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on Experimental Economics |
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Issue of 2023‒05‒08
twenty-six papers chosen by |
| By: | Giuseppe Attanasi (Sapienza University of Rome, Italy; BETA, University of Strasbourg, France; Université Côte d'Azur, CNRS, GREDEG, France); James C. Cox (Georgia State University); Vjollca Sadiraj (Georgia State University) |
| Abstract: | We run a staged field experiment during three concerts in the South of Italy, characterized by the same traditional music and a comparable average level of alcohol consumption by attendees. Individual blood alcohol concentration (BAC) is measured through electronic breathalyzers. The experimental games proposed to concert attendees are contractions (mini-games) of the private-property and the common-property trust game in Cox et al. (2009). We elaborate predictions on behavior of participants with null vs. positive BAC based on the revealed altruism theory of Cox et al. (2008). We find that alcohol consumption leads to less pro-social behavior (measured as either trust or reciprocity) independently of the version (private-property or common-property) of the trust game. Furthermore, inebriated participants show strategic altruism in the role of first mover (trust), but not in the role of second mover (reciprocity) in the trust game. |
| Keywords: | Staged Field Experiment, Alcohol, Trust Game, Trust, Reciprocity, Private vs. Common Property, Tourists |
| JEL: | C72 C93 Z10 Z32 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2022-39&r=exp |
| By: | Raphael Brade; Oliver Himmler; Robert Jaeckle |
| Abstract: | We present first experimental evidence that relative performance feedback improves both the speed and quality with which challenging long-term tasks are completed. Providing university students with ongoing relative feedback on accumulated course credits accelerates graduation by 0.12 SD, and also improves grades by 0.063 SD. Treatment effects are concentrated among students with medium pre-treatment graduation probabilities: when these students are informed about an above-average performance, their outcomes improve – otherwise their outcomes deteriorate. Combined with survey evidence, this pattern of results suggests that learning about own ability is a plausible mechanism. |
| Keywords: | relative performance feedback, rank, natural field experiment, higher education, perceived ability, belief updating |
| JEL: | C93 D83 D91 I21 I23 I24 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10346&r=exp |
| By: | Alison Andrew (Institute for Fiscal Studies); Sonya Krutikova (Institute for Fiscal Studies); Gabriela Smarrelli (Institute for Fiscal Studies); Hemlata Verma (Institute for Fiscal Studies) |
| Date: | 2022–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:22/41&r=exp |
| By: | Bhaumik, Sumon K. (University of Sheffield); Chowdhury, Subhasish M. (University of Sheffield); Dimova, Ralitza (University of Manchester); Fromell, Hanna (Aarhus University) |
| Abstract: | We investigate experimentally the effects of information about native/immigrant identity, and the ability to communicate a self-chosen personal characteristic towards the rival on conflict behavior. In a two-player individual contest with British and Immigrant subjects in the UK we find that neither information about identity nor communicating self-characteristics significantly affect the average level of conflict. Both of those, however, significantly affect players' strategies, in the sense of the extent they involve conflict over time. Overall, the results indicate that inter-personal communication may help to mitigate high intensity conflicts when the identities are common knowledge among rivals. |
| Keywords: | conflict, experiment, identity, immigrant, communication |
| JEL: | C72 C91 D72 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16020&r=exp |
| By: | Henning Hermes (University of Düsseldorf, Institute for Competition Economics); Marina Krauss (University of Augsburg, Department of Economics); Philipp Lergetporer (Technical University of Munich, School of Management); Frauke Peter (Deutsches Zentrum für Hochschul- und Wissenschaftsforschung); Simon Wiederhold (University of Ingolstadt, D-85049 Ingolstadt) |
| Abstract: | We present experimental evidence that enabling access to universal early child care for families with lower socioeconomic status (SES) increases maternal labor supply. Our intervention provides families with customized help for child care applications, resulting in a large increase in enrollment among lower-SES families. The treatment increases lower-SES mothers' full-time employment rates by 9 percentage points (+160%), household income by 10%, and mothers' earnings by 22%. The effect on full-time employment is largely driven by increased care hours provided by child care centers and fathers. Overall, the treatment substantially improves intra-household gender equality in terms of child care duties and earnings. |
