Papers - All

Michael Kremer, Edward Miguel

Cited by*: 7 Downloads*: 13

The history of foreign development assistance is one of movement away from addressing immediate needs and toward focusing on the underlying causes of poverty. A recent manifestation is the move towards sustainability,' which stresses community mobilization, education, and cost-recovery. This stands in contrast to the traditional economic analysis of development projects, with its focus on providing public goods and correcting externalities. We examine evidence from randomized evaluations on strategies for combating intestinal worms, which affect one in four people worldwide. Providing medicine to treat worms was extremely cost effective, although medicine must be provided twice per year indefinitely to keep children worm-free. An effort to promote sustainability by educating Kenyan schoolchildren on worm prevention was ineffective, and a mobilization' intervention from psychology failed to boost deworming drug take-up. Take-up was highly sensitive to drug cost: a small increase in cost led to an 80 percent reduction in take-up (relative to free treatment). The results suggest that, in the context we examine, the pursuit of sustainability may be an illusion, and that in the short-run, at least, external subsidies will remain necessary.

Esther Duflo, William Gale, Jeffrey Liebman, Peter Orszag, Emmanuel Saez

Cited by*: 7 Downloads*: 7

This paper analyzes the effects of a large randomized field experiment carried out with H&R Block, offering matching incentives for IRA contributions at the time of tax preparation. About 14,000 H&R Block clients, across 60 offices in predominantly low- and middle-income neighborhoods in St. Louis, were randomly offered a 20 percent match on IRA contributions, a 50 percent match, or no match (the control group). The evaluation generates two main findings. First, higher match rates significantly raise IRA participation and contributions. Take-up rates were 3 percent for the control group, 8 percent in the 20 percent match group, and 14 percent in the 50 percent match group. Average IRA contributions (including non-contributors, excluding the match) for the 20 percent and 50 percent match groups were 4 and 7 times higher than in the control group, respectively. Second, several additional findings are inconsistent with the full information, rational-saver model. In particular, we find much more modest effects on take-up and amounts contributed from the existing Saver's Credit, which provides an effective match for retirement saving contributions through the tax code; we suspect that the differences may reflect the complexity of the Saver's Credit as enacted, and the way in which its effective match is presented. Taken together, our results suggest that the combination of a clear and understandable match for saving, easily accessible savings vehicles, the opportunity to use part of an income tax refund to save, and professional assistance could generate a significant increase in contributions to retirement accounts, including among middle- and low-income households.

Jeffrey A Flory, Uri Gneezy, Kenneth Leonard, John A List

Cited by*: 7 Downloads*: 68

Gender differences in competitive behavior have received much attention, demonstrating a systematic gap between males' and females' tendencies to compete. Theories predict a biological factor linked to an evolutionary response to the different paths to reproductive success for men and women. Since strategies for reproductive success change over the female life-cycle, the gender gap is predicted to be largest for young adults but after menopause women should be as competitive as men. Using data drawn from two very different societies, we find strong support for this theoretical prediction: competitiveness in women is tightly linked to their biological roles in childrearing.

Vegard Iversen, Cecile Jackson, Bereket Kebede, Alistair Munro, Arjan Verschoor

Cited by*: 7 Downloads*: 23

We test core theories of the household using variants of a public good game and experimental data from 240 couples in rural Uganda. Spouses do not maximise surplus from cooperation and realise a greater surplus when women are in charge. This violates assumptions of unitary and cooperative models. When women control the common account, they receive less than when men control it; this contradicts standard bargaining models. Women contribute less than men and are rewarded more generously by men than vice versa. This casts doubt on postulates in Sen (1990). While the absence of altruism is rejected, we find evidence for opportunism. The results are put in a socioeconomic context using quantitative and qualitative survey data. Assortative matching and correlates of bargaining power influence behaviour within the experiments. Our findings suggest that a one-size fits all?? model of the household is unlikely to be satisfactory.

Peter Bohm

Cited by*: 7 Downloads*: 22

The main purpose of this article is to advance a set of conditions which demand-revealing mechanisms must pass in order to be politically acceptable for real-world applications and - to begin with - for real-world experiments. Without such non-laboratory experiments, real progress seems unlikely to take place in this field. So far, there are few indications that these conditions can be met with respect to the proposals made in the literature on public goods. One possible example of a mechanism that meets the ""acceptability"" conditions is given here. In addition, we present some comments as to why demand-revealing mechanisms constitute and important economic problem, a view which has recently been questioned.

Douglas Dyer, John H Kagel

Cited by*: 7 Downloads*: 29

Experienced construction industry executives suffer from a winner's curse in laboratory common value auction markets (Dyer et al. [Dyer, D., J. H. Kagel, D. Levin. 1989. A comparison of naive and experienced bidders in common value offer auctions: Laboratory analysis. Econom. J. 99 108-115.]). This paper identifies essential differences between field environments and the economic theory underlying the laboratory markets that account for the executives' success in the field and a winner's curse in the lab. These are (1) industry-specific mechanisms which enable contractors to escape the winner's curse even when they bid too low, (2) learned, industry-specific evaluative processes which enable experienced contractors to avoid the winner's curse in the first place, and (3) important private value elements that underlie bidding. Also identified are a number of industry-specific bidding characteristics whose evolution can be explained using modern auction theory. Lessons are drawn regarding the use of experimental methods in economics.

