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on Experimental Economics |
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Issue of 2023‒01‒02
twenty-one papers chosen by |
| By: | Martin Dufwenberg (University of Arizona); Paul Feldman (Texas A&M University); Maros Servatka (Macquarie Business School, University of Alaska Anchorage); Jorge Tarraso (Libretto); Radovan Vadovic (Carleton University) |
| Abstract: | Lab evidence on trust games involves more cooperation than conventional economic theory predicts. We explore whether this pattern extends to a field setting where we are able to control for (lack of) repeat-play and reputation: the taxi market in Mexico City. We find a remarkable degree of trustworthiness, even with price-haggling which was predicted to reduce trustworthiness. |
| Keywords: | trustworthiness, honesty, reciprocity, field experiment, haggling, taxis, Mexico City |
| JEL: | C72 C90 C93 D91 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2022-03&r=exp |
| By: | Shyamal Chowdhury (University of Sydney; IZA, Bonn); Hannah Schildberg-Hörisch (IZA, Bonn; University of Düsseldorf; Max Planck Institute for Research on Collective Goods, Bonn); Sebastian O. Schneider (Max Planck Institute for Research on Collective Goods, Bonn); Matthias Sutter (Max Planck Institute for Research on Collective Goods, Bonn; University of Cologne and University of Innsbruck) |
| Abstract: | Lack of information about COVID-19 and its spread may have contributed to excess mortality at the pandemic’s onset. In April and May 2020, we implemented a randomized controlled trial with more than 3,000 households in 150 Bangladeshi villages. Our one-to-one information campaign via phone stressed the importance of social distancing and hygiene measures, and illustrated the consequences of an exponential spread of COVID-19. We find that information provision improves knowledge about COVID-19 and induces significant behavioral changes. Information provision also yields considerably better health outcomes, most importantly by reducing the number of reported deaths by about 50% in treated villages. |
| Keywords: | Field experiment, COVID-19, Information intervention, Death rates |
| JEL: | C93 D01 D91 I12 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:211&r=exp |
| By: | Matthew J. Walker (Newcastle University Business School); Jason Shachat (Durham University Business School); Lijia Wei (Economics and Management School, Wuhan University) |
| Abstract: | A chief objective of creating competition among suppliers is the procurement of higher quality goods at lower prices. When procuring non-standard goods, it is often difficult to write a complete specification of desired quality in the contract. A moral hazard arises when this quality is costly and determined by the supplier ex post to contracting. In an effort to mitigate this moral hazard, we introduce a correlated contingent payment contract. This contract is awarded through competitive bidding. The winning supplier’s payment is, according to a fixed probability, either the amount of their bid or a quality contingent amount that depends on the bid and an exogenous norm for how a seller and buyer split social surplus. We show, both theoretically and experimentally, there is a “Goldilocks†region for high quality to emerge in which the probability of quality contingent payment is large enough to reward high quality provision, but not too large to induce overly aggressive bidding. This optimal implementation only relies upon preferences for maximizing one’s own profit and the rationality of backward induction. A surprising experimental result is that suppliers earned positive economic profits within this region. We estimate a structural model of bounded rationality to show that risk aversion can explain this result. These results have managerial implications for the design of contingent payments in contracts. |
| Keywords: | contingent payment, procurement, bidding, risk aversion, experiment |
| JEL: | C70 C92 D86 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:22-18&r=exp |
| By: | Caserta, Maurizio; Distefano, Rosaria; Ferrante, Livio |
| Abstract: | In everyday life, individuals interact with relatives, friends and colleagues, share ideas and passions and cooperate with others to pursue common goals. Within each social domain, individuals recognize themselves as a group member with rights and duties to observe. Understanding the importance of social norms and encouraging mutually beneficial cooperation is crucial for societal and economic development. This paper presents an experimental study of an educational program for early adolescents of 11 years old from South Italy. The program introduces participants to institutions, civic engagement, sense of duty, and decision-making. Among other didactic activities, it includes guided tours and a role-taking game. Our results suggest that the program attendance positively affects cooperation in a one-shot Prisoner’s Dilemma and altruistic behavior in a Dictator Game. Our findings contribute to the nature-nurture debate, showing that promoting prosocial behavior can be effective in pursing the common good. |
