nep-exp New Economics Papers
on Experimental Economics
Issue of 2021‒11‒15
25 papers chosen by



  1. An Experimental Test of Cause-Related Marketing and Charitable Giving By James J. Murphy; Molly Conlin; Bryan Haugstad
  2. Intelligence Disclosure and Cooperation in Repeated Interactions By Marco Lambrecht; Eugenio Proto; Aldo Rustichini; Andis Sofianos
  3. Reference Points and the Tradeoff between Risk and Incentives By Thomas Dohmen; Arjan Non; Tom Stolp
  4. Intelligence promotes cooperation in long-term interaction: Experimental evidence in infinitely repeated public goods games By Tetsuya Kawamura; Tiffany Tsz Kwan Tse
  5. The impact of asset purchases in an experimental market with consumption smoothing motives By Jieyi Duan; Nobuyuki Hanaki
  6. Investment Decisions and Gender in Agricultural Households: Evidence from Lab-in-the-Field Experiment in Rural Tanzania By Pamuk, Haki; Keenan, Michael; Karanja, Stanley; Hella, Joseph
  7. The Effectiveness of Committee Quotas; The Role of Group Dynamics By José J. Domínguez
  8. A Causality-based Graphical Test to obtain an Optimal Blocking Set for Randomized Experiments By Abhishek K. Umrawal
  9. Going... going... wrong: a test of the level-k (and cognitive hierarchy) models of bidding behaviour By Itzhak Rasooly
  10. The Supply of Motivated Beliefs By Michael Thaler
  11. The Formation of Reference Points in Consumer Choice Behavior: Experimental Evidence from a Fish Market in Nigeria By Shikuku, Kelvin Mashisia; Bulte, Erwin; Lagerkvist, Carl Johan; Tran, Nhuong
  12. Earnings Management and Managerial Honesty: The Investors' Perspectives By Gibson, Rajna; Sohn, Matthias; Tanner, Carmen; Wagner, Alexander F.
  13. An online sequential test for qualitative treatment effects By Shi, Chengchun; Luo, Shikai; Zhu, Hongtu; Song, Rui
  14. THE PRESENCE OF IMAGES DOES NOT MODERATE THE DISFLUENCY EFFECT By Timofei A. Berezner; Elena S. Gorbunova
  15. The usefulness of financial accounting information: evidence from the field By Cascino, Stefano; Clatworthy, Mark A.; Osma, Beatriz Garcia; Gassen, Joachim; Imam, Shahed
  16. Willingness to pay or willingness to accept? An experimental study on secondhand smoke By Eleanya Nduka
  17. Preferences for Tree-Fruit Market Attributes Among Smallholder Farmers in Eastern Rwanda: A Discrete Choice Experiment By Seegers, Ronja; Ihli, Hanna; Winter, Etti; Chiputwa, Brian; Gassner, Anja
  18. Economic education at the expense of indoctrination? Evidence from Germany By Kaiser, Tim; Oberrauch, Luis
  19. Assessing Selection Bias in Non-experimental Estimates of the Returns to Workplace Training By Sauermann, Jan; Stenberg, Anders
  20. Cognitive ability, financial literacy, and narrow bracketing in time-preference elicitation By Oberrauch, Luis; Kaiser, Tim
  21. Personality and Ethics on Online Labor Markets: How mood influences ethical perceptions By Mourelatos, Evangelos
  22. Morality and Trust in Impersonal Relationships By Minnameier, Gerhard; Bonowski, Tim Jonas
  23. Cash, Funeral Benefits or Nothing at All: How to Incentivize Family Consent for Organ Donation By Pham, Vinh
  24. Lock-In Effects in Online Labor Markets By Fabrizio Ciotti; Lars Hornuf; Eliza Stenzhorn
  25. Diverse Policy Committees Can Reach Underrepresented Groups By D'Acunto, Francesco; Fuster, Andreas; Weber, Michael

  1. By: James J. Murphy (Department of Economics, University of Alaska Anchorage); Molly Conlin (Department of Economics, University of Alaska Anchorage); Bryan Haugstad (Department of Economics, University of Alaska Anchorage)
    Abstract: We conducted a natural field experiment at a local toy store in Anchorage, Alaska to estimate the potential impact on consumer behavior and business revenues when the firm’s charitable donation is conditional on the total dollar amount of the individual transaction. Results suggest that there was a modest increase in sales revenue as a result of the donation offer, however it is unlikely that the additional profits offset the cost of the donations.
