nep-exp New Economics Papers
on Experimental Economics
Issue of 2021‒10‒25
fourteen papers chosen by

  1. Feedback in Homogeneous Ability Groups: A Field Experiment By Tim Klausmann
  2. I Think About You: Group Mentality and Altruism Among Farmers By Phumsith Mahasuweerachai
  3. Hiring Discrimination in Labor Markets. An Experimental Study of Mood Regulation By Mourelatos, Evangelos
  4. Physician’s Allocation Preferences under Scarcity and Uncertainty By Atehortua, S; Rodríguez-Valencia, A
  5. Do People Demand Fact-Checked News? Evidence From U.S. Democrats By Felix Chopra; Ingar Haaland; Christopher Roth
  6. Answering causal questions using observational data By Committee, Nobel Prize
  7. How Alliances Form and Conflict Ensues By Lu Dong; Lingbo Huang; Jaimie W. Lien; Jie Zheng
  8. Optimal mixed payment system and medical liability. A laboratory study By Finocchiaro Castro, Massimo; Ferrara, Paolo Lorenzo; Guccio, Calogero; Lisi, Domenico
  9. Imaginary future generations: A deliberative approach for intergenerational sustainability dilemma By Raja Ragendra Timilsina; Yoshinori Nakagawa; Yoshio Komijo; Koji Kotani; Tatsuyoshi Saijo
  10. From Just in Time, to Just in Case, to Just in Worst-Case: Simple models of a Global Supply Chain under Uncertain Aggregate Shocks. By Bomin Jiang; Daniel E. Rigobon; Roberto Rigobon
  11. Exact Bias Correction for Linear Adjustment of Randomized Controlled Trials By Haoge Chang; Joel Middleton; Peter Aronow
  12. Bayesian Persuasion in Sequential Trials By Shih-Tang Su; Vijay G. Subramanian; Grant Schoenebeck
  13. Preferences For The Far Future By Steinke, Marek; Trautmann, Stefan
  14. Natural experiments help answer important questions for society By Committee, Nobel Prize

  1. By: Tim Klausmann (Johannes Gutenberg University Mainz)
    Abstract: Relative performance feedback often increases effort and performance on average. However, in the context of education, learners with low ability often do not profit from relative performance feedback. Less is known on how learners react to feedback when changing the feedback group composition. In a randomized field experiment we allocated 7352 learners into (i) homogeneous ability feedbackgroups, (ii) heterogeneous ability feedbackgroups, and (iii) a control group. All learners were observed in an online learning enviroment with anonymity between them. We find that on average relative performance feedback increases learning effort by 0.11 standard deviations. However, we do not observe any difference between learners in homogeneous and heterogeneous feedback groups on average. Further, we analyze the differential treatment effect for different ability levels between homogeneous and heterogenous feedback groups.
    Keywords: Feedback, Relative Performance, Heterogeneity, Education, Online Education, Peer Quality, Tracking, Learning Behavior, Gamification
    JEL: D31 F12 F16 H24
    Date: 2021–09–30
  2. By: Phumsith Mahasuweerachai
    Abstract: Does exposure to reminder of resource scarcity lead individuals toward generous or selfish behavior? I estimate the effect of resource scarcity information on the number of farmers applied for the new crops program that provides temporary income subsidy using a field experiment. The result shows that the number of applicants in villages that received resource scarcity information, indicating that the number of farmers joining the program was limited in each village, is significantly lower than that of the villages that received no such information. And, a lab-in-the-field experiment reveals that when resource scarcity is salient, farmers tend to sacrifice their benefit to increase the benefit of others who are identified as their ingroup members. However, I do not find this generous behavior toward outsiders. Together, the results suggest that the exposure to resource scarcity information would not always guide people to focus on maximizing their own welfare, rather it may lead people to behave generously if resources are shared among their ingroup members.