| Keywords: | Experimental game theory; Group Decision Making; Cooperation; Prisoner’s Dilemma; Dictator Game. |
| JEL: | C72 C93 I20 |
| Date: | 2022–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115455&r=exp |
| By: | Guy Aridor; Duarte Goncalves; Daniel Kluver; Ruoyan Kong; Joseph Konstan |
| Abstract: | We conduct a field experiment on a movie-recommendation platform to identify if and how recommendations affect consumption. We use within-consumer randomization at the good level and elicit beliefs about unconsumed goods to disentangle exposure from informational effects. We find recommendations increase consumption beyond its role in exposing goods to consumers. We provide support for an informational mechanism: recommendations affect consumers' beliefs, which in turn explain consumption. Recommendations reduce uncertainty about goods consumers are most uncertain about and induce information acquisition. Our results highlight the importance of recommender systems' informational role when considering policies targeting these systems in online marketplaces. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.14219&r=exp |
| By: | AKIN, ZAFER |
| Abstract: | This paper experimentally explores playing the victim behavior, how prevalent it is, its determinants, and potential mechanisms to mitigate it with a subject pool from two regions (UAE and North America). The possibility of playing the victim is introduced by letting some participants receive a negative shock to their initial endowments, after which they can apply for extra compensation even when they do not receive the shock. We fi�nd that the majority of participants play the victim. We then test whether defaults and signing an honesty oath influence this behavior. We �find, contrary to intuitions, that the omission treatments, where lying is a default, failed to increase misrepresentation, and if anything decreased it, while the oath substantially reduced it as expected. Moreover, the extent of pro-sociality and perceived social norms are found to be strongly related to playing the victim behavior. The findings are very similar across regions. Our findings offer some insights to design better policies to support victims, especially during crises such as the Covid-19 pandemic. |
| Keywords: | Playing the victim, dishonesty, defaults, honesty pledges |
| JEL: | C90 |
| Date: | 2022–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115532&r=exp |
| By: | John List; Ian Muir; Gregory Sun |
| Abstract: | This study investigates how to use regression adjustment to reduce variance in experimental data. We show that the estimators recommended in the literature satisfy an orthogonality property with respect to the parameters of the adjustment. This observation greatly simplifies the derivation of the asymptotic variance of these estimators and allows us to solve for the efficient regression adjustment in a large class of adjustments. Our efficiency results generalize a number of previous results known in the literature. We then discuss how this efficient regression adjustment can be feasibly implemented. We show the practical relevance of our theory in two ways. First, we use our efficiency results to improve common practices currently employed in field experiments. Second, we show how our theory allows researchers to robustly incorporate machine learning techniques into their experimental estimators to minimize variance. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00763&r=exp |
| By: | Gustav Agneman (Lund University) |
| Abstract: | In this study, I investigate how conflict victimization influences civilians’ likelihood of (dis)obeying armed actors, a behavioral tendency which I elicit through a lab-in-the field experiment. Violence could foster either obedience or defiance depending on whether a “fear of punishment” or a “taste for retribution” dominate. In a sample with residents in Meta, a conflict-ridden department of Colombia, I find that conflict victimization increases disobedience. Participants who were victimized during the conflict are significantly more likely than non-victimized civilians to disobey the main insurgent group, but no more likely to disobey the Colombian Armed Forces. This differential effect is attributed to more frequent civilian victimization by the insurgents. I support a causal interpretation through an Instrumental Variable approach which leverages the distance to a historic front line as an instrument for victimization. In sum, the findings show that violent targeting of civilians can inspire resistance rather than submission. |
| Keywords: | conflict victimization, civilian obedience, rule compliance, field experiment |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:hic:wpaper:379&r=exp |
