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on Experimental Economics |
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Issue of 2022‒07‒25
twenty-one papers chosen by |
| By: | Christoph Huber; Michael Kirchler |
| Abstract: | Experiments can complement other methods in identifying causal relationships and in measuring behavioral deviations from theoretical predictions. While the experimental method has long been central in many scientific disciplines, it was almost nonexistent in finance until the 1980s. To survey the development of experiments in finance, we compile a comprehensive account of experimental studies published in the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Review of Finance, Journal of Quantitative and Financial Analysis, and Journal of Banking and Finance—as well as of experimental finance studies published in the Top 5 journals in economics. With this novel dataset, we identify historical trends in experimental finance. Since the first experiments where published in finance journals in the 1980s, and especially in the last 20 years, the share of experimental publications in these journals has increased strongly. We report trends towards descriptive experiments, individual decision experiments, and field experiments. |
| Keywords: | Experimental finance, laboratory experiments, field experiments, survey. |
| JEL: | B41 C90 G00 G41 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2022-09&r= |
| By: | Vincenzo Galasso; Massimo Morelli; Tommaso Nannicini; Piero Stanig |
| Abstract: | We evaluate how traditional parties may respond to populist parties on issues that are particularly fitting for populist messages. The testing ground is the 2020 Italian referendum on the reduction of members of Parliament. We implement a large-scale field experiment, with almost one million impressions of programmatic advertising, and a survey experiment. Our treatments are an informative video on the likely costs of cutting MPs, aimed at deconstructing the populist narrative, and a reducing trust video aimed at attacking the credibility of populist politicians. Our field experiment shows that the latter video is more effective at capturing the viewers’ attention. It decreases the turnout rate and, albeit less, the “Yes” votes (in favor of cutting MPs). We present a theoretical framework based on trust in traditional parties and information acquisition to account for our findings and provide additional predictions. In the survey experiment, both (unskippable) videos reduce the “Yes” votes and increase the share of undecided. Confirming the theory, for voters of traditional parties the effects are concentrated among people with low information, while for voters of populist parties previous information plays no role. Our findings show that campaign messages should target not only demographic characteristics but also trust attitudes. |
| Keywords: | field experiment, programmatic advertisement, electoral campaign |
| JEL: | D72 C93 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9789&r= |
| By: | Sylvain Chareyron; Yannick L'Horty; Pascale Petit |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:tep:teppwp:wp22-02&r= |
| By: | Sylvain Chareyron; Yannick L'Horty; Souleymane Mbaye; Pascale Petit |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:tep:teppwp:wp22-03&r= |
| By: | Ana Galvao; James Mitchell |
| Abstract: | Economic statistics are commonly published without any explicit indication of their uncertainty. To assess if and how the UK public interpret and understand data uncertainty, we conduct two waves of a randomized controlled online experiment. A control group is presented with the headline point estimate of GDP, as emphasized by the statistical office. Treatment groups are then presented with alternative qualitative and quantitative communications of GDP data uncertainty. We find that most of the public understand there is uncertainty inherent in official GDP numbers. But communicating uncertainty information improves understanding. It encourages the public not to take estimates at face-value, but does not decrease trust in the data. Quantitative tools to communicate data uncertainty – notably intervals, density strips and bell curves – are especially beneficial. They reduce dispersion of the public’s subjective probabilistic expectations of data uncertainty, improving alignment with objective estimates. |
| Keywords: | data revisions, data uncertainty, uncertainty communication |
| JEL: | C82 D80 E01 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:escoed:escoe-dp-2021-06&r= |
| By: | Kaisa ⓡ, Nurminen, Tuomas ⓡ, Miettinen, Topi ⓡ, Metsälampi, Satu ⓡ Kotakorpi; Kaisa Kotakorpi |
| Abstract: | We investigate effects of tax reporting institutions on evasion and incidence using an experimental double auction market setting. We find that 28% of the sellers are truthful when only sellers report, but that 88% and 64% of them are truthful under costless and costly third-party reporting by buyers, respectively. Reporting behavior therefore responds to the intensity of deterrence. However, we find that prices do not fully reflect the lower taxes of the evaders. Thus, when only sellers report, tax incidence deviates from the prediction of the standard model, and there is deadweight loss even if tax revenue is low. Pricing, incidence, and reporting patterns in all treatments can be explained by a model of lying costs with image concerns that give rise to a motivation to appear honest. |
