Papers - All

Paul J Ferraro

Cited by*: 0 Downloads*: 54

Economic analyses of asymmetric information typically start with the assumption that individuals know more about their own characteristics than outside observers. This assumption implies that individuals can accurately assess their own competence in a given domain. However, individuals can only judge their competence if they are sufficiently competent. The relationship between competence and self-awareness explains a great deal of the overconfidence observed among economic agents. More specifically, overconfidence is inversely proportional to competence. Through a series of experiments and analyses of field data, the link between incompetence and overconfidence is confirmed and its implications for economic theory are explored.

Nick Drydakis

Cited by*: 0 Downloads*: 3

In the spirit of the International Labour Organisation Code (2001) of decent work and respect for the human rights and dignity of persons infected or affected by HIV/AIDS, there should be no discrimination against applicants for work on the basis of real or perceived HIV status. Whilst, the successful implementation of an HIV/AIDS policy requires cooperation and trust between firms and employees, with the active involvement of workers infected and affected by HIV/AIDS (ILO [2007]). In the current study having considered the fundamental points the first ever correspondence testing was conducted in order to test whether job applicants living with HIV (still) face prejudices in the crucial stage of the selection process in Greece. Resumes differed only in applicants' health status were faxed to advertised job openings. We suggest that a HIV-positive applicant may want to identify whether firms are prone to provide any reasonable adjustments for the recruitment and interview process. Definitely, the outcomes must imply that employers use health condition as a factor when reviewing resumes, which matches the legal definition of discrimination. The rate of net discrimination against male (female) HIV positives is found to be between 82.6% and 97.8% (81.6%-98.8%) among sectors. Whilst, the degree of discrimination is randomly assigned across occupations disrelated to education level and job status. The current study initiates a key methodology which can drive world-wide researchers to conduct relevant surveys. As efforts grow up to address HIV discrimination, so does the need for a set of standard tested and validated discrimination indicators. Measurements and discrimination trends are a key tool for identifying effective anti-stigma programming.

Avner Ben-Ner, John A List, Louis Putterman, Anya Samek

Cited by*: 0 Downloads*: 43

An active area of research within the social sciences concerns the underlying motivation for sharing scarce resources and engaging in other pro-social actions. We develop a theoretical framework that sheds light on the developmental origins of social preferences by providing mechanisms through which parents transmit preferences for generosity to their children. Then, we conduct a field experiment with nearly 150 3-5 year old children and their parents, measuring (1) whether child and parent generosity is correlated, (2) whether children are influenced by their parents when making sharing decisions and (3) whether parents model generosity to children. We observe no correlation of independently measured parent and child sharing decisions at this young age. Yet, we find that apart from those choosing an equal allocation of resources between themselves and another child, children adjust their behaviors to narrow the gap with their parent's or other adult's choice. We find that fathers, and parents of initially generous children, increase their sharing when informed that their child will be shown their choice.

Avner Ben-Ner, John A List, Louis Putterman, Anya Samek

Cited by*: None Downloads*: None

An active area of research within the social sciences concerns the underlying motivation for sharing resources and engaging in other pro-social actions. In this paper we ask: do parents model social preference behavior to children, and do children emulate this behavior? We develop a theoretical framework to examine this question, and conduct an experiment with 147 3 to 5 year old children and their parents, using dictator games to measure generosity. We find (1) evidence of parental teaching/modeling in the case of fathers and in that of parents of relatively generous children, and (2) an emulation effect such that children who initially share less than half of their endowment subsequently share more the more they see a parent or other adult share. We find little correlation between baseline sharing of children and the parents, with the possible exception of the oldest children.

John A List, Ian Muir, Devin Pope, Gregory Sun

Cited by*: None Downloads*: None

Left-digit bias (or 99-cent pricing) has been discussed extensively in economics, psychology, and marketing. Despite this, we show that the rideshare company, Lyft, was not using a 99-cent pricing strategy prior to our study. Based on observational data from over 600 million Lyft sessions followed by a field experiment conducted with 21 million Lyft passengers, we provide evidence of large discontinuities in demand at dollar values. Approximately half of the downward slope of the demand curve occurs discontinuously as the price of a ride drops below a dollar value (e.g. $14.00 to $13.99). If our short run estimates persist in the longer run, we calculate that Lyft could increase its profits by roughly $160M per year by employing a left-digit bias pricing strategy. Our results showcase the robustness of an important behavioral bias for a large, modern company and its persistence in a highly-competitive market.

Michael J. Seiler, Eric Walden

Cited by*: 0 Downloads*: 0

In this study, we use functional magnetic resonance imaging (fMRI) to understand how homeowners process non-financial information when considering strategic mortgage default. We find that borrowers initially attempt to inhibit their knee-jerk reaction to retaliate against a lender who has engaged in egregious lending practices when compared to a financially conservative lender. Moreover, when defaults are rare, borrowers are less likely to default because violating the social norm results in feelings of disgust. Finally, when a lender refuses a loan modification, the borrower is found to seek retribution. Interestingly, granting even a modest loan modification removes the desire of homeowners to seek retribution towards their lender no matter what their impression of the lender may be. The results carry a number of policy implications.

