nep-exp New Economics Papers
on Experimental Economics
Issue of 2021‒08‒09
27 papers chosen by

  1. Delaying and Motivating Decisions in the (Bully) Dictator Game By Ennio Bilancini; Leonardo Boncinelli; Pietro Guarnieri; Lorenzo Spadoni
  2. Charitable giving: Framing and the role of information By Keser, Claudia; Späth, Maximilian
  3. Literature Review of Experimental Asset Markets with Insiders By Robert Merl
  4. Does the Frequency of Reminders Matter for their Effectiveness? A Randomized Controlled Trial By Antinyan, Armenak; Asatryan, Zareh; Dai, Zhixin; Wang, Kezhi
  5. Testing Classic Theories of Migration in the Lab By Catia Batista
  6. Didactic methods and small-group instruction for low-performing adolescents in mathematics. Results from a randomized controlled trial By Lars J. Kirkebøen; Trude Gunnes; Lena Lindenskov; Marte Rønning
  7. Default-Setting and Default Bias: Does the Choice Architect Matter? By David J. Freeman; Hanh T. Tong; Lanny Zrill
  8. Estimating Coherency between Survey Data and Incentivized Experimental Data By Belzil, Christian; Pernaudet, Julie; Poinas, François
  9. Limited Self-Knowledge and Survey Response Behavior By Armin Falk; Thomas Neuber; Philipp Strack
  10. Voluntary Partnerships For Equally Sharing Contribution Costs - Theoretical Aspects and Experimental Evidence - By Irene Maria Buso; Daniela Di Cagno; Werner Güth; Lorenzo Spadoni
  11. Profession and deception: Experimental evidence on lying behavior among business and medical students By Besancenot, Damien; Vranceanu, Radu
  12. Incentives, self-selection, and coordination of motivated agents for the production of social goods By Bauer, Kevin; Kosfeld, Michael; von Siemens, Ferdinand
  13. Personal norms in the online public good game By Marco Catola; Simone D'Alessandro; Pietro Guarnieri; Veronica Pizziol
  14. Fighting Climate Change: The Role of Norms, Preferences, and Moral Values By Peter Andre; Teodora Boneva; Felix Chopra; Armin Falk
  16. Why finance professionals hold green and brown assets? A lab-in-the-field experiment By Sébastien Duchêne; Adrien Nguyen-Huu; Dimitri Dubois; Marc Willinger
  17. Physician Response to Prices of Other Physicians: Evidence from a Field Experiment By Barkowski, Scott
  18. The impact of cognitive skills on investment decisions. An empirical assessment and policy suggestions By Lorenzo Esposito; Lorenzo Marrese
  19. "Personal Intergroup Contact Between Different Groups of Ex-Combatants and Civilians: Evidence from a Behavioural Experiment in Rwanda" By Mayuko Onuki; Keitaro Aoyagi; Yoshito Takasaki
  20. School Choice and Loss Aversion By Vincent Meisner; Jonas von Wangenheim
  21. Does lasting behavior change require knowledge change? Evidence from savings interventions for young adults By Samantha Horn; Julian C. Jamison; Dean Karlan; Jonathan Zinman
  22. Costly Mistakes: Why and When Spelling Errors in Resumes Jeopardise Interview Chances By Philippe Sterkens; Ralf Caers; Marijke De Couck; Michael Geamanu; Victor Van Driessche; Stijn Baert
  23. Social Risk Effects: The 'Experience of Social Risk' Factor By Diekert, Florian; Goeschl, Timo; König-Kersting, Christian
  24. Semiparametric Estimation of Long-Term Treatment Effects By Jiafeng Chen; David M. Ritzwoller
  25. Parochial cooperation and the emergence of signalling norms By Przepiorka, Wojtek; Andreas, Diekmann
  26. Dutch vs. First-Price Auctions With Expectations-Based Loss-Averse Bidders By Benjamin Balzer; Antonio Rosato; Jonas von Wangenheim
  27. Sampling Dynamics and Stable Mixing in Hawk–Dove Games By Arigapudi, Srinivas; Heller, Yuval; Schreiber, Amnon

  1. By: Ennio Bilancini; Leonardo Boncinelli; Pietro Guarnieri; Lorenzo Spadoni
    Abstract: We investigate experimentally how decisions in the Dictator Game are affected by cognitive manipulations aimed at promoting greater reliance on deliberation. Specifically, we run an online experiment where we have 6 distinct experimental conditions resulting from the combination of 2 conditions for the Dictator Game (non-bully: the dictator is initially endowed with all the money; bully: the initial endowment is equally split), and 3 conditions for the cognitive manipulations (time delay: decisions are delayed; motivated delay: decisions are delayed and a written motivation is required; control: no manipulation). We find that the equal initial endowment leads the dictator to keep less for himself, confirming in the online setting previous evidence from the lab. Further, our findings suggest that the request to write a motivation makes subjects take less for themselves with respect to the mere request to wait some time before choosing.
