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on Experimental Economics |
| By: | Stephen L Cheung; Nathan Rogut |
| Abstract: | We experimentally test an intervention designed to reduce investors’ disposition effect by prompting them to identify their worst asset, from the standpoint of its impact on future portfolio performance. We find that this intervention is mildly effective, and significantly more so for participants who correctly identify their worst asset, and/or sell the asset they identify. We also find that participants who correctly understand diversification in a financial literacy questionnaire exhibit larger disposition effects in the experiment. The latter finding raises concerns over the external validity of standard experimental paradigms used to study the disposition effect. |
| Keywords: | behavioural finance, portfolio choice, disposition effect, diversification. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:syd:wpaper:2024-17 |
| By: | Lindsey Lacey; Nirajana Mishra; Priya Mukherjee; Nikhilesh Prakash; Nishith Prakash; Diane Quinn; Shwetlena Sabarwal; Deepak Saraswat |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11241 |
| By: | Tatsushi Oka; Shota Yasui; Yuta Hayakawa; Undral Byambadalai |
| Abstract: | In this paper, we address the issue of estimating and inferring the distributional treatment effects in randomized experiments. The distributional treatment effect provides a more comprehensive understanding of treatment effects by characterizing heterogeneous effects across individual units, as opposed to relying solely on the average treatment effect. To enhance the precision of distributional treatment effect estimation, we propose a regression adjustment method that utilizes the distributional regression and pre-treatment information. Our method is designed to be free from restrictive distributional assumptions. We establish theoretical efficiency gains and develop a practical, statistically sound inferential framework. Through extensive simulation studies and empirical applications, we illustrate the substantial advantages of our method, equipping researchers with a powerful tool for capturing the full spectrum of treatment effects in experimental research. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.14074 |
| By: | Sofia Badini; Esther Gehrke; Friederike Lenel; Claudia Schupp |
| Abstract: | We implement a randomized controlled trial to investigate whether students in lower-secondary school more effectively acquire information about potential career paths if this information is preceded by a task that allows students to explore their own interests and the career information is presented in personalized order. We find that self-exploration in combination with the personalized display increases students’ information acquisition. Students also read about more diverse career paths and shift their focus from occupations that require university education towards those that require a high-school degree. |
| Keywords: | information acquisition, career guidance, education, field experiment |
| JEL: | C93 D83 D91 I21 O15 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11225 |
| By: | Abdellaoui, Mohammed (HEC Paris); Bleichrodt, Han (Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Australian National University (ANU) - School of Economics); Gutierrez, Cédric (Bocconi University - Department of Management and Technology) |
| Abstract: | Overconfident behavior, the excessive willingness to bet on one’s performance, may be driven by optimistic beliefs and/or ambiguity attitudes. Separating these factors is key for understanding and correcting overconfident behavior, as they may call for different corrective actions. We present a method to do so, which we implement in two incentivized experiments. The first experiment shows the importance of ambiguity attitudes for overconfident behavior. Optimistic ambiguity attitudes (ambiguity seeking) counterbalanced the effect of pessimistic beliefs, leading to neither over- nor underconfident behavior. The second experiment applies our method in contexts where overconfident behavior is expected to vary: easy vs. hard tasks. Our results showed that task difficulty affected both beliefs and ambiguity attitudes. However, while beliefs were more optimistic for relative performance (rank) and more pessimistic for absolute performance (score) on easy tasks compared to hard tasks, ambiguity attitudes were always more optimistic on easy tasks for both absolute and relative performance. Our findings show the subtle interplay between beliefs and ambiguity attitudes: they can reinforce or offset each other, depending on the context, increasing or lowering overconfident behavior. |
| Keywords: | overconfidence; subjective expected utility; beliefs measurement; ambiguity attitudes; hard-easy effect. |
| JEL: | D81 D83 D91 |
| Date: | 2023–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1484 |
| By: | SASAKI, Hiroki; HORIE, Shinya; HORIE, Tetsuya; TANAKA, Katsuya |
