nep-exp New Economics Papers
on Experimental Economics
Issue of 2021‒11‒29
thirty papers chosen by
Daniel Houser
George Mason University

  1. Randomize at your own risk: on the observability of ambiguity aversion By Aurelien Baillon; Yoram Halevy; Chen Li
  2. Reference Points and the Tradeoff Between Risk and Incentives By Thomas Dohmen; Arjan Non; Tom Stolp
  3. Effects of Attention and Recognition on Engagement, Content Creation and Sharing: Experimental Evidence from an Image Sharing Social Network By Huang, Justin T.; Narayanan, Sridhar
  4. Keep It Simple: A Field Experiment on Information Sharing among Strangers By Batista, Catia; Fafchamps, Marcel; Vicente, Pedro C.
  5. The Gates Effect in Public Goods Experiments: How Donors Focus on the Recipients Favored by the Wealthy By Luca Corazzini; Christopher Cotton; Enrico Longo; Tommaso Reggiani
  6. Cross-Game Learning and Cognitive Ability in Auctions By Thomas Giebe; Radosveta Ivanova-Stenzel; Martin G. Kocher; Simeon Schudy
  7. Physicians’ incentives to adopt personalised medicine: Experimental evidence By David Bardey; Samuel Kembou; Bruno Ventelou
  8. Experimental elicitation of ambiguity attitude using the random incentive system By Aurelien Baillon; Yoram Halevy; Chen Li
  9. A General Revealed Preference Test for Quasilinear Preferences: Theory and Experiments By Mikhail Freer; Marco Castillo
  10. Bargaining Under Liquidity Constraints: Nash vs. Kalai in the Laboratory By John Duffy; Lucie Lebeau; Daniela Puzzello
  11. Failure of Unravelling Theory? A natural field experiment on voluntary quality disclosure By Tom Lane; Minghai Zhou
  12. Using Branding to Signal Quality in Informal Markets. Evidence from an Experimental Auction in the Sahel. By Ricker-Gilbert, Jacob; Moussa, Bokar; Abdoulaye, Tahirou
  13. Can Interventions Targeting Community Attitudes Improve Education for Marginalized Students? Evidence from a Mixed-Methods Experimental Design in Zimbabwe By Ardyn Nordstrom
  14. Are you worthy of my help? An experiment in worthiness framing on charitable donations By Rhosyn A. Almond
  15. A model-based framework assisting the design of vapor-liquid equilibrium experimental plans By Duarte, Belmiro P.M.; Atkinson, Anthony C.; Granjo, Jose F.O; Oliveira, Nuno M.C
  16. Better energy cost information changes household property investment decisions: Evidence from a nationwide experiment By James Carroll; Eleanor Denny; Ronan C. Lyons
  17. Risk Taking and Skewness Seeking Behavior in a Demographically Diverse Population By Bougherara, Douadia; Friesen, Lana; Nauges, Céline
  18. Beliefs About the Stock Market and Investment Choices: Evidence from a Field Experiment By Christine Laudenbach; Annika Weber; Johannes Wohlfart
  19. Beliefs About the Stock Market and Investment Choices: Evidence from a Field Experiment By Annika Weber; Christine Laudenbach; Johannes Wohlfart
  20. The Effects of Forward Guidance: Theory with Measured Expectations By Mirko Wiederholt; Christopher Roth; Johannes Wohlfart
  21. Uncertainty and Compound Lotteries: Calibration By Yoram Halevy; Emre Ozdenoren
  22. Non-Standard Errors By Albert J. Menkveld; Anna Dreber; Felix Holzmeister; Juergen Huber; Magnus Johannesson; Michael Kirchler; Sebastian Neusüss; Michael Razen; Utz Weitzel; Edwin Baidoo; Michael Frömmel; et al
  23. Cheap Talk Messages for Market Design: Theory and Evidence from a Labor Market with Directed Search By John J. Horton; Ramesh Johari; Philipp Kircher
  24. Some Children Left Behind: Variation in the Effects of an Educational Intervention By Julie Buhl-Wiggers; Jason T. Kerwin; Juan S. Muñoz-Morales; Jeffrey A. Smith; Rebecca Thornton
  25. The Origins of Gender Differences in Competitiveness and Earnings Expectations: Causal Evidence from a Mentoring Intervention By Boneva, Teodora; Buser, Thomas; Falk, Armin; Kosse, Fabian
  26. Salary History and Employer Demand: Evidence from a Two-Sided Audit By Amanda Y. Agan; Bo Cowgill; Laura K. Gee
  27. Moral Hazard in Compulsory Insurance – Evidence from a Quasi-Experiment on Hog Insurance in China By Cai, Qingyin; Rao, Xudong; Zhang, Yuehua
