|
on Experimental Economics |
|
Issue of 2022‒10‒03
twenty-six papers chosen by |
| By: | Jan Feld (School of Economics and Finance, Victoria University of Wellington); Edwin Ip (Department of Economics, University of Exeter); Andreas Leibbrandt (Department of Economics, Monash University); Joseph Vecci (Department of Economics, University of Gothenburg) |
| Abstract: | Women are significantly underrepresented in the technology sector. We design a field experiment to identify statistical discrimination in job applicant assessments and test treatments to help improve hiring of the best applicants. In our experiment, we measure the programming skills of job applicants for a programming job. Then, we recruit a sample of employers consisting of human resource and tech professionals and incentivize them to assess the performance of these applicants based on their resumes. We find evidence consistent with inaccurate statistical discrimination: while there are no significant gender differences in performance, employers believe that female programmers perform worse than male programmers. This belief is strongest among female employers, who are more prone to selection neglect than male employers. We also find experimental evidence that statistical discrimination can be mitigated. In two treatments, in which we provide assessors with additional information on the applicants' aptitude or personality, we find no gender differences in the perceived applicant performance. Together, these findings show the malleability of statistical discrimination and provide levers to improve hiring and reduce gender imbalance. |
| Keywords: | inaccurate beliefs, discrimination, gender, field experiment |
| JEL: | J71 D90 C93 |
| Date: | 2022–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2205&r= |
| By: | Matteo Ploner |
| Abstract: | Individuals and organizations may delegate others to perform actions they would not do themselves because of moral constraints. In our experimental setting, a Principal can either self-report a value in a die-under-the-cup task or delegate the report to an Agent who has no material interest in the report. We experimentally manipulate the relative efficiency of the report: the Agent’s prospect either stochastically dominates that of the Principal or vice versa. We find that Principals have a high propensity to lie and delegate only when the Agent’s prospect is more efficient. Agents generally behave honestly, but those with higher prosocial attitudes tend to lie when assigned an inefficient lottery, most likely not to let down the Principal. |
| Keywords: | Honesty, Decision Making for Others, Belief-based preferences. |
| JEL: | D91 C91 D81 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:2202&r= |
| By: | Kusterer, David (University of Cologne); Sliwka, Dirk (University of Cologne) |
| Abstract: | We study the determinants of biases in subjective performance evaluations in an MTurk experiment to test the implications of a standard formal framework of rational subjective evaluations. In the experiment, subjects in the role of workers work on a real effort task. Subjects in the role of supervisors observe subsamples of the workers' output and assess their performance. We conduct 6 experimental treatments varying (i) whether workers' pay depends on the performance evaluation, (ii) whether supervisors are paid for the accuracy of their evaluations, and (iii) the precision of the information available to supervisors. In line with the predictions of the model of optimal evaluations we find that ratings are more lenient and less accurate when they determine bonus payments and that rewards for accuracy reduce leniency. When supervisors have access to more detailed performance information their ratings vary to a stronger extent with observed performance. In contrast to the model's prediction we do not find that more prosocial supervisors always provide more lenient ratings, but that they invest more time in the rating task and achieve a higher rating accuracy. |
| Keywords: | subjective performance evaluation, bias, bonuses, differentiation, social preferences |
| JEL: | J33 C91 M52 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15496&r= |
| By: | KAMEI Kenju |
| Abstract: | This study conducts a novel laboratory experiment that shows, for the first time, that the state of people’s self-regulatory resources influences their reliance on the formal enforcement of norms in a social dilemma. The experimental subjects’ self-regulatory resources are rigorously manipulated using well-known depletion tasks. On the one hand, when their resources are not depleted, most decide to govern themselves through monitoring and decentralized, peer-to-peer punishment in a public goods dilemma, and then successfully achieve high cooperation norms. On the other hand, when the amount of their resources is limited, the majority vote to enact a costly formal sanctioning institution and then construct deterrent punishment toward free riders; backed by formal punishment, groups achieve strong cooperation. A supplementary survey on the Covid-19 pandemic was conducted to enhance the external validity of the findings, generating a similar pattern. Self-control and commitment preference theories, combined with inequity aversion, can explain these patterns, because they predict that those with limited self-regulatory resources are motivated to remove temptations in advance as a commitment device, thus avoiding a large self-control cost. This underscores the role of commitment in the context of a social dilemma. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:22084&r= |
