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on Experimental Economics |
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Issue of 2021‒12‒20
twenty-two papers chosen by |
| By: | Morone, Andrea; Casamassima, Alessia; Cascavilla, Alessandro |
| Abstract: | We replicate the experiment proposed by Lisa R. Anderson and Sarah L. Stafford (2009) by conducting it through the Instagram platform. The structure of questionnaire is the same as the one of the original experiment inasmuch subjects might choose between two options that differ in resolution timing. According to the experimental results, we show that the percentage of subjects choosing later option increases as the value of the later option increases, and the percentage of subjects choosing later option is smaller the longer the temporal delay between two options. We found that risk does not make subjects less patient and there are interactions between risk and the length temporal delay. |
| Keywords: | Intertemporal decision-making; Risk; Intertemporal choice; Experiment. |
| JEL: | C91 D8 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110777&r= |
| By: | Bellemare, Marc; Boyd, Chris |
| Keywords: | Risk and Uncertainty |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae21:315337&r= |
| By: | Thomas Neuber |
| Abstract: | Social norms pervade human interaction, but their demands are often in conflict. To understand behavior, it is thus crucial to know how individuals resolve normative tradeoffs. This paper proposes that sincere judgments about the relative importance of conflicting norms are shaped by personal interest. We show that people tend to follow norms from which they benefit themselves, even in contexts where their own decisions only affect others. In a (virtual) laboratory experiment, each subject makes two decisions over allocations of points within a group of two other participants. The sets of possible allocations entail different normative tradeoffs, and subjects have no personal stakes in their own decisions. However, they are affected by others’ decisions: each subject is part of a group, and the members of different groups simultaneously decide over others’ allocations along a circle. We find that subjects’ decisions are biased towards the normative principles aligned with their own interests, thereby favoring other players whenever these share those interests. Subjects’ beliefs about the choices made by others suggest a largely unconscious mechanism. Moreover, survey answers indicate that the effects are driven by self-centered reasoning: subjects who report pronounced perspective-taking are less biased. |
| Keywords: | egocentrism, experiment, social norms |
| JEL: | C91 D63 D91 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2021_323&r= |
| By: | Bryan, Gharad; Grant, Matthew; Haggag, Kareem; Karlan, Dean; Startz, Meredith; Udry, Christopher |
| Abstract: | We test whether the endowment effect holds in an experiment conducted with children during Halloween trick-or-treating. We do not find evidence of the endowment effect in this context and with this experimental protocol. |
| Keywords: | endowment effect; external validity; Halloween |
| JEL: | J1 |
| Date: | 2020–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:105097&r= |
| By: | Duarte Gonçalves; Jonathan Libgober; Jack Willis |
| Abstract: | Widely discredited ideas nevertheless persist. Why do we fail to "unlearn"? We study one explanation: beliefs are resistant to retractions (the revoking of earlier information). Our experimental design allows us to identify updating from retractions - unlearning - and to compare it with updating from equivalent new information - learning. Across different kinds of retractions - for instance, those consistent or contradictory with the prior, or those occurring when prior beliefs are either extreme or moderate - subjects do not fully unlearn from retractions and update approximately one-third less from them than from equivalent new information. While we document a number of well-known biases in belief updating in our data, our results are inconsistent with any explanation that does not treat retractions as inherently different. Instead, our analysis suggests that retractions are harder to process, for instance, due to the intimate reliance on conditional reasoning. |
| JEL: | D8 D83 D9 D91 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29512&r= |
| By: | Gerardo Sabater-Grande (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzís (WSB Lab and School of Wine and Spirits Business, Burgundy School of Business, Dijon, France and LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Noemí Herranz-Zarzoso (LEE, Universitat Jaume I, Castellón, and Department of Economic Analysis, Universitat de València, Spain) |
