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on Experimental Economics |
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Issue of 2020‒05‒18
28 papers chosen by |
| By: | Rocco Caferra; Alessia Casamassima; Alessandro Cascavilla; Andrea Morone; Paola Tiranzoni |
| Abstract: | This work aims to identify and quantify the biases behind the anomalous behavior of people when they deal with the Three Doors dilemma, which is a really simple but counterintuitive game. Carrying out an artefactual field experiment and proposing eight different treatments to isolate the anomalies, we provide new interesting experimental evidence on the reasons why subjects fail to take the optimal decision. According to the experimental results, we can quantify the size and the impact of three main biases that explain the anomalous behavior of participants: Bayesian updating, illusion of control, and status quo bias. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00700&r=all |
| By: | Grözinger, Nicola; Irlenbusch, Bernd; Laske, Katharina; Schröder, Marina |
| Abstract: | In a novel real-effort setting, we experimentally study the effects of different communication media on creative performance in a collaborative tasks. We find that creative performance significantly decreases when group members communicate via chat instead of face-to-face. However, we find no significant difference between performances of groups that communicate via video conferences as compared to face-to-face. Thus, we provide evidence that barriers to creativity in virtual teams can be mitigated by real-time video conference communication. |
| Keywords: | Creativity, Communication, Laboratory Experiment, Real-effort, Complex Problem Solving, Innovation |
| JEL: | C91 J30 M52 O30 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-672&r=all |
| By: | Vincenzo Galasso; Tommaso Nannicini; Salvatore Nunnari |
| Abstract: | Negative advertising is frequent in electoral campaigns, despite its ambiguous effectiveness: negativity may reduce voters’ evaluation of the targeted politician but have a backlash effect for the attacker. We study the effect of negative advertising in electoral races with more than two candidates with a large scale field experiment during an electoral campaign for mayor in Italy and a survey experiment in a fictitious mayoral campaign. In our field experiment, we find a strong, positive spillover effect on the third main candidate (neither the target nor the attacker). This effect is confirmed in our survey experiment, which creates a controlled environment with no ideological components nor strategic voting. The negative ad has no impact on the targeted incumbent, has a sizable backlash effect on the attacker, and largely benefits the idle candidate. The attacker is perceived as less cooperative, less likely to lead a successful government, and more ideologically extreme. Keywords: Electoral Campaign, Political Advertisement, Randomized Controlled Trial, Field Experiment, Survey Experiment. JEL Codes: D72, C90, M37. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:664&r=all |
| By: | David Holtz; Ruben Lobel; Inessa Liskovich; Sinan Aral |
| Abstract: | Online marketplace designers frequently run A/B tests to measure the impact of proposed product changes. However, given that marketplaces are inherently connected, total average treatment effect estimates obtained through Bernoulli randomized experiments are often biased due to violations of the stable unit treatment value assumption. This can be particularly problematic for experiments that impact sellers' strategic choices, affect buyers' preferences over items in their consideration set, or change buyers' consideration sets altogether. In this work, we measure and reduce bias due to interference in online marketplace experiments by using observational data to create clusters of similar listings, and then using those clusters to conduct cluster-randomized field experiments. We provide a lower bound on the magnitude of bias due to interference by conducting a meta-experiment that randomizes over two experiment designs: one Bernoulli randomized, one cluster randomized. In both meta-experiment arms, treatment sellers are subject to a different platform fee policy than control sellers, resulting in different prices for buyers. By conducting a joint analysis of the two meta-experiment arms, we find a large and statistically significant difference between the total average treatment effect estimates obtained with the two designs, and estimate that 32.60% of the Bernoulli-randomized treatment effect estimate is due to interference bias. We also find weak evidence that the magnitude and/or direction of interference bias depends on extent to which a marketplace is supply- or demand-constrained, and analyze a second meta-experiment to highlight the difficulty of detecting interference bias when treatment interventions require intention-to-treat analysis. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2004.12489&r=all |
| By: | Florian Baumann (Center for Advanced Studies in Law and Economics (CASTLE), University of Bonn); Tim Friehe (Public Economics Group, University of Marburg); Pascal Langenbach (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | This paper studies the differential effects of fines and damages on people’s investment in accident prevention. We report results from a laboratory experiment in which monetary payoffs are maintained across the two policy instruments. While standard theory predicts no difference in behavior, we find that potential injurers invest substantially more money in accident prevention when they are subject to damages instead of a fine. We discuss possible behavioral channels that may explain our findings. |
