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on Experimental Economics |
| By: | Gabriele Camera (Economic Science Institute, Chapman University); James Gilmore (Economic Science Institute, Chapman University); Marilyn Giselle Hazlett (Economic Science Institute, Chapman University); Jason Shachat (Durham University, Durham University Business School); Bochen Zhu (Wuhan University, Economics and Management School) |
| Abstract: | We study within- and cross-culture interaction in a Stag Hunt game, using a controlled online experiment with Chinese and American participants. We fnd that cross-culture interactions can have a positive impact on efciency. American participants, particularly females, more frequently selected the efcient but risky action when facing a Chinese counterpart. Chinese male participants, instead, less frequently selected the efcient but risky action when facing an American counterpart. These behavioral asymmetries do not support the notion of cultural equivalence, nor the hypothesis that multiculturalism fosters strategic uncertainty. |
| Keywords: | Coordination games, Online experiment, Cultural biases, Gender diferences. |
| JEL: | C92 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:24-13 |
| By: | Robert Dur; Arjan Non; Paul Prottung; Benedetta Ricci |
| Abstract: | In many public policy areas, randomized policy experiments can greatly contribute to our knowledge of the effects of policies and can thus help to improve public policy. However, policy experiments are not very common. This paper studies whether a lack of appreciation for policy experiments among voters may be the reason for this. Collecting survey data representative of the Dutch electorate, we find clear evidence contradicting this view. Voters strongly support policy experimentation and particularly so when they do not hold a strong opinion about the policy. In a subsequent survey experiment among a selected group of Dutch politicians, we find that politicians conform their expressed opinion about policy experiments to what we tell them the actual opinion of voters is. |
| Keywords: | policy experiments, randomized controlled trials, voters, politicians, public policy, survey experiment, conformism |
| JEL: | C93 D72 D78 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11194 |
| By: | Jean-François Gajewski (Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon); Marco Heimann; Pierre-Majorique Léger; Prince Teye |
| Abstract: | This article studies whether nudges – that is, gentle alterations of people's behaviour – increase audit quality. Although the utility of nudges is well-established in behavioural sciences, their applicability and efficacy have been less studied in accounting and auditing. To bridge this knowledge gap, the study extends nudge theory to financial audits, offering experimental evidence of the impact of social norms and justification nudges on auditor behaviour. A factorial 2 × 2 between-subject experiment (social norms and justification) shows that nudges amplify professional skepticism, a critical indicator of audit quality. A follow-up eye-tracking experiment involving an audit task identifies the underlying cognitive mechanism of this effect; nudges heighten auditors' visual attention to pertinent information, thereby refining their evaluations of audit evidence and increasing their professional skepticism. |
| Keywords: | eye-tracking, behavioural auditing, nudge, Professional skepticism |
| Date: | 2024–07–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04636343 |
| By: | Yonas Alem; John Loeser; Aprajit Mahajan |
| Abstract: | The implications of commonly used money earlier or later (MEL) games for intertemporal behavior depend critically upon subjects’ choice bracketing. If subjects bracket narrowly, responses reflect preferences independent of subjects’ financial environment. Alternatively, if subjects bracket broadly, responses reflect subjects’ marginal returns to investment. We test both hypotheses in a lab-in-the-field experiment, which involves repeated MEL games, a large unconditional cash transfer, and an illiquid savings product. Subjects do not narrowly bracket – randomized cash transfers induce greater patience in MEL choices. Subjects do not broadly bracket either – they fail to arbitrage across equivalent MEL and savings opportunities. We develop a conceptual framework and present evidence that narrowly bracketing subjects drive the predictive power of MEL outcomes for financial choices, providing a rationale for the common practice of interpreting MEL choices as a proxy for time preferences rather than financial environment. |
| JEL: | O10 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32683 |
| By: | Lacey, Lindsey (Allegheny County Department of Human Services); Mishra, Nirajana (Northeastern University); Mukherjee, Priya (University of Wisconsin-Madison); Prakash, Nikhilesh (Stockholm School of Economics); Prakash, Nishith (Northeastern University); Quinn, Diane (University of Connecticut); Sabarwal, Shwetlena (World Bank); Saraswat, Deepak (University of Connecticut) |
| Abstract: | We conducted a randomized control trial to study the impact of two information messages aimed at reducing the stigma associated with mental illness on the willingness to seek mental healthcare among adults in Nepal. The first intervention shares information about the prevalence of mental health issues and the efficacy of treatment. The second intervention shares information about the mental health struggles of a Nepali celebrity and how he benefited from treatment. We find three results. First, compared to a no-information control group, both interventions increase participants' stated willingness to seek mental health treatment. This effect is driven by participants with high personal and anticipated stigma, less severe symptoms of depression and anxiety, and who hold strong beliefs about conformity to masculinity. Second, the impact on participants' stated willingness to seek mental health treatment mirrors their willingness to pay for counseling. Third, participants are, on average, more likely to report willingness to seek help when the enumerator is female. |
