nep-exp New Economics Papers
on Experimental Economics
Issue of 2024‒01‒15
28 papers chosen by

  1. The Virtues of Lab Experiments By Gary Charness; James Cox; Catherine Eckel; Charles Holt; Brian Jabarian
  2. Are Women in Science Less Ambitious than Men? Experimental Evidence on the Role of Gender and STEM in Promotion Applications By Müge Süer
  3. Promoting active transport through health information: evidence from a randomized controlled trial By Lassi Ahlvik; Anna Sahari
  4. Minority Protection in Voting Mechanisms – Experimental Evidence By Dirk Engelmann; Hans Peter Grüner; Timo Hoffmann; Alex Possajenikov
  5. Enhancing SMEs’ Digital Innovation Capabilities: Experimental Evidence from a User Experience Design Challenge By Davide Azzolini; Nicola Doppio; Luca Mion; Iunio Quarto Russo; Alessio Tomelleri
  6. An Experiment on Inequality within Groups in Contest By Mingye Ma; Francesco Trevisan
  7. Do emotions affect strategic sophistication? By Gonzo Damian Antonio
  8. Violent Conflict and Parochial Trust: Lab-in-the-Field and Survey Evidence By Katharina Werner; Ahmed Skali
  9. The Uneven Impact of Generative AI on Entrepreneurial Performance By Otis, Nicholas G.; Clarke, Rowan Philip; Delecourt, Solene; Holtz, David; Koning, Rembrand
  10. Basis Risk, Social Comparison, Perceptions of Fairness and Demand for Insurance: A Field Experiment in Ethiopia By Kramer, Berber; Porter, Maria; Wassie Bizuayehu, Solomon
  11. The Challenge of Using LLMs to Simulate Human Behavior: A Causal Inference Perspective By George Gui; Olivier Toubia
  12. Mens Sana in Corpore Sano! The Hiring Premium for Physical versus Mental Exercise in Different Occupations By Verhaest, Dieter; Baert, Stijn
  13. The power to conserve: a field experiment on electricity use in Qatar By Al-Ubaydli, Omar; Cassidy, Alecia; Chatterjee, Anomitro; Khalifa, Ahmed; Price, Michael
  14. What Money Can Buy: How Market Exchange Promotes Values By Roberto A. Weber; Sili Zhang
  15. Disparities in Spousal Desired Fertility and Land Tenure Expectations: Experimental Evidence from Rural Tanzania By Herrera-Almanza, Catalina; McCarthey, Aine Seitz
  16. Who Is in Favor of Affirmative Action? Representative Evidence from an Experiment and a Survey By Sabrina Herzog; Hannah Schildberg-Hörisch; Chi Trieu; Jana Willrodt
  17. Uncertainty about Carbon Impact and the Willingness to Avoid CO2 Emissions By Davide D. Pace; Taisuke Imai; Peter Schwardmann; Joël J. van der Weele
  18. E-payment technology and business finance: A randomized controlled trial with mobile money By Dalton, Patricio; van Soest, Daan; Uras, Burak
  19. Competition, confidence and gender: shifting the focus from the overconfident to the realistic By Tünde Lénárd; Hubert János Kiss; Dániel Horn
  20. Intergroup Contact and Exposure to Information about Immigrants: Experimental Evidence By Patrick Dylong; Silke Uebelmesser
  21. Experiments about Institutions By Michael Callen; Jonathan Weigel; Noam Yuchtman; Michael J. Callen
  22. Self‐control is negatively linked to prosociality in young children By Gladys Barragan-Jason; Astrid Hopfensitz
  23. Do LLM Agents Exhibit Social Behavior? By Yan Leng; Yuan Yuan
  24. Experiments about Institutions By Michael Callen; Jonathan L. Weigel; Noam Yuchtman
  25. Money, Time, and Grant Design By Kyle Myers; Wei Yang Tham
  26. Fairness Beliefs Affect Perceived Economic Inequality By Støstad, Morten Nyborg
  27. Public Opinion and Alliance Commitments in Cybersecurity: An Attack Against All? By Gomez, Miguel Alberto; Winger, Gregory
  28. The right to benefit: Using videos to encourage citizen involvement in resource revenue management By Christa Brunnschweiler; Nanang Kurniawan; Paivi Lujalac; Primi Putri; Sabrina Scherzer; Indah Wardhani

  1. By: Gary Charness; James Cox; Catherine Eckel; Charles Holt; Brian Jabarian
    Abstract: Physical lab experiments have played an instrumental role in sculpting the history of experimental economics, facilitating controlled information conditions, efficient monetary inducements, and exclusive advantages via immediate human interaction and engaging experiences. These unique benefits render in-person lab experiments essential for the future of experimental economics, complementing the growth of online experiments and the emerging AI revolution. We characterize the environments in which it seems particularly important to conduct lab-in-the-lab experiments. Overall, the lab benefits culminate in a comprehensive research procedure that produces precise and enlightening outcomes, ultimately enriching the domain of experimental economics, and potentially extending benefits to the broader realm of social science.
