Papers - All

Tova Levin, Steven D Levitt, John A List

Cited by*: 0 Downloads*: 37

The wealthiest 10% of donors now give 90% of charitable dollars in the U.S., but little is known about what motivates them. This study uses a natural field experiment, tracking over five thousand high capacity donors, to lend preliminary insights into the world of high capacity givers. On some dimensions, high capacity donors mirror modal donors: there is persistence in giving patterns, signals of program quality influence giving, and the price of giving is not unduly important. Unlike typical small donors, the givers in our data respond only on the intensive margin, and often with a longer time lag. Our study highlights the value to practitioners of partnering with academics, as our intervention has generated $30 million in incremental donations to the University.

Loukas Balafoutas, Nikos Nikiforakis, Bettina Rockenbach

Cited by*: 0 Downloads*: None

The degree of human cooperation among strangers is a major evolutionary puzzle. A prominent explanation is that cooperation maintained because many individuals have a predisposition to punish those violating group-beneficial norms. A critical condition for cooperation to evolve in evolutionary models is that punishment increases with the severity of the violation. Here we present evidence from a field experiment with real-life interactions that, unlike in lab experiments, altruistic punishment does not increase with the severity of the violation, regardless of whether it is direct (confronting a violator) or indirect (withholding help). We also document growing concerns for counter-punishment as the severity of the violation increases, indicating that the marginal cost of direct punishment increases with the severity of violations. The evidence suggests that altruistic punishment may not provide appropriate incentives to deter large violations. Our findings thus offer a rationale for the emergence of formal institutions for prompting large-scale cooperation among strangers.

Anne Alexander , Ralph d'Arge , John A List, Michael Margolis

Cited by*: 0 Downloads*: 6

The goal of this paper is to provide an investigation of several approaches to valuing ecosystem services and to contribute additional techniques which may be used in evaluating 'green' GDP accounts. Our estimates focus on the ecosystem as a productive economic input, not a stock which is depreciated or depleted over time; as such, it differs with other concepts more frequently employed in green GDP accounting. Most of our results are derived from the analytical fiction that a single owner of the biosphere establishes a market for all ecological resources. This monopolist then appropriates all rents from the human population. The maximum amount the monopolist charges is first assumed to be world gross product less the global human subsistence level. In addition, we examine the excess rents available in factor markets using the assumption of weak complementarity between factor inputs and ecosystem services. We also provide more conservative estimates of the value of ecosystem services by investigating the sustainable price the monopolist could charge the global population and by exploring the effects of compensating wage differentials and a non-monopolist owner of the ecosystem.

John A List, Daniel L Millimet

Cited by*: 3 Downloads*: 6

Devolution of tasks to local levels of government has recently become a popular agenda item within certain political factions in the US. While one expects the local policymaker to tailor policies to match the preferences of his constituents, critics of local policymaking claim that externalities are ignored and inefficiencies thus arise under local control of certain policies. A primary example concerns the control of pollution, which is known to have adverse effects on neighbouring jurisdictions. Whether localities actually 'race to the bottom' and enact lax environmental policies when given the chance remains an open issue. In this study, we make use of stochastic dominance tests to examine if President Reagan's policy of 'New Federalism' in the early 1980s induced states to lower environmental standards. Among the several environmental measures analysed, we do not find any evidence that the 'race to the bottom' materialized. Indeed, the evidence shows that even during these lean years of federal intervention several indicators of environmental quality at the state level continued to improve.

Gerald Pruckner, Rupert Sausgruber

Cited by*: 1 Downloads*: 48

A publisher uses an honor-system for selling a newspaper in the street. The customers make payments into a cash-box, but can also just take the paper without paying. Payments are not monitored and highly anonymous; hence customers exhibit trustworthiness if they pay for the paper. We run a natural field experiment to identify motives behind payments. The experiment reveals that trustworthiness is based on a social rather than a legal norm. Additional survey questions serve to identify individual-specific components of trustworthiness. We find effects of gender, age, family status, church attendance, measures of reciprocity, social connectedness, and social risk.

