nep-exp New Economics Papers
on Experimental Economics
Issue of 2023‒10‒02
seventeen papers chosen by

  1. Accurate Quality Elicitation in a Multi-attribute Choice Setting By Changkuk Im
  2. Seven routes to experimentation in policymaking: A guide to applied behavioural science methods By Chiara Varazzani; Henrietta Tuomaila; Torben Emmerling; Stefano Brusoni; Laura Fontanesi
  3. An Experiment on a Dynamic Beauty Contest Game By Nobuyuki Hanaki; Yuta Takahashi
  4. The Role of Social Norms in Zero Price effects By Xian Zhang; Tom Lane; Jose M. Grisolia
  5. Is There a Dividend of Democracy? Experimental Evidence from Cooperation Games By Thomas Markussen; Jean-Robert Tyran
  6. A Cognitive View of Policing By Oeindrila Dube; Sandy Jo MacArthur; Anuj K. Shah
  8. The Bright Side of Tax Evasion By Wladislaw Mill; Cornelius Schneider
  9. Participatory Teaching Improves Learning Outcomes: Evidence from a Field Experiment in Tanzania By Martina Jakob; Konstantin Büchel; Daniel Steffen; Aymo Brunetti
  10. Parent Training and Child Development at Low Cost? Evidence from a Randomized Field Experiment in Mexico By Sergio Cárdenas; David K. Evans; Peter Holland
  11. An Experimental Evaluation of Deferred Acceptance: Evidence from Over 100 Army Officer Labor Markets By Jonathan M.V. Davis; Kyle Greenberg; Damon Jones
  12. Affording Degree Completion: An Experimental Study of Completion Grants at Accessible Public Universities By Christine Baker-Smith; Kallie Clark; Sara Goldrick-Rab; Christel Perkins; Douglas A. Webber; Travis T. York
  13. Selection into Financial Education and Effects on Portfolio Choice By Irina Gemmo; Pierre-Carl Michaud; Olivia S. Mitchell
  14. Starting the school year on the right foot. Effects of a summer learning program targeting vulnerable students in Italy By Davide Azzolini; Martina Bazzoli; Sergiu C. Burlacu; Enrico Rettore
  15. Preventing Payments Fraud in the FinTech Era: New Evidence from a Behavioural Experiment By Jesper Akesson; John Gathergood; Edika Quispe-Torreblanca
  16. Attention Utility: Evidence From Individual Investors By Edika Quispe-Torreblanca; John Gathergood; George Loewenstein; Neil Stewart
  17. Understanding Education Policy Preferences: Survey Experiments with Policymakers in 35 Developing Countries By Lee Crawfurd; Susannah Hares; Ana Minardi; Justin Sandefur

  1. By: Changkuk Im
    Abstract: This paper studies how to accurately elicit quality for alternatives with multiple attributes. Two multiple price lists (MPLs) are considered: (i) m-MPL which asks subjects to compare an alternative to money, and (ii) p-MPL where subjects are endowed with money and asked whether they would like to buy an alternative or not. Theoretical results show that m-MPL requires fewer assumptions for accurate quality elicitation compared to p-MPL. Experimental evidence from a within-subject experiment using consumer products shows that switch points between the two MPLs are different, which suggests that quality measures are sensitive to the elicitation method.
    Date: 2023–08
  2. By: Chiara Varazzani; Henrietta Tuomaila; Torben Emmerling; Stefano Brusoni; Laura Fontanesi
    Abstract: Behavioural science methods are increasingly used to design and evaluate public policies that better reflect human behaviour and decision making. However, there is a lack of standardization in selecting and labelling these methods, making it difficult for policymakers to choose the appropriate one for a specific policy context. To address this, this working paper proposes guidelines and a visual roadmap, including five key questions to guide the selection of appropriate methods, and seven different experimental or non-experimental methods to choose from. The aim is to provide a simple and practical framework for policymakers to choose the most fit-for-purpose method for their policy context.