| By: | Marco Fongoni (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.) |
| Abstract: | This paper develops a theoretical framework to think about employees' effort choices, and applies this framework to assess the ability of existing laboratory designs to identify the effect of pay inequality on worker effort. The analysis shows that failure to control for a number of confounds-such as reciprocity towards the employer in multilateral gift-exchange games (vertical fairness), or the incentive to increase effort when feeling underpaid under piece rates (income targeting)-may lead to inaccurate interpretation of evidence of treatment effects. In light of these findings, the paper provides a set of recommendations on how to improve identification in the design of laboratory experiments in the future. |
| Keywords: | pay inequality; effort; laboratory experiments; reference dependence; fairness |
| JEL: | C91 D91 J31 J33 M52 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2230&r=exp |
| By: | Junichi Kikuchi |
| Abstract: | We examine whether inflation expectations obtained by open- and closed-ended questions lead to different inflation expectations through a randomized controlled trial. We find that different questionnaires measure significantly different inflation expectations, especially in the short term. We further investigate whether inflation expectations induce consumers to change the intertemporal allocation of consumption via the consumption Euler equation. Our results suggest that actual expenditures are significantly responsive to inflation expectations. The EIS of the sample in the closed-ended questionnaire was higher than that of the open-ended questionnaire. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1198&r=exp |
| By: | Dalton, Patricio (Tilburg University, School of Economics and Management); Pamuk, H. (Tilburg University, School of Economics and Management); Ramrattan, R.; van Soest, Daan (Tilburg University, School of Economics and Management); Uras, Burak (Tilburg University, School of Economics and Management) |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:ab4a8785-7101-48c4-b685-cb160536d2e5&r=exp |
| By: | Bublitz, Elisabeth; Wang, Hequn; Jäger, Julian; Beblo, Miriam; Lohmann, Henning |
| Abstract: | We examine the relationship between perceived income positions and attitudes towards inequality at a supranational-level. Conducting a survey in four EU Member States (Germany, Italy, Poland, and Sweden), we confirm that their citizens misperceive their own income position in the EU. Once we account for these misperceptions, we find that those with a lower income rank assess EU income differences as more unjust and are more supportive of an EU minimum wage. When we inform a randomized subsample about their actual income position in the EU, those who learn to be richer than they initially thought assess EU income differences as less unjust. Respondents in Italy, Poland, and to a lesser extent Sweden drive these results whereas income misperceptions of German respondents have opposing effects. |
| Keywords: | Income,Misperceptions,Inequality,EU Minimum Wage,European Union,Survey Experiment |
| JEL: | D31 D63 F55 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:uhhwps:70&r=exp |
| By: | Bnaya Dreyfuss; Ofer Glicksohn; Ori Heffetz; Assaf Romm |
| Abstract: | Can incorporating expectations-based-reference-dependence (EBRD) considerations reduce seemingly dominated choices in the Deferred Acceptance (DA) mechanism? We run two experiments (total N = 500) where participants are randomly assigned into one of four DA variants—{static, dynamic} × {student proposing, student receiving}—and play ten simulated large-market school-assignment problems. While a standard, reference-independent model predicts the same straightforward behavior across all problems and variants, a news-utility EBRD model predicts stark differences across variants and problems. As the EBRD model predicts, we find that (i) across variants, dynamic student receiving leads to significantly fewer deviations from straightforward behavior, (ii) across problems, deviations increase with competitiveness, and (iii) within specific problems, the specific deviations predicted by the EBRD model are indeed those commonly observed in the data. |
| JEL: | D47 D82 D84 D91 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30635&r=exp |
| By: | Bernd Hayo (Philipps-Universitaet Marburg); Pierre-Guillaume Méon (Université libre de Bruxelles (U.L.B.)) |
