nep-exp New Economics Papers
on Experimental Economics
Issue of 2022‒08‒08
fifteen papers chosen by

  1. Optimality of Matched-Pair Designs in Randomized Controlled Trials By Yuehao Bai
  2. Untapping Beer Terroir: Experimental Evidence of Regional Variation in Hop Flavor Profiles By Malone, Trey; Staples, Aaron J.; Sirrine, J. Robert; Mull, Alec; Stuhr, Scott; Adams, Alex
  3. Peer effects, self-selection and dishonesty By Liza Charroin; Bernard Fortin; Marie Claire Villeval
  4. An Experiment on Demand Commitment Bargaining By Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada
  5. Valuations of Transport Nuisances and Cognitive Biases: A Survey Laboratory Experiment in the Pyrenees Region By Laurent Denant-Boèmont; Javier Faulin; Sabrina Hammiche; Adrian Serrano-Hernandez
  6. Bridging America's Divide on Abortion, Guns and Immigration: An Experimental Study By Michele Belot; Guglielmo Briscese
  7. Study More Tomorrow By Pugatch, Todd; Schroeder, Elizabeth; Wilson, Nicholas
  8. Armed conflict exposure and trust: Evidence from a natural experiment in Turkey By Arzu Kibris; Lena Gerling
  9. On the Performance of the Neyman Allocation with Small Pilots By Yong Cai; Ahnaf Rafi
  10. How information about foreign aid affects public spending decisions: evidence from a field experiment in Malawi By Seim, Brigitte; Jablonski, Ryan S.; Ahlback, Johan
  11. The (in)stability of farmers’ risk preferences By Finger, Robert; Wüpper, David; McCallum, Chloe
  12. How Does Job Coaching Help Disability Insurance Recipients Work While on Claim? By Fontenay, Sébastien; Tojerow, Ilan
  13. A Horse Race of Monetary Policy Regimes: An Experimental Investigation By Olena Kostyshyna; Luba Petersen; Jing Yang
  14. Norm from the top: a social norm nudge to promote low-practiced behaviors without boomerang effect By Alix Rouillé
  15. Customisable or local? Consumers’ preferences and willingness for the characteristics of fruit and vegetable box schemes in Scotland By Akaichi, Faical; Toma, Luiza

  1. By: Yuehao Bai
    Abstract: In randomized controlled trials (RCTs), treatment is often assigned by stratified randomization. I show that among all stratified randomization schemes which treat all units with probability one half, a certain matched-pair design achieves the maximum statistical precision for estimating the average treatment effect (ATE). In an important special case, the optimal design pairs units according to the baseline outcome. In a simulation study based on datasets from 10 RCTs, this design lowers the standard error for the estimator of the ATE by 10% on average, and by up to 34%, relative to the original designs.
    Date: 2022–06
  2. By: Malone, Trey; Staples, Aaron J.; Sirrine, J. Robert; Mull, Alec; Stuhr, Scott; Adams, Alex
    Abstract: Thanks in part to the push for localized supply chains, U.S. hop production is becoming more regionally diverse. Differentiation in geographies implies changes in growing climates and other environmental factors known to alter the flavor profiles of agricultural commodities used in food and drink. We use a chemical analysis, blind taste test, and choice experiment to identify whether the same hop cultivar grown in different regions induces a unique sensory profile in hops and beer. The chemical analysis and taste test provide evidence of hop terroir, while we find that brewers are willing to pay a premium for local hops.
    Keywords: Crop Production/Industries, Agribusiness
    Date: 2021
  3. By: Liza Charroin (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Bernard Fortin (ULaval - Université Laval [Québec]); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics)
    Abstract: If individuals tend to behave like their reference group, is it because of peer effects, selfselection, or both? Using a peer effect model allowing for conformity and link formation, we designed a real-effort laboratory experiment in which individuals could misreport their performance and select their peers. Our results reveal both a preference for conformity and homophilous link formation, but only among individuals cheating in isolation. This suggests that such link formation was not motivated by a taste for similarity but by acquiring self-serving information. Importantly, we reject the presence of a self-selection bias in the peer effect estimates by showing that the size of peer effects is similar when identical peers were randomly assigned and when individuals selected them.