    Keywords: lab experiments, AI
    Date: 2023
  2. By: Müge Süer (HU Berlin)
    Abstract: The gender wage gap is to a significant extent driven by gender-based job segregation. One of the potential culprits can be found in supply-side behavioral differences in promotion applications. In this study, using a controlled lab experiment, we disentangle the roles of gender, field of study, and task difficulty in promotion application decisions. Our study pro- vides three crucial findings. First, gender differences in self-limiting promotion application behavior are only present in STEM field students when exposed to a male task. Specifi- cally, when an easier alternative is available, women are less willing to apply for promotions concerning harder tasks than men. Second, there exists no significant difference between men’s and women’s willingness to apply for promotion concerning female jobs in STEM or non-STEM fields. Third, we find that previously reported gender differences in confidence are present only between STEM field students. The results also suggest that self-sorting into positions does not cause a decrease in overall welfare, however, it causes fewer promotions for women in STEM. We finally propose an easy-to-implement policy intervention to close the gender gap in STEM students when applying for a promotion.
    Keywords: gender differences; promotion application; self-limiting behavior; hierarchical segregation; STEM; male task; experiment;
    JEL: D91 J16 J62 C91
    Date: 2023–12–16
  3. By: Lassi Ahlvik (University of Helsinki, Department of Economics and Management); Anna Sahari (VATT Institute for Economic Research)
    Abstract: The negative health impacts of passive transport can be substantial both from the individual point of view and with respect to public spending on health. We run a field-experiment to study the effectiveness of information in encouraging active transport choices. The treatment is carried out using a smartphone application that automatically tracks users’ daily transport choices. We find that the treatment group receives and internalizes the information, but we do not find a statistically signifcant effect on their travel behavior.
    Keywords: Transport Externalities, Active travel, Health Behaviour, Nudging
    JEL: I12 R41 D90
    Date: 2023–12
  4. By: Dirk Engelmann (HU zu Berlin); Hans Peter Grüner (University of Mannheim); Timo Hoffmann; Alex Possajenikov (University of Nottingham)
    Abstract: Under simple majority voting an absolute majority of voters may choose policies that are harmful to minorities. It is the purpose of sub- and super-majority rules to protect legitimate minority interests. We study how voting rules are chosen under the veil of ignorance and whether there are systematic biases in these choices. In our experiment, individuals choose voting rules for given distributions of gains and losses that can arise from a policy, but before learning their own valuation of the policy. We find that subjects on average adjust the voting rule in line with the skewness of the distribution. As a result, a higher share of the achievable surplus can be extracted with the suggested rules than with exogenously given simple majority voting. While the rule choices are not significantly biased towards under- or overprotection of the minority, towards majority voting or towards status-quo preserving rules, they only imperfectly reflect the distributions of benefits and costs. In expectation this leads to only 63% of the surplus being extracted. The participants are heterogeneous with respect to how well their rule choices adapt to the distribution of valuations, with a large share of the surplus loss caused by a small group of participants.