| Keywords: | Child care, maternal employment, gender equality, randomized controlled trial |
| JEL: | D90 J13 J18 J22 C93 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:aug:augsbe:0345&r=exp |
| By: | Camille Cornand (Corresponding author: CNRS, GATE UMR 5824, F-69130 Ecully, France. Full postal address: GATE, 93 chemin des Mouilles, 69130 Ecully, France); Maria Alejandra Erazo Diaz (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: | We use an experimental asset market with eye-tracker measurements for a novel exploration of the cognitive validity of a classic heterogeneous trader taxonomy. Following a top-down approach, we assume that the patterns of attention and information acquisition are governed by one of the three trading strategies, either feedback, passive, or speculative. In line with our first hypothesis, speculators seek information about market expectations. Notwithstanding the two other hypotheses, feedback traders reveal patterns of attention and information acquisition that could ex ante be expected from passive traders, and vice versa. |
| Keywords: | Experiment; Asset market; Attention; Information acquisition; Eye-tracking |
| JEL: | C92 G41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2307&r=exp |
| By: | Andrea La Nauze; Erica Myers |
| Abstract: | We use an experiment to test whether consumers optimally acquire information on energy costs in appliance markets where, like many contexts, consumers are poorly informed and make mistakes despite freely available information. To test for optimal information acquisition we compare the average utility gain from improved decision making due to information with willingness to pay for information. We find that consumers acquire information suboptimally. We then compare two behavioral policies: a conventional subsidy for energy-efficient products and a non-traditional subsidy paying consumers to acquire information on energy costs. The welfare effects of each policy depend on the benefits of improved decisions versus the losses of mental effort (from the information subsidy) or distorted choices (from the product subsidy). In our context, information subsidies dominate product subsidies. In a variety of settings where decisions are made and information is delivered online, paying for attention could more effectively target welfare improvements. |
| Keywords: | endogenous information acquisition, behavioral bias, information interventions, energy efficiency |
| JEL: | D91 D12 D83 Q41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10335&r=exp |
| By: | Benjamin Enke; Thomas Graeber; Ryan Oprea |
| Abstract: | We provide experimental evidence that core intertemporal choice anomalies – including extreme short-run impatience, structural estimates of present bias, hyperbolicity and transitivity violations – are driven by complexity rather than time or risk preferences. First, all anomalies also arise in structurally similar atemporal decision problems involving valuation of iteratively discounted (but immediately paid) rewards. These computational errors are strongly predictive of intertemporal decisions. Second, intertemporal choice anomalies are highly correlated with indices of complexity responses including cognitive uncertainty and choice inconsistency. We show that model misspecification resulting from ignoring behavioral responses to complexity severely inflates structural estimates of present bias. |
| Keywords: | complexity, hyperbolic discounting, present bias, bounded rationality, noise, cognitive uncertainty |
| JEL: | C91 D91 G00 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10327&r=exp |
| By: | Henning Hermes; Philipp Lergetporer; Fabian Mierisch; Frauke Peter; Simon Wiederhold |
| Abstract: | emails from fictitious parents to > 18, 000 early child care centers across Germany, asking if there is a slot available and how to apply. Randomly varying names to signal migration background, we find that migrants receive 4.4 percentage points fewer responses. Responses to migrants also contain substantially fewer slot offers, are shorter, and less encouraging. Exploring channels, discrimination against migrants does not differ by the perceived educational background of the email sender. However, it does differ by regional characteristics, being stronger in areas with lower shares of migrants in child care, higher right-wing vote shares, and lower financial resources. Discrimination on the child care market likely perpetuates existing inequalities of opportunities for disadvantaged children. |
| Keywords: | child care, discrimination, information provision, inequality, field experiment |
| JEL: | J13 J18 J22 C93 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bav:wpaper:225_hermesetal&r=exp |
| By: | Teresa Esteban-Casanelles; Duarte Gon\c{c}alves |