    Keywords: Resource Scarcity; Group Identity; Generosity; Field Experiment; Lab-in-the-Field Experiment
    JEL: C92 C93 D64 D81 D91
    Date: 2021–08
  3. By: Mourelatos, Evangelos
    Abstract: We explore whether there is a link between mood and hiring decisions. This research examines how positive mood affects the discrimination faced my homosexual job candidates compared to heterosexuals. Our experimental design allows us to track the complete hiring process and monitor employers' behavior within and without our treatment context, in both online and offline labor market settings. Constructing pairs of curriculum vitae, distinguished, in each case, only by the sexual orientation or the gender of the applicants, led to the observation that females and gay men faced a significantly lower chance of getting hired regardless the labor market context. We also find that female employers propose higher levels of discrimination only for the case of female applicants. Our positive mood manipulation led to a depletion of discrimination levels, with the effects being more robust in the online labor context. Thus, there is substantial experimental evidence to suggest that discrimination based on sexual orientation and gender does exist also in online labor markets. Contributions to the hiring discrimination, mood research, and gig-economy literature are discussed.
    Keywords: experiment,hiring discrimination,mood,online labor markets,gender,sexual orientation
    JEL: D91 D87 D53 D23 D01
    Date: 2021
  4. By: Atehortua, S; Rodríguez-Valencia, A
    Abstract: Physicians are no strangers to situations where they have to decide with resource restrictions and uncertainty on the relative needs of future beneficiaries of the scarce resources. We propose a lab experiment to understand if such an environment affects physician’s resource allocation decisions and how. When there are incentives to over-treat, we find that a patient tended by a constrained physician under uncertainty obtains higher benefits and receives allocations closer to her optimum than patients from physicians with no constraints or deciding under uncertainty alone. In addition, we observe a redistribution of resources when physicians decide with resource restrictions and uncertainty. In particular, when resources are scarce, physicians tend to allocate the limited services to patients with higher benefits in the absence of medical services, a higher capacity to benefit from the resources, the scantiest need for service units, and the lowest benefits at the optimum. Finally, we find that constraints, with or without complete information on patient characteristics, lead selfish physicians to approximate to what is best for the patient.
    Keywords: laboratory experiment, physician behavior, uncertainty, social preferences, resource scarcity, incentives to treat.
    JEL: C91 D81 D91 I19
    Date: 2021–10–15
  5. By: Felix Chopra (University of Bonn); Ingar Haaland (University of Bergen and CESifo); Christopher Roth (University of Cologne, ECONtribute, C-SEB, briq, CESifo, CEPR, CAGE)
    Abstract: In a large-scale online experiment with U.S. Democrats, we examine how the demand for a newsletter about an economic relief plan changes when the newsletter content is fact-checked. We first document an overall muted demand for factchecking when the newsletter features stories from an ideologically aligned source, even though fact-checking increases the perceived accuracy of the newsletter. The average impact of fact-checking masks substantial heterogeneity by ideology: fact-checking reduces demand among Democrats with strong ideological views and increases demand among ideologically moderate Democrats. Furthermore, fact-checking increases demand among all Democrats when the newsletter features stories from an ideologically non-aligned source.
    Keywords: Fact-checking, News Demand, Information, Media Bias, Belief Polarization
    JEL: D83 D91 L82
    Date: 2021–10
  6. By: Committee, Nobel Prize (Nobel Prize Committee)
    Abstract: Most applied science is concerned with uncovering causal relationships. In many fields, randomized controlled trials (RCTs) are considered the gold standard for achieving this. The systematic use of RCTs to study causal relationships — assessing the efficacy of a medical treatment for example — has resulted in tremendous welfare gains in society. However, due to financial, ethical, or practical constraints, many important questions — particularly in the social sciences — cannot be studied using a controlled randomized experiment. For example, what is the impact of school closures on student learning and the spread of the COVID-19 virus? What is the impact of low-skilled immigration on employment and wages? How do institutions affect economic development? How does the imposition of a minimum wage affect employment? In answering these types of questions, researchers must rely on observational data, i.e., data generated without controlled experimental variation. But with observational data, a fundamental identification problem arises: the underlying cause of any correlation remains unclear. If we observe that minimum wages and unemployment correlate, is this because a minimum wage causes unemployment? Or because unemployment and lower wage growth at the bottom of the wage distribution leads to the introduction of a minimum wage? Or because of a myriad of other factors that affect both unemployment and the decision to introduce a minimum wage? Moreover, in many settings, randomized variation by itself is not sufficient for identification of an average treatment effect.
