nep-exp New Economics Papers
on Experimental Economics
Issue of 2023‒07‒31
twenty-one papers chosen by
Daniel Houser
George Mason University

  1. Heterogeneity in health insurance choice: An experimental investigation of consumer choice and feature preferences By Hermanns, Benedicta; Kairies-Schwarz, Nadja; Kokot, Johanna; Vomhof, Markus
  2. Decentralized or Centralized Governance in Social Dilemmas? Experimental Evidence from Georgia By Mekvabishvili, Rati
  3. Nudging microentrepreneurs under fire: Experimental evidence from favelas in Rio de Janeiro By Anna-Katharina Lenz; Martin Valdivia
  4. On the dynamics of the responses in Frydman and Jin (2022): Nullius in verba By Hertel, Johanna; Igan, Deniz; Smith, John
  5. Can Communication Mitigate Strategic Delays in Investment Timing? By Ayse Gül Mermer; Sander Onderstal; Joep Sonnemans
  6. Social networks and organizational helping behavior: Experimental evidence from the helping game By Erkut, Hande; Reuben, Ernesto
  7. Familiarity Bias and Economic Decisions: Evidence from A Survey Experiment By Zhaobo Zhu; Zhenyan Qi; Yi Jin
  8. Confessions of a pirate: Gender difference in survey prime to increase honest reporting By Kate Whitman; Zahra Murad; Joe Cox
  9. Getting up to Speed: Informing Prior and Prospective Blood Donors about Supply Uncertainty and Hygiene Measures during the COVID‐19 Lockdown By Heynold, Anne Kathrin; Haylock, Michael; Ehmann, Stefanie
  10. The Impact of Formalization Assistance on Informality: Experimental evidence from Colombian mines By Saavedra, S
  11. Is it the Message or the Messenger? Examining Movement in Immigration Beliefs By Hassan Afrouzi; Carolina Arteaga; Emily K. Weisburst
  12. (Dis)honesty and the Value of Transparency for Campaign Promises By Matthias Lang; Simeon Schudy
  13. Public Disclosure and Tax Compliance: Evidence from Uganda By Tanner Regan; Priya Manwaring
  14. Everyday econometricians: Selection neglect and overoptimism when learning from others By Kai Barron; Steffen Huck; Philippe Jehiel
  15. Medical Brain Drain – Assessing the Role of Job Attributes and Individual Traits By Bertoni, Marco; Chattopadhyay, Debdeep; Gu, Yuanyuan
  16. Communication and the emergence of a unidimensional world By Philippos Louis; Orestis Troumpounis; Nikolas Tsakas
  17. A Classical Model of Speculative Asset Price Dynamics By Sabiou Inoua; Vernon Smith
  18. Would you like some coffee with your sugar? A natural field experiment on the efficiency and acceptability of setting zero sugars as a default in coffee-vending machines By Daniel Priolo; Isabelle Milhabet; Marilena Bertolino; Tom Juille; Dorian Jullien; Guilhem Lecouteux; Ismaël Rafaï; Pierre Thérouanne
  19. A Discrimination Report Card By Patrick Kline; Evan K. Rose; Christopher R. Walters
  20. Is Having an Expert “Friend†Enough? An Analysis of Consumer Switching Behavior in Mobile Telephony By Genakos, C.; Roumanias, C.; Valletti, T.
  21. Human Creativity: Functions, Mechanisms and Social Conditioning By De Dreu, Carsten; Nijstad, Bernard A.; Baas, Matthijs

  1. By: Hermanns, Benedicta; Kairies-Schwarz, Nadja; Kokot, Johanna; Vomhof, Markus
    Abstract: We investigate heterogeneity in patterns of preferences for health insurance features using health insurance choice data from a controlled laboratory experiment. Within the experiment, participants make consecutive insurance choices based on choice sets that vary in composition and size. We keep the health risk constant and equal for everyone. In addition, we implement a treatment that entails a feature-based insurance filter, allowing us to validate feature preferences. We also account for individually elicited risk preferences. On aggregate, we find that there is considerable heterogeneity in consumer choice. Participants differ particularly (a) in their willingness to pay to insure themselves against illnesses that differ in terms of their probability of occurrence and the size of the losses to be covered and (b) in their preference to forgo deductibles. However, if we measure the quality of individuals' decisions based on risk preferences, the heterogeneity among participants disappears. Our results suggest that heterogeneity in health insurance choices is not reflected in decision quality when we assume a rank-dependent expected utility model of risk preferences.