| Abstract: | Using a randomized controlled trial in a 2018 survey of a representative sample of the German population, we study whether providing information about the European Central Bank’s (ECB) inflation record in comparison to its inflation target affects people’s trust in the central bank. In the treatment, administered to half of the roughly 2000 respondents, a graph of the annual inflation rate in the euro area from 1999 to 2017 and the ECB’s 2% inflation target was shown to respondents. We find that the treatment has, on average, no significant effect on the level of trust respondents have in the ECB or on the distribution of survey answers. However, the treatment increases trust in the ECB among respondents who report no preference for any political party. Within this group, the effect is strongest among those who reported biased beliefs about the inflation rate but knew that price stability is the ECB’s objective and those who reported a low level of subjective and objective knowledge about monetary policy. |
| Keywords: | Central bank trust, European Central Bank, Central bank communication, Monetary policy, Germany, Household survey, RCT. |
| JEL: | E52 E58 Z1 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202245&r=exp |
| By: | Bonev, Petyo; Emmenegger, Rony; Forero, Laura; Ganev, Kaloyan; Simeonova-Ganeva, Ralitsa; Soederberg, Magnus |
| Abstract: | This paper studies the social acceptance of nuclear energy and nuclear waste. Using a randomized choice experiment, we find that the prospects of a nearby nuclear waste repository reduce the acceptance of nuclear power. This result indicates the the Not-In-My-Backyard problem is partially driven by free-riding: individuals willing to accept the advantages of nuclear energy but not willing to internalize the associated cost. We also find that economic incentives decrease free riding and potentially help solve the Not-In-My-Backyard problem. |
| Keywords: | environmental policy, nuclear power, nuclear waste, NIMBY, crowding intrinsic motivation |
| JEL: | C91 D71 D72 Q53 Q58 R53 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2022:15&r=exp |
| By: | Christa Brunnschweiler (School of Economics, University of East Anglia); Ishmael Edjekumhene (Kumasi Institute of Technology, Energy and Environment (KITE), Achimota Market); Paivi Lujala (Geography Research Unit, University of Oulu); Sabrina Scherzer (Geography Research Unit, University of Oulu) |
| Abstract: | How can citizens be motivated to demand accountability in the management of public revenues? We carry out a video survey experiment among 2300 Ghanaian respondents to study the impact of information provision and role models on attitudes and demand for accountability in the management of petroleum revenues. We find that providing information significantly increases knowledge about current revenue management, satisfaction with the way revenues are handled and spent, and the intention to demand more accountability. Role models have an additional effect: they increase the sense that an individual can influence how petroleum revenues are used, and the intention to contact media and to vote differently to ensure better accountability. However, a follow-up survey two years later shows that these impacts do not last. The experiment demonstrates that providing relevant information affects attitudes and intended behavior in the short term and that role models can give valuable encouragement for behavioral change. |
| Keywords: | accountability, survey experiment, video, role models, Ghana, petroleum revenues |
| JEL: | Q35 Q38 H41 H23 D80 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2022-10&r=exp |
| By: | Abigail Hurwitz; Olivia S. Mitchell |
| Abstract: | Older people often express regret about financial decisions made earlier in life that left them susceptible to old-age insecurity. Prior work has explored one outcome, saving regret, or peoples’ expressed wish that they had saved more earlier in life. The present paper extends attention to five additional areas regarding financial decisions, examining whether older Americans also regret not having insured better, claimed benefits and quit working too early, and becoming financially dependent on others. Using a controlled randomized experiment conducted on 1,764 respondents age 50+ in the Health and Retirement Study, we show that providing people objective longevity information does alter their self-reported financial regret. Specifically, giving people information about objective survival probabilities more than doubled regret expressed about not having purchased long term care, and it also boosted their regret by 2.4 times for not having purchased lifetime income. We conclude that information provision can be a potent, as well as cost-effective, method of alerting people to retirement risk. |
| JEL: | D14 D15 D83 G22 G41 G51 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30696&r=exp |
| By: | B. Kelsey Jack; Seema Jayachandran; Namrata Kala; Rohini Pande |
