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on Experimental Economics |
| 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. In my experiment workers 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 work-day 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.This finding has implications for any economic decision involving a present-biased decision-maker, including labor contracting and consumer good pricing. I offer a methodological remedy for experimental economists. |
| Keywords: | present bias, dynamic inconsistency, quasi-hyperbolic discounting, timepreferences, risk preferences, immediacy effect, certainty effect, experimental economics |
| JEL: | C91 D80 D90 |
| Date: | 2023–11 |
| URL: | https://d.repec.org/n?u=RePEc:pur:prukra:1338 |
| By: | Irenaeus Wolff; Dominik Folli |
| Abstract: | Experimental research typically shows that best-response rates are below what plausible error rates would suggest. We experimentally test the conjecture that observed action-belief inconsistencies are related to belief uncertainty. We rely on a belief-sampling model that has been highly successful in explaining behaviour in multi-armed bandit problems and aggregate outcomes in games, markets, and surveys. Our data shows that inducing higher belief uncertainty leads more frequently to choices that are inconsistent with stated beliefs and---in an experiment directly testing the mechanism---to stochastic belief reports. The uncertainty-inconsistency relationship continues to hold when we control for error costs econometrically in several ways. |
| Keywords: | Best Response, Belief Elicitation, Discoordination Game, Knightian Uncertainty, Errors, Elusive Beliefs |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:twi:respas:0130 |
| By: | Marco Fongoni (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: | This paper develops a theoretical framework to think about employees' effort choices, and applies this framework to assess the ability of existing experimental designs to identify the effect of pay inequality on worker effort. The analysis shows that failure to control for a number of confounds—such as reciprocity towards the employer in multi-lateral gift-exchange games (vertical fairness), or the incentive to increase effort when feeling underpaid under piece rates (income targeting)—may lead to inaccurate interpretation of evidence of treatment effects. In light of these findings, the paper provides a set of recommendations on how to improve identification in the design of controlled experiments in the future. |
| Keywords: | Pay inequality, Effort, Laboratory experiments, Fairness, Reference dependence |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04678955 |
| By: | Andries, Marianne; Bianchi, Milo; Huynh, Karen; Pouget, Sébastien |
| Abstract: | In an investment experiment, we show variations in information affect belief and decision behaviors within the information-beliefs-decisions chain. Subjects observe the time series of a risky asset and a signal that, in random rounds, helps predict returns. When they perceive the signal as useless, subjects form extrapolative forecasts, and their investment decisions underreact to their beliefs. When they perceive the signal as predictive, the same subjects rationally use it in their forecasts, they no longer extrapolate, and they rely significantly more on their forecasts when making risk allocations. Analyzing investments without observing forecasts and information sets leads to erroneous interpretations. |
| Keywords: | Return Predictability, Expectations, Long-Term Investment, Extrapolation, Model Uncertainty. |
| JEL: | G11 G41 D84 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129666 |
| By: | Blouin, Arthur (University of Toronto); Mani, Anandi (University of Oxford); Mukand, Sharun (University of Warwick); Sgroi, Daniel (University of Warwick) |
| 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 |
| JEL: | D91 C92 D63 D82 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17180 |
| By: | Andr\'es Aradillas Fern\'andez; Jos\'e Luis Montiel Olea; Chen Qiu; J\"org Stoye; Serdil Tinda |
| Abstract: | We study a class of binary treatment choice problems with partial identification, through the lens of robust (multiple prior) Bayesian analysis. We use a convenient set of prior distributions to derive ex-ante and ex-post robust Bayes decision rules, both for decision makers who can randomize and for decision makers who cannot. Our main messages are as follows: First, ex-ante and ex-post robust Bayes decision rules do not tend to agree in general, whether or not randomized rules are allowed. Second, randomized treatment assignment for some data realizations can be optimal in both ex-ante and, perhaps more surprisingly, ex-post problems. Therefore, it is usually with loss of generality to exclude randomized rules from consideration, even when regret is evaluated ex-post. We apply our results to a stylized problem where a policy maker uses experimental data to choose whether to implement a new policy in a population of interest, but is concerned about the external validity of the experiment at hand (Stoye, 2012); and to the aggregation of data generated by multiple randomized control trials in different sites to make a policy choice in a population for which no experimental data are available (Manski, 2020; Ishihara and Kitagawa, 2021). |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.11621 |
