Papers - All

Jasper Knockaert, Stefanie Peer, Erik T Verhoef

Cited by*: 0 Downloads*: 119

If left unidentified and uncorrected, self-selection biases may greatly compromise the external validity of the outcomes of field experiments. We show that self-selection biases in terms of observed und unobserved characteristics can be well identified and corrected by means of a complementary stated preference (SP) experiment conducted among the participants and non-participants of a field experiment. In the SP experiment, respondents are confronted with hypothetical choice situations that closely resemble the choice situations present in the field experiment. The SP experiment does not only allow us to compare participants and non-participants with respect to their behavior and implied preferences in the hypothetical choice situations, but also renders it possible to infer how non-participants would have behaved if they had decided to participate, using an innovative modeling approach to elicit the corresponding preference structures. We apply this approach in the context of a large-scale field experiment in which train commuters received monetary rewards for traveling outside peak hours. We find strong self-selection biases, especially with respect to the marginal utility of income, which is significantly higher among participants of the field experiment.

Luke N Condra, Mohammad Isaqzadeh, Sera Linardi

Cited by*: 0 Downloads*: 39

Does willingness to aid "others" change when in their physical presence? We argue that studies cueing non-coethnics through names and photos may underestimate discrimination resulting from actual interethnic interaction. In an experiment in Kabul, Afghanistan, Dari-speaking day-laborers contribute their earnings to a hospital under one of three randomly-assigned experimental conditions. In In-group, the hospital is in a Dari-speaking province; in Out-group-Abstract and Out-group-Real, it is in a Pashto-speaking (Pashtun) province. While subjects in In-group and Outgroup- Abstract wait for the experiment with only Dari-speakers present, subjects in Out-group-Real wait among both Dari-speakers and Pashto-speakers. When Pashtuns are absent, the findings accord with other experiments that find little to no out-group discrimination. However, the physical presence of Pashtuns (Out-group-Real) decreases contributions by 25%. Consistent with the threat hypothesis, contributions decrease the longer Dari-speakers wait with Pashtuns, though subjects' youth and ability to speak Pashto mediate this effect.

Elvis Cheng Xu

Cited by*: None Downloads*: None

We conduct a field trust game under a natural experiment context to test the impacts of urbanisation on trust. We conjecture that urbanisation, defined in this context as the process of state-led rural-urban migration, contributes to a transformation of trust levels among co-villagers and towards outsiders. We test this conjecture in an experimental approach and more generally, examine whether the urbanisation will produce significant impacts on in-group trust and out-group trust. The research finds that urbanisation does not decrease significantly the trust towards co-villagers, meaning the in-group trust did not change statistically significantly. However, the trust towards outsiders does increase as a result of the state-led urbanisation. We also run a regression on the trust exhibited towards participants in the experiment and found the partial effect of whether they are co-villagers or outsiders weakens as a result of the urbanisation, and therefore conclude urbanisation decreases out-group discrimination in trust.

Bruno S Frey, Stephan Meier

Cited by*: 0 Downloads*: 29

People behave pro-socially in a wide variety of situations that standard economic theory is unable to explain. Social comparison is one explanation for such pro-social behavior: people contribute if others contribute or cooperate as well. This paper tests social comparison in a field experiment at the University of Zurich. Each semester every single student has to decide whether he or she wants to contribute to two Social Funds. We provided 2500 randomly selected students with information about the average behavior of the student population. Some received the information that a high percentage of the student population contributed, while others received the information that a relatively low percentage contributed. The results show that people behave pro-socially, conditional on others. The more others cooperate, the more one is inclined to do so as well. The type of person is important. We are able to fix the "types" by looking at revealed past behavior. Some persons seem to care more about the pro-social behavior of others, while other "types" are not affected by the average behavior of the reference group.