    Keywords: Experimental economics, field experiment, charitable giving, cause-related marketing, corporate social responsibility, philanthropy
    JEL: C90 C93 D64 D9 H41
    Date: 2021–09
    URL: http://d.repec.org/n?u=RePEc:ala:wpaper:2021-02&r=
  2. By: Marco Lambrecht; Eugenio Proto; Aldo Rustichini; Andis Sofianos
    Abstract: We investigate in a laboratory setting whether revealing information on intelligence affects behavior in games with repeated interactions. In our experimental design we communicate information on the cognitive ability of both players. We use three stage games: Prisoners’ Dilemma (PD) and two versions of Battle of Sexes (BoS), with high and low payoff inequality. We find that the information affects strategic behavior significantly in two distinct ways. In PD, disclosure markedly hampers cooperation, as higher intelligence players are less cooperative once they are made aware that they play against someone of lower ability than themselves in the disclosure treatment. Similarly, in BoS with low payoff inequality, disclosure disrupts coordination on outcomes with positive payoffs, as higher intelligence players try to force their most preferred outcome onto the less intelligent. However, in BoS with high payoff inequality, this pattern of behavior dramatically changes. Disclosure does not significantly affect coordination rates. Differently from the low payoff inequality game, coordination is achieved more often on outcomes that favour less intelligent players. We conjecture that when coordination becomes more difficult, because of the high inequality between payoffs, intelligence and inequality together form a coordination device.
    Keywords: repeated prisoners dilemma, cooperation, intelligence, IQ
    JEL: C73 C91 C92 D83
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_9372&r=
  3. By: Thomas Dohmen (IZA (Schaumburg-Lippe-Strasse 5-9, 53113 Bonn, Germany), University of Bonn (Institute for Applied Microeconomics, Adenauerallee 24-42, 53113 Bonn, Germany), Maastricht University (Tongersestraat 53, 6211 LM Maastricht, The Netherlands)); Arjan Non (Erasmus University Rotterdam (E building, Burgemeester Oudlaan 50, 3062 PA Rotterdam, The Netherlands)); Tom Stolp (Maastricht University (Tongersestraat 53, 6211 LM Maastricht, The Netherlands))
    Abstract: We conduct laboratory experiments to investigate basic predictions of principal-agent theory about the choice of piece rate contracts in the presence of output risk, and provide novel insights that reference dependent preferences affect the tradeoff between risk and incentives. Subjects in our experiments choose their compensation for performing a real-effort task from a menu of linear piece rate and fixed payment combinations. As classical principal-agent models predict, more risk averse individuals choose lower piece rates. However, in contrast to those predictions, we find that low-productivity risk averse workers choose higher piece rates when the riskiness of the environment increases. We hypothesize that reference points affect piece rate choice in risky environments, such that individuals whose expected earnings would exceed (fall below) the reference point in a risk-free environment behave risk averse (seeking) in risky environments. In a second experiment, we exogenously manipulate reference points and confirm this hypothesis.
    Keywords: Incentive, piece-rate, risk, reference point, laboratory experiment
    JEL: D81 D91 M52
    Date: 2021–11
    URL: http://d.repec.org/n?u=RePEc:ajk:ajkdps:125&r=
  4. By: Tetsuya Kawamura; Tiffany Tsz Kwan Tse
    Abstract: A growing body of literature in experimental economics examines how cognitive ability affects cooperation in social dilemma settings. We contribute to the existing literature by studying this relationship in a more complex and strategic environment when the number of partners increases in an infinitely repeated public goods game. We designed four treatments with different continuation probability under two conditions: whether cooperation can be sustained as risk dominance or not. We asked participants to decide whether to cooperate in every period in the first five rounds. They were further asked to decide if they should elicit their strategy at the beginning of each super game using the strategy method in the last five rounds. We found that participants with greater cognitive abilities cooperated more (less) when cooperation could(not) be sustained as risk dominance. A similar trend was observed in the frequency of fully cooperative strategies. We also found that participants with greater cognitive abilities employed lenient and forgiving strategies more frequently when the continuation probability was far higher than the risk dominant threshold level.
