nep-exp New Economics Papers
on Experimental Economics
Issue of 2024‒04‒01
35 papers chosen by

  1. The Role of Payoff Parameters for Cooperation in the One-Shot Prisoner's Dilemma By Gächter, Simon; Lee, Kyeongtae; Sefton, Martin; Weber, Till O.
  2. Minimax-Regret Sample Selection in Randomized Experiments By Yuchen Hu; Henry Zhu; Emma Brunskill; Stefan Wager
  3. Experimental evidence on how implicit racial bias affects risk preferences By Auer, Daniel; Ruedin, Didier
  4. Is there a glass ceiling for ethnic minorities to enter leadership positions? Evidence from a large-scale field experiment with over 12, 000 job applications By Mladen Adamovic; Andreas Leibbrandt
  5. Does communication increase the precision of beliefs? By Lisa Bruttel; Vasilisa Petrishcheva
  6. Breaking Down Information Inequality: Evidence from a Field Experiment in the Technology Industry By Choi, Jung Ho; Ierokomos, Surya; Sterling, Adina
  7. Out-Group Penalties in Refugee Assistance: A Survey Experiment By Cristina Cattaneo; Daniela Gireco; Nicola Lacetera; Mario Macis
  8. Learning in a Complex World Insights from an OLG Lab Experiment By Cars Hommes; Stefanie J. Huber; Daria Minina; Isabelle Salle
  9. Do Positive Externalities Affect Risk Taking? Experimental Evidence on Gender and Group Membership By Carina Cavalcanti; Andreas Leibbrandt
  10. "Do voice and social information contribute to changing views about rent control policy?" By Jordi Brandts; Isabel Busom; Cristina Lopez-Mayan
  11. Learning to Maximize (Expected) Utility By Thomas Dohmen; Georgios Gerasimou
  12. Nudges and Monetary Incentives: A Green Partnership? By Maris, Robbie; Zack, Dorner; Carlsson, Fredrik
  13. Multi-Rater Performance Evaluations and Incentives By Ockenfels, Axel; Sliwka, Dirk; Werner, Peter
  14. Diversity and Discrimination in the Classroom By Dan Anderberg; Gordon B. Dahl; Christina Felfe; Helmut Rainer; Thomas Siedler
  15. Prosocial and Financial Incentives for Biodiversity Conservation: A Field Experiment Using a Smartphone App By Shusaku Sasaki; Takahiro Kubo; Shodai Kitano
  16. Diversity and Discrimination in the Classroom By Anderberg, Dan; Dahl, Gordon B.; Felfe, Christina; Rainer, Helmut; Siedler, Thomas
  17. Behavioral Mechanism Design as a Benchmark for Experimental Studies By David K Levine
  18. It's a pleasure to stay sustainably: Leveraging hedonic appeals in tourism and hospitality By M. Trabandt; W. Lasarov; G. Viglia
  19. Towards Generalizing Inferences from Trials to Target Populations By Melody Y Huang; Sarah E Robertson; Harsh Parikh
  20. High minority power facilitates democratization across ethnic fault lines By Luke Glowacki; Florian Morath; Hannes Rusch
  21. Can AI Bridge the Gender Gap in Competitiveness? By Mourelatos, Evangelos; Zervas, Panagiotis; Lagios, Dimitris; Tzimas, Giannis
  22. Beware the performance of an algorithm before relying on it: Evidence from a stock price forecasting experiment By Tiffany Tsz Kwan TSE; Nobuyuki HANAKI; Bolin MAO
  23. Cognitive Abilities and Individual Earnings in Hybrid Continuous Double Auctions By Yan Peng; Jason Shachat; Lijia Wei; S. Sarah Zhang
  24. Does increasing inequality threaten social stability? Evidence from the lab By Barr, Abigail; Hochleitner, Anna; Sonderegger, Silvia
  25. Households' financial resilience, risk perceptions, and financial literacy: Evidence from a survey experiment By Bucher-Koenen, Tabea; Fessler, Pirmin; Silgoner, Maria Antoinette
  26. Queen Bee Immigrant: The effects of status perceptions on immigration attitudes By Biljana Meiske
  27. Distributions of Posterior Quantiles via Matching By Anton Kolotilin; Alexander Wolitzky
  28. Digital Interventions to Increase Financial Knowledge: Evidence from a Pilot RCT By Oberrauch, Luis; Kaiser, Tim
  29. Do people rely on ChatGPT more than their peers to detect fake news? By Yuhao Fu; Nobuyuki Hanaki
  30. Cooling the Tropics Sustainably: Evidence from a Choice Experiment on Energy Efficient Air Conditioners in the Philippines By Miwa Nakai; Naonari Yajima; Majah-Leah Ravago
  31. Social Utility, Inequality Aversion, and Rank-Status By Cavve, Blake Stockton; Hurlstone, Mark J.; Farrell, Simon
  32. Alternative Models of Preference Heterogeneity for Elicited Choice Probabilities By Kettlewell, Nathan; Walker, Matthew J.; Yoo, Hong Il
  33. Die Hard: Exploring the Characteristics of Resource Users who Persist in the Tragedy of the Commons By Carina Cavalcanti; Andreas Leibbrandt
  34. An equilibrium analysis of the Arad-Rubinstein game By Christian Ewerhart; Stanisław Kaźmierowski
  35. Talking therapy: Impacts of a nationwide mental health service in England By Christian Krekel; Ekaterina Oparina; Sorawoot Srisuma

  1. By: Gächter, Simon (University of Nottingham); Lee, Kyeongtae (Bank of Korea); Sefton, Martin (University of Nottingham); Weber, Till O. (Newcastle University)
    Abstract: The prisoner's dilemma (PD) is arguably the most important model of social dilemmas, but our knowledge about how a PD's material payoff structure affects cooperation is incomplete. In this paper we investigate the effect of variation in material payoffs on cooperation, focusing on one-shot PD games where efficiency requires mutual cooperation. We report results from three experiments (N = 1, 993): in a preliminary experiment, we vary the payoffs over a large range. In our first main experiment (Study 1), we present a novel design that varies payoffs orthogonally in a within-subjects design. Our second main experiment, Study 2, investigates the orthogonal variation of payoffs in a between-subjects design. In a complementary analysis we also study the closely related payoff indices of normalized loss and gain, and the K-index. The most robust finding of our experiments and the complementary analyses is that cooperation in a PD increases with the gains of mutual cooperation over mutual defection.
