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Michael S Haigh, John A List

Cited by*: 135 Downloads*: 40

Two behavioral concepts, loss aversion and mental accounting, have recently been combined to provide a theoretical explanation of the equity premium puzzle. Recent experimental evidence suggests that undergraduate students' behavior is consistent with this "myopic loss aversion" conjecture. Our suspicion is that, much like certain anomalies in the realm of riskless decisions, these behavioral tendencies will be severely attenuated when real market players are put to the task. Making use of a unique subject pool-professional futures and options pit traders recruited from the Chicago Board of Trade-we do find behavioral differences between professionals and students. Yet, rather than discovering that the anomaly disappears, the data suggest that professional traders exhibit myopic loss aversion to a greater extent than undergraduate students.

Steven D Levitt, John A List

Cited by*: 38 Downloads*: 65

No abstract available

Glenn W Harrison, John A List

Cited by*: 23 Downloads*: 10

There has been a dramatic increase in the use of experimental methods in the past two decades. An oft-cited reason for this rise in popularity is that experimental methods provide the necessary control to estimate treatment effects in isolation of other confounding factors. We examine the relevance of experimental findings from laboratory settings that abstract from the field context of the task that theory purports to explain. Using common value auction theory as our guide, we identify naturally occurring settings in which one can test the theory. In our treatments the subjects are not picked at random, as in lab experiments with student subjects, but are deliberately identified by their trading roles in the natural field setting. We find that experienced agents bidding in familiar roles do not fall prey to the winner's curse. Yet, when experienced agents are observed bidding in an unfamiliar role, we find that they frequently fall prey to the winner's curse. We conclude that the theory predicts field behavior well when one is able to identify naturally occurring field counterparts to the key theoretical conditions.

Dean S Karlan, John A List

Cited by*: 0 Downloads*: 29

We conducted two matching grant experiments with an international development charity. The primary experiment finds that a matching grant from the Bill and Melinda Gates Foundation raises more funds than a matching grant from an anonymous donor. The effect persists, and is strongest for donors who previously gave to other poverty-oriented charities. Combining these insights with survey results, we conclude that our matching gift primarily works through a quality signal mechanism. Overall, the results help to clarify why people give to charity, what models help to describe those motivations, and how practitioners can leverage economics to increase their fundraising potential.

Fuhai Hong, Tanjim Hossain, John A List

Cited by*: 3 Downloads*: 35

Exploiting findings that losses loom larger than gains, studies have shown that framing manipulations can increase productivity of workers. Using a natural field experiment that exogenously manipulates wage bonuses within contests in a Chinese high-tech manufacturing facility, we show that how loss aversion affects worker behavior critically depends on the incentive scheme as well as the framing manipulation. Four sets of two identical teams competed against each other to win a bonus given to the team, within a set, with the higher average hourly productivity over the week. In each set, the bonus was framed as a reward or gain for one team and as a punishment or loss for the other. Average weekly productivity was slightly higher under the loss treatment, but this increase was statistically insignificant. However, the team under the loss treatment was at least 35% more likely to win the contest. As teams' payoffs are based on relative productivity under a contest, framing effect is much stronger in terms of relative productivity. Finally, workers seemingly responded to the bonus by increasing the quality of production as well as quantity-defect rate fell as productivity increased.

John A List, Zacharias Maniadis, Fabio Tufano

Cited by*: 0 Downloads*: 3

In his comment, Mitesh Kataria (2014) makes three main points about a specific part of our paper (Maniadis, Tufano, and List 2014), namely about Tables 2 and 3. In our paper, we employ these tables in order to illustrate the idea that very inconclusive post-study probabilities that a tested phenomenon is true may result from novel, surprising findings. The main arguments in Kataria (2014) are the following: First, if P(H0) is unknown, as is often the case with economic applications, the post-study probability can lead to even worse inference than the Classical significance test, depending on the quality of the prior. Second, the simulation in Maniadis et al. (2014) ignores previous assessments of P(H0) and instead utilizes a selective empirical setup that favors the use of post-study probabilities. [Third,] contrary to what Maniadis et al. (2014) argue, their results do not allow for drawing general recommendations about which approach is the most appropriate. (Kataria 2014, abs.) We believe that our work might have been misunderstood by Kataria. Moreover, it seems that some of his claims are not supported by relevant empirical evidence.

