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on Experimental Economics |
| By: | Adena, Maja; Huck, Steffen |
| Abstract: | Some companies engage in mass fundraising in addition to their core business. Via a corporate social responsibility (CSR) channel this may increase sales. However, ask avoidance, if present, could imply that fundraising activities may harm a company's core business. We examine how asking for donations affects ticket sales of a publicly owned leading opera company. In two large scale randomized controlled trials with over 50,000 opera visitors, who are asked to donate for an opera-organized social youth project, we find that donations can crowd out ticket expenditure during a campaign. But for the longer run we observe a precisely estimated null effect. |
| Keywords: | Charitable giving,field experiments,ask avoidance,corporate social responsibility |
| JEL: | C93 D64 D12 L21 M14 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2019304r&r= |
| By: | Margherita Comola; Marcel Fafchamps |
| Abstract: | We conduct a laboratory experiment to study a decentralized market where goods are differentiated and evaluations are private. We implement different semi-structured bargaining protocols based on deferred acceptance, and we compare their performance to the benchmark scenario of a sealed-bid auction. We show that bargaining dramatically improves efficiency, mainly to the benefit of players rather than the silent auctioneer. A protocol of unconstrained simultaneous bargaining performs best, doubling the proportion of deals relative to the benchmark. This is because participants seek to reveal information through a gradual bidding-up strategy that favors bargaining environments. Aggregate efficiency nonetheless suffers from the fact that buyers bargain harder than sellers, and that some players over-bargain to appropriate a larger share of the unknown surplus. |
| JEL: | C78 C91 D47 D82 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29265&r= |
| By: | Backhaus, Teresa; Breitmoser, Yves |
| Abstract: | Reanalyzing 12 experiments on the repeated prisoner's dilemma (PD), we robustly observe three distinct subject types: defectors, cautious cooperators and strong cooperators. The strategies used by these types are surprisingly stable across experiments and uncorrelated with treatment parameters, but their population shares are highly correlated with treatment parameters. As the discount factor increases, the shares of defectors decrease and the relative shares of strong cooperators increase. Structurally analyzing behavior, we next find that subjects have limited foresight and assign values to all states of the supergame, which relate to the original stage-game payoffs in a manner compatible with inequity aversion. This induces the structure of coordination games and approximately explains the strategies played using Schelling's focal points: after (c,c) subjects play according to the coordination game's cooperative equilibrium, after (d,d) they play according to its defective equilibrium, and after (c,d) or (d, c) they play according to its mixed equilibrium. |
| Keywords: | Repeated game,Behavior,Tit-for-tat,Mixed strategy,Memory,Belief-freeequilibrium,Laboratory experiment |
| JEL: | C72 C73 C92 D12 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2021303&r= |
| By: | Bursztyn, Leonardo; Callen, Mike; Ferman, Bruno; Gulzar, Saad; Hasanain, Ali; Yuchtman, Noam |
| Abstract: | We identify Pakistani men’s willingness to pay to preserve their anti-American identity using two experiments imposing clearly specified financial costs on anti-American expression, with minimal consequential or social considerations. In two distinct studies, one-quarter to one-third of subjects forgo payments from the U.S. government worth around one-fifth of a day’s wage to avoid an identity-threatening choice: anonymously checking a box indicating gratitude toward the U.S. government. We find sensitivity to both payment size and anticipated social context: when subjects anticipate that rejection will be observable by others, rejection falls suggesting that, for some, social image can outweigh self-image. |
| JEL: | P16 D00 C90 |
| Date: | 2020–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:101465&r= |
| By: | Nicola Maaser (Department of Economics and Business Economics, Aarhus University); Thomas Stratmann (Department of Economics, George Mason University) |
| Abstract: | We develop a theoretical model of voting behavior in committees when members differ in influence and receive payoffs that condition on the individual vote and the collective decision. Applied to a group decision involving moral costs, the model predicts that the distribution of decision-making power affects committee members’ incentives to make immoral choices: More influential agents tend to support the immoral choice, while less influential agents free-ride. A skewed power distribution makes immoral collective choices more likely. We then present results of a laboratory experiment that studies committee members’ voting behavior and collective choices under different distributions of decision-making power. As hypothesized, we find that the frequency of immoral decisions is positively related to an agent’s voting power. |
| Keywords: | Moral decision-making, Committees, Decision rules, Deception, Institutions, Threshold public good games, Laboratory experiments |
| JEL: | D71 C92 D02 H41 |
| Date: | 2021–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2021-11&r= |
| By: | Thomas Neuber (University of Bonn) |