    Keywords: prisoner's dilemma, cooperation, payoff parameters, temptation, risk, efficiency, normalized gain, normalized loss, K-index, experiments
    JEL: A13 C91
    Date: 2024–02
  2. By: Yuchen Hu; Henry Zhu; Emma Brunskill; Stefan Wager
    Abstract: Randomized controlled trials (RCTs) are often run in settings with many subpopulations that may have differential benefits from the treatment being evaluated. We consider the problem of sample selection, i.e., whom to enroll in an RCT, such as to optimize welfare in a heterogeneous population. We formalize this problem within the minimax-regret framework, and derive optimal sample-selection schemes under a variety of conditions. We also highlight how different objectives and decisions can lead to notably different guidance regarding optimal sample allocation through a synthetic experiment leveraging historical COVID-19 trial data.
    Date: 2024–03
  3. By: Auer, Daniel (University of Bern); Ruedin, Didier (University of Neuchâtel)
    Abstract: We ask how human behavior changes when racial discrimination is costly and when choices are risky. By asking N = 4, 944 participants in Germany to form a soccer team in a series of online experiments, we measure decision-making in an accessible way. Higher costs of discrimination can reduce disparities, but we show that these costs can also trigger implicit racial bias: participants who received an additional financial incentive to select more skilled soccer players outperformed nonincentivized participants and differentiated less based on skin color. However, when confronted with risky choices in a lottery, incentivized participants are more likely to gamble to avoid players with a darker skin color. That is, racial (minority) markers alter the risk preferences of people when their decisions carry costly consequences. This implicit racial bias may partly explain why members of visible minority groups are regularly discriminated against in real-world competitive markets.
    Date: 2023–12–28
  4. By: Mladen Adamovic (Department of Huan Resource Management & Employment Relations, King’s Business School, King’s College London, 30 Aldwych, London WC2B 4BG, UK.); Andreas Leibbrandt (Department of Economics, Monash University, Clayton, VIC 3800, Australia.)
    Abstract: Ethnic inequalities are pervasive in the higher echelons of organizations. We conducted a field experiment to analyze if there is a glass ceiling for ethnic minorities entering leadership positions. We submitted over 12, 000 job applications, to over 4, 000 job advertisements, to investigate hiring discrimination against six ethnic groups for leadership positions. Drawing on implicit leadership theory, we argue that ethnic discrimination is particularly pronounced in the recruitment of leadership positions. Our findings confirm this hypothesis. We find that discrimination increases for leadership positions. Resumes with non-English names receive 57.4% fewer positive responses for leadership positions than identical resumes with English names. For non-leadership positions, ethnic minorities receive 45.3 percent fewer positive responses. Ethnic discrimination for leadership positions is even more pronounced when the advertised job requires customer contact. In contrast, ethnic discrimination in leadership positions is not significantly influenced by whether the organization’s job advertisement emphasizes individualism or learning, creativity, and innovation. These findings provide novel evidence of a glass ceiling for ethnic minorities to enter leadership positions.
    Keywords: Ethnic discrimination, hiring discrimination, resume study, field experiment, audit study
    JEL: C93 J23 J71 J78
    Date: 2024–03
  5. By: Lisa Bruttel (University of Potsdam, CEPA); Vasilisa Petrishcheva (University of Potsdam)
    Abstract: In this paper, we study one channel through which communication may facilitate cooperative behavior – belief precision. In a prisoner’s dilemma experiment, we show that communication not only makes individuals more optimistic that their partner will cooperate but also increases the precision of this belief, thereby reducing strategic uncertainty. To disentangle the shift in mean beliefs from the increase in precision, we elicit beliefs and precision in a two-stage procedure and in three situations: without communication, before communication, and after communication. We find that the precision of beliefs increases during communication.
    Keywords: prisoner’s dilemma, communication, beliefs, strategic uncertainty, experiment
    JEL: C92 D83
    Date: 2024–03
  6. By: Choi, Jung Ho (Stanford U); Ierokomos, Surya (Stanford U); Sterling, Adina (Columbia U)
    Abstract: The under-representation of women in the technology industry has long been rec- ognized as a concern, and the provision of gender-specific information on job search platforms has emerged as a potential solution. In this research, we study how gender- specific information about employers may improve the search behavior of women on search platforms and lead to better job search outcomes. Through a randomized experiment on a professional job search platform, we find that the inclusion of gender-specific information in employee survey outcomes did not have the expected effects on job search. Instead of boosting job search activity, gender-specific information reduced user engagement on the job search platform, albeit less for women than men. In a follow-on abductive study, we discuss the multiple potential mechanisms affecting our results, and the implications of our findings within the existing literature.