  28. Understanding Farmers’ Low Uptake of Crop Insurance in India: A Discrete Choice Experiment Approach By Patil, Vikram; Veettil, Prakashan Chellattan; Yashodha, Yashodha
  29. Improving Women's Mental Health during a Pandemic By Vlassopoulos, Michael; Siddique, Abu; Rahman, Tabassum; Pakrashi, Debayan; Islam, Asad; Ahmed, Firoz
  30. Does Social Media cause Polarization? Evidence from access to Twitter Echo Chambers during the 2019 Argentine Presidential Debate By Rafael Di Tella; Ramiro H. Gálvez; Ernesto Schargrodsky

  1. By: Aurelien Baillon; Yoram Halevy; Chen Li
    Abstract: Facing several decisions, people may consider each one in isolation or integrate them into a single optimization problem. Isolation and integration may yield different choices, for instance, if uncertainty is involved, and only one randomly selected decision is implemented. We investigate whether the random incentive system in experiments that measure ambiguity aversion provides a hedge against ambiguity, making ambiguity-averse subjects who integrate behave as if they were ambiguity neutral. Our results suggest that about half of the ambiguity averse subjects integrated their choices in the experiment into a single problem, whereas the other half isolated. Our design further enable us to disentangle properties of the integrating subjects' preferences over compound objects induced by the random incentive system and the choice problems in the experiment.
    Keywords: hedging, random incentives, Ellsberg, ambiguity aversion, design of experiments, integration, isolation, narrow bracketing, narrow framing
    JEL: C81 C91 D81
    Date: 2021–11–15
  2. By: Thomas Dohmen; Arjan Non; Tom Stolp
    Abstract: We conduct laboratory experiments to investigate basic predictions of principal-agent theory about the choice of piece rate contracts in the presence of output risk, and provide novel insights that reference dependent preferences affect the tradeoff between risk and incentives. Subjects in our experiments choose their compensation for performing a real-effort task from a menu of linear piece rate and fixed payment combinations. As classical principal-agent models predict, more risk averse individuals choose lower piece rates. However, in contrast to those predictions, we find that low-productivity risk averse workers choose higher piece rates when the riskiness of the environment increases. We hypothesize that reference points affect piece rate choice in risky environments, such that individuals whose expected earnings would exceed (fall below) the reference point in a risk-free environment behave risk averse (seeking) in risky environments. In a second experiment, we exogenously manipulate reference points and confirm this hypothesis.
    Keywords: Incentive, piece-rate, risk, reference point, laboratory experiment
    JEL: D81 D91 M52
    Date: 2021–10
  3. By: Huang, Justin T. (U of Michigan); Narayanan, Sridhar (Stanford U)
    Abstract: In this study, we examine the impacts of attention and recognition received by a user's content on a social network on that user's subsequent engagement on the network, content creation and content sharing. The study of the impact of attention and recognition is typically challenging because they are not randomly assigned. Systematic differences within and across users in the degree of attention and recognition received by content shared by them makes the identification of effects difficult. To solve this identification problem, we implemented a field experiment in collaboration with an art-sharing social network, where we experimentally manipulated attention and recognition by selectively featuring users' content. A unique aspect of our experimental context is that we are able to observe both on-network and off-network activity of the individuals concerned. The main results of our experiment are that our manipulation shifting attention and recognition on the network increases engagement, tie-formation, posting of creative output and the usage of underlying software tools used to create content. We explore the temporal variation, heterogeneity, and mediation in these effects.