| Abstract: | Social norms pervade human interaction, but their demands are often in conflict. To understand behavior, it is thus crucial to know how individuals resolve normative tradeoffs. This paper proposes that sincere judgments about the relative importance of conflicting norms are shaped by personal interest. We show that people tend to follow norms from which they benefit themselves, even in contexts where their own decisions only affect others. In a (virtual) laboratory experiment, each subject makes two decisions over allocations of points within a group of two other participants. The sets of possible allocations entail different normative tradeoffs, and subjects have no personal stakes in their own decisions. However, they are affected by others' decisions: each subject is part of a group, and the members of different groups simultaneously decide over others' allocations along a circle. We find that subjects' decisions are biased towards the normative principles aligned with their own interests, thereby favoring other players whenever these share those interests. Subjects' beliefs about the choices made by others suggest a largely unconscious mechanism. Moreover, survey answers indicate that the effects are driven by self-centered reasoning: subjects who report pronounced perspective-taking are less biased. |
| Keywords: | egocentrism, experiment, social norms |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:116&r= |
| By: | Philip J. Grossman (Monash University); Jonathan Levy (Monash University) |
| Abstract: | Warm glow is the satisfaction an individual receives from being “seen†to be doing their part to help others. The satisfaction derives from looking good to themselves (self-image) or because they want to look good to others (social image). Evidence suggests approximately 50% of individuals are to some extent motivated by warm glow. The question remains, are these individuals giving to enhance their self-image or to enhance their social image. We conduct an online experiment to determine the importance of self-image and social image with respect to warm-glow giving. Our results suggest that at the extensive margin, warm-glow giving is primarily driven by self-image, not social image. At the intensive margin, social image significantly increases average giving. |
| Keywords: | self-image, social image, altruism, warm glow, experiment |
| JEL: | C90 D91 H40 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2021-04&r= |
| By: | Despoina Alempaki; Valeria Burdea; Daniel Read |
| Abstract: | In cases of conflict of interest, people can lie directly about payoff relevant private information, or they can evade the truth without lying directly. We analyse this situation theoretically and test the key predictions in an experimental sender-receiver setting. We find senders prefer to deceive through evasion rather than direct lying. This is because they do nοt want to deceive others, and they do nοt want to be seen as deceptive. The specific language of evasion does not matter. The results suggest deception should be tested in more naturalistic contexts with richer language. |
| JEL: | C91 D82 D83 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9286&r= |
| By: | E. Glenn Dutcher; Regine Oexl; Dmitry Ryvkin; Tim Salmon |
| Abstract: | A debate among practicing managers is whether to use cooperative or competitive incentives for team production. While competitive incentives may drive individual effort higher, they may also lead to less help and more sabotage; an issue exacerbated when team members' abilities are varied. Using a lab experiment, we examine how increasing competitive incentives affects performance as team composition changes. We find that competitive incentives generally underperform noncompetitive incentives and a larger bonus does not generate enough effort to compensate for a loss in help. Our results help understand better how to balance out individual versus team rewards and how firms could structure teams when employees have heterogeneous abilities. |
| Keywords: | contest, help and sabotage, team composition, incentive structure |
| JEL: | C92 D01 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2021-26&r= |
| By: | Sandro Ambuehl; B. Douglas Bernheim |
| Abstract: | We investigate how individuals think groups should aggregate members’ ordinal preferences – that is, how they interpret “the will of the people.” In an experiment, we elicit revealed attitudes toward ordinal preference aggregation and classify subjects according to the rules they apparently deploy. Majoritarianism is rare. Instead, people employ rules that place greater weight on compromise options. The classification’s fit is excellent, and clustering analysis reveals that it does not omit important rules. We ask whether rules are stable across domains, whether people impute cardinal utility from ordinal ranks, and whether attitudes toward aggregation differ across countries with divergent traditions. |
| Keywords: | Experiment, welfare economics, social choice, Borda, Condorcet |
| JEL: | C91 D71 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:395&r= |
| By: | Marie-Laure Allain (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); Claire Chambolle (ALISS - Alimentation et sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Patrick Rey (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - 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); Sabrina Teyssier (GAEL - Laboratoire d'Economie Appliquée de Grenoble - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes) |
| Abstract: | In a vertical chain in which two rivals invest before contracting with one of two competing suppliers, vertical integration can create hold-up problems for the rival. We develop an experiment to test this theoretical prediction in a setup in which suppliers can either pre commit ex ante to being greedy or degrade ex post the input they provide to their customer. Our experimental results confirm that vertical integration creates hold-up problems. However, vertical integration also generates more departures from theory, which can be explained by bounded rationality and social preferences. |
| Keywords: | Vertical integration,Hold-up,Experimental economics,Bounded rationality,Social preferences |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03341440&r= |
