|
on Experimental Economics |
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Issue of 2017‒12‒03
twenty-two papers chosen by |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods); Svenja Hippel (Max Planck Institute for Research on Collective Goods) |
| Abstract: | Public goods are dealt with in two literatures that neglect each other. Mechanism design advises a social planner that expects individuals to misrepresent their valuations. Experiments study the provision of the good when preferences might be non-standard. We introduce the problem of the mechanism design literature into a public good experiment. Valuations for the good are heterogeneous. To each group we add a participant with power to impose a contribution scheme. We study four settings: the authority has no personal interest and (1) valuations are common knowledge or (2) active participants may misrepresent their types; the authority has a personal interest (3) and must decide before learning her own valuation or (4) knows her own valuation. Disinterested social planners predominantly choose a payment rule that gives every group member the same ?nal payoff, even if misrepresentation is possible. Authorities are overly optimistic about truth telling. Interested social planners abuse their power, except if the opportunity cost of a more balanced rule is small. |
| Keywords: | Public Good, Social Planner, Truthtelling, Experiment |
| JEL: | C91 D02 D03 D61 D62 D64 H23 K12 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2017_23&r=exp |
| By: | Larbi Alaoui; Antonio Penta |
| Abstract: | Recent experiments suggest that level-k behavior is often driven by subjects' beliefs, rather than their binding cognitive bounds. But the extent to which this is true in general is not completely understood, mainly because disentangling 'cognitive' and 'behavioral' levels is challenging experimentally and theoretically. In this paper we provide a simple experimental design strategy (the 'tutorial method') to disentangle the two concepts purely based on subjects' choices. We also provide a 'replacement method' to assess whether the increased sophistication observed when stakes are higher is due to an increase in subjects' own understanding or their beliefs over others' increased incentives to reason. We find evidence that, in some of our treatments, the cognitive bound is indeed binding for a large fraction of subjects. Furthermore, a significant fraction of subjects do take into account others' incentives to reason. Our findings also suggest that in general, level-k behavior should not be taken as driven either by cognitive limits alone or beliefs alone. Rather, there is an interaction between own cognitive bound and reasoning about the opponent's reasoning process. From a methodological viewpoint, the tutorial and replacement methods have broader applicability, and can be used to study the beliefs-cognition dichotomy and higher order beliefs e ects in non level-k settings as well. |
| Keywords: | cognitive bound, depth of reasoning, higher-order beliefs. level-k reasoning, replacement method, tutorial method |
| JEL: | C72 C92 D80 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1587&r=exp |
| By: | Raf Van Gastel; Tim Goedemé; Julie Janssens; Eva Lefevere; Rik Lemkens |
| Abstract: | We evaluate how a simple letter and flyer sent to a low-income group stimulates the participation in a beneficial health insurance plan. Using a large-scale randomized field experiment we study the effect of contacting potential beneficiaries on the take-up of the Increased Reimbursement (IR) for healthcare in Belgium. We find a fourfold increase in the take-up of IR, with large differences across geographic areas. The group that remains without IR is, on average, less vulnerable than the group that takes up IR in response to the letter. As such, the mailing arguably succeeds in reaching out to the target population. |
| Keywords: | accessible health care, field experiment, Increased Reimbursement, Nudging, RCT |
| JEL: | I10 I13 I18 C93 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:wpaper:1712&r=exp |
| By: | Philipp Doerrenberg; Andreas Peichl |
| Abstract: | We present the first randomized survey experiment in the context of tax compliance to assess the role of social norms and reciprocity for intrinsic tax morale. We find that participants in a reciprocity treatment have significantly higher tax morale than those in a social-norm treatment. This suggests that a potential backfire effect of social norms is outweighed if the consequences of violating the social norm are made salient. We further document the anatomy of intrinsic motivations for tax compliance and present first evidence that previously found gender effects in tax morale are not driven by differences in risk preferences. |
| Keywords: | Tax compliance, tax evasion, instrinsic motivation, tax morale, social norms, reciprocity |
| JEL: | H20 H32 H50 C93 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_242&r=exp |
| By: | Serhiy Kandul; Olexandr Nikolaychuk |