    Keywords: dual process, motivation, deliberation, intuition, Dictator Game, bully, social norms
    JEL: D01 D81
    Date: 2021–07–01
  2. By: Keser, Claudia; Späth, Maximilian
    Abstract: We study the impact of information on the effectiveness of a taking frame in the context of charitable giving. In our laboratory experiment, either the decision maker (giving frame) or the recipient (taking frame) receives an endowment. In both cases, the decision maker can freely decide the final allocation of the money. In addition to the frame, we vary the level of information that we provide about the worthiness of the receiving charity. In keeping with our theoretical prediction, participants donate significantly more, when the decision is framed as taking rather than as giving. However, this framing effect is smaller, the more information we provide on the charity.
    Keywords: Information,Giving,Taking,Charity,Experiment
    JEL: C91 D64 D80
    Date: 2021
  3. By: Robert Merl (Institute of Banking and Finance, University of Graz)
    Abstract: Many researchers have conducted experiments to study different aspects of insider trading. Experimental laboratory asset markets allow the researcher to control parameters that are impossible to control or even measure in empirical data (e.g., fundamental value of the asset, quality and quantity of information traders receive). This paper provides an exhaustive overview of the results from experimental economics on asset markets with asymmetrically informed participants.
    Date: 2021–07–26
  4. By: Antinyan, Armenak (Cardiff Business School, Cardiff University.); Asatryan, Zareh (ZEW Mannheim); Dai, Zhixin (China Financial Policy Research Center, School of Finance, Renmin University of China); Wang, Kezhi (Shanghai Municipal Tax Service, State Taxation Administration)
    Abstract: We assess the impact of reminder frequency on the probability of paying overdue property taxes in a randomized controlled trial in China. One reminder a week (sent as a text message) considerably increases the probability of tax compliance and results in tangible fiscal gains compared to a one-off reminder. However, increasing the frequency of reminders to two text messages a week diminishes their effectiveness. The takeaway of our study is that frequent reminders are an important trigger for human behavior, nonetheless, beyond a certain frequency the effectiveness of additional reminders seems to decline.
    Keywords: Reminder Frequency; Randomized Controlled Trial; Tax Compliance
    JEL: C93 H24 H26
    Date: 2021–07
  5. By: Catia Batista
    Abstract: We test the predictions of different classic migration theories by using incentivized laboratory experiments to investigate how potential migrants decide between working in different destinations. We test theories of income maximization, migrant skill-selection, and multidestination choice as we vary migration costs, liquidity constraints, risk, social benefits, and incomplete information. We show the standard income maximization model of migration with selection on observed and unobserved skills leads to a much higher migration rate and more negative skill-selection than is obtained when migration decisions take place under more realistic assumptions. Second, we investigate whether the independence of irrelevant alternatives (IIA) assumption holds. We find it holds for most people when decisions just involve wages, costs, and liquidity constraints. However, once we add a risk of unemployment and incomplete information, IIA no longer holds for about 20 percent of our sample.
    Keywords: Migrant Selection, Destination Choice, Lab Experiment, IIA
    JEL: F22 O15 C91
    Date: 2021–07
  6. By: Lars J. Kirkebøen; Trude Gunnes (Statistics Norway); Lena Lindenskov; Marte Rønning
    Abstract: Can high-dosage tutoring help low-performing adolescents? We implement a randomized experiment to test a twofold intervention: A teacher training program customized for instructing 8th graders who perform poorly in mathematics and two 4-6 week periods of targeted math instruction for lowperforming 8th graders, a majority in small homogeneous groups and the rest in larger and more heterogeneous groups. We randomized 24 schools to treatment and 24 schools to control. For students receiving small-group instruction, we find that test scores increase by .06 SD. Moreover, the share of low-performing students decreases by up to 25 percent. We find no impact on treated students in large groups. Classroom observations and surveys to teachers indicate higher fidelity to the didactic methods among teachers managing small groups.
