino horn would likely not eliminate a parallel black market. Whether poaching would be reduced depends on the price difference in the two markets, campaigns ability to change consumer preferences, and regulation efforts.
    Date: 2021–04–12
  37. By: Sarah Xue Dong; Dewi Meisari; Banu Rinaldi
    Abstract: This paper presents the findings of a large scale randomized controlled field trial that informs micro and small businesses about a free and easy to use online registration portal for business registration. We find that in the context of Indonesia, a country with a large informal sector and complicated business registration process, simple online registration can be attractive to micro and small businesses. Sending three rounds of short WhatsApp or text messages resulted in 3.4% of recipients clicking the registration link in the messages. Only 0.1% of recipients registered through the portal, however, indicating that the registration portal is not easy enough to use. Different phrasing of messages results in different click rate, different registration rate, and different rates the sender’s number is blocked. Neutral message performs the best, followed by message that emphasize that registration is easy. Message that appeals to people’s patriotic feelings or message that emphasize the registration is free performs the last, depending on the outcome.
    Keywords: business registration; micro and small enterprises; informal sector; randomized controlled trial; behavioural insights;
    JEL: C93 O17 O29
    Date: 2021
  38. By: Ryo Takahashi (Graduate School of Economics, Waseda University); Keijiro Otsuka (Kobe University)
    Abstract: Although community forest management has become a principal approach for the management of forest resources in developing countries, empirical evidence on its effectiveness is mixed. We argue in this study that while community management is effective in protection or regulated use of forest resources as argued by Ostrom, it may fail to provide proper incentives to take care of such resources because of collective sharing of benefits of forest management. This study proposes a mixed private and community management system as a desirable arrangement for timber forest management in developing countries, which is characterized by communal protection of community-owned forest area and individual management of individually owned trees. We conducted a randomized experiment on community forests in Ethiopia in which individualized tree rights have been granted to member of randomly selected communities with the permission of the local authority. We found that the mixed management system significantly stimulated intensive forest management activities, including pruning, guarding, and watering. Furthermore, individual members of the mixed management system extracted more timber trees and forest products, which are byproducts of tree management, such as thinned trees and pruned branches. As may be expected, the extracted volumes of nontimber forest products unrelated to tree management (i.e., fodder and honey) did not change by the intervention.
    Keywords: property regimes, individual rights, commons, community forest management, RCT
    JEL: O13 Q23 Q24 P48

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