| Abstract: | How and why do incentive levels affect strategic behavior? This paper examines an experiment designed to identify the causal effect of scaling up incentives on choices and beliefs in strategic settings by holding fixed opponents' actions. In dominance-solvable games, higher incentives increase action sophistication and best-response rates and decrease mistake propensity. Beliefs tend to become more accurate with higher own incentives in simple games. However, opponents with higher incentive levels are harder to predict: while beliefs track opponents' behavior when they have higher incentive levels, beliefs about opponents also become more biased. We provide evidence that incentives affect cognitive effort and that greater effort increases performance and predicts choice and belief sophistication. Overall, the data lends support to combining both payoff-dependent mistakes and costly reasoning. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.00412&r=exp |
| By: | Michele Giannola (Institute for Fiscal Studies) |
| Date: | 2022–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:22/54&r=exp |
| By: | Ahsan Jansson, Cecilia (Department of Economics, School of Business, Economics and Law, Göteborg University); Patil, Vikram (International Rice Research Institute (IRRI), India); Vecci, Joe (Department of Economics, School of Business, Economics and Law, Göteborg University); Chellattan Veettil , Prakashan (International Rice Research Institute (IRRI), India.); Yashodha, Yashodha (International Water Management Institute (IWMI), India) |
| Abstract: | We study psychological impediments that make it difficult to change be- haviour. In particular, we evaluate the impact of a randomised psychological intervention designed to target locus of control–an individual’s belief in their own ability to influence their outcomes – on the adoption of climate resilient technologies. In the control farmers receive a standard agricultural education. Treatment farmers are assigned to one of three treatments where they receive agricultural training and either: a psychological information treatment providing tools to change belief about one’s sense of control, a crop simulation app – al- lowing farmers to simulate their agricultural decisions and a treatment with both combined. Our sample consists of 1674 farmers from 252 villages in Odisha, India. We find that at baseline, the majority do not believe they can influence their agri- cultural outcomes. However, the interventions have little impact on agricultural behaviour, locus of control or aspirations. We then study explanations. |
| Keywords: | Psychological Impediments; Locus of Control; Agriculture |
| JEL: | D01 D91 O13 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0833&r=exp |
| By: | Nicolás Ajzenman (McGill University); Bruno Ferman (São Paulo School of Economics - FGV); Sant’Anna Pedro C. (São Paulo School of Economics - FGV) |
| Abstract: | This paper assesses the results of an experiment designed to identify discrimination in users’ following behavior on Twitter. Specifically, we created fictitious bot accounts that resembled humans and claimed to be PhD students in economics. The accounts differed in three characteristics: gender (male or female), race (Black or White), and university affiliation (top- or lower-ranked). The bot accounts randomly followed Twitter users who form part of the #EconTwitter academic community. We measured how many follow-backs each account obtained after a given period. Twitter users from this community were 12% more likely to follow accounts of White students compared to those of Black students; 21% more likely to follow accounts of students from top-ranked, prestigious universities compared to accounts of lower-ranked institutions; and 25% more likely to follow female compared to male students. The racial gap persisted even among students from top-ranked institutions, suggesting that Twitter users racially discriminate even in the presence of a signal that could be interpreted as indicative of high academic potential. Notably, we find that Black male students from top-ranked universities receive no more follow-backs than White male students from relatively lower-ranked institutions. |
| Keywords: | Discrimination; Economics Profession; Gender; Race; Social Media |
| JEL: | J15 J16 A11 C93 I23 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:235&r=exp |
| By: | Sandro Ambuehl; Sebastian Blesse; Philipp Doerrenberg; Christoph Feldhaus; Axel Ockenfels |
| Abstract: | Much economic analysis derives policy recommendations based on social welfare criteria intended to model the preferences of a policy maker. Yet, little is known about policy maker’s normative views in a way amenable to this use. In a behavioral experiment, we elicit German legislators’ social welfare criteria unconfounded by political economy constraints. When resolving preference conflicts across individuals, politicians place substantially more importance on least-favored than on most-favored alternatives, contrasting with both common aggregation mechanisms and the equal weighting inherent in utilitarianism and the Kaldor-Hicks criterion. When resolving preference conflicts within individuals, we find no support for the commonly used “long-run criterion” which insists that choices merit intervention only if the lure of immediacy may bias intertemporal choice. Politicians’ and the public’s social welfare criteria largely coincide. |