| Keywords: | mental health, stigma, prejudice, seeking help, celebrity, Nepal |
| JEL: | I12 I15 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17166 |
| By: | Gill, David (Purdue University); Knepper, Zachary (Purdue University); Prowse, Victoria L. (Purdue University); Zhou, Junya (University of Texas at Dallas) |
| Abstract: | We explore the influence of cognitive ability and judgment on strategic behavior in the beauty contest game (where the Nash equilibrium action is zero). Using the level-k model of bounded rationality, cognitive ability and judgment both predict higher level strategic thinking. However, individuals with better judgment choose zero less frequently, and we uncover a novel dynamic mechanism that sheds light on this pattern. Taken together, our results indicate that fluid (i.e., analytical) intelligence is a primary driver of strategic level-k thinking, while facets of judgment that are distinct from fluid intelligence drive the lower inclination of high judgment individuals to choose zero. |
| Keywords: | cognitive ability, judgment, fluid intelligence, matrix reasoning, beauty contest, strategic sophistication, level-k, experiment, game theory |
| JEL: | C92 C72 D91 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17168 |
| By: | Vojtĕch Bartŏs; Silvia Castro; Kristina Czura; Timm Opitz; Vojtech Bartos |
| Abstract: | We analyze gender bias in entrepreneurship finance. Access to finance is crucial for entrepreneurial success, yet women are particularly constrained. We structurally unpack whether loan officers evaluate business ideas and implementation constraints differently for male and female entrepreneurs, for both individual entrepreneurs and for entrepreneurial teams. In a lab-in-the-field experiment with Ugandan loan officers, we document gender bias against individual female entrepreneurs, but no bias for entrepreneurial teams. The bias is not driven by animus but by differential beliefs about women’s implementation constraints in running a business. Policies aimed at team formation and alleviating family-related constraints may help to promote equal access to finance, ultimately stimulating growth. |
| Keywords: | gender bias, access to finance, entrepreneurship finance, business evaluations, teams, lab-in-the-field experiment |
| JEL: | C90 D91 G21 J16 L25 L26 O16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11205 |
| By: | Luna Bellani; Kattalina Berriochoa; Mark Kapteina; Guido Schwerdt |
| Abstract: | We study the effects of information on attitudes towards inheritance taxation using survey experiments fielded in Germany. We show that information about tax allowances increases demand for higher taxes and shifts public opinion from favoring abolition to supporting the tax. Effects are primarily due to a prevalent underestimation of tax allowances and the alteration of people’s expectations of being affected by such taxes. In contrast, information highlighting the increasing proportion of inherited wealth only negligibly affects policy demand. Our results suggest that pocketbook motives and misinformation may contribute to explaining the paradox of limited demand for inheritance taxation despite growing inequality concerns. |
| Keywords: | capital taxation, equality of opportunity, inheritance tax, information, randomized experiment |
| JEL: | H20 D72 D83 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11189 |
| By: | Eva Vivalt; Elizabeth Rhodes; Alexander W. Bartik; David E. Broockman; Sarah Miller |
| Abstract: | We study the causal impacts of income on a rich array of employment outcomes, leveraging an experiment in which 1, 000 low-income individuals were randomized into receiving $1, 000 per month unconditionally for three years, with a control group of 2, 000 participants receiving $50/month. We gather detailed survey data, administrative records, and data from a custom mobile phone app. The transfer caused total individual income to fall by about $1, 500/year relative to the control group, excluding the transfers. The program resulted in a 2.0 percentage point decrease in labor market participation for participants and a 1.3-1.4 hour per week reduction in labor hours, with participants’ partners reducing their hours worked by a comparable amount. The transfer generated the largest increases in time spent on leisure, as well as smaller increases in time spent in other activities such as transportation and finances. Despite asking detailed questions about amenities, we find no impact on quality of employment, and our confidence intervals can rule out even small improvements. We observe no significant effects on investments in human capital, though younger participants may pursue more formal education. Overall, our results suggest a moderate labor supply effect that does not appear offset by other productive activities. |
| JEL: | H0 J01 J08 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32719 |
| By: | Lu, Kelin |
| Abstract: | Intergenerational transfers are widespread and significantly unequal. This study explores people’s fairness preferences regarding inequality caused by wealth transfers from economically advantaged parents through a large-scale experiment. In the experiment, workers and their parents completed assignments. Workers’ earnings were derived either from their own merit or luck, or from wealth transferred by their parents, also earned via merit or luck. Impartial spectators from the U.S. and China then made real distributive decisions. Our results indicate a pronounced aversion among Americans to inequalities stemming from intergenerational transfers compared with those from self-earned wealth. In contrast, the Chinese exhibited only a mild aversion. Moreover, Americans showed a preference for intergenerational meritocracy, more accepting inequalities in transferred wealth when it resulted from parental merit rather than parental luck—a preference not shared by the Chinese. Further experiments suggest that attitudes toward unequal intergenerational wealth transfers are primarily driven by whether parents possess wealth to transfer rather than the choice to transfer it |
| Keywords: | Fairness, wealth inequality, social preference, intergenerational transfer |