    Keywords: health insurance, consumer preferences, heterogeneity, laboratory experiment, risk preferences
    JEL: C91 I13 D81 D83 G22
    Date: 2023
  2. By: Mekvabishvili, Rati
    Abstract: The vast majority of experimental studies on the effectiveness of punishments in promoting cooperation in social dilemma situation examine decentralized incentive systems where all group members can punish each other. Cross-societal experimental studies suggest that while decentralized incentives can successfully promote cooperation in one society, they fail to do so in another. So, how is social order, as a large-scale cooperation problem among strangers, maintained in such societies? Many modern societies overcome this problem through well-functioning top-down formal enforcement institutions. In the experimental setting of the public goods game, we compare a strong and weak exogenous centralized incentive system with a decentralized incentive system in the case of Georgia. Our experimental evidence suggests that in Georgia, self-governed groups are doomed to suffer from high inefficiencies under a decentralized peer-to-peer punishment incentive system. They are better off when punishment power is given to an external centralized authority that is not exposed to power abuse risks.
    Keywords: Centralized punishment, Decentralized punishment, Cooperation, Public goods, Welfare
    JEL: C71 C92 H41
    Date: 2023–06–10
  3. By: Anna-Katharina Lenz; Martin Valdivia
    Abstract: Do behavioral biases and the distortions generated by the presence of organized crime limit microentrepreneurs’ adoption of growth-oriented business practices? We explore this question in a field experiment with informal microentrepreneurs in which we provide informational visits and text messages about the advantages and convenience of a formalization program. All microentrepreneurs operated in Complexo Maré, a Favela in Rio de Janeiro, Brazil, where an important contextual factor was the presence of organized crime groups. After a recent state intervention, violence had increased in the intervened territories. Our average results suggest that while informative in-person visits do increase the knowledge about the formalization program and even the interest in formalizing, complementing the intervention with reminding messages is needed to increase business formalization. That is, treatment groups that received either information sessions or text messages show no effect, while those receiving both treatments show an increase in formalization by 8.5 percentage points. We also find, however, that these effects of the nudging intervention can be cancelled out by the distortions imposed by organized crime, in particular, by the mobility restrictions they often use to control their territories. We interpret these results as evidence in support of the importance of behavioral interventions such as reminder messages, to overcome limited attention and procrastination biases by microentrepreneurs, but also as an indication of the impacts that organized crime may have on adopting good business practices.
    Keywords: Entrepreneurship, Behavioral Biases, Formalization, Nudges, Attention Allocation, Development
    Date: 2023–07
  4. By: Hertel, Johanna; Igan, Deniz; Smith, John
    Abstract: Frydman and Jin (2022) ["Efficient coding and risky choice, " Quarterly Journal of Economics, 137, 161---213] present a model of efficient coding whereby decision makers are Bayesian learners of a stochastic distribution. The model predicts that decision makers will devote more cognitive resources to---and therefore be more sensitive to--values that appear more frequently. The authors conduct two experiments where subjects make binary choices between a certain amount and a lottery, where the trial-specific values are drawn from a stochastic distribution. While unknown to the subjects, the distribution can be learned over the course of the experiment. The authors conclude that the observations are consistent with efficient coding. However, we note that the authors do not examine observations across trials. When we examine the data from Experiment 1, we do not find evidence that the relationship between sensitivity and frequency increased across trials. When we include specifications that account for the parameters in the previous trial, the treatment interaction estimates are no longer significant. The effects identified by Frydman and Jin (2022) in Experiment 1 are simply a recency bias and not the result of Bayesian learning. We find that subjects in Experiment 2 are less---not more---sensitive to values they encounter more frequently. In summary, we do not find support for the central claims made by the authors. Finally, we describe some unreported details in the preregistration reports of Frydman and Jin (2022). We encourage economists to exercise more skepticism until convinced by the authors' arguments.
