nep-exp New Economics Papers
on Experimental Economics
Issue of 2022‒03‒07
twenty-one papers chosen by

  1. Stratifying Online Field Experiments Using the Pigeonhole Design By Jinglong Zhao; Zijie Zhou
  2. A Field Experiment on Business Opposition to the U.S.-China Trade War By Dolan, Lindsay; Kubinec, Robert; Nielson, Daniel; Zhang, Jack
  3. Reducing Sexual-Orientation Discrimination: Experimental Evidence from Basic Information Treatments By Aksoy, Cevat Giray; Carpenter, Christopher S.; De Haas, Ralph; Dolls, Mathias; Windsteiger, Lisa
  4. Selfish learning is more important than fair-minded conditional cooperation in public-goods games By Burton-Chellew, Maxwell; Guérin, Claire
  5. Negative Economic Shocks and the Compliance to Social Norms By Bogliacino, Francesco; Charris, Rafael Alberto; Gómez, Camilo Ernesto; Montealegre, Felipe
  6. The Bright Side of Dark Markets: Experiments By Halim, Edward; Riyanto, Yohanes E.; Roy, Nilanjan; Wang, Yan
  7. Free-Riding for Future: Field Experimental Evidence of Strategic Substitutability in Climate Protest By Jarke-Neuert, Johannes; Perino, Grischa; Schwickert, Henrike
  8. R&D Productivity And The Nexus Between Product Substitutability And Innovation: Theory And Experimental Evidence By Christos Ioannou; Miltiadis Makris; Carmine Ornaghi
  9. The Moral Preferences of Investors: Experimental Evidence By Jean-François Bonnefon; Augustin Landier; Parinitha R. Sastry; David Thesmar
  10. Income Contingency and the Electorate’s Support for Tuition By Lergetporer, P; Woessmann, L
  11. The strategy method conflates confusion with conditional cooperation in public goods games: evidence from large scale replications By Burton-Chellew, Maxwell; D'Amico, Victoire; Guérin, Claire
  12. Double trouble: concurrently targeting water and electricity using normative messages in the Middle East By Ramli, Ukasha; Laffan, Kate
  13. Statistical Discrimination and Affirmative Action in the Lab By Ahrash Dianat; Federico Echenique; Leeat Yariv
  14. Economic and political inequality in the management of socio-environmental problems By Bogliacino, Francesco; Mantilla, Cesar; Niño Eslava, Daniel
  15. Evidence for effective conservation fundraising: Comparing social media with traditional mailshot field experiments By KUBO, Takahiro; Yokoo, Hide-Fumi; Veríssimo, Diogo
  16. Cheap search, picky workers? Evidence from a field experiment By Harald Mayr
  17. Trust in the time of coronavirus: longitudinal evidence from the United States By Aassve, Arnstein; Capezzone, Tommaso; Cavalli, Nicolo'; Conzo, Pierluigi; Peng, Chen
  18. The Northern Ireland Longitudinal Study (NILS) as a resource for investigating neighbourhood peer effects: A case study using natural experiment(s) in fertility and labour market participation By Zhang, Meng Le
  19. Measuring Honesty and Explaining Adulteration in Naturally Occurring Markets By Devesh Rustagi; Markus Kroell
  20. Taxes in the Time of Revolution: An Experimental Test of the Rentier State during Algeria's Hirak By Kubinec, Robert; Milner, Helen
  21. Using a factorial survey to estimate the relative importance of well-being dimensions according to older people: insights from a repeated survey experiment in Flanders By Veerle Van Loon; Koen Decancq

  1. By: Jinglong Zhao; Zijie Zhou
    Abstract: Practitioners and academics have long appreciated the benefits that experimentation brings to firms. For online web-facing firms, however, it still remains challenging in handling heterogeneity when experimental units arrive sequentially in online field experiments. In this paper, we study a novel online experimental design problem, which we refer to as the "Online Stratification Problem." In this problem, experimental units with heterogeneous covariate information arrive sequentially and must be immediately assigned into either the control or the treatment group, with an objective of minimizing the total discrepancy, which is defined as the minimum weight perfect matching between the two groups. To solve this problem, we propose a novel experimental design approach, which we refer to as the "Pigeonhole Design." The pigeonhole design first partitions the covariate space into smaller spaces, which we refer to as pigeonholes, and then, when the experimental units arrive at each pigeonhole, balances the number of control and treatment units for each pigeonhole. We analyze the theoretical performance of the pigeonhole design and show its effectiveness by comparing against two well-known benchmark designs: the match-pair design and the completely randomized design. We conduct extensive simulations to study the numerical performance of the different designs and conclude with practical suggestions.