| JEL: | D3 D6 D9 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121451 |
| By: | Esther Duflo; Pascaline Dupas; Elizabeth Spelke; Mark P. Walsh |
| Abstract: | We provide experimental evidence on the intergenerational impacts of secondary education subsidies in a low-income context, leveraging a randomized controlled trial and 15-year longitudinal follow-up. For young women, receiving a scholarship for secondary school delays childbearing and marriage, and reduces unwanted pregnancies. Female scholarship recipients are more likely to marry a partner with tertiary education and their children have better early childhood development outcomes. In particular, we document a 45% reduction in under-three mortality as well as cognitive development gains of 0.25 standard deviations of test scores once children are of school age. The primary mechanism seems to be that more-educated caregivers have the knowledge and skills to safeguard their children’s health and stimulate their cognitive development. In contrast, we find no evidence of a positive impact for the children of male scholarship recipients, who tend to marry less educated partners. Together, these results suggest a key role for maternal education in child outcomes. We also estimate the cost-benefit ratio for secondary school scholarships and find that the impact on child survival alone is sufficient to make them a highly cost-effective investment. |
| JEL: | I26 J13 O15 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32742 |
| By: | Damon Jones; David Molitor; Julian Reif |
| Abstract: | We study habit formation in annual biometric health screenings using a field experiment that randomly assigned financial incentives to 4, 799 employees over three years. Completing the first screening raised subsequent screenings by 32.4-36.0 percentage points (84%-90%) annually. Habit formation was similar whether employees were offered screenings as part of a comprehensive wellness program or just screenings alone, suggesting such habits can develop without frequent interactions. We rule out inattention as an explanation, using a subsample assigned more salient incentives. The long-run effect stems from the initial decision to participate, indicating a habit formation process with a one-shot mechanism. |
| JEL: | H0 I1 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32745 |
| By: | Anujit Chakraborty; Luca Henkel |
| Abstract: | In prosocial decisions, decision-makers are inherently uncertain about how their decisions impact others’ utility – we call this interpersonal uncertainty. We show that people’s response to interpersonal uncertainty shapes well-known patterns of prosocial behavior. First, using standard social allocation decisions, we replicate the classic patterns of ingroup favoritism, merit-based fairness ideals, and self-favoring behavior in dictator games. We then show that these patterns also arise in non-social decisions which have no consequences for others and instead solely reflect responses to interpersonal uncertainty. Behavior across social and non-social decisions is highly correlated, and self-reported interpersonal uncertainty predicts behavior in both situations. Moreover, exogenously varying interpersonal uncertainty shifts prosocial behavior in the direction that avoids such uncertainty. Our results quantify how beliefs in the form of inter-personal uncertainty influence prosocial behavior, which we estimate to be of similar importance to social preferences. |
| Keywords: | prosocial behaviour, social preferences, ingroup versus outgroup decisions, dictator games, fairness preferences, interpersonal uncertainty |
| JEL: | C91 D01 D91 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11193 |
| By: | Blimpo, Moussa (University of Toronto); Carneiro, Pedro (University College London); Jervis Ortiz, Pamela (Universidad de Chile); Lahire, Nathalie (World Bank); Pugatch, Todd (Oregon State University) |
| Abstract: | We study two early childhood programs in The Gambia for children between 0 and 3 years of age. The basic version of the program, called Baby Friendly Community Initiative (BFCI), provides parents with child health and nutrition information delivered through home visits and community meetings. A second version, called BFCI+, is center-based and adds cognitive stimulation to the basic version of the program through activities with children. Villages were randomly assigned to one of two versions of the program or to a control group that received neither. The BFCI+ program had moderate impacts on parental investments in children in terms of resources and time. Child language development improved for well-off parents or parents in the more well-off region. Poorer parents invested more in time spent with the children, whereas those who were more materially well-off spent more financial resources on the children. The basic version of the program, the BFCI, had no detectable impacts. |
| Keywords: | early childhood development, cognitive stimulation, teacher training, The Gambia, randomized controlled trials, Malawi Developmental Assessment Tool |
| JEL: | I25 I38 O15 O22 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17133 |
| By: | Zhen, Shihang; Xia, Xianli; Huang, Luchen; Cao, Yihan; Fu, Hanliang; Ren, Yanjun |
| Abstract: | With the prominence of nutrition-related health issues worldwide, functional food is supposed to be an efficient way to address this challenge by achieving its nutrition and health benefits. However, whether consumers are willing to pay (WTP) for high-nutritional value foods of this kind and what is the role of consumers’ risk preferences in their WTPs are unclear. This study employs a discrete choice experiment (DCE) to investigate the effect of risk preferences on consumers’ preferences and WTPs for functional food, focusing on four attributes of dairy products: origin, organic label, functionality and price. We also seek to understand the physiological mechanisms underlying this effect by a lab experiment using eye-tracking technology. The results show that consumers have various preferences and WTPs for different attributes of milk, but they are reluctant to pay for functional milk. Compared to consumers with low-risk preferences, consumers with high-risk preferences are more willing to purchase functional milk. The evidence from eye-tracking experiments indicates that visual attention to the attributes considered positively correlates with their consumption preference. Consumers with high-risk preferences tend to pay more attention to the functional attribute and therefore have a higher prob- ability of purchasing functional milk. This study implies that consumers’ risk preferences should be considered when promoting consumers to purchase functional food, as different consumers have significantly distinct preferences. |
