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on Experimental Economics |
| By: | Castagnetti, Alessandro; Proto, Eugenio |
| Abstract: | Anger is an important driver in shaping economic activities, particularly in instances that involve strategic interactions between individuals. Here we test whether anger impairs the capacity to think strategically, and we analyze the implications of our result on bargaining and cooperation games. Accordingly, with a preregistered experiment (Experiment 1), we externally induce anger to a subgroup of subjects following a standard procedure that we verify by using a novel method of text analysis. We show that anger can impair the capacity to think strategically in a beauty contest game. Angry subjects choose numbers further away from the Nash equilibrium, and earn significantly lower profits. A structural analysis estimates that there is an increase in the share of level-zero players in the treated group compared to the control group. Furthermore, with a second preregistered experiment (Experiment 2), we show that this effect is not common to all negative emotions. Sad subjects do not play significantly further away from the Nash equilibrium than the control group in the same beauty contest game of Experiment 1, and sadness does not lead to more level-zero play. |
| Keywords: | anger; beauty-contest; induced emotions; Strategic Interactions |
| JEL: | C92 D90 D91 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15264&r= |
| By: | Caria, Stefano; Gordon, Grant; Kasy, Maximilian; Quinn, Simon; Shami, Soha; Teytelboym, Alex |
| Abstract: | We introduce a novel adaptive targeted treatment assignment methodology for field experiments. Our Tempered Thompson Algorithm balances the goals of maximizing the precision of treatment effect estimates and maximizing the welfare of experimental participants. A hierarchical Bayesian model allows us to adaptively target treatments. We implement our methodology in Jordan, testing policies to help Syrian refugees and local jobseekers to find work. The immediate employment impacts of a small cash grant, information and psychological support are close to zero, but targeting raises employment by 1 percentage-point (20%). After four months, cash has a sizable effect on employment and earnings of Syrians. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15359&r= |
| By: | Diaz, Lina (George Mason University); Houser, Daniel (George Mason University); Ifcher, John (Santa Clara University); Zarghamee, Homa (Barnard College) |
| Abstract: | In this paper, we use stated satisfaction to estimate social preferences: subjects report their satisfaction with payment-profiles that hold their own payment constant while varying another subject's payment. This approach yields significant support for the inequity aversion model of Fehr and Schmidt (1999). This model is among the most renowned in behavioral economics, positing a generalized aversion to inequality that is stronger when one's own payoff is lower–rather than higher–than others'; i.e., "envy" is stronger than "guilt." While aggregate-level estimates based on revealed preferences in laboratory games have supported the model, the assumption that guilt is stronger than envy is often violated at the individual level. This paradox may be due to limitations of the revealed-preference approach. An advantage of avoiding games is that eliciting stated satisfaction is relatively easy to implement and is less prone to being confounded with motives like reciprocity; also the absence of tradeoffs between own and others' payoffs is cognitively less demanding for subjects. Our unstructured approach does not limit the expression of social preferences to inequity aversion, yet our methodology yields significant support for it. At the individual level, 86% of subjects exhibit at least as strong envy as guilt, and 76% (65%) of subjects weakly (strongly) adhere to the model. Our individual-level estimates are robust to changing the value of one's own constant payment and to changing the range of the other subject's payments. Methodologically, eliciting satisfaction can be an easy-to-implement complement to choice-based preference-measures in contexts other than social preferences that are of interest to economists. |
| Keywords: | inequity aversion, social preferences, stated satisfaction, laboratory experiment |
| JEL: | C91 D31 D63 I31 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14347&r= |
| By: | Leaver, Clare; Ozier, Owen; Serneels, Pieter; Zeitlin, Andrew |
| 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: | field experiment; incentives; pay-for-performance; selection; teachers |
| JEL: | C93 I21 J45 M52 O15 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15333&r= |
| By: | Matteo M. Marini (Department of Economics and Management, University of Florence, Italy) |