Maria De Paola, Francesca Gioia, Vincenzo Scoppa

Cited by*: 7 Downloads*: 12

We conducted a field experiment involving 720 Italian undergraduate students to investigate the existence of gender differences in performance in competitive settings and whether performance is affected by one's opponent gender. The experimental design was aimed at disentangling gender differences in taste for competition from other differences in psychological attitudes, such as self-confidence and risk aversion. Students were invited to undertake a midterm exam under a tournament scheme having as a prize some bonus points to add to the final grade. Students competed in pairs of equal predicted ability but different gender composition. We find that females are as likely as males to take part in the competition and to obtain a good performance. The gender of one's competitor does not play any role in shaping students' behavior. Men and women perform similarly both in the competitive and in the non-competitive environment.

John A Fox, Jayson L Lusk

Cited by*: 6 Downloads*: 13

An increasing number of studies have begun conducting economic experiments in field, rather than laboratory settings. We directly compare results from laboratory and field valuation experiments. After controlling for unengaged bidders, results indicate field valuations were greater than laboratory valuations. Results are discussed in the context of recent literature on commitment costs.

Benjamin A Olken

Cited by*: 6 Downloads*: 26

This paper examines the accuracy of beliefs about corruption, using data from Indonesian villages. Specifically, I compare villagers' stated beliefs about the likelihood of corruption in a road-building project in their village with a more objective measure of 'missing expenditures' in the project, which I construct by comparing the project's official expenditure reports with an independent estimate of the prices and quantities of inputs used in construction. I find that villagers' beliefs do contain information about corruption in the road project, and that villagers are sophisticated enough to distinguish between corruption in the road project and other types of corruption in the village. The magnitude of their information, however, is small, in part because officials hide corruption where it is hardest for villagers to detect. This may limit the effectiveness of grass-roots monitoring of local officials. I also find evidence of systematic biases in corruption beliefs, particularly when examining the relationship between corruption and variables correlated with trust. For example, ethnically heterogeneous villages have higher perceived corruption levels but lower actual levels of missing expenditures. The findings illustrate the limitations of relying solely on corruption perceptions, whether in designing anti-corruption policies or in conducting empirical research on corruption.

David J Cooper

Cited by*: 6 Downloads*: 13

This paper studies experiments set in a corporate environment where a manager attempts to overcome a history of coordination failure by employees using either financial incentives or communication. I compare the choices of subject managers drawn from a standard undergraduate population with subject managers drawn from the executive MBA (EMBA) program at Case?s Weatherhead School of Management. The EMBA subjects are a group of experienced, successful managers; all of the EMBA subjects have at least ten years of work experience, including at least five years in a supervisory role, and have average annual earnings in excess of $120,000. The EMBA subject managers are able to overcome a history of coordination failure significantly faster than the undergraduate subject managers. This superior performance is driven neither by differences in the financial incentives offered to the employees nor by use of an inherently different communications strategy. Instead, EMBA subject managers are significantly more likely to use the same "good" communication strategy as is identified for undergraduate subject managers through systematic coding of managers messages to employees.

Steffen Andersen, Alec Brandon, Uri Gneezy, John A List

Cited by*: 6 Downloads*: 51

Perhaps the most powerful form of framing arises through reference dependence, wherein choices are made recognizing the starting point or a goal. In labor economics, for example, a form of reference dependence, income targeting, has been argued to represent a serious challenge to traditional economic models. We design a field experiment linked tightly to three popular economic models of labor supply-two behavioral variants and one simple neoclassical model--to deepen our understanding of the positive implications of our major theories. Consistent with neoclassical theory and reference--dependent preferences with endogenous reference points, workers (vendors in open air markets) supply more hours when presented with an expected transitory increase in hourly wages. In contrast with the prediction of behavioral models, however, when vendors earn an unexpected windfall early in the day, their labor supply does not respond. A key feature of our market in terms of parsing the theories is that vendors do not post prices rather they haggle with customers. In this way, our data also speak to the possibility of reference-dependent preferences over other dimensions. Our investigation again yields results that are in line with neoclassical theory, as bargaining patterns are unaffected by the unexpected windfall.

Alan S Gerber, Donald P Green, Matthew N Green

Cited by*: 6 Downloads*: 3

Political campaigns currently make extensive use of direct mail, particularly in state and local races, yet its effects on voter behavior are not well understood. This essay presents the results of large-scale randomized field experiments conducted in Connecticut and New Jersey during state and municipal elections of 1999. Tens of thousands of registered voters were sent from zero to nine pieces of direct mail. The target populations included party registrants with a strong history of voter participation, independents, and a random subset of registered voters. Our results indicate partisan campaign mail does little to stimulate voter turnout and may even dampen it when the mail is negative in tone.