    Keywords: Low-performing students; Ability grouping; High-dosage tutoring; Classroom management; Didactic methods; Mathematics; RCT; Stratified randomization; Cost-benefit of interventions
    JEL: I21 I24 I28
    Date: 2021–06
  7. By: David J. Freeman (Simon Fraser University); Hanh T. Tong (Simon Fraser University); Lanny Zrill (HEC Montreal)
    Abstract: This paper studies how choices are influenced by the procedure used to select the default option. We develop an approach to test and compare default bias across different default-setting rules while controlling for heterogeneous preferences. We apply it to a within-subjects experimental design lottery choice experiment to compare four different default-setting rules: Random defaults, Custom defaults selected based on an individual’s own past choices, Social defaults selected based on others’ choices, and Expert-set defaults. We find that the content of default-setting rules matters: default bias is present for all non-random default-setting rules we study, but not for randomly-set defaults.
  8. By: Belzil, Christian; Pernaudet, Julie; Poinas, François
    Abstract: Imagine the situation in which an econometrician can infer the distribution of welfare gains induced by the provision of higher education nancial aid using survey data obtained from a set of individuals, and can estimate the same distribution using a highly incentivized eld experiment in which the same set of individuals participated. In the experimental setting relying on incentivized choices, making the wrong decision can be costly. In the survey, the stakes are null and reporting false intentions and expectations is costless. In this paper, we evaluate the extent to which the decomposition of the two welfare gain distributions into latent factors are coherent. We nd that individuals often put a much dierent weight to a specic set of determinants in the experiment and in the survey and that the valuations of nancial aid are rank incoherent. About 66% of Biased Incoherency (dened as the tendency to have a higher valuation rank in the experiment than in the survey) is explained by individual heterogeneity in subjective benets, costs and other factors and about half of these factors aect the welfare gains of nancial aid in the survey and in the experiment in opposite directions. Ex-ante policy evaluation of a potential expansion of the Canadian higher education nancial aid system may therefore depend heavily on whether or not the data have been obtained in an \incentivized" context.
    JEL: I2 C91 C93 D12 D9 D91
    Date: 2021–07–23
  9. By: Armin Falk (briq –Institute on Behavior & Inequality and University of Bonn); Thomas Neuber (University of Bonn); Philipp Strack (Yale University)
    Abstract: We study response behavior in surveys and show how the explanatory power of selfreports can be improved. First, we develop a choice model of survey response behavior under the assumption that the respondent has imperfect self-knowledge about her individual characteristics. In panel data, the model predicts that the variance in responses for different characteristics increases in self-knowledge and that the variance for a given characteristic over time is non-monotonic in self-knowledge. Importantly, the ratio of these variances identifies an individual’s level of self-knowledge, i.e., the latter can be inferred from observed response patterns. Second, we develop a consistent and unbiased estimator for self-knowledge based on the model. Third, we run an experiment to test the model’s main predictions in a context where the researcher knows the true underlying characteristics. The data confirm the model’s predictions as well as the estimator’s validity. Finally, we turn to a large panel data set, estimate individual levels of self-knowledge, and show that accounting for differences in self-knowledge significantly increases the explanatory power of regression models. Using a median split in self-knowledge and regressing risky behaviors on self-reported risk attitudes, we find that the R2 can be multiple times larger for above- than below-median subjects. Similarly, gender differences in risk attitudes are considerably larger when restricting samples to subjects with high self-knowledge. These examples illustrate how using the estimator may improve inference from survey data.
    Keywords: survey research, rational inattention, lab experiment, non-cognitive skills, preferences
    JEL: C83 D83 C91 D91 J24
    Date: 2021–07
  10. By: Irene Maria Buso; Daniela Di Cagno; Werner Güth; Lorenzo Spadoni
    Abstract: Contributors to public goods with individual commitment power decide before voluntarily contributing, whether and when to join the (sub)group whose partners equally share the cost of their contributions. We analyse the voluntary formation of the cost sharing partnership, when it is internally (no partner wants to opt out) and externally (no outsider wants to opt in) stable, and how (un)stable partnerships affect contribution behaviour. All contributors decide between joining and not joining for all possible conditions before learning in which random sequence individual contributors successively enter or not the partnership. After being informed about whether there is no partnership and, when there is one, how many belong to it, and whether one is partner or outsider, all group members independently contribute. So participants can freeride not only by abstaining from voluntary contributions, but also by not joining the partnership. Theoretically participants would form a stable cost sharing partnership whose partners (outsiders) contribute maximally (minimally); experimental evidece shows that hardly any such benchmark behavior exists. Instead we confirm a strong inclination to join the partnership to avoid or at least weaken freeridng incentives.
