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on Experimental Economics |
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Issue of 2024‒05‒27
twenty-six papers chosen by |
| By: | Kate Bachtell; Andrew C. Chang; Joanne W. Hsu; Eva Ma; Micah Sjoblom |
| Abstract: | To encourage survey participation and improve sample representativeness, the Survey of Consumer Finances (SCF) offers an unconditional pre-paid monetary incentive and separate post-paid incentive upon survey completion. We conducted a pre-registered between-subject randomized control experiment within the 2022 SCF, with at least 1, 200 households per experimental group, to examine whether changing the pre-paid incentive structure affects survey outcomes. We assess the effects of: (1) altering the total dollar value of the pre-paid incentive (“incentive effect†), (2) giving two identical pre-paid incentives holding the total dollar value fixed (“reminder effect†), and (3) offering multiple pre-paid incentives of different amounts holding the total dollar value fixed (“slope effect†) on survey response rates, interviewer burden, and data quality. Our evidence indicates that a single $15 pre-paid incentive increases response rates and maintains similar levels of interviewer burden and data quality, relative to a single $5 pre-paid incentive. Splitting the $15 into two pre-paid incentives of different amounts increases interviewer burden though lengthening time in the field without improving response rates, reducing the number of contact attempts needed for a response, or improving data quality, regardless of whether the first pre-paid is larger or smaller than the second. |
| Keywords: | Pre-paid incentives; Unconditional incentives; Sequential incentives; Response rates; Surveys; Data quality; Household finance |
| JEL: | C83 C93 G50 |
| Date: | 2024–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2024-23&r=exp |
| By: | Alger, Ingela; Rivero-Wildemauwe, José Ignacio |
| Abstract: | We conduct a laboratory experiment using framing to assess the willing-ness to “sell a lemon”, i.e., to undertake an action that benefits self but hurts the other (the “buyer”). We seek to disentangle the role of other-regarding preferences and (Kan-tian) moral concerns, and to test if it matters whether the decision is described in neutral terms or as a market situation. When evaluating an action, morally motivated individuals consider what their own payo would be if—hypothetically—the roles were reversed and the other subject chose the same action (universalization). We vary the salience of role uncertainty, thus varying the ease for participants to envisage the role-reversal scenario. We find that subjects are (1) more likely to “sell a lemon” in the market frame, and (2) less likely to do so when the role uncertainty is salient. We also structurally estimate other-regarding and Kantian moral concern parameters. |
| Keywords: | market framing; lemons; social preferences; Kantian morality; experiment |
| JEL: | C91 D01 D91 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:129328&r=exp |
| By: | Silvia Angerer; Hanna Brosch; Daniela Glätzle-Rützler; Philipp Lergetporer; Thomas Rittmannsberger |
| Abstract: | We present representative evidence of discrimination against migrants through an incentivized choice experiment with over 2, 000 participants. Decision makers allocate a fixed endowment between two receivers. To measure discrimination, we randomly vary receivers’ migration background and other attributes, including education, gender, and age. We find that discrimination against migrants by the general population is both widespread and substantial. Our causal moderation analysis shows that migrants with higher education and female migrants experience significantly less discrimination. Discrimination is more pronounced among decision makers who are male, non-migrants, have rightwing political preferences, and live in regions with lower migrant shares. |
| Keywords: | discrimination, representative sample, migration, experiment |
| JEL: | C91 C93 J15 D90 |
| Date: | 2024–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2024-06&r=exp |
| By: | Steffen Altmann; Andreas Grunewald; Jonas Radbruch |
| Abstract: | We study the effects of two widely observed behavioral policy interventions⸻the simplification of complex decisions and the implementation of high-quality defaults. Based on a laboratory experiment featuring a dual-task paradigm, we demonstrate that these policies do not only improve decisions in the targeted choice domain, but also yield substantial positive indirect effects on non-targeted decisions. The latter emerge as a result of an attention-releasing effect of the policies. Furthermore, the relative importance of the direct and indirect effects varies systematically across the population. Evaluations that focus only on the targeted domain may therefore significantly underestimate the overall effectiveness of attention-releasing policies and provide a biased assessment of their distributional consequences. |
| Keywords: | administrative burden, limited attention, defaults, nudges, limited cognitive resources, behavioral economics, laboratory experiment |
| JEL: | D91 D01 D04 C91 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11069&r=exp |
| By: | Ignacio Sarmiento Barbieri (Universidad de los Andes); Eric Chiang (University of Nevada); José Vázquez (University of Illinois) |