    Date: 2022–01
  2. By: Dolan, Lindsay; Kubinec, Robert (New York University Abu Dhabi); Nielson, Daniel; Zhang, Jack
    Abstract: Despite the harmful consequences of the U.S-China trade war, only a handful of firms took collective action to oppose it. To understand why, we implemented a field experiment in which we randomly provided detailed estimates of the costs of the trade war to U.S. company managers and measured their willingness to take actions either opposing or supporting the trade war. While overall our treatment counter-intuitively reduced opposition to the trade war, these effects were highly conditional on respondents' prior beliefs and the number of tariffs in their industry. The treatment increased opposition the most among subjects in industries with substantial tariffs who also thought the trade war was harmful. However, it decreased opposition among subjects who held neutral beliefs about the trade war. Finally, we find that a company’s political culture strongly predicts their political activity, suggesting political ideology and not just a company’s business interests shape corporate behavior.
    Date: 2021–11–08
  3. By: Aksoy, Cevat Giray; Carpenter, Christopher S.; De Haas, Ralph; Dolls, Mathias; Windsteiger, Lisa
    Abstract: We study basic information treatments regarding sexual orientation using randomized experiments in three countries with strong and widespread anti-gay attitudes: Serbia, Turkey, and Ukraine. Participants who received information about the economic costs to society of sexual-orientation discrimination were significantly more likely than those in a control group to support equal employment opportunities based on sexual orientation. Information that the World Health Organization (WHO) does not regard homosexuality as a mental illness increased social acceptance of sexual minorities, but only for those who reported trust in the WHO. Our results have important implications for policy makers aiming to expand the rights of lesbian, gay, and bisexual people worldwide.
    Date: 2022–01–07
  4. By: Burton-Chellew, Maxwell; Guérin, Claire
    Abstract: Why does human cooperation often unravel in economic experiments despite a promising start? Previous studies have interpreted the decline as the reaction of disappointed cooperators retaliating in response to lesser cooperators (conditional cooperation). This interpretation has been considered evidence of a uniquely human form of cooperation, motivated by altruistic concerns for fairness and requiring special evolutionary explanations. However, experiments have typically shown individuals information about both their personal payoff and information about the decisions of their groupmates (social information). Showing both confounds explanations based on conditional cooperation with explanations based on individuals learning how to better play the game. Here we experimentally decouple these two forms of information, and thus these two learning processes, in public goods games involving 616 Swiss university participants. We find that payoff information leads to a greater decline, supporting a payoff-based learning hypothesis. In contrast, social information has small or negligible effect, contradicting the conditional cooperation hypothesis. We also find widespread evidence of both confusion and selfish motives, suggesting that human cooperation is maybe not so unique after all.