    Keywords: Peer effects,Self-selection,Homophily,Dishonesty,Experiment
    Date: 2022
  4. By: Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada
    Abstract: In this experiment, we compare three implementations of the Winter demand commitment bargaining mechanism: a one-period implementation, a two-period implementation with low delay costs, and a two-period implementation with high delay costs. Despite the different theoretical predictions, our results show that the three different implementations result in similar outcomes in all our investigation domains: namely, coalition formation, alignment with the Shapley value prediction, and satisfaction of the axioms. Our results suggest that a lighter bargaining implementation with only one period is often sufficient in providing allocations that sustain the Shapley value as an appropriate cooperative solution concept, while saving unnecessary time and resource costs.
    Date: 2021–11
  5. By: Laurent Denant-Boèmont (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Javier Faulin (UPNA - Universidad Pública de Navarra [Espagne] = Public University of Navarra); Sabrina Hammiche (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Adrian Serrano-Hernandez (UPNA - Universidad Pública de Navarra [Espagne] = Public University of Navarra)
    Abstract: We designed a survey that aims at estimating individual willingness-to-pay to reduce noise and air pollution arising from transportation activity near the Pyrenees in Navarre (Spain). Our participants cope with a series of contingent valuation questions and also with an economic experiment with real incentives about the same topic. Our goal is to identify several methodological problems in the valuation process coming from hypothetical bias, correlation effect and sequence effect when series of responses are requested. Our main results are that hypothetical bias is significant, because the willingness-to-pay is greater when the survey is hypothetical compared to when there is real monetary incentive. Likewise, the correlation effect also observes the same behavior since the willingness-to-pay for pollution mitigation is close to the one established for noise reduction. Finally, we have obtained mixed evidence for the sequence effect, being present only in the contingent valuation survey part.
    Keywords: Willingness-to-pay,Transport externality,Pollution,Cognitive bias,Laboratory economic experiment,Transportation
    Date: 2022–02
  6. By: Michele Belot; Guglielmo Briscese
    Abstract: Americans appear increasingly polarized and unable to bridge ideological divides. We study individuals' willingness to engage with others who hold opposite views on polarizing policies. Two thousand five hundred Americans are given the opportunity to listen to recordings of fellow countrymen and women expressing their views on immigration, abortion laws and gun ownership laws. We find that most Americans (more than two-thirds) are willing to listen to a view opposite to theirs, and a small fraction (ten percent) reports changing their views as a result. We also test whether emphasizing common grounds with those who think differently helps bridging views. We identify principles the vast majority of people agree upon: (1) a set of fundamental human rights, and (2) a set of simple behavioral etiquette rules. A random subsample of people are made explicitly aware they share common views, either on human rights or etiquette rules, before they have the opportunity to listen to different views. We find that the treatments induce people to adjust their views towards the center on abortion and immigration, relative to a control group, thus potentially reducing polarization.
    Date: 2022–06
  7. By: Pugatch, Todd (Oregon State University); Schroeder, Elizabeth (Oregon State University); Wilson, Nicholas (Robinhood)
    Abstract: We design a commitment contract for college students, "Study More Tomorrow," and conduct a randomized control trial testing a model of its demand. The contract commits students to attend peer tutoring if their midterm grade falls below a prespecified threshold. The contract carries a financial penalty for noncompliance, in contrast to other commitment devices for studying tested in the literature. We find demand for the contract, with take-up of 10% among students randomly assigned a contract offer. Contract demand is not higher among students randomly assigned to a lower contract price, plausibly because a lower contract price also means a lower commitment benefit of the contract. Students with the highest perceived utility for peer tutoring have greater demand for commitment, consistent with our model. Contrary to the model's predictions, we fail to find evidence of increased demand among present-biased students or among those with higher self-reported tendency to procrastinate. Our results show that college students are willing to pay for study commitment devices. The sources of this demand do not align fully with behavioral theories, however.
