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on Experimental Economics |
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Issue of 2023‒04‒03
seventeen papers chosen by |
| By: | Brice Corgnet (EM - emlyon business school); Mark Desantis; David Porter |
| Abstract: | We assess the effect of the cognitive make-up of market participants on the informational efficiency of markets. We put forth that cognitive skills, such as cognitive reflection, are crucial for ensuring the informational efficiency of markets because they endow participants with the ability to infer others' information from prices. Using laboratory experiments, we show that information aggregation is significantly enhanced when (i) all participants possess high levels of cognitive sophistication and (ii) this high level of cognitive sophistication is common information for all participants. Our findings shed light on the cognitive and informational constraints underlying the efficient market hypothesis. |
| Keywords: | Information aggregation, cognitive reflection, Experimental asset markets, behavioral finance |
| Date: | 2021–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03188235&r=exp |
| By: | Chen Sun (HU Berlin) |
| Abstract: | Growing evidence indicates that utility over time is different from utility under risk. Hence, measuring intertemporal preferences (discounting and utility) exclusively from intertemporal choices is desirable. We develop a simple method for measuring intertemporal preferences. It is parameter-free in both discounting and utility, and allows a wider range of models to be measured than preceding methods. It is easy to implement, clear to subjects, incentive compatible, and does not require more measurements than existing methods if identical assumptions are imposed. In an experiment, we illustrate how the method can be used to test recent models with unconventional assumptions non-parametrically. |
| Keywords: | measuring time preferences; intertemporal profile; parameter-free; |
| JEL: | C91 D12 D91 |
| Date: | 2023–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:386&r=exp |
| By: | Saulitis, Andris; Chapkovski, Philipp |
| Abstract: | This study employs a field experiment and qualitative content analysis to examine the effect of various behaviourally-informed messages on increasing tax compliance in Latvia. In a field experiment, more than 3, 000 businesses received a message with a normative appeal to increase the relatively low salaries compared to firms operating in the same industry and region. Other treatment groups received the same message with an additional paragraph that varied audit probabilities or included prosocial messages. All treatments effectively increased the average declared salaries in the enterprises relative to not sending a message. Even though the overall fiscal effect was positive, the qualitative analysis of the feedback by the firms indicates that messages, particularly those that did not state the future actions of the tax administration, provoked discontent and distrust between the taxpayer and the tax administration. Our findings demonstrate that clear communication of the intended actions of the tax administration is the most effective approach to promoting tax compliance. Furthermore, our research indicates that a relatively small audit probability (5%) is as effective as a larger probability (66%), implying that there is no need to carry out audits on a large scale to address tax evasion. |
| Keywords: | tax collection; shadow economy; prosocial behaviour; tax audits; mixed-methods |
| JEL: | C93 D03 H26 H32 H83 |
| Date: | 2023–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116560&r=exp |
| By: | Adélaïde Fadhuile; Daniel Llerena; Béatrice Roussillon |
| Abstract: | A demand response program is a promising tool to increase the share of intermittent renewable energy in the electricity production mix. It requires that households adapt their energy consumption to the level of energy production in order to balance the grid, i.e., decrease (increase) their consumption during peak load (peak energy production) event. However, energy conservation efforts suffer from many cognitive biases that impede the optimization of electricity consumption and thus demand flexibility. This article presents a randomized field experiment aimed at introducing demand response with nonmonetary incentives coupled by a set of nudges addressing these cognitive biases. Our results are very encouraging, as demand was successfully decreased by 21% during the peak load event and increased by 17% during the peak energy production event. Our tested nudges are cheap, easy to implement and provide interesting results in demand management programs. |
| Keywords: | Flexibility, Randomized Field Experiment, Energy Conservation, Nudges |
