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on Experimental Economics |
| By: | Andrea Pogliano (Erasmus University Rotterdam) |
| Abstract: | Meritocratic fairness justifies inequality when it stems from performance. Yet performance is influenced by one’s genetics. I investigate whether individuals’ redistribution preferences are affected by their beliefs about genetics’ role in generating performance inequality. In an incentivized online experiment, impartial spectators can redistribute the earnings that two workers earned based on their performance in a mathematical task. Across two treatments, I modify beliefs about the importance of genetics in performing in the task by means of an information provision treatment. I find that spectators for whom genetics is framed to play a larger role compensate the worse performer more, compared to those for whom genetics is framed to play a smaller role. When comparing the spectators’ decisions before and after the provision of information, I find that about 23% of spectators compensate the worse performer more whereas the majority does not change their allocation. This study highlights that individuals’ redistribution preferences are affected by their beliefs about genetics’ role in generating performance inequality. |
| Keywords: | Meritocracy, Genetics, Beliefs, Fairness, Inequality |
| JEL: | C90 C91 D63 D90 H23 |
| Date: | 2024–03–14 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240017 |
| By: | Darova, Ornella; Duchene, Anne |
| Abstract: | We run two field experiments on team diversity in a large undergraduate economics class. Small groups with random compositions are generated and assigned team tasks. In the first experiment, tasks are creative and complex, while in the second one they are more standard. We use a multidimensional measure of diversity based on gender, race, and migration status. We estimate its impact on teamwork quality and group performance. We find a significant U-shaped effect on teamwork quality in both experiments. However, the impact on performance depends on the type of task: it is positive for creative tasks, but negative for standard ones. We interpret these results as the consequence of two conflicting forces: diversity is a source of creativity, but it can hamper communication and coordination between team members. When tasks are creative, the first (positive) force dominates; for standard tasks, instead, communication challenges do. The U-shaped impact on teamwork quality suggests that faultlines – dividing lines that split a group into subgroups based on demographic characteristics – can cause inter-subgroup cohesion to break down, while very homogeneous or very heterogeneous groups collaborate better. These results allow us to build a comprehensive framework to better understand the impact of diversity on teamwork. |
| Keywords: | Diversity, Knowledge Production, Creativity, Teamwork, Education |
| JEL: | A22 I21 J15 |
| Date: | 2024–01–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121976 |
| By: | Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada |
| Abstract: | While the market design advocates the importance of good design to achieve desirable properties, experiments on coalition formation theory have shown fragility in proposed mechanisms to do so. We experimentally investigate the effectiveness of “structured” mechanisms that implement the Shapley value as an ex-ante equilibrium outcome with those of corresponding “semi-structured” bargaining procedures. We find a significantly higher frequency of the grand coalition formation and the higher efficiency in the semi-structured than in the structured procedure regardless of whether it is demand-based or offer-based. While significant differences in the resulting allocations are observed between the two structured procedures, little difference is observed between the two semi-structured procedures. Finally, possibility of free-form chat induces the equal division more frequently than without it. Our results suggest, when it comes to bargaining and coalition formation, not having various restrictions imposed by different mechanisms may lead to more desirable outcomes. |
| Date: | 2023–11 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1221r |
| By: | Nicholas A. Wright (Department of Economics, Florida International University); Puneet Arora (Management Development Institute, Gurgaon, India); Jesse Wright (Florida Gulf Coast University) |
| Abstract: | Students often start a course with high expectations and an ambitious plan of action. Some instructors use goal-inducing non-binding commitment pledges to nudge students to follow through on their intended course of action. Using a field experiment, we asked treated students to set a goal grade, identify the actions they will take to achieve it, and sign a commitment pledge to work towards this grade. We find that while treated students pledged a greater time commitment and targeted a higher grade, their overall test scores decrease by 0.23 standard deviations and they were 15 percentage points less likely to pass the course. |
| Keywords: | Commitment Pledge, Goal-setting, Academic Performance, Overconfidence, Grade Expectations |
| JEL: | A2 C93 D8 I2 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:fiu:wpaper:2411 |
| By: | Banerjee, Sanchayan; Picard, Julien |
| Abstract: | Adopting low-carbon diets is important to meet our climate goals. Prior experimental evidence suggests green nudges help people adopt such diets, more so when encouraged to think through them. In this paper, we re-evaluate this role of reflection in a “social norm” nudge to promote intentions for climate-friendly diets in the United Kingdom. Using 5, 555 English respondents, we find that the social norm nudge increases meal order intentions for low-carbon diets versus the control condition. Asking people to reveal their personal dietary norms after exposing them to these social norms (“lower-order nudge+”) does not produce any measurable change compared to the nudge. However, when people are subsequently encouraged to think and pledge to climate-friendly diets (“higher-order nudge+”), the effectiveness of the social norm nudge increases by 90% or more. |