| Abstract: | In this paper, we study overconfidence and goal-setting in academic performance, with and without monetary incentives. Students enrolled in a Microeconomics course were offered the possibility of setting their own target grade before taking part in the final exam. They were also asked to guess their grade immediately after they had taken the exam (“post-diction”). In general, students overestimated their performance, both at the goal-setting and at the post-diction stages. Controlling for several sources of this bias (cognitive abilities, academic record, risk preferences and self-reported academic confidence), we find that the use of monetary rewards mitigates the overestimation of potential achievements and eliminates overestimation of actual achievements through the improvement of actual performance. Our results suggest that monetary incentives do not cause subjects to put more effort into correct guesses but makes them put more effort into academic performance. Using students’ academic records to measure overall skill, we find a strong Dunning-Kruger bias which is intensified in the presence of monetary rewards. |
| Keywords: | overconfidence bias, reference points, self-chosen goals, post-dictions, monetary incentives, Dunning-Kruger cognitive bia |
| JEL: | C93 D03 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2021/14&r= |
| By: | de Bresser, Jochem (Tilburg University, School of Economics and Management); Knoef, Marike |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:246972d6-0fdb-4243-9e34-275c51479e6a&r= |
| By: | Douadia Bougherara (CEE-M, Univ. Montpellier, CNRS, INRAE, Institut Agro, Montpellier, France); Lana Friesen (School of Economics, University of Queensland, Brisbane, Australia); Céline Nauges (Toulouse School of Economics, INRAE, University of Toulouse Capitole, Toulouse, France) |
| Abstract: | We study the interaction between risk taking and skewness seeking behavior among the French population using an experiment that elicits certainty equivalent over lotteries that vary the second and third moments orthogonally. We find that the most common behavior is risk avoidance and skewness seeking. On average, we find no interaction between the two, and a weakly significant interaction only in some segments of the population. That is, in most cases, skewness seeking is not affected by the variance of the lotteries involved, nor is risk taking affected by the skewness of the lotteries. We also find a significant positive correlation between risk avoiding and skewness seeking behavior. Older and female participants make more risk avoiding and more skewness seeking choices, while less educated people and those not in executive occupations are more skewness seeking. |
| Keywords: | Risk; Skewness; Certainty Equivalent; Experiment |
| JEL: | C91 D81 D91 G11 G22 |
| Date: | 2021–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:650&r= |
| By: | Christoph Drobner (Technical University Munich (TUMCS)); Sebastian J. Goerg (Technical University Munich (TUMCS, SOM)) |
| Abstract: | We study belief updating about relative performance in an ego-relevant task. Manipulating the perceived ego-relevance of the task, we show that subjects update their beliefs about relative performance more optimistically as direct belief utility increases. This finding provides clean evidence for the optimistic belief updating hypothesis and supports theoretical models with direct belief utility. Moreover, we document that subjects, who received more bad signals, downplay the ego-relevance of the task. Taken together, these  findings suggest that subjects use two alternative strategies to protect their ego when presented with objective information. |
| Keywords: | Motivated beliefs; Optimistic belief updating; Direct belief utility; Bayes' rule; Ex-post rationalization. |
| JEL: | C91 D83 D84 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:aiw:wpaper:18&r= |
| By: | Max Cytrynbaum |
| Abstract: | This paper studies treatment effect estimation in a novel two-stage model of experimentation. In the first stage, using baseline covariates, the researcher selects units to participate in the experiment from a sample of eligible units. Next, they assign each selected unit to one of two treatment arms. We relate estimator efficiency to representative selection of participants and balanced assignment of treatments. We define a new family of local randomization procedures, which can be used for both selection and assignment. This family nests stratified block randomization and matched pairs, the most commonly used designs in practice in development economics, but also produces many useful new designs, embedding them in a unified framework. When used to select representative units into the experiment, local randomization boosts effective sample size, making estimators behave as if they were estimated using a larger experiment. When used for treatment assignment, local randomization does model-free non-parametric regression adjustment by design. We give novel asymptotically exact inference methods for locally randomized selection and assignment, allowing experimenters to report smaller confidence intervals if they designed a representative experiment. We apply our methods to the setting of two-wave design, where the researcher has access to a pilot study when designing the main experiment. We use local randomization methods to give the first fully efficient solution to this problem. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2111.08157&r= |