    JEL: D63 D83 J16 J62 J64 M12 M21 M41
    Date: 2023–08
  7. By: Cristina Cattaneo; Daniela Gireco; Nicola Lacetera; Mario Macis
    Abstract: We study out-group biases in attitudes toward refugees, and the effect of European Union (EU) immigration policies on these views, using an online survey experiment including 4, 087 Italian participants. We assess attitudes using donations to a randomly assigned group: Italian victims of violence or refugees fleeing wars in Ukraine or African countries. We also employ a novel measure, the share donated in cash. While donations indicated less support for African and Ukrainian refugees compared to Italian victims, the cash measure revealed a stronger prejudice against distant out-groups, with participants giving African refugees a smaller proportion of cash donations. This result was mainly driven by individuals with right-leaning political views. Providing information about immigration policy reforms that give the EU a more substantial role in receiving and allocating refugees had no impact. Textual analysis supports these findings.
    Keywords: ingroup-outgroup relations, prejudice, refugees, EU immigration policies, survey experiments
    JEL: C99 D02 D64 J15
    Date: 2024
  8. By: Cars Hommes (Canadian Economic Analysis, Bank of Canada; CeNDEF, Amsterdam School of Economics, University of Amsterdam; Tinbergen Institute, Amsterdam); Stefanie J. Huber (Department of Economics, University of Bonn; ECONtribute Research Cluster); Daria Minina (CeNDEF, Amsterdam School of Economics, University of Amsterdam); Isabelle Salle (Department of Economics, University of Ottawa; Macro and International Economics, Amsterdam School of Economics, University of Amsterdam; Tinbergen Institute, Amsterdam)
    Abstract: This paper brings novel insights into group coordination and price dynamics in complex environments. We implement an overlapping-generation model in the lab, where the output dynamics is given by the well-known chaotic quadratic map. This model structure allows us to study previously unexplored parameter regions where the perfect-foresight dynamics exhibits chaotic dynamics. This paper highlights three key findings. First, the price converges to the simplest equilibria, namely the monetary steady state or the two-cycle, in all markets. Second, we document a novel and intriguing finding: we observe a non-monotonicity of the behavior when complexity increases. Convergence to the two-cycle occurs for the intermediate parameter range, while both the extreme scenarios of a simple stable two-cycle and highly non-linear dynamics (with chaos) lead to coordination on the steady state in the lab. All indicators of coordination and convergence significantly exhibit this non-monotonic relationship in the learning-to-forecast experiments and this non-monotonicity persists in the learning-to-optimize design. Third, convergence in the learning-to-optimize experiment is more challenging to achieve: coordination on the two-cycle is never observed, although the two-cycle Pareto-dominates the steady state in our design.
    Keywords: Overlapping-generation (OLG) models, Complexity, Learning, Equilibria se- lection, Laboratory experiments
    JEL: E70 E17 C92 C62
    Date: 2024–03
  9. By: Carina Cavalcanti (Department of Accounting, Finance and Economics, Griffith University, Southport and Nathan, QLD, Australia.); Andreas Leibbrandt (Department of Economics, Monash University, Clayton, VIC 3800, Australia.)
    Abstract: Many positive externalities are created by risk-taking. We investigate whether risk-taking is affected by the presence of positive externalities. In our experiments, we study choices between investments in technologies that differ according to their level of risk and the extent to which they generate positive externalities for others. We find that even large positive externalities have little to no impact on individual risk-taking. We also find that women are generally less willing to take risks than men in the absence and presence of positive externalities and that they generate fewer positive externalities if they increase with risk but more positive externalities if they decrease with risk. Finally, we observe that groups invest more in technologies with larger positive externalities and that this is mainly driven by male group members. These findings provide a comprehensive view on the malleability of risk-taking in the presence of positive externalities.
    Keywords: Risk aversion, positive externality, gender
    JEL: C91 C92 D81 H23 J17
    Date: 2024–03
  10. By: Jordi Brandts (Instituto de Análisis Económico (CSIC) & Barcelona School of Economics.); Isabel Busom (Universitat Autònoma de Barcelona.); Cristina Lopez-Mayan (Serra Húnter Fellow & AQR-IREA, Universitat de Barcelona. Diagonal 690, Tower 4, 3rd floor, 08034 Barcelona (Spain).)
    Abstract: Citizens’ ability to make informed and thoughtful choices when voting for policy proposals rests on their awareness of and access to accurate information about the costs and benefits that each proposal entails. We study whether specific social factors affect the disposition to drop a misconception, the belief that rent control increases the availability of affordable housing. We design an on–line experiment to test whether giving voice, aggregate social information and disaggregate social information increase the effect of a video explaining the evidence on the consequences of rent control policies. While voice and aggregate social information do not have an additional effect relative to a control group that is shown the same video, supplying disaggregate social has an additional impact on updating beliefs. Furthermore, we find that changes in beliefs widely translate into intended voting and recommending the video. Finally, although ideological position and a zero–sum mentality are correlated with the initial misconception, these two factors do not thwart the disposition to update beliefs after receiving experts’ information.
    Keywords: Misconceptions, Policy beliefs, Communication, Social information, Online experiments, Refutation. JEL classification: A1, A2, C9, D83, D95.