| By: | Jos\'e Luis Montiel Olea; Brenda Prallon; Chen Qiu; J\"org Stoye; Yiwei Sun |
| Abstract: | We present a decision-theoretic justification for viewing the question of how to best choose where to experiment in order to optimize external validity as a k-median (clustering) problem, a popular problem in computer science and operations research. We present conditions under which minimizing the worst-case, welfare-based regret among all nonrandom schemes that select k sites to experiment is approximately equal - and sometimes exactly equal - to finding the k most central vectors of baseline site-level covariates. The k-median problem can be formulated as a linear integer program. Two empirical applications illustrate the theoretical and computational benefits of the suggested procedure. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.09187 |
| By: | Maria Montero (University of Nottingham); Alex Possajennikov (University of Nottingham); Yuliet Verbel (University of Michigan) |
| Abstract: | This paper studies responsibility attribution for outcomes of collusive bribery. In an experiment, participants labeled as either citizens or public officials can propose a bribery transaction to another participant (labeled as either public official or citizen, respectively), who decides whether to accept the proposal. We then let either the victims of the corrupt transaction or the bystanders of it judge the individual decisions of proposing and accepting. We interpret these judgments as a measure of responsibility attribution. We find that labels (citizen or public official) have a stronger effect than roles (proposer or responder): public officials are consistently regarded as more responsible for corruption than citizens, while those accepting a bribe are regarded as only somewhat more responsible than those proposing it. Further, we find that victims judge corruption decisions more severely than bystanders, although bystanders’ judgments are also consistently negative. In treatments with a neutral context, we find that judgments are less harsh than in the corruption context, bystanders’ judgments are much less harsh than those of victims, and responders are judged more severely than proposers. Our results suggest that people judge corrupt actors in context, more harshly when they are labeled as law enforcers (i.e., public officials), and that unaffected parties (i.e., bystanders) react nearly as negatively to corruption as those directly affected by it (i.e., victims). |
| Keywords: | responsibility attribution; bribery; experiment |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:not:notcdx:2024-06 |
| By: | Alejandro Hirmas (University of Amsterdam); Jan B. Engelmann (University of Amsterdam) |
| Abstract: | Sustainability ratings help consumers understand the environmental impact of their purchases. Such ratings have increased the consumers’ sustainable choices in the electrodomestics and housing markets. In the particular case of energy labels, sustainable products are also associated with private benefits due to future cost reductions in energy expenditure. These results question the potential effectiveness of sustainability ratings for other products, such as food, where the link between environmental and private benefits is less clear. In two incentivized experiments (N=749), we study how consumers use sustainability ratings when these ratings are dissociated from private benefit, i.e. product quality. Participants chose between two products based on their quality and sustainability, which were presented in separate rating scales, alongside the products’ prices. Furthermore, we study how consumers integrate the usage of ratings with other information provided from other sources. Halfway through the experiment, we provide information regarding the underlying value behind the ratings. Using a between-subject design, we modify the information provided and analyze the impact of such information on the participants’ subsequent choices. Our findings indicate that even when sustainability ratings are not connected to the products’ quality, participants make use of them to decide which products to buy. We also find that participants underreact to new information, and make inefficient choices based on their decisions from before. Moreover, to track the participants’ attention and analyze potential heterogeneous usage of the information we use process-tracing methods. We find that participants show highly heterogeneous attention patterns, which are linked to differential weighting of the product’s attributes (price, quality, and sustainability) during the decision. While our information treatment has little effect on attention allocation to individual attributes, participants correctly recall the information at the end of the experiment. These results suggest that participants partially neglect new information, and anchor to their initial decision rules formed before the information treatments. |
