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on Experimental Economics |
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Issue of 2023‒03‒06
eighteen papers chosen by |
| By: | Dökmeci, Tuna; Rainer, Carla; Schneebaum, Alyssa |
| Abstract: | Using experimental data, this paper analyzes the relationship between households' economic security and their fertility decisions for low-income households. Between 1974 and 1977, a randomized controlled trial was conducted in Manitoba, Canada in which the treatment groups received differing levels of guaranteed annual income. All of the program participants were low-income households. We find positive effects of the program on the probability of child birth that range between 7 to 10 percentage points. |
| Keywords: | fertility, economic security, policy analysis, guaranteed annual income, negative income tax |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:35832609&r=exp |
| By: | Tuna Dökmeci (Department of Economics, European University Institute); Carla Rainer (Department of Economics, Vienna University of Economics and Business); Alyssa Schneebaum (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | Using experimental data, this paper analyzes the relationship between households' economic security and their fertility decisions for low-income households. Between 1974 and 1977, a randomized controlled trial was conducted in Manitoba, Canada in which the treatment groups received differing levels of guaranteed annual income. All of the program participants were low-income households. We find positive effects of the program on the probability of child birth that range between 7 to 10 percentage points. |
| Keywords: | fertility, economic security, policy analysis, guaranteed annual income, negative income tax |
| JEL: | I38 J13 J18 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp332&r=exp |
| By: | Weijia Dai; Hyunjin Kim; Michael Luca |
| Abstract: | Measuring the returns of advertising opportunities continues to be a challenge for many businesses. We design and run a field experiment in collaboration with Yelp across 18, 294 firms in the restaurant industry to understand which types of businesses gain more from digital advertising. We randomly assign 7, 209 restaurants to freely receive Yelp’s standard ads package for three months. The scale of the experiment gives us a unique opportunity to assess the heterogeneity in advertising effectiveness across a variety of business attributes. We find that restaurants that receive advertising on Yelp observe on average a 7-19% increase in a wide range of purchase intention outcomes, as well as a 5% increase in customer reviews. We find that gains are heterogeneous across firms, with independent and higher-rated businesses observing larger gains, as well as those with more reviews and higher pre-experiment organic traffic. |
| JEL: | D8 M3 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30925&r=exp |
| By: | Wiese, Juliane V. (Warwick Business School); Powdthavee, Nattavudh (Nanyang Technological University, Singapore); Yeo, Jonathan (Nanyang Technological University, Singapore); Riyanto, Yohanes E. (Nanyang Technological University, Singapore) |
| Abstract: | How do we persuade people to part with money they feel they have rightly earned? We conducted a dyadic experiment (N=1, 986) where luck determined which of the players' performance counted toward winning the game. Despite luck playing a large part, we found strong evidence of justified deservingness among the winners. The better they performed in the task, the less they redistributed to their nonwinning partner. However, in treatments where performance was transparent, winners significantly increased redistribution to nonwinners who performed similarly well. We find that transparency can effectively alter redistributive preferences even when people feel fully deserving of their income. |
| Keywords: | luck, efforts, survivalship bias, redistribution, inequality, deservingness |
| JEL: | C9 D9 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15909&r=exp |
| By: | Frohnweiler, Sarah; Beber, Bernd; Ebert, Cara |
| Abstract: | Information frictions about the benefits of migration can lead to inefficient migration choices. We study the effects of a randomly assigned information treatment about regional income differentials in Ghana and Uganda to learn about participants' belief updating and subsequent changes in migration intentions and destination preferences. Participants react to the provided information by correcting their destination preferences towards regions with higher incomes, whereas their intent to migrate changes less. Participants' belief updating follows an asymmetric process restricted to individuals who initially underestimated regional differentials. The results suggest that income differentials matter for where to and less whether to migrate. |
| Keywords: | Income differentials, migration decision, belief updating |
| JEL: | J31 J68 O15 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:987&r=exp |
| By: | Rawley Z. Heimer; Zwetelina Iliewa; Alex Imas; Martin Weber |