John A List, Fatemeh Momeni

Cited by*: None Downloads*: None

We use a natural field experiment in which we hired over 2000 workers from an online labor market to explore how upfront payment affects worker motivation and misbehavior on the job. We start with a simple theory that shows paying upfront can increase misbehavior through reducing the perceived costs of cheating, but it can decrease misbehavior through generating a gift-exchange effect. Motivated by the theory, we designed a task that provided workers with opportunities to reciprocate or misbehave. A unique aspect of our design is that we are permitted an opportunity to measure the curvature of the gift-exchange value of the upfront payment. Our results suggest paying workers upfront induces a gift-exchange effect that is concave in the share of total wage paid upfront. Moreover, the impact is strong enough to suggest that small upfront payments are a cost-effective means for an employer to curb employee misbehavior.

Juan-Camilo Cardenas, John K Stranlund, Cleve E Willis

Cited by*: 98 Downloads*: 40

Regulations that are designed to improve social welfare typically begin with the premise that individuals are purely self-interested. Experimental evidence shows, however, that individuals do not typically behave this way; instead, they tend to strike a balance between self and group interests. From experiments performed in rural Colombia, we found that a regulatory solution for an environmental dilemma that standard theory predicts would improve social welfare clearly did not. This occurred because individuals confronted with the regulation began to exhibit less other-regarding behavior and made choices that were more self-interested; that is, the regulation appeared to crowd out other-regarding behavior.

Joshua D Angrist, Eric Bettinger, Michael Kremer

Cited by*: 2 Downloads*: 20

Colombia's PACES program provided over 125,000 poor children with vouchers that covered half the cost of private secondary school. The vouchers were renewable annually conditional on adequate academic progress. Since many vouchers were assigned by lottery, program effects can reliably be assessed by comparing lottery winners and losers. Estimates using administrative records suggest the PACES program increased secondary school completion rates by 15-20 percent. Correcting for the greater percentage of lottery winners taking college admissions tests, the program increased test scores by two-tenths of a standard deviation in the distribution of potential test scores. Boys, who have lower scores than girls in this population, show larger test score gains, especially in math.

Laura Derksen, Adamson Muula, Joep van Oosterhout

Cited by*: 0 Downloads*: 18

The HIV epidemic in southern Africa has important consequences for economic development. The epidemic could be stopped by a universal test and treat policy, as antiretroviral drugs block the spread of the virus. However, demand for HIV testing and treatment are surprisingly low. This paper develops a model in which the decision to seek an HIV test is a signal of infection, and those who seek a test are subject to statistical discrimination from potential sexual partners. We evaluate an information experiment designed to test the theory, and find evidence that this form of discrimination is a significant barrier to HIV testing. In particular, we provide information at the community level on the public benefit of antiretroviral therapy: because the drugs prevent HIV transmission, a person who is tested and treated for HIV is a relatively safe sexual partner. This information reduces discrimination and increases HIV testing, with the strongest effects in communities where the new information becomes common knowledge. The results demonstrate that discrimination towards HIV positive individuals can be due to rational behavior by a misinformed public, and that providing new information can be an effective way to mitigate its effects.

Paul W Rhode, Koleman S Strumpf

Cited by*: 12 Downloads*: 16

Political stock markets have a long history in the United States. Organized prediction markets for Presidential elections have operated on Wall Street (1880-1944), the Iowa Electronic Market (1988-present), and TradeSports (2001-present). Proponents claim such markets efficiently aggregate information and provide forecasts superior to polls. An important counterclaim is that such markets may be subject to manipulation by interested parties. We analyze this argument by studying alleged and actual speculative attacks- large trades, uninformed by fundamentals, intended to change prices- in these three markets. We first examine the historical Wall Street markets where political operatives from the contending parties actively and openly bet on city, state and national races; the record is rife with accusations that parties tried to boost their candidates through investments and wash bets. Next we report the results of a field experiment involving a series of planned, random investments-- accounting for two percent of total market volume-- in the Iowa Electronic Market in 2000. Finally, we investigate the speculative attacks on TradeSports market in 2004 when a single trader made a series of large investments in an apparent attempt to make one candidate appear stronger. In the cases studied here, the speculative attack initially moved prices, but these changes were quickly undone and prices returned close to their previous levels. We find little evidence that political stock markets can be systematically manipulated beyond short time periods.

Jan Hansen, Carsten Schmidt, Martin Strobel

Cited by*: 6 Downloads*: 13

Political stock markets (PSM) are sometimes seen as substitutes for opinion polls. On the bases of a behavioural model, specific preconditions were drawn out under which manipulation in PSM can weaken this argument. Evidence for manipulation is reported from the data of two separate PSM during the Berlin 1999 state elections.