| By: | Gill, David (Purdue University); Rosokha, Yaroslav (Purdue University) |
| Abstract: | We aim to understand the role and evolution of beliefs in the indefinitely repeated prisoner's dilemma (IRPD). To do so, we elicit beliefs about the supergame strategies chosen by others. We find that heterogeneity in beliefs and changes in beliefs with experience are central to understanding behavior and learning in the IRPD. Beliefs strongly predict cooperation, initial beliefs match behavior quite well, most subjects choose strategies that perform well given their beliefs, and beliefs respond to experience while becoming more accurate over time. Finally, we uncover a novel mechanism whereby trusting subjects learn to cooperate through their interaction with experience. |
| Keywords: | infinitely repeated prisoner’s dilemma, cooperation, optimism, belief elicitation, supergame strategies, experimentation, trust, experiment |
| JEL: | C72 C73 C91 D91 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15492&r= |
| By: | Juliana Bernhofer (Department of Economics, Ca' Foscari University of Venice, Italy); Alessandro Fedele (Free University of Bozen-Bolzano, Italy); Mirco Tonin (Free University of Bozen-Bolzano, Italy) |
| Abstract: | Health systems around the world face an increasing shortage of workers. It is thus important to understand what motivates people to enter the sector. We study how financial incentives affect the performance on the entry test into medical and healthcare schools, a crucial step for aspiring healthcare professionals. To this end, we conduct a randomized information experiment with Italian applicants. We first elicit applicants' expectations about the starting wage of the healthcare job they want to study for. We then inform the treatment group about the true starting wages, while we provide no information to the control group. We finally collect the test scores obtained by applicants. Correcting wage expectations enhances the test scores when expectations are lower than the true wage level, while no significant effects occur when expectations are higher. The treatment does not induce negative selection in terms of ability and altruism. Our findings provide novel experimental evidence that wages matter for prospective students in the health sector and suggest an impact of prospective financial rewards also at a very early stage of careers. |
| Keywords: | Information Experiment; Applicants to Medical and Healthcare Schools; Wage Expectations; Admission Test Scores. |
| JEL: | I1 I23 J3 C9 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:bzn:wpaper:bemps95&r= |
| By: | Mallory L. Avery; Osea Giuntella; Peiran Jiao |
| Abstract: | This study investigates the mechanisms affecting sleep choice and explores whether commitment devices and monetary incentives can be used to promote healthier sleep habits. To this end, we conducted a field experiment with college students, providing them incentives to sleep and collecting data from wearable activity trackers, surveys, and time-use diaries. Monetary incentives were effective in increasing sleep duration with some evidence of persistence after the incentive was removed. We uncover evidence of demand for commitment. Our results are consistent with partially sophisticated time-inconsistent preferences and overconfidence, and have implications for the effectiveness of information interventions on sleep choice. |
| JEL: | B49 C93 I10 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30375&r= |
| By: | Richard B. Freeman; Xiaofei Pan; Xiaolan Yang; Maoliang Ye |
| Abstract: | Team incentives are important in many compensation systems that pay workers according to the output of their team as well as to their own output, with team bonuses often depending on whether the team meets or exceeds specified thresholds. Yet little is known about how team members with different abilities respond to compensation rules and thresholds. We contrast the performance of lower ability participants and higher ability participants in an experiment with three distribution schemes – equal sharing, piece rate sharing, and tournament style winner-takes-all – in settings with and without a team threshold. Workers randomly assigned to equal sharing had higher productivity than those assigned to winner-takes-all and had similar productivity to workers in individual piece-rate scheme with no team element. Output under equal sharing was boosted by the higher productivity of less able workers, possibly motivated by a desire to avoid guilt feelings about letting down their partners, per models of guilt aversion. Given a choice of distribution schemes, participants selected piece rate sharing over equal sharing and favored both of those over winner-takes-all, with persons facing a team threshold evincing greater preference for equal sharing and concern about cooperation in chatting about the teams’ compensation system than others. The findings suggest that organizations with teams of workers with varying abilities are likely to do better if the organization can fully consider lower ability workers’ responsiveness to sharing in rewards, e.g., to have an equal sharing component in its compensation system when they are strongly guilt averse. |