    Date: 2024–02
  11. By: Thomas Dohmen; Georgios Gerasimou
    Abstract: We study if participants in a choice experiment learn to behave in ways that are closer to the predictions of ordinal and expected utility theory as they make decisions from the same menus repeatedly and without receiving feedback of any kind. We designed and implemented a non-forced-choice lab experiment with money lotteries and five repetitions per menu that aimed to test this hypothesis from many behavioural angles. In our data from 308 subjects in the UK and Germany, significantly more individuals were ordinal- and expected-utility maximizers in their last 15 than in their first 15 identical decision problems. Furthermore, around a quarter and a fifth of all subjects, respectively, decided in those modes throughout the experiment, with nearly half revealing non-trivial indifferences. A considerable overlap was found between those consistently rational individuals and the ones who satisfied core principles of random utility theory. Finally, in addition to finding that choice consistency is positively correlated with cognitive ability, we document that subjects who learned to maximize utility were more cognitively able than those who did not. We discuss potential implications of our analysis.
    Date: 2024–02
  12. By: Maris, Robbie (Centre for Education Policy and Equalising Opportunities, University College London (UCL)); Zack, Dorner (Department of Environmental Management, Lincoln University); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Shifting individual behaviour is an important tool for addressing environmental issues and there is a wide literature evaluating interventions to encourage pro-environmental behaviour. One important but under-researched area is the effect of combining interventions to affect behaviour. In this paper, we evaluate the effects of two interventions – monetary incentives and nudges – on nature restoration volunteering. We use a two-by-two treatment design to evaluate the individual and combined effects of the interventions in a field experiment setting. We find that the monetary incentive significantly increases volunteering behaviour, despite concerns incentives may crowd out motivation, but that nudging alone is ineffective at shifting behaviour. However, there are considerable positive synergies between the monetary incentive and nudge. The monetary incentive becomes more than twice as effective when it is combined with a nudge. We find support for our theoretical prediction that this synergy arises because the nudge reduces motivational crowding out effects from the incentive. Our results have important policy implications, showing that concerns around motivation crowding out from monetary incentives could be mitigated by simple, low-cost nudges.
    Keywords: Field experiment; incentive; nature restoration; nudge; PEB; pro-environmental behaviour; synergy; volunteering
    JEL: C93 D91 Q57
    Date: 2024–03–11
  13. By: Ockenfels, Axel (University of Cologne); Sliwka, Dirk (University of Cologne); Werner, Peter (Maastricht University)
    Abstract: We compare evaluations of employee performance by individuals and groups of supervisors, analyzing a formal model and running a laboratory experiment. The model predicts that multi-rater evaluations are more precise than single-rater evaluations if groups rationally aggregate their signals about employee performance. Our controlled laboratory experiment confirms this prediction and finds evidence that this can indeed be attributed to accurate information processing in the group. Moreover, when employee compensation depends on evaluations, multi-rater evaluations tend to be associated with higher performance.
    Keywords: performance appraisal, calibration panels, group decision-making, real effort, incentives
    JEL: J33 M52
    Date: 2024–02
  14. By: Dan Anderberg; Gordon B. Dahl; Christina Felfe; Helmut Rainer; Thomas Siedler
    Abstract: What makes diversity unifying in some settings but divisive in others? We examine how the mixing of ethnic groups in German schools affects intergroup cooperation and trust. We leverage the quasi-random assignment of students to classrooms within schools to obtain variation in the type of diversity that prevails in a peer group. We combine this with a large-scale, incentivized lab-in-field-experiment based on the investment game, allowing us to assess the in-group bias of native German students in their interactions with fellow natives (in-group) versus immigrants (out-group). We find in-group bias peaks in culturally polarized classrooms, where the native and immigrant groups are both large, but have different religious or language backgrounds. In contrast, in classrooms characterized by non-cultural polarization, fractionalization, or a native supermajority, there are significantly lower levels of own-group favoritism. In terms of mechanisms, we find empirical evidence that culturally polarized classrooms foster negative stereotypes about immigrants’ trustworthiness and amplify taste-based discrimination, both of which are costly and lead to lower payouts. In contrast, accurate statistical discrimination is ruled out by design in our experiment. These findings suggest that extra efforts are needed to counteract low levels of inclusivity and trust in culturally polarized environments.
    Keywords: in-group bias, discrimination, diversity
    JEL: J15
    Date: 2024
  15. By: Shusaku Sasaki; Takahiro Kubo; Shodai Kitano
    Abstract: Ascertaining the number, type, and location of plant, insect, and animal species is essential for biodiversity conservation. However, comprehensively monitoring the situation only through public fixed-point surveys is challenging, and therefore information voluntarily provided by citizens assists in ascertaining the species distribution. To effectively encourage the citizens' data sharing behavior, this study proposed a prosocial incentive scheme in which, if they provide species information, donations are made to activities for saving endangered species. We conducted a field experiment with users (N=830) of a widely-used Japanese smartphone app to which they post species photos and measured the incentive's effect on their posting behavior. In addition, we measured the effect of a financial incentive scheme that provides monetary rewards for posting species photos and compared the two incentives' effects. The analyses revealed that while the prosocial incentive did not increase the number of posts on average, it did change the contents of posts, increasing the proportion of posts on rare species. On the contrary, the financial incentive statistically significantly increased the number of posts, in particular, on less rare and invasive species. Our findings suggest that the prosocial and financial incentives could stimulate different motivations and encourage different posting behaviors.