| By: | Olivier Bochet; Manshu Khanna; Simon Siegenthaler (Division of Social Science) |
| Abstract: | We design a laboratory experiment to study bargaining when parties need to agree on multiple issues. We find that bundling—the ability to make price offers on combinations of issues rather than separately—is critical for reaching agreement. We also find that giving bargainers access to more information about each other’s valuations and costs does not raise efficiency, because the boost in agreement rates in small-surplus negotiations is offset by increased risk-taking and conflicting fairness preferences in large-surplus negotiations. Finally, we show that successful negotiations are characterized by an alternating offer structure, which emerges endogenously. It involves offers that split the difference between the two most recent demands, and it displays a higher probability of agreement vis-a`-vis other formats of bargaining observed in our data. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:nad:wpaper:20210070&r= |
| By: | Henning Hermes (NHH Bergen, FAIR & Department of Economics); Philipp Lergetporer (Technical University of Munich & ifo Institute at the University of Munich and CESifo); Frauke Peter (German Centre for Higher Education Research and Science Studies (DZHW) & DIW Berlin); Daniela Simon Wiederhold (KU EichstŠtt-Ingolstadt, Ingolstadt School of Management & ifo Institute Munich) |
| Abstract: | Children with lower socioeconomic status (SES) tend to benefit more from early child care, but are substantially less likely to be enrolled. We study whether reducing behavioral barriers in the application process increases enrollment in child care for lower-SES children. In our RCT in Germany with highly subsidized child care (n > 600), treated families receive application information and personal assistance for applications. For lower-SES families, the treatment increases child care application rates by 21 pp and enrollment rates by 16 pp. Higher-SES families are not affected by the treatment. Thus, alleviating behavioral barriers closes half of the SES gap in early child care enrollment. |
| Keywords: | Child care, early childhood, behavioral barriers, information, educational inequality, randomized controlled trial |
| JEL: | I21 J13 J18 J24 C93 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:aiw:wpaper:15&r= |
| By: | Bazoche, Pascale; Guinet, Nicolas; Poret, Sylvaine; Teyssier, Sabrina |
| Abstract: | A widespread transition towards diets based on plant proteins as substitutes for animal pro- teins would contribute to food system sustainability. Such changes in consumer food choices can be fostered by public policy. We conducted an online experiment to test whether provid- ing consumers with information regarding the negative consequences of meat consumption on the environment or health increases the substitution of animal-based proteins with plant-based proteins. The consumers had to make three meal selections, the first without exposure to infor- mation and the latter two after exposure to environmental or health information. One group of consumers served as the control and received no information. The results show that half of the consumers chose meals with animal proteins in all three cases. The information intervention had a limited impact on the average consumer. However, a latent class analysis shows that the information intervention impacted a sub-sample of the consumers. Information policy does not appear to be sufficient for altering consumer behaviour regarding the consumption of animal proteins. |
| Keywords: | Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics |
| Date: | 2021–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:ags:inrasl:313663&r= |
| By: | Olivier Bochet; Jacopo Magnani (Division of Social Science) |
| Abstract: | In vertically differentiated matching markets with private information, agents face an acceptance curse: being accepted as a partner conveys bad news. We experimentally investigate whether individuals anticipate the acceptance curse in such an environment. We test the effect of an exogenous change in reservation values which, by making some types more selective, induces significant changes in the posterior distribution of match qualities. Consistent with limited strategic sophistication, subjects do not respond to this manipulation. Through additional investigation and structural estimations, we suggest a mechanism explaining the lack of subjects’ response: out-of-equilibrium beliefs are quantitatively more important than limited conditional thinking. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:nad:wpaper:20210071&r= |
| By: | Susan Athey; Peter J. Bickel; Aiyou Chen; Guido Imbens; Michael Pollmann |
| Abstract: | We develop new semiparametric methods for estimating treatment effects. We focus on a setting where the outcome distributions may be thick tailed, where treatment effects are small, where sample sizes are large and where assignment is completely random. This setting is of particular interest in recent experimentation in tech companies. We propose using parametric models for the treatment effects, as opposed to parametric models for the full outcome distributions. This leads to semiparametric models for the outcome distributions. We derive the semiparametric efficiency bound for this setting, and propose efficient estimators. In the case with a constant treatment effect one of the proposed estimators has an interesting interpretation as a weighted average of quantile treatment effects, with the weights proportional to (minus) the second derivative of the log of the density of the potential outcomes. Our analysis also results in an extension of Huber's model and trimmed mean to include asymmetry and a simplified condition on linear combinations of order statistics, which may be of independent interest. |