| Keywords: | positive welfare economics, politicians, preference aggregation, paternalism |
| JEL: | C90 D60 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10329&r=exp |
| By: | Lei Wang (Shaanxi Normal University); Yiwei Qian (Stanford University); Nele Warrinnier (Queen Mary University of London and LICOS, KU Leuven); Orazio Attanasio (Yale University, the Institute of Fiscal Studies (IFS)); Scott Rozelle (Stanford University); Sean Sylvia (University of North Carolina at Chapel Hill) |
| Abstract: | We present evidence from a randomized experiment testing the impacts of a six-month early childhood home-visiting program on child outcomes at school entry. Two and a half years after completion of the program, we find persistent effects on child working memory - a key skill of executive functioning that plays a central role in children’s development of cognitive and socio-emotional skills. We also find that the program had persistent effects on parental time investments and preschool enrolment decisions. Children were enrolled earlier and in higher quality preschools, the latter reflecting a shift in preferences over preschool attributes toward quality. Our findings imply an important role for the availability of high-quality subsequent schooling in sustaining the impacts of early intervention programs. |
| Keywords: | Early Childhood Development, Parenting, China, Poverty |
| JEL: | J13 I21 I28 H11 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:931&r=exp |
| By: | James C. Cox; Vjollca Sadiraj; James M. Walker |
| Abstract: | This paper studies the effect of power asymmetry on resolution of social dilemmas in repeated play of linear public good games. The experiment uses a 2X2 design that crosses power symmetry or asymmetry in games with positive (provision) or negative (appropriation) externalities. Our data suggest that power asymmetry has a detrimental effect on voluntary allocations to a public good, with the effect being more pronounced in the asymmetric-power appropriation game. Allocations to a public good increase with "social" income, which is inconsistent with allocations by different individuals being strategic substitutes. With power asymmetry, second movers earn more than first movers in the appropriation game but not in the provision game. |
| JEL: | C73 C52 H41 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2022-04&r=exp |
| By: | Palaash Bhargava; Daniel L. Chen; Matthias Sutter; Camille Terrier |
| Abstract: | Social networks are a key factor of success in life, but they are also strongly segmented on gender, ethnicity, and other demographic characteristics (Jackson, 2010). We present novel evidence on an understudied source of homophily: behavioral traits. Behavioral traits are important determinants of life outcomes. While recent work has focused on how these traits are influenced by the family environment, or how they can be affected by childhood interventions, little is known about how these traits are related to social networks. Based on unique data collected using incentivized experiments on more than 2, 500 French high-school students, we find high levels of homophily across all ten behavioral traits that we study. Notably, the extent of homophily depends on similarities in demographic characteristics, in particular with respect to gender. Furthermore, the larger the number of behavioral traits that students share, the higher the overall homophily. Using network econometrics, we show that the observed homophily is not only an outcome of endogenous network formation, but is also a result of friends influencing each others’ behavioral traits. Importantly, the transmission of traits is larger when students share demographic characteristics, such as gender, have longer periods of friendship, or are friends with more popular individuals. |
| Keywords: | homophily, social networks, behavioural traits, peer effects, experiments |
| JEL: | D85 C91 D01 D90 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10351&r=exp |
| By: | Okoroji, Celestin; Gleibs, Ilka H.; Howard, Simon |
