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on Experimental Economics |
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Issue of 2021‒10‒18
twenty-two papers chosen by |
| By: | Fisar, Milos; Reggiani, Tommaso (Cardiff Business School); Sabatini, Fabio; Spalek, Jirí |
| Abstract: | We study the impact of the media negativity bias on tax compliance. Through a framed laboratory experiment, we assess how the exposure to biased news about government action affects compliance in a repeated taxation game. Subjects treated with positive news are signicantly more compliant than the control group. Instead, the exposure to negative news does not prompt any significant reaction compared to the neutral condition, suggesting that participants may perceive the media negativity bias in the selection and tonality of news as the norm rather than the exception. Overall, our results suggest that biased news provision is a constant source of psychological priming and plays a vital role in taxpayers' compliance decisions. |
| Keywords: | tax compliance, media bias, taxation game, laboratory experiment.; tax compliance, media bias, taxation game, laboratory experiment. |
| JEL: | C91 D70 H26 H31 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2021/26&r= |
| By: | Paul J. Ferraro (arey Business School & Whiting School of Engineering, Johns Hopkins University); J. Dustin Tracy (Economic Science Institute, Chapman University) |
| Abstract: | Behavioral scientists have reported substantial increases in worker productivity when incentives are framed as losses rather than gains. Loss-framed incentive contracts have also been reported to be preferred by workers. These claims are challenged by results from our meta-analysis and real-effort experiment. Whereas the summary effect size from loss-framed contracts in laboratory experiments is a 0.4 SD increase in productivity, the summary effect size from ï¬ eld experiments is 0.0 SD. Although this difference may reflect differing labor environments in the laboratory and ï¬ eld, we detect evidence of publication biases among laboratory experiments. In a new laboratory experiment that addresses prior design weaknesses, we estimate an effect size of 0.1 SD. This result, in combination with evidence from the meta-analysis, suggests that the difference between the effect size estimates in published laboratory and ï¬ eld experiments does not stem from the limited external validity of laboratory experiments, but may instead stem from a mix of underpowered laboratory designs and publication biases. Moreover, in our experiment, most workers preferred the gain-framed contract and the increase in average productivity is only detectable in the subgroup of workers (∼20%) who preferred the loss-framed contracts. This result suggests that employers may ï¬ nd using these contracts in real labor environments challenging. Based on the results from our experiment and meta-analysis, we believe that further research is warranted to assess the robustness and magnitude of the impacts from loss-framed contracts before advocating for their adoption by private and public sector actors. |
| Keywords: | framing effects, incentive contracts, meta-analysis, real-effort experiment, and behavioral insights |
| JEL: | C91 J24 J33 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:21-20&r= |
| By: | Takehito Masuda; Ryo Mikami; Toyotaka Sakai; Shigehiro Serizawa; Takuma Wakayama |
| Abstract: | We conduct laboratory experiments for the multi-unit Vickrey auction with and without advice to subjects on strategy-proofness. The rate of truth-telling among the subjects without advice stays at 20%, whereas the rate increases to 47% among those who have received advice. By conducting similar experiments for the pay-your-bid auction, which is not strategy-proof, we confirm that the increase in truth-telling is due significantly to the net advice effect (i.e., the effect beyond the so-called experimenter demand effect). Moreover, we find that providing advice improves efficiency in the Vickrey auction, particularly in the early periods, when the subjects are less experienced. In general, subjects tend to overbid in Vickrey auction experiments. Our results indicate the possibility that providing simple advice decreases such overbidding by promoting a better understanding of the strategy-proofness of the Vickrey auction. Strategy-proof mechanisms are sometimes criticized because players often fail to recognize the benefit of telling the truth. However, our observations show that introducing advice on the property of strategy-proofness helps them behave “correctly.” |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1109rr&r= |
| By: | Luke Boosey; R. Mark Isaac; Abhijit Ramalingam |
| Abstract: | We use a laboratory experiment to investigate the extent to which leaders—faced with opportunistic incentives—employ monitoring to improve team production. Participants are assigned to teams, with one person appointed as the leader. The leader has the power to commit to a monitoring option, which replaces the default equal sharing rule with one that distributes team revenue in proportion to individual investments. Additionally, the leader can announce a claim to a portion of the team revenue, which is paid before shares are distributed. Theoretically, there are multiple equilibria involving monitoring and full investment, characterized by the largest claim the non-leaders are willing to cede to the leader. We appeal to fairness concerns and repeated interaction in order to provide sharper predictions that pivot around a ‘fair claim’. In the experiments, leaders are mostly unsuccessful at increasing team production as they claim too much or forgo the monitoring option too often, especially when it is costly to monitor. When there is no cost, nearly half of the leaders successfully increase team production towards full investment, by relying on constant monitoring and resisting the temptation to issue unfair claims. These results highlight the potential for opportunistic incentives to undermine efficiency-enhancing leadership, even when the leader can commit to her decisions. Key Words: leader, monitoring, team production, fairness, free-riding, experiment |