    Date: 2024–02
  16. By: Anderberg, Dan (Royal Holloway, University of London); Dahl, Gordon B. (University of California, San Diego); Felfe, Christina (University of Konstanz); Rainer, Helmut (CEPR); Siedler, Thomas (University of Potsdam)
    Abstract: What makes diversity unifying in some settings but divisive in others? We examine how the mixing of ethnic groups in German schools affects intergroup cooperation and trust. We leverage the quasi-random assignment of students to classrooms within schools to obtain variation in the type of diversity that prevails in a peer group. We combine this with a large-scale, incentivized lab-in-field-experiment based on the investment game, allowing us to assess the in-group bias of native German students in their interactions with fellow natives (in-group) versus immigrants (out-group). We find in-group bias peaks in culturally polarized classrooms, where the native and immigrant groups are both large, but have different religious or language backgrounds. In contrast, in classrooms characterized by non-cultural polarization, fractionalization, or a native supermajority, there are significantly lower levels of own-group favoritism. In terms of mechanisms, we find empirical evidence that culturally polarized classrooms foster negative stereotypes about immigrants' trustworthiness and amplify taste-based discrimination, both of which are costly and lead to lower payouts. In contrast, accurate statistical discrimination is ruled out by design in our experiment. These findings suggest that extra efforts are needed to counteract low levels of inclusivity and trust in culturally polarized environments.
    Keywords: in-group bias, discrimination, diversity
    JEL: J15
    Date: 2024–02
  17. By: David K Levine
    Date: 2024–03–14
  18. By: M. Trabandt; W. Lasarov (Audencia Business School); G. Viglia
    Abstract: The tourism sector is actively exploring methods to reduce its adverse environmental impact. Our study introduces hedonic appeals as a novel approach to encourage guests to reduce their room cleaning requests. We contend that combining this approach with sustainable appeals is at least as effective as the previously identified most effective strategy, namely providing guests with financial incentives. The effectiveness of hedonic appeals is channeled through guest value creation. Our empirical evidence – involving a field experiment at a European hotel and a lab experiment – supports the proposed effects and explanation mechanisms. We also demonstrate that our new strategy is the most profitable by introducing a profitability index that considers room cleaning requests, monetary investments, and side effects. We therefore recommend hotels to adopt this cost-effective strategy to reduce room cleaning requests without affecting overall guest satisfaction.
    Keywords: Sustainable tourism, Field experiment, Room cleaning practices, Hedonic appeals, Financial incentives, Sustainable appeals, Guest value, Guest behavior
    Date: 2024–02
  19. By: Melody Y Huang; Sarah E Robertson; Harsh Parikh
    Abstract: Randomized Controlled Trials (RCTs) are pivotal in generating internally valid estimates with minimal assumptions, serving as a cornerstone for researchers dedicated to advancing causal inference methods. However, extending these findings beyond the experimental cohort to achieve externally valid estimates is crucial for broader scientific inquiry. This paper delves into the forefront of addressing these external validity challenges, encapsulating the essence of a multidisciplinary workshop held at the Institute for Computational and Experimental Research in Mathematics (ICERM), Brown University, in Fall 2023. The workshop congregated experts from diverse fields including social science, medicine, public health, statistics, computer science, and education, to tackle the unique obstacles each discipline faces in extrapolating experimental findings. Our study presents three key contributions: we integrate ongoing efforts, highlighting methodological synergies across fields; provide an exhaustive review of generalizability and transportability based on the workshop's discourse; and identify persistent hurdles while suggesting avenues for future research. By doing so, this paper aims to enhance the collective understanding of the generalizability and transportability of causal effects, fostering cross-disciplinary collaboration and offering valuable insights for researchers working on refining and applying causal inference methods.
    Date: 2024–02
  20. By: Luke Glowacki; Florian Morath; Hannes Rusch
    Abstract: The historical record knows only few instances of democracies waging war against each other. Therefore, democratization is considered key in achieving global peace. However, efforts to achieve sustained democratic governance often fail — Afghanistan being a recent example. Democratization appears particularly challenging where grievances between ethnic groups can spill over into democratic institutions and obstruct the negotiation of mutually beneficial compromises. So far, research on democratization vis-à-vis preexisting ethnic conflict has relied on correlational evidence and historical case studies, making it hard to establish causality. Here, we complement previous work with an economic lab-in-the-field experiment modeling a situation in which unequal groups with ongoing ethnic tensions can solve a joint allocation problem either democratically or aggressively. We find that, as theoretically predicted, minority groups are much more likely to opt for inefficient aggression, but also that equipping minorities with high power under the democratic allocation procedure substantially reduces this problem. Removing ethnic hostility subtly shifts participants’ beliefs but does not reduce aggressive behavior. Thus, our results demonstrate that well-designed democratic institutions can achieve efficient, peaceful outcomes even when intergroup hostility is prevalent. However, we also see that their success vitally depends on their inclusivity towards the interests of minority groups.