| Abstract: | In this study, we explore the impact of "Nudge" and "Boost" methodologies on mitigating methane emissions from rice cultivation, a significant contributor to global greenhouse gas emissions. Through a cluster randomized control trial conducted in Japan, we assess whether strategic informational campaigns, incorporating these behavioral insight, can enhance the adoption of a prolonged mid-season drainage period, which can lower methane emissions from rice paddies. Our experimental results show notable differences in the effectiveness of basic communications from the local government as before (Control group) versus those enriched with social comparison messaging focusing on methane emission from paddy fields (Nudge). Specifically, we find a clear positive effect of social comparison messaging for farmers participating in community-based agriculture. Furthermore, our research indicates that targeted technical guidance (Boost), addressing prevalent concerns about altering traditional farming methods, significantly sways farmers' future intentions toward methane-reduction techniques. The study underscores the importance of combining nudges, which subtly alter the external choice architecture, with boosts that empower farmers' decision-making capabilities and counter cognitive biases, to effectively steer behavior towards environmentally sustainable practices. |
| Keywords: | Environmental Economics and Policy, Institutional and Behavioral Economics |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344318 |
| By: | Pietro Dall'Ara |
| Abstract: | I study the persuasion of a receiver who accesses information only if she exerts costly attention effort. The sender designs an experiment to persuade the receiver to take a specific action. The experiment also affects the receiver's attention effort, that is, the probability that she updates her beliefs. As a result, persuasion has two margins: extensive (effort) and intensive (action). The receiver's utility exhibits a supermodularity property in information and effort. By leveraging this property, I prove a general equivalence between experiments and persuasion mechanisms \`a la Kolotilin et al. (2017). Censoring high states is an optimal strategy for the sender in applications. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.01250 |
| By: | Pablo Brañas-Garza; Antonio Cabrales; María Paz Espinosa; Teresa García-Muñoz |
| Abstract: | In this paper we explore how individual social preferences correlate with political support for redistribution. We ran an incentivized experiment with a large representative sample of the Spanish population. Our participants took six decisions that elicited their social preferences. Their choices could result in a different total surplus and different distributions of the surplus between the subject and an anonymous counterpart. In our sample, social preferences are unrelated to political support for distributive policies. The main correlates for support of redistribution are the beliefs concerning the importance of effort versus luck for success (fairness), the trust in government institutions (effectiveness) and the perceived importance of the poverty problem (need). |
| Keywords: | elicitation of social preferences, income distribution and politics, trust in government institutions |
| JEL: | C93 D31 D72 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11238 |
| By: | J. Lucas Reddinger |
| Abstract: | Is an option especially tempting when it is both immediate and certain? I test the effect of risk on the present-bias factor given quasi-hyperbolic discounting. My experimental subjects allocate about thirty to fifty minutes of real-effort tasks between two weeks. I study dynamic consistency by comparing choices made two days in advance of the workday with choices made when work is imminent. My novel design permits estimation of present-bias using a decision with a consequence that is both immediate and certain. I find greater present-bias when the consequence is certain. I offer a methodological remedy for experimental economists. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.14955 |
| By: | Heyen, Daniel; Tavoni, Alessandro |
| Abstract: | Solar geoengineering denotes a set of technologies that would enable a fast and relatively cheap global temperature reduction. Besides potential physical side-effects, a major concern is the strategic dimension: Who is going to use solar geoengineering and how would it affect others? How does the presence of solar geoengineering change the strategic incentives surrounding other climate policy instruments such as mitigation? We review the existing theoretical and experimental contributions to those questions and outline promising lines of future economic research. |
| Keywords: | Climate policy; Experiments; political economy; public goods; solar geoengineering; strategic interaction |
| JEL: | J1 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124448 |
| By: | Anastasia Danilov; Ju Yeong Hong; Anja Schöttner |
| Abstract: | A significant portion of the workforce experiences what we term `unfriendly leadership, ' encompassing various forms of hostile behavior exhibited by managers. The motivations driving managers to adopt such behaviors are insufficiently understood. To explore this phenomenon, we conducted a laboratory experiment examining the relationship between managers' use of unfriendly leadership and labor market competition. We discern two labor market states: excess labor demand, where managers compete to hire workers, and excess labor supply, where workers compete to be hired. By perceiving unfriendly leadership as a performance-contingent punishment device inflicting discomfort on workers, we hypothesize that managers are less inclined to resort to unfriendly leadership when they compete to hire workers. We find that managers tend to engage in unfriendly leadership more frequently and intensely under excess labor supply, in comparison to excess labor demand. This trend is particularly pronounced among male participants. Additionally, workers display a decreased likelihood of accepting employment offers from more unfriendly managers and exert lower levels of effort when working under such managers, indicating that unfriendly leadership is costly. |