    Date: 2021–11–22
  5. By: Bogliacino, Francesco (Universidad Nacional de Colombia); Charris, Rafael Alberto (Universidad Nacional de Colombia); Gómez, Camilo Ernesto (Centro de Investigaciones para el Desarrollo); Montealegre, Felipe (Universidad Nacional de Colombia)
    Abstract: This paper is about why suffering a Negative Economic Shock, i.e. a large loss, may trigger a change in behavior. We conjecture that people trade off a concern for money with a conditional preference to follow social norms, and that suffering a shock makes the first motivation more salient, leading to more norm violation. We study this question experimentally: After administering losses on the earnings from a Real Effort Task, we elicit decisions in set of pro-social and anti-social settings. To derive our predictions, we elicit social norms separately from behavior. We find that a shock increases deviations from norms in antisocial settings — more subjects cheat, steal, and avoid retaliation, with changes that are economically large. This is in line with our prediction. The effect on trust and cooperation is instead more ambiguous. Finally, we conducted an additional experiment to study the difference between an intentional shock and a random shock in a trust game. We found that the two induce partially different effects and that victims of intentional losses are more sensible to the in-group belief. This may explain why part of the literature studying shocks in natural settings found an increase in pro-social behavior, contrary to our prediction.
    Date: 2021–11–15
  6. By: Halim, Edward; Riyanto, Yohanes E.; Roy, Nilanjan; Wang, Yan
    Abstract: We design an experiment to study the effects of dark trading on incentives to acquire costly information, price efficiency, market liquidity, and investors' earnings in a financial market. When the information precision is high, adding a dark pool alongside a lit exchange encourages information acquisition, crowds out liquidity from the lit market, and results in a non-linear relationship between price efficiency and dark pool participation. At modest levels, dark pools enhance information aggregation. Investors with stronger signals use the lit exchange relatively more, and uninformed traders are better off when they trade more in the dark pool.
    Keywords: Market institutions, dark pools, information aggregation, the efficiency of security markets, costly information acquisition, experiments
    JEL: C91 C92 G12 G14
    Date: 2022–02–03
  7. By: Jarke-Neuert, Johannes; Perino, Grischa; Schwickert, Henrike
    Abstract: We test the hypothesis that protest participation decisions in an adult population of potential climate protesters are interdependent. Subjects (n=1,510) from the four largest German cities were recruited two weeks before protest date. We measured participation (ex post) and beliefs about the other subjects' participation (ex ante) in an online survey, used a randomized informational intervention to induce exogenous variance in beliefs, and estimated the causal effect of a change in belief on the probability of participation using a control function approach. Participation decisions are found to be strategic substitutes: a one percentage-point increase of belief causes a .67 percentage-point decrease in the probability of participation in the average subject.
    Date: 2021–12–16
  8. By: Christos Ioannou (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Miltiadis Makris (University of Kent [Canterbury]); Carmine Ornaghi (University of Southampton)
    Abstract: The present study proposes a theoretical model that investigates how R&D productivity influences the relationship between product substitutability and R&D investment in a duopolistic market. We argue that the effects on R&D investment are more complex than the previous literature suggests. We show theoretically that, in unlevelled industries, the laggard's R&D investment decreases with product substitutability regardless of the R&D productivity level. In sharp contrast, in levelled industries, whether R&D investment increases or decreases with product substitutability depends crucially on the level of the R&D productivity. We choose parameters and formulate testable predictions that we take to the laboratory. We find that subjects' behavior is largely consistent with the model's predictions.
    Keywords: Experiments,Product Substitutability,R&D Productivity,Duopoly
    Date: 2021
  9. By: Jean-François Bonnefon; Augustin Landier; Parinitha R. Sastry; David Thesmar
    Abstract: We characterize investors’ moral preferences in a parsimonious experimental setting, where we auction stocks with various ethical features. We find strong evidence that investors seek to align their investments with their social values (“value alignment”), and find no evidence of behavior driven by the social impact of investment decisions (“impact-seeking preferences”). First, the willingness to pay for a stock is a linear function of corporate externalities, and is symmetric for positive or negative externalities. Second, whether charity transfers are contingent or independent on investors buying the auctioned stock does not affect their WTP. Our results are thus compatible with a utility model where non-pecuniary benefits of firms’ externalities only accrue through stock ownership, not through the actual impact of investment decisions. Finally, non-pecuniary preferences are linear and additive: willingness to pay for social externalities is proportional to the expected sum of charity transfers made by firms (even if some of these donations are negative).
