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on Experimental Economics |
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Issue of 2019‒02‒25
twenty-two papers chosen by |
| By: | Blimpo, Moussa P.; Carneiro, Pedro; Jervis, Pamela; Pugatch, Todd |
| Abstract: | This paper studies two experiments of early childhood development programs in The Gambia: one increasing access to services, and another improving service quality. In the first experiment, new community-based early childhood development (ECD) centers were introduced to randomly chosen villages that had no pre-existing structured ECD services. In the second experiment, a randomly assigned subset of existing ECD centers received intensive provider training. We find no evidence that either intervention improved average levels of child development. Exploratory analysis suggests that, in fact, the first experiment, which increased access to relatively low quality ECD services, led to declines in child development among children from less disadvantaged households. Evidence supports that these households may have been steered away from better quality early childhood settings in their homes. |
| Keywords: | early childhood development,cognitive stimulation,teacher training,The Gambia,randomized control trials,Malawi Developmental Assessment Tool |
| JEL: | I25 I38 O15 O22 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:318&r=all |
| By: | Philip J. Grossman (Monash University); Youngseok Park (Colby College); Jean Paul Rabanal (Monash University); Olga A. Rud (RMIT Univeristy) |
| Abstract: | We conduct a laboratory experiment to study the role of gender on social welfare outcomes in a strategic commitment game of incomplete information. In our baseline treatment, players simultaneously commit to either a Hawkish action, which leads to a private payoff, or a Dovish action, which can enhance social welfare. We add a sequential and an endogenous move treatment, where in the former, the first mover is exogenously selected and in the latter, players self-select the order of play. The two additional treatments relax the commitment constraint for the second mover. We find that (i) social welfare is significantly improved in the last two treatments and (ii) the outcome in the endogenous move treatment is mainly driven by gender. Men are willing to play the risky Dovish action more often than women. |
| Keywords: | Gender, type uncertainty, endogenous timing, laboratory experiment |
| JEL: | C72 C92 D82 D91 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:141&r=all |
| By: | Ferdinand A. von Siemens |
| Abstract: | This article studies whether people want to control which information on their own past pro-social behavior is revealed to other people. Participants in an experiment are assigned a color which depends on their own past pro-sociality. They can then spend money to increase or decrease the probability with which their color is revealed to another participant. The data show that participants are more likely to reveal colors that have a more favorable informational content. This pattern is not found in a control treatment in which colors are randomly assigned and thus have no informational content. Regression analysis confirms these findings, also when controlling for the initial pro-social decision. These results complement the existing empirical evidence, and suggests that people strategically manipulate the pro-social impression they make on other people, even though a favorable reputation has no immediate material benefits. |
| Keywords: | social signaling, trust, altruism |
| JEL: | C90 D01 D80 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7497&r=all |
| By: | Benistant, Julien (GATE, University of Lyon); Villeval, Marie Claire (CNRS, GATE) |
| Abstract: | Using a real-effort experiment, we study whether group identity affects unethical behavior in a contest game. We vary whether minimal group identity is induced or not, whether individuals have to report their own outcome or the outcome of their competitor, and whether pairs of competitors share the same group identity or not. We show that individuals misreport in the same proportion and to the same extent by inflating their outcome or by decreasing their opponent's outcome, except when any possible scrutiny by the experimenter is removed. Regardless of the possibility of scrutiny by the experimenter, misreporting is affected neither by the competitor's group identity nor by the individual's beliefs about others' misreporting behavior. This suggests that in competitive settings, unethical behavior is mainly driven by an unconditional desire to win. |
| Keywords: | lying, sabotage, group identity, contests, experiment |
| JEL: | C92 M54 D63 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12120&r=all |
| By: | Le Yaouanq, Yves; Schwardmann, Peter |
| Abstract: | How can naiveté about present bias persist despite experience? To answer this question, our experiment investigates participants' ability to learn from their own behavior. Participants decide how much to work on a real effort task on two predetermined dates. In the week preceding each work date, they state their commitment preferences and predictions of future effort. While we find that participants are present biased and initially naive about their bias, our methodology enables us to establish that they are Bayesian in how they learn from their experience at the first work date. A treatment in which we vary the nature of the task at the second date further shows that learning is unencumbered by a change in environment. Our results suggest that persistent naiveté cannot be explained by a fundamental inferential bias. At the same time, we find that participants initially underestimate the information that their experience will provide - a bias that may lead to underinvestment in experimentation and a failure to activate self-regulation mechanisms. |