| Keywords: | Attention, Sustainability ratings, conjoint analysis, information treatments, Mouselab |
| JEL: | D81 D83 D87 D91 |
| Date: | 2024–04–10 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240024 |
| 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 behaviour. |
| Keywords: | narratives, reasoning, surveys, financial prediction, social movements |
| JEL: | D72 D74 D83 G41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11264 |
| By: | Bhan, Prateek Chandra; Wen, Jinglin |
| Abstract: | Historical monuments and statues mediate a conversation between the past and present. In this randomised controlled trial, we test the presence of such communications and their consequences. Focusing on a cohort of primary school students in India, we study the role modelling effect of historical statues. Students in the treatment group were exposed to a short virtual tour of otherwise locally present yet then inaccessible statues due to the Covid pandemic. The placebo group watched a video on the same role models, comprising of images of these role models instead of their statue. There was a third pure control group. Immediately after the 6-minute intervention, students watching the treatment video performed better than the placebo and control groups in a memory test. We detect improvements in treated students' academic performance after a month, which are sustained after 6-months. The treatment affects only boys suggesting that the lack of female role models and their statues may attribute to this gender gap in academic performance. |
| Keywords: | Statues, role models, aspirations, education, gender, India |
| JEL: | D10 D90 O15 I25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cexwps:301858 |
| By: | Bailey, Megan (University of Calgary); Brown, David P. (University of Alberta, Department of Economics); Myers, Erica (University of Calgary); Shaffer, Blake (University of Calgary); Wolak, Frank A. (Stanford University) |
| Abstract: | The growth of electric vehicles (EVs) raises new challenges for electricity systems. We implement a field experiment to assess the effect of time-of-use (TOU) pricing and managed charging on EV charging behavior. We find that while TOU pricing is effective at shifting EV charging into off-peak hours, it unintentionally induces new and larger “shadow peaks” of simultaneous charging. These shadow peaks lead to greater exceedance of local capacity constraints and advance the need for distribution network upgrades. In contrast, centrally managed charging solves the coordination problem, reducing transformer capacity requirements, and is well-tolerated by consumers in our setting. |
| Keywords: | Electric Vehicles; Regulation; Rate Design; Field Experiment |
| JEL: | L94 Q41 R40 |
| Date: | 2024–09–10 |
| URL: | https://d.repec.org/n?u=RePEc:ris:albaec:2024_004 |
| By: | Caferra, Rocco; Morone, Andrea; Pierno, Donato |
| Abstract: | This study explores how people learn and adapt their risk preferences using different elicitation methods, challenging the neoclassical theory that suggests preferences are fixed. Instead, we show that preferences can change. However, we aim to explain whether the observed changes are due to a real change in the measure, i.e. individuals' risk preferences, or if they are attributable to the limitations of the measurement tool, i.e. the specific risk elicitation method employed. We use a detailed experimental design to examine the stability and consistency of risk preferences using a hands-on learning experience. Our main goals are to assess how consistent risk choices are, understand how preferences remain stable or change over time, and evaluate the effectiveness of different elicitation methods like the Multiple Price List and Ordered Lottery Selection ones. On the one hand, results demonstrate that risk preferences are variable and adaptable, and this can be partly due to the role of experience-based learning. On the other hand, we observe how Multiple Price List methods, even if more complex, are more accurate in identifying risk preferences and then in improving measurement stability and accuracy. |
| Keywords: | Risk preferences; Experiments; Elicitation Methods; Learning. |
| JEL: | D81 D90 |
| Date: | 2024–06–13 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121590 |