Nick Drydakis

Cited by*: 0 Downloads*: 12

A field experiment was contacted in order to unbiased test whether female ethnic minorities; Albanians, face housing discrimination by owners when they seek to rent a unit in Greece three years after the national adoption of the European anti-discrimination legislation. Replicated the commonest process to rent a unit in Greece; telephone contact, we investigated a big sample represented by 122 areas. Rationally classified them in three status groups, according to their average rent levels, we found that discrimination increased monotonically with areas' status. The estimated probability of Albanians to receive an invitation to investigate a unit was lower by 0.231 in low status areas, followed by 0.324 in medium status areas, and by 0.419 in high status areas than that of Greeks. Adjusted for intra-class correlation the estimated differentials were found to be statistically significant. Similarly, we estimated an insignificant rent penalty against Albanians of 0.010 in low status areas, and significant penalties of 0.015 in medium status areas and of 0.023 in high status areas against Albanians. Consequently, a taste and/or statistical discrimination implied against Albanian seekers. Interestingly, the study enabled to estimate further that good rental housings are in significant degree unavailable to Albanians restricted their freedom in selecting a place to live. Specifically, Albanian seekers faced significantly less probabilities to investigate newer, busheled and units placed in floor than Greeks. Whilst, Albanians in order to have access to good units they had to pay more than Greeks. Finally, we estimated that female owners practiced significantly more availability constraints to Albanians than male owners. The current research contributes to two areas that have attracted scarce research attention in Greece: the experimental investigation of housing discrimination and discrimination by ethnicity. The results of this study have implications for understanding some of the enduring patterns of ethnic discrimination in the housing market.

Luigi Butera, John A List

Cited by*: 1 Downloads*: 355

Novel empirical insights by their very nature tend to be unanticipated, and in some cases at odds with the current state of knowledge on the topic. The mechanics of statistical inference suggest that such initial findings, even when robust and statistically significant within the study, should not appreciably move priors about the phenomenon under investigation. Yet, a few well-conceived independent replications dramatically improve the reliability of novel findings. Nevertheless, the incentives to replicate are seldom in place in the sciences, especially within the social sciences. We propose a simple incentive-compatible mechanism to promote replications, and use experimental economics to highlight our approach. We begin by reporting results from an experiment in which we investigate how cooperation in allocation games is affected by the presence of Knightian uncertainty (ambiguity), a pervasive and yet unexplored characteristic of most public goods. Unexpectedly, we find that adding uncertainty enhances cooperation. This surprising result serves as a test case for our mechanism: instead of sending this paper to a peer-reviewed journal, we make it available online as a working paper, but we commit never to submit it to a journal for publication. We instead offered co-authorship for a second, yet to be written, paper to other scholars willing to independently replicate our study. That second paper will reference this working paper, will include all replications, and will be submitted to a peer- reviewed journal for publication. Our mechanism allows mutually-beneficial gains from trade between the original investigators and other scholars, alleviates the publication bias problem that often surrounds novel experimental results, and accelerates the advancement of economic science by leveraging the mechanics of statistical inference.

Michael J. Seiler, Eric Walden

Cited by*: 0 Downloads*: 0

This study examines strategic mortgage default on a neurological level. Specifically, we test two mainstream behavioral finance/economic theories: sunk cost fallacy and cognitive dissonance. Using fMRI technology, we identify a number of substrates within the brain that provide a neurobiological explanation for why some homeowners exercise their mortgage put option while others do not. We find that borrowers rationally do not suffer from the sunk cost fallacy as it relates to strategic default in that stye significantly prioritize their negative equity position over the amount of their initial down payment. We do, however, find neurological support that cognitive dissonance is relevant in homeowners' thought processes as they toil with the hesitancy brought on by the belief that strategic default is immortal against strong financial incentive to walk away from a substantially underwater mortgage.

Greer K Gosnell, John A List, Robert D Metcalfe

Cited by*: 8 Downloads*: 42

Understanding motivations in the workplace remains of utmost import as economies around the world rely on increases in labor productivity to foster sustainable economic growth. This study makes use of a unique opportunity to "look under the hood" of an organization that critically relies on worker effort and performance. By partnering with Virgin Atlantic Airways on a field experiment that includes over 40,000 unique flights covering an eight-month period, we explore how information and incentives affect captains' performance. Making use of more than 110,000 captain-level observations, we find that our set of treatments-which include performance information, personal targets, and prosocial incentives-induces captains to improve efficiency in all three key flight areas: pre-flight, in-flight, and post-flight. We estimate that our treatments saved between 266,000-704,000 kg of fuel for the airline over the eight-month experimental period. These savings led to between 838,000-2.22 million kg of CO2 abated at a marginal abatement cost of negative $250 per ton of CO2 (i.e. a $250 savings per ton abated) over the eight-month experimental period. Methodologically, our approach highlights the potential usefulness of moving beyond an experimental design that focuses on short-run substitution effects, and it also suggests a new way to combat firm-level externalities: target workers rather than the firm as a whole.