Daron Acemoglu, David Laibson , John A List

Cited by*: 4 Downloads*: 13

Internet-based educational resources are proliferating rapidly. One concern associated with these (potentially transformative) technological changes is that they will be disequalizing - as many technologies of the last several decades have been - creating superstar teachers and a winner-take-all education system. These important concerns notwithstanding, we contend that a major impact of web-based educational technologies will be the democratization of education: educational resources will be more equally distributed, and lower-skilled teachers will benefit. At the root of our results is the observation that skilled lecturers can only exploit their comparative advantage if other teachers complement those lectures with face-to-face instruction. This complementarity will increase the quantity and quality of face-to-face teaching services, potentially increasing the marginal product and wages of lower-skill teachers.

John A List, Michael K Price

Cited by*: 8 Downloads*: 7

One fact that has emerged in modern societies is that people help others. Whether it is donating a few dollars to help feed the poor or volunteering time to help rebuild someone's life after a natural disaster, people around the globe commonly lend a hand. This study provides an overview of that support, summarizing gifts of both time and money around the globe. We also highlight research that indicates useful ways in which we can enhance the charitable pie. Our discussion revolves around both individual giving and corporate philanthropy, but we focus on empirical insights from recent charitable fundraising field experiments in the Western World. We present information that is useful for policymakers, fundraising practitioners, and academicians.

Steven D Levitt, John A List

Cited by*: 321 Downloads*: 96

A critical question facing experimental economists is whether behavior inside the laboratory is a good indicator of behavior outside the laboratory. To address that question, we build a model in which the choices that individuals make depend not just on financial implications, but also on the nature and extent of scrutiny by others, the particular context in which a decision is embedded, and the manner in which participants and tasks are selected. We present empirical evidence demonstrating the importance of these various factors. To the extent that lab and naturally occurring environments systematically differ on any of these dimensions, the results obtained inside and outside the lab need not correspond. Focusing on experiments designed to measure social preferences, we discuss the extent to which the existing laboratory results generalize to naturally-occurring markets. We summarize cases where the lab may understate the importance of social preferences as well as instances in which the lab might exaggerate their importance. We conclude by emphasizing the importance of interpreting laboratory and field data through the lens of theory.

John A List, Daniel M Sturm

Cited by*: 3 Downloads*: 1

In this paper we explore to what extent secondary policy issues are influenced by electoral incentives. We develop a political agency model in which a politician decides on both a frontline policy issue, such as the level of public spending, and a secondary policy issue, such as environmental policy. The model shows under which conditions the incumbent finds it worthwhile to manipulate the secondary policy to attract additional votes to his platform. We test the predictions of the model using state-level panel data on Gubernatorial environmental policy choices over the years 1960-2000. In contrast to the popular view that choices on secondary policy instruments are largely determined by lobbying, we find strong effects of electoral incentives on environmental policy.

Craig Gallet, John A List, Peter Orazem

Cited by*: 0 Downloads*: 0

The 1987 academic market was strong, whereas the 1997 market was weak. A multimarket theory of optimal search suggests that job seekers will respond to a weakening market by changing their search strategies at the extensive margin (which markets to enter) and the intensive margin (how many applications to submit per market). Employers respond to the weakening market by raising their hiring standards. High-quality applicants will obtain an increased share of academic interviews in weak markets while applicants from weaker schools will increasingly secure interviews outside of the academic market. Empirical results show that in the bust market, graduates of elite schools shifted their search strategies to include weaker academic institutions, while graduates of lower-ranked schools shifted their applications away from academia and toward the business sector. In bust conditions, academic institutions increasingly concentrate their interviews on elite school graduates, women, and U.S. residents

Ted Gayer, John Horowitz, John A List

Cited by*: 0 Downloads*: 0

Clear Skies is an economist's approach to pollution reduction. We heartily endorse its core approach, while recommending surgery for a few minor blemishes.

Charles Godward , John A List, Mark Thompson

Cited by*: 0 Downloads*: 4

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Uri Gneezy, Alex Imas, John A List

Cited by*: 2 Downloads*: 6

We introduce a simple, easy to implement instrument for jointly eliciting risk and ambiguity attitudes. Using this instrument, we structurally estimate a two-parameter model of preferences. Our findings indicate that ambiguity aversion is significantly overstated when risk neutrality is assumed. This highlights the interplay between risk and ambiguity attitudes as well as the importance of joint estimation. In addition, over our stakes levels we find no difference in the estimated parameters when incentives are real or hypothetical, raising the possibility that a simple hypothetical question can provide insights into an individuals preferences over ambiguity in such economic environments.