| JEL: | C91 C92 D23 J33 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30427&r= |
| By: | Nils Brouwer; Jakob de Haan |
| Abstract: | We use a random controlled trial among Dutch households to analyze whether communication about monetary policy instruments impacts inflation expectations and trust in the ECB. All participants in the survey receive information about the ECB's goal, but only a subset also receives information about how the ECB tries to achieve this. Our results suggest that individuals who are informed about policy instruments have inflation expectations closer to the ECB's target inflation than individuals who only receive information about the ECB's objective. Our evidence also indicates that communication about the ECB's instruments does not impact average trust in the ECB. |
| Keywords: | central bank; communication; general public; trust; RCT |
| JEL: | D12 D84 E52 E58 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:707&r= |
| By: | Johannes Haushofer; Sara Lowes; Abednego Musau; David M. Ndetei; Nathan Nunn; Moritz Poll; Nancy Qian |
| Abstract: | While observational evidence suggests that people behave more prosocially towards members of their own ethnic group, many laboratory studies fail to find this effect. One possible explanation is that coethnic preference only emerges during times of stress. To test this hypothesis, we pharmacologically increase levels of the stress hormone cortisol, after which participants complete laboratory experiments with coethnics and noncoethnics. We find mixed evidence that increased cortisol decreases prosocial behavior. Coethnic preferences do not vary with cortisol. However, in contrast to previous studies, we find strong and robust evidence of coethnic preference. |
| JEL: | O12 Z10 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30363&r= |
| By: | Gächter, Simon (University of Nottingham); Starmer, Chris (University of Nottingham); Tufano, Fabio (University of Nottingham) |
| Abstract: | We introduce "group cohesion" to study the economic relevance of social relationships in team production. We operationalize measurement of group cohesion, adapting the "oneness scale" from psychology. A series of experiments, including a pre-registered replication, reveals strong positive associations between group cohesion and performance assessed in weak-link coordination games, with high-cohesion groups being very likely to achieve superior equilibria. In exploratory analysis, we identify beliefs rather than social preferences as the primary mechanism through which factors proxied by group cohesion influence group performance. Our evidence provides proof-of-concept for group cohesion as a useful tool for economic research and practice. |
| Keywords: | social relationships, group cohesion, oneness, coordination, weak-link game, experiments, real groups |
| JEL: | C92 D91 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15512&r= |
| By: | Penelope Buckley (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Daniel Llerena (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes) |
| Abstract: | Using a contextualised common pool resource framework, individual energy consumption choices are studied. Individuals are nudged towards the socially optimal level of consumption by the use of a happy (sad) face if they are underconsuming (overconsuming). A price is set to incentivise a second group to choose the level of consumption observed in the nudge treatment in order to quantify the nudge via an equivalent price. Across all 10 periods, consumption is significantly lower in treatment groups compared to control groups without nudges and prices. The price treatment leads to an average level of consumption above the Nash equilibrium. There are implications for policy makers as the nudge treatment performs as well, on average, as an equivalent price without the implied loss of welfare, and is understood and integrated into subjects' decision making quicker than an equivalent price. However, there is a tendency for both the nudge and the price to reinforce existing consumption behaviour as those who overconsume continue to overconsume. |
| Keywords: | Energy conservation,Financial incentive,Laboratory experiment,Nudge |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03765755&r= |
| By: | Béatrice BOULU-RESHEF; Catherine BRUNEAU; Maxime NICOLAS; Thomas RENAULT |