    Keywords: Labor markets; natural experiments
    JEL: J00
    Date: 2021–10–11
  7. By: Lu Dong (Nanjing Audit University); Lingbo Huang (Nanjing Audit University); Jaimie W. Lien (Chinese University of Hong Kong); Jie Zheng (Tsinghua University)
    Abstract: In a social network in which friendly and rival bilateral links can be formed, how do alliances between decision-makers form, and what determines whether a conflict will arise? We study a network formation game between ex-ante symmetric players in the laboratory to examine the dynamics of alliance formation and conflict evolution. A peaceful equilibrium yields the greatest social welfare, while a successful bullying attack transfers the victimized player’s resources evenly to the attackers at a cost. Consistently with the theoretical model predictions, peaceful and bullying outcomes are prevalent among the randomly re-matched experimental groups, based on the cost of attack. We further examine the dynamics leading to the final network and find that groups tend to coordinate quickly on a first target for attack, while the first attacker entails a non-negligible risk of successful counter-attack by initiating the coordination. These findings provide insights for understanding social dynamics in group coordination.
    Keywords: network formation, conflict, alliance, bully, peace
    Date: 2021–04
  8. By: Finocchiaro Castro, Massimo; Ferrara, Paolo Lorenzo; Guccio, Calogero; Lisi, Domenico
    Abstract: In a controlled laboratory environment, we test the role of medical malpractice liability on physicians’ service provision under fee-for-service, capitation, and mixed payment. We find that the introduction of medical liability causes a significant deviation from patient-optimal treatment that it is not mitigated by the use of a standard mixed payment system. Specifically, we find that the presence of medical liability pressure involves a proper optimal calibration of mixed payment system. Our findings have relevant policy implications for the correct calibration and implementation of the mixed payment system.
    Keywords: medical liability; defensive medicine; payment systems; physicians’ behaviour; laboratory experiment
    JEL: C91 I12 K13
    Date: 2021–10–20
  9. By: Raja Ragendra Timilsina (School of Economics and Management, Kochi University of Technology); Yoshinori Nakagawa (School of Economics and Management, Kochi University of Technology); Yoshio Komijo (Waseda University); Koji Kotani (School of Economics and Management, Kochi University of Technology); Tatsuyoshi Saijo (Research Institute for Future Design, Kochi University of Technology)
    Abstract: The current generation affects future generations, but the opposite is not true. This one-way nature of the dependence of generations is the leading cause of many intergenerational problems, such as climate change. These problems are characterized by the fact that the current generation tends to choose actions to their benefit without considering future generations, which we call the intergenerational sustainability dilemma (ISD). This paper designs and implements deliberation experiments representing ISD with a single generation of three people and examines how the dilemma can be solved. “Imaginary future generations†(IFG) is suggested as a treatment in which one person in the current generation is asked to be a representative from the future without any obligations. We analyze the recorded deliberation of generation decisions. We find that intergenerational sustainability is enhanced through deliberations when one generational member emerges naturally as a neutral icebreaker to deliberate (neutral icebreaker is defined as a person who voluntarily opens and activates the deliberation from a neutral standpoint) and/or IFG is present in a generation. Specifically, we demonstrate that when an icebreaker and/or IFG is present during deliberation, generation brings a wider variety of ideas and viewpoints about the ISD, leading to intergenerational sustainability. This research illustrates how a deliberative analysis can be usefully combined with economic experiments as a methodology to reveal human behaviors and preferences for intergenerational decision making.