| Keywords: | Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344293 |
| By: | John List; Ioannis Pragidis; Michael Price |
| Abstract: | Prosumers are becoming increasingly important in global energy consumption and production. We partner with an energy service provider in Sweden to explore the economics facing such agents by conducting a natural field experiment over a 32-month period. As a policy instrument, we explore how simple nudges affect choices on both the consumption and production sides. Importantly, with the added flexibility to influence both sides of the market, and with a rich data set that permits an analysis of intraday, intraweek, and seasonal variation, we can detail effects on overall conservation efforts, intertemporal substitution, load shifting, and net purchases from the grid. The overarching theme is that nudges have the potential to have an even greater impact on the energy market with prosumers compared to their portmanteau components. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:feb:natura:00791 |
| By: | Luis Oberrauch; Tim Kaiser |
| Abstract: | We study the effects of 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 robo-advised investment in Exchange Traded Funds (ETFs). Three months after the intervention, the video treatment enhanced financial knowledge scores by more than 0.5 standard deviations. Conversely, the vouchers showed no effect. The findings suggest that subsidies encouraging robo-advised investment into ETFs cannot substitute direct financial education in our setting, and there is no evidence for complementarity between these interventions. |
| Keywords: | digital intervention, financial literacy, Financial knowledge, financial education, robo-advisor, ETFs |
| JEL: | G53 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11187 |
| By: | Salvatore Nunnari; Eugenio Proto; Aldo Rustichini |
| Abstract: | Rational choice theories assume that voters accurately assess the outcomes of policies. However, many important policies—such as regulating prices and introducing Pigouvian taxation—yield outcomes through indirect or equilibrium effects that may differ from their direct effects. Citizens may underestimate these effects, leading to a demand for bad policy, that is, opposition to reforms that would increase welfare or support for reforms that would decrease it. This appreciation might be linked to cognitive functions, raising important research questions: Do cognitive abilities influence how individuals form preferences regarding policies, especially untried reforms? If so, what is the underlying mechanism? We use a simple theoretical framework and an experiment to show that enhanced cognitive abilities may lead to better policy choices. Moreover, we emphasize the crucial role of beliefs about other citizens’ cognitive abilities. These findings have important policy implications as they suggest that educational programs developing cognitive skills or interventions increasing trust in others’ understanding could improve the quality of democratic decision-making in our societies. |
| Keywords: | voting, policy reform, political failure, cognition, experiment |
| JEL: | C90 D72 D91 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11206 |
| By: | Yuriy Gorodnichenko; Xiao Yin |
| Abstract: | We combine a customized survey and randomized controlled trial (RCT) to study the effect of higher-order beliefs on U.S. retail investors’ portfolio allocations. We find that investors’ higher-order beliefs about stock market returns are correlated with but distinct from their first-order beliefs. Furthermore, the differences between the two vary systematically according to investor characteristics. We use information treatments in the RCT to create exogenous differential variations in first- and higher-order beliefs. We find that an exogenous increase in first-order beliefs increases the portfolio share allocated to the stock market (risky assets), while an exogenous increase in higher-order beliefs reduces it. |
| JEL: | C83 D84 G11 G12 G51 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32680 |
| By: | Gorodnichenko, Yuriy (University of California, Berkeley); Yin, Xiao (University College London) |
| Abstract: | We combine a customized survey and randomized controlled trial (RCT) to study the effect of higher-order beliefs on U.S. retail investors' portfolio allocations. We find that investors' higher-order beliefs about stock market returns are correlated with but distinct from their first-order beliefs. Furthermore, the differences between the two vary systematically according to investor characteristics. We use information treatments in the RCT to create exogenous differential variations in first- and higher-order beliefs. We find that an exogenous increase in first-order beliefs increases the portfolio share allocated to the stock market (risky assets), while an exogenous increase in higher-order beliefs reduces it. |
| Keywords: | expectations, surveys, higher-order beliefs, asset pricing |
| JEL: | G11 G12 G51 D84 C83 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17120 |
| By: | Blouin, Arthur (University of Toronto); Mani, Anandi (University of Oxford); Mukand, Sharun W. (University of Warwick Author-Sgroi, Daniel; University of Warwick & IZA) |