| Keywords: | , Investor sentiment, Efficient market hypothesis, Natural language, Emojis, Social media, Experimental finance, Behavioral finance. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:leo:wpaper:2940&r= |
| By: | Jesper Akesson; Robert W. Hahn; Robert D. Metcalfe; Itzhak Rasooly |
| Abstract: | Scholars have suggested that White American support for welfare is related to beliefs about the racial composition of welfare recipients. While a host of observational studies lend credence to this view, it has not yet been tested using the tools of randomized inference. In this study, we do this by conducting two incentive-compatible experiments (n = 9,775) in which different participants are randomly given different signals about the share of welfare recipients who identify as Black and White. Our analysis yields four main findings. First, 86% of respondents greatly overestimate the share of welfare recipients who are Black, with the average respondent overestimating this by almost a factor of two. Second, White support for welfare is inversely related to the proportion of welfare recipients who are Black—a causal claim that we establish using treatment assignment as an instrument for beliefs about the racial composition of welfare recipients. Third, just making White participants think about the racial composition of welfare recipients reduces their support for welfare. Fourth, providing White respondents with accurate information about the racial composition of welfare recipients (relative to not receiving any information) does not significantly influence their support for welfare. |
| JEL: | C93 D90 H0 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30426&r= |
| By: | Tabea Bucher-Koenen; Rob Alessie; Annamaria Lusardi; Maarten van Rooij |
| Abstract: | Women are less financially literate than men. It is unclear whether this gap reflects a lack of knowledge or, rather, a lack of confidence. Our survey experiment shows that women tend to disproportionately respond “do not know†to questions measuring financial knowledge, but when this response option is unavailable, they often choose the correct answer. We estimate a latent class model and predict the probability that respondents truly know the correct answers. We find that about one-third of the financial literacy gender gap can be explained by women’s lower confidence levels. Both financial knowledge and confidence explain stock market participation. |
| Keywords: | financial knowledgel gender gapl financial decision making; confidence; measurement error; latent class model; finite mixture model |
| JEL: | G53 C81 D91 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:708&r= |
| By: | John A. List; Rohen Shah |
| Abstract: | In organizations, teams are ubiquitous. “Weakest Link” and “Best Shot” are incentive schemes that tie a group member’s compensation to the output of their group’s least and most productive member, respectively. In this paper, we test the impact of these incentive schemes by conducting two pilot RCTs (one in-person, one online), which included more than 250 graduate students in a graduate math class. Students were placed in study groups of three or four students, and then groups were randomized to either control, Weakest Link, or Best Shot incentives. We find evidence that such incentive approaches can affect test scores, both in-person and online. |
| JEL: | C9 C93 D79 I2 J3 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30374&r= |
| By: | Adam, Martin; Röthke, Konstantin; Benlian, Alexander |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:127115&r= |
| By: | Marcel Preuss; Germ\'an Reyes; Jason Somerville; Joy Wu |
| Abstract: | This paper examines how people redistribute income when there is uncertainty about the role luck plays in determining opportunities and outcomes. We introduce a portable experimental method that generates exogenous variation in the probability that real workers' earnings are due to luck, while varying whether luck interacts with effort in the earning process. Then, we elicit redistribution decisions from a U.S.-nationally representative sample who observe worker outcomes and whether luck magnified workers' effort ("lucky opportunities") or determined workers' income directly ("lucky outcomes"). We find that participants redistribute less and are less reactive to changes in the importance of luck in environments with lucky opportunities. We show that individuals rely on a simple heuristic when assessing the impact of unequal opportunities, which leads them to underappreciate the extent to which small differences in opportunities can have a large impact on outcomes. Our findings have implications for models that seek to understand and predict attitudes toward redistribution, while helping to explain the gap between lab evidence on preferences for redistribution and real-world inequality trends. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2209.00534&r= |
| By: | Allister Loder; Fabienne Cantner; Andrea Cadavid; Markus B. Siewert; Stefan Wurster; Sebastian Goerg; Klaus Bogenberger |