Luigi Butera, Philip J Grossman, Daniel Houser, John A List, Marie-Claire Villeval

Cited by*: None Downloads*: None

Creation of empirical knowledge in economics has taken a dramatic turn in the past few decades. One feature of the new research landscape is the nature and extent to which scholars generate data. Today, in nearly every field the experimental approach plays an increasingly crucial role in testing theories and informing organizational decisions. Whereas there is much to appreciate about this revolution, recently a credibility crisis has taken hold across the social sciences, arguing that an important component of Fischer (1935)'s tripod has not been fully embraced: replication. Indeed, while the importance of replications is not debatable scientifically, current incentives are not sufficient to encourage replications from the individual researcher's perspective. We propose a novel mechanism that promotes replications by leveraging mutually beneficial gains between scholars and editors. We develop a model capturing the trade-offs involved in seeking independent replications before submission of a paper to journals. We showcase our method via an investigation of the effects of Knightian uncertainty on cooperation rates in public goods games, a pervasive and yet largely unexplored feature in the literature.

Hansika Kapoor, Savita Kulkarni, Anirudh Tagat

Cited by*: None Downloads*: None

This study aims to investigate intra-household bargaining outcomes elicited in an artefactual field experiment design where participants completed a purchase task of real commodities. Married couples separately expressed their initial preferences over commodities. The bargaining process in the experiment was exogenously introduced by sharing information about partners' preferences in the treatment group. We hypothesized that the spouse with weaker bargaining position at the household level would consider the information of their partner's preferences while making own consumption decisions more compared to their partner. Therefore, they may deviate from their own preferences when purchasing commodities. More than 230 married couples from two villages in the Tamil Nadu state of India participated in the experiment. It was observed that information about partners' spending preferences resulted in reduced final allocation for female participants. However, the deviation was not significantly different from the original intention to spend. Therefore, information about partners' preferences may not be an effective medium to elicit bargaining power in the context of jointly-consumed household commodities. Subgroup analyses were performed to identify any heterogeneous treatment effects.

Peter A Riach, Judith Rich

Cited by*: 21 Downloads*: 27

Pairs of carefully-matched, written applications were made to advertised job vacancies in England to test for sexual discrimination in hiring. Two standard resumes were constructed for each occupation to control for all relevant supply-side variables, such as qualifications, experience and age. Consequently any differential response recorded can be attributed to demand-side discrimination. Statistically significant discrimination against men was found in the `female occupation' - secretary, and against women in the `male occupation' - engineer. Statistically significant, and unprecedented, discrimination against men was found in two `mixed occupations' - trainee chartered accountant and computer analyst programmer.

Inkyoung Hur, Sung-Hee Kim, Anya Samek, Ji Soo Yi

Cited by*: 0 Downloads*: 50

We investigate the effect of different interactive technologies on the decision-making process in an information search laboratory experiment. In our experiment, the participant makes a selection from a list of differently-valued objects with multiple attributes. We compare presenting information in static form to two methods of interactive presentation. In the first, the participant can manually sort objects by attribute, a capability similar to that found in spreadsheet software. In the second, we present an interactive visual tool that (1) automatically sorts all objects by attribute and (2) uses visual cues for comparisons. Manual sorting capability does not cause an improvement in decisions in this context. On the other hand, the visual tool increases the value of the objects selected by the participant and decreases time spent deliberating. We also find that our interactive presentations affect the decision-making process of participants by changing the number of intermediate options considered. Our results highlight the importance of investigating the effect of technology on information search, and suggest that appropriate interactive visual displays may improve search in practice.

Anya Samek

Cited by*: 0 Downloads*: 3

Reputation systems provide decision support for e-commerce. A shortcoming of existing systems is that all transactions are rated equally, and the impact of reputation systems for differently valued goods is not well understood. In an experiment, we study a heterogeneous good market. We find that the reputation system increases surplus by increasing transactions in the high value good. Allowing for heterogeneous goods reduces information, as buyers cannot determine whether the seller previously transacted in low/high value goods. We test a new system, which displays reputation separately for each good. We provide evidence that this additional information is utilized in decisions.