| Keywords: | Externality, Care, Liability, Damages, Fine |
| JEL: | H62 K42 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2020_08&r=all |
| By: | Andrea Morone; Paola Tiranzoni |
| Abstract: | This study presents an analysis of hypothetical bias in WTA valuation connected with a bargaining game setting, in a field experiment context. The field of the experiment is the History Channel television "Pawn Stars". We collected a unique dataset that allowed us to analyze not only the gap between real and hypothetical WTA but also how they affect the bargaining game and vice versa. The general aim of this paper is to study the hypothetical bias related to subjects' WTA, and the factors that mostly affect it. The main results, of our paper, show that the hypothetical bias is positive, and it depends mainly on the price range and the type of good. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:feb:framed:00702&r=all |
| By: | John Cawley; Alex M. Susskind; Barton Willage |
| Abstract: | The United States, in 2018, implemented a nationwide requirement that chain restaurants disclose calorie information on their menus and menu boards. This law was motivated by concern that consumers underestimate the number of calories in restaurant food, but it remains unclear the extent to which this information disclosure affects consumer knowledge. This paper fills that gap by estimating the impact of information disclosure on consumer knowledge through a randomized controlled field experiment of calorie labels on the menus of a full-service restaurant. The results indicate that information disclosure significantly reduces the extent to which consumers underestimate the number of calories in restaurant food; the labels improve the accuracy of consumers’ post-meal estimates of the number of calories they ordered by 4.0 percent and reduces by 28.9% the probability of underestimating the calories in one’s meal by 50% or more, both of which are statistically significant. However, even after information disclosure, there remains considerable error in consumer beliefs about the calorie content of the restaurant food they ordered. Even among the treatment group who received calorie labels, the average absolute value of percent error in their report is 34.2%. |
| JEL: | D8 D83 H0 I1 I12 I14 I18 I24 K2 Q18 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27126&r=all |
| By: | Nina Boogen (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland); Claudio Daminato (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland); Massimo Filippini (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland and Universita della Svizzera italiana, Switzerland); Adrian Obrist (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland) |
| Abstract: | There is an ongoing debate in the literature about whether consumers are fully informed when investing in energy effciency. We experimentally evaluate the role of imperfect informa- tion or limited attention about energy costs of home appliances and light bulbs on households' choices. Using in-home visits, we collect information on the energy effciency of home appliances and light bulbs that households own. Exploiting these unique data, the intervention provided treated households with customized information about the potential of monetary savings from the adoption of new comparable efficient durables. We find a substantial impact of our informa- tion treatment on both the energy efficiency of the newly purchased durables and the intensity of utilization of existing home appliances. Our findings suggest that individuals are not fully informed about or pay attention to energy costs when purchasing and utilizing home appliances. |
| Keywords: | Imperfect information, Limited attention, Consumers durable choices, Energy efficiency, Field experiment. |
| JEL: | C93 D12 D83 Q40 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:20-334&r=all |
| By: | Brassiolo, Pablo; Estrada, Ricardo; Fajardo, Gustavo; Vargas, Juan |
| Abstract: | We study whether the existence of opportunities to extract rents in a job affects the type of individuals who are attracted to it. We design a laboratory experiment in which individuals choose between two contracts, each offering a payment in return for performing a task, and we experimentally introduce the possibility of graft in one of the contracts. First, we find that the corruptible contract attracts less honest individuals and repels the more honest ones, thus changing the composition of the group that chooses that contract to the detriment of integrity. Second, we observe extensive graft when the opportunity is introduced. Using a double randomization strategy to disentangle pure incentives and selection effects, we find that selection is the fundamental driver of graft in our context. |
| Keywords: | Corrupción, |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:dbl:dblwop:1567&r=all |
| By: | Zahra Murad (University of Portsmouth); Chris Starmer (University of Nottingham) |