| Abstract: | This paper is a follow-up investigation to the aggregate data meta-analysis by Marini (2021), the latter study being designed to detect what experimental protocols moderate the effect of emotions on risk-taking. Our work purports to check the robustness of Marini (2021)’s findings when gender is taken into account as a moderator. The goal is pursued by pooling individual participant data from the subset of studies that make use of multiple price lists as risk elicitation method. We find preliminary support for the results of the benchmark metaanalysis to the extent that sadness promotes risk aversion and subjects take greater risks when studies are conducted in individualist countries. Gender does not moderate the influence of emotions on risk propensity, whereas safe choices become more popular as the magnitude of financial rewards increases. |
| Keywords: | : meta-analysis, gender differences, emotion, risk-taking, multiple price list |
| JEL: | C91 D81 D91 J16 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2021/06&r= |
| By: | King King Li (Shenzhen University); Bo Huang (Chinese University of Hong Kong) |
| Abstract: | We conduct an online survey experiment to investigate determinants of macroeconomic expectations. We investigate the effect of probability overweighting, religiosity, ambiguity aversion, and time preference. We find that subjects exhibiting probability overweighting, having higher degree of religiosity, having lower discount factor are more optimistic on economic growth and income, while ambiguity averse subjects are more pessimistic about the impact of Covid-19 outbreak on the economic growth rate. We compute the forecast errors and estimate the proportion of forecasts with rounding and implausible values. We find that significant proportion of subjects have rather poor understanding on macroeconomic variables. Subjects with higher degree of religiosity, living in small towns and villages, and with higher subjective socioeconomic status have higher forecast errors, while subjects with better education have lower forecast errors. Overall, we find that subjects form optimistic expectations, supporting the implication of belief-based utility (Brunnermeier and Parker, 2005) and wishful thinking (Seybert and Bloomfield, 2009) on macroeconomic expectations. |
| Keywords: | Macroeconomic Expectations; Belief-based Utility; Probability Overweighting; Ambiguity Aversion; Time Preference; Religiosity; Experiment |
| JEL: | C93 D84 E21 E31 E71 |
| Date: | 2021–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:cth:wpaper:gru_2021_015&r= |
| By: | Sören Harrs (Department of Economics, University of Cologne); Lara Marie Müller (Department of Economics, University of Cologne); Bettina Rockenbach (Department of Economics, University of Cologne and Max Planck Institute for Research on Collective Goods) |
| Abstract: | Politicians, scientists and journalists have aired vastly different assessments of the COVID-19 pandemic, ranging from rather optimistic to very pessimistic ones. In this paper we investigate how narratives conveying different assessments of the pandemic impact economic behavior. In a controlled experiment with incentivized economic games we find that subjects behave more risk averse and less patiently when confronted with a pessimistic compared to an optimistic or balanced narrative. Further we find that narratives change subjects’ expectations about the pandemic and the stock market. Hence our experiment provides causal evidence for an impact of narratives on fundamental determinants of household behavior. |
| Keywords: | Narrative Economics, Risk Aversion, Patience, Expectations |
| JEL: | D80 D91 E71 G41 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:091&r= |
| By: | Antonio Cabrales (Dept. of Economics, Universidad Carlos III de Madrid); Antonio M. Espín (Department of Social Anthropology, University of Granada and Loyola Behavioral Lab, Loyola Andalucía University); Praveen Kujal (Department of Economics, Middlesex University); Stephen Rassenti (Economic Science Institute, Chapman University) |
| Abstract: | Human decisions in the social domain are modulated by the interaction between intuitive and reflective processes. Requiring individuals to decide quickly or slowly triggers these processes and is thus likely to elicit different social behaviors. Meanwhile, time pressure has been associated with inefficiency in market settings and market regulation often requires individuals to delay their decisions via cooling-off periods. Yet, recent research suggests that people who make reflective decisions are met with distrust. If this extends to external time constraints, then forcing individuals to delay their decisions may be counterproductive in scenarios where trust considerations are important. In three Trust Game experiments (total n = 1,872), including within- and betweensubjects designs, we test whether individuals trust more someone who is forced to respond quickly (intuitively) or slowly (reflectively). We find that trustors do not adjust their behavior (or their beliefs) to the trustee’s time conditions. This seems to be an appropriate response because time constraints do not affect trustees’ behavior, at least when the game decisions are binary (trust vs. don’t trust; reciprocate vs. don’t reciprocate) and therefore mistakes cannot explain choices. Thus, delayed decisions per se do not seem to elicit distrust. |
| Keywords: | trust; trustworthiness; beliefs; reflection; dual process; intuition |