    Keywords: Endogenous Public Good, Group Formation, Group Size.
    JEL: C92 H41 D85
    Date: 2021
  11. By: Besancenot, Damien (Université de Paris Descartes); Vranceanu, Radu (ESSEC Research Center, ESSEC Business School)
    Abstract: This paper reports data from a sender-receiver experiment that compares lying behavior between two groups of students, one in business administration and the other in medicine. We use a modified version of the sender-receiver deception game introduced by Erat and Gneezy (2012) to collect data on 393 subjects. The results show that both groups of students respond to incentives as expected: the frequency of lying is higher, the higher the benefit for the sender, and the lower the loss for the receiver is. For given payoffs, there is little difference between the two groups in the domain of white lies; however, business students resort to selfish lies more frequently than do medical students. Furthermore, the analysis does not confirm differences in altruism between the two groups
    Keywords: Lies; deception; communication; medicine; business administration; survey data
    JEL: C91 D83 I19
    Date: 2020–09–11
  12. By: Bauer, Kevin; Kosfeld, Michael; von Siemens, Ferdinand
    Abstract: We study, theoretically and empirically, the effects of incentives on the self-selection and coordination of motivated agents to produce a social good. Agents join teams where they allocate effort to either generate individual monetary rewards (selfish effort) or contribute to the production of a social good with positive effort complementarities (social effort). Agents differ in their motivation to exert social effort. Our model predicts that lowering incentives for selfish effort in one team increases social good production by selectively attracting and coordinating motivated agents. We test this prediction in a lab experiment allowing us to cleanly separate the selection effect from other effects of low incentives. Results show that social good production more than doubles in the lowincentive team, but only if self-selection is possible. Our analysis highlights the important role of incentives in the matching of motivated agents engaged in social good production.
    Keywords: incentives,intrinsic motivation,self-selection,public service
    JEL: C91 D90 J24 J31 M52
    Date: 2021
  13. By: Marco Catola; Simone D'Alessandro; Pietro Guarnieri; Veronica Pizziol
    Abstract: This paper shows that personal norms have a prominent role in explaining prosocial contributions in an online public good game. This finding suggests that the role of social norms might be loosened when subjects are distanced, and interaction occurs online and in complete anonymity. Through cluster analysis, we show that a) subjects who contributed more hold both high expectations about the social norms followed by others and a high personal normative commitment; b) subjects who contributed less hold both low expectations and have low personal commitment. However, for both clusters the personal norm is the main driver of decisions. Moreover, we elicited personal and social norms in a group of subjects not performing the contribution task, thus obtaining a measure of norms not affected by self-justification and ruling out a potential endogeneity issue.
    Keywords: Public good game, online experiment, personal norms, social norms, belief elicitation, social dilemma
    JEL: C90 D71 H41
    Date: 2021–07–01
  14. By: Peter Andre; Teodora Boneva; Felix Chopra; Armin Falk
    Abstract: We document individual willingness to fight climate change and its behavioral determinants in a large representative sample of US adults. Willingness to fight climate change – as measured through an incentivized donation decision – is highly heterogeneous across the population. Individual beliefs about social norms, economic preferences such as patience and altruism, as well as universal moral values positively predict climate preferences. Moreover, we document systematic misperceptions of prevalent social norms. Respondents vastly underestimate the prevalence of climatefriendly behaviors and norms among their fellow citizens. Providing respondents with correct information causally raises individual willingness to fight climate change as well as individual support for climate policies. The effects are strongest for individuals who are skeptical about the existence and threat of global warming.