| Abstract: | We investigate whether relative performance feedback can create biases in confidence leading it to ‘snowball’. We study elicited confidence about own performance, relative to other group members, in three stages. As subjects move across stages, we change group composition so that new groups contain either only top performers or only bottom performers, from the previous stage. Between treatments, we manipulate whether subjects know about their own past relative performance or that of currently matched group members. In the NoFeedback treatment, they know neither of these things and confidence remains calibrated and stable across the stages. In both of the other two treatments, we provide feedback on own performance and, in both of these treatments, confidence snowballs significantly in the direction of the feedback: confidence consistently rises among top performers and falls among bottom performers. In one of these treatments - the OwnFeedback treatment, which we interpret as inducing full reference group neglect – subjects are not told about how their reference group is changing. In the FullFeedback treatment, however, subjects do have a basis for judging that their own performance feedback is essentially uninformative, yet we still find strong evidence that confidence snowballs and only limited evidence that they are weaker than those arising from full reference group neglect. Hence, the results are broadly consistent with the reference group neglect hypothesis. The results suggest the possibility of confidence biases emerging and snowballing in a potentially wide range of field settings. |
| Keywords: | overconfidence, relative performance feedback, confidence updating |
| JEL: | C91 D81 |
| Date: | 2020–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:pbs:ecofin:2020-08&r=all |
| By: | Stephan Zheng; Alexander Trott; Sunil Srinivasa; Nikhil Naik; Melvin Gruesbeck; David C. Parkes; Richard Socher |
| Abstract: | Tackling real-world socio-economic challenges requires designing and testing economic policies. However, this is hard in practice, due to a lack of appropriate (micro-level) economic data and limited opportunity to experiment. In this work, we train social planners that discover tax policies in dynamic economies that can effectively trade-off economic equality and productivity. We propose a two-level deep reinforcement learning approach to learn dynamic tax policies, based on economic simulations in which both agents and a government learn and adapt. Our data-driven approach does not make use of economic modeling assumptions, and learns from observational data alone. We make four main contributions. First, we present an economic simulation environment that features competitive pressures and market dynamics. We validate the simulation by showing that baseline tax systems perform in a way that is consistent with economic theory, including in regard to learned agent behaviors and specializations. Second, we show that AI-driven tax policies improve the trade-off between equality and productivity by 16% over baseline policies, including the prominent Saez tax framework. Third, we showcase several emergent features: AI-driven tax policies are qualitatively different from baselines, setting a higher top tax rate and higher net subsidies for low incomes. Moreover, AI-driven tax policies perform strongly in the face of emergent tax-gaming strategies learned by AI agents. Lastly, AI-driven tax policies are also effective when used in experiments with human participants. In experiments conducted on MTurk, an AI tax policy provides an equality-productivity trade-off that is similar to that provided by the Saez framework along with higher inverse-income weighted social welfare. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2004.13332&r=all |
| By: | Deven E. Carlson; Alex Schmidt; Sarah Souders; Barbara L. Wolfe |
| Abstract: | In this paper, we leverage the random assignment of a need-based financial aid grant offer—the Fund for Wisconsin Scholars (FFWS) grant—and several sets of administrative records to provide experimental evidence on the effects of the grant offer on students’ in-state employment and earnings. For students in four-year universities, our results demonstrate significant employment reductions in the two years immediately following the aid offer as well as in the sixth, seventh, and eighth after receiving the randomized grant offer. We also find the aid offer to reduce these students’ in-state earnings throughout the full eight-year period we study. However, we show that the aid offer increases student grade point average, suggesting that the employment and earnings reductions during students’ in-college years are attributable to a reallocation of time and effort away from employment and toward coursework. For students’ post-college years, we provide suggestive evidence that the reductions are attributable to a combination of two mechanisms: 1) Reduced loan debt offering greater financial flexibility when selecting among employment options, and 2) Offer-induced outstate migration. We find little evidence that the FFWS grant offer affects the labor market outcomes of students in two-year institutions, although the effects for students in technical colleges are significantly more positive than the effects for students in two-year colleges in the University of Wisconsin System. |
| JEL: | I23 I24 I28 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27125&r=all |
| By: | Schildberg-Hörisch, Hannah; Trieu, Chi; Willrodt, Jana |