| JEL: | C90 C91 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:21-08&r= |
| By: | Anmina Murielle Djiguemde (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); Dimitri Dubois (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); Alexandre Sauquet (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); Tidball Mabel (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) |
| Abstract: | We study the impact of discrete versus continuous time on the behavior of agents in the context of a dynamic common pool resource game. To this purpose, we consider a linear quadratic model in which agents exploit a renewable resource with an infinite horizon and conduct a lab experiment. We use a differential game for continuous time and derive its discrete time approximation. When the agent is the sole owner of the resource, we fail to detect on a battery of indicators any difference between discrete and continuous time. Conversely, in the two-player setting, significantly more agents can be classified as myopic and end up with a low resource level in discrete time. Continuous time seems to allow for better cooperation and thus greater sustainability of the resource than does discrete time. Also, payoffs are more equally distributed in the continuous time setting. |
| Keywords: | Common Pool Resource,Differential Games,Experimental Economics,Continuous Time,Discrete Time |
| Date: | 2021–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03214973&r= |
| By: | Anna Werbeck; Ansgar Wübker; Nicolas R. Ziebarth |
| Abstract: | Using a randomized field experiment, we show that health care specialists cream-skim patients by their expected profitability. In the German two-tier system, outpatient reimbursement rates for both public and private insurance are centrally determined but are significantly higher for the privately insured. In our field experiment, following a standardized protocol, the same hypothetical patient called 991 private practices in 36 German counties to schedule appointments for allergy tests, hearing tests and gastroscopies. Practices were 4% more likely to offer an appointment to the privately insured. Conditional on being offered an appointment, wait times for the publicly insured were twice as long than for the privately insured. We also find smaller access differences when reimbursement rate differences are smaller. Our findings show that structural differences in reimbursement rates lead to structural differences in health care access. |
| JEL: | I11 I14 I18 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28809&r= |
| By: | Abeler, Johannes (University of Oxford); Falk, Armin (briq); Kosse, Fabian (LMU Munich) |
| Abstract: | Reporting private information is a key part of economic decision making. A recent literature has found that many people have a preference for honest reporting, contrary to usual economic assumptions. In this paper, we investigate whether preferences for honesty are malleable and what determines them. We experimentally measure preferences for honesty in a sample of children. As our main result, we provide causal evidence on the effect of the social environment by randomly enrolling children in a year-long mentoring programme. We find that, about four years after the end of the programme, mentored children are significantly more honest. |
| Keywords: | honesty; lying; truth-telling; formation of preferences; experiments with children; |
| JEL: | C90 D90 D64 D82 H26 J13 |
| Date: | 2021–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:282&r= |
| By: | Becker, Christoph; Melkonyan, Tigran; Proto, Eugenio; Sofianos, Andis; Trautmann, Stefan |
| Abstract: | Bayesian Updating is the dominant theory of learning in economics. The theory is silent about how individuals react to events that were previously unforeseeable or unforeseen. Recent theoretical literature has put forth axiomatic frameworks to analyze the unknown. In particular, we test if subjects update their beliefs in a way that is consistent reverse Bayesian, which ensures that the old information is used correctly after an unforeseen event materializes. We find that participants do not systematically deviate from reverse Bayesianism, but they do not seem to expect an unknown event when this is reasonably unforeseeable, in two pre-registered experiments that entail unforeseen events. We argue that participants deviate less from the reverse Bayesian updating than from the usual Bayesian updating. We provide further evidence on the moderators of belief updating. |
| Keywords: | Bayesian updating; Reverse Bayesianism; Unawareness; Unforeseen |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15477&r= |
| By: | Silvia Castro; Kristina Czura |