Fuhai Hong, Tanjim Hossain, John A List, Migiwa Tanaka

Cited by*: 6 Downloads*: 98

A well-recognized problem in the multitasking literature is that workers might substantially reduce their effort on tasks that produce unobservable outputs as they seek the salient rewards to observable outputs. Since the theory related to multitasking is decades ahead of the empirical evidence, the economic costs of standard incentive schemes under multitasking contexts remain largely unknown. This study provides empirical insights quantifying such effects using a field experiment in Chinese factories. Using more than 2200 data points across 126 workers, we find sharp evidence that workers do trade off the incented output (quantity) at the expense of the non-incented one (quality) as a result of a piece rate bonus scheme. Consistent with our theoretical model, treatment effects are much stronger for workers whose base salary structure is a flat wage compared to those under a piece rate base salary. While the incentives result in a large increase in quantity and a sharp decrease in quality for workers under a flat base salary, they result only in a small increase in quantity without affecting quality for workers under a piece rate base salary.

Heike Hennig-Schmidt, Bettina Rockenbach, Abdolkarim Sadrieh

Cited by*: 6 Downloads*: 7

We present a field experiment to assess the effect of own and peer wage variations on actual work effort of employees with hourly wages. Work effort neither reacts to an increase of the own wage, nor to a positive or negative peer comparison. This result seems at odds with numerous laboratory experiments that show a clear own wage sensitivity on effort. In an additional real-effort laboratory experiment we show that explicit cost and surplus information that enables to exactly calculate employer's surplus from the work contract is a crucial pre-requisite for a positive wage-effort relation. This demonstrates that employee's reciprocity requires a clear assessment of the surplus at stake.

Michael S Haigh, John A List

Cited by*: 6 Downloads*: 12

An important class of investment decisions is characterized by unrecoverable sunk costs, resolution of uncertainty through time, and the ability to invest in the future as an alternative to investing today. The options model provides guidance in such settings, including an investment decision rule called the "bad news principle": the downside investment state influences the investment decision whereas the upside investment state is ignored. This study takes a new approach to examining predictions of the options model by using the tools of experimental economics. Our evidence, which is drawn from student and professional trader subject pools, is broadly consonant with the options model.

Anya Samek, Roman Sheremeta

Cited by*: 6 Downloads*: 4

We experimentally investigate simultaneous decision-making in two contrasting environments: one that encourages competition (lottery contest) and one that encourages cooperation (public good game). We find that simultaneous participation in the public good game affects behavior in the contest, decreasing sub-optimal overbidding. Contributions to the public good are not affected by participation in the contest. The direction of behavioral spillover is explained by differences in strategic uncertainty and path-dependence across games. Our design allows us to compare preferences for cooperation and competition. We find that in early periods, there is a negative correlation between decisions in competitive and in cooperative environments.

Sally Sadoff, Anya Samek, Charles Sprenger

Cited by*: 6 Downloads*: 40

We conduct a natural field experiment with over 200 customers at a grocery store to investigate dynamic inconsistency and the demand for commitment in food choice. Subjects are invited to allocate and re-allocate food items received as part of a grocery delivery program. We observe substantial dynamic inconsistency, as well as a demand for commitment among a non-negligible number of subjects. Interestingly, individuals who demand commitment are more likely to be dynamically consistent in their prior behavior. This work provides direct evidence of dynamic inconsistency in consumption choices in the field and points towards potential extensions to models of temptation.

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.

Joshua D Clinton, John S Lapinski

Cited by*: 6 Downloads*: 6

Scholars disagree whether negative advertising demobilizes or stimulates the electorate. We use an experiment with over 10,200 eligible voters to evaluate the two leading hypotheses of negative political advertising. We extend the analysis to examine whether advertising differentially impacts the turnout of voter subpopulations depending on the advertisement's message. In the short term, we find no evidence that exposure to negative advertisements decreases turnout and little that suggests it increases turnout. Any effect appears to depend upon the message of the advertisement and the characteristics of the viewer. In the long term, we find little evidence that the information contained in the treatment groups' advertisements is sufficient to systematically alter turnout.

Gustavo J Bobonis, Edward Miguel, Charu P Sharma

Cited by*: 6 Downloads*: 22

Iron-deficiency anemia is among the world's most widespread health problems, especially for children, but it is rarely studied by economists. This paper evaluates the impact of a health intervention delivering iron supplementation and deworming drugs to 2-6 year old children through an existing pre-school network in the slums of Delhi, India. At baseline 69 percent of sample children were anemic and 30 percent had intestinal worm infections. Sample pre-schools were randomly divided into groups and gradually phased into treatment. Weight increased significantly among assisted children, and pre-school participation rates rose sharply by 5.8 percentage points - a reduction of one-fifth in school absenteeism - in the first five months of the program. Gains are largest in low socio-economic status areas. Year two estimates are similar, but two methodological problems--sample attrition, and the non-random sorting of new child cohorts into treatment groups--complicate interpretation of the later results.