| Abstract: | Experimental literature on pro-social behavior has been largely focused on settings where the decision of donors is sufficient for an interaction to occur. However, in many real-life applications recipients first have to ask donors for help to initiate the transaction. We suggest that this first move by the recipients might be associated with psychological costs which include shame of not being able to manage on one's own, negative feelings from the loss of respect, or stigmatization from the society. We argue that the reluctance to initiate the transaction is different from the unwillingness to accept help initiated by somebody else and test this preposition in a laboratory experiment. We let participants play a dictator game with two procedures: (1) dictator first chooses a transfer, and the recipient decides to accept or reject it; (2) recipient first decides to ask or not, and if asked the dictator then chooses a transfer. We also let recipients choose in which of the two conditions they want to play and then compare recipients' and dictators' behavior within each experimental procedure. |
| Keywords: | dictator game; procedural preferences; fairness; role allocation; social preferences. |
| JEL: | D01 D64 D90 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:irn:wpaper:17-13&r=exp |
| By: | Huck, Steffen; Szech, Nora; Wenner, Lukas M. |
| Abstract: | Recent behavioral models argue in favor of avoidance of instrumental information. We explore the role of information avoidance in a real-effort setting. Our experiment offers three main results. First, we confirm that preferences for avoidance of instrumental information exist, studying information structures on performance pay. Second, information avoiders outperform information receivers. This result holds independently of effects of self-selection. Third, the findings support theories on information avoidance that favor an optimistic belief design rather than theories that rationalize such behavior as a way to mitigate selfcontrol problems. This suggests that coarse information structures lead agents to distort their beliefs away from the objective prior. |
| Keywords: | optimal expectations,belief design,performance,real effort task,coarse incentive structures,workplace incentives |
| JEL: | D83 D84 J31 M52 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2015304r2&r=exp |
| By: | Erlend Berg; Michael Blake; Karlijn Morsink |
| Abstract: | Households, organisations and governments commonly engage in risk sharing. The residual risk, however, is often considerable. In response, many policy makers consider the introduction of parametric or index insurance. This raises the question of how demand for insurance depends on the extent of pre-existing risk sharing. We contribute to the literature in two ways. First, we present a simple model to analyse demand for both standard indemnity insurance and index insurance in the presence of risk sharing. Second, we conduct an artefactual field experiment with Ethiopian farmers, in which the predictions of the theoretical framework are borne out. |
| Keywords: | risk sharing; indemnity insurance; index insurance |
| JEL: | D14 D81 G22 O16 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2017-01-2&r=exp |
| By: | Alexia Gaudeul; Claudia Keser |
| Abstract: | We run a laboratory experiment where some participants are selected to make investment decisions on behalf of others. We test whether a democratic context influences the social preferences of decision makers in terms of efficiency, altruism and concern for inequality. We find that decision makers who are selected democratically are generally more efficiency-oriented, but also more altruistic, than leaders who are selected at random or by ability. Because wealth generation and distribution sometime conflict, efficiency is no higher with democratic leaders, although payoffs are more equal. We interpret our results in terms of a democratic norm that mitigates how elections may otherwise lead to an enhanced feeling of entitlement to one’s role. We exclude a selection effect and discuss the drivers of our results in terms of belief in the legitimacy of the selection procedure and reduced social distance. |
| Keywords: | Altruism,Democracy,Earned role,Efficiency,Elitism,Entitlement effect,Inequality,Majority-rule,Meritocracy,Social preferences, |
| JEL: | C91 D63 D64 |
| Date: | 2017–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2017s-25&r=exp |
| By: | Alberto Chong; Gianmarco León; Vivian Roza; Martin Valdivia; Gabriela Vega |
| Abstract: | We use a field experiment to evaluate the impact of two informational get-out-the-vote (GOTV) campaigns to boost female electoral participation in Paraguay. We find that public rallies have no effect either on registration or on voter turnout in the 2013 presidential elections. However, households that received door-to-door (D2D) treatment are 4.6 percentage points more likely to vote. Experimental variation on the intensity of the treatment at the locality level allows us to estimate spillover effects, which are present in localities that are geographically more concentrated, and thus may favor social interactions. Reinforcement effects to the already treated population are twice as large as diffusion to the untreated. Our results underscore the importance of taking into account urbanization patterns when designing informational campaigns. |
| Keywords: | Voter behavior, electoral politics, urbanization, spillover effects, Paraguay |
| JEL: | O10 D72 O53 D71 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1589&r=exp |
| By: | Khan, Adnan Q.; Khwaja, Asim I.; Olken, Benjamin A. |
