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on Experimental Economics |
| By: | Timothy W. Shields (Argyros College of Business and Economics, Economic Science Institute, Chapman University); James Wilhelm (Argyros College of Business and Economics, Economic Science Institute, Chapman University) |
| Abstract: | A robust finding in managerial accounting research is that participants prefer economically equivalent contracts framed as bonuses to penalties. Another finding is that participants put forth more effort when facing penalty contracts than equivalent bonus contracts. Both results are commonly described as due to loss aversion, an integral portion of Prospect Theory. We test whether loss aversion is correlated with higher effort in an experiment with two parts. In the first part, we elicit individual participants' loss aversion using two measures. In the second part of the experiment, participants choose costly efforts to increase the likelihood of high versus low state-contingent payoffs framed as bonuses or penalties. We find significant differences in the effort chosen between treatments: participants put in significantly more effort when facing penalty contracts. However, we find no evidence that either measure's degree of loss aversion correlates with effort choices as predicted by Prospect Theory. We find that only a quarter of participants are consistent with the Prospect Theory, and for those, we see little evidence of the commonly cited features of loss aversion. While the most cited reason for framing incentives changing participant behavior is loss aversion, our results suggest that this reason is falsified. While the results from prior studies are replicable, the untested underlying mechanism is not loss aversion. |
| Keywords: | contract framing, loss-aversion, bonus, penalty, utility preference, model selection |
| JEL: | C92 D82 D81 M40 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:24-14 |
| By: | Evaluator 3 |
| Abstract: | Evaluation of "Selecting the Most Effective Nudge: Evidence from a Large-Scale Experiment on Immunization" for The Unjournal. |
| Date: | 2024–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:bjn:evalua:eval3effectivenudge |
| By: | Tobias Werner; Ivan Soraperra; Emilio Calvano; David C. Parkes; Iyad Rahwan |
| Abstract: | Conversational AI models are becoming increasingly popular and are about to replace traditional search engines for information retrieval and product discovery. This raises concerns about monetization strategies and the potential for subtle consumer manipulation. Companies may have financial incentives to steer users toward search results or products in a conversation in ways that are unnoticeable to consumers. Using a behavioral experiment, we show that conversational AI models can indeed significantly shift consumer preferences. We discuss implications and ask whether regulators are sufficiently prepared to combat potential consumer deception. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.12143 |
| By: | Melo, Vitor; Rocha, Hugo Vaca Pereira; Sigaud, Liam; Warren, Patrick L.; Gaddis, S. Michael (NWEA) |
| Abstract: | We examine the extent and mechanisms by which race affects the college admissions process. We provide evidence from a field experiment where fictitious applicants request application fee waivers from all university admissions counselors in the United States. White applicants are much more likely to receive a waiver, be informed that the application is free, or receive a request for more information than Black or Asian applicants. Our results contrast sharply with previous evidence from acceptance decisions showing bias in favor of Black applicants. We introduce a model of university pricing and use information from counselors' LinkedIn and university profiles, along with university characteristics, to test predictions. We find evidence consistent with agent-taste-based discrimination, where biases stem from counselors' preferences, and profit-maximizing statistical discrimination. Discrimination in university admissions can vary substantially based on the context in which decisions are made. |
| Date: | 2024–10–04 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:5ctms |
| By: | Garbarino, Nicola; Möhrle, Sascha; Neumeier, Florian; von Schickfus, Marie-Theres |
| JEL: | G52 H23 H84 Q54 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302399 |
| By: | Corgnet, Brice; DeSantis, Mark; Siemroth, Christoph |
| JEL: | C92 D61 G12 G14 G41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302411 |
| By: | Lagarde, Mylène; Riumallo Herl, Carlos |
| Abstract: | In a field experiment with 400 groups of informal entrepreneurs in El Salvador, we compare the impact of group incentives (linked to compliance of all members) to equivalent individual ones to encourage cardiovascular check-ups. We test two incentive designs: small rewards and lotteries. Group incentives are as effective as individual ones at increasing demand for prevention, but, unlike individual incentives, they fail to target those with potentially higher health risks. The equal effectiveness of group incentives is linked to more communication, coordination between members and, to some extent, peer pressure. These social dynamics contribute to reduce uncertainty about other group members’ decisions and enhance the perceived net benefit of prevention. Although the preventive check-ups do not induce short-term lifestyle changes, they substantially increase the detection of new risk factors, making all incentives highly cost-effective interventions in this population. |
| JEL: | C93 D91 I12 |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125349 |
| By: | Gabriele Camera (Economic Science Institute, Chapman University, One University Dr., Orange, CA 92866); Gary Charness (University of California, Santa Barbara, Department of Economics, North Hall 3032 , Santa Barbara, CA 93106); Nir Chemaya (University of California, Santa Barbara, Department of Economics, North Hall 2049, Santa Barbara, CA 93106) |