| Keywords: | tax evasion, tax incidence, third-party reporting, double auction, social image, experiment |
| JEL: | H21 H22 H26 D40 D44 D91 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9791&r= |
| By: | Lisette Ibanez (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro - Montpellier SupAgro - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Sébastien Roussel (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro - Montpellier SupAgro - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement) |
| Abstract: | Communication policies employed by policymakers and non-governmental organizations (NGOs) often appeal to the emotions to persuade people to adopt virtuous behavior. The aim of this paper is to study the impact of induced emotions on pro-environmental behavior (PEB). We design a three-stage laboratory experiment. In the first stage, we determine the level of the subjects' environmental awareness. In the second stage, subjects read scripts that place them in realistic hypothetical scenarios designed to induce specific emotions. We implement a 2 x 2 in-between design by varying both the valence and social dimension of the four emotional states induced: happiness, sadness, pride and shame. In the third stage, subjects play a modified dictator game in which the recipient is an environmental non-governmental organization (ENGO). We show that the emotional states of subjects can influence PEB. In particular, negative emotions significantly reduce the average individual amount of donations made to ENGOs. We also find that the precise impact of the emotional states is more complex and appears to be dependent on individuals' characteristics and awareness for environmental issues. For instance, in positive emotional states, men donate significantly less than women. In addition, a high level of environmental awareness increases donations in subjects experiencing shame and decreases their likelihood to donate when feeling pride. Also, we observe behavioral consistency for negative emotions and rather compensatory behavior for positive emotions. |
| Keywords: | Emotions,Happiness,Prosocial Behavior,Dictator game,Educational attainment,Decision making,Experimental economics,advertising |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03352952&r= |
| By: | Alessandro De Chiara; Florian Engl; Holger Herz; Ester Manna |
| Abstract: | Companies typically control various aspects of their workers’ behaviors. In this paper, we investigate whether the hierarchical distance of the superior who imposes such control measures matters for the workers’ ensuing reaction. In particular, we test, in a laboratory experiment, whether potential negative behavioral reactions to imposed control are larger when they are implemented by a direct superior rather than a hierarchically more distant superior. We find that hierarchical proximity indeed magnifies such control aversion and discuss several potential channels for this result. |
| Keywords: | control aversion, hierarchies, delegation, principal-agent-problem |
| JEL: | C92 D23 M12 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9779&r= |
| By: | Sam Jones; Kunal Sen |
| Abstract: | Can digital labour market platforms reduce search frictions in either formal or informal labour markets? We study this question using a randomized experiment embedded in a tracer study of the work transitions of graduates from technical and vocational colleges in Mozambique. We implement an encouragement design, inviting graduates by SMS to join one of two local digital platforms: Biscate , a site to find freelancers for informal manual tasks; and Emprego , a conventional formal jobs website. |
| Keywords: | Job search, Search frictions, Unemployment, Mozambique, Labour market outcomes |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2022-69&r= |
| By: | John List |
| Abstract: | These are the slides from John A. List's keynote at the 2022 AFE conference. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00755&r= |
| By: | Emanuele Colonnelli; Bo Li; Ernest Liu |
| Abstract: | We study the demand for government participation in China’s venture capital and private equity market. We conduct a large-scale, non-deceptive field experiment in collaboration with the leading industry service provider, through which we survey both sides of the market: the capital investors and the private firms managing the invested capital by deploying it to high-growth entrepreneurs. Our respondents together account for nearly $1 trillion in assets under management. Each respondent evaluates synthetic profiles of potential investment partners, whose characteristics we randomize, under the real-stakes incentive that they will be introduced to real partners matching their preferences. Our main result is that the average firm dislikes investors with government ties, indicating that the benefits of political connections are small compared to the cons of having the government as an investor. We show that such dislike is not present with government-owned firms, and this dislike is highest with best-performing firms. Additional results and follow-up surveys suggest political interference in decision-making is the leading mechanism why government capital is unattractive to private firms. We feed our experimental estimates and administrative data into a simple model of two-sided search to discuss the distributional effects of government participation. Overall, our findings point to a “grabbing hand” interpretation of state-firm relationships reflecting a desire by the government to keep control over the private sector. |