    Keywords: Climate change, climate behavior, climate policies, social norms, economic preferences, moral values, beliefs, survey experiments
    JEL: D64 D83 D91 Q51 Z13
    Date: 2021–07
  15. By: Chiragbhai M. Darji
    Abstract: There is a dire need to develop expressional skills in English right from the primary section in India. There are mainly four language skills ie. Listening, Speaking, Reading and Writing. Listening and Reading are known as receptive skills where as Writing and Speaking are known as productive or expressional skills. Speaking and Writing are easily noticeable. Talking about writing in compare to speaking is more official and serious. It is rightly said, the more practice you do the better result you get. Keeping this in mind, the researcher tried to carry out a research on developing writing skills among the upper primary students. Second language learners of two schools affiliated to Gujarat State Education Board were selected randomly for the study. The study was both qualitative and quantitative in nature. The research was true experiment. Out of these two, one school was kept as control and the other school was kept as experimental. The students of control group were not given any treatment as they studied such contents from their regular school teacher. The pre test was administered to equal the groups. The students were made to study through activity based sessions. The finding of the study was the activity package was useful in developing writing skills among the students of experimental group. Students developed the understanding of basic format and terminologies of developing writing skills. The students also developed various styles of writing. The programme was equally effective on both male and female students of experimental group. The students became responsible and systematic while preparing any type of draft. Key Words: : Writing skills, activity package
    Date: 2021–06
  16. By: Sébastien Duchêne (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); Adrien Nguyen-Huu (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, Chaire Energie & Prospérité - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - Institut Louis Bachelier); 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); Marc Willinger (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 assess the impact of environmental externalities on portfolio decisions in a lab-inthe-field experiment on finance professionals and students. Subjects show pro-environmental preferences, with a strong asymmetry because of the sign of the externality. They are prone to accept lower return for positive environmental impact, but not to bear increased risk. Finance professionals are more pro-environmental than students, particularly regarding negative externalities, and less influenced by a ranking signal about environmental performance. Additional control tasks show that pro-social and pro-environmental preferences have much less influence on portfolio composition than market practices for finance professionals, but they are significant predictors for students.
    Abstract: Nous évaluons l'impact d'externalités environnementales sur les décisions de portefeuille dans le cadre d'une expérience en laboratoire sur des professionnels de la finance et des étudiants. Les sujets exhibent des préférences pro-environnementales, avec une forte asymétrie due au signe de l'externalité. Ils sont enclins à accepter un rendement inférieur pour un impact environnemental positif, mais pas à supporter un risque accru. Les professionnels de la finance sont plus pro-environnementaux que les étudiants, notamment en ce qui concerne les externalités négatives, et moins influencés par un signal de rang concernant la performance environnementale. Des tâches de contrôle supplémentaires montrent que les préférences pro-sociales et pro-environnementales ont beaucoup moins d'influence sur la composition du portefeuille que les pratiques de marché pour les professionnels de la finance, mais qu'elles sont des prédicteurs significatifs pour les étudiants.
    Date: 2021–07–16
  17. By: Barkowski, Scott
    Abstract: Recent efforts to increase price transparency for American consumers of health care have largely failed to produce savings. Medical-field research on physician-side price transparency, however, has shown promise for savings but suffers from pervasive methodological problems. I perform a field experiment that addresses these measurement difficulties while studying an area that has received little attention: physician referrals. Working with a group of medical practices linked as an Independent Practice Association (IPA), I randomly selected primary care practices to receive a list of average costs -- that is, prices -- for new referrals to six ophthalmology practices that were part of the IPA's provider network. These practices handled the bulk of the IPA's ophthalmology patients and represented substitute providers. Using the IPA's administrative data on referrals, I find that during the first two months following the distribution of the price list, the treatment group primary care physicians (PCPs) increased referral share towards the least expensive ophthalmology practice by 147 percent. These referrals were allocated away from the most expensive practice and those not listed on the report. These effects were only found, however, for patients for whom the PCPs had a cost reduction incentive. The large initial effect dissipated over the following four months. For patients with a limited financial interest for the PCPs, I find little evidence of a treatment response. These contrasting results suggest the PCPs were influenced by cost reduction motives and provide more evidence of the potential for savings from physician-side price transparency.
    Keywords: Physician price transparency; referrals; information
    JEL: D83 I11
    Date: 2021–07–30
  18. By: Lorenzo Esposito (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – Banca d'Italia, Milano); Lorenzo Marrese (DISCE, Università Cattolica del Sacro Cuore)
    Abstract: Results of behavioral economics pose a strong challenge to mainstream finance theory conclusions. We discuss, theoretically and empirically, the connections of cognitive skills, biases and financial decisions using the Cognitive Reflection Test (Frederick, 2005). In particular, we have chosen overconfidence, risk aversion, bandwagon effect, time preference and money illusion, among the biases most discussed in the literature. The experiment we conducted confirmed a role of the cognitive skills in determining the decision mechanism of the investor although not neatly, especially for more complex biases, such as money illusion. Finally, we expose policy alternatives, focusing on the role of financial education to tackle cognitive biases in finance and monetary policy.