| Abstract: | Performance pay for tax collectors has the potential to raise revenues, but might come at a cost if it increases the bargaining power of tax collectors vis-à-vis taxpayers. We report the first large-scale field experiment on these issues, where we experimentally allocated 482 property tax units in Punjab, Pakistan, into one of three performance pay schemes or a control. After two years, incentivized units had 9.4 log points higher revenue than controls, which translates to a 46% higher growth rate. The scheme that rewarded purely on revenue did best, increasing revenue by 12.9 log points (64% higher growth rate), with little penalty for customer satisfaction and assessment accuracy compared to the two other schemes that explicitly also rewarded these dimensions. The revenue gains accrue from a small number of properties becoming taxed at their true value, which is substantially more than they had been taxed at previously. The majority of properties in incentivized areas in fact pay no more taxes, but instead report higher bribes. The results are consistent with a collusive setting in which performance pay increases collectors’ bargaining power over taxpayers, who have to either pay higher bribes to avoid being reassessed or pay substantially higher taxes if collusion breaks down. |
| JEL: | F3 G3 |
| Date: | 2016–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66265&r=exp |
| By: | Alberto Chong; Gianmarco León; Vivian Roza; Martín Valdivia; Gabriela Vega |
| Abstract: | We use a field experiment to evaluate the impact of two informational get-out-the-vote (GOTV) campaigns to boost female electoral participation in Paraguay. We find that public rallies have no effect either on registration or on voter turnout in the 2013 presidential elections. However, households that received door-to-door (D2D) treatment are 4.6 percentage points more likely to vote. Experimental variation on the intensity of the treatment at the locality level allows us to estimate spillover effects, which are present in localities that are geographically more concentrated, and thus may favor social interactions. Reinforcement effects to the already treated population are twice as large as diffusion to the untreated. Our results underscore the importance of taking into account urbanization patterns when designing informational campaigns. |
| Keywords: | voter behavior, electoral politics, urbanization, spillover effects, Paraguay |
| JEL: | O10 D72 O53 D71 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1004&r=exp |
| By: | Serhiy Kandul; Olexandr Nikolaychuk |
| Abstract: | Delineation of someone's ownership typically involves the sense of deservedness: the property right is respected as long as the owner deserve to own the object. Objectively, deservedness is often linked to one's actions or specific attributes that justify the owner's claims. We argue that people might get the sense of deservedness without an objective causal attribution. In our experiment, the pure luck defines the allocation of the roles. Still, compared to a standard setting, in a treatment where actions have no causal effect on the outcome, dictators keep larger share. At the same time, dictators do not compensate recipients for their irrelevant actions. We interpret this asymmetry in reaction towards the procedures of role allocation as 'illusory property': people care about irrelevant procedures only if they favor themselves but not others. |
| Keywords: | dictator game; entitlement; fairness; social preferences; procedural preferences. |
| JEL: | D01 D64 D90 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:irn:wpaper:17-12&r=exp |
| By: | Bertoni, M.; Corazzini, L.; Robone, S.; |
| Abstract: | We ran a population-level randomized field experiment to ascertain whether a costless manipulation of the informational content (restricted or enhanced information) and the framing (gain or loss framing) of the invitation letter to the national breast cancer screening program affects the take-up rate. Our experiment involved more than 6,000 women aged 50-69 targeted by the screening program of the Province of Messina in Sicily, randomly assigned to receive different invitation letter formats. Using administrative data from the Local Health Authority archives, we show that giving enhanced loss-framed information about the risks of not having a mammography increases take-up rate by about 25 percent with respect to all other treatments (no information; restricted gain-framed information; restricted loss-framed information; enhanced gain-framed information). Results are stronger for subjects living farther away from the screening site. For them, the manipulation may indicate higher perceived risks of negative outcomes that makes it worthwhile to participate in the screening program, in spite of longer travel time. |
| Keywords: | screening; breast cancer; randomized field experiment; framing; information disclosure; nudging; |
| JEL: | C93 H51 I11 I18 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:17/27&r=exp |
| By: | Gosnell, Greer; Metcalfe, Robert; List, John A |