| Abstract: | Debates about affirmative action often revolve around fairness. Accordingly, we document substantial heterogeneity in the fairness perception of various affirmative action policies. But do these differences translate into different consequences? In a laboratory experiment, we study three different quota rules that favor individuals whose performance is low, either due to bad luck (discrimination), low productivity, or choice of a short working time. Higher fairness perceptions coincide with a higher willingness to compete and less retaliation against winners. No policy harms overall efficiency or post-competition teamwork. Furthermore, individuals seem to internalize the normbehind the policies that are perceived as fairest. |
| Keywords: | affirmative action,fairness ideals,experiment,tournament,real effort |
| JEL: | C91 D02 D63 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:338&r=all |
| By: | Chakravarty, Surajeet; Choo, Lawrence; Fonseca, Miguel A.; Kaplan, Todd R. |
| Abstract: | We study, using laboratory experiments, the extent to which disclosure policies about the financial health of a bank affect the likelihood of a bank run. We consider two disclosure regimes, full disclosure and no disclosure, under two scenarios: one in which the bank is on average financially solvent and another in which the bank is on average insolvent. When the bank is on average insolvent, the full disclosure regime reduces the expected likelihood of runs. In contrast, when the bank is on average solvent, the full disclosure regime increases the expected likelihood of runs. Our evidence illustrates the importance of contemporary financial disclosure regulations. |
| Keywords: | Bank runs, Banking crises, Public policy, Information disclosure. |
| JEL: | C72 C92 G18 G21 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99948&r=all |
| By: | Jean-Michel Servet (IHEID - Institut de hautes études internationales et du développement - University of Geneva [Switzerland]); Bruno Tinel (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | One-sentence summary : Randomized controlled trials by behavioural economists pretend to be pragmatic and only interested in what really works to solve practical problems but in reality they have notorious normative and ideological aspects. Key points: Behavioural RCTs ignore contexts and composition effects and reflect the biases of those who perform assessments. Behavioural randomizers presume without demonstrating that market exchanges are the most effective form of regulation for societies in all situations of social life. The positive or negative incentives ("nudges") offered by behavioural economics aim to normalize the behaviour of consumers, users, employees or small/independent producers. They are part of a set of power devices by which individual behaviours are shaped and forced, without their knowledge, to conform to dominant class interests. |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-02562758&r=all |
| By: | Watson, Nicole Elizabeth; Huebner, Gesche; Fell, Michael James; Shipworth, David |
| Abstract: | Usually consumers have a relationship with a single energy supplier. Increasingly, the option for consumers to retain their current supplier whilst taking on additional contracts with local suppliers is viewed as having the potential to support growth of local renewable energy. This study took a behavioural economic approach and conducted two pre-registered nationally representative survey experiments (n=1042, n=762). The main aims of the study were to assess the attractiveness of a multiple supplier model for British consumers and to understand the role of default effects and associated cognitive biases (loss-aversion, cognitive effort and implied endorsement) in consumers’ decisions to remain with incumbent suppliers. Results showed that participants were significantly more likely to engage with local energy suppliers under a multiple supplier model than the current single supplier model. In one experiment, consumers’ preference for adding a local supplier under a multiple supplier model was so strong that it overcame default effects. The perception that the supplier has been recommended (i.e. implied endorsement) was the most robust mechanism associated with remaining with default suppliers, suggesting that explicit endorsement of local suppliers may encourage engagement with the energy market. These findings suggest findings suggest that multiple supplier models are likely to be a promising avenue for driving the growth of local energy and opening opportunities for innovation in the British energy market. |
| Date: | 2020–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:e9nyu&r=all |
| By: | David Holtz; Sinan Aral |
| Abstract: | In an A/B test, the typical objective is to measure the total average treatment effect (TATE), which measures the difference between the average outcome if all users were treated and the average outcome if all users were untreated. However, a simple difference-in-means estimator will give a biased estimate of the TATE when outcomes of control units depend on the outcomes of treatment units, an issue we refer to as test-control interference. Using a simulation built on top of data from Airbnb, this paper considers the use of methods from the network interference literature for online marketplace experimentation. We model the marketplace as a network in which an edge exists between two sellers if their goods substitute for one another. We then simulate seller outcomes, specifically considering a "status quo" context and "treatment" context that forces all sellers to lower their prices. We use the same simulation framework to approximate TATE distributions produced by using blocked graph cluster randomization, exposure modeling, and the Hajek estimator for the difference in means. We find that while blocked graph cluster randomization reduces the bias of the naive difference-in-means estimator by as much as 62%, it also significantly increases the variance of the estimator. On the other hand, the use of more sophisticated estimators produces mixed results. While some provide (small) additional reductions in bias and small reductions in variance, others lead to increased bias and variance. Overall, our results suggest that experiment design and analysis techniques from the network experimentation literature are promising tools for reducing bias due to test-control interference in marketplace experiments. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2004.12162&r=all |