Yan Chen, Peter Cramton, John A List, Axel Ockenfels

Cited by*: None Downloads*: None

We review past research and discuss future directions on how the vibrant research areas of market design and behavioral economics have influenced and will continue to impact the science and practice of management in both the private and public sectors. Using examples from various auction markets, reputation and feedback systems in online markets, matching markets in education, and labor markets, we demonstrate that combining market design theory, behavioral insights, and experimental methods can lead to fruitful implementation of superior market designs in practice.

David P Tracer

Cited by*: 0 Downloads*: 56

In order to test the proposition that performance in bargaining experiments is significantly affected by degree of monetarization, market integration, and relative westernization, a one-shot Ultimatum Game was conducted during the months of June and July 1998 in two villages in a rural region of Papua New Guinea: Anguganak (where the people speak Au) and Bogasip (where they speak Gnau). Although the villages are located in close proximity to one another and are relatively homogeneous culturally, and both subsist using a mixture of foraging and horticulture and have an elaborate system of exchange relationships, they are distinguished by their average degree of exposure to and integration in a cash-based economy, as well as their degree of education (both are greater in Anguganak). The different sections of the chapter provide: an ethnographic account of the two villages; a description of the experimental methods employed; a presentation and analysis of the results in terms of various indicators of wealth and market integration; and a discussion of the implications of the results. The level of offers made in the Ultimatum Game data combined for Anguganak and Bogasip were between those in western industrialized populations and the Machiguenga of Peru. There was some indication that variability in the level of market integration between the two village populations may have influenced the results, although they appeared to be equally influenced by local beliefs on reciprocity, generosity, and indebtedness, and an unfamiliarity with impersonal transactions.

Omar Al-Ubaydli, Peter Boettke

Cited by*: 2 Downloads*: 21

The work of Friedrich Von Hayek contains several testable predictions about the nature of market processes. Vernon Smith termed the most important one the "Hayek hypothesis:" equilibrium prices and the gains from trade can be achieved in the presence of diffuse, decentralized information, and in the absence of price-taking behavior and centralized market direction. Vernon Smith tested this by surveying data on laboratory experimental markets and found strong support. We repeat this exercise using field experimental market data. Using field experiments allows us to test several other predictions. Generally speaking, we find support for Hayek's theories.

Craig Gallet, John A List

Cited by*: 0 Downloads*: 1

This paper uses market share data to infer the nature of rivalry in the U.S. cigarette industry over the 1934-94 period. Unlike previous studies, which measure rivalry from various constructs of market share instability, we examine the time-series properties of market shares to determine whether or not rivalry is evident. Our empirical results imply that a majority of firm-level market shares are martingales, suggesting market shares have been unstable from 1934-94. This result leads us to conclude that rivalry in the cigarette industry has remained strong.

John A List, Daniel Rondeau

Cited by*: 31 Downloads*: 11

This study designs a natural field experiment linked to a controlled laboratory experiment to examine the effectiveness of matching gifts and challenge gifts, two popular strategies used to secure a portion of the $200 billion annually given to charities. We find evidence that challenge gifts positively influence contributions in the field, but matching gifts do not. Methodologically, we find important similarities and dissimilarities between behavior in the lab and the field. Overall, our results have clear implications for fundraisers and provide avenues for future empirical and theoretical work on charitable giving.

Richard Martin, John Randal

Cited by*: 0 Downloads*: 11

We describe a natural field experiment investigating donation behaviour. The setting was an art gallery where donations could be deposited into a transparent box in the foyer. Two aspects of the donation environment were manipulated: signs on the donation box and the initial contents of the box. We used three sign treatments: a control with no sign, a sign that thanked donors, and a sign that indicated donations would be matched. We used two initial contents treatments: one with relatively little money ($50) and one with four times as much. The average donation per donor was significantly larger in the $200 treatments but this was offset by a decrease in the propensity to donate. In the matching treatments donations were significantly larger both at the per donor and per visitor level. A control donate variable turned out to have the largest influence on donation behaviour: the day of the week. The average donation per visitor was 51% higher on Sundays, when compared to every other day of the week.

Rene Bekkers

Cited by*: 20 Downloads*: 112

A field study of altruistic behaviour is presented using a modification of the dictator game in a large random sample survey in the Netherlands (n=1,964). In line with laboratory experiments, only 5.7% donated money. In line with other survey research on giving, generosity increased with age, education, income, trust, and prosocial value orientation.

Uri Gneezy, John A List, Jeffrey A Livingston, Xiangdong Qin, Sally Sadoff, Yang Xu

Cited by*: 1 Downloads*: 124

Tests measuring and comparing educational achievement are an important policy tool. We experimentally show that offering students extrinsic incentives to put forth effort on such achievement tests has differential effects across cultures. Offering incentives to U.S. students, who generally perform poorly on assessments, improved performance substantially. In contrast, Shanghai students, who are top performers on assessments, were not affected by incentives. Our findings suggest that in the absence of extrinsic incentives, ranking countries based on low-stakes assessments is problematic because test scores reflect differences in intrinsic motivation to perform well on the test itself, and not just differences in ability.