| Keywords: | Bayesian updating; learning; Naivete; present bias |
| JEL: | C91 D83 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13510&r=all |
| By: | Hélia Marreiros (Universidade Católica Portuguesa, Católica Porto Business School and CEGE) |
| Abstract: | This paper examines experimentally the effects of social identity and communication on teams’ distributional rules and wealth creation. The context studied is team production with multiple resource owners of different skills. In these organizational settings, heterogeneity of skills might create a conflict between equity, equality and social welfare. The results of a two-stage experiment, where participants vote in the distributional rule in stage I and make their effort decisions in stage II, indicate that induced group identity prompts preferences for equality even at the expense of wealth creation. We find that compared to a setting where social interaction is absent, identity does not increase team productivity, but equalizes individual payoffs. These findings suggest that group identity triggers the wide spread use of equal sharing rules by heterogeneous teams, as it increases the team’s level of egalitarianism. This paper provides recommendations for organizational decisionmaking. |
| Keywords: | Teams; Heterogeneous skills; Social identity; Communication; Voting; Distributional preferences; Experiments. |
| JEL: | C92 D31 D63 J33 M52 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cap:wpaper:022019&r=all |
| By: | Nadja R. Ging-Jehli; Florian H. Schneider; Roberto A. Weber |
| Abstract: | We experimentally study settings where an individual may have an incentive to adopt negative beliefs about another’s intentions in order to justify egoistic behavior. Our first study uses a game in which a player can take money from an opponent in order to prevent the opponent from subsequently causing harm. We hypothesize that players will justify taking by engaging in “strategic cynicism,” convincing themselves of the opponent’s ill intentions. We elicit incentivized beliefs both from players with such an incentive and from neutral third parties with no incentive to bias their beliefs. We find no difference between the two sets of beliefs, suggesting that people do not negatively bias their beliefs about a strategic opponent even when they have an incentive to do so. This result contrasts with Di Tella, et al. (2015), who argue that they provide evidence of strategic cynicism. We reconcile the discrepancy by using Di Tella, et al.’s, data, a simple model of strategic belief manipulation and a novel experiment in which we replicate Di Tella, et al.’s, experiment and also elicit the beliefs of neutral third parties. Across three experimental datasets, the results provide no evidence of negatively biased beliefs about others’ intentions. However, Di Tella, et al.’s, results and our novel data indicate that those with a greater incentive to view others’ intentions negatively exhibit relatively less positive beliefs than those without such incentives. |
| Keywords: | motivated beliefs, strategic cynicism, bias, experiment |
| JEL: | C72 D83 C92 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7517&r=all |
| By: | Henning Finseraas; Torbjørn Hanson; Åshild A. Johnsen; Andreas Kotsadam; Gaute Torsvik |
| Abstract: | We study how close personal contact with minorities affects in-group and out-group trust in a field experiment in the armed forces. Soldiers are randomly assigned to rooms with or without ethnic minorities. At the end of the recruit period, we measure trust by using a trust game. Results indicate that close personal contact with minorities increases trust towards a generic immigrant. We replicate the result that individuals coming from more ethnically diverse areas trust minorities less, but random assignment to interact with minority soldiers removes this negative correlation. We conclude that social integration involving personal contact can reduce negative effects of ethnic diversity on trust. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7515&r=all |
| By: | van der Klaauw, Bas; Ziegler, Lennart |
| Abstract: | We conduct a field experiment to evaluate the effectiveness of labor market speeddates where unemployed workers meet temporary employment agencies. Our analysis shows that participation in such events increases immediate job finding by 6-7 percentage points. In the subsequent months, employment effects diminish again, suggesting that vacancies mediated through temporary employment agencies have no long-lasting effect on employment prospects. While the intervention is cost effective for the UI administration, higher labor earnings of treated job seekers do not fully compensate for the decline in benefit payments. Additional survey evidence shows that speeddate participation increases job search motivation and reduces reservation wages. |
| Keywords: | active labor market policies; job search behavior; Matching events; randomized experiment; temporary work |
| JEL: | C21 C93 J64 J65 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13516&r=all |
| By: | Andrew Dustan; Juan Manuel Hernandez-Agramonte; Stanislao Maldonado |