| Abstract: | Inadequate hygiene during menstruation can have severe consequences, such as adverse health effects, lower educational attainment and higher work absenteeism. Cultural taboos and social norms surrounding menstruation may contribute to misinformation about menstrual hygiene and may also interfere with attempts to improve knowledge. Using lab-in-the-field experiments with women in rural Bangladesh, we measure social norms in the form of empirical and normative expectations about menstrual health and hygiene explicitly, and relate them to behavior and knowledge. We then provide an information intervention on menstrual health and hygiene and observe how this changes the perceived social norms. We find that the majority of women report decreased physical and mental well-being, in particular stress and shame, during their menstruation. Further, we find knowledge gaps on the proper use of hygienic material for menstrual health management and that empirical and normative expectations are well matched to reported adverse health behavior. The information intervention helps to correct harmful social norms, although results are more pronounced for women who have more autonomy and agency over their own decisions. |
| Keywords: | social norms, menstrual health management, menstrual hygiene, information, adverse health behavior |
| JEL: | I12 I15 D91 O12 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9081&r= |
| By: | Bryan, Gharad (London School of Economics); Chowdhury, Shyamal (University of Sydney); Mobarak, Ahmed Mushfiq (Yale University); Morten, Melanie (Stanford University); Smits, Joeri (Harvard Kennedy School) |
| Abstract: | Conditional cash transfer (CCT) programs aim to reduce poverty or achieve other social goals by making the transfers conditional upon the receivers' actions. Conditions are designed to encourage some desirable behavior that recipients might otherwise under-invest in. An unintended consequence of the conditionality may be to distort recipients' actions in ways that lower their welfare. The transfer size plays an important role in shaping such distortionary effects. In certain circumstances, a larger transfer increases distortion more than that it raises benefits from stronger encouragement, implying that (i) there is an optimal transfer size for CCTs, and (ii) unconditional cash transfers (UCTs) may be better than CCTs when the transfer amount is large. We illustrate a range of distortions arising from CCT programs around the world. We then introduce an experimental design that permits a test of this distortionary effect, and implement it in a cash transfer program conditional on seasonal labor migration in rural Indonesia. We find that when the transfer size exceeds the amount required for travel expenses, distortion increases and CCT program outcomes deteriorate. |
| Keywords: | conditional cash transfers, distortion, seasonal migration |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14326&r= |
| By: | Franz, Anjuli; Croitor, Evgheni |
| Date: | 2021–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:126519&r= |
| By: | Horn, Samantha; Jamison, Julian C.; Karlan, Dean S.; Zinman, Jonathan |
| Abstract: | Is financial knowledge change necessary for lasting savings behavior change? Or, akin to the canonical Friedman billiards player, can behavior persist "as if" such knowledge is held? We randomize 240 Ugandan young-adult clubs to financial education, savings account access, both, or neither. Each education arm, but not the account-only arm, increases financial knowledge and trust in banks at one-year. But at five-years the knowledge effects disappear, and the trust effects diminish. Savings activity, wealth, and income increase at both one-year and five-years for all treatment arms, suggesting that knowledge change is unnecessary for lasting impacts on behavior and outcomes. |
| Keywords: | financial access; Financial Education; financial literacy; Savings |
| JEL: | D12 D91 O12 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15392&r= |
| By: | Hunt Allcott; Joshua J. Kim; Dmitry Taubinsky; Jonathan Zinman |
| Abstract: | It is often argued that people might take on too much high-cost debt because they are present focused and/or overoptimistic about how soon they will repay. We measure borrowers' present focus and overoptimism using an experiment with a large payday lender. Although the most inexperienced quartile of borrowers underestimate their likelihood of future borrowing, the more experienced three quartiles predict correctly on average. This finding contrasts sharply with priors we elicited from 103 payday lending and behavioral economics experts, who believed that the average borrower would be highly overoptimistic about getting out of debt. Borrowers are willing to pay a significant premium for an experimental incentive to avoid future borrowing, which we show implies that they perceive themselves to be time inconsistent. We use borrowers' predicted behavior and valuation of the experimental incentive to estimate a model of present focus and naivete. We then use the model to study common payday lending regulations. In our model, banning payday loans reduces welfare relative to existing regulation, while limits on repeat borrowing might increase welfare by inducing faster repayment that is more consistent with long-run preferences. |
| JEL: | D14 D15 D18 D61 D90 L69 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28799&r= |
| By: | Dong, Xueqi; Liu, Shuo Li |