    Keywords: data reanalysis, Bayesian learning, Bob Critique
    JEL: C30 G02
    Date: 2023–06–30
  5. By: Ayse Gül Mermer (Tilburg University); Sander Onderstal (University of Amsterdam); Joep Sonnemans (University of Amsterdam)
    Abstract: In economic environments, decision-makers can strategically delay irreversible investments to learn from the actions of others. This creates free-riding incentives and can lead to socially suboptimal outcomes. We experimentally examine if and how communication mitigates this free-riding problem in an investment-timing game. In our baseline investment-timing game, participants choose when to invest in a nonrival project with uncertain returns, in groups of two or four players. The earliest investor of the group bears the costs of investment while everyone in the group benefits if the project reveals high returns. If more investors invest at the same time, they share the costs. In the communication treatment, subjects can freely communicate before choosing the investment time. We find that in groups of two players, communication increases cooperation and leads to significantly earlier investments. In groups of four players, however, communication significantly reduces delay only in the first period of interaction, but not in the aggregate over all periods
    Keywords: stochastic volatility, social cost of carbon, climate damage, Duffie-Epstein preference
    JEL: C72 C92 D83 H41
  6. By: Erkut, Hande; Reuben, Ernesto
    Abstract: This paper studies the causal impact of social ties and network structure on helping behavior in organizations. We introduce and experimentally study a game called the 'helping game, ' where individuals unilaterally decide whether to incur a cost to help other team members when helping is a rivalrous good. We find that social ties have a strong positive effect on helping behavior. Individuals are more likely to help those with whom they are connected, but the likelihood of helping decreases as the social distance between individuals increases. Additionally, individuals who are randomly assigned to be more central in the network are more likely to help others.
    Keywords: helping, social ties, social networks, communication, organizations
    JEL: D23 D91
    Date: 2023
  7. By: Zhaobo Zhu (Audencia Business School); Zhenyan Qi (Shenzhen University [Shenzhen]); Yi Jin (MUST - Macau University of Science and Technology)
    Abstract: This paper provides experimental evidence that people in China have strong familiarity bias identified by hometown and education locations when making merger and acquisition decisions. Emotions and genders could affect the role of familiarity bias in merger and acquisition decisions.
    Keywords: Familiarity bias, Home bias, Emotion, Merger and acquisition decisions
    Date: 2023–05
  8. By: Kate Whitman (University of Portsmouth); Zahra Murad (University of Portsmouth); Joe Cox (University of Portsmouth)
    Abstract: Survey data is essential for marketing and scientific research. However, recent evidence suggests that men and women may underreport undesirable behavior to different degrees and for different motivations, making it difficult for marketers to trust consumer data. Two survey experiments were conducted to test priming effects aimed at minimizing social desirability bias, hypothesizing a gender difference in efficacy. Using digital piracy as an example of an underreported behavior, Study 1 shows that a positive cues condition, which is designed to provide respondents with convenient rationalizations, increases undesirable behavior reporting. Negative primes have a greater inhibitory effect on men’s reporting of undesirable behavior compared to women’s, thus reversing the gender reporting gap. Study 2 explores the relationship between measured social desirability bias, positive cues, and gender. We find that the treatment has the strongest effect on men and only significantly affects participants with high social desirability bias. When considering both studies (N = 1, 734) we estimate that the positive cues treatment increases the amount of piracy participants are willing to report by 42%. Market researchers are recommended to add positive cues before questions about undesirable behavior, especially in the case of men. Furthermore, sequential undesirable behavior questions are likely to increasingly inhibit men’s reporting, suggesting that market researchers should randomize these sensitive questions.
