Papers - All

Alec Brandon, Paul J Ferraro, John A List, Robert D Metcalfe, Michael K Price, Florian Rundhammer

Cited by*: 4 Downloads*: 95

This study examines the mechanisms underlying long-run reductions in energy consumption caused by a widely studied social nudge. Our investigation considers two channels: physical capital in the home and habit formation in the household. Using data from 38 natural field experiments, we isolate the role of physical capital by comparing treatment and control homes after the original household moves, which ends treatment. We find 35 to 55 percent of the reductions persist once treatment ends and show this is consonant with the physical capital channel. Methodologically, our findings have important implications for the design and assessment of behavioral interventions.

Michael J. Seiler

Cited by*: 4 Downloads*: 0

Inequity Aversion has long been applied in a game theoretic setting to explain that individuals are willing to sacrifice personal wealth in order to financially penalize players they perceive to be acting selfishly or unfairly. I apply inequity aversion to strategic mortgage default decisions and find that individual homeowners (as well as a second sample of professional mortgage lenders) have a differential stated willingness to walk away from their mortgage based on the perceived characteristics of their lender. Importantly, these significant differences can be removed even with extremely modest loan modifications. Finally, I document that regular homeowners and even professional lenders do a poor job differentiating between the owner of their loan and the servicer of their loan. This is particularly troubling given the extreme misconception of their bank's true character. As a result, much of their willingness to penalize is misplaced resulting in an unnecessary number of strategic mortgage defaults.

David M Harrison, Mark A. Lane, Michael J. Seiler

Cited by*: 4 Downloads*: 0

This study examines the herding behavior of individuals in the context of their willingness to strategically default on a mortgage based on the (falsely) observed behavior of those around them. We find that homeowners are easily persuaded to follow the herd and adopt a strategic default proclivity consistent with that of their peers. Herding behavior is stronger when a Maven, or thought leader, is involved and weaker when the person finds strategic default to be morally objectionable. Homeowners appear to herd more for informational gains rather than for social reasons, and do not herd differentially based on signal strength. In a robustness check using a sample of real estate professionals, the strong mimetic herding result continues to hold.

Orana Bandiera, Iwan Barankay, Imran Rasul

Cited by*: 4 Downloads*: 14

We document the establishment and evolution of a cooperative norm among workers using evidence from a natural field experiment on a leading UK farm. Workers are paid according to a relative incentive scheme under which increasing individual effort raises a worker's own pay but imposes a negative externality on the pay of all co-workers, thus creating a rationale for cooperation. As a counterfactual, we analyze worker behavior when workers are paid piece rates and thus have no incentive to cooperate. We find that workers cooperate more as their exposure to the relative incentive scheme increases. We also find that individual and group exposure are substitutes, namely workers who work alongside colleagues with higher exposure cooperate more. Shocks to the workforce in the form of new worker arrivals disrupt cooperation in the short term but are then quickly integrated into the norm. Individual exposure, group exposure, and the arrival of new workers have no effect on productivity when workers and paid piece rates and there is no incentive to cooperate.

Lee Cronk

Cited by*: 4 Downloads*: 10

The effects of cultural framing on behavior in experimental games were explored with a trust game and the Maasai concept of osotua. Maasai use the term osotua to refer to gift-giving relationships based on obligation, need, respect, and restraint. In the trust game, the first player is given money and an opportunity to give any portion of it to the second player. The amount given is then multiplied by the experimenter, and the second player has an opportunity to give any amount back to the first player. Fifty trust games were played by Maasai men at a field site in north central Kenya. Half of the games were played without deliberate framing, and half were framed with the statement, "This is an osotua game." Compared to games with no deliberate framing, those played within the osotua rhetorical frame were associated with lower transfers by both players and with lower expected returns on the part of the first players. Osotua rhetorical framing is also associated with a negative correlation between amounts given by the first player and amounts returned by the second. These results have implications both for the experimental game method and for our understanding of the relationship between culture and behavior.