    Date: 2021–10
    URL: http://d.repec.org/n?u=RePEc:dpr:wpaper:1146&r=
  5. By: Jieyi Duan; Nobuyuki Hanaki
    Abstract: We investigate the effect of preannounced market intervention on an asset price as well as participants' welfare in an experimental framework where participants have consumption smoothing motives to trade the asset. The results show that, on one hand, the preannounced intervention results in significantly larger overpricing of the asset relative to the rational expectations equilibrium level in periods prior to the intervention compared with the treatment without it. The participants' welfare, measured by the discounted sum of the payoffs at the beginning of the experiment, on the other hand, are not significantly worsened by the intervention.
    Date: 2021–11
    URL: http://d.repec.org/n?u=RePEc:dpr:wpaper:1147&r=
  6. By: Pamuk, Haki; Keenan, Michael; Karanja, Stanley; Hella, Joseph
    Keywords: Labor and Human Capital, Consumer/Household Economics
    Date: 2021–08
    URL: http://d.repec.org/n?u=RePEc:ags:iaae21:315291&r=
  7. By: José J. Domínguez (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: Committee quotas have been introduced during the last years for combatting the underrepresentation of women in male-stereotyped environments. However, the unclear effect of evaluators’ gender and the gender differences in group dynamics in mixed-gender committees question the effectiveness of the policy. I provide experimental evidence in both directions; a) how the gender composition of the committees affects the probability of female candidates of being recruited in a hiring process, and b) how men and women behave in group dynamics as a mechanism explaining the outcome of the policy. I designed a laboratory experiment in which groups of three subjects have to jointly select two candidates in a pool of six to perform a task. The probability of success of female candidates does not improve as the number of women in the committee increases. I found that malemajority committees were the most beneficial for female candidates. In these groups, men and women exhibited a similar level of voice and influence during deliberations, proposing male and female candidates for recruitment. Female-majority groups were, in contrast, the most detrimental for female candidates. Women in female-majority groups presented a higher level of voice but men, who proposed only male candidates as a modal proposal, were more influential, what limited the contribution of women. The paper suggests that more women in the committee do not necessarily benefit female candidates and examines some reasons that question the effectiveness of this policy.
    Keywords: Committee Quotas; Gender Gap; Group Dynamics; Laboratory Experiment.
    JEL: D03 C92 J71
    Date: 2021–11–02
    URL: http://d.repec.org/n?u=RePEc:gra:wpaper:21/12&r=
  8. By: Abhishek K. Umrawal
    Abstract: Randomized experiments are often performed to study the causal effects of interest. Blocking is a technique to precisely estimate the causal effects when the experimental material is not homogeneous. We formalize the problem of obtaining a statistically optimal set of covariates to be used to create blocks while performing a randomized experiment. We provide a graphical test to obtain such a set for a general semi-Markovian causal model. We also propose and provide ideas towards solving a more general problem of obtaining an optimal blocking set that considers both the statistical and economic costs of blocking.
    Date: 2021–11
    URL: http://d.repec.org/n?u=RePEc:arx:papers:2111.02306&r=
  9. By: Itzhak Rasooly
    Abstract: In this paper, we design and implement an experiment aimed at testing the level-k model of auctions. We begin by asking which (simple) environments can best disentangle the level-k model from its leading rival, Bayes-Nash equilibrium. We find two environments that are particularly suited to this purpose: an all-pay auction with uniformly distributed values, and a first-price auction with the possibility of cancelled bids. We then implement both of these environments in a virtual laboratory in order to see which theory can best explain observed bidding behaviour. We find that, when plausibly calibrated, the level-k model substantially under-predicts the observed bids and is clearly out-performed by equilibrium. Moreover, attempting to fit the level-k model to the observed data results in implausibly high estimated levels, which in turn bear no relation to the levels inferred from a game known to trigger level-k reasoning. Finally, subjects almost never appeal to iterated reasoning when asked to explain how they bid. Overall, these findings suggest that, despite its notable success in predicting behaviour in other strategic settings, the level-k model (and its close cousin cognitive hierarchy) cannot explain behaviour in auctions.