| Abstract: | We document a robust dynamic inconsistency in risky choice. Using a unique brokerage dataset and a series of experiments, we compare people's initial risk-taking plans to their subsequent decisions. Across settings, people accept risk as part of a “loss-exit” strategy—planning to continue taking risk after gains and stopping after losses. Actual behavior deviates from initial strategies by cutting gains early and chasing losses. More people accept risk when offered a commitment to their initial strategy. Our results help reconcile seemingly contradictory findings on risk-taking in static versus dynamic contexts. We explore implications for theory and welfare. |
| JEL: | D01 D90 G40 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30910&r=exp |
| By: | Keisuke Hirano; Jack R. Porter |
| Abstract: | We develop asymptotic approximation results that can be applied to sequential estimation and inference problems, adaptive randomized controlled trials, and other statistical decision problems that involve multiple decision nodes with structured and possibly endogenous information sets. Our results extend the classic asymptotic representation theorem used extensively in efficiency bound theory and local power analysis. In adaptive settings where the decision at one stage can affect the observation of variables in later stages, we show that a limiting data environment characterizes all limit distributions attainable through a joint choice of an adaptive design rule and statistics applied to the adaptively generated data, under local alternatives. We illustrate how the theory can be applied to study the choice of adaptive rules and end-of-sample statistical inference in batched (groupwise) sequential adaptive experiments. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2302.03117&r=exp |
| By: | Nguyen, Minh-Hoang |
| Abstract: | To check the ability of AI to identify precise and detailed scientific information, I experiment with how accurate AI recognizes scientific terms, their origins, meanings, and usages, and whether the accuracy increases over time. |
| Date: | 2023–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:kr29c&r=exp |
| By: | Nguyen, Minh-Hoang |
| Abstract: | To check the ability of AI to identify precise and detailed scientific information, I experiment with how accurate AI recognizes scientific terms, their origins, meanings, and usages, and whether the accuracy increases over time |
| Date: | 2023–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:25yjw&r=exp |
| By: | Harold D Chiang; Yukitoshi Matsushita; Taisuke Otsu |
| Abstract: | This paper is concerned with estimation and inference on average treatment effects in randomized controlled trials when researchers observe potentially many covariates. By employing Neyman's (1923) finite population perspective, we propose a bias-corrected regression adjustment estimator using cross-fitting, and show that the proposed estimator has favorable properties over existing alternatives. For inference, we derive the first and second order terms in the stochastic component of the regression adjustment estimators, study higher order properties of the existing inference methods, and propose a bias-corrected version of the HC3 standard error. Simulation studies show our cross-fitted estimator, combined with the bias-corrected HC3, delivers precise point estimates and robust size controls over a wide range of DGPs. To illustrate, the proposed methods are applied to real dataset on randomized experiments of incentives and services for college achievement following Angrist, Lang, and Oreopoulos (2009). |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2302.00469&r=exp |
| By: | Maurice Dunaiski (UNODC Research); Janne Tukiainen (Department of Economics, University of Turku.) |
| Abstract: | This paper examines whether income transparency - the public release of citizens' income information - affects support for redistribution. We leverage a quasi-experiment in Finland, where every year on the so-called tax day, the authorities release income information on Finland's top earners to the public. To identify causal effects we compare respondents who took part in the European Social Survey shortly before and after the event. We find that the tax day increases perceptions that earnings of the top 10% are unfair, but that public support for redistribution remains largely unaffected. A notable exception are top earners, who decrease their support for redistribution, and young people, who increase their support for redistribution. Our results highlight the scope conditions of previous experimental studies, and suggest that increasing exposure to inequality through a real-world policy, rather than experimental treatments, may trigger only marginal changes in support for redistribution. |
| Keywords: | income transparency, inequality, redistribution, taxes |
| JEL: | D31 D63 D72 D80 H20 H23 H24 H31 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:tkk:dpaper:dp159&r=exp |