    Keywords: minority protection; voting; experiments;
    JEL: D72 C91
    Date: 2023–12–17
  5. By: Davide Azzolini; Nicola Doppio; Luca Mion; Iunio Quarto Russo; Alessio Tomelleri
    Abstract: Innovating product design is crucial for firms operating in the digital sector as it is closely linked with innovation capability and, therefore, with firm performance and productivity. In this paper, we run a randomized controlled trial to assess if participating in an open innovation initiative increases SMEs’ capability to design more competitive digital products. More specifically, the intervention aimed at increasing firms’ knowledge of the Design Sprint and their readiness to implement user-centered design techniques. 190 SMEs based in 7 different European countries took part in the field trial in spring 2021. We find that the intervention increased participants’ knowledge about user-centered design methods, although no statistically significant effects are found on participants’ intention to adopt that in their firms. This may be traced back to organizational and financial constraints typically related to the small-sized firms involved.
    Keywords: Open Innovation, SMEs, Randomized Controlled Trial, User Experience Design, Design Sprint
    JEL: D22 M31 O31
    Date: 2024–01
  6. By: Mingye Ma (University of Southampton); Francesco Trevisan (Ca' Foscari University of Venice)
    Abstract: We study Tullock contests allowing heterogeneity of both rewards and abilities within the competing groups. Our main concern is whether higher degrees of inequality in a group can improve its performance, namely group effort and probability of winning. First, we show that the answer to this question is positive under plausible conditions on players' cost function. Second, we test these predictions in the lab. Unlike theory predicts, inequality in abilities does not help a team win. Inequality in rewards does help but moderately. The efficient combination of both inequalities, which assigns high rewards to high ability players, substantially increases a team's performance. Finally, through the analysis of subjects' beliefs, we provide empirical evidence that overbidding is more severe than we expected.
    Keywords: groups contests, inequality, optimal incentives, experiment
    JEL: C72 C91 D72
    Date: 2023
  7. By: Gonzo Damian Antonio
    Abstract: Anger is a negative emotion commonly experienced by all human beings, and it has proven effects on human cognition. Research in this field has shown that cognitive abilities diminish in angry individuals, a phenomenon referred to as "the depth of thought effect." This paper establishes a causal relationship between anger and the strategic sophistication of subjects in a laboratory setting. The experimental design involves an emotion-induction treatment and a beauty contest to measure the strategic sophistication of participants. Treated subjects report higher levels of anger and choose significantly higher numbers in the game, indicating a negative effect of anger on strategic sophistication.
    JEL: D1
    Date: 2023–11
  8. By: Katharina Werner (University of Passau); Ahmed Skali (University of Groningen & GLO)
    Abstract: How does conflict exposure affect trust? We hypothesize that direct (firsthand) experience with conflict induces parochialism: trust towards out-groups worsens, but trust towards in-groups, owing to positive experiences of kin solidarity, may improve. Indirect exposure to conflict through third-party accounts, on the other hand, reduces trust toward everyone, owing to negativity bias. We find consistent support for our hypotheses in a lab-in-the-field experiment in Maluku, Indonesia, which witnessed a salient Christian-Muslim conflict during 1999-2002, as well as in three cross-country datasets exploiting temporal and spatial variation in exposure to violence. Our results help resolve a seeming contradiction in the literature and inform policies on resolving conflicts.
    Keywords: trust, conflict, direct exposure, indirect exposure, religion, discrimination
    JEL: C93 D74 Z12 Z13
    Date: 2023–12
  9. By: Otis, Nicholas G.; Clarke, Rowan Philip; Delecourt, Solene; Holtz, David (University of California, Berkeley); Koning, Rembrand (Harvard Business School)
    Abstract: There is a growing belief that scalable and low-cost AI assistance can improve firm decision-making and economic performance. However, running a business involves a myriad of open-ended problems, making it hard to generalize from recent studies showing that generative AI improves performance on well-defined writing tasks. In our five-month field experiment with 640 Kenyan entrepreneurs, we assessed the impact of AI-generated advice on small business revenues and profits. Participants were randomly assigned to a control group that received a standard business guide or to a treatment group that received a GPT-4 powered AI business mentor via WhatsApp. While we find no average treatment effect, this is because the causal effect of generative AI access varied with the baseline business performance of the entrepreneur: high performers benefited by just over 20% from AI advice, whereas low performers did roughly 10% worse with AI assistance. Exploratory analysis of the WhatsApp interaction logs shows that both groups sought the AI mentor’s advice, but that low performers did worse because they sought help on much more challenging business tasks. These findings highlight how the tasks selected by firms and entrepreneurs for AI assistance fundamentally shape who will benefit from generative AI.