    Keywords: cognitive biases, financial education, behavioral economics, CRT
    JEL: G41
    Date: 2021–07
  19. By: Mayuko Onuki (Institute of Asia-Pacific Studies, Waseda University); Keitaro Aoyagi (Metrics Work Consultants Inc.); Yoshito Takasaki (Faculty of Economics, The University of Tokyo)
    Abstract: Though personal intergroup contact is known to predict positive intergroup outcomes, little is known about a condition that elicits the kind of positive personal contact that reduces prejudice in real-world post-conflict societies. Using a behavioural experiment, the present study examined the effect of face-to-face personal contact between ex-combatants of three different groups, that are former adversaries, and civilians with disabilities in Rwanda. A total of 444 participants were randomly assigned to intergroup or intragroup pairs to interact under personal and task-focused contact conditions, and their person preference, evaluative bias, and impressions of those contact partners were compared against others with no direct contact. Between ex-combatants of the national army and civilians, task-focused contact generally resulted in better intergroup outcomes than personal contact or no contact. The trend is reversed for the task-focused versus personal contact between the three groups of ex-combatants. Implications for personal contact in real-world post-conflict societies are discussed.
    Date: 2021–08
  20. By: Vincent Meisner; Jonas von Wangenheim
    Abstract: Evidence suggests that participants in direct student-proposing deferred-acceptance mechanisms (DSPDA) play dominated strategies. To explain the observed data, we introduce expectation-based loss aversion into a school-choice setting and characterize choice-acclimating personal equilibria in DSPDA. We find that non-truthful preference submissions can be strictly optimal if and only if they are top-choice monotone. In equilibrium, DSPDA may implement allocations with justified envy. Specifically, it discriminates against students who are more loss averse or less con- fident than their peers, and amplifies already existing discrimination. To level the playing field, we propose sequential mechanisms as an alternative that is robust to these biases.
    Keywords: Market design, Matching, School choice, Reference-dependent preferences, Loss aversion, Deferred acceptance
    JEL: C78 D47 D78 D81 D82 D91
    Date: 2021–07
  21. By: Samantha Horn (Department of Social and Decision Sciences, Carnegie Mellon University); Julian C. Jamison (Department of Economics, University of Exeter); Dean Karlan (Kellog School of Management, Northwestern University); Jonathan Zinman (Department of Economics, Dartmouth College)
    Abstract: Is financial knowledge change necessary for lasting behavior change? Or, akin to Friedman's billiard 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 members' financial knowledge and trust at one-year. At five-years, knowledge effects essentially disappear and trust effects weaken. However, savings, wealth and income increase for each treatment at both one and five years, suggesting multiple viable paths to statistically indistinguishable average outcomes and that textbook knowledge change is unnecessary for lasting impacts.
    Keywords: financial education, financial literacy, financial access, savings
    JEL: D12 D91 O12
    Date: 2021–07–30
  22. By: Philippe Sterkens; Ralf Caers; Marijke De Couck; Michael Geamanu; Victor Van Driessche; Stijn Baert (-)
    Abstract: Earlier research has associated spelling errors in resumes with reduced hiring chances. However, the analysis of hiring penalties due to spelling errors has thus far been restricted to white-collar occupations and relatively high numbers of errors per resume. Moreover, the mechanisms underlying the spelling error penalty have remained unclear. To fill these gaps in the peerreviewed literature, we conducted a scenario experiment with 445 genuine recruiters. Results show that, compared to error-free resumes, hiring penalties are being inflicted for both error-laden resumes (18.5 percent points lower interview probability) and resumes with fewer errors (7.3 percent points lower interview probability). Furthermore, we find substantial heterogeneity in penalties inflicted based on various applicant, job and participant characteristics. About half of the spelling error penalty can be explained by the perception that applicants who make spelling errors have lower interpersonal skills (9.0%), conscientiousness (12.1%) and mental abilities (32.2%).
    Keywords: spelling errors, resumes, signalling, hiring experiments.