| Keywords: | commitment; nudge; nudge+; personal norms; social norms |
| JEL: | J1 |
| Date: | 2023–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:120057 |
| By: | Zanoni, Wladimir; Duryea, Suzanne; Paredes, Jorge |
| Abstract: | In this study, we investigate the extent and mechanisms of gender-based discrimination in urban Ecuador's hiring practices, a critical issue for understanding persistent gender disparities and informing policy. Using an artifactual field experiment with 392 recruiters evaluating observationally equivalent male and female job candidates, we uncover a significant preference for female candidates. Our results show that women were preferred by a margin of 15%, despite equivalent productivity assessments between genders. This suggests that hiring decisions are influenced by factors beyond assessed productivity differentials. We hypothesize that social norms advocating for gender equality significantly drive these preferences, and demonstrate that the preference for women aligns with the observed trend of narrowing the employment gender gap in survey data. |
| Keywords: | Gender discrimination;Occupational Segregation;labor market;Stereotyping |
| JEL: | J16 J71 C93 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13705 |
| By: | Marianne Andries (USC - University of Southern California); Milo Bianchi (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Karen Huynh (AMUNDI Asset Management); Sébastien Pouget (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| 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. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04680777 |
| By: | Lina Lozano (New York University Abu Dhabi); Arno Riedl (CESifo, IZA, Netspar & Maastricht University); Christina Rott (Vrije Universiteit Amsterdam) |
| Abstract: | We investigate experimentally how the menstrual cycle affects bargaining behavior and bargaining outcomes of women. Female participants negotiate in an unstructured bilateral bargaining game with asymmetric information about the allocation of a surplus (’pie size’). We find that the menstrual cycle affects bargaining behavior and that the effects depend on players’ information. Players who are informed about the pie size are less compromising during ovulation and receive higher payoffs conditional on reaching an agreement. Uninformed players achieve higher final payoffs during ovulation, which is mainly driven by higher agreement rates. Our study provides first evidence that biological factors affect bargaining. |
| Keywords: | bargaining, asymmetric information, menstrual cycle, biological factors |
| JEL: | C78 C91 D87 J16 |
| Date: | 2024–02–08 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240009 |
| By: | Matthew Robson (Erasmus University Rotterdam); Owen O’Donnell (Erasmus University Rotterdam); Tom Van Ourti (Erasmus University Rotterdam) |
| Abstract: | We estimate responsibility-sensitive welfare weights for health that facilitate inequality- and inequity-sensitive policy evaluation. In a UK general population sample, 569 on- line experiment participants distribute constrained resources to determine the health of hypothetical individuals distinguished by randomly generated resource productivity as well as sex, income and smoking (41, 460 observations). We elicit beliefs about responsibility for income and smoking, and use their associations with the allocations to estimate responsibility-sensitive weights that reflect inequality aversion and health prioritisation by the non-health characteristics. There is slight, moderate and substantial prioritisation of females, the poor and non-smokers, respectively. Inequality aversion lowers weights on females and non-smokers, who are health-advantaged, and raises the weight on the poor, who are health-disadvantaged. As beliefs about responsibility for income and smoking strengthen, weights on the poor decrease and weights on non-smokers significantly increase. |
| Keywords: | Experiment, Social Preferences, Inequality Aversion, Equity |
| JEL: | C90 D30 D63 I14 I38 |
| Date: | 2024–07–10 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240045 |
| By: | Crick Lund (King’s College London); Kate Orkin (University of Oxford); Marc Witte (VU Amsterdam); John Walker (University of Oxford); Thandi Davies (University of Cape Town); Johannes Haushofer (Stockholm University); Sarah Murray (John Hopkins University); Judy Bass (John Hopkins University); Laura Murray (John Hopkins University); Wietse Tol (University of Copenhagen); Vikram Patel (Harvard University) |
| Abstract: | Mental health conditions are prevalent but rarely treated in low- and middle-income countries (LMICs). Little is known about how these conditions affect economic participation. This paper shows that treating mental health conditions substantially improves recipients’ capacity to work in these contexts. First, we perform a systematic review and meta-analysis of all randomized controlled trials (RCTs) ever conducted that evaluate treatments for mental ill-health and measure economic outcomes in LMICs. On aver- age, treating common mental disorders like depression with psychotherapy improves an aggregate of labor market outcomes made up of employment, time spent working, capacity to work and job search by 0.16 standard deviations. Treating severe mental disorders, like schizophrenia, improves the aggregate by 0.30 standard deviations, but effects are noisily estimated. Second, we build a new dataset, pooling all available microdata from RCTs using the most common trial design: studies of psychotherapy in LMICs that treated depression and measured days participants were unable to work in the past month. We observe comparable treatment effects on mental health and work outcomes in this sub-sample of highly similar studies. We also show evidence consistent with mental health being the mechanism through which psychotherapy improves work outcomes. |