| Abstract: | Audit studies demonstrate that unemployed people are less likely to receive a callback when they apply for a job than employed candidates, the reason for this is unclear. Across two experiments (N = 461), we examine whether the perceived competence of unemployed candidates accounts for this disparity. In both studies, participants assessed one of two equivalent curriculum vitae’s, differing only on the current employment status. We find that unemployed applicants are less likely to be offered an interview or hired. The relationship between the employment status of the applicant and these employment-related outcomes is mediated by the perceived competence of the applicant. We conducted a mini meta-analysis, finding that the effect size for the difference in employment outcomes was d = .274 and d = .307 respectively, while the estimated indirect effect was -.151[-.241, -.062]. These results offer a mechanism for the differential outcomes of job candidates by employment status. |
| Keywords: | unemployment; stereotype content; audit studies; decision making |
| JEL: | R14 J01 |
| Date: | 2023–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117806&r=exp |
| By: | Jaime Ramirez-Cuellar |
| Abstract: | This paper provides asymptotically valid tests for the null hypothesis of no treatment effect heterogeneity. Importantly, I consider the presence of heterogeneity that is not explained by observed characteristics, or so-called idiosyncratic heterogeneity. When examining this heterogeneity, common statistical tests encounter a nuisance parameter problem in the average treatment effect which renders the asymptotic distribution of the test statistic dependent on that parameter. I propose an asymptotically valid test that circumvents the estimation of that parameter using the empirical characteristic function. A simulation study illustrates not only the test's validity but its higher power in rejecting a false null as compared to current tests. Furthermore, I show the method's usefulness through its application to a microfinance experiment in Bosnia and Herzegovina. In this experiment and for outcomes related to loan take-up and self-employment, the tests suggest that treatment effect heterogeneity does not seem to be completely accounted for by baseline characteristics. For those outcomes, researchers could potentially try to collect more baseline characteristics to inspect the remaining treatment effect heterogeneity, and potentially, improve treatment targeting. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.01141&r=exp |
| By: | Lewandowski, Piotr (Institute for Structural Research (IBS)); Lipowska, Katarzyna (Institute for Structural Research (IBS)); Smoter, Mateusz (Institute for Structural Research (IBS)) |
| Abstract: | We study workers' and employers' preferences for remote work, estimating the willingness to pay for working from home (WFH) using discrete choice experiments with more than 10, 000 workers and more than 1, 500 employers in Poland. We selected occupations that can be done remotely and randomised wage differences between otherwise identical home- and office-based jobs, and between otherwise identical job candidates, respectively. We find that demand for remote work was substantially higher among workers than among employers. On average, workers would sacrifice 2.9% of their earnings for the option of remote work, especially hybrid WFH for 2-3 days a week (5.1%) rather than five days a week (0.6%). However, employers, on average, expect a wage cut of 21.0% from candidates who want to work remotely. This 18 pp gap in the valuations of WFH reflects employers' assessments of productivity loss associated with WFH (14 pp), and the additional effort required to manage remote workers (4 pp). Employers' and workers' valuations of WFH align only in 25-36% of firms with managers who think that WFH is as productive as on-site work. |
| Keywords: | working from home, remote work, discrete choice experiment, willingness to pay |
| JEL: | J21 J31 J81 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16041&r=exp |
| By: | Brian Jabarian; Elia Sartori |
| Abstract: | In a stylized voting model, we establish that increasing the share of critical thinkers -- individuals who are aware of the ambivalent nature of a certain issue -- in the population increases the efficiency of surveys (elections) but might increase surveys' bias. In an incentivized online social media experiment on a representative US population (N = 706), we show that different digital storytelling formats -- different designs to present the same set of facts -- affect the intensity at which individuals become critical thinkers. Intermediate-length designs (Facebook posts) are most effective at triggering individuals into critical thinking. Individuals with a high need for cognition mostly drive the differential effects of the treatments. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.16422&r=exp |
| By: | Lena Dräger; Michael J. Lamla; Damjan Pfajfar |
| Abstract: | We study the effects of forward-looking communication in an environment of rising inflation rates on German consumers’ inflation expectations using a randomized control trial. We show that information about rising inflation increases short- and long-term inflation expectations. This initial increase in expectations can be mitigated using forward-looking information about inflation. Among these information treatments, professional forecasters’ projections seem to reduce inflation expectations by more than policymaker’s characterization of inflation as a temporary phenomenon. |