    Date: 2023–12–21
  10. By: Kramer, Berber; Porter, Maria; Wassie Bizuayehu, Solomon
    Abstract: Index insurance is considered an important strategy to reduce agricultural risk and increase smallholder farmers’ investments. However, insured farmers may develop mistrust of insurance if they experience crop losses and do not receive a payout, for instance because index insurance covers only a subset of covariate risks. At the same time, insurance for idiosyncratic risks would introduce differences in payouts within social networks, which might be considered unfair, introduce jealousy, and further depress demand for insurance. We conduct lab-in-the-field experiments with farmers in Ethiopia to examine the effects of a novel insurance approach that ensures insurance payouts for farmers with crop losses due to idiosyncratic events. We also examine the effects of informing farmers about their neighbors’ experiences alongside their own. We find that such social comparison increases perceived fairness of weather index insurance. In addition, providing complete insurance coverage for crop losses increases farmers’ perceived fairness of outcomes and willingness to pay, without introducing jealousy over neighbors receiving different payouts. Finally, we find that the increase in willingness to pay for complete insurance is concentrated among men and risk averse respondents.
    Keywords: Agricultural Finance, Risk and Uncertainty
    Date: 2023–12–18
  11. By: George Gui; Olivier Toubia
    Abstract: Large Language Models (LLMs) have demonstrated impressive potential to simulate human behavior. Using a causal inference framework, we empirically and theoretically analyze the challenges of conducting LLM-simulated experiments, and explore potential solutions. In the context of demand estimation, we show that variations in the treatment included in the prompt (e.g., price of focal product) can cause variations in unspecified confounding factors (e.g., price of competitors, historical prices, outside temperature), introducing endogeneity and yielding implausibly flat demand curves. We propose a theoretical framework suggesting this endogeneity issue generalizes to other contexts and won't be fully resolved by merely improving the training data. Unlike real experiments where researchers assign pre-existing units across conditions, LLMs simulate units based on the entire prompt, which includes the description of the treatment. Therefore, due to associations in the training data, the characteristics of individuals and environments simulated by the LLM can be affected by the treatment assignment. We explore two potential solutions. The first specifies all contextual variables that affect both treatment and outcome, which we demonstrate to be challenging for a general-purpose LLM. The second explicitly specifies the source of treatment variation in the prompt given to the LLM (e.g., by informing the LLM that the store is running an experiment). While this approach only allows the estimation of a conditional average treatment effect that depends on the specific experimental design, it provides valuable directional results for exploratory analysis.
    Date: 2023–12
  12. By: Verhaest, Dieter (KU Leuven); Baert, Stijn (Ghent University)
    Abstract: We investigate the impact of participation in physical and mental exercise activities on hirability. Besides by comparing both forms of exercising, we innovate against the existing literature by comparing their impact between different types of jobs, where other effects could be expected. To this end, an audit experiment is conducted in which we send 2184 fictitious applications of young job seekers to real job vacancies. On average, the estimated effect of both physical and mental exercise activities is small and statistically insignificant. However, the effect of participation in any exercise activity is significantly positive for jobs combining low cognitive with low physical demands. These findings are not consistent with the common consideration of physical exercise activities being used by employers as signals of physical fitness and appearance.