| JEL: | C93 D2 D20 D22 G0 G02 G18 G28 G3 G38 G4 O0 O1 O14 O16 O17 O25 O3 O38 O4 O40 O47 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30161&r= |
| By: | Nestor Gandelman (Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales. Departmento de Economía); Diego Lamé |
| Abstract: | Using a standard trust game, we elicit trust and reciprocity measures in a representative sample of adult players in Montevideo, the capital city of Uruguay, a country that exhibits relatively better levels of tolerance towards migrants than other Latin American countries. We find no statistically significant differences in trust levels of Uruguayans towards countrymen versus migrants. In reciprocity, we find only marginally significant differences attributable to the nationality of the players. |
| Keywords: | Trust, Reciprocity, Experimental games, Migrations |
| JEL: | C9 J15 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:avs:wpaper:128&r= |
| By: | Jonas Hjort (Columbia University [New York], CEPR - Center for Economic Policy Research - CEPR); Vinayak Iyer (Columbia University [New York]); Golvine de Rochambeau (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Evidence suggests that firms in poor countries stagnate because they cannot access growth-conducive markets. We hypothesize that overlooked heterogeneity in marketing ability distorts market access. To investigate, we gave a random subset of Liberian firms vouchers for a week-long program that teaches how to sell to corporations, governments, and other large buyers. Firms that participate win about three times as many contracts, but only firms with access to the Internet benefit. We use a simple model and variation in online and offline demand to show evidence that this is because ICT dampens traditional information frictions, but not marketing barriers. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpspec:hal-03389180&r= |
| By: | Yuehao Bai; Jizhou Liu; Max Tabord-Meehan |
| Abstract: | This paper studies inference in randomized controlled trials with multiple treatments, where treatment status is determined according to a "matched tuples" design. Here, by a matched tuples design, we mean an experimental design where units are sampled i.i.d. from the population of interest, grouped into "homogeneous" blocks with cardinality equal to the number of treatments, and finally, within each block, each treatment is assigned exactly once uniformly at random. We first study estimation and inference for matched tuples designs in the general setting where the parameter of interest is a vector of linear contrasts over the collection of average potential outcomes for each treatment. Parameters of this form include but are not limited to standard average treatment effects used to compare one treatment relative to another. We first establish conditions under which a sample analogue estimator is asymptotically normal and construct a consistent estimator of its corresponding asymptotic variance. Combining these results establishes the asymptotic validity of tests based on these estimators. In contrast, we show that a common testing procedure based on a linear regression with block fixed effects and the usual heteroskedasticity-robust variance estimator is invalid in the sense that the resulting test may have a limiting rejection probability under the null hypothesis strictly greater than the nominal level. We then apply our results to study the asymptotic properties of what we call "fully-blocked" $2^K$ factorial designs, which are simply matched tuples designs applied to a full factorial experiment. Leveraging our previous results, we establish that our estimator achieves a lower asymptotic variance under the fully-blocked design than that under any stratified factorial design. A simulation study and empirical application illustrate the practical relevance of our results. |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2206.04157&r= |
| By: | Moritz Grebe (University of Giessen); Peter Tillmann (University of Giessen) |
| Abstract: | This paper studies the impact of dissent in the ECB's Governing Council on uncertainty surrounding households' inflation expectations. We conduct a randomized controlled trial using the Bundesbank Online Panel Households. Participants are provided with alternative information treatments concerning the vote in the Council, e.g. unanimity and dissent, and are asked to submit probabilistic inflation expectations. The results show that the vote is informative. Households revise their subjective inflation forecast after receiving information about the vote. Dissenting votes cause a wider individual distribution of future inflation. Hence, dissent increases households' uncertainty about inflation. This effect is statistically significant once we allow for the interaction between the treatments and individual characteristics of respondents. The results are robust with respect to alternative measures of forecast uncertainty and hold for different model specifications. Our findings suggest that providing information about dissenting votes without additional information about the nature of dissent is detrimental to coordinating household expectations. |