| Abstract: | In spring 2022, the German federal government agreed on a set of measures that aimed at reducing households' financial burden resulting from a recent price increase, especially in energy and mobility. These measures included among others, a nation-wide public transport ticket for 9\ EUR per month and a fuel tax cut that reduced fuel prices by more than 15\,\%. In transportation research this is an almost unprecedented behavioral experiment. It allows to study not only behavioral responses in mode choice and induced demand but also to assess the effectiveness of transport policy instruments. We observe this natural experiment with a three-wave survey and an app-based travel diary on a sample of hundreds of participants as well as an analysis of traffic counts. In this third report, we provide first findings from the second survey, conducted during the experiment. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2208.14902&r= |
| By: | Sarah Auster; Yeon-Koo Che; Konrad Mierendorff |
| Abstract: | This paper studies sequential information acquisition by an ambiguity-averse decision maker (DM), who decides how long to collect information before taking an irreversible action. The agent optimizes against the worst-case belief and updates prior by prior. We show that the consideration of ambiguity gives rise to rich dynamics: compared to the Bayesian DM, the DM here tends to experiment excessively when facing modest uncertainty and, to counteract it, may stop experimenting prematurely when facing high uncertainty. In the latter case, the DM’s stopping rule is non-monotonic in beliefs and features randomized stopping. |
| Keywords: | Wald Problem, Ambiguity Aversion |
| JEL: | C61 D81 D83 D91 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_366&r= |
| By: | Sarah Auster (Department of Economics, University of Bonn); Yeon-Koo Che (Department of Economics, Columbia University); Konrad Mierendorff (Department of Economics, University College London) |
| Abstract: | This paper studies sequential information acquisition by an ambiguity-averse decision maker (DM), who decides how long to collect information before taking an irreversible action. The agent optimizes against the worst-case belief and updates prior by prior. We show that the consideration of ambiguity gives rise to rich dynamics: compared to the Bayesian DM, the DM here tends to experiment excessively when facing modest un-certainty and, to counteract it, may stop experimenting prematurely when facing high uncertainty. In the latter case, the DM’s stopping rule is non-monotonic in beliefs and features randomized stopping. |
| Keywords: | Wald Problem, Ambiguity Aversion |
| JEL: | C61 D81 D83 D91 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:194&r= |
| By: | J. Machicao (USP - University of São Paulo, Escola Politecnica da Universidade de Sao Paulo [Sao Paulo]); A. Ben Abbes (FRB - Fondation pour la recherche sur la Biodiversité , UMA - Université de la Manouba [Tunisie]); L. Meneguzzi (USP - University of São Paulo, Escola Politecnica da Universidade de Sao Paulo [Sao Paulo]); P L P Corrêa (Polytechnic School of the University of São Paulo (Brazil) - USP - Universidade de São Paulo, Escola Politecnica da Universidade de Sao Paulo [Sao Paulo]); A. Specht (USQ - University of Southern Queensland); Romain David (ERINHA-AISBL - European Research Infrastructure on Highly Pathogenic Agents); G. Subsol (UMR 228 Espace-Dev, Espace pour le développement - IRD - Institut de Recherche pour le Développement - UPVD - Université de Perpignan Via Domitia - AU - Avignon Université - UR - Université de La Réunion - UG - Université de Guyane - UA - Université des Antilles - UM - Université de Montpellier); D. Vellenich (USP - University of São Paulo, Escola Politecnica da Universidade de Sao Paulo [Sao Paulo]); R. Devillers (UMR 228 Espace-Dev, Espace pour le développement - IRD - Institut de Recherche pour le Développement - UPVD - Université de Perpignan Via Domitia - AU - Avignon Université - UR - Université de La Réunion - UG - Université de Guyane - UA - Université des Antilles - UM - Université de Montpellier); S. Stall (American Geophysical Union); N. Mouquet (CESAB - Centre de Synthèse et d’Analyse sur la Biodiversité - FRB - Fondation pour la recherche sur la Biodiversité , UNIMES - Université de Nîmes); M. Chaumont (LIRMM - Laboratoire d'Informatique de Robotique et de Microélectronique de Montpellier - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier); L Berti‐equille (UMR 228 Espace-Dev, Espace pour le développement - IRD - Institut de Recherche pour le Développement - UPVD - Université de Perpignan Via Domitia - AU - Avignon Université - UR - Université de La Réunion - UG - Université de Guyane - UA - Université des Antilles - UM - Université de Montpellier); D. Mouillot (LSEA MARBEC - Laboratoire Service d' Experimentations Aquacoles [Palavas les Flots] - UMR MARBEC - MARine Biodiversity Exploitation and Conservation - IRD - Institut de Recherche pour le Développement - IFREMER - Institut Français de Recherche pour l'Exploitation de la Mer - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier, UM - Université de Montpellier) |