| Abstract: | Likelihood functions have been the central pieces of statistical inference. For discrete choice data, conventional likelihood functions are specified by random utility(RU) models, such as logit and tremble, which generate choice stochasticity through an ”error”, or, equivalently, random preference.For risky discrete choice, this paper explores an alternative method to construct the likelihood function: Rational Expectation Stochastic Choice (RESC). In line with Machina (1985), the subject optimally and deterministically chooses a stochastic choice function among all possible stochastic choice functions; the choice stochasticity canbe explained by risk aversion and the relaxation of the reduction of compound lottery. The model maximizes a simple two-layer expectation that disentangles risk and randomization, in the similar spirit of Klibanoff et al. (2005) where ambiguity and risk are disentangled. The model is applied to an experiment, where we do not commit to a particular stochastic choice function but let the data speak. In RESC, well-developed decision analysis methods to measure risk attitude toward objective probability can also be ap-plied to measure the attitude toward the implied choice probability. Stochastic choicefunctions are structurally estimated to estimate the stochastic choice functions, anduse standard discrimination test to compare the goodness of fit of RESC and differentRUs. The RUs are Expected Utility+logit and other leading contenders for describing decision under risk. The results suggest the statistical superiority of RESC over ”error” rules. With weakly fewer parameters, RESC outperforms different benchmarkRU models for 30%−89% of subjects. RU models outperform RESC for 0%−2% of subjects. Similar statistical superiority is replicated in a second set of experimental data. |
| Keywords: | Experiment; Likelihood Function; Maximum Likelihood Identification;Risk Aversion Parameter; Clarke Test; Discrimination of Stochastic Choice Functions |
| JEL: | D8 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107678&r= |
| By: | Diego Carrasco-Novoa (School of Economics, University of Queensland, Brisbane, Australia); Sandro D´ıez-Amigo (Department of Economics, Massachusetts Institute of Technology); Shino Takayama (School of Economics, University of Queensland, Brisbane, Australia) |
| Abstract: | We introduce a flexible theoretical framework to model the mechanics of peer effects in education. Then we take advantage of a natural experiment in order to illustrate how the proposed model can be used to gain additional empirical insights from reduced-form econometric analysis. Leveraging the exogenous variation in peer characteristics generated by the random assignment of freshman college students to their first semester class groups, we observe a negative impact on academic performance of secondary schoolmate presence and concentration in the first semester college classroom, suggesting that in the study context socialization was in overall terms distractive, and that the group structure increased socialization for all students. We also find some evidence of a negative impact of higher average admission scores on academic performance, suggesting that in the study context the direct positive impact of peer mean ability on academic performance was more than eclipsed by the negative effect of higher peer mean ability on self-confidence. Observed peer effects generally persist throughout the duration of undergraduate studies. |
| Date: | 2021–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:644&r= |
| By: | Kofoed, Michael S. (U.S. Military Academy, West Point); Gebhart, Lucas (U.S. Military Academy); Gilmore, Dallas (U.S. Military Academy); Moschitto, Ryan (U.S. Military Academy) |
| Abstract: | COVID-19 shifted schools and colleges to online instruction with little causal evidence of outcomes. In the fall of 2020, we randomized 551 West Point students in a required Introductory Economics course across twelve instructors to either an online or in-person class. Final grades for online students dropped by 0.215 standard deviations; a result apparent in both assignments and exams and largest for academically at-risk students. A post-course survey finds that online students struggled to concentrate in class and felt less connected to their instructors and peers. We find that the shift to online education had negative results for learning. |
| Keywords: | online learning, COVID-19, randomized control trial |
| JEL: | I21 I23 H75 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14356&r= |
| By: | Ryosuke Moriyasu (Keio Economic Observatory, Keio University) |
| Abstract: | This paper considers the role of information for university enrollment. We examine whether information on university enrollment positively influences the desire to advance on to higher education among Japanese high school students. The analysis is based on a clusterrandomized controlled trial. It is considered that this paper conducts the first verification in Japan using a randomized controlled trial targeting schools from an economic perspective. We randomly assigned 1st-year students of a certain Japanese local high school into three groups. The first treatment group was provided with information on the Returns to higher education, the second treatment group was provided with the Costs to higher education, and the remaining one is the control group that was provided with information unrelated to education. As a result, due to the small sample size, the providing information did not have a significant effect on the desire to advance on to university. However, it was found that their willingness to study increases. This suggests that human capital investment behavior should be promoted. |