| By: | Massimo Filippini (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland and Universita della Svizzera italiana, Switzerland); Nilkanth Kumar (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland); Suchita Srinivasan (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland) |
| Abstract: | Addressing hazardous levels of air pollution in densely-populated cities in emerging countries requires concerted efforts to reduce fossil fuel use, especially in the transport sector. Given that motorcycles comprise almost 80% of vehicle sales in Nepal, a viable alternative to reduce air pollution is driving more fuel-efficient electric alternatives. However, their adoption has been limited due to a gamut of market failures and behavioral anomalies. In this study, we collect rich data on preferences, socio-economic factors and biases of more than 2,000 potential motorcycle buyers in the Kathmandu valley in Nepal. Using a stated choice experiment with randomized information treatments, we evaluate the role of specific behavioral anomalies in determining the stated-preference of consumers on whether they would be willing to buy an electric motorcycle. We find evidence to suggest that cognitive/skills limitations, framing of information, and the affect heuristic play a role in determining the stated-preference of respondents. In particular, displaying qualitative information on the air pollution impact of their choices, and “priming” them through impactful photographs and texts could have a positive effect. Furthermore, the results also hint at the importance of gender, health status and cognitive skills in determining the effectiveness of these nudges in promoting the adoption of electric alternatives. Implications of this study relate to policy choice in settings similar to Kathmandu, where fuel-inefficient vehicles are preferred and widely used, and the negative externalities due to air pollution are very stark. |
| Keywords: | Market failures, Behavioral anomalies, Electric vehicles, Stated-choice experiment, Nepal |
| JEL: | D1 D8 Q4 Q5 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:20-333&r=all |
| By: | Leib, Margarita; Schweitzer, Maurice |
| Abstract: | Seeing others engage in unethical behavior helps individuals justify their own unethical actions. In this article, we explore whether and how individuals search for information about others’ unethical behavior. Across two financially incentivized studies (total N = 617), participants could search either free (in Study 1) or costly (in Study 2) information about others’ behavior. Our findings reveal that individuals are both curious and are significantly influenced by the information they observe. However, individuals do not aggressively seek information about others’ unethical behavior, and are very sensitive to the costs to obtain this information. Free information promotes information search, which increases the likelihood that individuals will observe others’ unethical behavior and ultimately engage in unethical behavior themselves. When information is costly, individuals are far less likely to search for information, and are subsequently less likely to observe and engage in unethical behavior themselves. In contrast to prior work that has asserted that “sunlight” and greater access to information will curb dishonesty, we find that free access to information about others’ transgression may promote, rather than deter, unethical behavior. To curb unethical behavior, however, organizations may not have to shield individuals from learning about others’ transgressions; they may merely need to make this information difficult to obtain. |
| Date: | 2020–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:3pwcg&r=all |
| By: | Antoine Billot (LEM - Laboratoire d'Économie Moderne - UP2 - Université Panthéon-Assas); Sujoy Mukerji (QMUL - Queen Mary University of London); Jean-Marc Tallon (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We review some of the (theoretical) economic implications of David Schmeidler's models of decision under uncertainty (Choquet expected utility and maxmin expected utility) in competitive market settings. We start with the portfolio inertia result of Dow and Werlang (1992), show how it does or does not generalize in an equilibrium setting. We further explore the equilibrium implications (indeterminacies, non revelation of information) of these decision models. A section is then devoted to the studies of Pareto optimal arrangements under these models. We conclude with a discussion of experimental evidence for these models that relate, in particular, to the implications for market behaviour discussed in the preceding sections. |