    Keywords: Behavioural and experimental economics, Behavioural economics, Experimental economics, Experimental methods, Experimentation, Experimentation and policy-making, Field experiments, Observational methods, Qualitative methods, RCT
    JEL: C9
    Date: 2023–09–20
  3. By: Nobuyuki Hanaki; Yuta Takahashi
    Abstract: We present and conduct a novel experiment on a dynamic beauty contest game motivated by the canonical New-Keynesian model. Participants continuously provide forecasts for prices spanning multiple future periods. These forecasts determine the price for the current period and participants’ payoffs. Our findings are threefold. First, the observed prices in the experiment deviate more from the rational expectations equilibrium prices under strategic complementarity than under strategic substitution. Second, participants’ expectations respond to announcements of future shocks on average. Finally, participants employ heuristics in their forecasting; however, the choice of heuristic varies with the degree of strategic complementarity.
    Date: 2023–09
  4. By: Xian Zhang (Ningbo Academy of Agricultural Sciences); Tom Lane (University of Nottingham Ningbo China); Jose M. Grisolia (Universidad de Las Palmas de Gran Canaria)
    Abstract: It has been proposed that social norms play a role in zero price effects on consumption. In Study 1, we use a norm-elicitation experiment to directly measure the effects on norms of consumption, demonstrating that the social appropriateness of consuming high quantities is significantly lower when goods are offered for free than when they are sold at 1 cent. In Study 2, we employ a natural field experiment to put into practice the scenarios from Study 1 and measure actual consumption behavior. Results depend upon how we measure zero price effects, but offer some support for findings of previous research that zero pricing increases the likelihood of an individual consuming while reducing the amount taken by those who do consume. Overall, the evidence suggests high consumption of free goods is prevented by its social inappropriateness, potentially helping to explain for the inconsistent evidence on the direction of zero price effects in previous studies. Conditional logit estimations suggest social norms drive consumption decisions for free goods, while material benefits are the dominant consideration when goods are positively priced.
    Keywords: social norms; social appropriateness; zero price effects; natural field experiment; norm-elicitation task
    Date: 2023–07
  5. By: Thomas Markussen; Jean-Robert Tyran
    Abstract: Do democratically chosen rules lead to more cooperation and, hence, higher efficiency, than imposed rules? To discuss when such a “dividend of democracy” obtains, we review experimental studies in which material incentives remain stacked against cooperation (i.e., free-riding incentives prevail) despite adoption of cooperation-improving policies. While many studies find positive dividends of democracy across a broad range of cooperation settings, we also report on studies that find no dividend. We conclude that the existence of a dividend of democracy cannot be considered a stylized fact. We discuss three channels through which democracy can produce such a dividend: selection, signaling, and motivation. The evidence points to the role of “culture” in conditioning the operation of these channels. Accepting a policy in a vote seems to increase the legitimacy of a cooperation-inducing policy in some cultures but not in others.
    Keywords: voting collective decision making, public goods
    JEL: C90 D70 D90 H40
    Date: 2023
  6. By: Oeindrila Dube; Sandy Jo MacArthur; Anuj K. Shah
    Abstract: What causes adverse policing outcomes, such as excessive uses of force and unnecessary arrests? Prevailing explanations focus on problematic officers or deficient regulations and oversight. Here, we introduce a new, overlooked perspective. We suggest that the cognitive demands inherent in policing can undermine officer decision-making. Unless officers are prepared for these demands, they may jump to conclusions too quickly without fully considering alternative ways of seeing a situation. This can lead to adverse policing outcomes. To test this perspective, we created a new training that teaches officers to more deliberately consider different ways of interpreting the situations they encounter. We evaluated this training using a randomized controlled trial with 2, 070 officers from the Chicago Police Department. In a series of lab assessments, we find that treated officers were significantly more likely to consider a wider range of evidence and develop more explanations for subjects' actions. Critically, we also find that training affected officer performance in the field, leading to reductions in uses of force, discretionary arrests, and arrests of Black civilians. Meanwhile, officer activity levels remained unchanged, and trained officers were less likely to be injured on duty. Our results highlight the value of considering the cognitive aspects of policing and demonstrate the power of using behaviorally informed approaches to improve officer decision-making and policing outcomes.