    Keywords: sports, mental fitness, skills, employment, field experiments
    JEL: J24 J63
    Date: 2023–12
  13. By: Al-Ubaydli, Omar; Cassidy, Alecia; Chatterjee, Anomitro; Khalifa, Ahmed; Price, Michael
    Abstract: High resource users often have the strongest response to behavioral interventions promoting conservation. Yet, little is known about how to motivate them. We implement a field experiment in Qatar, where residential customers have some of the highest energy use per capita in the world. Our dataset consists of 207, 325 monthly electricity meter readings from a panel of 6, 096 customers. We employ two normative treatments priming identity - a religious message quoting the Qur’an, and a national message reminding households that Qatar prioritizes energy conservation. The treatments reduce electricity use by 3.8% and both messages are equally effective. However, this masks significant heterogeneity. Using machine learning methods on supplemental survey data, we elucidate how agency, motivation, and responsibility activate conservation responses to our identity primes.
    Keywords: electricity consumption; natural field experiments; identity; moral suasion; agency; Qatar; super-users; consumer behaviour; electricity; energy; energy saving; household energy
    JEL: C93 D90 Q41
    Date: 2023–11–20
  14. By: Roberto A. Weber; Sili Zhang
    Abstract: We study consumers’ concerns for the ideological values of their market counterparts and the implications of such concerns for the public promotion of values. Using a survey and online and laboratory experiments, we find that consumers are willing to pay premiums to exchange with counterparts who demonstrate support for their values. When sellers anticipate the possibility of market exchange, they exhibit public support for consumers’ values. Our findings challenge notions that market exchange is impersonal, suggest that public value positions can provide a dimension of firm differentiation, and provide evidence that market exchange can influence public support for ideological values.
    Keywords: market exchange, ideology, values, experiment
    JEL: A13 C90 D12 D22 D91
    Date: 2023
  15. By: Herrera-Almanza, Catalina; McCarthey, Aine Seitz
    Abstract: Fertility decline in rural sub-Saharan Africa has lagged behind other developing countries. The gap in fertility preferences between men and women plays a pivotal role in determining household fertility and reproductive health outcomes, with men desiring more children and exerting more significant influence in household decision-making. This disparity becomes more pronounced in rural regions where patrilineal norms, especially those associated with land inheritance, remain prevalent. We estimate the effect of an informational family planning intervention on male and female fertility preferences in rural Tanzania. The experiment consisted of randomizing household consultations on modern contraception, with sessions conducted either jointly for husbands and wives or exclusively for wives in private. Surprisingly, husbands who engaged in joint consultations increased their desired additional number of children, and their wives mirrored this increase in fertility preferences. In contrast, women in private consultations reduced their additional desired number of children while their husbands’ preferences remained unchanged. We provide suggestive evidence that the unintended effects on fertility preferences might be motivated by land inheritance expectations, as our results are driven by households with firstborn daughters (rather than sons).
    Keywords: Consumer/Household Economics, Farm Management, Labor and Human Capital
    Date: 2023–12–18
  16. By: Sabrina Herzog; Hannah Schildberg-Hörisch; Chi Trieu; Jana Willrodt
    Abstract: Although affirmative action remains controversial, little is known about who supports or opposes it and why. This paper investigates preferences for affirmative action by combining causal evidence from an experiment on the role of self-serving motives and in-group favoritism with survey data on three different affirmative action policies. Our results rely on a population-representative sample from the US. We find that support for affirmative action is based both on self-serving motives and principled grounds (e.g., related to an individual’s altruism, fairness perceptions, concerns for efficiency, and political views). By contrast, in-group favouritism and socio-demographic characteristics play a much smaller role.
    Keywords: support for affirmative action, self-serving motives, in-group favoritism, altruism, efficiency, fairness, discrimination
    JEL: C99 D01 D63 J78
    Date: 2023
  17. By: Davide D. Pace; Taisuke Imai; Peter Schwardmann; Joël J. van der Weele
    Abstract: With a large representative survey (N=1, 128), we document that consumers are very uncertain about the emissions associated with various actions, which may affect their willingness to reduce their carbon footprint. We experimentally test two channels for the behavioural impact of such uncertainty, namely risk aversion about the impact of mitigating actions and the formation of motivated beliefs about this impact. In two large online experiments (N=2, 219), participants make incentivized trade-offs between personal gain and (uncertain) carbon impact. We find no evidence that uncertainty affects individual climate change mitigation efforts through risk aversion or motivated belief channels. The results suggest that reducing consumer uncertainty through information campaigns is not a policy panacea and that communicating scientific uncertainty around climate impact need not backfire.