| Abstract: | Nous passons en revue les implications en termes d'allocation du risque des modèles de décision développés par David Schmeidler. Nous revenons sur le résultat d'inertie des portfeuilles de Dow et Werlang (1992) et discutons de l'extension du résultat dans un cadre d'équilibre. Nous procédons ensuite à une revue des propriétés d'équilibre (indétermination, non révélation d'information) liées à ces modèles. Nous exposons ensuite les propriétés d'optimalité et concluons avec une discussion de la littérature expérimentale sur le sujet.. |
| Keywords: | Maxmin Expected Utility,No-trade,Risk Sharing,Indeterminacy,Experimental evidence,Choquet Expected Utility,Espérance d'utilité à la Choquet,Minimum d'espérances d'utilité,absence d'échanges,partage du risque,indétermination,expériences |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:halshs-02495663&r=all |
| By: | Raymundo M. Campos-Vazquez |
| Abstract: | Despite evidence of high inequality and low social mobility throughout the world, there has been only limited demand for change. Using new survey and experimental data, we investigate how perceptions about inequality and social mobility affect preferences for redistribution in Mexico. In addition to the perceived level of inequality typically measured in previous studies, we explore perceptions about who is rich and poor and their share of the population. The shape of perceived inequality that we find provides new insights as to why people tolerate large differences between the rich and the poor. We find that Mexicans generally perceive poverty and inequality not too far from measured levels, but they overestimate the income of the rich and their proportion of the population. Their perceptions of social mobility correctly estimate persistence rates at the top and bottom of the distribution, but they overestimate upward and downward mobility. Providing people with more information about observed income inequality and social mobility is one way to encourage a demand for redistribution. However, randomly providing selected participants with this information has almost zero effect on their desired levels of equality, social mobility, and tax rates. We measure the degree of tax progressiveness people want and calculate whether it is consistent with the level of equality they seek. We find that Mexicans want a progressive tax system in which the poor pay an average tax rate of 14% and the wealthy pay 41%, and that preference for a more progressive tax structure is negatively related to wealth. Our analysis shows, however, that the post-tax but pre-transfer income distribution respondents want is not consistent with these tax rates. |
| Keywords: | Mexique |
| JEL: | Q |
| Date: | 2020–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:avg:wpaper:en10822&r=all |
| By: | Gönül Dogan; Luke Glowacki; Hannes Rusch |
| Abstract: | Humans often favor their own group members over others, a preference that drives discrimination and intergroup conflicts. Whether such ingroup bias is a result of elevated concerns for one's group members or diminished concerns for outgroup members remains an open question. We test this experimentally with natural groups in Ethiopia that have varying intergroup relations (neutral vs. enmity) and strengths of group identity (weak vs. strong). We find that ingroup bias manifests as concern toward ingroup but not outgroup members and that a strong group identity amplifies ingroup concerns, whereas enmity has no effect. Our results thus identify shared group identity as a primary driver of concerns for others. |
| Date: | 2020–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0101&r=all |
| By: | Makoto Hagiwara (Faculty of Economics, Osaka University of Economics, Research Institute for Economics and Business Administration, Kobe University); Fumihiro Yonekura (School of Engineering, Tokyo Institute of Technology) |
| Abstract: | "King Solomon's Dilemma" is based on a biblical story and this can be considered as an allocation problem for an indivisible object among two players. A social planner wants to assign the object without payment to the player whose valuation is the highest. We say that such an allocation is "first-best." We experimentally compare the relative performance of the mechanism of Mihara (Japanese Economic Review, 63(3), 420-429, 2012) and a mechanism which we modify Mihara's mechanism. We find that a modified Mihara's mechanism relatively works better than Mihara's mechanism from the following five view points: (1) the proportion of the first-best allocations; (2) the proportion of the right-player allocations; (3) resource inefficiency and wrong-player infficiency; (4) net mean efficiency; and (5) players' behavior. |
| Keywords: | Implementation in iterative elimination of obviously dominated strategies; King Solomon's Dilemma; Mihara's mechanism; Ascending clock auctions; Laboratory experiment |
| JEL: | C92 D44 D78 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2020-17&r=all |
| By: | Briscese, Guglielmo (University of Chicago); Zanella, Giulio (University of Adelaide); Quinn, Veronica (Macquarie University, Sydney) |
| Abstract: | Finding a job requires effective search skills to engage successfully with employers with vacancies. In a field experiment, we test a website that supplements such search skills by providing editable resume and cover letter templates as well as tips on how to look and apply for jobs. Exposure to the website was randomized among about 2,700 job seekers in Australia. The intervention increased job-finding rates, particularly among job seekers aged 35-50 (up to 8 percentage points), with larger effects for women within this age group (up to 10 percentage points). The quality of job matches improved too. |