    JEL: C91 C93 D03 D91 J08 K40 K42
    Date: 2023–09
  7. By: Sam Desiere; Christian Walker; (-)
    Abstract: Shift work is a widespread but understudied phenomenon. This paper examines one specific aspect of shift work: the shift premium. To this end, we included a discrete choice experiment in an online survey targeted at night and shift workers. Respondents chose between a standard 9 am – 5 pm job paying €15 per hour and a job with shift work in which the wage randomly varied between €12 and €20. The results show that respondents demand sizeable shift premiums to prefer shift over daytime work, with higher premiums for more onerous working hours such as night shifts or rotating shifts. We observe substantial heterogeneity in the shift premium across respondents and provide suggestive evidence of labour market sorting.
    Keywords: shift work, shift premium, Willingness to Pay, discrete choice experiment
    JEL: C91 J31 J48
    Date: 2023–09
  8. By: Wladislaw Mill; Cornelius Schneider
    Abstract: This paper investigates whether tax evasion can be beneficial for an optimal income tax schedule. Past theoretical discussions have presented mixed outcomes as to whether allowing taxpayers to opt into uncertainty could indeed enhance overall tax revenues. In this study, we conducted an original real effort experiment in an online labor market with almost 1, 000 participants to test this hypothesis empirically. Our findings show significant positive labor supply responses to the opportunity to evade (increased labor supply by 37%). More importantly, the expected tax revenue significantly and substantially increased by up to more than 50%. As an example, our data suggests that a 40% tax rate with complete enforcement could be replaced with a 28% tax rate with the option of tax evasion, without any loss in tax revenue. Strikingly, this effect persists when comparing effective tax rates: Lowering effective tax rates through probabilistic enforcement (the opportunity to evade) is more efficient than simply lowering statutory tax rates. Our findings suggest that the opportunity for tax evasion can increase tax revenues beyond what a corresponding decrease in nominal rates would achieve. For welfare analyses, this highlights the importance of not only considering the elasticity of taxable income (ETI) but total earned income elasticities.
    Keywords: tax evasion, tax revenues, labor supply, optimal taxation, experiment
    JEL: H21 H24 H26 J22 C91
    Date: 2023
  9. By: Martina Jakob; Konstantin Büchel; Daniel Steffen; Aymo Brunetti
    Abstract: Participatory teaching methods have been shown to be more successful than traditional rote learning in high-income countries. It is, however, less clear if they can help address the learning crisis in low- and middle-income countries, where classes tend to be large and teachers have fewer resources at their disposal. Based on a field experiment with 440 teachers from 220 schools in Tanzania, we use official standardized student examinations to assess the impact of a pedagogy-centered intervention. A five-day in-service teacher training on participatory and practice-based methods improved students' test scores 18 months later by 0.15 SD. The additional provision of laptops with a learning software allowing teachers to refresh their content knowledge did not yield further learning gains for students. Complementary results from qualitative surveys and interviews suggest that the program was highly appreciated by different stakeholders, but that participants are unable to assess its impact along different dimensions, giving equally positive evaluations of its successful and its less successful elements.