| By: | Gustafsson, Peter (Lund University); Nilsson, Peter (GfK); David, Lucinda (CIRCLE, Lund University); Marañon, Antonia (CIRCLE, Lund University) |
| Abstract: | Sustainability transitions literature is largely missing the point of view of consumers. This is problematic in efforts to understand how sustainable forms of energy diffuses where consumers are understood as active players in embedding energy efficient technologies in their homes. It remains unclear how consumers make energy-relevant decisions and what constitutes this decision-making process. We address this gap by conducting a random experiment asking consumers to make choices regarding solar energy technologies based on a set of options. Options are framed in either a subtractive or additive way to test how consumers process these choices, whether the type of framing matters in encouraging pro-solar energy behavior, and which solar technologies are preferred. We hypothesize that subtractive framing of energy-relevant choices leads to more options being selected than additive framing, that the type of option framing matters in shaping consumer preferences, and that the framing affects the transition probabilities in the decision-making process. Results show that consumers are susceptible to option framing when making energy-relevant decisions. Respondents were concerned primarily with costs when options were framed additively but exhibited decision difficulties and more pro-solar energy transition behavior when options were framed subtractively. This paper demonstrates the sequential steps in decision-making under subtractive framing, which induces a willingness in consumers to embed more solar energy technologies into their households despite the cost, as opposed to additive framing. This paper contributes a representation of the cognitive process of energy relevant decision-making, empirical evidence on the potentiality of nudging consumers towards more pro-solar energy transition behavior, and the importance of framing tools in encouraging this behavior. |
| Keywords: | additive and subtractive option framing; experimental design; Markov chain; final state distribution; transition probability; distance from initial model; anchoring |
| JEL: | C12 C93 D12 D81 |
| Date: | 2021–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2021_014&r= |
| By: | de Bresser, Jochem (Tilburg University, Center For Economic Research); Knoef, Marike |
| Keywords: | income redistribution; measurement; efficiency |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:246972d6-0fdb-4243-9e34-275c51479e6a&r= |
| By: | Michael Becher; Nicolas Longuet Marx; Vincent Pons; Sylvain Brouard; Martial Foucault; Vincenzo Galasso; Eric Kerrouche; Sandra León Alfonso; Daniel Stegmueller |
| Abstract: | Beyond its immediate impact on public health and the economy, the COVID-19 pandemic has put democracy under stress. While a common view is that people should blame the government rather than the political system for bad crisis management, an opposing view is that dissatisfaction with government performance may cause deeper dissatisfaction with democracy even in consolidated democratic regimes. We use a pre-registered survey and experiment covering 12 countries and 22,500 respondents to examine the impact of the pandemic on public attitudes about incumbent governments, the functioning of democracy and support for different types of regimes. To estimate causal effects, we leverage experimental treatments using an instrumental variable design. We find that dissatisfaction with the government, which is equally driven by economic and health considerations, decreases satisfaction with how democracy works. However, it does not translate into an embrace of non-democratic regime types. |
| JEL: | D72 D83 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29514&r= |
| By: | Giovanni Di Bartolomeo; Martin Dufwenberg; Stefano Papa |
| Abstract: | Building on a partner-switching mechanism, we experimentally test two theories that posit different reasons why promises breed trust and cooperation. The expectation-based explanation (EBE) operates via belief-dependent guilt aversion, while the commitment-based explanation (CBE) suggests that promises offer commitment power via a (belief-independent) preference to keep one's word. Previous research performed a similar test, which we however argue should be interpreted as concerning informal agreements rather than (unilateral) promises. |
| Keywords: | Promises; Partner-switching, Expectations, Commitment, Guilt, Informal agreements |
| JEL: | A13 C91 D01 D64 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:sap:wpaper:wp215&r= |
| By: | Isabella Dobrescu (School of Economics); Alberto Motta (UNSW School of Economics); Richard Holden (UNSW School of Economics); Adrian Piccoli (UNSW Sydney) |