| Abstract: | Particulate matter significantly reduces life expectancy in India. We use a randomized controlled trial in the Indian state of Punjab to evaluate the effectiveness of conditional cash transfers (also known as payments for ecosystem services, or PES) in reducing crop residue burning, which is a major contributor to the region’s poor air quality. Credit constraints and distrust may make farmers less likely to comply with standard PES contracts, which only pay the participant after verification of compliance. We randomize paying a portion of the money upfront and unconditionally. Despite receiving a lower reward for compliance, farmers offered partial upfront payment are 8-12 percentage points more likely to comply than are farmers offered the standard contract. Burning measures derived from satellite imagery indicate that PES with upfront payments significantly reduced burning, while standard PES payments were inframarginal. We also show that PES with an upfront component is a cost-effective way to improve India’s air quality. |
| JEL: | O13 Q01 Q56 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30690&r=exp |
| By: | Gopi Shah Goda (Stanford University); Matthew R. Levy (London School of Economics and Political Science); Colleen Flaherty Manchester (University of Minnesota - Twin Cities); Aaron Sojourner (W.E. Upjohn Institute for Employment Research); Joshua Tasoff (Claremont Graduate University); Jiusi Xiao (Claremont Graduate University) |
| Abstract: | We conduct a randomized controlled trial to understand how a web-based retirement saving calculator affects workers’ retirement-savings decisions. In both conditions, the calculator projects workers’ retirement income goals. In the treatment condition, it also projects retirement income based on defined-contribution savings, prominently displays the gap between projected goal and actual retirement income, and allows users to interactively explore how alternative, future contribution choices would affect the gap. The treatment increased average annual retirement contributions by $174 (2.3 percent). However, effects were larger for those with greater financial knowledge, suggesting this type of tool complements, rather than substitutes for, underlying financial capability. |
| Keywords: | retirement planning, retirement saving, exponential-growth bias, present bias, financial literacy, financial capability |
| JEL: | D14 G53 J32 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:22-378&r=exp |
| By: | Richard W. Patterson; William L. Skimmyhorn |
| Abstract: | Information provision, choice simplification, social messaging, active-choice frameworks, and automatic enrollment all increase retirement savings. However, gauging the relative efficacy of these approaches is challenging because the supporting evidence spans widely different institutional settings, populations, and time periods. In this study, we leverage experimental and quasi-experimental variation in a constant setting, the U.S. military between 2016-2018, to examine the effects of nearly two dozen experiments for four leading policy options (i.e., information emails, action steps, target contribution rates, active choice, and automatic enrollment) designed to increase retirement savings. Consistent with previous literature, we find sizable effects of savings interventions on participation and cumulative contributions that increase with the intensity of the intervention. We then exploit cost data to complete the first cost-effectiveness analysis in the literature. Our analysis suggests that active choice programs are the most cost-effective method to generate new program participation and contributions for small, medium, and large firms, while automatic enrollment is more cost-effective for very large firms. |
| JEL: | D14 D91 G41 G51 J45 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30697&r=exp |
| By: | Blaufus, Kay; Milde, Michael; Schaefer, Marcel |
| Abstract: | Using a series of experiments, we examine whether the additional opportunity to save retroactively for retirement at the time of tax filing increases overall retirement savings. Our findings show that introducing the additional savings opportunity at tax time increases the total savings rate by almost 5 percentage points. This positive effect holds regardless of whether retirement savings are taxed immediately (back-loaded pension plans) or deferred (front-loaded pension plans) or whether subjects expect back taxes or a tax refund. We show that the effect is not due to higher tax salience at tax time but that the additional offer to save nudges impulsive savings behavior. Policymakers may thus consider the introduction of an additional savings opportunity at tax time as a policy tool to encourage retirement savings. In addition, policymakers should consider the advantage of immediate over deferred taxation in increasing retirement savings. We show that the savings gap between immediate and deferred taxation found in previous studies can expand further if savings are additionally allowed at tax filing. |
| Keywords: | Retirement savings,tax incentives,impulsive savings,tax salience,nudging,deferred taxa-tion |
| JEL: | D9 D14 D15 G51 H31 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:272&r=exp |