| Abstract: | As online course offerings become increasingly prevalent in institutions of higher learning, online assessments offer several key advantages, including reduced administrative costs, the ability to use a variety of multimedia resources, and faster results. To reduce the potential for academic dishonesty in online assessments, various proctoring solutions exist, though their effectiveness has not been studied in depth. Using randomized controlled trials, thispaper analyzes the role of human proctors used in online assessments, a preventative measure used in testing centers and classroom settings where students complete assessments online but under supervision. Moreover, we study the effect of self-reported test anxiety on exam scores, which can be heightened in the presence of a proctor, creating a negative effect on student performance. Our analysis also investigates the effect of proctoring and anxiety by gender andgrade point average to further explore the impact that proctoring has on student performance |
| Keywords: | Academic integrity, Proctoring methods, Test anxiety |
| JEL: | A20 A22 I20 I23 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:320&r=exp |
| By: | John M. Barrios; Jeremy Bertomeu; Radhika Lunawat; Ibrahima Sall |
| Abstract: | We examine the impacts of ethical declarations on market transactions through a controlled laboratory experiment, where privately-informed sellers issue a public report prior to a first-price auction. We find that while signing an ethical statement does not reduce misreporting by sellers, it significantly increases buyer trust, often skewing the terms of the trade in favor of sellers. Contrary to rational expectations, buyers consistently struggle to undo the bias. In counterfactual scenarios, from our structural analysis, we find that price efficiency improves when buyers rationally process uncertainty about sellers' ethical preferences, yet bias persists even when buyers have more accurate perceptions of sellers'’ ethical standards. Overall, our results suggests that disclosure interventions aimed at enhancing ethical conduct in market settings may not necessarily lead to more efficient pricing or reduced bias, and in some instances, may even disadvantage certain market participants. |
| JEL: | D53 G10 G14 G4 G41 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32385&r=exp |
| By: | VojtÄ›ch Zíka (Economic Science Institute, Chapman University and Jan Evangelista PurkynÄ› University) |
| Abstract: | This laboratory experiment (N=120) explored the possibility that overconfdence research concerning overestimation and overplacement may be afected by the one-half heuristic, a tendency of individuals to estimate quantities with unknown distributions at half of the maximum value. The data from multiple rounds of the computerized hand game Rock–Paper–Scissors provide convincing evidence that half of the maximum is the most popular estimate and that manipulating the game’s average score can afect the direction and magnitude of estimation, averaging, and placement levels. The resulting methodological proposal is that the score participants estimate should have an expected value equal to half of the maximum so that the hypothesized efect of the heuristic is accounted for. Additionally, this study introduces confdence levels, a standardized measure of overconfdence, allowing a direct comparison of results across studies. |
| Keywords: | overconfdence, one-half heuristic, laboratory experiment, methodology |
| JEL: | B40 C91 D01 D81 D83 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:24-08&r=exp |
| By: | Beloborodova, Anna |
| Abstract: | How polarized is Russian society regarding the war in Ukraine? Political views affect various behaviors, including relationship formation. This study conducts a field experiment on a large Russian dating site and gathers data from over 3, 000 profile evaluations. The findings reveal significant penalties for those who express pro-war or anti-war positions on their dating profiles. Age emerges as the most polarizing factor: younger individuals are less likely to approach pro-war profiles but not anti-war ones, whereas older individuals are less likely to respond positively to profiles indicating anti-war views but not pro-war ones. The results align with survey evidence of a positive relationship between respondents' age and expressed support for the war in Russia, although the experiment indicates a higher degree of polarization. Overall, the experimental findings demonstrate that survey data can reveal trends and relationships between individuals' characteristics and their opinions, but may overstate the levels of support for government agendas in non-democratic states. |
| Keywords: | affective polarization; relationship formation; assortative mating; field experiment; war in Ukraine |
| JEL: | C93 D1 J12 |
| Date: | 2023–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120739&r=exp |
| By: | Avichai Snir; Dudi Levy; Dian Wang; Haipeng Allan Chen; Daniel Levy |