| Abstract: | Can inequality in rewards result in an erosion in broad-based support for meritocratic norms? We hypothesize that unequal rewards between the successful and the rest, drives a cognitive gap in their meritocratic beliefs, and hence their social preferences for redistribution. Two separate experiments (one in the UK and the other in the USA) show that the elite develop and maintain “meritocratic bias” in the redistributive taxes they propose, even when not applied to their own income: lower taxes on the rich and fewer transfers to the poor, including those who failed despite high effort. These social preferences at least partially reflect a selfserving meritocratic illusion that their own high income was deserved. A Wason Card task confirms that individuals maintain their illusion of being meritocratic, by not expending cognitive effort to process information that may undermine their self-image even when incentivized to do otherwise. |
| Keywords: | Inequality ; Meritocracy ; Redistribution ; Populism ; Motivated Reasoning ; Social Preferences |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1509 |
| By: | Ricardo Perez-Truglia; Jeffrey Yusof |
| Abstract: | In the United States, there are 741 billionaires with a combined net worth of $5.2 trillion. These billionaires live highly public lives, with some achieving superstar status. Despite growing inequality, billionaires face effective tax rates lower than the average American. Is this due to a lack of public support for taxation? Is it due to misperceptions about billionaires’ lives and careers? To address these questions, we conducted a survey experiment with a sample of 9, 013 Americans. We designed multiple treatments based on research on preferences for redistribution and arguments made by academics, journalists, and the general public to increase taxes on the ultra-wealthy. Our findings reveal significant misperceptions about billionaires, with individuals updating their beliefs in response to information. Contrary to expert predictions that all treatments would positively affect the demand for taxation, most treatments have a null or negative effect. Providing information about the lavish lifestyles of billionaires does have a robust positive effect on the demand for taxation. |
| JEL: | D31 H24 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32712 |
| By: | Eaman Jahani; Benjamin S. Manning; Joe Zhang; Hong-Yi TuYe; Mohammed Alsobay; Christos Nicolaides; Siddharth Suri; David Holtz |
| Abstract: | In an online experiment with N = 1891 participants, we collected and analyzed over 18, 000 prompts to explore how the importance of prompting will change as the capabilities of generative AI models continue to improve. Each participant in our experiment was randomly and blindly assigned to use one of three text-to-image diffusion models: DALL-E 2, its more advanced successor DALL-E 3, or a version of DALL-E 3 with automatic prompt revision. Participants were then asked to write prompts to reproduce a target image as closely as possible in 10 consecutive tries. We find that task performance was higher for participants using DALL-E 3 than for those using DALL-E 2. This performance gap corresponds to a noticeable difference in the similarity of participants' images to their target images, and was caused in equal measure by: (1) the increased technical capabilities of DALL-E 3, and (2) endogenous changes in participants' prompting in response to these increased capabilities. More specifically, despite being blind to the model they were assigned, participants assigned to DALL-E 3 wrote longer prompts that were more semantically similar to each other and contained a greater number of descriptive words. Furthermore, while participants assigned to DALL-E 3 with prompt revision still outperformed those assigned to DALL-E 2, automatic prompt revision reduced the benefits of using DALL-E 3 by 58%. Taken together, our results suggest that as models continue to progress, people will continue to adapt their prompts to take advantage of new models' capabilities. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.14333 |
| By: | Felipe Araujo; Alex Imas; Alistair Wilson |
| Abstract: | We demonstrate the pitfalls when extrapolating behavioral findings across different contexts and decision environments. We focus on regret theory and the use of “regret lotteries” for motivating behavior change. Here, findings from one-shot settings have been used to promote regret as a tool to boost incentives in recurrent decisions across many settings. Using theory and experiments, we replicate regret lotteries as the superior one-shot incentive; however, for repeated decisions the comparative static is entirely reversed. Moreover, the effects are extremely sensitive to details of regret implementation. Our results suggest caution should be used when designing incentive schemes that exploit regret. |
| JEL: | D0 D03 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32759 |
| By: | Fernández, Violeta; Pietrelli, Rebecca; Torero, Maximo |
| Abstract: | Digital agriculture offers promising solutions to meet growing food demands. Investigating whether targeting youth in digital agriculture affects the adoption of good practices is a topic that has been overlooked but holds critical implications for policymakers. This study explores whether providing agricultural information via digital technologies to adolescents can influence household adoption of improved agricultural practices. Leveraging a Randomized Control Trial (RCT) conducted in collaboration with a secondary school in rural Uganda, we examined the transmission of knowledge from students to household members and assessed adoption rates and food loss reductions. To the best of our knowledge, our research is the first to focus on the effectiveness of digital technologies aimed at youth in promoting agricultural practices in Africa, particularly affordable basic farming techniques essential for vulnerable and poorer farmers. Our most conservative estimates indicate that households exposed to agricultural videos through computer classes showed substantial gains in knowledge (with a 16% increase). We find a modest effect on adoption rates, with households whose students were exposed to agricultural videos in the classroom showing twice as much adoption rates than those who were not. We speculate that the joint decision-making process could be a constraint on adoption. Interestingly, the intervention had a greater effect on poorer households and those with more traditional values, indicating that strong family ties may be a pathway for the impact. The insights contribute to bridging the gap between behavioral economics and agricultural adoption, offering practical implications for sustainable agricultural development strategies. |