Min Ding, Rajdeep Grewal, John Liechty

Cited by*: 49 Downloads*: 25

Because most conjoint studies are conducted in hypothetical situations with no consumption consequences for the participants, the extent to which the studies are able to uncover "true" consumer preference structures is questionable. Experimental economics literature, with its emphasis on incentive alignment and hypothetical bias, suggests that more realistic incentive aligned studies will result in stronger out-of-sample predictive performance of actual purchase behaviors and provide better estimates of consumer preference structures than hypothetical studies. To test this hypothesis, the authors design an experiment with conventional (hypothetical) conditions and their parallel incentive-aligned counterparts. Using Chinese dinner specials as the context, the authors conducted a field experiment in a Chinese restaurant during dinnertime. The results provide strong evidence in favor of incentive-aligned choice conjoint analysis, in that incentive-aligned choice conjoint outperforms hypothetical choice conjoint in out-of-sample predictions (59% versus 26% for incentive-aligned choice conjoint and hypothetical choice conjoint, respectively for the top two choices). As expected, subjects in the incentive-aligned choice condition exhibit preference structures that are systematically different from the preference structures of subjects in the hypothetical condition. Most notably, the subjects in the incentive-aligned choice condition are more price sensitive and exhibit different heterogeneity patterns. To determine the robustness of these results, the authors conducted a second study that used snacks as the context and only considered the choice treatments. This study confirmed the results by again providing strong evidence in favor of incentive-aligned choice analysis in out-of-sample predictions (36% versus 16% for incentive-aligned choice conjoint and hypothetical choice conjoint, respectively for the top two choices). The results provide a strong motivation for conjoint practitioners to consider conducting their studies in realistic settings using incentive structures that require participants to live with their decisions.

Michal Krawczyk

Cited by*: None Downloads*: None

Several studies have identified the "better than average" effect - the tendency of most people to think they are better than most other people on most dimensions. The effect would have profound consequences (see e.g. Barber and Odean (2001)). These findings are predominantly based on non-incentivized, non-verifiable self-reports. The current study looks at the impact of incentives to judge one's abilities accurately in a framed field experiment. Nearly 400 students were asked to predict whether they would do better or worse than average in an exam. The most important findings are that subjects tend to show more confidence when incentivized and when asked before the exam rather than afterwards. The first effect shows particularly in females.

Orana Bandiera, Iwan Barankay, Imran Rasul

Cited by*: 0 Downloads*: 19

We present evidence from a firm level experiment in which we engineered an exogenous change in managerial compensation from fixed wages to performance pay based on the average productivity of lower-tier workers. Theory suggests that managerial incentives affect both the mean and dispersion of workers' productivity through two channels. First, managers respond to incentives by targeting their efforts towards more able workers, implying that both the mean and the dispersion increase. Second, managers select out the least able workers, implying that the mean increases but the dispersion may decrease. In our field experiment we find that the introduction of managerial performance pay raises both the mean and dispersion of worker productivity. Analysis of individual level productivity data shows that managers target their effort towards high ability workers, and the least able workers are less likely to be selected into employment. These results highlight the interplay between the provision of managerial incentives and earnings inequality among lower-tier workers.

Erwin Bulte, John A List, Daan van Soest

Cited by*: None Downloads*: None

Incomplete contracts are the rule rather than the exception, and any incentive scheme faces the risk of improving performance on incented aspects of a task at the detriment of performance on non-incented aspects. Recent research documents the effect of loss-framed versus gain-framed incentives on incentivized behavior, but how do such incentives affect overall performance? We explore potential trade-offs by conducting field experiments in an artificial "workplace". We explore two types of incentive spillovers: those contemporaneous to the incented task and those subsequent to the incented task. We report three main results. First, consonant with the extant literature, a loss aversion incentive induces greater effort on the incented task. Second, offsetting this productivity gain, we find that the quality of work decreases if quality is not specified in the incentive contract. Third, we find no evidence of harmful spillover effects to subsequent tasks; if anything, the loss aversion incentive induces more effort in subsequent tasks. Taken together, our results highlight that measuring and accounting for incentive spillovers are important when considering their overall impact.

John A List, Anya Samek, Terri Zhu

Cited by*: 0 Downloads*: 67

We use a field experiment to investigate the effect of incentives on food purchase decisions at a grocery store. We recruit over 200 participants and track their purchases for a period of 6 months, permitting us a glimpse of more than 3,500 individual shopping trips. We randomize participants to one of several treatments, in which we incentivize fresh fruit and vegetable purchases, provide tips for fruit and vegetable preparation, or both. We report several key insights. First, our informational content treatment has little effect. Second, we find an important price effect: modest pecuniary incentives more than double the proportion of dollars spent on produce in the grocery store. Third, we find an interesting pattern of consumption after the experiment ends: even when incentives are removed, the treatment group has higher fruit and vegetable purchases compared to the control group. These long-term results are in stark contrast to either a standard price model or a behavioral model of 'crowd out.' Rather, our results are consonant with a habit formation model. This opens up the distinct possibility that short term incentives can be used as a key instrument to combat obesity.