| Keywords: | leadership style, labor market competition, non-monetary incentives |
| JEL: | L20 M14 M55 |
| Date: | 2024–07–16 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0042 |
| By: | Jahani, Eaman; Manning, Benjamin; Zhang, Joe; TuYe, Hong-Yi; Alsobay, Mohammed Abdulrahman M; Nicolaides, Christos (University of Cyprus); Suri, Siddharth; Holtz, David (University of California, Berkeley) |
| Abstract: | In an online experiment with N = 1, 891 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: | 2024–07–22 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:9rhku |
| By: | Antinyan, Armenak; Asatryan, Zareh |
| Abstract: | Governments increasingly use nudges to improve tax collection. We synthesize the growing literature that evaluates nudging experiments using meta-analytical methods. We find that simple reminders increase the probability of compliance by 2.7 percentage points relative to the baseline where about a quarter of taxpayers are compliant. Nudges that commonly refer to elements of tax morale increase compliance by another 1.4 percentage points. Deterrence nudges, which inform taxpayers about enforcement parameters, increase compliance the most, amounting to an additional 3.2 percentage points increase on top of reminders. Our additional findings highlight the conditions where nudges are more effective, such as their potential when targeting sub-population of late-payers, and also suggest that even this sample of randomized trials may be susceptible to selective reporting of results. Overall, our findings imply that taxpayers are biased by various informational and behavioral constraints, and that nudges can be of some help in overcoming these frictions. |
| Keywords: | Tax compliance, Tax evasion, Randomized control trials, Nudging, Reminders, Tax morale, Deterrence, Meta-analysis, Publication selection bias |
| JEL: | C93 D91 H26 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:300677 |
| By: | Bocar A. Ba; Abdoulaye Ndiaye; Roman G. 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. |
| Keywords: | Reasoning; Social movements; Narratives; Surveys; Financial prediction |
| JEL: | D72 D83 D74 G41 |
| Date: | 2024–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedmoi:98640 |
| By: | Steffen Jahn (School of Economics and Business, Martin Luther University Halle-Wittenberg, Germany); Daniel Guhl (School of Business and Economics, Humboldt University Berlin, Germany); Ainslee Erhard (Faculty of Business and Economics, University of Göttingen, Germany) |
| Abstract: | Efforts to promote sustainable resource use through reduced meat consumption face challenges as global meat consumption persists. The resistance may be attributed to the lower sales price of meat compared to most plant-based meat alternatives (PBMAs). Addressing this, our research delves into the pivotal question of which PBMAs resonate most with consumers and how pricing affects demand. In a hypothetical restaurant context, we conducted 2 representative studies among 2, 126 individuals in the U.S. to scrutinize preferences for meat, analog, semi-analog, and non-analog burgers. First, in a survey, we assessed rankings of the four burgers, alongside evaluating participants' genuine consideration of these choices to discern a diverse preference distribution. Subsequently, in an experiment, we examined the influence of prices on participants' consideration and choice of PBMAs, thereby capturing both phases of the decision-making process. Our survey shows that meat has considerably higher utility and consumer preference than all PBMAs on average, but we also find substantial heterogeneity (i.e., some consumers prefer PBMAs over meat). In the experiment, we establish that there is a negative association between the consideration of meat and PBMA burgers, though consideration of any one PBMA is positively associated with considering other PBMAs. A noteworthy increase in consideration and choice is observed when prices of PBMAs are reduced, while changing the price of the meat burger only has minimal effect on demand. Such findings underscore the importance of affordability beyond price parity in catalyzing the shift towards plant-based diets. |
| Keywords: | Plant-based meat; Food decision making; Sustainability; Price elasticity; |
| JEL: | M31 L66 Q56 C11 C35 |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:509 |
| By: | Laurent Davezies; Guillaume Hollard; Pedro Vergara Merino |
| Abstract: | We propose a novel randomization approach for randomized controlled trials (RCTs), named the cube method. The cube method allows for the selection of balanced samples across various covariate types, ensuring consistent adherence to balance tests and, whence, substantial precision gains when estimating treatment effects. We establish several statistical properties for the population and sample average treatment effects (PATE and SATE, respectively) under randomization using the cube method. The relevance of the cube method is particularly striking when comparing the behavior of prevailing methods employed for treatment allocation when the number of covariates to balance is increasing. We formally derive and compare bounds of balancing adjustments depending on the number of units $n$ and the number of covariates $p$ and show that our randomization approach outperforms methods proposed in the literature when $p$ is large and $p/n$ tends to 0. We run simulation studies to illustrate the substantial gains from the cube method for a large set of covariates. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.13613 |
| By: | Teevrat Garg; Maulik Jagnani; Elizabeth Lyons |