| Keywords: | central bank communication, disagreement, inflation expectations, randomized controlled trial, survey |
| JEL: | E52 E43 E32 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202226&r= |
| By: | Joanna Lahey; Roberto M. Mosquera |
| Abstract: | We explore the labor market for Hispanic high school graduates in the United States by age using information from the US Census, American Community Survey, Current Population Survey, and three laboratory experiments. We find, in general, that the differences in outcomes for Hispanic and non-Hispanic high school graduates do not change across the lifecycle. Moving to a laboratory setting, we provided participants with randomized resumes for a clerical position that are on average equivalent except for name and age (as indicated by date of high school graduation). In all three experiments, hypothetical applicants with Hispanic and non-Hispanic names were generally treated the same across the lifecycle by a student population, a population of human resources managers, and a more general population from mTurk. These results stand in contrast to earlier results that find strong differences by age in how resumes with Black and White names are treated. |
| JEL: | C91 J14 J15 J18 J7 M5 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30171&r= |
| By: | David L. Dickinson |
| Abstract: | The confirmation bias is a well-known form of motivated reasoning that serves to protect an individual from discomfort. Hearing opposing viewpoints or information creates cognitive dissonance, and so avoiding exposure to, or discounting the validity of, dissonant information are rational strategies that may help avoid or mitigate negative emotion. Because there is often a systematic thought process involved in generating the confirmation bias, deliberation tends to promote this behavioral bias. Nevertheless, the importance of negative emotion in triggering the need for this bias is an underappreciated facet of the confirmation bias. This paper addresses this gap in the literature by examining mood and the confirmation bias in the political domain. Using data from two studies and three distinct decision tasks, we present data on over 1100 participants (Study 1, n=611; Study 2, n=503) that document the confirmation bias in different settings. Specifically, task 1 (Study 1) examines perceptions of opposing argument strength in a classic confirmation bias task. Task 2 (Study 1) is a novel task that measures the change in one’s perceptions and normative preferences regarding political issues after receipt of a random issue-specific informational message. Finally, Task 3 (Study 2) administers a Bayesian decision task to examine one’s belief-updating regarding the truthfulness of factual political statements after receipt of a noisy signal about whether the statement is true or false. All methods (recruitment and sample size, hypotheses, variables, analysis plans, etc.) were preregistered on the Open Science Framework. Our data show evidence of a confirmation bias across the variety of tasks administered, which covered distinct dimensions of belief and preference formation. As hypothesized, the data show a strong increase in self-reported negative mood states after viewing political statements or information that are dissonant with one’s political ideology. Finally, while not as robust across tasks, we report evidence that supports our hypothesis that negative mood will moderate the strength of the confirmation bias. Together, these results highlight the importance of mood response in understanding the confirmation bias, which helps further our understanding of how this bias may be particularly difficult to combat. Key Words: confirmation bias; sleep; deliberation; cognitive reflection; motivated reasoning |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:22-04&r= |
| By: | Jonathan Chapman; Erik Snowberg; Stephanie Wang; Colin Camerer |
| Abstract: | We measure individual-level loss aversion using three incentivized, representative surveys of the U.S. population (combined N = 3,000). We find that around 50% of the U.S. population is loss tolerant, with many participants accepting negative-expected-value gambles. This is counter to earlier findings−which mostly come from lab/student samples−and expert predictions that 70-90% of participants are loss averse. Consistent with the difference between our study and the prior literature, loss aversion is more prevalent in people with high cognitive ability. Loss-tolerant individuals are more likely to report recent gambling and to have experienced financial shocks. These results support the general hypothesis that individuals value gains and losses differently, although the tendency in a large proportion of the population to emphasize gains over losses is an overlooked behavioral phenomenon. |
| Keywords: | loss aversion, DOSE, risk preferences, cognitive ability, negative shocks, gambling |
| JEL: | C81 C90 D03 D81 D90 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9820&r= |