| Abstract: | We study how non-monetary incentives, motivated by recent advances in behavioral economics, affect civil servant performance in a context where state capacity is weak. We collaborated with a government agency in Peru to experimentally vary the context of text messages targeted to civil servants in charge of a school maintenance program. These messages incorporated behavioral insights in dimensions related to information provision, social norms, and weak forms of monitoring and auditing. We find that these messages are a very cost-effective strategy to enforce compliance with national policies among civil servants. We further study the role of social norms and the salience of social benefits in a follow-up experiment and explore the external validity or our original results by implementing a related experiment with civil servants from a different national program. The findings of these new experiments support our original results and provide additional insights regarding the context in which these incentives may work. Our results highlight the importance of carefully designed non-monetary incentives as a tool to improve civil servant performance when the state lacks institutional mechanisms to enforce compliance. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00664&r=all |
| By: | Camille Cornand (Centre National de la Recherche Scientifique (CNRS)); Paul Hubert (Observatoire français des conjonctures économiques) |
| Abstract: | Establishing the external validity of laboratory experiments in terms of inflation forecasts is crucial for policy initiatives to be valid outside the laboratory. Our contribution is to document whether different measures of inflation expectations based on various categories of agents (participants to experiments, households, industry forecasters, professional forecasters, financial market participants and central bankers) share common patterns by analyzing: the forecasting performances of these different categories of data; the information rigidities to which they are subject; the determination of expectations. Overall, the different categories of forecasts exhibit common features: forecast errors are comparably large and autocorrelated, forecast errors and forecast revisions are predictable from past information, which suggests the presence of information frictions. Finally, the standard lagged inflation determinant of inflation expectations is robust to the data sets. There is nevertheless some heterogeneity among the six different sets. If experimental forecasts are relatively comparable to survey and financial market data, central bank forecasts seem to be superior. |
| Keywords: | Inflation expectations; Experimental forecasts; Survey forecasts; Market -based forecasts; Central bank forecasts |
| JEL: | E3 E5 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/6o4qdck7489u7pqc068eeuqsnq&r=all |
| By: | Nina Hestermann; Yves Le Yaouanq |
| Abstract: | We study the inference and experimentation problem of an agent in a situation where the outcomes depend on the individual’s intrinsic ability and on an external variable. We analyze the mistakes made by decision-makers who hold inaccurate prior beliefs about their ability. Overconfident individuals take too much credit for their successes and excessively blame external factors if they fail. They are too easily dissatisfied with their environment, which leads them to experiment in variable environments and revise their self-confidence over time. In contrast, underconfident decision-makers might be trapped in low-quality environments and incur perpetual utility losses. |
| Keywords: | learning, experimentation, overconfidence, attribution bias |
| JEL: | D83 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7501&r=all |
| By: | Bastani, Spencer; Waldenström, Daniel |
| Abstract: | We study how attitudes to inheritance taxation are influenced by information about the role of inherited wealth in society. Using a randomized experiment in a register-linked Swedish survey, we find that informing individuals about the large aggregate importance of inherited wealth and its link to inequality of opportunity significantly increases the support for inheritance taxation. The effect is almost uniform across socio-economic groups and survives a battery of robustness tests. Changes in the perceived economic importance of inherited wealth and altered views on whether luck matters most for economic success appear to be the main driving factors behind the treatment effect. Our findings suggest that the low salience of inherited wealth could be one explanation behind the relatively marginalized role of inheritance taxation in developed economies. |
| Keywords: | Capital taxation; Equality of Opportunity; randomized experiment; tax attitudes |
| JEL: | D31 H20 H31 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13484&r=all |
| By: | Casella, Alessandra; sanchez, luis |
| Abstract: | Storable Votes and Quadratic Voting are voting systems designed to account for voters' intensity of preferences. We test their performance in two samples of California residents using data on four initiatives prepared for the 2016 California ballot. We bootstrap the original samples and generate two sets of 10,000 multi-elections simulations. As per design, both systems induce minority victories and result in higher expected welfare relative to majority voting. In our parametrization, quadratic voting induces more minority victories and achieves higher average welfare, but causes more frequent inefficient minority victories. The results are robust to different plausible rules-of-thumb in casting votes. |