| JEL: | D9 C93 Q41 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:gbl:wpaper:2023-01&r=exp |
| By: | Guenther, Benno; Lordan, Grace |
| Abstract: | We conducted a within-subject experiment with 193 professional traders (151 professional commodities traders), to examine how the tendency towards the disposition effect varies across decision-making in mean reverting commodities and non-mean reverting equities contexts. In addition, we consider whether a simple informational intervention that makes the disposition effect salient can alter decision-making. Overall, we find that prior to the intervention the traders exhibit the disposition effect in the direction that aligns with profit maximisation goals suggesting that they are acting rational. For example, when being asked to make decisions on commodities the traders make choices in the direction of the disposition effect, which is rational given that these picks are mean reverting. We also find that the informational intervention is effective in changing the level of the disposition effect observed and also decision-making, regardless of whether traders are considering decisions over mean reverting or non-mean reverting securities. Further, we provide evidence that our simple informational intervention improves trader returns when making decisions on non-mean reverting securities only. In contrast, it has negative impacts when utilised for commodities. Our study highlights the power of simple interventions to make disproportionately large changes to decision-making regardless of whether they are in our best interests, and their beneficial role only when the context is right. |
| Keywords: | disposition effect; prospect theory; commodities; behavioural finance; trading decision-making; Frontiers deal |
| JEL: | G11 |
| Date: | 2023–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:118353&r=exp |
| By: | Wang Zhijian |
| Abstract: | People choose their strategies through a trial-and-error learning process in which they gradually discover that some strategies work better than others. The process can be modelled as an evolutionary game dynamics system, which may be controllable. In modern control theory, eigenvalue (pole) assignment is a basic approach to designing a full-state feedback controller, which can influence the outcome of a game. This study shows that, in a game with two Nash equilibria, the long-running strategy distribution can be controlled by pole assignment. We illustrate a theoretical workflow to design and evaluate the controller. To our knowledge, this is the first realisation of the control of equilibrium selection by design in the game dynamics theory paradigm. We hope the controller can be verified in a laboratory human subject game experiment. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2302.09131&r=exp |
| By: | Leplat Mélody (L@BISEN - Laboratoire ISEN - Institut supérieur de l'électronique et du numérique (ISEN) - YO - YNCREA OUEST); Loheac Youenn (ESC [Rennes] - ESC Rennes School of Business); Teillet Eric (SensoStat) |
| Keywords: | meat substitutes, sensory evaluation, choices experiment, real products |
| Date: | 2022–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03932558&r=exp |
| By: | Yinghua He (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Thierry Magnac (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | A matching market often requires recruiting agents, or ‘programmes', to costly screen ‘applicants', and congestion increases with the number of applicants to be screened. We investigate the role of application costs : higher costs reduce congestion by discouraging applicants from applying to certain programmes; however, they may harm match quality. In a multiple-elicitation experiment conducted in a real-life matching market, we implement variants of the Gale-Shapley deferred-acceptance mechanism with different application costs. Our experimental and structural estimates show that a (low) application cost effectively reduces congestion without harming match quality. |
| Keywords: | Gale-Shapley Deferred Acceptance Mechanism, Costly Preference Formation, Screening, Stable Matching, Congestion, Matching Market Design |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03979233&r=exp |
| By: | NAKAMURA Hideki; SEKIZAWA Yoichi; TAGUCHI Kayoko; OKAWA Sho; SATO Daisuke; SASAKI Tsubasa; TAMURA Masaki; SHIMIZU Eiji |