    Date: 2023–12
  18. By: Dalton, Patricio (Tilburg University, School of Economics and Management); van Soest, Daan (Tilburg University, School of Economics and Management); Uras, Burak (Tilburg University, School of Economics and Management)
    Date: 2023
  19. By: Tünde Lénárd (Centre for Economic and Regional Studies, SOFI, Stockholm University); Hubert János Kiss (Centre for Economic and Regional Studies, Corvinus University of Budapest); Dániel Horn (Centre for Economic and Regional Studies, Corvinus University of Budapest)
    Abstract: The gender gap in competitiveness is argued to explain gender differences in later life outcomes, including career choices and the gender wage gap. In experimental settings, a prevalent explanation attributes this gap to males being more (over)confident than females (we call this the compositional channel). While our lab-in-the-field study using data from students in 53 classrooms (N$>$1000) reproduces this finding, it also uncovers a second, potentially more impactful channel of confidence contributing to the gender gap in competitiveness (the preference channel). To disentangle the two channels, we propose a more precise measure of confidence based on whether the subjects’ believed performance rank exceeds, coincides with or falls short of their actual performance in a real-effort task. We label categories of this Guessed - Actual Performance (GAP) difference as overconfident, realistic or underconfident, respectively. Surprisingly, there is no gender difference in competitiveness within the over- and underconfident subgroups, while a significant gender gap exists among the realistic. So, even if both genders had the same level of confidence, a persistent gender gap in preference (or taste) for competition would remain in the realistic group. This finding is robust across all specifications, challenging previous theories about the overconfidence of men being the sole driver of the relationship between confidence and the gender gap in competition.
    Keywords: Keywords: adolescents, competitiveness, confidence, gender, experiment
    JEL: C9 D91 J16
    Date: 2023–09
  20. By: Patrick Dylong; Silke Uebelmesser
    Abstract: We examine the relationship between beliefs about and attitudes towards immigrants and intergroup contact between natives and migrants in eastern Germany, a region characterized by anti-immigrant sentiment. Using probability-based survey data, we randomly vary respondents’ access to a signal about the true size of the immigrant population in the region. Respondents who receive the signal show more supportive attitudes toward immigration, with effect sizes being more pronounced for attitudes toward high-skilled immigrants. Importantly, estimating conditional average treatment effects shows that respondents who have less contact with immigrants prior to our intervention respond more strongly to the treatment. Additional findings suggest that the level of intergroup contact and biased beliefs about immigrants are complementary targets for information campaigns on immigration.
    Keywords: beliefs about immigrants, immigration attitudes, intergroup contact, information campaign
    JEL: C90 D83 F22 J15
    Date: 2023
  21. By: Michael Callen; Jonathan Weigel; Noam Yuchtman; Michael J. Callen
    Abstract: We review an emerging experimental literature studying institutional change. Institutions are a key determinant of economic growth, but the “critical junctures” in which institutions can change are not precisely defined. For example, such junctures are often identified ex post, raising methodological problems: selection on the outcome of institutional change; an inability to study beliefs, central to coordination and thus the process of institutional change; and an inability to conduct experiments to identify causal effects. We argue that critical junctures are identifiable in real-time as moments when there exists deep uncertainty about future institutions. Consistent with this conception, the papers reviewed: (i) examine changes to institutions, i.e., the “fundamental rules of the game”; (ii) are real-time studies of plausible critical junctures; and, (iii) use field experiments to achieve causal identification. Substantively, this literature examines institutional changes in state capacity and legitimacy, political inclusion, and political accountability. We also advocate more systematic measurement of beliefs about future institutions to identify critical junctures as they happen and provide an empirical proof of concept. Such work is urgent given contemporary critical junctures arising from democratic backsliding, state fragility, climate change, and conflicts over the rights of the marginalized.