Dean S Karlan, Jonathan Zinman

Cited by*: 4 Downloads*: 16

The price elasticity of demand for credit has major implications for macroeconomics, finance, and development. We present estimates of this parameter derived from a randomized trial. The experiment was implemented by a consumer microfinance lender in South Africa and identifies demand curves that, while downward-sloping with respect to price, are flatter than recent estimates in both developing and developed countries throughout most of a wide price range. However, demand becomes highly price sensitive at higher-than-normal rates. We discuss several interpretations of this kink and present some related evidence. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rate. This pattern is more pronounced among lower income individuals, a comparative static that has been observed in the United States as well and is consistent with liquidity constraints that decrease with income.

John A List

Cited by*: 4 Downloads*: 6

Walrasian tatonnement has been a fundamental assumption in economics ever since Walras' general equilibrium theory was introduced in 1874. Nearly a century after its introduction, Vernon Smith relaxed the Walrasian tatonnement assumption by showing that neoclassical competitive market theory explains the equilibrating forces in ""double- auction"" markets. I make a next step in this evolution by exploring the predictive power of neoclassical theory in decentralized naturally occurring markets. Using data gathered from two distinct markets--the sports card and collector pin markets--I find a tendency for exchange prices to approach the neoclassical competitive model prediction after a few market periods.

Peter Bohm, Hans Lind

Cited by*: 4 Downloads*: 11

Preference reversal, or choice/reservation-price inconsistency, has been documented experimentally for certain types of lotteries. We argue that the relevance of these findings for real-world markets is uncertain because the type of objects used cannot exist on a market and because the extent to which the subjects had any real interest in the objects is unknown. Using real-world lotteries, we have tested choice/price consistency on subjects who prefer lotteries to cash. Preference reversal was observed, but the frequency was much lower than in earlier experiments. There were no differences between subjects who qualify as ""lottery interested"" and those who did not.

Abigail Barr, Jose Garcia-Montalvo, Magnus Lindelow, Pieter Serneels

Cited by*: 4 Downloads*: 11

We explore the value of the strategy method to field experimentalists. Specifically, we demonstrate that, while the method may lead to reductions in subject understanding, it also generates valuable insights. We played the Third Party Punishment Game and the Generalized Trust Game with Ethiopian medical and nursing students applying the strategy method to the responding role in each case. Then, making use of two proxy measures for the students` cognitive abilities, we investigate the relationship between strategy-type choices and subject understanding. Thus, we find support for the assertion that apparently random and internally inconsistent strategies are symptomatic of problems of cognition. We also find support for the often, implicitly made assumption that, in BDM-type trust games, the ratio of what is returned to what is sent is an appropriate focus for comparative analyses of responder behaviour. Finally, we find evidence that an observed difference in third party punishing behaviour between Swiss and Ethiopian students is due, not to misunderstanding, but to variations in what is perceived as punishable. Our results lead us to conclude that the strategy method is of considerable value in Third Party Punishment Games, but need not be routinely applied in BDM-type trust games.

Abigail Barr

Cited by*: 4 Downloads*: 8

This paper presents rigorous and direct tests of two assumptions relating to limited commitment and asymmetric information that underpin current models of risk pooling. A specially designed economic experiment involving 678 subjects across 23 Zimbabwean villages is used to solve the problems of observability and quantification that have frustrated previous attempts to conduct such tests. I find that more extrinsic commitment is associated with more risk pooling, but that more information is associated with less risk pooling. The first of these results accords with our expectations and assumptions. The second does not. I offer two explanations as to the origin of the second result and discuss their implications for how we view the assumptions made elsewhere in the literature. I also conduct a test of the relevance or external validity of the experimental results to our understanding of real risk pooling behaviour. In four out of the five villages for which the test could be conducted the networks of risk pooling contracts constructed during the experiment and the networks existing in real life were significantly correlated.

John A List

Cited by*: 4 Downloads*: 46

No abstract available

Frank W Marlowe

Cited by*: 4 Downloads*: 16

No abstract available

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.