| Keywords: | democracy; majority; voting |
| JEL: | D70 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13479&r=all |
| By: | Craig Tutterow; Guillaume Saint-Jacques |
| Abstract: | Randomized experiments, or A/B tests are used to estimate the causal impact of a feature on the behavior of users by creating two parallel universes in which members are simultaneously assigned to treatment and control. However, in social network settings, members interact, such that the impact of a feature is not always contained within the treatment group. Researchers have developed a number of experimental designs to estimate network effects in social settings. Alternatively, naturally occurring exogenous variation, or 'natural experiments,' allow researchers to recover causal estimates of peer effects from observational data in the absence of experimental manipulation. Natural experiments trade off the engineering costs and some of the ethical concerns associated with network randomization with the search costs of finding situations with natural exogenous variation. To mitigate the search costs associated with discovering natural counterfactuals, we identify a common engineering requirement used to scale massive online systems, in which natural exogenous variation is likely to exist: notification queueing. We identify two natural experiments on the LinkedIn platform based on the order of notification queues to estimate the causal impact of a received message on the engagement of a recipient. We show that receiving a message from another member significantly increases a member's engagement, but that some popular observational specifications, such as fixed-effects estimators, overestimate this effect by as much as 2.7x. We then apply the estimated network effect coefficients to a large body of past experiments to quantify the extent to which it changes our interpretation of experimental results. The study points to the benefits of using messaging queues to discover naturally occurring counterfactuals for the estimation of causal effects without experimenter intervention. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1902.07133&r=all |
| By: | López Bóo, Florencia (Inter-American Development Bank); Creamer, John (U.S. Census Bureau) |
| Abstract: | We explore the effects of a randomly assigned conditional cash transfer in Honduras (Bono 10000) on early childhood development. We find significant impacts on cognitive development in children 0-60 months, with an average effect size of 0.13 SD. We show differential impacts by type of transfer: 0-5-year-old children from families receiving the "health" transfer, which targeted families with 0-5-year-old children only, benefited significantly from the program, whereas 0-5 year-olds in families receiving the "education" transfer, which targeted 6-18 year-olds, perceived no benefit. In comparison with other programs, the effect of this impact is sizeable (0.34 SD on average). Although the overall program appears to have slightly changed some behaviors that might affect children (i.e. decreased probability of maternal employment, and increased maternal self-esteem), we did not find heterogenous impacts of the Bono across these variables. Results are explained mainly by differences in conditions: while the "education" component imposed conditions only on children of schooling age, the "health" transfer required regular health checkups of 0-5 year old children. The "health" transfer families were more likely to attend health checkups, which may have induced behavior changes that improved children's health and cognitive development, including purchasing more nutritious food. These results imply that cash without well-targeted conditions attached, might not be as effective for the development of young children. |
| Keywords: | Honduras, education, health, early childhood development, children, conditional cash transfers (CCTs), impact evaluation |
| JEL: | C93 J13 I25 I38 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12109&r=all |
| By: | Bosetti, Valentina; Heugues, Melanie; Tavoni, Alessandro |
| Abstract: | We explore the prospects of cooperation in a threshold public bad game. The experiment’s setup allows us to investigate the issue of effort coordination between signatories and non-signatories to a climate agreement under the threat of a catastrophe. Motivated actors may signal willingness to lead by committing a share of investments to a ‘clean’ but less remunerative project. The game is parametrized such that the externality cannot be fully internalized by the coalition, so that some effort on the part of the second movers is required if the catastrophic losses are to be avoided. We manipulate both the relative returns of two investments and the extent to which the gains from leadership diffuse to second movers. We find that the likelihood of reaching a sizeable coalition of early investors in the clean technology is higher when the benefits are appropriated by the coalition. Conversely, spillovers can entice second movers’ adoption. |
| JEL: | C70 C92 Q50 |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68931&r=all |
| By: | Charles Bellemare; Alexander Sebald |