    Date: 2020–12
  4. By: Batista, Catia (Nova School of Business and Economics); Fafchamps, Marcel (Stanford University); Vicente, Pedro C. (Universidade Nova de Lisboa)
    Abstract: SMS information campaigns are increasingly used for policy. We conduct a field experiment to study information sharing through mobile phone messages. Subjects are rural households in Mozambique who have access to mobile money. In the baseline intervention, subjects receive an SMS containing simple instructions on how to redeem a voucher for mobile money. They can share this non-rival information with other exogenously assigned subjects unknown to them. We find that few participants redeem the voucher. They nonetheless share it with others and many share information about the voucher they do not use themselves. Information is shared more when communication is anonymous and we find no evidence of more sharing with subjects who have similar characteristics. We introduce treatments to increase the cost of sending a message, shame those who do not send the voucher to others, or allow subjects to appropriate the value of information. All these treatments decrease information sharing. To encourage information diffusion among strangers, the best is to 'keep it simple'.
    Keywords: SMS information campaign, nudging, mobile money, anonymity, empathy, shared identity
    JEL: D83 D64 O33
    Date: 2021–10
  5. By: Luca Corazzini; Christopher Cotton (Queen's University); Enrico Longo (Unviersity of Venice); Tommaso Reggiani
    Abstract: Experiments involving multiple public goods with contribution thresholds capture many features of charitable giving environments in which donors try to coordinate their contributions across various potential recipients. We present results from a laboratory experiment that introduces endowment and preference differences into such a framework to explore the impact of donor heterogeneity on public good success and payoffs. We observe that donors tend to focus on the recipients preferred by the wealthiest contributors, ignoring other recipients, as they try to coordinate their donations to ensure public good success. We refer to this collective focus on the preferred good of the wealthiest as the Gates Effect, showing that the public goods preferred by the wealthiest are more salient even in the absence of seed money, matching grants, misperception of payoffs. The Gates Effect can reduce inequality among donors groups that succeed in funding a public good; however, it also affects the philanthropic agenda, reducing the variety of public goods that receive funding.
    Keywords: philanthropy, lab experiment, public goods, donor heterogeneity, donor strategy, crowdfunding, campaign contributions, fundraising
    JEL: C91 C92 H40 H41 L31
    Date: 2021–11
  6. By: Thomas Giebe; Radosveta Ivanova-Stenzel; Martin G. Kocher; Simeon Schudy
    Abstract: Overbidding in second-price auctions (SPAs) has been shown to be persistent and associated with cognitive ability. We study experimentally to what extent cross-game learning can reduce overbidding in SPAs, taking into account cognitive skills. Employing an order-balanced design, we use first-price auctions (FPAs) to expose participants to an auction format in which losses from high bids are more salient than in SPAs. Experience in FPAs causes substantial cross-game learning for cognitively less able participants but does not affect overbidding for the cognitively more able. Vice versa, experiencing SPAs before bidding in an FPA does not affect bidding behavior by the cognitively less able but, somewhat surprisingly, reduces bid shading by cognitively more able participants, resulting in lower profits in FPAs. Thus, cross-game learning has the potential to benefit bidders with lower cognitive ability whereas it has little or even adverse effects for higher ability bidders.
    Keywords: cognitive ability, cross-game learning, experiment, auction, heuristics, first-price auctions, second-price auctions
    JEL: C72 C91 D44 D83
    Date: 2021
  7. By: David Bardey (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, CEDE - Los Andes University); Samuel Kembou (UNIL - University of Lausanne); Bruno Ventelou (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We study physicians' incentives to use personalised medicine techniques, replicating the physician's trade-offs under the option of personalised medicine information. In a laboratory experiment conducted in two French Universities, prospective physicians played a real-effort game. We vary both the information structure (free access versus paid access to personalised medicine information) and the payment scheme (pay-for-performance (P4P), capitation (CAP) and fee-for-service (FFS)), implementing a within-subject design. Our results are threefold: (i) Compared to FFS and CAP, the P4P scheme strongly and positively impacts the decision to adopt personalised medicine. (ii) Although expected to dominate the other schemes, P4P is not always efficient in transforming free access to personalised medicine into higher quality of care. (iii) When it has to be paid for and after controlling for self-selection, personalised medicine is positively associated with quality, suggesting that subjects tend to make better use of information that comes at a cost. We find this effect to be stronger for males than for females prospective physicians. Quantification of our results however suggests that this positive impact is not strong enough to justify generalising the payment for personalised medicine access. Finally, we develop a theoretical model that includes in its set-up a commitment device component, which is the mechanism that we inferred from the data of the experiment. Our model replicates the principal results of the experiment, reinforcing the interpretation that the higher quality provided by subjects who bought personalised medicine can be interpreted as a commitment device effect.