| Keywords: | Higher Education, Information, Perceived Returns, Cluster-Randomized Controlled Trials |
| JEL: | I21 I24 J24 |
| Date: | 2021–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2021-008&r= |
| By: | Eugen Dimant |
| Abstract: | Political polarization has ruptured the fabric of U.S. society. I quantify this phenomenon through the use of 5 pre-registered studies, comprising 15 behavioral experiments and a diverse set of over 8,600 participants. The focus of this paper is to examine various behavioral-, belief-, and norm-based layers of (non-)strategic decision-making that are plausibly affected by existing polarization in the context of Donald J. Trump. I find strong heterogeneous effects: ingroup-love occurs in the perceptional domain (how close one feels towards others), whereas outgroup-hate occurs in the behavioral domain (how one helps/harms/cooperates with others). The rich setting also allows me to examine the mechanisms of observed intergroup conflict, which can be attributed to one’s grim expectations regarding cooperativeness of the opposing faction, rather than one’s actual unwillingness to cooperate. In a final step, I test whether popular behavioral interventions (defaults and norm-nudging) can eradicate the detrimental impact of polarization in the (non-) strategic contexts studied here. The interventions are ineffective in closing the polarization gap, suggesting that structural – on top of behavioral - changes are needed to mend existing fractions and heal the society. |
| Keywords: | identity, norms, nudging, polarization, social preferences |
| JEL: | C90 D01 D90 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9073&r= |
| By: | Takashi Ui (Hitotsubashi University) |
| Abstract: | In incomplete information games with ambiguous information, rational behavior depends on fundamental ambiguity (ambiguity about states) and strategic ambiguity (ambiguity about others’ actions). We study the impact of strategic ambiguity in global games, which is evident when one of the actions yields a constant payoff. Ambiguous-quality information makes more players choose this action, whereas (unambiguous) low-quality information makes more players choose an ex-ante best response to the uniform belief over the opponents’ actions. If the ex-ante best-response action yields a constant payoff, sufficiently ambiguous-quality information makes most players choose this action, thus inducing a unique equilibrium, whereas sufficiently low-quality information generates multiple equilibria. In applications to financial crises, we demonstrate that news of more ambiguous quality triggers a debt rollover crisis, whereas news of less ambiguous quality triggers a currency crisis. |
| JEL: | C72 D81 D82 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:upd:utmpwp:032&r= |
| By: | Stantcheva, Stefanie |
| Abstract: | I study how people understand, reason, and learn about tax policy. The goal is to uncover the mental models that people use to think about income and estate taxes. To that end, I run large-scale online surveys and experiments on representative U.S. samples to elicit not only respondents' factual knowledge about tax policy and the income or wealth distributions, but also their understanding of the mechanisms of tax policy and their reasoning about it. The detailed survey questions are designed to address the three main factors emphasized in our core tax model that can shape support for or opposition to taxes: efficiency effects, distributional implications, and fairness considerations. But they also elicit broader concerns that could influence policy views, such as misperceptions, views of government, perceived spillovers from taxes, and views on how tax revenues are or should be spent. I decompose policy views into the various underlying factors and find that support for tax policy is most strongly correlated with views on the benefits of redistribution and fairness, as well as with views of the government. Efficiency concerns play a more minor role. These correlational patterns are confirmed by the experimental approach, which shows people instructional videos that explain the workings and consequences of one of the aspects of tax policy (the ``Redistribution'' and the ``Efficiency'' treatments) or that bring the two together and focus on the trade-off (the ``Economist'' treatment). The Redistribution treatment and Economist treatments significantly increase support for more progressive taxes. I also find that there are partisan divergences not just in the final policy views, but also at every step of the reasoning about the underlying mechanisms of taxes, and most starkly on the fairness considerations. |
| Keywords: | Experiments; Fairness; Perceptions; redistribution; survey; taxation |
| JEL: | D72 D91 H21 H23 H24 H41 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15216&r= |