    Date: 2021–07
  23. By: Diekert, Florian; Goeschl, Timo; König-Kersting, Christian
    Abstract: Anticipating "social risk", or risk caused by humans, affects decision-making differently from anticipating natural risk. Drawing upon a large sample of the US population (n=3,982), we show that the phenomenon generalizes to risk experience. Experiencing adverse outcomes caused by another human reduces future risk-taking, but experiencing the same outcome caused by nature does not. While puzzling from a consequentialist perspective, the Experience of Social Risk Factor that we identify deepens our understanding of decision-making in settings in which outcomes are co-determined by different sources of uncertainty. Our findings imply that a unifying theory of social risk effects requires new explanations.
    Keywords: social risk; risk experience; decision-making under risk; behavioral economics; experiment
    Date: 2021–08–02
  24. By: Jiafeng Chen; David M. Ritzwoller
    Abstract: This paper studies the estimation of long-term treatment effects though the combination of short-term experimental and long-term observational datasets. In particular, we consider settings in which only short-term outcomes are observed in an experimental sample with exogenously assigned treatment, both short-term and long-term outcomes are observed in an observational sample where treatment assignment may be confounded, and the researcher is willing to assume that the causal relationships between treatment assignment and the short-term and long-term outcomes share the same unobserved confounding variables in the observational sample. We derive the efficient influence function for the average causal effect of treatment on long-term outcomes in each of the models that we consider and characterize the corresponding asymptotic semiparametric efficiency bounds.
    Date: 2021–07
  25. By: Przepiorka, Wojtek; Andreas, Diekmann
    Abstract: Why do people adorn themselves with elaborate body piercings or tattoos, wear obstructing garbs, engage in life-threatening competitions and other wasteful and harmful but socially stipulated practices? Norms of cooperation and coordination, which promote the efficient attainment of collective benefits, can be explained by theories of collective action. However, social norms prescribing wasteful and harmful behaviours have eluded such explanations. We argue that signalling theory constitutes the basis for the understanding of the emergence of such norms, which we call signalling norms. Signalling norms emerge as a result of the uncertainty about who is friend and who is foe. The need to overcoming this uncertainty arises when different groups compete for scarce resources and individuals must be able to identify, trust and cooperate with their fellow group members. After reviewing the mechanisms that explain the emergence of cooperation and coordination norms, we introduce the notion of signalling norms as markers of group distinction. We argue that adherence to signalling norms constitutes a commitment promoting parochial cooperation rather than a quality-revealing signal facilitating partner choice. We formalize our argument in a game-theoretic model that allows us to specify the boundary conditions for the emergence of signalling norms. Our paper concludes with a discussion of potential applications of our model and a comparison of signalling norms with related concepts.
    Date: 2021–07–24
  26. By: Benjamin Balzer; Antonio Rosato; Jonas von Wangenheim
    Abstract: We study Dutch and fi rst-price auctions with expectations-based loss-averse bidders and show that the strategic equivalence between these formats no longer holds. Intuitively, as the Dutch auction unfolds, a bidder becomes more optimistic about her chances of winning; this stronger "attachment" effect pushes her to bid more aggressively than in the first-price auction. Thus, Dutch auctions raise more revenue than first-price ones. Indeed, the Dutch auction raises the most revenue among standard auction formats. Our results imply that dynamic mechanisms that make bidders more optimistic raise more revenue, thereby ratio- nalizing the use of descending-price mechanisms by sellers in this field.
    Keywords: Loss Aversion, Dutch Auctions, Revenue Equivalence, Personal Equilibrium
    JEL: D44 D81 D82
    Date: 2021–07
  27. By: Arigapudi, Srinivas; Heller, Yuval; Schreiber, Amnon
    Abstract: The hawk–dove game admits two types of equilibria: an asymmetric pure equilibrium in which players in one population play “hawk” and players in the other population play “dove,” and a symmetric mixed equilibrium. The existing literature on dynamic evolutionary models shows that populations will converge to playing one of the asymmetric pure equilibria from any initial state. By contrast, we show that plausible sampling dynamics, in which agents occasionally revise their actions by observing either opponents’ behavior or payoffs in a few past interactions, can induce the opposite result: global convergence to a symmetric mixed equilibrium.
    Keywords: Chicken game, learning, evolutionary stability, bounded rationality, payoff sampling dynamics, action sampling dynamics.
    JEL: C72 C73
    Date: 2021–07–15

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.