Michael Greenstone, John A List, Chad Syverson

Cited by*: 14 Downloads*: 1

The economic costs of environmental regulations have been widely debated since the U.S. began to restrict pollution emissions more than four decades ago. Using detailed production data from nearly 1.2 million plant observations drawn from the 1972-1993 Annual Survey of Manufactures, we estimate the effects of air quality regulations on manufacturing plants' total factor productivity (TFP) levels. We find that among surviving polluting plants, stricter air quality regulations are associated with a roughly 2.6 percent decline in TFP. The regulations governing ozone have particularly large negative effects on productivity, though effects are also evident among particulates and sulfur dioxide emitters. Carbon monoxide regulations, on the other hand, appear to increase measured TFP, especially among refineries. The application of corrections for the confounding of price increases and output declines and sample selection on survival produce a 4.8 percent estimated decline in TFP for polluting plants in regulated areas. This corresponds to an annual economic cost from the regulation of manufacturing plants of roughly $21 billion, about 8.8 percent of manufacturing sector profits in this period.

Omar Al-Ubaydli, John A List

Cited by*: None Downloads*: None

Natural field experiments investigating key labour market phenomena such as unemployment have only been used since the early 2000s. This paper reviews the literature and draws three primary conclusions that deepen our understanding of unemployment. First, the inability to monitor workers perfectly in many occupations complicates the hiring decision in a way that contributes to unemployment. Second, the inability to determine a worker's attributes precisely at the time of hiring leads to discrimination on the basis of factors such as race, gender, age and ethnicity. This can lead to systematically high and persistent levels of unemployment for groups that face discrimination. Third, the importance of social and personal dynamics in the workplace can lead to short-term unemployment. Much of the knowledge necessary for these conclusions could only be obtained using natural field experiments due to their ability to combine randomized control with an absence of experimenter demand effects.

Omar Al-Ubaydli, John A List

Cited by*: None Downloads*: None

This is a review of the literature of field experimental studies of markets. The main results covered by the review are as follows: (1) Generally speaking, markets organize the efficient exchange of commodities; (2) There are some behavioral anomalies that impede efficient exchange; (3) Many behavioral anomalies disappear when traders are experienced.

Annika List, John A List, Anya Samek

Cited by*: None Downloads*: None

Social scientists for years have documented the pervasiveness of discrimination in product and labor markets. While the literature has recently attempted to measure the nature of such discrimination, much less work has been done exploring the origins of discrimination. We make a modest step in this direction by reporting data from a field experiment attempting to measure discrimination amongst 3-5 years olds. Using a design that isolated discriminatory behaviors in economic games, we find that both White and Hispanic children send more resources to Black children than White children, whereas black children send equal amounts. This provides a first glimpse that suggests preferences amongst the young do not show similar patterns as preferences of adults.

John A List, Ragan Petrie, Anya Samek

Cited by*: None Downloads*: None

In the past several decades the experimental method has lent deep insights into economics. One surprising area that has contributed is the experimental study of children, where advances as varied as the evolution of human behaviors that shape markets and institutions to how early life influences shape later life outcomes have been explored. We first develop a framework for economic preference measurement that provides a lens into how to interpret data from experiments with children. Next, we survey work that provides general empirical insights within our framework. Finally, we provide 10 tips for pulling off experiments with children, including factors such as taking into account child competencies, causal identification, and logistical issues related to recruitment and implementation. We envision the experimental study of children as a high growth research area in the coming decades as social scientists begin to more fully appreciate that children are active participants in markets who (might) respond predictably to economic incentives.

John A List, Ian Muir, Gregory Sun

Cited by*: None Downloads*: None

This study investigates how to use regression adjustment to reduce variance in experimental data. We show that the estimators recommended in the literature satisfy an orthogonality property with respect to the parameters of the adjustment. This observation greatly simplifies the derivation of the asymptotic variance of these estimators and allows us to solve for the efficient regression adjustment in a large class of adjustments. Our efficiency results generalize a number of previous results known in the literature. We then discuss how this efficient regression adjustment can be feasibly implemented. We show the practical relevance of our theory in two ways. First, we use our efficiency results to improve common practices currently employed in field experiments. Second, we show how our theory allows researchers to robustly incorporate machine learning techniques into their experimental estimators to minimize variance.