| By: | Henning Schaak (BOKU - Universität für Bodenkultur Wien = University of Natural Resources and Life Sciences [Vienne, Autriche]); Jens Rommel (SLU - Swedish University of Agricultural Sciences = Sveriges lantbruksuniversitet); Julian Sagebiel (iDiv - German Centre for Integrative Biodiversity Research); Jesus Barreiro-Hurlé (JRC - European Commission - Joint Research Centre [Seville]); Douadia Bougherara (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Luigi Cembalo (University of Naples Federico II = Università degli studi di Napoli Federico II); Marija Cerjak (UNIZG - Faculty of Agriculture [Zagreb] - University of Zagreb); Tajana Čop (University of Zagreb); Mikołaj Czajkowski (UW - University of Warsaw); María Espinosa-Goded (Universidad de Sevilla = University of Seville); Julia Höhler (WUR - Wageningen University and Research [Wageningen]); Carl-Johan Lagerkvist (SLU - Swedish University of Agricultural Sciences = Sveriges lantbruksuniversitet); Macario Rodriguez-Entrena (Universidad de Córdoba = University of Córdoba [Córdoba]); Annika Tensi (WUR - Wageningen University and Research [Wageningen]); Sophie Thoyer (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Marina Tomić Maksan (University of Zagreb); Riccardo Vecchio (University of Naples Federico II = Università degli studi di Napoli Federico II); Katarzyna Zagórska (UW - University of Warsaw) |
| Abstract: | Risk is a pervasive factor in agriculture and a subject of great interest to agricultural economists. However, there is a lack of comprehensive understanding of the knowledge held by farm advisors, students, and economists with regards to farmers' risk preferences. Misconceptions about farmers' willingness to take risks could lead to misguided advice. This study builds upon a recent multinational endeavor that employed a multiple price list to assess risk preferences among European farmers. We expand this research by gathering predictions for farmers' risk preferences from 561 farm advisors, students, and economists. Our objectives are threefold: firstly, we explore variations as to how accurately participants can predict risk preferences in different specializations; secondly, we compare the predictive accuracy of different groups of forecasters; and thirdly, we assess whether modifying incentive mechanisms can improve the accuracy of predictions. Whereas our findings reveal substantial variation in individual predictions, the averages closely align with the observed responses of farmers. Notably, the most accurate predictions were provided by a sample of experimental economics researchers. Furthermore, predictions for different production systems exhibit minimal disparities. Introducing incentive schemes, such as a tournament structure, where the best prediction receives a reward, or a high-accuracy system, where randomly selected participants are compensated for the accuracy of their predictions, does not significantly impact accuracy. Further research and exploration are needed to identify the most reliable sources of advice for farmers. |
| Keywords: | Risk attitudes, Expert predictions, Expert forecasts, Multiple prices lists, Meta-science |
| Date: | 2024–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04677299 |
| By: | Sofoklis Goulas (Economic Studies, Brookings Institution); Bhagya N. Gunawardena (School of Economics, Finance, & Marketing, RMIT); Rigissa Megalokonomou (Department of Economics, Monash University); Yves Zenou (Department of Economics, Monash University) |
| Abstract: | Using Greek administrative data, we examine the impact of being randomly assigned to a classroom with a same-gender top-performing student on both short- and long-term educational outcomes. These top performers are tasked with keeping classroom attendance records, which positions them as role models. Both male and female students are influenced by the performance of a same-gender top performer and experience both spillover and conformist effects. However, only female students show significant positive effects from the presence of a same-gender role model. Specifically, female students improved their science test scores by 4 percent of a standard deviation, were 2.5 percentage points more likely to choose a STEM track, and were more likely to apply for and enroll in a STEM university degree 3 years later. These effects were most pronounced in lower-income neighborhoods. Our findings suggest that same-gender peer role models could reduce the underrepresentation of qualified females in STEM fields by approximately 3 percent. We further validate our findings through a lab-in-the-field experiment, in which students rated the perceived influence of randomized hypothetical top-performer profiles. The results suggest that the influence of same-gender top performers is primarily driven by exposure-related factors (increased perception of distinction feasibility and self-confidence) rather than direct interactions. |
| Keywords: | gender gap, lab-in-the-field experiment, natural experiment, random peer group formation, role models |
| JEL: | J24 J16 I24 I26 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2024-15 |
| By: | Claudio Schilter; Samuel Luethi; Stefan C. Wolter |