    Keywords: democratization, ethnicity, intergroup conflict, warfare, peace-making, minority power
    Date: 2023
  21. By: Mourelatos, Evangelos; Zervas, Panagiotis; Lagios, Dimitris; Tzimas, Giannis
    Abstract: This paper employs an online real-effort experiment to investigate gender disparities in the selection of individuals into competitive working environments when assisted by artificial intelligence (AI). In contrast to previous research suggesting greater competitiveness among men, our findings reveal that both genders are equally likely to compete in the presence of AI assistance. Surprisingly, the introduction of AI eliminates an 11-percentage-point gender gap, between men and women in our competitive scenario. We also discuss how the gender gap in tournament entry appears to be contingent on ChatGPT selection rather than being omnipresent. Notably, 47% of female participants independently chose to utilize ChatGPT, while 55% of males did the same. However, when ChatGPT was offered by the experimenter-employer, more than 53% of female participants opted for AI assistance, compared to 57% of males, in a gender-neutral online task. This shift prompts a reevaluation of gender gap trends in competition entry rates, particularly as women increasingly embrace generative AI tools, resulting in a boost in their confidence. We rule out differences in risk aversion. The discussion suggests that these behavioral patterns may have significant policy implications, as the introduction of generative AI tools in the workplace can be leveraged to rectify gender disparities.
    Keywords: Gender differences, ChatGPT, Competition, Economic experiments
    JEL: C90 J16 J71
    Date: 2024
  22. By: Tiffany Tsz Kwan TSE; Nobuyuki HANAKI; Bolin MAO
    Abstract: We experimentally investigated the relationship between participants' reliance on algorithms, their familiarity with the task, and the performance level of the algorithm. We found that when participants could freely decide on their final forecast after observing the one produced by the algorithm (a condition found to mitigate algorithm aversion), the average degree of reliance on high and low performing algorithms did not significantly differ for participants with little experience in the task. Experienced participants relied less on the algorithm than inexperienced participants, regardless of its performance level. The reliance on the low performing algorithm was positive even when participants could infer that they outperformed the algorithm. Indeed, participants would have done better without relying on the low performing algorithm at all. Our results suggest that, at least in some domains, excessive reliance on algorithms, rather than algorithm aversion, should be a concern.
    Date: 2022–10
  23. By: Yan Peng (Xiamen University); Jason Shachat (Durham University Business School, Wuhan Unviversity, Chapman University); Lijia Wei (Wuhan University); S. Sarah Zhang (University of Manchester)
    Abstract: We study the influence of cognitive abilities, in particular reaction time, trader intuition (Theory of Mind), and cognitive reflection abilities, on human participants’ individual earnings when competing alongside algorithmic traders in continuous double auctions. In balanced markets, where each human trader has an algorithmic trader clone with the same valuations or costs, faster human reaction time significantly improves trading performance, while Theory of Mind can be detrimental to human trading performance, particularly for sellers. For unbalanced markets with humans and algorithmic traders on opposite sides of the market, the effects of cognitive abilities depend on trader role as well as agent presence and speed, highlighting the influence of market balance and agent presence and speed on trading success and earnings.
    Keywords: Trading agents, Cognitive abilities, Algorithmic trading, Laboratory experiment
    JEL: C78 C92 D40
    Date: 2024
  24. By: Barr, Abigail (University of Nottingham); Hochleitner, Anna (Dept. of Economics, Norwegian School of Economics and Business Administration); Sonderegger, Silvia (University of Nottingham)
    Abstract: We study the relationship between inequality and social instability. While the argument that inequality can be damaging for the cohesion of a society is well established, the empirical evidence is mixed. We use a novel approach to isolate the causal relationship running from inequality to social instability. We run a laboratory experiment in which two groups interact repeatedly and have an incentive to coordinate even though coordination comes at the cost of inter-group inequality. Then, we vary the extent of the inequality implied by coordination. Our results show that increasing inequality has a destabilising effect; the disadvantaged initiate the destabilisation; and a worsening of the absolute situation of the disadvantaged exacerbates the destabilising effect of increasing inequality. These findings are in line with a simple model incorporating inequality aversion and myopic best response. Finally, we show that history matters. People respond differently to the same level of current inequality depending on their past experiences. More specifically, a history of stability facilitates the re-emergence of coordination in more unequal environments, and a sudden increase in inequality is more destabilising than a gradual increase.
    Keywords: Collective decision making; Conflict and Revolutions; Inequality
    JEL: C92 D01 D63 D74
    Date: 2024–03–04
  25. By: Bucher-Koenen, Tabea; Fessler, Pirmin; Silgoner, Maria Antoinette
    Abstract: We examine the financial resilience of Austrian households, relating it to their experience of financial shocks earlier in life and to their financial literacy. We find that previous negative (positive) financial shocks are negatively (positively) related to financial resilience. Financial literacy and households' financial resilience are positively related. Based on a randomized survey experiment, we investigate the role of over-optimism when evaluating the potential impact of future events on households' financial situation. Households are asked to assess specific risks for their own household (treatment) or for a household with similar characteristics (control). On average, households assign a lower probability to shocks that negatively affect personal finances if asked for their own household compared to a similar household. We do not find the reverse effect for positive shocks. We find a negative correlation between over-optimism and financial literacy, indicating that financial literacy is relevant to both, financial behavior and the ability to assess financial shocks.