| Abstract: | Many experimental studies report that economics students tend to act more selfishly than students of other disciplines, a finding that received widespread public and professional attention. Two main explanations that the existing literature offers for the differences found in the behavior between economists and noneconomists are the selection effect, and the indoctrination effect. We offer an alternative, novel explanation. We argue that these differences can be explained by differences in the interpretation of the context. We test this hypothesis by conducting two social dilemma experiments in the US and Israel with participants from both economics and non-economics majors. In the experiments, participants face a tradeoff between profit maximization, that is the market norm and workers welfare, that is the social norm. We use priming to manipulate the cues that the participants receive before they make their decision. We find that when participants receive cues signaling that the decision has an economic context, both economics and non-economics students tend to maximize profits. When the participants receive cues emphasizing social norms, on the other hand, both economics and non-economics students are less likely to maximize profits. We conclude that some of the differences found between the decisions of economics and non-economics students can be explained by contextual cues. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.03893&r=exp |
| By: | Charlotte Cordes; Jana Friedrichsen; Simeon Schudy |
| Abstract: | Procrastination is often attributed to time-inconsistent preferences but may also arise when individuals derive anticipatory utility from holding optimistic beliefs about their future effort costs. This study provides a rigorous empirical test for this notion of ‘motivated procrastination’. In a longitudinal experiment over four weeks, individuals must complete a cumbersome task of unknown length. We find that exogenous variation in scope for motivated reasoning results in optimistic beliefs among workers, which causally increase the deferral of work to the future. The roots for biased beliefs stem from motivated memory, such that procrastination may persist even if uncertainty is eventually resolved. |
| Keywords: | anticipatory utility, beliefs, memory, motivated cognition, procrastination, real effort, task allocation |
| JEL: | C91 D83 D84 D90 D91 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11072&r=exp |
| By: | Ege Aksu; Sidhya Balakrishnan; Eric Bettinger; Jonathan S. Hartley; Michael S. Kofoed; Dubravka Ritter; Douglas A. Webber |
| Abstract: | We conduct a survey-based experiment with 2, 776 students at a non-profit university to analyze income insurance demand in education financing. We offered students a hypothetical choice: either a federal loan with income-driven repayment or an income-share agreement (ISA), with randomized framingof downside protections. Emphasizing income insurance increased ISA uptake by 43%. We observe that students are responsive to changes in contract terms and possible student loan cancellation, which is evidence of preference adjustment or adverse selection. Our results indicate that framing specific terms can increase demand for higher education insurance to potentially address risk for students with varying outcomes. |
| Keywords: | Adverse Selection; Education Finance; Higher Education; Income Share Agreements; Student Loans |
| JEL: | G51 I22 H81 D14 D82 |
| Date: | 2024–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2024-24&r=exp |
| By: | Benjamin S. Manning; Kehang Zhu; John J. Horton |
| Abstract: | We present an approach for automatically generating and testing, in silico, social scientific hypotheses. This automation is made possible by recent advances in large language models (LLM), but the key feature of the approach is the use of structural causal models. Structural causal models provide a language to state hypotheses, a blueprint for constructing LLM-based agents, an experimental design, and a plan for data analysis. The fitted structural causal model becomes an object available for prediction or the planning of follow-on experiments. We demonstrate the approach with several scenarios: a negotiation, a bail hearing, a job interview, and an auction. In each case, causal relationships are both proposed and tested by the system, finding evidence for some and not others. We provide evidence that the insights from these simulations of social interactions are not available to the LLM purely through direct elicitation. When given its proposed structural causal model for each scenario, the LLM is good at predicting the signs of estimated effects, but it cannot reliably predict the magnitudes of those estimates. In the auction experiment, the in silico simulation results closely match the predictions of auction theory, but elicited predictions of the clearing prices from the LLM are inaccurate. However, the LLM's predictions are dramatically improved if the model can condition on the fitted structural causal model. In short, the LLM knows more than it can (immediately) tell. |
| JEL: | D0 D9 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32381&r=exp |
| By: | Iván Barreda-Tarrazona (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Ainhoa Jaramillo-Gutiérrez (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Marina Pavan (LEE & Economics Department, Universitat Jaume I, Castellón-Spain); Gerardo Sabater-Grande (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | We gather information from a large laboratory sample comprising 1161 subjects and study gender differences in altruism using a dual-role dictator game. For robustness purposes, we control for factors potentially affecting the role of gender in dictator giving, such as the subject's age, cognitive ability, and personality traits, together with the dictator's response time and self-reported emotions motivating the decision. We find that women behave in a significantly more generous way than men: after controlling for the factors mentioned above, females transfer 7.5 percentage points more of their endowment than males. The only factor moderating this relationship between gender and dictator giving is agreeableness, which increases transfers significantly more for males than for females. |