    Keywords: economics of education, higher education, commitment contracts, randomized control trials
    JEL: D91 I21 I23
    Date: 2022–06
  8. By: Arzu Kibris (University of Warwick); Lena Gerling (University of Muenster)
    Abstract: We study the individual-level effects of exposure to internal armed conflict on social capital, focusing on trust in institutions and in social relations. We introduce new data from a large-N field survey we conducted in Turkey in 2019, exploiting a natural experimental setting that is created by the military institutions and the geography of the long running civil conflict in the country. This setting allows us to identify and analyze the causal impacts of conflict exposure on trust assessments of our respondents in isolation from possible confoundment by conflict-related changes in the socio-economic environment. Results indicate heterogenous effects depending on the type of exposure. We find that while exposure to the conflict environment increases trust, those who directly experience violent events in that environment exhibit lower levels of trust. We document that the results are comparable for two different dimensions of trust, namely institutional trust and social trust. We then show that the effects transmit through exposure-induced changes in an individual’s worldviews. Our results highlight the legacies of internal conflicts on beliefs and behavior.
    Date: 2022–01
  9. By: Yong Cai; Ahnaf Rafi
    Abstract: The Neyman Allocation and its conditional counterpart are used in many papers on experiment design, which typically assume that researchers have access to large pilot studies. This may not be realistic. To understand the properties of the Neyman Allocation with small pilots, we study its behavior in a novel asymptotic framework for two-wave experiments in which the pilot size is assumed to be fixed while the main wave sample size grows. Our analysis shows that the Neyman Allocation can lead to estimates of the ATE with higher asymptotic variance than with (non-adaptive) balanced randomization, particularly when the population is relatively homoskedastic. We also provide a series of empirical examples showing that the Neyman Allocation may perform poorly for values of homoskedasticity that are relevant for researchers. Our results suggest caution when employing experiment design methods involving the Neyman Allocation estimated from a small pilot study.
    Date: 2022–06
  10. By: Seim, Brigitte; Jablonski, Ryan S.; Ahlback, Johan
    Abstract: Does foreign aid shift public spending? Many worry that aid will be “fungible” in the sense that govern- ments reallocate public funds in response to aid. If so, this could undermine development, increase the poorest’s dependency on donors, and free resources for patronage. Yet, there is little agreement about the scale or consequences of such effects. We conducted an experiment with 460 elected politicians in Malawi. We provided information about foreign aid projects in local schools to these politicians. After- wards, politicians made real decisions about which schools to target with development goods. Politicians who received the aid information treatment were 18% less likely to target schools with existing aid. These effects increase to 22-29% when the information was plausibly novel. We find little evidence that aid information heightens targeting of political supporters or family members, or dampens support to the neediest. Instead the evidence indicates politicians allocate the development goods in line with equity concerns.
    Keywords: foreign aid; public spending; Malawi; fungibility; international development; Africa
    JEL: E6 J1
    Date: 2020–09–01
  11. By: Finger, Robert; Wüpper, David; McCallum, Chloe
    Abstract: We test and quantify the (in)stability of farmer risk preferences, accounting for both the instability across elicitation methods and the instability over time. We used repeated measurements (N=1530) with Swiss fruit and grapevine producers over 3 years, where different risk preference elicitation methods (domain-specific self-assessment and incentivized lotteries) were used. We find that farmers’ risk preferences change considerably when measured using different methods. For example, self-reported risk preference and findings from a Holt and Laury lottery correlate only weakly (correlation coefficients range from 0.06 to 0.23). Moreover, we find that risk preferences vary considerable over time too, i.e. applying the same elicitation method to the same farmer in a different point in time results in different risk preference estimates. Our results show self-reported risk preferences are moderately correlated (correlation coefficients range from 0.42 to 0.55) from one year to another. Finally, we find experiencing climate and pest related crop damages is associated with farmers becoming more risk loving.
    Keywords: Research Methods/ Statistical Methods, Risk and Uncertainty
    Date: 2022–04
  12. By: Fontenay, Sébastien (Free University of Brussels); Tojerow, Ilan (Free University of Brussels)
    Abstract: We evaluate the effects of a Supported Employment (SE) program aimed at Disability Insurance (DI) recipients with mental conditions. The program is characterized by a "work-first" approach, which includes intensive job coaching and follow-along support. Using a Randomized Control Trial with more than 660 participants over a follow-up period of 18 months, we compare the benefits of this newly introduced program to regular vocational rehabilitation services traditionally used in Belgium. We find that SE increases the probability that DI recipients with mental conditions work while on claim and reduces their reliance on DI benefits. Specifically, we estimate that 18 months after the start of their return-to-work program, participants in the SE group are 9.5 percentage points more likely to be working, and receive 6% less in DI benefits than those in the control group.