    Keywords: Intergenerational sustainability, Imaginary future generations, deliberation, economic experiments
    Date: 2021–10
  10. By: Bomin Jiang; Daniel E. Rigobon; Roberto Rigobon
    Abstract: Covid-19 highlighted the weaknesses in the supply chain. Many have argued that a more resilient or robust supply chain is needed. But what does a robust supply chain mean? And how do firms’ decisions change when taken that approach? This paper studies a very stylized model of a supply chain, where we study how the decision of a multinational corporation changes in the presence of uncertainty. The two standard theories of supply chain are Just-in-time and Just-in-case. Just-in-time argues in favor of pursuing efficiency, while Just-in-case studies how such decision changes when the firm faces idiosyncratic risk. We find that a robust supply chain is very different specially in the presence of systemic shocks. In this case, firms need to concentrate on the worst-case. This strategy implies a supply chain where the allocation of resources and capabilities does not correspond to the standard theories studied in economics, but follow a heuristic behavioral rule called “probability matching”. It has been found in nature and in experimental research that subjects appeal to probability matching when seeking survival. We find that a robust supply chain will reproduce this behavioral outcome. In fact, a multinational optimizing under uncertainty, follows a probability matching which leads to an allocation that is suboptimal from the individual producer point of view, but rules out the possibility of supply disruptions.
    JEL: E7 F02 F12 F13 L15
    Date: 2021–10
  11. By: Haoge Chang; Joel Middleton; Peter Aronow
    Abstract: In an influential critique of empirical practice, Freedman \cite{freedman2008A,freedman2008B} showed that the linear regression estimator was biased for the analysis of randomized controlled trials under the randomization model. Under Freedman's assumptions, we derive exact closed-form bias corrections for the linear regression estimator with and without treatment-by-covariate interactions. We show that the limiting distribution of the bias corrected estimator is identical to the uncorrected estimator, implying that the asymptotic gains from adjustment can be attained without introducing any risk of bias. Taken together with results from Lin \cite{lin2013agnostic}, our results show that Freedman's theoretical arguments against the use of regression adjustment can be completely resolved with minor modifications to practice.
    Date: 2021–10
  12. By: Shih-Tang Su; Vijay G. Subramanian; Grant Schoenebeck
    Abstract: We consider a Bayesian persuasion or information design problem where the sender tries to persuade the receiver to take a particular action via a sequence of signals. This we model by considering multi-phase trials with different experiments conducted based on the outcomes of prior experiments. In contrast to most of the literature, we consider the problem with constraints on signals imposed on the sender. This we achieve by fixing some of the experiments in an exogenous manner; these are called determined experiments. This modeling helps us understand real-world situations where this occurs: e.g., multi-phase drug trials where the FDA determines some of the experiments, funding of a startup by a venture capital firm, start-up acquisition by big firms where late-stage assessments are determined by the potential acquirer, multi-round job interviews where the candidates signal initially by presenting their qualifications but the rest of the screening procedures are determined by the interviewer. The non-determined experiments (signals) in the multi-phase trial are to be chosen by the sender in order to persuade the receiver best. With a binary state of the world, we start by deriving the optimal signaling policy in the only non-trivial configuration of a two-phase trial with binary-outcome experiments. We then generalize to multi-phase trials with binary-outcome experiments where the determined experiments can be placed at any chosen node in the trial tree. Here we present a dynamic programming algorithm to derive the optimal signaling policy that uses the two-phase trial solution's structural insights. We also contrast the optimal signaling policy structure with classical Bayesian persuasion strategies to highlight the impact of the signaling constraints on the sender.
    Date: 2021–10
  13. By: Steinke, Marek; Trautmann, Stefan
    Abstract: Both research and anecdotal evidence suggest that people care about long-run environmental outcomes, but often fail to act sustainably, endangering environmental stability. For a large population sample, we show that people substantially value the environment intrinsically, i.e., even after their own and their kin’s lifespan. Willingness-to-pay for very long-run environmental benefits not experienced by the respondent is similar to that of short-run benefits, experienced by the respondent. However, adding a cooperation problem through uncertainty about other people’s preferences significantly decreases participants’ willingness-to-pay for both time frames, with respondents being pessimistic about others’ willingness to contribute.
    Date: 2021–10–19
  14. By: Committee, Nobel Prize (Nobel Prize Committee)
    Abstract: This year’s Laureates – David Card, Joshua Angrist and Guido Imbens – have provided us with new insights about the labour market and shown what conclusions about cause and effect can be drawn from natural experiments. Their approach has spread to other fields and revolutionised empirical research.
    Keywords: Labor markets; natural experiments
    JEL: J00
    Date: 2021–10–11

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