    Keywords: Pay-for-performance,Fee-forservice,Capitation,Personalised medicine,Laboratory experiment,Prospective physicians
    Date: 2021–11
  8. By: Aurelien Baillon; Yoram Halevy; Chen Li
    Abstract: We demonstrate how the standard usage of the random incentive system in ambiguity experiments eliciting certainty and probability equivalents might not be incentive compatible if the decision-maker is ambiguity averse. We propose a slight modification of the procedure in which the randomization takes place before decisions are made and the state is realized, and prove that if subjects evaluate the experimental environment in that way (first - risk, second - uncertainty), incentive compatibility may be restored.
    Keywords: incentive compatibility, certainty equivalent, probability equivalents, broad bracketing, Ellsberg, BDM, choice list, MPL
    JEL: C81 C91 D81
    Date: 2021–11–14
  9. By: Mikhail Freer; Marco Castillo
    Abstract: We provide a generalized revealed preference test for quasilinear preferences. The test applies to nonlinear budget sets and non-convex preferences as those found in taxation and nonlinear pricing contexts. We study the prevalence of quasilinear preferences in a laboratory real-effort task experiment with nonlinear wages. The experiment demonstrates the empirical relevance of our test. We find support for either convex (non-separable) preferences or quasilinear preferences but weak support for the hypothesis of both quasilinear and convex preferences.
    Date: 2021–11
  10. By: John Duffy; Lucie Lebeau; Daniela Puzzello
    Abstract: We report on an experiment in which buyers and sellers engage in semi-structured bargaining in two dimensions: how much of a good the seller will produce and how much money the buyer will offer the seller in exchange. Our aim is to evaluate the empirical relevance of two axiomatic bargaining solutions, the generalized Nash bargaining solution and Kalai's proportional bargaining solution. These bargaining solutions predict different outcomes when buyers are constrained in their money holdings. We first use the case when the buyer is not liquidity constrained to estimate the bargaining power parameter, which we find to be equal to 1/2. Then, imposing liquidity constraints on buyers, we find strong evidence in support of the Kalai proportional solution and against the generalized Nash solution. Our findings have policy implications, e.g., for the welfare cost of inflation in search-theoretic models of money.
    Keywords: Bargaining; Monetary Economics; Experimental Economics
    JEL: C78 C92 D83
    Date: 2021–11–10
  11. By: Tom Lane (University of Nottingham, Ningbo China); Minghai Zhou (University of Nottingham, Ningbo China)
    Abstract: Classic ‘unravelling’ theory holds that buyers should treat with maximal scepticism sellers who withhold verifiable information relating to their quality, as buyers infer from such non-disclosure that the seller possesses the lowest possible quality. This study is the first to use a natural field experiment to test this proposition, and the first to test it in a labour market context. We sent out 12,301 job applications, varying the information on degree classification – a signal of academic quality – that the applicant presented to the employer. Our results do not support unravelling theory. Applications which left degree classification undisclosed were significantly more likely to receive positive responses from employers than those disclosing the lowest possible degree classification. Employers treated non-disclosing applicants similarly to those disclosing mid-scale classifications, suggesting the extent to which adverse inference is drawn from missing information is limited.