    Date: 2021–11
    URL: http://d.repec.org/n?u=RePEc:arx:papers:2111.05686&r=
  10. By: Michael Thaler
    Abstract: When people choose what messages to send to others, they often consider how others will interpret the messages. In many environments, particularly in politics, people are motivated to hold particular beliefs and distort how they process information in directions that favor their motivated beliefs. This paper uses two experiments to study how message senders are affected by receivers' motivated beliefs. Experiment 1, conducted using an online sample of social media users, analyzes the effect of incentivizing senders to be perceived as truthful. These incentives cause senders to send less truthful messages. When incentivized, senders send more false information when it aligns with receivers' politically-motivated beliefs, controlling for receivers' current beliefs. However, receivers do not anticipate the adverse effects of senders' incentives. Experiment 2 isolates the role that information processing plays by analyzing an environment in which receivers assess the truthfulness of messages from a computer and senders choose one of the computer's messages to determine their earnings. Senders predict that receivers distort information processing in the direction of their politics, demand information about receivers' political preferences, and condition on the receivers' politics to strategically choose less truthful computer messages.
    Date: 2021–11
    URL: http://d.repec.org/n?u=RePEc:arx:papers:2111.06062&r=
  11. By: Shikuku, Kelvin Mashisia; Bulte, Erwin; Lagerkvist, Carl Johan; Tran, Nhuong
    Keywords: Consumer/Household Economics
    Date: 2021–08
    URL: http://d.repec.org/n?u=RePEc:ags:iaae21:314964&r=
  12. By: Gibson, Rajna; Sohn, Matthias; Tanner, Carmen; Wagner, Alexander F.
    Abstract: Extant research shows that CEO characteristics affect earnings management. This paper studies how investors infer a specific characteristic of CEOs, namely moral commitment to honesty, from earnings management and how this perception - in conjunction with their own social and moral preferences - shapes their investment choices. We conduct two laboratory experiments simulating investment choices. Our results show that participants perceive a CEO to be more committed to honesty when they infer that the CEO engaged less in earnings management. For investment decisions, a one standard deviation increase in a CEO's perceived commitment to honesty compared to another CEO reduces the relevance of differences in the CEOs' claimed future returns by 40%. This effect is most prominent among investors with a proself value orientation. To prosocial investors, their own honesty values and those attributed to the CEO matter directly, while returns play a secondary role. Overall, perceived CEO honesty matters to different investors for distinct reasons.
    Keywords: Earnings management,honesty,investor preferences,investor segmentation,protected values
    JEL: M41 G41 G11
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:zbw:lawfin:7&r=
  13. By: Shi, Chengchun; Luo, Shikai; Zhu, Hongtu; Song, Rui
    Abstract: Tech companies (e.g., Google or Facebook) often use randomized online experiments and/or A/B testing primarily based on the average treatment effects to compare their new product with an old one. However, it is also critically important to detect qualitative treatment effects such that the new one may significantly outperform the existing one only under some specific circumstances. The aim of this paper is to develop a powerful testing procedure to efficiently detect such qualitative treatment effects. We propose a scalable online updating algorithm to implement our test procedure. It has three novelties including adaptive randomization, sequential monitoring, and online updating with guaranteed type-I error control. We also thoroughly examine the theoretical properties of our testing procedure including the limiting distribution of test statistics and the justification of an efficient bootstrap method. Extensive empirical studies are conducted to examine the finite sample performance of our test procedure.
    JEL: C1
    Date: 2021–10–27
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:112521&r=
  14. By: Timofei A. Berezner (National Research University Higher School of Economics); Elena S. Gorbunova (National Research University Higher School of Economics)
    Abstract: The disfluency effect is an improvement in the retention of information if its processing is difficult. Disfluency is usually attained by changing perceptual characteristics, and in the case of texts, fonts are made less legible. The disfluency effect has been demonstrated in several studies, but the number of unsuccessful replications is significantly higher. Among the possible reasons why the disfluency effect often cannot be detected, we consider the influence of other factors acting as moderators. This study examines the presence of images accompanying text information as a moderator. Based on dual-coding theory, we assume that the disfluency effect will manifest itself only when there are no images, since their presence contributes to better memorization. Two experiments were conducted in which information written either in Arial (fluent condition) or Comic Sans (disfluent condition) was presented to participants. The information was also accompanied by images or not. In the first experiment, the participants were asked to memorize 40 short words, in the second 7 fictional facts about the Earth. In both cases, the hypotheses were not confirmed—the disfluency effect did not manifest under any conditions.