| Keywords: | Institutional and Behavioral Economics, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods |
| Date: | 2024–07–26 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344380 |
| By: | Aditya, Korekallu Srinivasa; Dagmar, Mithöfer |
| Abstract: | Solar-Powered Irrigation Systems (SPIS) are an important component of India’s effort towards sustainable energy transition and are promoted with financial support under the PM-KUSUM program. In spite of the promise and the policy push, the adoption of SPIS is low. In this paper, we use the Discrete Choice Experiment (DCE) for evaluating the policy attributes in the promotion of SPIS. We selected five attributes of SPIS with different levels for the choice experiment, and a ‘D-efficient’ non-zero prior choice experimental design was used. The data was collected from 500 farmers randomly chosen from 31 villages across Mysore district, Karnataka, India, and analyzed using the random parameter logit model. For a nuanced interpretation and contextualization of the results, follow-up qualitative interviews were conducted. The results highlight that farmers preference, as indicated by the highest part worth, is for a loan with a repayment holiday of three years, followed by guaranteed service provision for 10 years. Given that SPIS is a new technology with a high initial investment, easing liquidity constraints and assuring farmers with guaranteed repair services act as strong incentives to adopt it. These findings can be incorporated into the existing policies so that they align well with farmers' preferences. |
| Keywords: | Environmental Economics and Policy |
| Date: | 2024–07–26 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344382 |
| By: | Undral Byambadalai; Tatsushi Oka; Shota Yasui |
| Abstract: | We propose a novel regression adjustment method designed for estimating distributional treatment effect parameters in randomized experiments. Randomized experiments have been extensively used to estimate treatment effects in various scientific fields. However, to gain deeper insights, it is essential to estimate distributional treatment effects rather than relying solely on average effects. Our approach incorporates pre-treatment covariates into a distributional regression framework, utilizing machine learning techniques to improve the precision of distributional treatment effect estimators. The proposed approach can be readily implemented with off-the-shelf machine learning methods and remains valid as long as the nuisance components are reasonably well estimated. Also, we establish the asymptotic properties of the proposed estimator and present a uniformly valid inference method. Through simulation results and real data analysis, we demonstrate the effectiveness of integrating machine learning techniques in reducing the variance of distributional treatment effect estimators in finite samples. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.16037 |
| By: | Natalie Bau; David J. Henning; Corinne Low; Bryce Steinberg |
| Abstract: | Early fertility is a key barrier to female human capital attainment in sub-Saharan Africa, yet contraceptive take-up remains puzzlingly low, even among educated populations with healthcare access. We study a barrier to hormonal contraceptive uptake that has not been causally tested: the persistent (incorrect) belief that these contraceptives cause later infertility. This belief creates a perceived tradeoff between current and future reproductive control. We use a randomized controlled trial with female undergraduates at the flagship university in Zambia to test two interventions to increase contraceptive use. Despite high rates of sexual activity, low rates of condom-use, and near zero desire for current pregnancy, only 5% of this population uses hormonal contraceptives at baseline. Providing a non-coercive conditional cash transfer to visit a local clinic only temporarily increases contraceptive use. However, pairing this transfer with information addressing fears that contraceptives cause infertility has a larger initial effect and persistently increases take-up over 6 months. This treatment reduces beliefs that contraceptives cause infertility and leads to the take-up of longer-lasting contraceptives. Compliers are more likely to cite fear of infertility as the reason for not using contraceptives at baseline. Eliminating the belief that contraceptives cause infertility would more than triple contraceptive use. |
| JEL: | I10 I12 J10 J13 O10 O12 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32735 |
| By: | Afrouzi, Hassan; Priftis, Romanos; Dietrich, Alexander M.; Myrseth, Kristian Ove R.; Schoenle, Raphael S. |
| Abstract: | We document novel survey-based facts about preferred long-run inflation rates among US consumers. Consumers on average prefer a 0.20% annual inflation rate, well 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 and 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 Classification: C83, E31, E52 |
| Keywords: | household expectations, inflation preferences, survey |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20242957 |
| By: | Moritz A. Drupp; Jasper N. Meya; Björn Bos; Simon Disque |
| Abstract: | We study the heterogeneity of preferences regarding the limited substitutability of environmental public goods vis-a-vis private consumption goods and how it affects the economic valuation of environmental public goods. We show theoretically that mean marginal willingness to pay for an environmental public good decreases in society’s mean substitutability preference and increases in the heterogeneity of individual-level substitutability preferences. We then introduce an experimental framework to elicit individual-level substitutability preferences for the first time directly, which we apply to study general population preferences concerning the trade-off between market goods and forest ecosystem services. We estimate preference parameters for almost 1, 500 individuals and document substantial preference heterogeneity. The majority of individual preferences imply a complementary relationship, with a median elasticity of substitution (complementarity) of around 0.4 (2.5). We show that accounting for heterogeneity in substitutability preferences may considerably increase the societal value attached to environmental public goods. These findings are relevant for environmental cost-benefit analysis and for the comprehensive accounting of public natural capital. |