    Keywords: Voluntary Disclosure; Unravelling; Labour Market; Field Experiment
    Date: 2021–07
  12. By: Ricker-Gilbert, Jacob; Moussa, Bokar; Abdoulaye, Tahirou
    Keywords: Marketing
    Date: 2021–08
  13. By: Ardyn Nordstrom
    Abstract: This paper uses a quasi-randomized field experiment in Zimbabwe to understand the impact of a large-scale intervention targeting community attitudes. I measure the impact that the program has had on attitudes, the behaviour of teachers and caregivers, and the learning and progression outcomes of at-risk youth. The quantitative survey and learning assessment data I use for this is complemented by transcripts from focus groups and interviews, which I analyze using innovative text mining methods to measure changes in community sentiment towards marginalized groups. I find that the program improved community attitudes toward girls’ education by 0.403 SD over the three and a half year project. This contributed to a 20.9 percentage point increase in the likelihood that students in the treatment group reported receiving enough support from their community to continue learning during COVID-19 school closures, along with other changes in the behaviours of community members and families. The program facilitated better learning and progression outcomes, with marginalized students performing 0.28 SD better on learning assessments after the project. These findings lead to two important conclusions about the efficacy of interventions designed to reshape community attitudes. The first is that community attitudes can be influenced in a relatively short time to become more supportive towards marginalized groups. The second is that these interventions can support education outcomes. This paper also demonstrates the usefulness of qualitative methods and natural language processing techniques for future experimental work.
    Keywords: Education, Attitudes, Development, Text mining, Mixed-methods evaluation
    JEL: I25 H43 C10
    Date: 2021–11
  14. By: Rhosyn A. Almond (School of Economics and Centre for Behavioural and Experimental Social Science, University of East Anglia, Norwich)
    Abstract: We investigate the effect of worthiness framing on donation behaviour – both the propensity to donate and magnitude of donation. People prefer to donate to ‘worthy’ causes. Prosocial behaviour is strongly influenced by value judgements based on the individual’s perception of a situation and are therefore highly context-dependent. In this experiment, the target of manipulation is the context of a donation decision. We invited participants to donate to the local food bank and used selected questions from the World Values Survey to measure perceptions about the context of inequality. We find a treatment effect of worthiness framing– but only for those with certain beliefs about the context of inequality. We use hardworking and unlucky frames to highlight the worthiness of the recipient group and find this framing is only effective in increasing donations if it challenges an individual’s prior beliefs. Framing a recipient as worthy only increases donations from those whose beliefs suggest they consider the poor less worthy.
    Keywords: prosocial behaviour, charity, worthiness, framing, deservingness
    Date: 2021–11
  15. By: Duarte, Belmiro P.M.; Atkinson, Anthony C.; Granjo, Jose F.O; Oliveira, Nuno M.C
    Abstract: In this paper we propose a framework for Model-based Sequential Optimal Design of Experiments to assist experimenters involved in Vapor-Liquid equilibrium characterization studies to systematically construct thermodynamically consistent models. The approach uses an initial continuous optimal design obtained via semidefinite programming, and then iterates between two stages (i) model fitting using the information available; and (ii) identification of the next experiment, so that the information content in data is maximized. The procedure stops when the number of experiments reaches the maximum for the experimental program or the dissimilarity between the parameter estimates during two consecutive iterations is below a given threshold. This methodology is exemplified with the D-optimal design of isobaric experiments, for characterizing binary mixtures using the NRTL and UNIQUAC thermodynamic models for liquid phase. Significant reductions of the confidence regions for the parameters are achieved compared with experimental plans where the observations are uniformly distributed over the domain.
    Keywords: sequential optimal design of experiments; vapor-liquid equilibrium; semidefinite programming; NRTL model; nonlinear programming
    JEL: C1
    Date: 2021–02–01
  16. By: James Carroll (Department of Economics, Trinity College Dublin); Eleanor Denny (Department of Economics, Trinity College Dublin); Ronan C. Lyons (Department of Economics, Trinity College Dublin)
    Abstract: With buildings accounting for roughly 40% of energy consumption in the US and Europe, energy efficiency upgrades will be central in meeting climate targets. Based on the hypothesis that there is imperfect information regarding the cost-saving implications of efficiency improvements, we add property-specific energy cost labels to sales advertisements in a randomized controlled trial covering the entire Irish housing market. This is the first energy framing field trial for property, the household’s largest energy consuming investment and the household technology which likely has the highest variation in energy consumption due to heterogeneity in efficiency and size. Our analysis of over 31,000 transacted properties finds strong evidence that energy cost forecasts change homebuyer behaviour, with the energy efficiency premium increasing by 0.7 percentage points in treatment counties. We also find that more energy efficient properties sell faster and, for the first time, show that treatment further shortened this time-to-sell. While a major departure from existing property labelling policy, these results suggest that framing property energy efficiency according to cost implications rather than kilowatt-hours increases the demand for energy efficiency.