    JEL: G11 G41 M14
    Date: 2022–01
  10. By: Lergetporer, P (Technical University of Munich and ifo Institute, CESifo); Woessmann, L (University of Munich and ifo Institute, Hoover Institution, Stanford University, CESifo, IZA and CAGE)
    Abstract: We show that the electorate’s preferences for using tuition to finance higher education strongly depend on the design of the payment scheme. In representative surveys of the German electorate (N>18,000), experimentally replacing regular upfront by deferred income-contingent payments increases public support for tuition by 18 percentage points. The treatment turns a plurality opposed to tuition into a strong majority of 62 percent in favor. Additional experiments reveal that the treatment effect similarly shows when framed as loan repayments, when answers carry political consequences, and in a survey of adolescents. Reduced fairness concerns and improved student situations act as strong mediators.
    Keywords: tuition, higher education finance, income-contingent loans, voting JEL Classification: H52, I22, D72
    Date: 2022
  11. By: Burton-Chellew, Maxwell; D'Amico, Victoire; Guérin, Claire
    Abstract: The strategy method is often used in public goods games to measure individuals’ willingness to cooperate depending on the level of cooperation by others (conditional cooperation). However, while the strategy method is informative, it risks being suggestive and inducing elevated levels of conditional cooperation that are not motivated by concerns for fairness, especially in uncertain or confused participants. Here we make 845 participants complete the strategy method two times, once with human and once with computerized groupmates. Cooperation with computers cannot rationally be motivated by concerns for fairness. Worryingly, 69% of participants conditionally cooperated with computers, whereas only 7% conditionally cooperated with humans while not cooperating with computers. Overall, 83% of participants cooperated with computers, contributing 89% as much as towards humans. Results from games with computers present a serious problem for measuring social behaviors.
    Date: 2021–12–04
  12. By: Ramli, Ukasha; Laffan, Kate
    Abstract: Personalised normative messages have been shown to be effective at encouraging both electricity and separately water savings. As use of this approach to promote resource savings becomes increasingly widespread, an important question is whether providing such feedback on consumption of the two resources together can yield reductions in both areas. In a field experiment with over 200,000 households in the Middle East, we send households personalised normative messages regarding both their water and electricity consumption on a monthly basis. This intervention saw a statistically significant reduction of around 1.2% for electricity but not for water consumption. Furthermore, we test different ways of concurrently presenting normative messages of both water and energy, including presenting it as a combined eco score. Local treatment effects of these were around 1.2% reduction. Our findings contribute towards nexus thinking around how (not) to concurrently achieve energy and water savings using normative feedback.
    Keywords: eco-feedback; energy usage; pro-environmental; social norms; water usage
    JEL: L81
    Date: 2022–06–01
  13. By: Ahrash Dianat (University of Essex); Federico Echenique (Caltech); Leeat Yariv (Princeton University)
    Abstract: We present results from laboratory experiments studying statistical discrimination and affirmative action. We induce statistical discrimination in simple labor-market interactions between firms and workers. We then introduce affirmative-action policies that vary in the size and duration of a subsidy that firms receive for hiring discriminated against workers. These different affirmative-action policies have nearly the same effect, and practically eliminate discriminatory hiring practices. However, once lifted, few positive effects remain and discrimination reverts to its initial levels. One exception is lengthy affirmative-action policies, which exhibit somewhat longer-lived effects. Stickiness of beliefs, which we elicit, helps explain the observed outcomes.