| Abstract: | We report results from a ï¬ eld experiment on cultural context in standardized tests among 6th- and 8th-grade school students in Australia. The National Assessment Program Literacy and Numeracy (NAPLAN) is a series of basicskills tests given to Australian students. In our experiment, 1135 students in Dubbo – a regional area in the North-Western part of the state of New South Wales – were randomly assigned to either a regular NAPLAN test or a contextualized test designed speciï¬ cally for this experiment by the NSW Aboriginal Education Consultative Group — a not-for-proï¬ t Aboriginal organization. The contextualized test was speciï¬ cally designed to mimic the regular test, but adapted to the local context of Dubbo. We evaluate effects on tests scores in numeracy for grades 6 and 8, and reading for grade 6. In numeracy, we do not ï¬ nd robust evidence of an impact on test scores. In reading, we ï¬ nd qualitatively large effects. The average treatment effect for reading is 0.27 s.d., with higher effects for Indigenous students (0.30 s.d.) than non-Indigenous students (0.24 s.d.) Together these results imply that cultural context may be important for performance on certain types of basic-skills tests. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2021-08&r= |
| By: | Nisvan Erkal (University of Melbourne); Lata Gangadharan (Monash University); Boon Han Koh (University of East Anglia) |
| Abstract: | We investigate whether gender distorts performance evaluation in environments where outcomes are determined by leaders’ unobservable effort choices and luck. Evaluators form beliefs about effort choices and make discretionary payment decisions. We find that while the discretionary payments made to male leaders are determined by both outcomes and evaluators’ beliefs, those made to female leaders are determined by outcomes only. Hence, beliefs are a source of gender biases in our decision-making environment not because they are biased, but because they play differential roles in female and male leaders’ discretionary payments. We label this new source of gender bias as the gender belief-outcome gap. These findings further our understanding of the factors driving gender gaps in leadership and performance pay. They imply that in the labor market, good outcomes are necessary for women to get bonuses, but men can receive bonuses for bad outcomes as long as evaluators hold them in high regard. |
| Keywords: | Gender gaps; Performance evaluation; Biases in belief updating; Outcome bias; Social preferences; Laboratory experiments |
| JEL: | C92 D91 J71 |
| Date: | 2021–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2021-09&r= |
| By: | Jelena Zurovac; Thomas D. Cook; John Deke; Mariel M. Finucane; Duncan Chaplin; Jared S. Coopersmith; Michael Barna; Lauren Vollmer Forrow |
| Abstract: | Observational studies are needed when experiments are not possible. Within study comparisons (WSC) compare observational and experimental estimates that test the same hypothesis using the same treatment group, outcome, and estimand. Meta-analyzing 39 of them, we compare mean bias and its variance for the eight observational designs that result from combining whether there is a pretest measure of the outcome or not, whether the comparison group is local to the treatment group or not, and whether there is a relatively rich set of other covariates or not. Of these eight designs, one combines all three design elements, another has none, and the remainder include any one or two. We found that both the mean and variance of bias decline as design elements are added, with the lowest mean and smallest variance in a design with all three elements. The probability of bias falling within 0.10 standard deviations of the experimental estimate varied from 59 to 83 percent in Bayesian analyses and from 86 to 100 percent in non-Bayesian ones -- the ranges depending on the level of data aggregation. But confounding remains possible due to each of the eight observational study design cells including a different set of WSC studies. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2111.06941&r= |
| By: | Peter Christensen; Ignacio Sarmiento-Barbieri; Christopher Timmins |
| Abstract: | We report evidence on discriminatory behavior from the largest correspondence study conducted to date in the rental housing market. Using more than 25,000 interactions with rental property managers across the 50 largest U.S. cities, the study reveals that African American and Hispanic/LatinX renters continue to face discriminatory constraints in the majority of U.S. cities although there are important regional differences. Stronger discriminatory constraints on renters of color (particularly African Americans) are also associated with higher levels of residential segregation and larger gaps in intergenerational income mobility. Using matched evidence on the actual rental outcomes at the properties in our experiment, we show that correspondence study measurements of discrimination do indeed predict actual outcomes. |
| JEL: | J15 R31 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29516&r= |
| By: | Ofosu, George K.; Posner, Daniel N. |