| Abstract: | Background: Tension-type headaches are associated with significant socioeconomic costs through reduction of employee productivity and quality of life. The purpose of this study was to determine whether internet-computerized cognitive behavioral therapy (iCBT) was superior to psychoeducation (PE) in improving headache. Methods: After approval by the Institute Review Board, workers who gave their informed consent, who were aged 20 to 50 years with chronic tension-type headaches, were included in the study. A randomized controlled trial to compare iCBT with PE was conducted for 6 weeks. The primary outcome was the Brief Pain Inventory (BPI). The secondary outcomes were headache intensity (Headache Impact Test: HIT-6), catastrophic thinking, anxiety, depression and so on. Results: 514 participants were randomly assigned to the two groups. 399 participants (iCBT: n=141, PE: n=258) who performed at least once for 6 weeks were analyzed. There was no significant difference of BPI as the primary outcome between the two groups. As the secondary outcomes, PHQ-15 at 6 weeks and HIT-6 at 12 weeks were significantly reduced in iCBT, compared with that in PE. No significant differences of the other secondary outcomes between the two groups were found. Comparing within-group, the mean changes of BPI were significantly reduced in iCBT (-0.48) and in PE (-0.50) at 6 weeks from baseline. HIT-6 and PCS were also significantly reduced at 6 weeks from baseline in both groups. Conclusions: No significant differences were found in the primary outcome between the two intervention groups for tension-type headaches. Although the results must be interpreted with caution because of a lack of comparison with a waitlist control group or pharmacotherapy, this study suggested simple Internet-based self-help psychological interventions including iCBT and PE could act as alternatives to using drugs to improve tension-type headaches. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:23009&r=exp |
| By: | Pan, Jingjing; Li, Jianbiao; Zhu, Chengkang |
| Abstract: | Although previous literature demonstrates that punishment is more efficient and stable than reward, in our daily life, numerous kinds of rewards permeate. One possible explanation for widely use of reward institution in practice is that it’s an efficient and satisfactory way to enhance cooperation and welfare in a social dilemma situation even the contribution is hardly evaluated accurately. Nevertheless, this explanation lacks support from empirical evidence. Our study aims to examine whether the institution with reward option is an efficient and satisfactory way to solve social dilemma problems under imperfect information conditions. We show that reward institutions sustain higher cooperation levels and let participants get more welfare under imperfect information conditions. Furthermore, we find most participants to have a tendency to favor reward institutions, even when the information is highly noisy. Our study sheds light on the superiority of reward institutions over punishment institutions in a realistic world. |
| Keywords: | Public goods games, Reward, Imperfect information, Cooperation, Welfare |
| JEL: | C91 C92 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:269216&r=exp |
| By: | Johannes Wimmer (LMU Munich); Leonhard Vollmer (LMU Munich) |
| Abstract: | The rise of right-wing populism throughout Western democracies coincided with an increasing adoption of social media – both among supporters and opponents of right-wing populism alike. In light of these trends, we assess whether grassroots organizations are effective in combating right-wing populism via social media. We study this question using a tightly controlled online field experiment embedded in the Facebook campaign of a German grassroots organization. Leveraging geo-spatial variation in where the organization disseminated its Facebook ads targeting Germany’s leading right-wing populist party (AfD), we find that the campaign did not significantly affect the AfD’s vote share and turnout. Drawing on data from a complementary online experiment, we show that insufficient outreach on Facebook together with the absence of individual-level responses of attitudes and behavior explains why the campaign did not meaningfully shape aggregate election outcomes. |
| Date: | 2023–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:390&r=exp |
| By: | Ayşegül Kanay (CLLE-LTC - Cognition, Langues, Langage, Ergonomie - EPHE - École pratique des hautes études - PSL - Université Paris sciences et lettres - UT2J - Université Toulouse - Jean Jaurès - CNRS - Centre National de la Recherche Scientifique); Denis Hilton (CLLE-LTC - Cognition, Langues, Langage, Ergonomie - EPHE - École pratique des hautes études - PSL - Université Paris sciences et lettres - UT2J - Université Toulouse - Jean Jaurès - CNRS - Centre National de la Recherche Scientifique); Laetitia Charalambides (UNIL - Université de Lausanne = University of Lausanne, CLLE-LTC - Cognition, Langues, Langage, Ergonomie - EPHE - École pratique des hautes études - PSL - Université Paris sciences et lettres - UT2J - Université Toulouse - Jean Jaurès - CNRS - Centre National de la Recherche Scientifique); Jean-Baptiste Corrégé (LIMSI - Laboratoire d'Informatique pour la Mécanique et les Sciences de