| Keywords: | Labor, Development, Human capital, Mental health, Psychotherapy |
| JEL: | D9 I14 J24 O1 |
| Date: | 2024–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240043 |
| By: | Pol Campos-Mercade; Armando N. Meier; Stephan Meier; Devin G. Pope; Florian H. Schneider; Erik Wengström |
| Abstract: | Whether monetary incentives to change behavior work and how they should be structured are fundamental economic questions. We overcome typical data limitations in a large-scale field experiment on vaccination (N = 5, 324) with a unique combination of administrative and survey data. We find that guaranteed incentives of $20 increase uptake by 13 percentage points in the short run and 9 in the long run. Guaranteed incentives are more effective than lottery-based, prosocial, or individually-targeted incentives, though all boost vaccinations. There are no unintended consequences on future vaccination or heterogeneities based on vaccination attitudes and incentivized economic preferences. Further, administrative data on relatives shows substantial positive spillovers. Our findings demonstrate the great potential of incentives for improving public health and provide guidance on their design. |
| JEL: | C93 D01 D62 I12 I18 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32899 |
| By: | Zhang, Shuo (Northeastern University); Kuhn, Peter J. (University of California, Santa Barbara) |
| Abstract: | We audit the job recommender algorithms used by four Chinese job boards by creating fictitious applicant profiles that differ only in their gender. Jobs recommended uniquely to the male and female profiles in a pair differ modestly in their observed characteristics, with female jobs advertising lower wages, requesting less experience, and coming from smaller firms. Much larger differences are observed in these ads' language, however, with women's jobs containing 0.58 standard deviations more stereotypically female content than men's. Using our experimental design, we can conclude that these gender gaps are generated primarily by content-based matching algorithms that use the worker's declared gender as a direct input. Action-based processes like item-based collaborative filtering and recruiters' reactions to workers' resumes contribute little to these gaps. |
| Keywords: | recommender system, algorithm, gender, job platform |
| JEL: | C93 J71 J16 O33 M50 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17245 |
| By: | Víctor González-Jiménez (Erasmus University Rotterdam) |
| Abstract: | This paper demonstrates that well-established biases in decision making under uncertainty can generate poverty traps. A theoretical framework is developed to demonstrate that: i) probability weighting and ambiguity attitude can lead individuals to erroneously undervalue profitable investments, and ii) poverty increases the magnitude of these investment errors. The model predicts that poverty is perpetuated by inducing poor individuals to underinvest in profitable opportunities to a greater extent than rich individuals. We empirically validate these theoretical predictions using data from two experiments conducted on a representative sample of American households. |
| Keywords: | Poverty traps, Probability Weighting, Ambiguity Attitude |
| JEL: | O12 D81 I3 |
| Date: | 2024–09–13 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240058 |
| By: | Omar Al-Ubaydli; John List |
| Abstract: | The A/B testing approach invites promising early results that are unlikely to be realized in a larger setting. We argue that within the social sciences, a fundamentally different approach is needed; we call it option C thinking. Put simply, a twenty-first-century team of civil servants and social scientists should lead with experiments that anticipate likely causes of failure at scale, even if doing so requires more time, effort, and resources initially. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:feb:artefa:00795 |
| By: | Imas, Alex; Madarász, Kristóf |
| Abstract: | We propose that a person's desire to consume an object or possess an attribute increases in how much others want but cannot have it. We term this motive imitative superiority-seeking and show that it generates preferences for exclusion that help explain a host of market anomalies and make novel predictions in a variety of domains. In bilateral exchange, trade becomes more zero-sum, leading to an endowment effect. People's value of consuming a good increases in its scarcity, which generates a motive for firms and organizations to engage in exclusionary policies. A monopolist producing at constant marginal cost can increase profits by randomly excluding buyers relative to the standard optimal mechanism of posting a common price. In the context of auctions, a seller can extract greater revenues by randomly barring a subset of consumers from bidding. Moreover, such non-price-based exclusion leads to higher revenues than the classic optimal sales mechanism. A series of experiments provides direct support for these predictions. In basic exchange, a person's willingness to pay for a good increases as more people are explicitly barred from the opportunity to acquire it. In auctions, randomly excluding people from the opportunity to bid substantially increases bids amongst those who retain this option. Consistent with our predictions, exclusion leads to bigger gains in expected revenue than increasing competition through inclusion. Our model of superiority-seeking generates "Veblen effects, "rationalizes attitudes against redistribution and provides a novel motive for social exclusion and discrimination. |
| Keywords: | social preferences; ownership; pricing; exclusivity; marketing; political economy; inequality; stratification; discrimination; OUP deal |
| JEL: | D90 D40 C90 P00 |
| Date: | 2024–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:120207 |