| Keywords: | short-run and long-run inflation expectations, inflation surge, randomized control trial, survey experiment, persistent or transitory inflation shock |
| JEL: | E31 E52 E58 D84 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10330&r=exp |
| By: | John List; Ian Muir; Devin Pope; Gregory Sun |
| Abstract: | Left-digit bias (or 99-cent pricing) has been discussed extensively in economics, psychology, and marketing. Despite this, we show that the rideshare company, Lyft, was not using a 99-cent pricing strategy prior to our study. Based on observational data from over 600 million Lyft sessions followed by a field experiment conducted with 21 million Lyft passengers, we provide evidence of large discontinuities in demand at dollar values. Approximately half of the downward slope of the demand curve occurs discontinuously as the price of a ride drops below a dollar value (e.g. $14.00 to $13.99). If our short run estimates persist in the longer run, we calculate that Lyft could increase its profits by roughly $160M per year by employing a left-digit bias pricing strategy. Our results showcase the robustness of an important behavioral bias for a large, modern company and its persistence in a highly-competitive market. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00771&r=exp |
| By: | Syngjoo Choi; Kyu Sup Hahn; Byung-Yeon Kim; Eungik Lee; Jungmin Lee; Sokbae Lee |
| Abstract: | This paper investigates whether ideological indoctrination by living in a communist regime relates to low economic performance in a market economy. We recruit North Korean refugees and measure their implicit bias against South Korea by using the Implicit Association Test. Conducting double auction and bilateral bargaining market experiments, we find that North Korean refugees with a larger bias against the capitalistic society have lower expectations about their earning potential, exhibit trading behavior with lower target profits, and earn less profits. These associations are robust to conditioning on correlates of preferences, human capital, and assimilation experiences. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.00651&r=exp |
| By: | Byrne, Shane (Central Bank of Ireland); Devine, Kenneth (Central Bank of Ireland); McCarthy, Yvonne (Central Bank of Ireland) |
| Abstract: | A widespread tendency for mortgage holders to forego opportunities to reduce their repayment burden through refinancing has been well documented. This puzzle has persisted in spite of considerable regulatory and public attention to the topic. In this Letter, we conduct a randomised controlled trial on a sample of circa 12, 000 mortgage holders to test how targeted enhancements to an existing disclosure can prompt greater take-up of advantageous refinancing opportunities. The results show the best performing enhancement delivered a 76 per cent increase in the number of refinances completed, when compared against the pre-existing standard disclosure. Refinancers benefit materially, saving on average €1, 209 just within the first 12 months after action. We observe that reminders substantially drive the increased uptake, and that the incorporation of personalised euro savings estimates as part of the menu of refinancing options presented to consumers can also help them to more easily weigh-up their opportunities and make the best informed choices . These results demonstrate the value of integrating behavioural economics into consumer protection policymaking. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:cbi:ecolet:9/el/22&r=exp |
| By: | Andrej Angelovski (Middlesex University); Praveen Kujal (Middlesex University and Chapman University); Christos Mavridis (Gabriele d’Annunzio University of Chieti-Pescar) |
| Abstract: | Given the prevalence of local public goods, whose broader use is often limited by distance and borders, we propose a potential solution to the free-riding problem by having each participant/beneficiary delegate the public good contribution decision to a non-local intermediary who neither puts in own endowment into the public good nor benefits from it. Intermediaries make decisions under two compensation mechanisms where the incentives for the intermediary are either non-aligned (fixed) or aligned (variable) with those of the beneficiary. We find that the use of intermediaries, regardless of whether their compensation is aligned or not with that of the beneficiary, significantly increases contributions to the provision of the public good. We conclude that individuals behave differently when they (formally) make decisions for someone else even if their incentive structures are identical. |
| Keywords: | Public goods, intermediaries, delegation |
| JEL: | H4 C91 D90 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:23-06&r=exp |