| Keywords: | online job search assistance, search skills, active labor market policy |
| JEL: | J08 J64 J68 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13170&r=all |
| By: | Bartos, Vojtech (University of Munich); Bauer, Michal (Charles University, Prague); Cahlíková, Jana (Max Planck Institute for Tax Law and Public Finance); Chytilová, Julie (Charles University, Prague) |
| Abstract: | Intergroup conflicts represent one of the most pressing problems facing human society. Sudden spikes in aggressive behavior, including pogroms, often take place during periods of economic hardship or health pandemics, but little is known about the underlying mechanism behind such change in behavior. Many scholars attribute it to scapegoating, a psychological need to redirect anger and to blame an out-group for hardship and problems beyond one's own control. However, causal evidence of whether hardship triggers out-group hostility has been lacking. Here we test this idea in the context of the Covid-19 pandemic, focusing on the common concern that it may foster nationalistic sentiments and racism. Using a controlled money-burning task, we elicited hostile behavior among a nationally representative sample (n = 2,186) in a Central European country, at a time when the entire population was under lockdown and border closure. We find that exogenously elevating salience of thoughts related to Covid-19 pandemic magnifies hostility and discrimination against foreigners, especially from Asia. This behavioral response is large in magnitude and holds across various demographic sub-groups. For policy, the results underscore the importance of not inflaming racist sentiments and suggest that efforts to recover international trade and cooperation will need to address both social and economic damage. |
| Keywords: | COVID-19, pandemic, scapegoating, hostility, inter-group conflict, discrimination, experiment |
| JEL: | C90 D01 D63 D91 J15 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13250&r=all |
| By: | Daoust, Jean-François; Nadeau, Richard; Dassonneville, Ruth; Lachapelle, Erick; Bélanger, Éric (McGill University); Savoie, Justin; van der Linden, Clifton |
| Abstract: | The extent to which citizens comply with newly-enacted public health measures such as social distancing or lockdowns strongly affects the propagation of the virus and the number of deaths from COVID-19. It is however very difficult to identify non-compliance through survey research because claiming to follow the rules is socially desirable. Using three survey experiments, we examine the efficacy of different “face-saving” questions that aim to reduce social desirability in the measurement of compliance with public health measures. Our treatments soften the social norm of compliance by way of a short preamble in combination with a guilty-free answer choice making it easier for respondents to admit non-compliance. We find that self-reported non-compliance increases by up to 11 percentage points when making use of a face-saving question. Considering the current context and the importance of measuring non-compliance, we argue that researchers around the world should adopt our most efficient face-saving question. |
| Date: | 2020–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:gursd&r=all |
| By: | Prati, Alberto (Aix-Marseille University); Senik, Claudia (Paris School of Economics) |
| Abstract: | Can people remember correctly their past well-being? We study three national surveys of the British, German and French population, where more than 50,000 European citizens were asked questions about their current and past life satisfaction. We uncover systematic biases in recalled subjective well- being: on average, people tend to overstate the improvement in their well-being over time and to understate their past happiness. But this aggregate figure hides a deep asymmetry: while happy people recall the evolution of their life to be better than it was, unhappy ones tend to exaggerate its worsening. It thus seems that feeling happy today implies feeling better than yesterday. These results offer an explanation of why happy people are more optimistic, perceive risks to be lower and are more open to new experiences. |
| Keywords: | memory biases, remembered utility, life satisfaction, intra-personal comparisons |
| JEL: | I31 D91 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13166&r=all |
| By: | Gregory Howard; John C. Whitehead; Jacob Hochard |
| Abstract: | There is a growing literature that utilizes stated preference surveys to estimate discount rates. A review of the literature reveals large variation both in the discount rate estimates coming from different stated preference surveys and in the specific methodologies used to estimate discount rates. While most methods use similar theory and logic in deriving discount rate estimates, it is an open question how much of the variation seen in the literature is due to differences in methodology. Using a single data set, we estimate annual discount rates using six different methodologies and find that most of our estimates are tightly clustered between 25 31%. One methodology yields an outlier value of 200%. We also use multiple metrics to examine which methodology yields the “right” discount rate. Key Words: Discount rate; mixed logit; discrete choice experiment |
| JEL: | Q58 H43 C52 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:20-01&r=all |