| Abstract: | We study trading networks where the apportioning of participants’ payments flows, or, validation, relies on one of two governance architectures: centralized, validation authority is concentrated in a single participant, or decentralized, authority is distributed among all participants. Both architectures support multiple Pareto-ranked equilibria, with and without failure to properly apportion payments. In the experiment, decentralization never promoted validation failures, and in fact discouraged them—boosting trading activity—when we introduced pre-play communication, a natural feature of a trading environment. This governance advantage shows that there is scope for decentralization in innovating monetary and financial networks. |
| Keywords: | communication, digital currencies, group decision-making, payments systems. |
| JEL: | D81 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2407 |
| By: | Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - EM - EMLyon Business School - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This review explores the social determinants of unethical behavior through a review of the recent experimental literature. It examines how decision-making environments, encompassing institutional frameworks, organizational structures, incentive schemes, peer influences, and social norms, affect unethical behaviors such as lying, corruption, tax evasion, or asset destruction. Key areas include the cultural roots of unethical behavior, the influence of markets and organizational cultures on moral values, the impact of competitive and cooperative incentive schemes, and the role of peer effects and social norms, social image and guilt. By analyzing the interaction between social determinants and individual behavior, the chapter highlights the complex dynamics that lead to unethical actions and suggests ways to harness these determinants to foster ethical conduct. The chapter concludes on interventions aimed at promoting ethical behavior, such as moral appeals and norm nudges. |
| Keywords: | Unethical behavior, dishonesty, moral values, social norms, experiments |
| Date: | 2024–07–03 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04706356 |
| By: | Köbis, Nils; Rahwan, Zoe (Max Planck Institute for Human Development); Bersch, Clara; Ajaj, Tamer; Bonnefon, Jean-François (Toulouse School of Economics); Rahwan, Iyad |
| Abstract: | While artificial intelligence (AI) enables significant productivity gains from delegating tasks to machines, it can also facilitate the delegation of unethical behaviour. Here, we demonstrate this risk by having human principals instruct machine agents to perform a task with an incentive to cheat. Principals’ requests for cheating behaviour increased when the interface implicitly afforded unethical conduct: Machine agents programmed via supervised learning or goal specification evoked more cheating than those programmed with explicit rules. Cheating propensity was unaffected by whether delegation was mandatory or voluntary. Given the recent rise of large language model-based chatbots, we also explored delegation via natural language. Here, cheating requests did not vary between human and machine agents, but compliance diverged: When principals intended agents to cheat to the fullest extent, the majority of human agents did not comply, despite incentives to do so. In contrast, GPT4, a state-of-the-art machine agent, nearly fully complied. Our results highlight ethical risks in delegating tasks to intelligent machines, and suggest design principles and policy responses to mitigate such risks. |
| Date: | 2024–10–04 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:dnjgz |
| By: | Schilter, Claudio (University of Bern); Lüthi, Samuel (Swiss Co-ordination Center for Research in Education); Wolter, Stefan C. (University of Bern) |
| Abstract: | We merge experimental data on competitiveness of a large sample of students with their complete educational history for up to ten years after the initial assessment. Exploiting quasi-random class assignments, we find that having competitive peers as classmates makes students choose and secure positions in higher-paying occupations. These occupations are also more challenging and more popular. On the cost side, competitive peers do not lead to a lower probability of graduating from the subsequent job-specific education, but they significantly increase the probability of requiring extra time to do so. |
| Keywords: | peer effects, competitiveness, occupational choice |
| JEL: | C93 D91 J24 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17289 |
| By: | Pedro Gonzalez-Fernandez; Ciril Bosch-Rosa; Thomas Meissner |
| Abstract: | We introduce a novel method to elicit belief distributions and apply it to elicit inflation expectations in a representative US sample through a pre-registered survey experiment. Our approach elicits beta belief distributions directly in a two-step process. First, participants specify their minimum and maximum expected inflation. They then use a graphical interface with two sliders to adjust the mean and variance of their inflation belief distribution. We benchmark our method against the “Bins” method, popularized by the New York Fed’s Survey of Consumer Expectations (SCE). Our findings reveal significant variations in elicited belief distributions depending on the method used. Specifically, our approach yields higher mean inflation estimates and substantially reduces the standard deviations of the distributions. Respondents report that our method is easier to use, more engaging, and better allows them to express their beliefs. Furthermore, the resulting distributions more accurately reflect participants’ beliefs across several dimensions and show stronger correlations with their point predictions. |
| Keywords: | Belief Elicitation, Inflation Expectations, Macroeconomic Survey |
| Date: | 2024–09–16 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0048 |
| By: | Brice Corgnet (EM - EMLyon Business School, GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique); Camille Cornand; Nobuyuki Hanaki |
| Abstract: | We design a novel experiment to assess investors' behavioural and physiological reactions to negative tail events. Investors who observed, without suffering from, tail events decreased their bids whereas investors suffering tail losses increased them. However, the increase in bids after tail losses was not observed for those who exhibited no emotional arousal. This suggests that emotions are key in explaining Prospect Theory prediction of risk seeking in the loss domain. |