    Keywords: financial fragility, expectations, risk assessment, financial behavior, over-optimism
    JEL: D14 D91 G53
    Date: 2023
  26. By: Biljana Meiske
    Abstract: This work studies the dynamics of inter-minority relations and attempts to uncover the influence of status position of the established immigrants on their attitudes towards new waves of immigration. I hypothesize that relative status deprivation, that is, the degree to which own in-group is ranked low in the ethnic status hierarchy of the host country, has a negative impact on group members’ attitudes toward an even lower ranked status group (such as refugees). In an online experiment (N=1, 159), participants with migration background residing in Germany receive either a positive or a negative evaluation of their own ethnic/national in-group, as evaluated by a group of ethnic German participants, while keeping constant the evaluations of other immigrant groups. The results show that participants whose in-group received a negative evaluation are systematically less willing to donate to an organization supporting refugees. Furthermore, receiving negative evaluation impacts participants’ perceived descriptive norms regarding expression of non-acceptance of refugees (and other low-status out-groups) among majority population. Additionally, I study the role of indirect reciprocity as a possible moderator of observed treatment effects.
    Keywords: Immigration attitudes, Discrimination, Status
    JEL: C90 J15 J71
    Date: 2022–06
  27. By: Anton Kolotilin; Alexander Wolitzky
    Abstract: We offer a simple analysis of the problem of choosing a statistical experiment to optimize the induced distribution of posterior medians, or more generally $q$-quantiles for any $q \in (0, 1)$. We show that all implementable distributions of the posterior $q$-quantile are implemented by a single experiment, the $q$-quantile matching experiment, which pools pairs of states across the $q$-quantile of the prior in a positively assortative manner, with weight $q$ on the lower state in each pair. A dense subset of implementable distributions of posterior $q$-quantiles can be uniquely implemented by perturbing the $q$-quantile matching experiment. A linear functional is optimized over distributions of posterior $q$-quantiles by taking the optimal selection from each set of $q$-quantiles induced by the $q$-quantile matching experiment. The $q$-quantile matching experiment is the only experiment that simultaneously implements all implementable distributions of the posterior $q$-quantile.
    Date: 2024–02
  28. By: Oberrauch, Luis (University of Kaiserslautern); Kaiser, Tim (University of Kaiserslautern)
    Abstract: We study the effects of low-intensity digital financial education interventions on undergraduate students' financial knowledge in a small-scale RCT. We test the substitutability or complementarity of two treatments: an online video financial education treatment and an incentive-based approach where students are issued pre-paid voucher cards worth 50 EUR to register with a broker specializing in roboadvised investment in Exchange Traded Funds (ETFs). Three months after the intervention, the video treatment enhanced financial knowledge scores by more than 50 percent of a standard deviation. Conversely, the vouchers showed no effect. The findings suggest that subsidies encouraging roboadvised investment into ETFs cannot substitute direct financial education in our setting, and there is no evidence for complementarity between these interventions in creating human capital in the domain of financial decision-making.
    Keywords: digital intervention, financial literacy, financial knowledge, financial education, robo-advisor, ETFs
    JEL: G53
    Date: 2024–02
  29. By: Yuhao Fu; Nobuyuki Hanaki
    Abstract: In the era of rapidly advancing artificial intelligence (AI), understanding to what extent people rely on generative AI products (AI tools), such as ChatGPT, is crucial. This study experimentally investigates whether people rely more on AI tools than their human peers in assessing the authenticity of misinformation. We quantify participants’ degree of reliance using the weight of reference (WOR) and decompose it into two stages using the activation-integration model. Our results indicate that participants exhibit a higher reliance on ChatGPT than their peers, influenced significantly by the quality of the reference and their prior beliefs. The proportion of real parts did not impact the WOR. In addition, we found that the reference source affects both the activation and integration stages, but the quality of reference only influences the second stage.
    Date: 2024–03
  30. By: Miwa Nakai (Faculty of Economics, Fukui Prefectural University, 4-1-1, Matsuoka Kenjojima, Eiheiji-cho, Fukui, 910-1195, Japan); Naonari Yajima (Faculty of Economics, Seijo University, 6-1-20, Seijo, Setagata-ku, Tokyo, 157-0066, Japan); Majah-Leah Ravago (Department of Economics, Ateneo de Manila University, Room 409, Leong Hall, Loyola Heights, Quezon City, Philippines 1108)
    Abstract: Energy efficiency of home appliances plays a crucial role in climate mitigation policies, especially considering the increasing energy consumption in developing countries. Particularly in countries with high temperatures such as the Philippines, switching to energy efficient air conditioners (ACs) can make a substantial contribution to both climate mitigation and sustainable development. We conducted a field survey among households with a choice experiment in the Philippines. We investigated the attributes that influence the decision to purchase ACs and to understand the variations in preferences among consumers in the tropics. Utilizing primary data with a broad range of socio-economic characteristics, we find that households have higher willingness-to-pay for energy efficient models. Moreover, in terms of preference variability, certain consumer groups such as AC owners, younger age segments, higher income brackets, and those with higher environmental awareness displayed higher willingness-to-pay. Furthermore, our survey reveals the potential for a significant rebound effect in AC use if households purchase an energy efficient model. Therefore, we emphasise the importance of combining the transition to energy efficient ACs with additional policy measures to reduce wastage and consume energy efficiently across other domains, as a country transitions to more sustainable and cleaner energy.