Michael Kremer, Edward Miguel, Rebecca Thornton

Cited by*: 16 Downloads*: 13

We report results from a randomized evaluation of a merit scholarship program for adolescent girls in Kenya. Girls who scored well on academic exams had their school fees paid and received a cash grant for school supplies. Girls eligible for the scholarship showed significant gains in academic exam scores (average gain 0.12-0.19 standard deviations) and these gains persisted following the competition. There is also evidence of positive program externalities on learning: boys, who were ineligible for the awards, also showed sizeable average test gains, as did girls with low pretest scores, who were unlikely to win. Both student and teacher school attendance increased in the program schools. We discuss implications both for understanding the nature of educational production functions and for the policy debate surrounding merit scholarships.

Jared Rubin, Anya Samek, Roman Sheremeta

Cited by*: 0 Downloads*: 17

Firms face an optimization problem that requires a maximal quantity output given a quality constraint. How firms should incentivize quantity and quality to meet these dual goals remains an open question. We provide a theoretical model and conduct an experiment in which participants are paid for both quantity and quality of a real effort task. Consistent with the theoretical predictions, higher quality incentives encourage participants to shift their attention from quantity to quality and to decrease the error rate at the expense of lowering quantity of output. This quantity-quality trade-off is significantly impacted by the participant's ability and level of loss aversion.

Travis Lybbert

Cited by*: 4 Downloads*: 12

Potential poverty traps among the rural poor suggest a need to reduce poor farmers' vulnerability by stabilizing crop yields and limiting yield losses. Advances in biotechnology will help address this need directly with crops that tolerate climate fluctuation or resist biotic stresses. Evaluating ex ante how farmers will value these "poor" seeds is important for delivery design, but also challenging. This paper describes an experimental economic approach to understanding farmers' valuation of such seeds. Using data from a survey and experiment, I assess Indian farmers' valuation of changes in the mean, variance, and skewness of payoff distributions. These farmers value increases in expected value, but seem indifferent about higher moment changes in payoff distributions. Farmer traits such as wealth and risk exposure affect their valuation of these changes only mildly. While various limitations to the experimental approach must qualify practical implications of these findings, the experiment demonstrates the viability of conducting valuation experiments with open-ended questions in developing countries.

Andreas Leibbrandt, Redzo Mujcic

Cited by*: 0 Downloads*: 85

Some of the greatest human achievements are difficult to imagine without pro-sociality. This paper employs a natural field experiment to investigate indirect reciprocity in natural social interactions. We find strong evidence of indirect reciprocity in one-shot interactions among drivers. Subjects for whom other drivers stopped were more than twice as likely to extend a similar act to a third party. This result is robust to a number of factors including age, gender, social status, presence of onlookers, and the opportunity cost of time. We provide novel evidence for the power of indirect reciprocity to promote prosocial behavior in the field.

E. Lance Howe, James J Murphy, Drew Gerkey, Colin Thor West

Cited by*: 0 Downloads*: 54

Integrating information from existing research, qualitative ethnographic interviews, and participant observation, we designed a field experiment that introduces idiosyncratic environmental risk and a voluntary sharing decision into a standard public goods game. Conducted with subsistence resource users in rural villages on the Kamchatka Peninsula in Northeast Siberia, we find evidence consistent with a model of indirect reciprocity and local social norms of helping the needy. When participants are allowed to develop reputations in the experiments, as is the case in most small-scale societies, we find that sharing is increasingly directed toward individuals experiencing hardship, good reputations increase aid, and the pooling of resources through voluntary sharing becomes more effective. We also find high levels of voluntary sharing without a strong commitment device; however, this form of cooperation does not increase contributions to the public good. Our results are consistent with previous experiments and theoretical models, suggesting strategic risks tied to rewards, punishments, and reputations are important. However, unlike studies that focus solely on strategic risks, we find the effects of rewards, punishments, and reputations are altered by the presence of environmental factors. Unexpected changes in resource abundance increase interdependence and may alter the costs and benefits of cooperation, relative to defection. We suggest environmental factors that increase interdependence are critically important to consider when developing and testing theories of cooperation.