| By: | Thomas Dohmen (University of Bonn, IZA Institute of Labor Economics, Maastricht University); Simone Quercia (University of Verona); Jana Willrodt (Düsseldorf Institute for Competition Economics (DICE)) |
| Abstract: | In this paper, we hypothesize that the strength of the consensus effect, i.e., the tendency for people to overweight the prevalence of their own values and preferences when forming beliefs about others’ values and preferences, depends on the salience of own preferences. We manipulate salience by varying the order of elicitation of preferences and beliefs. Although our results confirmthe existence of the consensus effect, we find no evidence of a difference between the two orders of elicitation. While our results highlight the robustness of the consensus effect, they also indicate that salience does not mediate the strength of this phenomenon. |
| Keywords: | Consensus effect, social preferences, trust game, beliefs |
| JEL: | C91 D01 D83 D91 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:219&r=exp |
| By: | Julien Senn; Jan Schmitz; Christian Zehnder |
| Abstract: | Using a large-scale real effort experiment, we explore whether and how different peer assignment mechanisms affect worker performance and stress. Letting individuals choose whom to compare to increases productivity to the same extent as a targeted exogenous matching policy aimed at maximizing motivational spillovers. These effects are significantly larger than those obtained through random assignment and their magnitude is comparable to the impact of monetary incentives that increase pay by about 10 percent. A downside of targeted peer assignment is that, unlike endogenous peer selection, it leads to a large increase in stress. We uncover the behavioral origins of these desirable effects of peer choice using a combination of choice data, text analysis and simulations. The key advantage of letting workers choose whom to compare to is that it allows those workers who want to be motivated to compare to a motivating peer while also permitting those for whom social comparisons have little benefits or are too stressful to avoid them. Altogether, our results highlight that policies should not only be compared regarding their effects on output, but also with respect to their potential unintended consequences. |
| Keywords: | Social comparisons, productivity, stress, incentives, real effort |
| JEL: | C93 J24 M54 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:427&r=exp |
| By: | Max Cytrynbaum |
| Abstract: | This paper studies covariate adjusted estimation of the average treatment effect (ATE) in stratified experiments. We work in the stratified randomization framework of Cytrynbaum (2021), which includes matched tuples designs (e.g. matched pairs), coarse stratification, and complete randomization as special cases. Interestingly, we show that the Lin (2013) interacted regression is generically asymptotically inefficient, with efficiency only in the edge case of complete randomization. Motivated by this finding, we derive the optimal linear covariate adjustment for a given stratified design, constructing several new estimators that achieve the minimal variance. Conceptually, we show that optimal linear adjustment of a stratified design is equivalent in large samples to doubly-robust semiparametric adjustment of an independent design. We also develop novel asymptotically exact inference for the ATE over a general family of adjusted estimators, showing in simulations that the usual Eicker-Huber-White confidence intervals can significantly overcover. Our inference methods produce shorter confidence intervals by fully accounting for the precision gains from both covariate adjustment and stratified randomization. Simulation experiments and an empirical application to the Oregon Health Insurance Experiment data (Finkelstein et al. (2012)) demonstrate the value of our proposed methods. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2302.03687&r=exp |
| By: | Bellani, Luna; Bertogg, Ariane; Kulic, Nevena; Strauß, Susanne |
| Abstract: | The increase in inequalities during the ongoing COVID-19 pandemic has been the topic of intense scholarly and public debate. School closures are one of the containment measures that have been debated most critically in this regard. What drives support for school and daycare/kindergarten closures during a public health crisis such as the current COVID-19 pandemic? More specifically, do inequality concerns affect this support? To identify causal linkages between awareness of inequalities and support for school and daycare/kindergarten closures, we use a survey experiment with information treatment, in which we randomly assign information designed to prime the respondents to think about either education inequality, gender inequality, or both. Based on an original survey experiment involving more than 3, 000 respondents, conducted in spring 2021 at the end of a long lockdown in Germany, our findings show that concerns about education inequality and gender inequality are equally important for decreasing support for preschool and primary school closures, while they do not seem to matter regarding secondary school closures. |