    Keywords: Statistical Discrimination, Affirmative Action, Experiments
    JEL: J71 D04 C91
    Date: 2021–10
  14. By: Bogliacino, Francesco (Universidad Nacional de Colombia); Mantilla, Cesar; Niño Eslava, Daniel
    Abstract: We designed and conducted an experiment of common-pool resource management involving economic and political inequality. Participants are assigned to different types differing in their endowments-Poor, Middle and Rich-and play an appropriation dilemma, with and without a voting procedure to select a quota limiting maximum extraction. Political inequality is introduced by allocating a higher likelihood to select the voted quota of a given player type: in the Ptochocracy treatment, the "Poor" type has a higher chance of setting her choice as quota; whereas in the Demarchy and Plutocracy treatments, this is true for the "Middle" and "Rich" types, respectively. These are contrasted with Democracy, where the votes of all three types are equally likely to be selected. Theoretically, each player type selfishly prefers the quota closer (i.e., one unit below) their endowment, although the lower quota would be socially desirable. We find that participants voted for the selfishly preferred quota between half and two-thirds of the time, and the introduction of these quotas decreased the absolute extraction in about 17.5%, even though participants were more likely to choose extraction levels closer to their maximum capacity (now set by the quota). Nonetheless, we do not find systematic differences in extraction patterns between treatments.
    Date: 2021–11–03
  15. By: KUBO, Takahiro; Yokoo, Hide-Fumi; Veríssimo, Diogo
    Abstract: Funding shortage limits conservation impact, making it vital to find effective fundraising methods. To explore how traditional and digital conservation fundraising methods perform, we conducted real-world field experiments by using mailshot and Facebook advertisements. We compare three types of message frames (Simple, Seed money, and Ecological) and found that the Seed money frame, which emphasizes the amount already donated, increased the number of donors, whereas the Ecological frame, which focuses on the fact that the fundraiser benefits threatened species, led to a relative reduction in this number. We also found that while on Facebook advertising costs were higher than donations, the opposite was true for the traditional mailshot experiment. Our findings illustrate some of the challenges associated with online fundraising, and importance of behavioral evidence to enhance effective fundraising in conservation.
    Date: 2021–10–19
  16. By: Harald Mayr
    Abstract: Search frictions impede the labor market. Despite this indisputable fact, it is a priori unclear how job search costs affect search duration and unemployment: lower search costs make it easier to find a job, reducing search duration and unemployment, but may also increase the reservation wage, increasing search duration and unemployment. I collaborate with a recruiting company to directly test the effects of lower search costs in a field experiment among approximately 400 IT professionals in Switzerland. I find that workers are more likely to search for detailed job information, but not to file a job application, when search costs are lower. These findings are consistent with an increase in the reservation wage. Lower search costs might lead to picky workers, but fail to ultimately reduce search duration and unemployment.
    Keywords: Job search, search costs, search frictions, recruiting, reservation wage
    JEL: J63 J64 J24 M50 M54
    Date: 2022–02
  17. By: Aassve, Arnstein; Capezzone, Tommaso; Cavalli, Nicolo'; Conzo, Pierluigi; Peng, Chen
    Abstract: The COVID-19 pandemic has exposed most countries to an unexpected crisis, with unclear consequences for citizens’ trust in others and in public authorities. This study shed lights on how social and political trust changed during the pandemic. We conducted a longitudinal survey in the US of about 1000 respondents at three points in time during the pandemic. We elicited respondents’ trust towards other people and towards different institutional authorities, along with attribution of responsibility for the current situation. Results show that institutional trust fell, while interpersonal trust slightly increased, especially during the peak of the first pandemic wave. This dynamic was mainly driven by Republicans, whose institutional trust decreased, especially when exposed to COVID-19, along with growth in social trust. Considering that Republicans attributed, at the time, more responsibilities to their political leader, we argue that institutional trust was crowded out by social trust. Disappointed voters felt unprotected by institutions and looked for support elsewhere in society. Consistent with this, though, in the reverse direction, experimental results from the third wave show that Republicans increased institutional trust. However, social trust fell when primed with positive information about the pandemic. Overall, these findings suggest that societal shocks may induce people to exchange formal with informal institutions as a coping strategy, with social and political trust moving in opposite directions.