| By: | Sophie Cetre (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This thesis investigates the determinants of wage inequality through a behavioral economics perspective. Chapter one analyzes how students make educational choices that will influence the course of their professional careers. Exploiting novel data from the content of letters of motivation written by students, it measures how they update their beliefs about their academic preferences and how they take ability signals into account. Chapter two describes the results of a lab experiment studying people's distributive preferences. It shows that, behind the veil of ignorance, individuals largely favor larger inequality when it is efficient. But when inequality becomes more concrete, a quarter of subjects engage in money burning at the top in order to reduce inequality, even when it does not make anyone better off. A majority of subjects embrace a more equal distribution if their own income or overall efficiency is not at stake. The third chapter investigates how managers' distributive preferences affect wage allocations within firms, using both firm survey data and a lab experiment. It shows that managers hold normative distributive preferences and are willing to pay to implement them. Chapter four analyzes the results of an online experiment on ethnic discrimination conducted on representative samples of the US and Germany. It describes the patterns of ingroup favoritism, both between and within countries. It shows that releasing information about the economic success of ethnic minorities successfully reduces discrimination from the ethnic majority. However, this piece of information can backfire, as it can increase mistrust within minorities. |
| Abstract: | Cette thèse examine les déterminants des inégalités salariales, du point de vue de l'économie comportementale. Le premier chapitre analyse les choix d'orientation des étudiants dans le supérieur. En fondant notre analyse sur le contenu de lettres de motivation, nous décrivons l'évolution de leurs préférences scolaires et la manière dont ils prennent en compte des informations relatives à leurs capacités dans différentes matières. Le deuxième chapitre décrit les résultats d'une expérience étudiant les préférences en matière d'attribution des revenus. Nous montrons que, derrière le voile d'ignorance, les individus favorisent largement des inégalités plus importantes lorsqu'elles sont aussi plus efficaces. Mais lorsque ces inégalités apparaissent concrètement, un quart des sujets préfère réduire le montant attribué aux plus riches, même si cela n'améliore la situation de personne. Le troisième chapitre étudie la manière dont les préférences distributives des managers affectent la répartition des salaires, en se fondant sur des données d'enquête et une expérience. Nous montrons que les managers ont des préférences distributives normatives et sont prêts à payer pour les mettre en œuvre. Le quatrième chapitre analyse les résultats d'une expérience en ligne sur la discrimination ethnique aux États-Unis et en Allemagne. Nous comparons les caractéristiques du favoritisme ethnique au sein de chaque pays. Nous montrons que divulguer des informations sur la réussite économique des minorités ethniques permet de réduire le comportement discriminatoire de la majorité ethnique. Cependant, ces informations peuvent accroître la méfiance entre deux personnes issues de la même minorité. |
| Keywords: | Inequality,Distributive preferences,Higher education,Ethnic discrimination,Inégalités,Préférences distributives,Education supérieure,Discrimination ethnique |
| Date: | 2020–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpspec:tel-03408393&r= |
| By: | Sylvain Chassang (Princeton University); Lucia Del Carpio (INSEAD); Samuel Kapon (Princeton University) |
| Abstract: | We consider a government collecting taxes from a large number of tax-payers using limited enforcement capacity. Under random enforcement, limited capacity results in multiple equilibria: if most agents comply, limited enforcement is sufficient to dissuade individual misbehavior; if most agents do not comply, enforcement capacity is overstretched and fails to dissuade misbehavior. In settings without behavioral frictions, prioritized enforcement strategies can implement high collection as the unique rationalizable outcome. Motivated by a field implementation opportunity, we investigate both theoretically and experimentally the extent to which this insight extends to environments with incomplete information and bounded rationality. |
| Keywords: | tax collection, government capacity, divide and conquer |
| JEL: | H20 H29 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:299&r= |
| By: | Fulya Ersoy |
| Abstract: | While distance learning has become widespread, causal estimates regarding returns to effort in technology-assisted learning environments are scarce due to high attrition rates and endogeneity of effort. In this paper, I manipulate effort by randomly assigning students different numbers of lessons in a popular online language learning platform. Using administrative data from the platform and the instrumental variables strategy, I find that completing 9 Duolingo lessons, which corresponds to approximately 60 minutes of studying, leads to a 0.057-0.095 standard deviation increase in test scores. Comparisons to the literature and back-of-the-envelope calculations suggest that distance learning can be as effective as in-person learning for college students for an introductory language course |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00756&r= |