| Keywords: | altruism; gender differences; dictator game; big five personality traits; cognitive ability; emotions. |
| JEL: | C91 C72 D64 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2024/03&r=exp |
| By: | Teodora Boneva (University of Bonn); Thomas Buser (University of Amsterdam and Tinbergen Institute); Armin Falk (University of Bonn); Fabian Kosse (University of Würzburg) |
| Abstract: | We investigate the role played by the social environment in the development of gender differences in competitiveness and earnings expectations. First, we find that the gender gap in competitiveness and earnings expectations is more pronounced among adolescents with low socioeconomic status (SES). We further document that there is a positive association between the competitiveness of mothers and daughters, but not between mothers and sons. Second, we show that a randomized mentoring intervention that exposes low-SES children to predominantly female role models causally affects girls' willingness to compete and narrows both the gender gap in competitiveness as well as earnings expectations. |
| Keywords: | competitiveness, gender, socioeconomic status, inequality, earnings expectations |
| JEL: | I24 I26 D90 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:301&r=exp |
| By: | Tim Kaiser; Annamaria Lusardi |
| Abstract: | This article provides a concise narrative overview of the rapidly growing empirical literature on financial literacy and financial education. We first discuss stylized facts on the demographic correlates of financial literacy. We next cover the evidence on the effects of financial literacy on financial behaviors and outcomes. Finally, we review the evidence on the causal effects of financial education programs focusing on randomized controlled trial evaluations. The article concludes with perspectives on future research priorities for both financial literacy and financial education. |
| Keywords: | financial education, financial literacy, financial behavior |
| JEL: | G53 D14 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11070&r=exp |
| By: | Nicolas Jacquemet (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Jason F. Shogren (Departement of Economics and Finance, University of Wyoming - UW - University of Wyoming); Adam Zylbersztejn (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Social norms like the mutual belief in reciprocity facilitate economic exchange. But this reciprocity norm requires trust among traders, which can be challenging to create among strangers even with communication. The honesty oath is a time-honored mechanism that societies use to overcome this challenge-taking a solemn oath to tell the truth sends a trustworthy signal of real economic commitment given incomplete contracts. Herein we explore how the truth-telling oath creates trust within the sequential reciprocity trust game with pre-play, fixed-form, and cheap-talk communication. Four key results emerge: (1) communication under oath creates more trust and cooperative behavior; but (2) the oath induces a selection effect-it makes people more wary of using communication as a signal. (3) Although the overall net effect on cooperation is positive, the oath cannot reverse a general decay of cooperation over time. (4) By comparing the oath's performance to mild and deterrent fines for deception, we find that the oath is behaviorally equivalent to mild fines. The deterrent fine induces the highest level of cooperation. |
| Keywords: | fine, Trust game, cooperation, communication, commitment, deception, oath |
| Date: | 2023–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-04391214&r=exp |
| By: | Tim Kaiser; Annamaria Lusardi |
| Abstract: | This article provides a concise narrative overview of the rapidly growing empirical literature on financial literacy and financial education. We first discuss stylized facts on the demographic correlates of financial literacy. We next cover the evidence on the effects of financial literacy on financial behaviors and outcomes. Finally, we review the evidence on the causal effects of financial education programs focusing on randomized controlled trial evaluations. The article concludes with perspectives on future research priorities for both financial literacy and financial education. |
| JEL: | D14 G53 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32355&r=exp |
| By: | Joris Wauters (Economics and Research Department, National Bank of Belgium); Zivile Zekaite (Irish Economic Analysis Division, Central Bank of Ireland); Garo Garabedian (Monetary Policy Division, Central Bank of Ireland) |
| Abstract: | The ECB concluded its strategy review in 2021 with a plan to include owner-occupied housing (OOH) costs in its inflation measure in the future. This paper uses the Bundesbank’s online household panel to study how household expectations would react to this change. We conducted a survey experiment with different information treatments and compared long-run expectations for euro area overall inflation, interest rates, and OOH inflation. Long-run expectations are typically higher for OOH inflation than overall inflation, and both are unanchored from the ECB’s target at the time of the survey. We find significantly higher inflation expectations under the treatment where OOH costs are assumed to be fully included in the inflation measure. This information effect is heterogeneous as, among others, homeowners and respondents with low trust in the ECB react more strongly. However, inflation expectations remain stable when information about past OOH inflation is also given. Careful communication design could thus prevent expectations from becoming more de-anchored. |