| JEL: | C72 C92 D20 D70 H41 M5 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:21-11&r= |
| By: | Brosig-Koch, Jeannette; Groß, Mona; Hennig-Schmidt, Heike; Kairies-Schwarz, Nadja; Wiesen, Daniel |
| Abstract: | This paper systematically studies how performance pay, complementing either baseline feefor-service or capitation, affects physicians' medical service provision and the quality of care. Using a series of controlled experiments with physicians and students, we test the incentive effect of performance pay at a within-subject level. A discrete bonus is granted if a quality threshold is reached, which varies with the patients' severity of illness. We find that performance pay significantly reduces non-optimal service provision and enhances the quality of care. Effect sizes depend on the patients' severity of illness and whether the baseline is fee-for-service or capitation. Health policy implications, including a cost benefit analysis of introducing performance pay, are discussed. |
| Keywords: | Fee-for-service,capitation,pay for performance,heterogeneous patients,artefactual field experiment,laboratory experiments |
| JEL: | C91 I11 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:923&r= |
| By: | Brice Corgnet (emlyon business school); Camille Cornand (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon); Nobuyuki Hanaki (Osaka University [Osaka]) |
| Abstract: | We study the reaction of investors to tail events across trading institutions. We conduct experiments in which investors bid on a financial asset that delivers a small positive reward in more than 99% of the cases and a large loss otherwise. The baseline treatment uses a repeated BDM mechanism whereas the market treatment replaces the uniform draw of the BDM mechanism by a uniform draw over the bids of the other participants. Our design is such that bids should not differ across treatments in normal times while allowing for potential differences to emerge after tail events have occurred. We find that markets tend to exacerbate the reaction of investors to tail losses and we attribute this effect to emotions. |
| Keywords: | Tail events,trading institutions,experimental finance,emotions and risk |
| Date: | 2021–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03357898&r= |
| By: | Joop Adema; Till Nikolka; Panu Poutvaara; Uwe Sunde; Joop Age Harm Adema |
| Abstract: | We exploit the unique design of a repeated survey experiment among students in four countries to explore the stability of risk preferences in the context of the COVID-19 pandemic. Relative to a baseline before the pandemic, we find that self-assessed willingness to take risks decreased while the willingness to take risks in an incentivized lottery task increased, for the same sample of respondents. These findings suggest domain specificity of preferences that is partly reflected in the different measures. |
| Keywords: | stability of risk preferences, measurement of risk aversion, Covid-19 |
| JEL: | D12 D91 G50 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9332&r= |
| By: | Loukas Balafoutas (Department of Public Finance, University of Innsbruck); Helena Fornwagner (Institute of Economics and Econometrics, University of Regensburg); Brit Grosskopf (Department of Economics, University of Exeter) |
| Abstract: | Competition for limited resources is ubiquitous in social and economic life and has sparked a large body of research on the determinants of competitive behavior. While we know a lot about the role of contextual factors and personality traits, no link has been established between competitive behavior and physical appearance. In this study, we document for the first time a strong positive association between attractiveness, measured through ratings of headshots from experimental participants, and the competitive behavior of female participants in the form of opting for a tournament payment scheme in a real-effort task. We also show that individuals are sometimes better than chance at predicting the competitiveness of experimental participants, just by looking at their headshots. These findings significantly advance our understanding of the factors that underlie competitive attitudes and of the role of observable physical characteristics as telltale signs of behavior. |
| Date: | 2021–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2107&r= |
| By: | Shenoy, Ashish; Gallenstein, Richard; Flatnes, Jon Einar |
| Keywords: | Institutional and Behavioral Economics, International Development, Research Methods/Statistical Methods |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:313919&r= |
| By: | Maximilian Späth (University of Potsdam) |
| Abstract: | Charities typically ask potential donors repeatedly for a donation. These repeated requests might trigger avoidance behavior. Considering that, this paper analyzes the impact of offering an ask avoidance option on charitable giving. In a proposed utility framework, the avoidance option decreases the social pressure to donate. At the same time, it induces feelings of gratitude toward the fundraiser, which may lead to a reciprocal increase in donations. The results of a lab experiment designed to disentangle the two channels show no negative impact of the option to avoid repeated asking on donations. Instead, the full model indicates a positive impact of the reciprocity channel. This finding suggests that it might be beneficial for charities to introduce an ask avoidance option during high-frequency fundraising campaigns. |
| Keywords: | Charitable giving, Repeated request, Ask avoidance, Experiment |