Adriaan R Soetevent

Cited by*: 63 Downloads*: 51

The role of anonymity in giving is examined in a field experiment performed in thirty Dutch churches. For a period of 29 weeks, the means by which offerings are gathered is determined by chance, prescribing for each offering the use of either 'closed' collection bags or open collection baskets. When using baskets, attendants' contributions can be identified by their direct neighbors, and attendants can observe the total amount given by the people who preceded them. Initially, contributions to the services' second offerings increase by 10% when baskets are used, whereas no effect is found for first offerings. The positive effect of using baskets peters out over the experimental period. Additional data on the coins collected show that in both offerings, people switch to giving larger coins when baskets are used.

Douglas V DeJong, Robert Forsythe, Wilfred C Uecker

Cited by*: 13 Downloads*: 12

Using the data from sealed offer laboratory markets, we compare the price and quality choices of student subjects with those of businessmen subjects. The businessmen subjects were public accounting firm partners and corporate financial officers. This is of interest since the financial officer-auditor relationship is one particular application of the elementary principal-agent model which the laboratory environment was designed to test. Using several different performance measures we are unable to reject the null hypothesis that the average performance of the two subject pools were the same. However, the market using businessmen subjects generally exhibited greater variance than the market using students.

Cannon Koo, John A List, Michael Margolis, Jason F Shogren

Cited by*: 31 Downloads*: 9

Second-price auctions are designed to induce people to reveal their private preferences for a good. Laboratory evidence suggests that while these auctions do a reasonable job on aggregate, they fall short at the individual level, especially for bidders who are off-margin of the market-clearing price. Herein we introduce and explore whether a random nth-price auction can engage all bidders to bid sincerely. Our results first show that the random nth-price auction can induce sincere bidding in theory and practice. We then compare the random nth-price to the second-price auction. We find that the second-price auction works better on-margin, and the random nth-price auction works better off-margin.

Anne M Farrell, Susan D Krische, Karen L Sedatole

Cited by*: 0 Downloads*: 4

Complementing proprietary archival data with an experiment, we examine employees' subjective valuations of their employee stock options and explore a stock option education program as a mechanism for influencing those valuations. We argue that the conflicting evidence on employee subjective valuations in prior studies can be attributed in part to knowledge differences. Our archival and experimental results show most employees value their options lower than the corresponding Black-Scholes cost. We find that a stock option education program that provides descriptive information about the Black-Scholes option pricing model and quantitative information about option values using that model increases not only employees' subjective valuations but also their self-reported loyalty and motivation. We complement our primary results with analyses of the cross-sectional determinants of subjective valuations, the differential effects on valuations of different components of the education program, and the heuristics used to formulate subjective valuations.

John A List, Charles F Mason

Cited by*: 0 Downloads*: 20

Are individuals expected utility maximizers? This question represents much more than academic curiosity. In a normative sense, at stake are the fundamental underpinnings of the bulk of the last half-century's models of choice under uncertainty. From a positive perspective, the ubiquitous use of benefit-cost analysis across government agencies renders the expected utility maximization paradigm literally the only game in town. In this study, we advance the literature by exploring CEO's preferences over small probability, high loss lotteries. Using undergraduate students as our experimental control group, we find that both our CEO and student subject pools exhibit frequent and large departures from expected utility theory. In addition, as the extreme payoffs become more likely CEOs exhibit greater aversion to risk. Our results suggest that use of the expected utility paradigm in decision making substantially underestimates society's willingness to pay to reduce risk in small probability, high loss events.

Jayson L Lusk, Ted C Schroeder

Cited by*: 125 Downloads*: 80

This study compares hypothetical and nonhypothetical responses to choice experiment questions. We test for hypothetical bias in a choice experiment involving beef ribeye steaks with differing quality attributes. In general, hypothetical responses predicted higher probabilities of purchasing beef steaks than nonhypothetical resposnes. Thus, hypothetical choices overestimate total willingness-to-pay for beef steaks. However, marginal willingness-to-pay for a change in steak quality is, in general, not statistically different across hypothetical and actual payment settings.