l'Ingénieur - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique, CLLE-LTC - Cognition, Langues, Langage, Ergonomie - EPHE - École pratique des hautes études - PSL - Université Paris sciences et lettres - UT2J - Université Toulouse - Jean Jaurès - CNRS - Centre National de la Recherche Scientifique); Eva Inaudi (UT2J - Université Toulouse - Jean Jaurès); Laurent Waroquier (LAPSCO - Laboratoire de Psychologie Sociale et Cognitive - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Stéphane Cézéra (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We compared the effectiveness of basket goal-setting to product information strategies on sustainable consumption in a simulated online supermarket. Experiment 1 found a significant effect of basket goal setting techniques with carbon basket feedback in either numerical or graphical form on the carbon content of baskets purchased but no effect of numerical product information alone or in combination with basket CO2 information. Experiment 2 also found that basket goal setting was effective, but found no additional effect of introducing five-colour coding of the carbon footprints of either products or baskets. Experiment 3 found that repeated visits to the online supermarket led to improved learning about product carbon footprint in the basket goal setting condition, which mediated the effect of goal setting on basket carbon footprint. Our results suggest that goal setting techniques with feedback can reduce the carbon footprint of online shopping baskets and facilitate learning about product carbon footprint. |
| Keywords: | Sustainable consumption, Goal-setting, Decision-aiding, Carbon labels, Groceries |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03403040&r=exp |
| By: | Olivia Bertelli (DIAL, LEDa, IRD, Université Paris-Dauphine, Université PSL); Thomas Calvo (Université Paris-Dauphine, PSL University, CNRS UMR8007, IRD UMR260, LEDa, DIAL); Emmanuelle Lavallée (DIAL, LEDa, IRD, Université Paris-Dauphine, Université PSL); Marion Mercier (Université Paris-Dauphine, PSL University, CNRS UMR8007, IRD UMR260, LEDa, DIAL); Sandrine Mesplé-Somps (IRD, Université Paris-Dauphine, PSL Research University, CNRS, LEDa, DIAL) |
| Abstract: | Measuring behaviors and preferences in times of conflict is of great interest for understanding conflict dynamics and designing conflict-resolution interventions. Yet, data users often cast doubts on the reliability of sensitive self-reported measures, especially in fragile contexts. We study sensitive experiences and preferences related to insecurity in a fragile State – Mali – by explicitly addressing potential response biases using a List Experiment (LE) method. We survey 1, 500 individuals across the entire country and randomly assign respondents to answer sensitive questions through the LE or direct questions (DQ) techniques to measure response biases. We focus on three experience-related items (physical assault victimization, firearms’ possession, willingness to engage in violence) and two preference-related items (support for the military regime and trust in foreign armed forces in Mali). Results show significant biases affecting responses about preference-related items. Our analysis confirms that popular support for the military regime and mistrust in the foreign armed forces are large, but suffer from a substantial overestimation. Misreporting is not uniformly distributed across the population, but varies depending on gender, education and conflict exposure. Further results suggest that such heterogeneity in response bias can yield fake significant correlations between individual characteristics and sensitive items’ prevalence rates depending on the survey technique used. |
| Keywords: | Survey method, Measurement bias, Fragile State, Africa, Mali |
| JEL: | C83 D74 O55 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:dia:wpaper:dt202301&r=exp |
| By: | Sievert, Martin (University of Mannheim) |
| Abstract: | Previous literature presents a strong rationale for the positive impact of symbolic representation in coproduction contexts. However, empirical studies yield inconclusive findings indicating that meaningful effects are limited if citizens face high levels of uncertainty. This article combines symbolic representation with signaling theory, suggesting that the representativeness of central reference groups might reduce uncertainty. The theoretical framework suggests that the representation of supervisors and existing coproducers might positively affect citizens’ willingness to coproduce. Contrary to the theoretical expectations, the empirical results from two preregistered factorial survey experiments (n = 2, 979), situated in prisoner rehabilitation and refugee integration, indicate that the symbolic gender representation of these reference groups has a limited impact. Only a balanced representation of coproducers exhibits a positive treatment effect on citizens’ willingness to coproduce. The results oppose central arguments in the representative bureaucracy literature. At least for gender categories, symbolic representation is less important than expected. |