    Keywords: Social Desirability Bias; Digital Piracy; Survey Primes; Cognitive Dissonance; Moral Decision Making; Response Bias; Survey Methodology
    JEL: C83
    Date: 2023–07–12
  9. By: Heynold, Anne Kathrin; Haylock, Michael; Ehmann, Stefanie
    Abstract: The already uncertain supply of whole blood from donors has been made even more volatile by the COVID‐19 pandemic. Potential reasons for the persistence of this shock are unawareness of the supply drop, and fear of infection while donating. The primary aim of this study is to test efficacy of measures used by donation organizations and media to appeal to donors and nondonors to donate blood and ensure donor safety during the COVID‐19 pandemic. The secondary aim is to explore why some donors donated less as a result of the pandemic. Using a survey experiment with 1, 207 participants, we test the effect of informing subjects about donation urgency (shortage information), and secondly, the effect of reducing the potential fear of a SARSCoV‐2 infection (hygiene information) on their inclination to donate before and after the COVID‐19 lockdown ended. The results show that shortage information increases willingness to donate for prospective blood donors by 15 percentage points (pp), and increases the willingness of (prospective) donors to donate within the next month by 12pp (9pp), on average. Hygiene information reduces the intention of prior donors to donate again by 8pp, on average. The experimental results are corroborated by evidence from previous donations, showing a 12pp lower likelihood to donate less in 2020 than in 2019 for those who had been informed about shortages by donation organizations. The results suggest that interventions focusing on the marginal impact of donation are more effective than interventions focusing on marginal costs.
    Keywords: Blood donation, altruism, urgency, uncertainty
    Date: 2022–11–22
  10. By: Saavedra, S
    Abstract: More than 60% of global employees work in the informal economy. One of the reasons that firms remain in informality is the length and cost of the formalization process. I explore whether assisting in the formalization process could reduce informality in the mining sector in Colombia. The study is a randomized control trial with informal coal and gold mines. After two years of treatment, the formalization assistance treatment did not increase formalization rates, and attrition was high. However, the treatment increased miners’ income but not expenses, suggesting the miners are saving more, possibly for the titling costs. The high attrition and unsuccessful treatment highlight the difficulties of formalizing the mining sector.
    Keywords: Formalization; Mining; Colombia
    JEL: E26 L72 O17
    Date: 2023–07–13
  11. By: Hassan Afrouzi; Carolina Arteaga; Emily K. Weisburst
    Abstract: How do political leaders affect constituents’ beliefs? Is it rhetoric, leader identity, or the interaction of the two that matters? Using a large-scale experiment we decompose the relative importance of partisan messages vs leader sources, in the context of beliefs about immigration. Participants listen to anti-immigrant and pro-immigrant speeches from both Presidents Obama and Trump. These treatments are benchmarked to versions of the speeches recorded by an actor to control for message content, and to non-ideological presidential speeches to control for leader priming. Our findings show that political leader sources influence beliefs beyond the content of their messages in a special case: when leaders deliver unanticipated messages to individuals in their own party. This evidence supports the hypothesis that individuals will “follow their leader” to new policy positions.
    JEL: C90 D83
    Date: 2023–06
  12. By: Matthias Lang (LMU Munich); Simeon Schudy (LMU Munich)
    Abstract: Promise competition is prevalent in many economic environments, but promise keeping is often difficult to observe. We study the value of transparency for promise competition and ask whether promises still offer an opportunity to honor future obligations when outcomes do not allow for observing promise keeping. Focusing on campaign promises, we show theoretically how preferences for truth-telling shape promise competition when promise keeping can(not) be observed and identify the causal effects of transparency in an incentivized experiment. Transparency leads to less promise breaking but also to less generous promises. Rent appropriations are higher in opaque institutions though only weakly so when not fully opaque. Instrumental reputational concerns and preferences for truth-telling explain these results.
    Keywords: campaign promises; promise breaking; voting; lying costs; preferences for truth-telling; political Economy; theory; experiment;
    JEL: C91 C92 D72 D73 D91
    Date: 2023–07–04
  13. By: Tanner Regan (George Washington University); Priya Manwaring (University of Oxford)
    Abstract: Public disclosure of tax behavior is a promising policy tool for raising tax compliance in low-income countries with limited capacity for alternative enforcement mechanisms. Through a field experiment involving over 65, 000 taxpayers in Kampala, we study effects of reporting delinquents and recognizing compliers and provide evidence on the social determinants of tax compliance. The threat of publicly disclosing delinquency raises compliance, but subsequently disseminating delinquent behavior lowers compliance of others. Public recognition backfires, lowering compliance both for those promised recognition and for those who receive information about compliant taxpayers. These results are consistent with a model of tax evasion with privacy costs to tax eligibility status and limited shame of delinquency. Disseminating tax behavior reduces compliance by lowering compliance beliefs as measured in survey data. Overall, public disclosure policies in this context are limited at raising revenue and enforcement reminder nudges more effective.