    Date: 2022–01–27
  18. By: Zhang, Meng Le
    Abstract: Our neighbours can potentially influence our behaviour. For instance, poor health behaviours amongst neighbours may normalise and reinforce our poor health behaviours. This is an example of a peer effect. Imitative behaviour can cause small initial changes in individual behaviour to spread amongst their social networks and result in a social multiplier effect. Understanding the size and mechanisms behind the social multiplier effect allows for more effective health interventions. It also helps us understand why persistent health inequalities exist across different neighbourhoods and social groups. In an ideal experiment, we would randomly allocate people into treatment and control groups and change the behaviours of persons A in the treatment group (directly or through incentives). Then we would observe the effects of changes in person A's behaviour on their neighbour person B. This ideal experiment is practically and (possibly) ethically unfeasible. Furthermore, data on a large enough sample of people and their neighbours is very expensive to collect. Instead of a normal experiment, we can use natural experiments which change person A's behaviour. In this paper, we use a well-known natural experiment that affects women's fertility and, indirectly, their labour market participation. Furthermore, data on people and their neighbours are available from the Northern Ireland Longitudinal Study (NILS). The Northern Ireland Longitudinal Study (NILS) is a longitudinal study consisting of 28% of the NI census and roughly 50% of all households. The NILS is linked to a database of all addressable properties in NI which include the coordinates of residences. In theory, NILS contains a large sample of households in NI and their close neighbours that can be used for studying peer effects. This project is a proof of concept for studying peer effects using NILS. If any random intervention exists (e.g. natural, quasi- or actual randomised trial) then NILS can always be used to study peer effects (amongst neighbours). This is significant because peer effects are notoriously hard to study due data limitations and a large number of credible natural experiments exist in health research. This project's contribution is the discovery that NILS almost uniquely placed as resource for studying peer effects in the UK.
    Date: 2021–12–03
  19. By: Devesh Rustagi (School of Economics, University of Nottingham); Markus Kroell (private sector)
    Abstract: There is astounding variation in product quality sold in markets even when quality is difficult to ascertain and rules are poorly enforced. We investigate whether sellers differ in innate honesty (incur private cost to provide good quality) and whether this explains the variation in quality. Our study takes place in milk markets in India, where milkmen collude on price, customer rarely switch, and it is difficult to establish reputation. We invite milkmen to take part in a novel behavioral experiment to measure dishonesty. We then measure quality objectively as the percentage of water added to a liter of milk sold to customers. Our results show that dishonest milkmen add significantly more water to milk. Evidence from milk-testing tournament confirms that milk quality is difficult to verify. These results suggest that some sellers are willing to forego monetary gains to provide good quality in return for utility from being honest, even in an environment that encourages cheating.
    Keywords: Honesty, adulteration, milk markets, asymmetric information, measurement error, India
    Date: 2022–03
  20. By: Kubinec, Robert (New York University Abu Dhabi); Milner, Helen
    Abstract: In this paper we examine the rentier thesis that a state's control over oil resources should help it resist calls for democratization. During Algeria's mass mobilization for regime change known as the Hirak in 2019, we implemented an interactive experimental treatment providing specific information about the Algerian government's high subsidies of gasoline and low value-added taxes with regional comparisons. Based on a sample of 5,968 Algerians, we find that when Algerians learn about their country's relatively high level of fuel subsidies and low level of taxes, their assessments of the government's performance improves; however, we do not see similar patterns for respondents' expressed intention to join the protests due to treatment heterogeneity defined by respondent wealth. Wealthier respondents report lower protest intentions upon learning about the scope of the rentier state, whereas poorer respondents report much higher protest intentions upon receiving the treatment. As a result, we find that the rentier state may be capable of improving perceptions of regime performance, yet still permit mass mobilization if there are class differences in the perceived benefits derived from redistribution.
    Date: 2021–12–27
  21. By: Veerle Van Loon; Koen Decancq
    Date: 2021–10

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