    Keywords: productivity in education, participatory teaching, teacher content knowledge, computer-assisted learning, development economics
    JEL: C93 I21 J24 O15
    Date: 2023–09–05
  10. By: Sergio Cárdenas (Centro de Investigación y Docencia Económicas (CIDE)); David K. Evans (Center for Global Development); Peter Holland (World Bank)
    Abstract: Can at-scale, government-implemented parent training programs improve parenting practices and child development outcomes? This paper presents evidence on the effects of a low-cost, group-based early childhood education program that provided parent training and direct child stimulation in rural communities in six Mexican states. Despite limited take-up, the program had positive impacts on observed parent behaviors in its first year. An index of observed parenting behaviors increased by 0.20 standard deviations, with larger effects (0.32 standard deviations) for parents of the youngest children (ages 0-35 months). An index of impacts on child development showed no statistically significantly effects, but certain aspects of child development showed suggestive evidence of positive impacts in the first year. For both parenting practices and child development, effect sizes were smaller and not statistically significant in the second year. The fade-out of effects is consistent with existing literature on parenting programs. Impacts of the program on child development were not significantly different for girls versus boys or for younger versus older children. These results suggest that parent training can be implemented at low cost, although design changes to improve implementation and take-up would likely be needed to generate sustained impacts on parenting practices.
    Keywords: Early childhood education, early childhood development, low- and middle-income countries, human capital, parenting
    Date: 2023–08–09
  11. By: Jonathan M.V. Davis; Kyle Greenberg; Damon Jones
    Abstract: We present evidence from a randomized trial of the impact of matching workers to jobs using the deferred acceptance (DA) algorithm. Our setting is the U.S. Army’s annual many-to-one marketplace that matches 10, 000 officers to units. Officers and jobs are partitioned into over 100 distinct markets, our unit of randomization. Matching with DA reduced officers’ attrition in their first year in their new match by 16.7 percent, but we can rule out more than a 10 percent reduction in attrition by the end of their second year. Matching with DA had precise zero effects on performance evaluations and promotions. Although matching with DA increased truthful preference reporting by a statistically significant 10 percent, many officers matched by DA misreport their true preferences. We present new evidence suggesting that communication and coordination of preferences may limit the benefits of DA in matching markets where each side actively ranks the other.
    JEL: D47 J01 M5
    Date: 2023–08
  12. By: Christine Baker-Smith; Kallie Clark; Sara Goldrick-Rab; Christel Perkins; Douglas A. Webber; Travis T. York
    Abstract: To improve college affordability and graduation rates, universities are increasingly allocating “completion grants” to students who are nearing the finish line but facing financial challenges. Using an experimental design and common program model across 11 broad-access public universities in ten states, we assessed the impact of a completion grants averaging $1, 200 distributed among more than 14, 000 students. We find that, despite university expectations that most students were near completion, only two-thirds of students eligible to receive a completion grant graduated within the academic year. Receiving a completion grant did not improve that rate. However, nearly all eligible students (95%) graduated within three years or were still working on their degrees. While completion grants are intended to enhance equity, we do not find evidence that they exerted positive impacts for marginalized groups as designed in this study. Moreover, while there was some program implementation variation across universities, it did not lead to differences in program impact.
    Keywords: higher education; affordability; graduation; financial aid; inequality
    Date: 2023–07
  13. By: Irina Gemmo; Pierre-Carl Michaud; Olivia S. Mitchell
    Abstract: To examine how financial education affects financial outcomes, one must evaluate whether and how sample selection may bias inferences regarding program impacts. Our incentivized experiment reveals how such selection influences estimated financial education effects. The more financially literate and those expecting higher gains pay more to purchase education, while those who consider themselves very financially literate pay less. Using portfolio allocation tasks, we show that the financial education increases portfolio efficiency and welfare by almost 20 and 3 percentage points, respectively. In our setting, selection does not greatly influence estimated program effects, comparing those participating and those who do not.