| JEL: | C91 D64 C73 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:38&r= |
| By: | Timo Ehrig (Max Planck Institute for Mathematics in the Sciences, Leipzig); Monica Jaison Manjaly (Indian Institute of Technology, Gandhinagar); Aditya Singh (Indian Institute of Technology, Gandhinagar); Shyam Sunder (School of Management and Cowles Foundation, Yale University) |
| Abstract: | Forming beliefs or expectations about others’ behavior is fundamental to strategy, as it co-determines the outcomes of interactions in and across organizations. In the game theoretic conception of rationality, agents reason iteratively about each other to form expectations about behavior. According to prior scholarship, actual strategists fall short of this ideal, and attempts to understand the underlying cognitive processes of forming expectations about others are in their infancy. We propose that emotions help regulate iterative reasoning, that is, their tendency to not only reflect on what others think, but also on what others think about their thinking. Drawing on a controlled experiment, we ï¬ nd that a negative emotion (fear) deepens the tendency to engage in iterative reasoning, compared to a positive emotion (amusement). Moreover, neutral emotions yield even deeper levels of iterative reasoning. We tentatively interpret these early ï¬ ndings and speculate about the broader link of emotions and expectations in the context of strategic management. Extending the view of emotional regulation as a capability, emotions may be building blocks of rational heuristics for strategic interaction and enable interactive decision-making when strategists have little experience with the environment. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2227r&r= |
| By: | Hintermann, Beat (University of Basel); Schoeman, Beaumont (University of Basel); Molloy, Joseph; Götschli, Thomas; Castro, Alberto; Tchervenkov, Christopher; Tomic, Uros; Axhausen, Kay W. |
| Abstract: | Pigovian transport pricing was implemented in a large-scale field experiment in urban areas of Switzerland. The pricing varied across time, space and mode of transport. One third of the participants were given a financial incentive to reduce their external costs of transport, whereas others were provided information only or served as a control group. The pricing treatment caused a significant reduction in the external costs of transport. This reduction is a consequence of mode substitution and a shift of departure times. The effect of providing information in the absence of pricing was statistically significant only for subgroups of the sample. |
| Keywords: | Transport pricing; pigovian taxation; mobility; external costs; congestion; tracking. |
| JEL: | H23 H31 I18 Q52 Q54 R41 R48 |
| Date: | 2021–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2021/11&r= |
| By: | Yuan, Rao; Asioli, Daniele; Jin, Shaosheng; Nayga, Rodolfo M. |
| Keywords: | Food Consumption/Nutrition/Food Safety, Marketing, Research Methods/Statistical Methods |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:313957&r= |
| By: | Street, John; Smith, David |
| Keywords: | Public Economics |
| Date: | 2021–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ctrf31:314706&r= |
| By: | Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun, Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | While economists in the past tended to assume that individual preferences, including risk preferences, are stable over time, a recent literature has developed that indicate that risk preferences respond to shocks. This paper combines survey data and field experiments with three different tools that facilitated elicitation of dis-aggregated measures of risk preferences, including utility curvature, probability weighting and loss aversion. By treating the recent shocks as natural experiments, the study assessed the sensitivity of each of these risk preference measures to the recent idiosyncratic and covariate (drought) shocks among a sample of resource-poor young adults living in a semi-arid rural environment in Sub-Saharan Africa. The results show that the dis-aggregated risk preference measures revealed substantial shock effects that were undetected when relying on a tool that elicited only one single measure of risk tolerance. Both the timing and covariate nature of the shocks affected the dis-aggregated measures of risk preferences differently, pointing towards the need for further studies of this kind in different contexts. |
| Keywords: | Covariate shocks; Idiosyncratic shocks; Stability of risk preference parameters; Field experiment; Ethiopia |
| JEL: | C93 D81 |
| Date: | 2021–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsclt:2021_005&r= |
| By: | Ori Heffetz; John List |
| Abstract: | Carefully designed scientific experiments have been an engine of economic, technological, and social progress for well over a century, which is why the public generally trusts such methods. Unfortunately, governments around the world still routinely oppose controlled trials of public policies. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00739&r= |
| By: | Knauer, Heather A.; Balasanyan, Sona; Bakhshinyan, Elmira; Alderman, Harold |
| Abstract: | Many school feeding programs target child hunger, nutritional deficiencies, attendance, and education outcomes but often do not examine their effects on cognitive development. In this cluster-randomized controlled trial, we tested the effects of adding a morning snack to a school lunch program on the fluid intelligence of 951 children ages 4 to 6 years. While there were no significant effects on development overall, the morning snack improved short-term memory (STM) and total score on the Wechsler Preschool and Primary Scale of Intelligence, Fourth Edition (WPPSI-IV) among children from the lowest quartile of household expenditures (STM: 0.35SD, p = 0.020; WPPSI-IV: 0.65SD, p = 0.087), and those whose mothers completed secondary school or less (STM: 0.35SD, p = 0.002; total WPPSI-IV: 0.81SD, p = 0.011). For at risk preschoolers, school snack programs may help meet their developmental needs. |