| Keywords: | Owner-occupied housing costs, survey experiment, inflation measurement, inflation expectations, ECB |
| JEL: | D83 D84 E31 E50 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202405-449&r=exp |
| By: | Bosch, Oriol J. (The London School of Economics and Political Science); Asensio, Marc; Roberts, Caroline |
| Abstract: | Smartphones are now ubiquitous in daily life, requiring the development of accurate methodologies to study their impact on various aspects of human experience. A promising approach to collect mobile log data is to ask participants to donate, in the context of online surveys, the data that is already available to them through features such as iOS Screen Time and Android Digital Wellbeing. This approach grants participants control over the data they share while providing researchers with valuable observational insights into their mobile and app behaviours. However, the active involvement required from participants poses challenges, leading to low compliance rates and potential biases in the final sample of donors. This study investigates whether the method used to collect data donations, and the incentives provided, have an impact on compliance rates, and the subsequent composition of the sample. Specifically, we implemented a 2 x 3 between-subject web survey experiment (N = 872) in a research-led probability-based panel in Switzerland. Participants were randomly asked to capture and share their data through screenshots, video recordings, and by manual imputation (which we call enhanced recall). Results show that, while compliance rates are very low when using screenshots and video recordings as data donation methods, almost two thirds of participants donated their data by manually imputing their log data. The methods also differ in terms of sample composition, with enhanced recall introducing fewer biases. Overall, our study sheds light on maximizing compliance in data donation studies, offering insights for researchers studying mobile and app usage. |
| Date: | 2024–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:q8v35&r=exp |
| By: | Philip Oreopoulos; Chloe Gibbs; Michael Jensen; Joseph Price |
| Abstract: | Mastery learning - the process by which students must demonstrate proficiency with a single topic before moving on - is well recognized as one of the most effective ways to learn, yet many teachers struggle or remain unsure about how to implement it into a classroom setting. This study evaluates a program to encourage greater mastery learning through technology and proactive continuous teacher support. Focusing on elementary and middle school mathematics, teachers receive weekly coaching in how to use Computer Assisted Learning (CAL) for helping students follow a customized roadmap of incremental progress. Results from two field experiments indicate significant Intent To Treat effects on math performance of 0.12 - 0.22 standard deviations. Further analysis indicates that these gains are from students in classrooms with at least an average of 35 minutes of practice per week. Teachers able to achieve high-dosage practice have a high degree of initial buy-in, a clear implementation strategy for when practice occurs, and a willingness to closely monitor progress and follow-up with struggling students. |
| JEL: | I2 J18 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32388&r=exp |
| By: | Raymond Kluender; Neale Mahoney; Francis Wong; Wesley Yin |
| Abstract: | Two in five Americans have medical debt, nearly half of whom owe at least $2, 500. Concerned by this burden, governments and private donors have undertaken large, high-profile efforts to relieve medical debt. We partnered with RIP Medical Debt to conduct two randomized experiments that relieved medical debt with a face value of $169 million for 83, 401 people between 2018 and 2020. We track outcomes using credit reports, collections account data, and a multimodal survey. There are three sets of results. First, we find no impact of debt relief on credit access, utilization, and financial distress on average. Second, we estimate that debt relief causes a moderate but statistically significant reduction in payment of existing medical bills. Third, we find no effect of medical debt relief on mental health on average, with detrimental effects for some groups in pre-registered heterogeneity analysis. |
| Keywords: | debt relief, medical debt, health care, mental health, access to credit |
| JEL: | G51 I10 I18 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11074&r=exp |
| By: | Günnur Ege Bilgin; Cavit Görkem Destan |
| Abstract: | We present a model demonstrating politicians strategically adopt extreme positions even when the voters are homogeneous and moderate. We examine the behavior of voters and electoral candidates under the assumption that the salience of political issues affects voting decisions through voter preferences. Voters have limited attention, which is unintentionally captured by distinctive policies. We demonstrate that candidates who differ in their budget constraints and voters with such limited attention can account for extremist policies, even though voters are identical in their preferences. Subsequently, we examine the elections with decoy candidates unlikely to win. Even though these candidates do not attract the voters, they might still influence the election outcome by altering salience. Moreover, we provide experimental evidence that salience affects consumer preferences and election outcomes using a representative sample of Turkey's vote base. |