| Keywords: | Childcare Policy, COVID-19, School Closures, Survey Experiment, Information Treatment, Policy Support, Educational Inequality, Gender Inequality, Germany |
| JEL: | D13 I24 J16 H4 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cexwps:11&r=exp |
| By: | Yuehao Bai; Liang Jiang; Joseph P. Romano; Azeem M. Shaikh; Yichong Zhang |
| Abstract: | This paper studies inference on the average treatment effect in experiments in which treatment status is determined according to "matched pairs" and it is additionally desired to adjust for observed, baseline covariates to gain further precision. By a "matched pairs" design, we mean that units are sampled i.i.d. from the population of interest, paired according to observed, baseline covariates and finally, within each pair, one unit is selected at random for treatment. Importantly, we presume that not all observed, baseline covariates are used in determining treatment assignment. We study a broad class of estimators based on a "doubly robust" moment condition that permits us to study estimators with both finite-dimensional and high-dimensional forms of covariate adjustment. We find that estimators with finite-dimensional, linear adjustments need not lead to improvements in precision relative to the unadjusted difference-in-means estimator. This phenomenon persists even if the adjustments are interacted with treatment; in fact, doing so leads to no changes in precision. However, gains in precision can be ensured by including fixed effects for each of the pairs. Indeed, we show that this adjustment is the "optimal" finite-dimensional, linear adjustment. We additionally study two estimators with high-dimensional forms of covariate adjustment based on the LASSO. For each such estimator, we show that it leads to improvements in precision relative to the unadjusted difference-in-means estimator and also provide conditions under which it leads to the "optimal" nonparametric, covariate adjustment. A simulation study confirms the practical relevance of our theoretical analysis, and the methods are employed to reanalyze data from an experiment using a "matched pairs" design to study the effect of macroinsurance on microenterprise. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2302.04380&r=exp |
| By: | Lin William Cong; Xiang Hui; Catherine Tucker; Luofeng Zhou |
| Abstract: | Blockchain-based smart contracts can potentially replace certain traditional contracts through decentralized enforcement and reduced transaction costs. However, scalability is a key bottleneck hindering their broader application and adoption, often leading to concentrated or exclusive networks. To avoid falling short of the original promise of the technology, firms actively explore "layer-2" methods for scaling. We provide some initial evidence on the economic implications of a layer-2 scaling solution, which moves information aggregation from on-chain to off-chain peer-to-peer networks. A parallel-system experiment allows clean identification because we observe the same unit in the treatment and control systems at the same time. We find that this scaling solution reduces operating costs by 76%, and importantly, leads to decentralization with lower market concentration and more participation, which in turn improves data accuracy. The findings provide initial evidence of how blockchain and smart contracting technologies evolve towards achieving decentralized and scalable trust. |
| JEL: | D20 L86 O33 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30912&r=exp |
| By: | Rafat Beigpoor Shahrivar; Duesterhoeft, Ilka; Rogna, Marco; Vogt, Carla |
| Abstract: | Public good games in coalitional form, such as the ones depicting international environmental agreements for the reduction of a global pollutant, generally foresee scarce levels of cooperation. The incentive to free ride, that increases for higher levels of cooperation, prevents the formation of stable coalitions. The introduction of other-regarding preferences, in the form of Fehr and Schmidt utility functions, enlarges cooperation, but still at suboptimal levels. The present paper considers a further possibility, namely the introduction of a mechanism through which the contributions of players to the public good are proportional to the average contribution of the other players abiding to the mechanism: proportional contributions. The mechanism is therefore rooted into reciprocity. By applying it to a standard abatement game parameterized on the RICE model, we show that the mechanism is in fact able to increase cooperation both under standard and under F&S preferences. Stability of the grand coalition is never reached, but potential internally stable grand coalitions are achieved under F&S preferences. The attainment of higher cooperation comes at the expense of the level of global abatement that is lower when proportional contributions are in place. |
| Keywords: | Coalitional game, cooperation, F&S preferences, public good, reciprocity |
| JEL: | C72 D63 H41 Q54 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:990&r=exp |