    Keywords: Energy Labels, Energy Efficiency Premium, Energy Performance Certificate, Randomized Controlled Trial
    JEL: D12 Q40 C93
    Date: 2020–08
  17. By: Bougherara, Douadia; Friesen, Lana; Nauges, Céline
    Keywords: We study the interaction between risk taking and skewness seeking behavior among the French population using an experiment that elicits certainty equivalent over lotteries that vary the second and third moments orthogonally. We find that the most common behavior is risk avoidance and skewness seeking. On average, we find no interaction between the two, and a weakly significant interaction only in some segments of the population. That is, in most cases, skewness seeking is not affected by the variance of the lotteries involved, nor is risk taking affected by the skewness of the lotteries. We also find a significant positive correlation between risk avoiding and skewness seeking behavior. Older and female participants make more risk avoiding and more skewness seeking choices, while less educated people and those not in executive occupations are more skewness seeking.
    JEL: C93 D81
    Date: 2021–11–24
  18. By: Christine Laudenbach (Department of Economics, University of Bonn); Annika Weber (House of Finance, Goethe University Frankfurt and SAFE); Johannes Wohlfart (Department of Economics and CEBI, University of Copenhagen, CESifo, Danish Finance Institute)
    Abstract: We survey retail investors at an online bank to study beliefs about the autocorrelation of aggregate stock returns, and how these beliefs shape investment decisions measured in administrative account data. Individuals' beliefs exhibit substantial heterogeneity and predict trading responses to market movements. We inform a random half of our respondents that historically the autocorrelation of aggregate returns was close to zero, which persistently changes their beliefs. Among those initially believing in mean reversion, treated respondents buy significantly less equity during the COVID-19 crash four months later. Our results highlight how heterogeneity in subjective models causally drives trade in asset markets.
    Keywords: Expectation Formation, Information, Updating, Retail Investors, Trading
    JEL: D14 D83 D84 D91 E71
    Date: 2021–11
  19. By: Annika Weber (Goethe University Frankfurt and SAFE); Christine Laudenbach (University of Bonn); Johannes Wohlfart (Department of Economics and CEBI, University of Copenhagen)
    Abstract: We survey retail investors at an online bank to study beliefs about the autocorrelation of aggregate stock returns, and how these beliefs shape investment decisions measured in administrative account data. Individuals' beliefs exhibit substantial heterogeneity and predict trading responses to market movements. We inform a random half of our respondents that historically the autocorrelation of aggregate returns was close to zero, which persistently changes their beliefs. Among those initially believing in mean reversion, treated respondents buy significantly less equity during the COVID-19 crash four months later. Our results highlight how heterogeneity in subjective models causally drives trade in asset markets.
    Keywords: Expectation Formation, Information, Updating, Retail Investors, Trading,
    JEL: D14 D83 D84 D91 E71
    Date: 2021–11–23
  20. By: Mirko Wiederholt (LMU Munich and Sciences Po); Christopher Roth (University of Cologne); Johannes Wohlfart (Department of Economics and CEBI, University of Copenhagen)
    Abstract: We study the effects of forward guidance with an approach that combines theory with experimental estimates of counterfactual expectation adjustments. Guided by the model, we conduct experiments with representative samples of the US population to study how households adjust their expectations in response to changes in the Fed’s projections about future interest rates. Respondents significantly downward-adjust their inflation expectations in response to learning about an increase in the Fed’s projection about the federal funds rate three years in the future, and they expect inflation to respond most strongly immediately after the announcement. By contrast, respondents do not adjust their nominal income expectations. Our model-based estimates highlight a small average consumption response to forward guidance due to opposing effects from intertemporal substitution and changes in expected real income.