    Keywords: institutional change, critical junctures, field experiments, fragile states, belief elicitation
    JEL: P00 O10 D70
    Date: 2023
  22. By: Gladys Barragan-Jason; Astrid Hopfensitz (EM - emlyon business school)
    Abstract: "Human prosociality is a valuable but also deeply puzzling trait. While several studies suggest that prosociality is an impulsive behavior, others argue that self-control is necessary to develop prosocial behaviors. Yet, prosociality and self-control in children have rarely been studied jointly. Here, we measured self-control (i.e., delay-of-gratification) and prosociality (i.e., giving in a dictator game) in 250 4- to 6-year-old French schoolchildren. Contrary to previous studies, we found a negative relationship between waiting in the delay-of-gratification task and giving in the dictator game. The effect was especially pronounced when the partner in the dictator game was unknown compared with giving in a dictator game where the partner was a friend. Our results suggest that self-control is not always necessary to act prosocially. Future studies investigating whether and how such pattern develops across the lifespan and across cultures are warranted."
    Keywords: self control, sharing, children, dictator game
    Date: 2023–10–01
  23. By: Yan Leng; Yuan Yuan
    Abstract: The advances of Large Language Models (LLMs) are expanding their utility in both academic research and practical applications. Recent social science research has explored the use of these "black-box" LLM agents for simulating complex social systems and potentially substituting human subjects in experiments. Our study delves into this emerging domain, investigating the extent to which LLMs exhibit key social interaction principles, such as social learning, social preference, and cooperative behavior, in their interactions with humans and other agents. We develop a novel framework for our study, wherein classical laboratory experiments involving human subjects are adapted to use LLM agents. This approach involves step-by-step reasoning that mirrors human cognitive processes and zero-shot learning to assess the innate preferences of LLMs. Our analysis of LLM agents' behavior includes both the primary effects and an in-depth examination of the underlying mechanisms. Focusing on GPT-4, the state-of-the-art LLM, our analyses suggest that LLM agents appear to exhibit a range of human-like social behaviors such as distributional and reciprocity preferences, responsiveness to group identity cues, engagement in indirect reciprocity, and social learning capabilities. However, our analysis also reveals notable differences: LLMs demonstrate a pronounced fairness preference, weaker positive reciprocity, and a more calculating approach in social learning compared to humans. These insights indicate that while LLMs hold great promise for applications in social science research, such as in laboratory experiments and agent-based modeling, the subtle behavioral differences between LLM agents and humans warrant further investigation. Careful examination and development of protocols in evaluating the social behaviors of LLMs are necessary before directly applying these models to emulate human behavior.
    Date: 2023–12
  24. By: Michael Callen; Jonathan L. Weigel; Noam Yuchtman
    Abstract: We review an emerging experimental literature studying institutional change. Institutions are a key determinant of economic growth, but the “critical junctures” in which institutions can change are not precisely defined. For example, such junctures are often identified ex post, raising methodological problems: selection on the outcome of institutional change; an inability to study beliefs, central to coordination and thus the process of institutional change; and an in- ability to conduct experiments to identify causal effects. We argue that critical junctures are identifiable in real-time as moments when there exists deep uncertainty about future institutions. Consistent with this conception, the papers reviewed: (i) examine changes to institutions, i.e., the “fundamental rules of the game”; (ii) are real-time studies of plausible critical junctures; and, (iii) use field experiments to achieve causal identification. Substantively, this literature examines institutional changes in state capacity and legitimacy, political inclusion, and political accountability. We also advocate more systematic measurement of beliefs about future institutions to identify critical junctures as they happen and provide an empirical proof of concept. Such work is urgent given contemporary critical junctures arising from democratic backsliding, state fragility, climate change, and conflicts over the rights of the marginalized.