    Keywords: property tax, tax morale, public disclosure, shaming
    JEL: O18 H30 H26
    Date: 2023–04
  14. By: Kai Barron (WZB - Wissenschaftszentrum Berlin für Sozialforschung); Steffen Huck (UCL - University College of London [London], WZB - Wissenschaftszentrum Berlin für Sozialforschung); Philippe Jehiel (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UCL - University College of London [London])
    Abstract: This study explores selection neglect in an experimental investment game where individuals can learn from others' outcomes. Experiment 1 examines aggregate-level equilibrium behavior. We find strong evidence of selection neglect and corroborate several comparative static predictions of Jehiel's (2018) model, showing that the severity of the bias is aggravated by the sophistication of other individuals and moderated when information is more correlated across individuals. Experiment 2 focuses on individual decision-making, isolating the influence of beliefs from possible confounding factors. This allows us to classify individuals according to their degree of naivety and explore the limits of, and potential remedies for, selection neglect.
    Keywords: Selection neglect, beliefs, overoptimism, survivorship bias, experiment
    Date: 2023–07
  15. By: Bertoni, Marco (University of Padova); Chattopadhyay, Debdeep; Gu, Yuanyuan (Macquarie University, Sydney)
    Abstract: We study physicians' migration intentions by undertaking a Discrete Choice Experiment with senior Italian medical students. Using the mixed logit models, we estimate how much income students are willing to forego for various job characteristics, including the job location. We find that future doctors are willing to sacrifice €13, 500/year on average to remain in their home country. Those with higher willingness to take risks, competitiveness, cognitive skills and altruism levels are more likely to migrate abroad, with implications for the quality of future doctors remaining in their home country. Furthermore, the valuations of several job characteristics differ substantially for jobs located in the home country or abroad, informing the design of job contracts that shall help retain young doctors.
    Keywords: brain drain, medical workforce, job design, personality traits, discrete choice experiments
    JEL: F66 I18 J08
    Date: 2023–06
  16. By: Philippos Louis; Orestis Troumpounis; Nikolas Tsakas
    Abstract: While individuals hold, exchange, and update opinions over multiple issues, opinions are often correlated and a unidimensional spectrum is enough to summarize them. But when should one expect opinions to be unidimensional? And how important is the underlying structure of communication? Our experimental results: i) validate the crisp predictions by DeMarzo et al. (2003) when individuals update their opinions on a fixed network always trusting the same neighbors, ii) jointly with simulations indicate the prevalence of unidimensionality as an expected outcome even when communication is less structured with individuals’ network possibly varying over time, and iii) highlight the importance of the communication structure in predicting whether individuals hold relatively moderate or extreme opinions.
    Keywords: opinion dynamics; information aggregation; persuasion bias; social networks
    JEL: D83 D85
    Date: 2023–05–18
  17. By: Sabiou Inoua; Vernon Smith
    Abstract: In retrospect, the experimental findings on competitive market behavior called for a revival of the old, classical, view of competition as a collective higgling and bargaining process (as opposed to price-taking behaviors) founded on reservation prices (in place of the utility function). In this paper, we specialize the classical methodology to deal with speculation, an important impediment to price stability. The model involves typical features of a field or lab asset market setup and lends itself to an experimental test of its specific predictions; here we use the model to explain three general stylized facts, well established both empirically and experimentally: the excess, fat-tailed, and clustered volatility of speculative asset prices. The fat tails emerge in the model from the amplifying nature of speculation, leading to a random-coefficient autoregressive return process (and power-law tails); the volatility clustering is due to the traders' long memory of news; bubbles are a persistent phenomenon in the model, and, assuming the standard lab present value pattern, the bubble size increases with the proportion of speculators and decreases with the trading horizon.