| JEL: | C01 C1 C14 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29242&r= |
| By: | Sule Alan; Gozde Corekcioglu; Matthias Sutter |
| Abstract: | We evaluate the impact of a program aiming at improving the workplace climate in corporations. The program is implemented via a clustered randomized design and evaluated with respect to the prevalence of support networks, antisocial behavior, perceived relational atmosphere, and turnover rate. We find that professionals in treated corporations are less inclined to engage in toxic competition, exhibit higher reciprocity toward each other, report higher workplace satisfaction and a more collegial atmosphere. Treated firms have fewer socially isolated individuals and a lower employee turnover. The program's success in improving leader-subordinate relationships emerges as a likely mechanism to explain these results. |
| Keywords: | workplace climate, relational dynamics, leadership quality, RCT |
| JEL: | C93 M14 M53 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9304&r= |
| By: | Rabie, Dina |
| Abstract: | Rotating Savings and Credit Associations (RoSCAs) is a widely spread informal financial institution in developing countries. This paper examines how access to formal banking (or lack thereof), impatience and self-control are correlated with individuals' decisions to join RoSCAs. The paper employs an incentivized experiment to elicit impatience and a questionnaire to measure bank access, self-control and RoSCA participation among university employees in Cairo (Egypt). Findings indicate that access to formal banking significantly decreases the likelihood of RoSCA participation. In addition, behavioural attitudes partially (self-control but not impatience) correlates with the RoSCA participation decision. Conditional on RoSCA participation, behavioural attitudes towards self-control and impatience are significant correlates of whether an individual is a saver or a borrow in the informal institution. |
| Keywords: | RoSCAs,RoSCA rank,informal banking,impatience,self-control |
| JEL: | C91 D14 O17 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:52&r= |
| By: | Pedro Bordalo; John J. Conlon; Nicola Gennaioli; Spencer Yongwook Kwon; Andrei Shleifer |
| Abstract: | People often estimate probabilities, such as the likelihood that an insurable risk will materialize or that an Irish person has red hair, by retrieving experiences from memory. We present a model of this process based on two established regularities of selective recall: similarity and interference. The model accounts for and reconciles a variety of conflicting empirical findings, such as overestimation of unlikely events when these are cued vs. neglect of non-cued ones, the availability heuristic, the representativeness heuristic, as well as over vs. underreaction to information in different situations. The model makes new predictions on how the content of a hypothesis (not just its objective probability) affects probability assessments by shaping the ease of recall. We experimentally evaluate these predictions and find strong experimental support. |
| JEL: | C91 D01 D84 D90 D91 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29273&r= |
| By: | Michael Thaler |
| Abstract: | Numerous experiments have found that when people receive signals that would lead a Bayesian to substantially revise beliefs, they underinfer. This paper experimentally considers inference from a wider range of signal strengths and finds that subjects overinfer when signals are sufficiently weak. A model of cognitive imprecision adapted to study misperceptions about signal strength explains the data well. As the theory predicts, subjects with more experience, greater cognitive sophistication, and lower variance in answers, infer less from weak signals and infer more from strong signals. The results also relate misperceptions to demand for information and inference from multiple signals. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2109.09871&r= |
| By: | Anthony A. DeFusco; Huan Tang; Constantine Yannelis |
| Abstract: | Information asymmetries are known in theory to lead to inefficiently low credit provision, yet empirical estimates of the resulting welfare losses are scarce. This paper leverages a randomized experiment conducted by a large fintech lender to estimate welfare losses arising from asymmetric information in the market for online consumer credit. Building on methods from the insurance literature, we show how exogenous variation in interest rates can be used to estimate borrower demand and lender cost curves and recover implied welfare losses. While asymmetric information generates large equilibrium price distortions, we find only small overall welfare losses, particularly for high-credit-score borrowers. |
| JEL: | D14 D82 G10 G23 G5 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29270&r= |
| By: | Joel A. Middleton |
| Abstract: | This paper provides a design-based framework for variance (bound) estimation in experimental analysis. Results are applicable to virtually any combination of experimental design, linear estimator (e.g., difference-in-means, OLS, WLS) and variance bound, allowing for unified treatment and a basis for systematic study and comparison of designs using matrix spectral analysis. A proposed variance estimator reproduces Eicker-Huber-White (aka. "robust", "heteroskedastic consistent", "sandwich", "White", "Huber-White", "HC", etc.) standard errors and "cluster-robust" standard errors as special cases. While past work has shown algebraic equivalences between design-based and the so-called "robust" standard errors under some designs, this paper motivates them for a wide array of design-estimator-bound triplets. In so doing, it provides a clearer and more general motivation for variance estimators. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2109.09220&r= |