| Keywords: | ARMENIA; ASIA; school feeding; school meals; children; cognitive development; preschool children; nutrition; WPPSI |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:2046&r= |
| By: | Lynn, Peter; Bianchi, Annamaria; Gaia, Alessandra |
| Abstract: | The day of the week on which sample members are invited to participate in a web survey might influence propensity to respond, or to respond promptly. This effect could differ between sample members with different characteristics. We explore such effects using a large-scale experiment implemented on the Understanding Society Innovation Panel, in which some people received an invitation on a Monday and some on a Friday. Specifically, we test whether any effect of the invitation day is moderated by economic activity status, previous participation in the panel, or whether the invitation was sent only by post or by post and email simultaneously. |
| Date: | 2021–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:ese:ukhlsp:2021-07&r= |
| By: | D. Layne Coppock (Department of Environment and Society, Utah State University); Lucas Crowley (Innovations for Poverty Action); Susan L. Durham (Ecology Center, Utah State University); Dylan Groves (Department of Political Science, Columbia University); Julian C. Jamison (Department of Economics, University of Exeter); Dean Karlan (Kellogg School of Management, Northwestern University); Brien E. Norton (Department of Wildland Resources, Utah State University); R. Douglas Ramsey (Department of Wildland Resources, Utah State University) |
| Abstract: | Classic theories suggest that common pool resources are subject to overexploitation. Community-based resource management approaches may ameliorate "tragedy of the commons" effects. Using a randomized evaluation in Namibia's communal rangelands, we find that a comprehensive four-year program to support community-based rangeland and cattle management led to persistent and large improvements for eight of thirteen indices of social and behavioral outcomes. Effects on rangeland health, cattle productivity and household economics, however, were either negative or nil. Positive impacts on community resource management may have been offset by communities' inability to control grazing by non-participating herds and inhibited by an unresponsive rangeland sub-system. This juxtaposition, in which measurable improvements in community resource management did not translate into better outcomes for households or rangeland health, demonstrates the fragility of the causal pathway from program implementation to intended socioeconomic and environmental outcomes. It also points to challenges for improving climate change-adaptation strategies. |
| JEL: | C93 H41 O13 Q24 Q56 |
| Date: | 2021–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2106&r= |
| By: | Shr, Yau-Huo Jimmy; Zhang, Wendong |
| Keywords: | Environmental Economics and Policy, Agricultural and Food Policy, Research Methods/Statistical Methods |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:313927&r= |
| By: | Santoro, Fabrizio; Groening, Edward; Mdluli, Winnie; Shongwe, Mbongeni |
| Abstract: | Very little is known about why taxpayers in sub-Saharan Africa (SSA) remit their taxes. In collaboration with the Eswatini Revenue Authority (SRA), this study implements a nationwide randomised controlled trial nudging more than 20,000 income tax payers with behaviourally-informed mailings. This study attempts to shed new light on the drivers of SSA taxpayers’ compliance, and how can these be leveraged by resource-constrained tax authorities. While the tax nudge literature has boomed in OECD countries and Latin America, only a handful of studies can be found on SSA – this paper contributes significantly to these. First, thanks to the wealth of administrative data available, this study is the first of its kind to target three different categories of taxpayers at the same time – non-filers, nil-filers and active; most of the existing literature focusses on positive filers. Second, we tailor the content of letters to be specific to each taxpayer category. Third, we are able to target both companies and individuals, and explore heterogeneity of results along a number of dimensions, including past filing behaviour. We find that non-filers significantly respond to the nudges, while nil- and active filers do not. The best performing nudges build on the deterrence and taxpayer-assistance paradigms. Perverse responses are found from large companies. With the causal evidence produced, we are able to formulate policy recommendations on how best to target the complex ecosystem of income tax payers. |
| Keywords: | Economic Development, Finance, Governance, |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:15723&r= |
| By: | Alex Armand; Mattia Fracchia; Pedro C. Vicente |
| Abstract: | Vaccinating against COVID-19 is the main hope to end the current pandemic. We develop and test experimentally three phone-based cumulative interventions to increase COVID-19 vaccine acceptance in Mozambique. First, the provision of a simple positive message informing about these vaccines. Second, the activation of social memory on the country’s success in eradicating wild polio. Finally, the inoculation against fake news by developing among participants a critical view towards misleading information. We find that the combination of the three interventions increases COVID-19 vaccine acceptance and trust in institutions. |
| Keywords: | COVID-19, vaccines, acceptance, hesitancy, information, trust, social memory, fake news, misinformation, inoculation theory, Mozambique, Africa |
| JEL: | O12 D83 D91 I12 I15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:unl:novafr:wp2113&r= |