    Keywords: Expectation Formation, Information, Updating
    JEL: D12 D14 D83 D84 E32 G11
    Date: 2021–11–10
  21. By: Yoram Halevy; Emre Ozdenoren
    Abstract: The Ellsberg experiments provide an intuitive illustration that the Savage approach, which reduces subjective uncertainty to risk, is not rich enough to capture many decision makers' preferences. Experimental evidence suggests that decision makers reduce uncertainty to compound risk. This work presents a theoretical model of decision making in which preferences are defined on both Savage subjective acts and compound objective lotteries. Preferences are two-stage probabilistically sophisticated when the ranking of acts corresponds to a ranking of the respective compound lotteries induced by the acts through the decision maker's subjective belief. This family of preferences includes various theoretical models that have been proposed in the literature to accommodate non-neutral attitude towards ambiguity. The principle of calibration, which was used by Ramsey and de Finetti, allows an outside observer to relate preferences over acts and compound objective lotteries. If preferences abide by the calibration axioms, the evaluation of the compound lottery induced by an act through the subjective belief coincides with the valuation of the corresponding compound objective lottery. Calibration provides a foundation to formalize and understand the tight empirical association between probabilistic sophistication and reduction of compound lotteries, for all two-stage probabilistically sophisticated preferences.
    Keywords: ambiguity, probabilistic sophistication, reduction of compound lotteries, Ellsberg
    JEL: D81
    Date: 2021–11–18
  22. By: Albert J. Menkveld; Anna Dreber; Felix Holzmeister; Juergen Huber; Magnus Johannesson; Michael Kirchler; Sebastian Neusüss; Michael Razen; Utz Weitzel; Edwin Baidoo; Michael Frömmel; et al (-)
    Abstract: In statistics, samples are drawn from a population in a datagenerating process (DGP). Standard errors measure the uncertainty in sample estimates of population parameters. In science, evidence is generated to test hypotheses in an evidencegenerating process (EGP). We claim that EGP variation across researchers adds uncertainty: non-standard errors. To study them, we let 164 teams test six hypotheses on the same sample. We find that non-standard errors are sizeable, on par with standard errors. Their size (i) co-varies only weakly with team merits, reproducibility, or peer rating, (ii) declines significantly after peer-feedback, and (iii) is underestimated by participants.
    Date: 2021–11
  23. By: John J. Horton; Ramesh Johari; Philipp Kircher
    Abstract: In a model with cheap talk, employers can send messages about their willingness to pay for higher ability workers, which job-seekers can use to direct their search and tailor their wage bid. Introducing such messages leads—under certain conditions—to an informative separating equilibrium which affects the number of applications, types of applications, and wage bids across firms. This model is used to interpret an experiment conducted in a large online labor market: employers were given the opportunity to state their relative willingness to pay for more experienced workers, and workers can easily condition their search on this information. Preferences were collected for all employers, but only treated employers had their signal revealed to job-seekers. In response to revelation of the cheap talk signal, job-seekers targeted their applications to employers of the right “type” and they tailored their wage bids, affecting who was matched to whom and at what wage. The treatment increased measures of match quality through better sorting, illustrating the power of cheap talk to improve market outcomes.
    JEL: J01 J64
    Date: 2021–11
  24. By: Julie Buhl-Wiggers; Jason T. Kerwin; Juan S. Muñoz-Morales; Jeffrey A. Smith; Rebecca Thornton
    Abstract: We document substantial variation in the effects of a highly-effective literacy pro-gram in northern Uganda. The program increases test scores by 1.40 SDs on average, but standard statistical bounds show that the impact standard deviation exceeds 1.0SD. This implies that the variation in effects across our students is wider than the spread of mean effects across all randomized evaluations of developing country education interventions in the literature. This very effective program does indeed leave some students behind. At the same time, we do not learn much from our analyses that attempt to determine which students benefit more or less from the program. We reject rank preservation, and the weaker assumption of stochastic increasingness leaves wide bounds on quantile-specific average treatment effects. Neither conventional nor machine-learning approaches to estimating systematic heterogeneity capture more than a small fraction of the variation in impacts given our available candidate moderators.
    JEL: C18 C21 I21 I25 J24
    Date: 2021–11
  25. By: Boneva, Teodora (University of Bonn); Buser, Thomas (University of Amsterdam); Falk, Armin (briq, University of Bonn); Kosse, Fabian (Ludwig-Maximilians-Universität München)
    Abstract: We present evidence on the role of the social environment for the development of gender differences in competitiveness and earnings expectations. First, we document that the gender gap in competitiveness and earnings expectations is more pronounced among adolescents with low socioeconomic status (SES). We further document that there is a positive association between the competitiveness of mothers and their daughters, but not between the competitiveness of mothers and their sons. Second, we show that a randomized mentoring intervention that exposes low-SES children to predominantly female role models causally affects girls' willingness to compete and narrows both the gender gap in competitiveness as well as the gender gap in earnings expectations. Together, the results highlight the importance of the social environment in shaping willingness to compete and earnings expectations at a young age.