    Keywords: disfluency effect, processing fluency, fonts, images, memory, learning, desirable difficulties
    JEL: Z
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:hig:wpaper:127psy2021&r=
  15. By: Cascino, Stefano; Clatworthy, Mark A.; Osma, Beatriz Garcia; Gassen, Joachim; Imam, Shahed
    Abstract: We examine how investment professionals assess the usefulness of financial accounting information depending on their information acquisition objectives and preparers’ earnings management incentives. We conduct a survey experiment based on face-to-face interviews with investment professionals and document two main results. First, we find that, compared with investment professionals assigned a firm valuation objective, those assigned a managerial performance evaluation objective assess accounting information as significantly less useful. Second, we find no systematic evidence that preparers’ earnings management incentives negatively affect investment professionals’ assessments of accounting information usefulness. To elucidate this second finding, we conduct a large-scale follow-up online experiment. Our results continue to offer no support for the effect of earnings management incentives on investment professionals’ assessments of accounting information usefulness, irrespective of preparers’ corporate governance quality. Instead, we find that poor corporate governance, by itself, reduces the usefulness of accounting information to investment professionals.
    Keywords: decision usefulness; financial reporting objectives; earnings management; corporate governance; investment professionals; relevance; representational faithfulness
    JEL: G15 G18 G38 M41
    Date: 2021–02–17
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:107569&r=
  16. By: Eleanya Nduka (Department of Economics, University of Exeter)
    Abstract: The anomaly between willingness to pay (WTP) and willingness to accept (WTA) invokes a well-established discussion in the stated preference literature. The debate involves which of the two is a better welfare measure. Although a few studies have tried to provide some insights, many researchers settle for eliciting WTP rather than WTA. However, WTA is a better welfare measure in some circumstances, especially in situations involving spillover effects and property rights. We investigate one of such situations and provide insights into how individuals in heterogeneous healthcare systems (private (U.S.) and public (U.K.)) value the effects of a spillover. First, we use choice experiments and contingent valuation techniques to quantify the attributes of secondhand smoke (SHS) health risks, focusing on generating crosscountry comparisons. We then compare the WTP and WTA welfare estimates. We find that agents differ significantly in valuing "external" health risks. Hence, this study uncovers an aspect of health risks valuation lacking in the literature. We also find that the two welfare measures differ significantly; thus, we contribute to the ongoing debate between WTP and WTA.
    Date: 2021–11–06
    URL: http://d.repec.org/n?u=RePEc:exe:wpaper:2108&r=
  17. By: Seegers, Ronja; Ihli, Hanna; Winter, Etti; Chiputwa, Brian; Gassner, Anja
    Keywords: Marketing
    Date: 2021–08
    URL: http://d.repec.org/n?u=RePEc:ags:iaae21:314980&r=
  18. By: Kaiser, Tim; Oberrauch, Luis
    Abstract: We study the impact of a recent curriculum reform introducing mandatory economic education in higher-track secondary schools in Southwest Germany. The curriculum reform provides the opportunity to leverage the exogenous variation in exposure to economic education relative to the previous cohort not affected by the reform. One year after exposure to the mandate, we observe positive treatment effects on test scores measuring cognitive elements of economic competence only for students with high test scores at baseline. Two years after exposure to the mandate, we find positive treatment effects on test scores across the entire distribution, as well as socio-emotional skills relevant to financial decision making while we do not observe effects on self-reported financial behaviors. At the same time, we find no changes in social preferences and normative attitudes that could give rise to concerns of indoctrination effects regarding students’ views on profit maximization and the market mechanism.
    Keywords: Economic education,financial literacy,impact evaluation,social preferences,indoctrination,financial behaviors
    JEL: A21 G53 I21
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:zbw:esprep:245801&r=
  19. By: Sauermann, Jan; Stenberg, Anders
    JEL: J24
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:zbw:vfsc21:242344&r=
  20. By: Oberrauch, Luis; Kaiser, Tim
    Abstract: We study the role of cognitive ability and financial literacy for inter-temporal decision-making using an adapted version of the Convex Time Budget Protocol. We document substantial heterogeneity in choice-patterns and estimated parameters at the individual-level: We find that subjects with higher cognitive ability and domain specific-knowledge are more likely to make patient inter-temporal choices, to allocate the entire budget to a single payment-date, and to allocate the entire budget to corner choices as interest rates increase. At the same time, domain specific knowledge is uncorrelated with choice consistency and estimated individual error parameters, suggesting these results are not driven by a reduction in random noise among high ability respondents. These results serve as suggestive evidence for inter-temporal arbitrage among high ability respondents, thereby revealing a potential confound in time-preference elicitation tasks relying on time-dated monetary rewards.