| Date: | 2023–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:r2s95&r=exp |
| By: | Afridi, Farzana (Indian Statistical Institute); Arora, Abhishek (Harvard University); Dhar, Diva (University of Oxford); Mahajan, Kanika (Ashoka University) |
| Abstract: | While it is well-acknowledged that the gendered division of labor within marriage adversely affects women's allocation of time to market work, there is less evidence on how extant social norms can influence women's work choices pre-marriage. We conduct an experiment on an online marriage market platform that allows us to measure preferences of individuals in partner selection in India. We find that employed women are 14.5% less likely to receive interest from male suitors relative to women who are not working. In addition, women employed in 'masculine' occupations are 3.2% less likely to elicit interest from suitors relative to those in 'feminine' occupations. Our results highlight the strong effect of gender norms and patriarchy on marital preferences, especially for men hailing from higher castes and northern India, where communities have more traditional gender norms. These findings suggest that expectations regarding returns in the marriage market may influence women's labor market participation and the nature of market work. |
| Keywords: | social norms, work choices, marriage market, gender, India |
| JEL: | J12 J16 J24 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15948&r=exp |
| By: | Brice Corgnet (Univ Lyon, Emlyon Business School, GATE UMR 5824, F-69130 Ecully, France); Roberto Hernan-Gonzalez (Burgundy School of Business, Dijon, France); Yao Thibaut Kpegli (Univ Lyon, Université Lyon 2, GATE UMR 5824, F-69130 Ecully, France); Adam Zylbersztejn (Univ Lyon, Université Lyon 2, GATE UMR 5824, F-69130 Ecully, France; research fellow at Vistula University Warsaw (AFiBV), Warsaw, Poland) |
| Abstract: | The risk-incentives tradeoff (RIT) is a fundamental result of principal-agent theory. Yet, empirical evidence has been elusive. This could be due to a lack of robustness of the theory outside of the standard expected utility framework (EUT) or to confounding factors in the empirical tests. First, we theoretically study the existence of RIT under alternative theories: Rank-Dependent Utility (RDU) and Mean-Variance-Skewness (MVS). We show that RIT is remarkably robust under RDU, but not under MVS. Second, we use a novel experimental design that eliminates confounding factors and find evidence for RIT even in the case of risk-seeking agents, which is a distinct prediction of RDU. Our results provide support for the risk-incentives tradeoff and suggest that it applies to a broad range of situations including cases in which agents are risk-seeking (e.g., executive compensation). |
| Keywords: | Risk-Incentives Tradeoff, Rank-Dependent Utility, Mean-Variance-Skewness, Experiments |
| JEL: | C92 D23 D86 M54 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2305&r=exp |
| By: | Rodemeier, Matthias (Bocconi University) |
| Abstract: | What do markets for voluntary climate protection imply about people's valuations of en- vironmental protection? I study this question in a large-scale field experiment (N=255, 000) with a delivery service, where customers are offered carbon offsets that compensate for emissions. To estimate demand for carbon mitigation, I randomize whether the delivery service subsidizes the price of the offset or matches the offset's impact on carbon mitigation. I find that consumers are price-elastic but fully impact-inelastic. This would imply that consumers buy offsets but their willingness to pay (WTP) for the carbon it mitigates is zero. However, I show that consumers can be made sensitive to impact through a simple information treatment that increases the salience of subsidies and matches. Salient information increases average WTP for carbon mitigation from zero to 16 EUR/tCO2. Two complementary surveys reveal that consumers have a limited comprehension of the carbon-mitigating attribute of offsets and, as a result, appear indifferent to impact variations in the absence of information. Finally, I show that the widely-used contingent valuation approach poorly captures revealed preferences: Average hypothetical WTP in a survey is 200 EUR/tCO2, i.e., 1, 150% above the revealed preference estimate. |
| Keywords: | climate change, carbon mitigation, willingness to pay, carbon offsets, contingent valuation, nudging |
| JEL: | D61 D82 H21 Q51 Q58 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15939&r=exp |