Alan S Gerber

Cited by*: 3 Downloads*: 10

This article reports the results of several field experiments designed to measure campaign effects in partisan contests. The findings suggest incumbent campaigns failed to increase incumbent vote share, whereas the challenger campaign was effective. To understand these and other results, the incumbent's optimal spending strategy was analyzed theoretically. The analysis reveals that if incumbents maximize their probability of victory rather than vote share, campaigns by typical incumbents are expected to produce only minimal improvement in incumbent vote share. The analysis also explains how returns to campaign spending vary with the competitiveness of the election, how incumbent spending can improve the incumbent's probability of victory yet have only minimal effect on incumbent vote share, and why rational spending plans might decrease the sponsor's expected vote. This article demonstrates the wide scope of application for field experiments and provides an example of how experimental findings can serve as a catalyst for generating theories.

Craig E Landry, Andreas Lange, John A List, Michael K Price, Nicholas G Rupp

Cited by*: 3 Downloads*: 1

An important dialogue between theorists and experimentalists over the past few decades has raised the study of the interaction of psychological and economic incentives from academic curiosity to a bona fide academic field. One recent area of study within this genre that has sparked interest and debate revolves around the "hidden costs" of conditional incentives. This study overlays randomization on a naturally-occurring environment in a series of temporally-linked field experiments to advance our understanding of the economics of charity and test if such "costs" exist in the field. This approach permits us to examine why people initially give to charities, and what factors keep them committed to the cause. Several key findings emerge. First, there are hidden benefits of conditional incentives that would have gone undetected had we maintained a static theory and an experimental design that focused on short run substitution effects rather than dynamic interactions. Second, we can reject the pure altruism model of giving. Third, we find that public good provision is maximized in both the short and long run by using conditional, rather than unconditional, incentives.

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.

Jing Cai, Adam Szeidl

Cited by*: 3 Downloads*: 38

We organize regular business meetings for randomly selected managers of young Chinese firms to study the effect of business networks on firm performance. We randomize 2,800 managers into several groups that hold monthly meetings for one year, and a "no-meetings" control group. We find that: (1) The meetings increase firm revenue by 7.8 percentage points, and also significantly increase profit, a management score, employment, and the number of business partners; (2) These effects persist one year after the conclusion of the meetings; and (3) Firms randomized to have better peers exhibit higher growth. We exploit additional interventions to document concrete channels: (4) Peers share exogenous business-relevant information, particularly when they are not competitors, showing that the meetings facilitate learning; (5) Managers create more business partnerships in the regular than in other one-time meetings, showing that the meetings improve firm-to-firm matching.

John A List, Michael K Price

Cited by*: 3 Downloads*: 6

This study showcases the usefulness of field experiments to the study of environmental and resource economics. Our focus pertains to work related to field experiments in the area of 'behavioral' environmental and resource economics. Within this rubric, we discuss research in two areas: those that inform i) benefit cost analysis and ii) conservation of resources. Within each realm, we show how field experiments have been able to test the relevant theories, provide important parameters to construct new theories, and guide policymakers. We conclude with thoughts on how field experiments can be used to deepen our understanding of important areas within environmental and resource economics.

David H Herberich, Steven D Levitt, John A List

Cited by*: 3 Downloads*: 74

No abstract available

James Andreoni, Michael Callen, Karrar Hussain, Muhammad Yasir Khan, Charles Sprenger

Cited by*: 3 Downloads*: 7

We use structural estimates of time preferences to customize incentives for a sample of polio vaccinators during a series of door-to-door vaccination drives in Pakistan. Our investigation proceeds in three stages. First, we measure time preferences using intertemporal allocations of vaccinations. Second, we derive the mapping between these structural estimates and individually optimal incentives given a specific policy objective. Third, we experimentally evaluate the effect of matching contract terms to individual discounting patterns in a subsequent experiment with the same vaccinators. This exercise provides a test of the specific point predictions given by structural estimates of time preference. We document present bias among vaccinators and find that tailored contracts achieve the intended policy objective of smoothing intertemporal allocations of effort.