    Keywords: Intertemporal choice,cognitive ability,financial literacy,narrow bracketing,arbitrage
    JEL: G53 D15 D91
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:zbw:esprep:245802&r=
  21. By: Mourelatos, Evangelos
    Abstract: This research explores whether there is a link between mood and ethical perceptions in online labor markets. The experimental design allows to track the determinants of the underlying mechanism of individuals’ behavior within and without the treatment context. By using OLS estimation methods the paper also provides empirical evidence for several statistically significant effects of personality traits on ethical perceptions, value co-creation and relationship quality. In general, the positive mood manipulation lead to an increase of individuals’ ethical perceptions, value co-creation and relationship quality. These findings suggest that mainly the effect of positive mood on the outcomes operates through the trait of agreeableness. Contributions to the ethical perception, mood research and online-economy literature are discussed
    Keywords: ethical perception,value co-creation,mood,personality,online labor markets
    JEL: D91 D87 D53 D23 D01
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:zbw:esprep:244735&r=
  22. By: Minnameier, Gerhard; Bonowski, Tim Jonas
    JEL: D90
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:zbw:vfsc21:242438&r=
  23. By: Pham, Vinh
    Abstract: Incentives, such as funeral expense reimbursements and direct payments for surviving families, have been suggested to increase organ supply from post-mortem donors. Following Heyman and Ariely’s 2004 findings on the impact of gift labeling and reward magnitude on behaviors in altruistic environments, this study utilizes a full factorial survey design to examine subjects’ moral assessment of funeral benefits and cash prizes, and the effects these incentives had on the willingness to provide family consent (WTC). Regression analysis showed that funeral aids, when presented as gifts, outperformed direct payments in all ethical principles. Furthermore, a full funeral service without a revealed value was found to increase WTC by 8.5% from the current system.
    Keywords: organ donation, incentives, prosocial behavior, factorial survey
    JEL: C9 C91 D12 D64 I18
    Date: 2021–07–19
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:110471&r=
  24. By: Fabrizio Ciotti; Lars Hornuf; Eliza Stenzhorn
    Abstract: This article reports on an investigation of the role of lock-in exploitation and the impact of reputation portability on workers’ switching behaviors in online labor markets. Online platforms using reputation mechanisms typically prevent users from transferring their ratings to other platforms, inducing lock-in effects and high switching costs and leaving users vulnerable to platform exploitation. With a theoretical model, in which workers in online labor markets are locked-in by their reputational data, we test the effects using an online lab-in-the-field decision experiment. In addition to comparing a policy regime with and without reputation portability, we vary lock-in exploitation using platform fees to consider how switching behavior might differ according to monetary motives and fairness preferences. Theoretically, this study reveals how reputational investments can produce switching costs that platforms can exploit. Experimentally, the results suggest that reputation portability mitigates lock-in effects, making users less susceptible to lock-in exploitation. The data further show that switching is driven primarily by monetary motives, but perceiving the fee as unfair also has a significant role.
    Keywords: crowdsourcing, online markets, online labor, reputation portability, switching costs
    JEL: J24 D91 L51
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_9379&r=
  25. By: D'Acunto, Francesco; Fuster, Andreas; Weber, Michael
    Abstract: Increasing the diversity of policy committees has taken center stage worldwide, but whether and why diverse committees are more effective is still unclear. In a randomized control trial that varies the salience of female and minority representation on the Federal Reserve's monetary policy committee, the FOMC, we test whether diversity affects how Fed information influences consumers' subjective beliefs. Women and Black respondents form unemployment expectations more in line with FOMC forecasts and trust the Fed more after this intervention. Women are also more likely to acquire Fed-related information when associated with a female official. White men, who are overrepresented on the FOMC, do not react negatively. Heterogeneous taste for diversity can explain these patterns better than homophily. Our results suggest more diverse policy committees are better able to reach underrepresented groups without inducing negative reactions by others, thereby enhancing the effectiveness of policy communication and public trust in the institution.
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:zbw:lawfin:21&r=

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