| Keywords: | substitutability, complementarity, heterogeneous preferences, non-market valuation, experiment, donations, public goods, policy appraisal |
| JEL: | Q51 Q56 H41 D64 C99 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11197 |
| By: | Weidmann, Ben (Harvard Kennedy School); Vecci, Joseph (University of Gothenburg); Said, Farah (Lahore School of Economics); Deming, David (Harvard University); Bhalotra, Sonia R. (University of Warwick) |
| Abstract: | This paper develops a novel method to identify the causal contribution of managers to team performance. The method requires repeated random assignment of managers to multiple teams and controls for individuals' skills. A good manager is someone who consistently causes their team to produce more than the sum of their parts. Good managers have roughly twice the impact on team performance as good workers. People who nominate themselves to be in charge perform worse than managers appointed by lottery, in part because self-promoted managers are overconfident, especially about their social skills. Managerial performance is positively predicted by economic decision-making skill and fluid intelligence – but not gender, age, or ethnicity. Selecting managers on skills rather than demographics or preferences for leadership could substantially increase organizational productivity. |
| Keywords: | teamwork, managers, skills, measurement, experiment |
| JEL: | M54 J24 C90 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17165 |
| By: | Josie Zvelebilova; Saiph Savage; Christoph Riedl |
| Abstract: | How does the presence of an AI assistant affect the collective attention of a team? We study 20 human teams of 3-4 individuals paired with one voice-only AI assistant during a challenging puzzle task. Teams are randomly assigned to an AI assistant with a human- or robotic-sounding voice that provides either helpful or misleading information about the task. Treating each individual AI interjection as a treatment intervention, we identify the causal effects of the AI on dynamic group processes involving language use. Our findings demonstrate that the AI significantly affects what teams discuss, how they discuss it, and the alignment of their mental models. Teams adopt AI-introduced language for both terms directly related to the task and for peripheral terms, even when they (a) recognize the unhelpful nature of the AI, (b) do not consider the AI a genuine team member, and (c) do not trust the AI. The process of language adaptation appears to be automatic, despite doubts about the AI's competence. The presence of an AI assistant significantly impacts team collective attention by modulating various aspects of shared cognition. This study contributes to human-AI teaming research by highlighting collective attention as a central mechanism through which AI systems in team settings influence team performance. Understanding this mechanism will help CSCW researchers design AI systems that enhance team collective intelligence by optimizing collective attention. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.17489 |
| By: | Shuze Chen; David Simchi-Levi; Chonghuan Wang |
| Abstract: | As service systems grow increasingly complex and dynamic, many interventions become localized, available and taking effect only in specific states. This paper investigates experiments with local treatments on a widely-used class of dynamic models, Markov Decision Processes (MDPs). Particularly, we focus on utilizing the local structure to improve the inference efficiency of the average treatment effect. We begin by demonstrating the efficiency of classical inference methods, including model-based estimation and temporal difference learning under a fixed policy, as well as classical A/B testing with general treatments. We then introduce a variance reduction technique that exploits the local treatment structure by sharing information for states unaffected by the treatment policy. Our new estimator effectively overcomes the variance lower bound for general treatments while matching the more stringent lower bound incorporating the local treatment structure. Furthermore, our estimator can optimally achieve a linear reduction with the number of test arms for a major part of the variance. Finally, we explore scenarios with perfect knowledge of the control arm and design estimators that further improve inference efficiency. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.19618 |
| By: | Bocar A. Ba; Abdoulaye Ndiaye; Roman Rivera; Alexander Whitefield |
| Abstract: | We study how negative sentiment around an industry impacts beliefs and behaviors, focusing on demands for racial justice after the murder of George Floyd and the salience of the “defund the police” movement. We assess stakeholder beliefs on the impact of protests on the stock prices of police-affiliated firms. In our survey experiment, laypeople and finance professionals predicted more negative stock price outcomes when they lacked details on the products supplied by such firms. Exposure to narratives about the context of the protests further reduced the prediction accuracy of these groups. In contrast, product information improved the prediction accuracy of respondents. Turning to real-life behavior, we find that mutual funds exposed to protests were 20% less likely to hold police stocks, after the protests, than funds in areas without protests. Political support for maintaining police funding, though in the majority, declined by 4.3 percentage points in protest areas. The salience of the “defund the police” narrative led to significant overreactions in both financial predictions and real-life behavior. |