| Abstract: | Understanding motivations in the workplace remains of utmost import as economies around the world rely on increases in labor productivity to foster sustainable economic growth. This study makes use of a unique opportunity to “look under the hood” of an organization that critically relies on worker effort and performance. By partnering with Virgin Atlantic Airways on a field experiment that includes over 40,000 unique flights covering an eight-month period, we explore how information and incentives affect captains’ performance. Making use of more than 110,000 captain-level observations, we find that our set of treatments—which include performance information, personal targets, and prosocial incentives—induces captains to improve efficiency in all three key flight areas: pre-flight, in-flight, and post-flight. We estimate that our treatments saved between 266,000-704,000 kg of fuel for the airline over the eight-month experimental period. These savings led to between 838,000-2.22 million kg of CO2 abated at a marginal abatement cost of negative $250 per ton of CO2 (i.e. a $250 savings per ton abated) over the eight-month experimental period. Methodologically, our approach highlights the potential usefulness of moving beyond an experimental design that focuses on short-run substitution effects, and it also suggests a new way to combat firm-level externalities: target workers rather than the firm as a whole. |
| JEL: | R14 J01 |
| Date: | 2016–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:84331&r=exp |
| By: | Attanasi, Giuseppe; Dessí, Roberta; Moisan, Frederic; Robertson, Donald |
| Abstract: | Intergenerational interactions play an important part in society with older generations often acting as role models that influence younger ones. We investigate in a public good experiment how the behavior of more experienced and knowledgeable players (graduate students) is affected when they are informed that some of their personal and behavioral characteristics will be transmitted to future first-year undergraduates (enrolling the following year) playing the same game at the same university. In the "information" treatment, the history of behavior is transmitted with some personal characteristics (e.g. age and gender). In the "photo" treatment, a photo is also transmitted. Despite the absence of any monetary linkage between generations, our results show a significant effect of visibility by the future audience on initial contributions and dynamic behavior. Contrary to previous findings in the literature, contributions are lower in the presence of such personal identification. We explain this surprising negative effect by a "sucker aversion" bias according to which people become more sensitive to being perceived as exploited by their peers. We argue that the nature of the "audience" matters in reaching such an undesirable outcome. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12413&r=exp |
| By: | Mathieu Bunel; Yannick L'Horty; Loïc du Parquet; Pascale Petit |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tep:teppwp:wp17-06&r=exp |
| By: | Francisco Gallego; Ofer Malamud; Cristian Pop-Eleches |
| Abstract: | This paper explores how asymmetric information between parents and children and direct parental controls can influence children’s internet use in Chile. We designed and implemented a set of randomized interventions whereby approximately 7700 parents were sent weekly SMSs messages with (i) specific information about their children’s internet use, and/or (ii) encouragement and assistance with the installation of parental control software. We separate the informational content from the cue associated with SMS messages and vary the strength of the cues by randomly assigning whether parents received messages in a predictable or unpredictable fashion. Our analysis yields three main findings. First, we find that messages providing parents with specific information reduce children’s internet use by 6-10 percent and help parents mitigate the problem of asymmetric information in the household. Second, we do not find significant impacts from helping parents directly control their children’s Internet access with parental control software. Third, the strength or salience of the cue associated with receiving a message has an independent impact on internet use. |
| JEL: | D82 I15 J12 J13 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23982&r=exp |
| By: | Heufer, Jan (Erasmus School of Economics and Tinbergen Institute); Hjertstrand, Per (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We propose a method to recover homothetic preferences from choice data with minor optimization or measurement errors. Our method allows for a more detailed graphical analysis to reveal subjects' preferences and to choose appropriate functional forms for parametric analysis. It can also be used to extend applications of the money metric function, such as parametric recoverability as introduced by Halevy et al. (2017). It can also improve nonparametric comparison of preferences as suggested by Heufer (2014). |
| Keywords: | Graphical Analysis; Homotheticity; Money Metric Utility; Recoverability; Revealed Preference |
| JEL: | C14 C91 D11 D12 |
| Date: | 2017–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1187&r=exp |
| By: | de Bresser, Jochem (Tilburg University, Center For Economic Research); van Soest, Arthur (Tilburg University, Center For Economic Research) |
| Abstract: | This paper evaluates the predictive validity of stated intentions for actual behaviour. In the context of the 2017 Dutch parliamentary election, we compare how well polls based on probabilistic and deterministic questions line up with subsequent votes. Our empirical strategy is built around a randomised experiment in a representative panel. Respondents were either simply asked which party they will vote for, or were asked to allocate probabilities of voting for each party. The results show that for the large majority of the respondents, probabilities predict individual behaviour better than deterministic statements. There is, however, substantial heterogeneity in the predictive power of the subjective probabilities. We find evidence that they work better for those with higher probability numeracy, even though probability numeracy was measured eight years earlier. |