| Abstract: | The challenges of Reproducibility and Replicability (R & R) in computer science experiments have become a focus of attention in the last decade, as efforts to adhere to good research practices have increased. However, experiments using Deep Learning (DL) remain difficult to reproduce due to the complexity of the techniques used. Challenges such as estimating poverty indicators (e.g. wealth index levels) from remote sensing imagery, requiring the use of huge volumes of data across different geographic locations, would be impossible without the use of DL technology. To test the reproducibility of DL experiments, we report a review of the reproducibility of three DL experiments which analyse visual indicators from satellite and street imagery. For each experiment, we identify the challenges found in the datasets, methods and workflows used. As a result of this assessment we propose a checklist incorporating relevant FAIR principles to screen an experiment for its reproducibility. Based on the lessons learned from this study, we recommend a set of actions aimed to improve the reproducibility of such experiments and reduce the likelihood of wasted effort. We believe that the target audience is broad, from researchers seeking to reproduce an experiment, authors reporting an experiment, or reviewers seeking to assess the work of others. |
| Keywords: | Reproducibility,Replicability,Deep learning,Machine learning,FAIR,poverty indicators |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03761874&r= |
| By: | Sarah Auster; Yeon-Koo Che; Konrad Mierendorff |
| Abstract: | This paper studies sequential information acquisition by an ambiguity-averse decision maker (DM), who decides how long to collect information before taking an irreversible action. The agent optimizes against the worst-case belief and updates prior by prior. We show that the consideration of ambiguity gives rise to rich dynamics: compared to the Bayesian DM, the DM here tends to experiment excessively when facing modest uncertainty and, to counteract it, may stop experimenting prematurely when facing high uncertainty. In the latter case, the DM's stopping rule is non-monotonic in beliefs and features randomized stopping. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2208.14121&r= |
| By: | Abhijit Banerjee; Greg Fischer; Dean Karlan; Matt Lowe; Benjamin N. Roth |
| Abstract: | What accounts for the ubiquity of small vendors operating side-by-side in the urban centers of developing countries? Why don’t competitive forces drive some vendors out of the market? We ran an experiment in Kolkata vegetable markets in which we induced (via subsidizing) some vendors to sell additional produce. The vendors earned higher profits, even when excluding the value of the subsidy. Nevertheless, after the subsidies ended vendors largely stopped selling the additional produce. Our results are consistent with collusion and inertial business practices suppressing competition and efficient market exit. |
| JEL: | D22 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30360&r= |
| By: | Sebastian Galiani (University of Maryland/NBER); Peter Gertler (University of California, Berkeley/NBER); Camila Navajas Ahumada (Universidad Torcuato Di Tella) |
| Abstract: | We randomly assigned beneficiaries of a conditional cash transfer program in Peru to attend a 3 hour training session designed to build their trust in financial institutions.We find that the intervention: (a) increased trust in banks, but had no effect on financial literacy, and (b) increased savings over a ten month period. The increase insavings represents a 1.4 percentage point increase in the savings rate out of the cash transfer deposits, and a 0.4 percentage point increase in the savings rate out of household income. |
| Keywords: | Trust, savings and poverty |
| JEL: | G20 D14 I30 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:174&r= |
| By: | Arun G. Chandrasekhar; Esther Duflo; Michael Kremer; João F. Pugliese; Jonathan Robinson; Frank Schilbach |
| Abstract: | An enduring puzzle regarding technology adoption in developing countries is that new technologies often diffuse slowly through the social network. Two of the key predictions of the canonical epidemiological model of technology diffusion are that forums to share information and higher returns to technology should both spur social transmission. We design a large-scale experiment to test these predictions among farmers in Western Kenya, and we fail to find support for either. However, in the same context, we introduce a technology that diffuses very fast: a simple kitchen spoon (painted in blue) to measure out how much fertilizer to use. We develop a model that explains both the failure of the standard approaches and the surprising success of this new technology. The core idea of the model is that not all information is reliable, and farmers are reluctant to develop a reputation of passing along false information. The model and data suggest that there is value in developing simple, transparent technologies to facilitate communication. |
| JEL: | D83 D9 O13 Q10 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30423&r= |