    Keywords: competitiveness, gender, socioeconomic status, inequality, earnings expectations
    JEL: I24 J16
    Date: 2021–10
  26. By: Amanda Y. Agan; Bo Cowgill; Laura K. Gee
    Abstract: We study how salary history disclosures affect employer demand by using a novel, two-sided field experiment featuring hundreds of recruiters reviewing over 2000 job applications. We randomize the presence of salary history questions as well as candidates' disclosures. We find that employers make negative inferences about non-disclosing candidates, and view salary history as a stronger signal about competing options than worker quality. Disclosures by men (and other highly-paid candidates) yield higher salary offers, however they are negative signals of value (net of salary), and thus yield fewer callbacks. Male wage premiums are regarded as a weaker signal of quality than other sources (such as the premiums from working at higher paying firms, or being well-paid compared to peers). Recruiters correctly anticipate that women are less likely to disclose salary history at any level, and punish women less than men for silence. In our simulation of bans, we find no evidence that bans affect the gender ratio of callback choices, but find large reductions in gender inequality in salary offers among candidates called back. However, salary offers are lower overall (especially for men). A theoretical framework shows how these effects may differ by key properties of labor markets.
    JEL: C90 J70 M50
    Date: 2021–11
  27. By: Cai, Qingyin; Rao, Xudong; Zhang, Yuehua
    Keywords: Agricultural Finance, Livestock Production/Industries
    Date: 2021–08
  28. By: Patil, Vikram; Veettil, Prakashan Chellattan; Yashodha, Yashodha
    Keywords: Risk and Uncertainty
    Date: 2021–08
  29. By: Vlassopoulos, Michael (University of Southampton); Siddique, Abu (Technical University of Munich); Rahman, Tabassum (University of Newcastle, Australia); Pakrashi, Debayan (Indian Institute of Technology Kanpur); Islam, Asad (Monash University); Ahmed, Firoz (Khulna University, Bangladesh)
    Abstract: In low-income settings, women are vulnerable to the psychological distress caused by the social and economic impact of large-scale shocks (e.g., pandemics, natural disasters, political). This paper evaluates a randomized over-the-phone counseling intervention aimed at mitigating the mental health impact of COVID-19 on a sample of 2,402 women across 357 villages in Bangladesh. We find that the provision of mental support to participating women improves their mental health ten months post-intervention, leading to reductions of 20.4% in the prevalence of moderate and severe stress and 32.8% in depression, relative to women in the control group. We also find positive impacts on economic outcomes: household food security and time invested in homeschooling of children, suggesting that improvement in mental health is an important step toward better economic well-being for these women. Finally, we also observe impacts on various other outcomes, including preventive health behavior associated with COVID-19 and vaccination take-up. Our results suggest that this type of low-cost intervention can be effective in providing rapid psychological support to vulnerable groups in times of crises.
    Keywords: mental health, COVID-19, food security, telecounseling, randomized experiment, parental investment, rural Bangladesh
    JEL: I10 I12 I18 I31 O12
    Date: 2021–10
  30. By: Rafael Di Tella; Ramiro H. Gálvez; Ernesto Schargrodsky
    Abstract: We study how two groups, those inside vs those outside echo chambers, react to a political event when we vary social media status (Twitter). Our treatments mimic two strategies often suggested as a way to limit polarization on social media: they expose people to counter-attitudinal data, and they get people to switch off social media. Our main result is that subjects that started inside echo chambers became more polarized when these two strategies were implemented. The only scenario where they did not become more polarized is when they did not even experience the political event. Interestingly, subjects that were outside echo chambers before our study began experienced no change (or a reduction) in polarization. We also study a group of non-Twitter users in order to have a simple, offline benchmark of the debate’s impact on polarization.
    JEL: D72 L82 L86 O33 P16 Z13
    Date: 2021–11

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