| Keywords: | salience bias, extremism |
| JEL: | D72 D91 C9 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_542&r=exp |
| By: | Meles, Tensay Hadush (Economic and Social Research Institute, Ireland); Lokina, Razack (University of Dar es Salaam); Mtenga, Erica Louis (Georgia State University); Tibanywana, Julieth Julius (School of Economics, University of Dar es Salaam, Tanzania) |
| Abstract: | Stated preference studies are often based on the assumptions that proposed outcomes would be realized with certainty and respondents believe their survey responses are consequential. This paper uses split sample treatments to test whether survey consequentiality and outcome uncertainty lead to differences in welfare measures, focusing on a discrete choice experiment on improving quality of electricity supply among business enterprises in Tanzania. Our results show that while survey consequentiality and outcome uncertainty have some influence on preferences and willingness to pay (WTP) estimates for certain attributes, they do not significantly affect overall welfare estimates. The findings highlight that incorporating uncertainty and survey consequentiality into a stated preference study could improve its credibility but may not have substantial economic or statistical imp |
| Keywords: | Stated preferences; Survey consequentiality; Outcome uncertainty; Discrete choice experiment; Power outages; Business enterprises; Tanzania |
| JEL: | D22 D81 L94 Q58 |
| Date: | 2023–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunefd:2023_016&r=exp |
| By: | Huang, Lingxi; Guenther, Benno |
| Abstract: | The disposition effect is one of the most prominent and widely studied behavioral biases observed among investors. It describes the tendency to close out winning investments prematurely while holding on to losing ones for too long and is generally associated with reduced investment returns. Researchers have explored various debiasing strategies and interventions to mitigate the disposition effect and its detrimental impact on returns. We summarize a between-subject experiment with n = 132 UK participants testing the impact of an informational feedback-like intervention to mitigate the disposition effect, informing participants about the disposition effect. Moreover, we re-examine our intervention's impact in the follow-up measurements which are two weeks and again three months after the first measurement. We find our intervention to have a significant impact, reducing the disposition effect in the first measurement. In addition, we still find a significant impact of the intervention, reducing the disposition effect after two weeks, while no significant impact is observed at the three-month point.While we find a higher disposition effect to be associated with lower returns for one measurement, the opposite is true for the other two measurements. Moreover, the intervention had a return reducing impact for one measurement and no significant impact for the other two. Overall, our study shows a promising intervention that may be readily deployed among retail investors with a somewhat lasting impact to mitigate the disposition effect. However, our study also shows that the relationship between the disposition effect and investment returns is nuanced. |
| Keywords: | disposition effect; behavioral finance; trading biases; retail investors; investment decision-making; REF fund |
| JEL: | J1 |
| Date: | 2024–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122579&r=exp |
| By: | Hassan Afrouzi; Alexander Dietrich; Kristian Myrseth; Romanos Priftis; Raphael Schoenle |
| Abstract: | We document novel survey-based facts on preferred long-run inflation rates among U.S. consumers. Consumers on average prefer a 0.20% annual inflation rate, considerably below the Federal Reserve’s 2% target. Inflation preferences not only correlate with demographic and socioeconomic characteristics, but also with economic reasoning. A randomized control trial reveals that two narratives based on economic models—describing how inflation lowers the real value of wages as well as money holdings—affect inflation preferences. While our results can inform the design of central bank communication on inflation targets, they also raise questions about the alignment between such targets and consumer preferences. |
| JEL: | E58 E71 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32379&r=exp |
| By: | Esponda, Ignacio; Vespa, Emanuel; Yuksel, Sevgi |
| Abstract: | We experimentally document persistence of suboptimal behavior despite ample opportunities to learn from feedback in a canonical updating problem where people suffer from base-rate neglect. Our results provide insights on the mechanisms hindering learning from feedback. Importantly, our results suggest mistakes are more likely to be persistent when they are driven by incorrect mental models that miss or misrepresent important aspects of the environment. Such models induce confidence in initial answers, limiting engagement with and learning from feedback. We substantiate these insights in an alternative scenario where individuals involved in a voting problem overlook the importance of being pivotal. (JEL D83, D91) |
| Keywords: | Economics, Applied Economics, Mental Health, Brain Disorders, Behavioral and Social Science, Mental health, Good Health and Well Being, Commerce, Management, Tourism and Services, Commerce, management, tourism and services |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsdec:qt8cb387t8&r=exp |