| Keywords: | subjective probabilities; predictive validity; probabilistic polling; elections |
| JEL: | D84 C81 C25 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:67bd2341-45c7-4e60-99e5-ff32b1be1668&r=exp |
| By: | Lea Skræp Svenningsen (Department of Food and Resource Economics, University of Copenhagen) |
| Abstract: | This study examines whether people have distributional preferences for the impacts of climate policy when making donations towards such policies. In an online choice experiment, using a real donation mechanism, a representative sample of 95 members of the Danish public are provided 27€ and asked to make 16 donation choices among different climate policy options. The climate policies are described in terms of two main outcome variables, including future effects on income in 2100 and present co-benefits from mitigation action. Both outcomes are described for three specific regions of the world, Western Europe, Southeast Asia and Sub-Saharan Africa. For each participant, one policy choice was drawn at random to be realised and the total amount donated by participants was used to purchase and withdraw CO2 quotas and credits in the European Emission Trading Scheme and as a donation to the UN Adaptation Fund. A random parameter logit model shows that distributional concerns matter for people when they donate to climate policy and that elements of both inequity aversion and general altruism influence the choice of climate policy. The results underscore the importance of considering preferences for distributional outcomes when designing climate policy. |
| Keywords: | choice experiment, climate change, inequity aversion, altruism, random parameters logit, intergenerational, distributional social preferences |
| JEL: | D30 D91 Q51 Q54 Q58 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2017_11&r=exp |
| By: | Hitoshi Matsushima (Department of Economics, University of Tokyo) |
| Abstract: | An economic agent (player) sometimes fails to correct hypothetical (contingent) thinking, which may increase the occurrence of anomalies in various economic situations. This paper demonstrates a method to encourage such a boundedly rational player to practice correct hypothetical thinking in strategic situations with imperfect information. We introduce a concept termed “frame†as a description of a synchronized cognitive procedure, through which a player decides multiple actions in a step-by-step manner, shaping his (or her) strategy selection as a whole. We could regard a frame as a supposedly irrelevant factor from the viewpoint of full rationality. However, this paper theoretically shows that in a multi-unit auction with private values, the ascending proxy auction has a significant advantage over the second-price auction in terms of the boundedly rational players' incentive to practice correct hypothetical thinking, because of the difference, not in physical rule, but in background frame, between these auction formats. By designing frames appropriately, we generally show that any static game that is solvable in iteratively undominated strategies is also solvable even if players cannot practice correct hypothetical thinking without the help of a well-designed frame. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cfi:fseres:cf425&r=exp |
| By: | Camuffo, Arnaldo; Cordova, Alessandro; Gambardella, Alfonso |
| Abstract: | A classical approach to collecting and elaborating information to make entrepreneurial decisions combines search heuristics such as trial and error, effectuation, and confirmatory search. This paper develops a framework for exploring the implications of a more scientific approach to entrepreneurial decision making. The panel sample of our randomized control trial includes 116 Italian startups and 16 data points over a period of about one year. Both the treatment and control groups receive 10 sessions of general training on how to obtain feedback from the market and gauge the feasibility of their idea. We teach the treated startups to develop frameworks for predicting the performance of their idea and to conduct rigorous tests of their hypotheses very much like scientists do in their research. We let the firms in the control group, instead, follow their intuitions about how to assess their idea, which has typically produced fairly standard search heuristics. We find that entrepreneurs who behave like scientists perform better, pivot to a greater extent to a different idea, and do not drop out less than the control group in the early stages of the startup. These results are consistent with the main prediction of our theory: a scientific approach improves precision – it reduces the odds of pursuing projects with false positive returns, and raises the odds of pursuing projects with false negative returns. |
| Keywords: | decision-making; entrepreneurship; randomized control trial; scientific method; startup |
| JEL: | L21 L26 M13 M21 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12421&r=exp |