| JEL: | D72 D74 D84 G41 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32730 |
| By: | Leopoldo Fergusson; José-Alberto Guerra; James A. Robinson |
| Abstract: | Since formal rules can only partially reduce opportunistic behavior, third-party sanctioning to promote fairness is critical to achieving desirable social outcomes. Social norms may underpin such behavior, but they can also undermine it. We study one such norm the "don’t be a toad" norm, as it is referred to in Colombia that tells people to mind their own business and not snitch on others. In a set of fairness games where a third party can punish unfair behavior, but players can invoke the "don’t be a toad" norm, we find that the mere possibility of invoking this norm completely reverses the benefits of third-party sanctioning to achieve fair social outcomes. We establish this is an anti-social norm in a well-defined sense: most players consider it inappropriate, yet they expect the majority will invoke it. To understand this phenomenon we develop an evolutionary model of endogenous social norm transmission and demonstrate that a payoff advantage from adherence to the norm in social dilemmas, combined with sufficient heterogeneity in the disutility of those who view the norm as inappropriate, can generate the apparent paradox of an anti-social norm in the steady-state equilibrium. We provide further evidence that historical exposure to political violence, which increased the ostracization of snitches, raised sensitivity to this norm. |
| JEL: | C91 D74 D91 N46 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32717 |
| By: | Yilong Xu (Utrecht School of Economics, Utrecht University); Mikolaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Nick Hanley (University of Glasgow); Leonhard Lades (University of Stirling); Charles N. Noussair (Eller College of Management, University of Arizona); Steven Tucker (University of Waikato) |
| Abstract: | We consider how people's emotions affect their stated preferences and willingness to pay for changes in environmental quality, focusing on the effect of incidental emotions. We use videos to induce emotional states and test the replicability of the results reported in Hanley et al. (2016). Additionally, we employ a novel methodology - Face reading software - to verify whether the intended emotional states were successfully induced. We find that our treatments succeed in implementing the predicted emotional condition in terms of self-reported emotions, but had a variable effect on measured (estimated) emotional states. We replicate the result from Hanley et al. (2016): induced emotional state has no significant effect on stated preference estimates or on willingness to pay for an environmental quality change. Moreover, we confirm that, irrespective of the treatment assignment or emotional state - be it self-reported or measured - we observe no significant effect of emotion on preference estimates. We conclude that stated preference estimates for environmental change are unaffected by changes in incidental emotions. Our results suggest that preference estimates are robust to the emotional state of the responder. |
| Keywords: | Choice experiments; Laboratory Experiments; Behavioral Economics; Environmental Valuation; Emotions; Cost-Benefit Analysis |
| JEL: | Q51 Q57 D03 |
| Date: | 2024–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:wai:econwp:24/06 |
| By: | Chiara Farronato; Andrey Fradkin; Chris Karr |
| Abstract: | Understanding the behavior of users online is important for researchers, policymakers, and private companies alike. But observing online behavior and conducting experiments is difficult without direct access to the user base and software of technology companies. We introduce Webmunk, an open-source tool designed to make conducting online studies much easier. The user-facing side of Webmunk is a browser extension that can track consumer browsing behavior and experimentally modify consumers experiences as they browse the Internet. It can be installed just like any other browser extension, such as ad blockers. Through this extension, researchers can collect a host of consumer data, from URLs to web page HTML elements, clicks, and scroll positions. The extension can also modify information and change the look of a web page, allowing for researchers to implement interventions that vary across study participants. A key advantage of this approach is that interventions occur while participants are engaging in real world activities such as shopping, browsing the news, using social media, or searching for information. We demonstrate the power of Webmunk by discussing two studies in progress. |
| JEL: | K2 L4 M0 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32694 |
| By: | Marta Pizzetti (EM - EMLyon Business School); Diletta Acuti; Isabella Soscia; Michael Gibbert |
| Abstract: | In four studies, we found that receiving a customized gift leads recipients to appreciate the gift more highly because of vicarious feelings of pride. This vicarious pride is the same feeling that the customizer experiences after having self-customized a product. In the first two experiments with real-life pairs of friends, vicarious pride was documented among recipients of customized gifts. The findings show that the relationship between customization and gift appreciation is mediated by vicarious pride. Study 3 and Study 4 replicate the results of the first series of experiments, and reveal the role of vicarious pride in enhancing state self-esteem and, in turn, gift appreciation. Study 4 also tests the effect of a relational variable (i.e., relationship anxiety) on this relationship. Specifically, relationship anxiety affects vicarious pride, and then consequently state self-esteem and gift appreciation, which are only enhanced by customization when the relationship is not anxious. As a practical implication, this research emphasizes the importance of communicating gift customization to gift recipients to enhance their gift experience and appreciation. |
| Keywords: | customization, gift, pride, state self-esteem, vicarious experiences |
| Date: | 2024–05–27 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04637410 |