Thomas Dohmen, Armin Falk, David Huffman, Jurgen Schupp, Uwe Sunde, Gert G Wagner

Cited by*: 93 Downloads*: 28

This paper presents new evidence on the distribution of risk attitudes in the population, using a novel set of survey questions and a representative sample of roughly 22,000 individuals living in Germany. Using a question that asks about willingness to take risks on an 11-point scale, we find evidence of heterogeneity across individuals, and show that willingness to take risks is negatively related to age and being female, and positively related to height and parental education. We test the behavioral relevance of this survey measure by conducting a complementary field experiment, based on a representative sample of 450 subjects, and find that the measure is a good predictor of actual risk-taking behavior. We then use a more standard lottery question to measure risk preference, and find similar results regarding heterogeneity and determinants of risk preferences. The lottery question makes it possible to estimate the coefficient of relative risk aversion for each individual in the sample. Using five questions about willingness to take risks in specific domains - car driving, financial matters, sports and leisure, career, and health - the paper also studies the impact of context on risk attitudes, finding a strong but imperfect correlation across contexts. Using data on a collection of risky behaviors from different contexts, including traffic offenses, portfolio choice, smoking, occupational choice, participation in sports, and migration, the paper compares the predictive power of all of the risk measures. Strikingly, the general risk question predicts all behaviors whereas the standard lottery measure does not. The best overall predictor for any specific behavior is typically the corresponding context-specific measure. These findings call into the question the current preoccupation with lottery measures of risk preference, and point to variation in risk perceptions as an understudied determinant of risky behavior.

Alberto Cavallo, Guillermo Cruces, Ricardo Perez-Truglia

Cited by*: 3 Downloads*: 15

Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, individuals in lower-inflation contexts have significantly weaker priors about the inflation rate. This finding suggests that rational inattention may be an important source of information frictions. Second, cognitive limitations also appear to be a source of information frictions: even when information about inflation statistics is made readily available, individuals still place a significant weight on less accurate sources of information, such as their memories of the price changes of the supermarket products they purchase. We discuss the implications of these findings for macroeconomic models and policy-making.

Tobias Heldt

Cited by*: 0 Downloads*: 16

In a natural experiment, this paper studies the impact of an informal sanctioning mechanism on individuals' voluntary contribution to a public good. Cross-country skiers' actual cash contributions in two ski resorts, one with and one without an informal sanctioning system, are used. I find the contributing share to be higher in the informal sanctioning system (79 percent) than in the non-sanctioning system (36 percent). Previous studies in one-shot public good situations have found an increasing conditional contribution (CC) function, i.e. the relationship between expected average contributions of other group members and the individual's own contribution. In contrast, the present results suggest that the CC-function in the non-sanctioning system is non-increasing at high perceived levels of others' contribution. This relationship deserves further testing in lab.

Leonardo Becchetti, Vittorio Pelligra, Tommaso Reggiani

Cited by*: 0 Downloads*: 24

In this paper, we study by means of a framed field experiment on a representative sample of the population the effect on people's charitable giving of three, substantial and procedural, elements: information provision, belief elicitation and threshold on distribution. We frame this investigation within the 5X1000 tax scheme, a mechanism through which Italian taxpayers may choose to give a small proportion (0.5%) of their income tax to a voluntary organization to fund its activities. We find two main results: (i) providing information or eliciting beliefs about previous donations increases the likelihood of a donation, while thresholds have no effect; (ii) information about previous funding increases donations to organizations that received fewer donations in the past, while belief elicitation also increases donations to organizations that received most donations in the past, since individuals are more likely to donate to the organizations they rank first.

Jonathan E Alevy, Michael S Haigh, John A List

Cited by*: 21 Downloads*: 24

Previous empirical studies of information cascades use either naturally occurring data or laboratory experiments with student subjects. We combine attractive elements from each of these lines of research by observing market professionals from the Chicago Board of Trade (CBOT) in a controlled environment. As a baseline, we compare their behavior to student choices in similar treatments. We further examine whether, and to what extent, cascade formation is influenced by both private signal strength and the quality of previous public signals, as well as decision heuristics that differ from Bayesian rationality. Analysis of over 1,500 individual decisions suggests that CBOT professionals are better able to discern the quality of public signals than their student counterparts. This leads to much different cascade formation. Further, while the behavior of students is consistent with the notion that losses loom larger than gains, market professionals are unaffected by the domain of earnings. These results are important in both a positive and normative sense.

John A List

Cited by*: 13 Downloads*: 59

No abstract available