| Abstract: | We merge experimental data on competitiveness of a large sample of students with their complete educational history for up to ten years after the initial assessment. Exploiting quasi-random class assignments, we find that having competitive peers as classmates makes students choose and secure positions in higher-paying occupations. These occupations are also more challenging and more popular. On the cost side, competitive peers do not lead to a lower probability of graduating from the subsequent job-specific education, but they significantly increase the probability of requiring extra time to do so. |
| Keywords: | Peer effects, competitiveness, occupational choice |
| JEL: | C93 D91 J24 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iso:educat:0228 |
| By: | Collins, Jason; Denham, Amanda Baptista; Du, Zhuoran; Waller, David |
| Abstract: | Esguerra, Vollmer and Wimmer (2023) examined respondents' desire to influence other people's choices via their own behaviour. They conducted a field study on German residents' registration for the COVID-19 vaccination, where 1, 401 "Senders" made their registration decision, which could then be shared with a peer before or after that peer's decision, providing an understanding of motives and social pressure on decisions. The authors found that individual influence motives increase a participant's likelihood to register for vaccination, but social pressure effects do not alter it. We reproduced the results using the original code and data. We tested the robustness of the primary analysis by (i) using a logistic regression model, (ii) limiting the analysis to participants who inform their partner of their decision, and (iii) changing the criteria by which participants are recorded as "verified registered". We found that these tests did not materially change the effect size estimates or the conclusions to be drawn from the analysis. We also tested the authors' sub-analysis by the level of trust in the vaccine. We found that an alternative cutoff for the high-trust group did not materially change the result. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:139 |
| By: | Raphael Boleslavsky; Aaron Kolb |
| Abstract: | A sender has a privately known preference over the action chosen by a receiver. The sender would like to influence the receiver's decision by providing information, in the form of a statistical experiment or test. The technology for information production is controlled by a monopolist intermediary, who offers a menu of tests and prices to screen the sender's type, possibly including a "threat" test to punish nonparticipation. We characterize the intermediary's optimal screening menu and the associated distortions, which we show may benefit the receiver. We compare the sale of persuasive information with other forms of influence -- overt bribery and controlling access. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.03689 |
| By: | Rose, Julian; Neubauer, Florian; Ankel-Peters, Jörg |
| Abstract: | Banerjee, Duflo, and Sharma (BDS, 2021a) conduct a ten-year follow-up of a randomized transfer program in West Bengal. BDS find large effects on consumption, food security, income, and health. We conduct a replicability assessment. First, we successfully reproduce the results, thanks to a perfectly documented reproduction package. Results are robust across alternative specifications. We furthermore assess the paper's pre-specification diligence and the reporting in terms of external and construct validity. While the paper refers to a pre-registration, it lacks a pre-analysis plan. Assessing the validity of findings for other contexts is difficult absent necessary details about the exact treatment delivery. |
| Keywords: | replicability, randomized controlled trial, transfer programs, research transparency |
| JEL: | A1 O12 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:142 |
| By: | Kerwin, Jason (University of Washington); Rostom, Nada (University of Antwerp); Sterck, Olivier (University of Oxford) |
| Abstract: | Economists often use balance tests to demonstrate that the treatment and control groups are comparable prior to an intervention. We show that typical implementations of balance tests have poor statistical properties. Pairwise t-tests leave it unclear how many rejections indicate overall imbalance. Omnibus tests of joint orthogonality, in which the treatment is regressed on all the baseline covariates, address this ambiguity but substantially over-reject the null hypothesis using the sampling-based p-values that are typical in the literature. This problem is exacerbated when the number of covariates is high compared to the number of observations. We examine the performance of alternative tests, and show that omnibus F-tests of joint orthogonality with randomization inference p-values have the correct size and reasonable power. We apply these tests to data from two prominent recent articles, where standard F-tests indicate imbalance, and show that the study arms are actually balanced when appropriate tests are used. |
| Keywords: | balance tests, power, size, randomization inference |
| JEL: | C1 C9 O12 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17217 |