| Abstract: | We derive bounds on the causal effect of belief-dependent preferences (reciprocity and guilt aversion) on choices in sequential two-player games without exploiting information or data on the (higher-order) beliefs of players. We show how informative bounds can be derived by exploiting a specific invariance property common to those preferences. We illustrate our approach by analyzing data from an experiment conducted in Denmark. Our approach produces tight bounds on the causal effect of reciprocity in the games we consider. These bounds suggest there exists significant reciprocity in our population – a result also substantiated by the participants’ answers to a post-experimental questionnaire. On the other hand, our approach yields high implausible estimates of guilt aversion. We contrast our estimated bounds with point estimates obtained using data on self-declared higher-order beliefs, keeping all other aspects of the model unchanged. We find that point estimates fall within our estimated bounds suggesting that elicited higher-order belief data in our experiment is weakly (if at all) affected by a potential endogeneity problem due to e.g. false consensus effects. |
| Keywords: | belief-dependent preferences, partial identification |
| JEL: | C93 D63 D84 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7505&r=all |
| By: | John List; Fatemeh Momeni |
| Abstract: | We use a natural field experiment in which we hired over 2000 workers from an online labor market to explore how upfront payment affects worker motivation and misbehavior on the job. We start with a simple theory that shows paying upfront can increase misbehavior through reducing the perceived costs of cheating, but it can decrease misbehavior through generating a gift-exchange effect. Motivated by the theory, we designed a task that provided workers with opportunities to reciprocate or misbehave. A unique aspect of our design is that we are permitted an opportunity to measure the curvature of the gift-exchange value of the upfront payment. Our results suggest paying workers upfront induces a gift-exchange effect that is concave in the share of total wage paid upfront. Moreover, the impact is strong enough to suggest that small upfront payments are a cost-effective means for an employer to curb employee misbehavior. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:feb:natura:00665&r=all |
| By: | Sinning, Mathias; Fels, Katja M. |
| Abstract: | Tax noncompliance harms both social cohesion and public welfare. In the US alone, tax underpayment averaged $39 billion per year from 2008 to 2010. How can tax authorities collect outstanding payments more efficiently? Novel research by RWI in cooperation with the Australian National University provides new insights: based on three natural field experiments, the researchers show that a simplified language and reminders increase tax compliance by corporate taxpayers. Early reminders are especially attractive from a tax collector's perspective. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwiimp:192970&r=all |
| By: | Daniel Spiro |
| Abstract: | This paper explores intergenerational transmission of culture and the consequences of a plausible assumption: that people care not only for their children’s culture but also for how their grand-children are raised. This departs from the previous literature which, without exception, assumes parents either do not care about, or fail to consider, the effect their actions have on all future generations. The current paper models a sequential game where parents take actions trading off being close to their own preferences and influencing their children, and where parents take into account that the children face a similar trade-off when raising their children. Predictions regarding endogenous extremism, the effect of societal socialization, parents. discounting, social pressure and interaction between groups are derived. In equilibrium, parents behave more extremely than their own preferences and this effect is intensified the more extreme preferences the parent has. There may be perpetual extremizing whereby an arbitrarily long sequence of generations will behave more extremely than the first ancestor’s preferences. Furthermore, interaction of groups implies more extreme initial behavior but also faster integration. |
| Keywords: | culture, integration, social pressure |
| JEL: | D90 J15 Z10 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7507&r=all |
| By: | Michalis Drouvelis; Benjamin Marx |
| Abstract: | Charitable donations provide positive externalities and can potentially be increased with an understanding of donor preferences. We obtain a uniquely comprehensive characterization of donation motives using an experiment that varies treatments between and within subject. Donations are increasing in peers’ donations, past subjects’ donations, and bonus income. These findings of peer and income effects do not extend to earned income, anonymous donations, or peers’ donations of bonus income. A model of an uncertain social norm for giving can explain the patterns here and in several strands of past research. Estimation of the model reveals substantial heterogeneity in subjects’ adherence to the norm and perceptions of its form. Correlations between these dimensions of preferences are such that charities with perfect information could increase net revenue using targeted give-aways to certain donors. A simpler fundraising strategy using only the social dimension of donor preferences increases donations by 30 percent. |
| Keywords: | charitable, donation, altruism, warm glow, social preferences, peer effects, experiment |
| JEL: | D01 D64 A13 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7496&r=all |