    JEL: D70 O10 P0
    Date: 2023–12
  25. By: Kyle Myers; Wei Yang Tham
    Abstract: The design of research grants has been hypothesized to be a useful tool for influencing researchers and their science. We test this by conducting two thought experiments in a nationally representative survey of academic researchers. First, we offer participants a hypothetical grant with randomized attributes and ask how the grant would influence their research strategy. Longer grants increase researchers' willingness to take risks, but only among tenured professors, which suggests that job security and grant duration are complements. Both longer and larger grants reduce researchers' focus on speed, which suggests a significant amount of racing in science is in pursuit of resources. But along these and other strategic dimensions, the effect of grant design is small. Second, we identify researchers' indifference between the two grant design parameters and find they are very unwilling to trade off the amount of funding a grant provides in order to extend the duration of the grant $\unicode{x2014}$ money is much more valuable than time. Heterogeneity in this preference can be explained with a straightforward model of researchers' utility. Overall, our results suggest that the design of research grants is more relevant to selection effects on the composition of researchers pursuing funding, as opposed to having large treatment effects on the strategies of researchers that receive funding.
    Date: 2023–12
  26. By: Støstad, Morten Nyborg (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: This paper establishes a causal link from fairness beliefs to perceived economic inequality. I conduct an experiment where participants are asked to estimate various income inequality measures of hypothetical societies. While the true income distributions of the societies remain identical and simple, the description of the societies varies to indicate “fair” and “unfair” inequality across respondents. Describing the society as “unfair” increases the incentivized estimated top 10% income share as much as the actual difference between Denmark and the United States. Other inequality metrics are similarly affected. The findings imply that ideological beliefs fundamentally alter how people perceive economic inequality.
    Keywords: Fairness; Economic inequality; Income inequality
    JEL: H23 J18
    Date: 2023–12–18
  27. By: Gomez, Miguel Alberto (Eidgenössische Technische Hochschule); Winger, Gregory
    Abstract: Cyber operations as a facet of international competition pose a direct challenge to alliances. Designed to respond to conventional military attacks, alliances like the North Atlantic Treaty Organization must now determine whether their defensive commitments extend into cyberspace. This question is not limited to political and military elites. As the use of force in defense of allies is among the most politically charged decisions a state can make and relies significantly on public support. This article extends recent public opinion literature on cyber conflict to investigate public attitudes towards existing treaty commitments following a destructive cyber operation against an allied state. Using a survey experiment involving U.S. nationals, we find that while subjects are sensitive to treaty obligations and allied casualties these effects are moderated by domain expertise. Furthermore, we observe that specific aggressor-ally dyads tied to geographic region can shape public preferences with subjects being more reactive to Europe based scenarios that comparable treatments in Asia.
    Date: 2023–12–19
  28. By: Christa Brunnschweiler (School of Economics, University of East Anglia); Nanang Kurniawan (Department of Politics and Government, Universitas Gadja Mada); Paivi Lujalac (Geography Research Unit, University of Oulu); Primi Putri (Geography Research Unit, University of Oulu); Sabrina Scherzer (Department of Geography, NTNU); Indah Wardhani (Department of Politics and Government, Universitas Gadja Mada)
    Abstract: The governance of natural resource wealth is a key factor in promoting strong institutions and economic development in resource-rich countries. In this paper, we explore how individuals engagement in local natural resource revenue (NRR) management can be enhanced and encouraged. We focus on Indonesia, which is a large gold and petroleum producer, among other natural resources, with local challenges such as underdevelopment of resource-rich areas and corruption. We run a randomized survey experiment among 807 local community members in an oil-rich district using videos with three information treatments that give citizens salient and easily understandable information on local NRR and additional motivation to use this information to engage in NRR management. Our outcomes include survey questions on stated behavior and citizen rights perception regarding NRR management, and two incentive-compatible measures. We find that providing easily understandable information increases respondents sense of the right to personally influence how NRR are used and the propensity to donate to an anti-corruption NGO. Our positive example treatment was able to increase respondents sense of their right to benefit from NRR and their right to influence NRR management, while our negative example treatment had no impact on our outcomes. We also explore intervening mechanisms and heterogeneous effects. Providing the population of resource-rich areas with easily understood information on NRR management that is relevant to the local context offers an encouraging avenue for combating NRR-related mismanagement and corruption.
    Keywords: accountability, survey experiment, video, Indonesia, petroleum revenues, information treatment
    JEL: Q35 Q38 H41 H23 D80
    Date: 2023–12

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.