    Date: 2023–07
  18. By: Daniel Priolo (EPSYLON - Dynamique des capacités humaines et des conduites de santé - UPVM - Université Paul-Valéry - Montpellier 3); Isabelle Milhabet (LAPCOS - Laboratoire d'Anthropologie et de Psychologie Cliniques, Cognitives et Sociales - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - UCA - Université Côte d'Azur); Marilena Bertolino (LAPCOS - Laboratoire d'Anthropologie et de Psychologie Cliniques, Cognitives et Sociales - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - UCA - Université Côte d'Azur); Tom Juille (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Dorian Jullien (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Guilhem Lecouteux (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Ismaël Rafaï (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Pierre Thérouanne (LAPCOS - Laboratoire d'Anthropologie et de Psychologie Cliniques, Cognitives et Sociales - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - UCA - Université Côte d'Azur)
    Abstract: This paper aims to replicate the effect of a nudge on behavior (efficiency) and acceptability in a natural field experiment. The nudge in our study consists in setting zero sugars as the default level of sugar in hot drinks–vending machines in a French university. We compared Campus A (default option set to 0 sugars) to Campus B (default option set to 3 sugars). We measured the efficiency of this default option by observing the level of sugar actually chosen by the participants, and we measured acceptability through a questionnaire. We hypothesized a high level of efficiency for the nudge and a higher acceptability in Campus A (default option set to 0 sugars) compared to Campus B (default option set to 3 sugars). Our results show that participants with the default option set to zero sugars (Campus A) consumed less sugar than those with the default option set to 3 sugars (Campus B). We also found a high level of acceptability on both campuses, though with no difference between Campus A (where the nudge was implemented) and Campus B (where a future nudge would be implemented). The discussion addresses the applied perspectives and ethical implications of these results.
    Keywords: behavioral policy, nudge, efficiency, default option, acceptability
    Date: 2023
  19. By: Patrick Kline; Evan K. Rose; Christopher R. Walters
    Abstract: We develop an Empirical Bayes grading scheme that balances the informativeness of the assigned grades against the expected frequency of ranking errors. Applying the method to a massive correspondence experiment, we grade the racial biases of 97 U.S. employers. A four-grade ranking limits the chances that a randomly selected pair of firms is mis-ranked to 5% while explaining nearly half of the variation in firms' racial contact gaps. The grades are presented alongside measures of uncertainty about each firm's contact gap in an accessible rubric that is easily adapted to other settings where ranks and levels are of simultaneous interest.
    Date: 2023–06
  20. By: Genakos, C.; Roumanias, C.; Valletti, T.
    Abstract: We present novel evidence from a large panel of UK consumers who receive personalized reminders from a specialist price-comparison website about the precise amount they could save by switching to their best-suited alternative mobile telephony plan. We document three phenomena. First, even self-registered consumers with positive savings exhibit inertia. Second, we show that being informed about potential savings has a positive and significant effect on switching. Third, controlling for savings, the effect of incurring overage payments is significant and similar in magnitude to the effect of savings: paying an amount that exceeds the recurrent monthly fee weighs more on the switching decision than being informed that one can save that same amount by switching to a less inclusive plan. We interpret this asymmetric reaction on switching behavior as potential evidence of loss aversion. In other words, when facing complex and recurrent tariff plan choices, consumers care about savings but also seem to be willing to pay upfront fees in order to get “peace of mind†.
    Keywords: tariff/plan choice, inertia, switching, loss aversion, mobile telephony
    JEL: D91 D12 D81 L96 M30
    Date: 2023–07–11
  21. By: De Dreu, Carsten; Nijstad, Bernard A. (University of Groningen); Baas, Matthijs
    Abstract: Creativity is part and parcel of human history and enables (groups of) individuals to adapt to and shape their natural and social surroundings. Here we identify (1) core functions of creativity (“what is it for?”) in terms of its ability to solve ill-defined problems of survival and prosperity and, (2) the neurocognitive mechanisms (“how does it work?”) underlying creative production in terms of cognitive persistence and flexibility. We summarize experimental support for this Dual Pathway to Creativity Model (DPCM) from our own laboratory and that of others, and review work implicating the dopamine-innervated fronto-striatal circuitry in achieving a balance between cognitive flexibility on the one hand, and persistence on the other. We use DPCM to analyze how creativity emerges and develops across the lifespan. We show (3) how personalities and psychopathologies marked by approach (avoidance) motivation link to creativity because of enhanced capacity for flexibility (persistence), and (4) how socio-cultural factors, including psychological safety, diversity, and leadership, condition individual and group creativity. We conclude with open questions for future research, including how (5) individuals and groups move from generating to implementing creative ideas, insights, and problem solutions.
    Date: 2023–06–10

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