| Keywords: | tail events, emotions, risk |
| Date: | 2023–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04228190 |
| By: | W. Lasarov (Audencia Business School); S. Hoffmann; R. Mai; J. Schleich |
| Abstract: | Innovative information technology such as a Carbon Footprint Tracking App can contribute to achieve global climate targets like the 2°C target of the Paris Agreement. This is particularly relevant for countries with strong socio-economic development, which often have high individual carbon footprints but also possess the technological advancements to help mitigate these emissions. This paper explores how carbon footprint feedback and goal-oriented appeals affect consumers' carbon emissions. Focusing on interventions in the food and mobility domains, this research distinguishes the impact of self-related and society-related goals across these focal domains and examines spillover effects on heating and other household activities. Using a Carbon Footprint Tracking App in a longitudinal experimental study with 210 participants over three waves, the following key findings emerge. First, goal activation affects carbon emissions differently across consumption domains. Second, while the obtained evidence points to spillover across domains, the appeals' effectiveness within the same domain is contingent on individual goal prioritization. In particular, behavioral interventions need to target specific goals within each domain, particularly normative and moral goals in the food domain, and hedonic and cost-related goals in the mobility domain. |
| Abstract: | Innovative information technology such as a Carbon Footprint Tracking App can contribute to achieve global climate targets like the 2 ◦C target of the Paris Agreement. This is particularly relevant for countries with strong socio-economic development, which often have high individual carbon footprints but also possess the technological advancements to help mitigate these emissions. This paper explores how carbon footprint feedback and goal-oriented appeals affect consumers' carbon emissions. Focusing on interventions in the food and mobility domains, this research distinguishes the impact of self-related and society-related goals across these focal domains and examines spillover effects on heating and other household activities. Using a Carbon Footprint Tracking App in a longitudinal experimental study with 210 participants over three waves, the following key findings emerge. First, goal activation affects carbon emissions differently across consumption domains. Second, while the obtained evidence points to spillover across domains, the appeals' effectiveness within the same domain is contingent on individual goal prioritization. In particular, behavioral interventions need to target specific goals within each domain, particularly normative and moral goals in the food domain, and hedonic and cost-related goals in the mobility domain. |
| Keywords: | Sustainable consumption, carbon footprint, self-tracking, goal framing, spillover effects |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04689730 |
| By: | Luca Congiu (DEF, University of Rome "Tor Vergata"); Enrico Botta (OECD, Green Growth and Global Relations Division); Mariangela Zoli (CEIS & DEF, University of Rome "Tor Vergata") |
| Abstract: | The circular economy transition requires consumers to make further efforts in their waste disposal behaviors, by increasing waste sorting, repairing and reusing products, and reducing the amount of waste produced. The literature has identified several barriers to consumers’ adoption of these practices. In this paper, we posit that such barriers can be ultimately linked to well-known decisional biases and proceed to offer a review. In doing so, we categorize biases into “cognitive”, referring to deviations from normatively correct behavior, and “motivational”, encompassing behavior driven by desirability concerns. We also survey the existing behavioral policies addressing the identified biases, focusing on “nudges”, that is, interventions leveraging biases to improve welfare. In our review, we call attention to the importance of recognizing the relevant bias behind specific behaviors to identify the best interventions to implement. By offering a conceptual link between biases and circular economy practices, we also lay the groundwork for future experimental investigation. |
| Keywords: | cognitive bias, motivational bias, nudge, circular economy, second-hand, review |
| JEL: | D01 D04 D91 M31 |
| Date: | 2024–10–03 |
| URL: | https://d.repec.org/n?u=RePEc:rtv:ceisrp:583 |
| By: | Katrin M Smolka (WBS - Warwick Business School - University of Warwick [Coventry]); Thijs H J Geradts; Peter W van der Zwan (Universiteit Leiden = Leiden University); Andreas Rauch (Audencia Business School) |
| Abstract: | The proliferation of entrepreneurship education in business schools suggests that it is commonly believed to foster venture creation. At the same time, research on entrepreneurship education is growing. However, further studies are needed to determine the effectiveness of compulsory entrepreneurship education (CEE) by providing evidence on the specific type of entrepreneurial behavior it elicits and when these effects occur. To address this gap, this study evaluates different behavioral outcomes of CEE over time while building on social cognitive career theory to account for mediating effects of entrepreneurial intentions and entrepreneurial self-efficacy. We conduct a field quasi-experiment by following university business students (1, 387 observations for 450 individuals) over 24 months post-treatment. Our findings reveal that CEE effectively increases entrepreneurial behavior in the short term but does not extend much beyond that. A follow-up study (N = 395) adds confidence to the generalizability of the results. We contribute to research on entrepreneurship education and policy. |
| Keywords: | Compulsory) entrepreneurship education entrepreneurship policy entrepreneurial behavior entrepreneurial intentions entrepreneurial self-efficacy, Compulsory) entrepreneurship education, entrepreneurship policy, entrepreneurial behavior, entrepreneurial intentions, entrepreneurial self-efficacy |
| Date: | 2023–08–17 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04701309 |