    Keywords: Financial Education, Financial Literacy, Portfolio Choice, Selection
    JEL: G11 G41 G53
    Date: 2023
  14. By: Davide Azzolini; Martina Bazzoli; Sergiu C. Burlacu; Enrico Rettore
    Abstract: We conducted a randomized controlled trial to evaluate the impact of a summer learning program for vulnerable students across ten cities in Italy (N=1, 038). The program had two components: educational workshops in small groups (88 hours) and personalized tutoring (12 hours). Results indicate significant improvements in reading comprehension and marginally in grammar. Improvements in arithmetic and geometry are smaller albeit significant when aggregated into a single mathematics score. Effects were most pronounced among primary school students and among students with special needs or from vulnerable environments. The program compensated for summer learning loss, as treatment group students returned to school in September with higher learning levels than before the summer, while the control group experienced learning setbacks, predominantly in mathematics. While the study clearly shows that students start the new year with a higher level of competencies, it does not definitively establish the lasting impact of these effects. An explorative analysis of noncognitive skills provides conflicting insights: an increase in students' interest in acquiring new competencies suggests potential enduring effects, but the emergence of dissatisfaction with traditional school activities and heightened school-related stress raises concerns about reduced engagement with conventional schooling.
    Keywords: summer learning loss, summer learning program, Italy, achievement gap, RCT
    JEL: I24
    Date: 2023–09
  15. By: Jesper Akesson (The Behaviouralist); John Gathergood (University of Nottingham); Edika Quispe-Torreblanca (University of Leeds)
    Abstract: Innovation in financial technology has granted consumers increased access to faster, more convenient payment services. This development has, however, also given rise to Authorised Push Payment (APP) fraud, where consumers are unwittingly manipulated into authorising transactions to counterfeit parties, such as fake online sellers. The annual costs of APP fraud are growing, and for example total more than £0.5bn in the United Kingdom alone. In this paper, we present the results from an online experiment tthat tests interventions designed to reduce the likelihood that consumers fall for APP fraud. These interventions were presented to consumers within a mobile bank application, and for instance, involved presenting warnings and increasing the salience of calls-to-action. Our analysis shows that redesigned calls-to-action can dramatically reduce fraud success rates, whereas traditional behavioural and risk-based warnings have much weaker effects. Our results show how redesigning consumer journeys can potentially reduce fraud prevalence.
    Keywords: fraud; financial technology; behavioural science
    Date: 2023–08
  16. By: Edika Quispe-Torreblanca (University of Oxford; Leeds University Business School); John Gathergood (University of Nottingham); George Loewenstein (Carnegie Mellon University); Neil Stewart (University of Warwick)
    Abstract: We introduce attention utility, the hedonic pleasure or pain derived purely from paying attention to information, and diers from the news utility that arises from gaining new information. Two studies document selective attention to good news. The first study examines brokerage account login data to show that investors pay disproportionate attention to already-known positive information on their stocks. Through its effect on logins, this selective attention affects their trading activity. A second experimental study shows that investors are more likely to engage in a paid task that will involve attention to a prior investment if that investment has gained value.
    Keywords: information utility; attention; login; investor behavior
    Date: 2022
  17. By: Lee Crawfurd (Center for Global Development); Susannah Hares (Center for Global Development); Ana Minardi (Center for Global Development); Justin Sandefur (Center for Global Development)
    Abstract: Foreign aid donors and international organizations supporting education in developing countries have increasingly coalesced around a policy agenda prioritizing foundational learning, measured by test scores in primary school, based on a diagnosis of deficient school quality, and a growing body of empirical evidence about effective interventions to improve quality. We survey over 900 senior government officials working on education in 35 low- and middle-income countries to gauge their alignment with this agenda. Using conjoint and survey experiments, we show that on average policymakers prioritise vocational over foundational skills. We then seek to explain variation in preferences as a function of three possible factors: different objectives for education (e.g., test scores versus socialization), different beliefs about the state of the world (e.g., enrollment and learning levels), and different beliefs about the effectiveness of specific interventions. Misalignment with donor agendas is evident in all three dimensions. We also show experimentally that beliefs can be changed through the provision of evidence.
    Keywords: foundational literacy, vocational education, bureaucracy, policy preferences, conjoint, discrete choice
    JEL: H40 H52 I22 I25 O15
    Date: 2021–11–30

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