| Abstract: | Despite the increasing importance of occupations that rely heavily on interpersonal interaction, the impact of heat on team production relative to individual production remains largely unexplored. Heat can affect team and individual production in distinct ways, potentially increasing aggression, thereby complicating team coordination. Conversely, teams may counteract the productivity effects of heat through mutual support strategies, such as sharing tasks, identifying mistakes, or encouragement. We randomly assign programmers to either pair up in teams of two or work independently on a coding task, under either warm (29◦C) or control (24◦C) conditions. Our findings reveal two key insights: (1) Individuals working on coding tasks in warm environments perform comparably to those in control environments. However, teams working in warm conditions significantly underperform relative to teams in control settings. (2) The adverse effects of heat are particularly pronounced in mixed-gender teams and teams with differences in semester-standing, indicating that heat may intensify issues related to coordination and communication within heterogenous teams. Surveys confirm these patterns, with heterogenous teams in warm settings reporting lower partner assessments and a higher desire to switch partners for future tasks. |
| Keywords: | team production, heat stress, labor productivity |
| JEL: | J24 Q54 Q56 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11219 |
| By: | Bruno Fava |
| Abstract: | Important questions for impact evaluation require knowledge not only of average effects, but of the distribution of treatment effects. What proportion of people are harmed? Does a policy help many by a little? Or a few by a lot? The inability to observe individual counterfactuals makes these empirical questions challenging. I propose an approach to inference on points of the distribution of treatment effects by incorporating predicted counterfactuals through covariate adjustment. I show that finite-sample inference is valid under weak assumptions, for example when data come from a Randomized Controlled Trial (RCT), and that large-sample inference is asymptotically exact under suitable conditions. Finally, I revisit five RCTs in microcredit where average effects are not statistically significant and find evidence of both positive and negative treatment effects in household income. On average across studies, at least 13.6% of households benefited and 12.5% were negatively affected. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.14635 |
| By: | Athapaththu, Poorni; Weerahewa, Jeevika |
| Abstract: | This study evaluated the willingness-to pay (WTP) for quality mango planting materials of TomEJC cultivar and identified the variables that affect WTP and degree of adoption of the technology. A second price sealed bid auction was conducted among villagers in Thirappane, Anuradhapura district, Sri Lanka to determine WTP and a Heckman two-stage model was estimated to ascertain the determinants of WTP. The respondents were randomly divided in to two groups and one group was given information on growing of TomEJC before the experiment was conducted. The socio-economic characteristics of the respondents were gathered using a structured questionnaire. The findings showed that the pooled sample's mean bid for TomEJC planting materials was LKR 287.03 per plant and the WTP of group that received advance notice was higher by LKR 151.62. Heckman model first-stage results indicated that the decision to adopt was positively and significantly influenced by household type, mango availability in the home garden, education level, and desire to begin commercial mango cultivation. The second-stage results revealed that WTP was positively & significantly influenced by information provision and average monthly income. These results suggest that the first step in promoting new technology will be to raise awareness targeting the non-poor farmers. |
| Keywords: | Community/Rural/Urban Development, Institutional and Behavioral Economics, Research and Development/Tech Change/Emerging Technologies |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344265 |
| By: | Neil Christy; A. E. Kowalski |
| Abstract: | We use the exact finite sample likelihood and statistical decision theory to answer questions of ``why?'' and ``what should you have done?'' using data from randomized experiments and a utility function that prioritizes safety over efficacy. We propose a finite sample Bayesian decision rule and a finite sample maximum likelihood decision rule. We show that in finite samples from 2 to 50, it is possible for these rules to achieve better performance according to established maximin and maximum regret criteria than a rule based on the Boole-Frechet-Hoeffding bounds. We also propose a finite sample maximum likelihood criterion. We apply our rules and criterion to an actual clinical trial that yielded a promising estimate of efficacy, and our results point to safety as a reason for why results were mixed in subsequent trials. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.18206 |
| By: | Martin Mugnier |
| Abstract: | This note provides a conceptual clarification of Ronald Aylmer Fisher's (1935) pioneering exact test in the context of the Lady Testing Tea experiment. It unveils a critical implicit assumption in Fisher's calibration: the taster minimizes expected misclassification given fixed probabilistic information. Without similar assumptions or an explicit alternative hypothesis, the rationale behind Fisher's specification of the rejection region remains unclear. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.07251 |