| Abstract: | Scholars assert that pre-analysis plans (PAPs) generate boring, lab-report style papers and thus hamper publication. We test this claim by comparing the publication rates of experimental NBER working papers with and without PAPs. We find that articles with PAPs are slightly less likely to be published. However, conditional on being published, PAP-generated papers are significantly more likely to land in top-five journals. Also, PAP-based journal articles generate more citations. Our findings suggest that the alleged trade-off between career concerns and the scientific credibility that comes from registering and adhering to a PAP is less stark than is sometimes alleged. |
| JEL: | A14 I23 |
| Date: | 2020–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:112748&r= |
| By: | Stefano Ceolotto (Department of Economics, Trinity College Dublin); Eleanor Denny (Department of Economics, Trinity College Dublin) |
| Abstract: | It has been shown that individuals often underinvest in energy efficiency despite net benefits over the longer term. One possible explanation is that agents do not understand and/or cannot interpret energy information when provided in physical units, as in most energy efficiency labels. Prior studies have investigated the effect of reframing energy information reported on energy labels into monetary units. Outcomes are mixed, and it is not clear whether this is due to the use of different products, different methods or because studies were conducted in different countries with different energy prices and labelling standards. This paper overcomes that ambiguity by testing the effect of alternative ways to provide energy consumption information using the same experiment in a multi-country setting. Results show that the specific national context in which an intervention is implemented is a key determinant of its effectiveness. Personalised energy expenditures increase the willingness-to-pay for energy efficiency in the United Kingdom, whereas monetary information has a negative impact in Canada. No significant effect is detected in Ireland and the United States. In addition, it seems that providing monetary information crowds out individuals who would buy a more efficient product for environmental reasons. |
| Keywords: | Energy Efficiency Labels, Discrete Choice Experiment, Tumble dryers, Framing Effect |
| JEL: | Q41 Q48 Q49 D04 D10 D12 D90 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep1521&r= |
| By: | Louis Lippens; Siel Vermeiren; Stijn Baert (-) |
| Abstract: | Notwithstanding the improved integration of various minority groups in the workforce, unequal treatment in hiring still hinders many individuals’ access to the labour market. To tackle this inaccessibility, it is essential to know which and to what extent minority groups face hiring discrimination. This meta-analysis synthesises a quasi-exhaustive register of correspondence experiments on hiring discrimination published between 2005 and 2020. Using a random-effects model, we computed pooled discrimination ratios concerning ten discrimination grounds upon which unequal treatment in hiring is forbidden under United States federal or state law. We find that hiring discrimination against candidates with disabilities, older candidates, and less physically attractive candidates is at least equally severe as the unequal treatment of candidates with salient racial or ethnic characteristics. Remarkably, hiring discrimination against older applicants is even higher in Europe than in the United States. Furthermore, unequal treatment in hiring based on sexual orientation seems to be prompted mainly by signalling activism rather than same-sex orientation in itself. Last, aside from a significant decrease in ethnic and racial hiring discrimination in Europe, we find no structural evidence of recent temporal changes in hiring discrimination based on the various other grounds within the scope of this review |
| Keywords: | hiring discrimination, unequal treatment, meta-analysis, correspondence experiment, audit study |
| JEL: | J71 J23 J14 J15 J16 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:21/1035&r= |
| By: | Burton, Jonathan; Couper, Mick P.; Crossley, Thomas F.; Jäckle, Annette; Walzenbach, Sandra |
| Abstract: | Linkages between surveys and administrative data provide an important opportunity for social and health research, but such linkages often require the informed consent of respondents. We use experimental data collection across five different samples to study how consent decisions are made. Only about a third of respondents report using a “reflective†decision process, considering the consequences of consent or their trust in the relevant organisations. Many more use an “instinctive†process (such as “gut feeling†). More reflective decision processes are associated with higher rates of consent, greater comprehension of the proposed data linkage and greater confidence in the decision. |
| Date: | 2021–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:ese:ukhlsp:2021-05&r= |