    Keywords: Appliance labelling, Energy-saving behaviour, Choice experiment, Air conditioner, Tropical climate, Philippines
    JEL: D12 R11 Q56
    Date: 2024–03
  31. By: Cavve, Blake Stockton; Hurlstone, Mark J.; Farrell, Simon
    Abstract: Several distinct strategies or motivations have been proposed in order to characterise the ways in which people compare themselves to others, and how such information influences the decisions they make. Among the most studied type of social preference is inequality aversion, which describes a preference for equal outcomes for all group members, usually with a particular dislike for doing worse than others. A second, rank-status, describes the tendency to focus on the ordinal position (rather than the magnitude) of outcomes and the desire to rank higher than others in outcome standings. Though these competing forms of social preference describe very different psychological processes, these theories do—under certain circumstances—generate identical predictions. To accurately assess how people use information about others in decision-making, these theories must be deliberately, directly, and carefully disentangled. This paper presents two studies in which we competitively test these models of social preference as well as self-interest. We construct social utility curves from a series of satisfaction ratings of allocations for the self and one peer (Study 1) and two peer (Study 2) reference points. In both studies we find some heterogeneity expressed in preferences regarding distribution of several different attributes. Overall, a consistent plurality of participants are best fit by the Fehr and Schmidt inequality aversion model compared to mean reference fairness models and rank-based preference models; though a lesser proportion than found elsewhere in the literature (i.e., without comparison against competing models). Surprisingly, this preference is also prominent in considerations of vacation time, a leisure attribute assumed to be unaffected by social judgement. The results highlight both discrete and continuous individual differences in the form of social preference.
    Date: 2024–02–24
  32. By: Kettlewell, Nathan (University of Technology, Sydney); Walker, Matthew J. (Newcastle University); Yoo, Hong Il (Loughborough University)
    Abstract: Discrete choice experiments (DCEs) often present concise choice scenarios that may appear incomplete to respondents. To allow respondents to express uncertainty arising from this incompleteness, DCEs may ask them to state probabilities with which they expect to make specific choices. The workhorse method for analyzing the elicited probabilities involves semi-parametric estimation of population average preferences. Despite flexible distributional assumptions, this method presents challenges in estimating unobserved preference heterogeneity, a key element in non-market valuation studies. We introduce a fractional response model based on a mixture of beta distributions. The model enables researchers to uncover preference heterogeneity under comparable parametric assumptions as adopted in conventional choice analysis, and can accommodate multiplicative forms of heterogeneity that make the semi-parametric method inconsistent. Using a DCE on alternative fuel vehicles, we illustrate the complementary roles of the parametric and semi-parametric approaches. We also undertake a separate analysis in which respondents are randomized to either a DCE employing a conventional choice elicitation format or a parallel DCE employing the probability elicitation format.
    Keywords: discrete choice experiment, probability elicitation, mixed logit, beta regression; willingness to pay
    JEL: C35 D12 D84 Q42 R41
    Date: 2024–02
  33. By: Carina Cavalcanti (Department of Accounting, Finance and Economics, Griffith University, Southport and Nathan, QLD, Australia.); Andreas Leibbrandt (Department of Economics, Monash University, Clayton, VIC 3800, Australia.)
    Abstract: This field study investigates the characteristics and preferences of artisanal fishers who continue their profession in a lake afflicted by overfishing. We relate their economic preferences, fishing data, social networks, and socio-demographic information to their decision to either persist or discontinue fishing 4 and 15 years later. Our findings reveal that an increasing portion of fishers have chosen to cease fishing over time. We observe that the fisher’s risk preference is an important and robust factor for persistence: More risk-averse fishers are more likely to endure in their fishing endeavors. We also find evidence that better socially integrated, older and less educated individuals are more persistent. In contrast, we do not observe any notable relationships between persistence and the individual extent of overfishing or social preferences. These insights offer valuable novel knowledge regarding the evolving dynamics of resource user groups. By understanding these factors, policymakers and managers can optimize their approach to designing effective management practices and policies.
    Keywords: common pool resource, fishing, risk aversion
    JEL: C91 D81 H23 J24
    Date: 2024–03
  34. By: Christian Ewerhart; Stanisław Kaźmierowski
    Abstract: Colonel Blotto games with discrete strategy spaces effectively illustrate the intricate nature of multidimensional strategic reasoning. This paper studies the equilibrium set of such games where, in line with prior experimental work, the tie-breaking rule is allowed to be flexible. We begin by pointing out that equilibrium constructions known from the literature extend to our class of games. However, we also note that, irrespective of the tie-breaking rule, the equilibrium set is excessively large. Specifically, any pure strategy that allocates at most twice the fair share to each battlefield is used with positive probability in some equilibrium. Furthermore, refinements based on the elimination of weakly dominated strategies prove ineffective. To derive specific predictions amid this multiplicity, we compute strategies resulting from long-run adaptive learning.
    Keywords: Colonel Blotto games, multidimensional strategic reasoning, tiebreaking rules, Nash equilibrium, dominated strategies, adaptive learning
    JEL: C72 C91 D74
    Date: 2024–03
  35. By: Christian Krekel; Ekaterina Oparina; Sorawoot Srisuma
    Abstract: Common mental health problems impose significant costs on individuals and societies, yet healthcare systems often overlook them. We provide the first causal evidence on the effectiveness of a pioneering, nationwide mental health service for treating depression and anxiety disorders in England using non-experimental data and methods. We exploit variations in waiting times to identify treatment effects, based on a novel dataset of over one million patients that well represent the English population. Our findings show that treatment improved mental health and reduced impairment in work and social life. We also provide suggestive evidence of enhanced employment. However, effects vary across patients, services, and areas. The programme is cost-effective and provides a blueprint for treating mental health in other countries.
    Keywords: policy evaluation, mental health, psychological therapies, quasi-natural experiment, machine learning, cost-benefit analysis , Wellbeing
    Date: 2024–02–29

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.