    Keywords: employment support, disability insurance, mental health, randomized experiment
    JEL: H55 I38 J24
    Date: 2022–06
  13. By: Olena Kostyshyna; Luba Petersen; Jing Yang
    Abstract: We provide a comprehensive assessment of five monetary policy regimes—inflation targeting (IT), dual mandate (DM), average inflation targeting under 4-period (AIT-4) and 10-period (AIT-10) horizons, price level targeting (PLT), and nominal GDP level targeting (NGDP)—in a unified experimental framework. We study how participants can understand different regimes and form expectations during periods of economic stability and during a demand-driven recession that temporarily brings the economy to the ELB. Our results suggest a distinct ranking of policy regimes in terms of their ability to achieve macroeconomic stability. DM and IT are the most stabilizing regimes, followed by AIT and then level-targeting regimes PLT and NGDP. AIT with a shorter horizon performs better than AIT with a longer horizon. Monetary policy regimes that are framed around the inflation rate (e.g., AIT-10) are found to deliver significantly more stable economic outcomes than those that target price levels (PLT). Participants have greater difficulty understanding regimes that are more history-dependent and forecasting in the rationally expected direction. They instead rely on trend-chasing heuristics to form their expectations. Trend-chasing forecasting is more destabilizing for regimes with more history dependence. Participants also “need to see it to believe it.” PLT and NGDP initially have mixed success at achieving their targets, and these regimes do not gain credibility before the economy enters into the ELB, where credibility is needed more than ever.
    Keywords: Inflation targets; Monetary policy; Monetary policy communications; Monetary policy framework
    JEL: C9 D84 E58
    Date: 2022–07
  14. By: Alix Rouillé (CEPS - Centre d'Economie de l'ENS Paris-Saclay - Université Paris-Saclay - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay)
    Abstract: Social norms have proven to be a powerful nudge to make people adopt prosocial behavior. Informing people that most of their peers behave virtuously encourages them to improve their own behavior. However, since feedback is based on the average behavior of the population, the targeted desirable behavior must already be practiced by a majority of the population in order to avoid the boomerang effect. The boomerang effect is defined as a deterioration in attitude towards prosocial behavior. This deterioration is by the people who contributed to prosocial behavior more than the average; once they are informed about this, they modify their action accordingly. In this study, our purpose is to create a norm that can be implemented as nudges in behaviors where current social norm nudges are inefficient. This novel implementation could increase the range of prosocial behaviors that can be enhanced by social norm nudges. Within a nudge framework, we build a new norm that provides information based on the most altruistic people in the population. By having participants fill out additional surveys related to environmental topics, we found that this new norm, i.e., "Norm from the top", acted as an efficient nudge, increasing the average contribution to prosocial behavior. In contrast, the standard norm does not have a significant effect due to the boomerang effect. These results show the potential of applying the "Norm from the top" to promote low-practiced prosocial behaviors.
    Keywords: Nudge,Prosocial behavior,Descriptive norms,Injunctive norm,Social norms
    Date: 2022–05–19
  15. By: Akaichi, Faical; Toma, Luiza
    Abstract: The demand for fruit and vegetable boxes (FVB) has increased sharply (111%) as a result of the Covid19 pandemic. Nonetheless, there is a growing fear that FVB schemes may increase food waste at home as, for example, many of the available fruit and veg boxes are not fully customisable. A choice experiment-based survey with 500 Scottish consumers was conducted to estimate consumers’ preferences and willingness to pay for strategies (e.g., completely customisable fruit and veg boxes) that can help reduce food waste that may result from the purchase and use of FVB. The preliminary results showed that customisability is a major barrier that is deterring over 76% of consumers from buying FVB. The sample consumers were found to be willing to pay a substantial price premium to improve the customisability of the FVB. Other FVB’s attributes that are frequently promoted by the sellers of FVB were found to be significantly less valued by 37% of the sampled Scottish consumers.
    Keywords: Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Consumer/Household Economics
    Date: 2022–04

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