Papers - All

Aileen Heinberg, Angela Hung, Arie Kapteyn, Annamaria Lusardi, Anya Samek, Joanne Yoong

Cited by*: 2 Downloads*: 3

In this paper, we design and field a low-cost, easily-replicable financial education program called "Five Steps," covering five basic financial planning concepts that relate to retirement. We conduct a field experiment to evaluate the overall impact of "Five Steps" on a probability sample of the American population. In different treatment arms, we quantify the relative impact of delivering the program through video and narrative formats. Our results show that short videos and narratives (each takes about three minutes) have sizable short-run effects on objective measures of respondent knowledge. Moreover, keeping informational content relatively constant, format has significant effects on other psychological levers of behavioral change: effects on motivation and self-efficacy are significantly higher when videos are used, which ultimately influences knowledge acquisition. Follow-up tests of respondents' knowledge approximately eight months after the interventions suggest that between one-quarter and one-third of the knowledge gain and about one-fifth of the self-efficacy gains persist. Thus, this simple program has effects both in the short run and medium run.

Michael J. Seiler

Cited by*: 2 Downloads*: 1

In this study, I examine relative private signal strength and find that offered advice is significantly more influential in changing strategic mortgage default proclivity than is observed actions. Moreover, these private signals are more reflective of financial herding than they are of an information cascade. From a policy perspective, herds are easier to reverse than are cascades making more effective policies aimed at curbing the incidence of strategic mortgage default. Interestingly, an informationally equivalent change in private signal strength across actions and advice alters strategic default willingness, but not the moral stance of borrowers, which demonstrates the complexity of this life-altering financially and emotionally impactful decision.

Michael J. Seiler

Cited by*: 2 Downloads*: 0

This study identifies a severe gap between the financial backlash borrowers believe awaits them after strategic mortgage default and the reality that lenders rarely pursue deficiency judgments. This coupled with the social norm finding that borrowers widely view strategic default as immoral, leads us to recommend lenders and policymakers seeking to stem the tide of defaults to pursue a policy of informational opacity. We make several recommendations for how to carry out such a policy as well as what might need to change in society before the alternative policy of informational transparency becomes ideal.

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.

Ginger Z Jin, Andrew Kato, John A List

Cited by*: 2 Downloads*: 6

Using sportscard grading as an example, we employ field experiments to investigate empirically the informational role of professional certifiers. In the past 20 years, professional grading of sportscards has evolved in a way that provides a unique opportunity to measure the information provision of a monopolist certifier and that of subsequent entrants. Empirical results suggest three patterns: the grading certification provided by the first professional certifier offers new information to inexperienced traders but adds little information to experienced dealers. This implies that the certification may reduce the information asymmetry between informed and uninformed parties. Second, compared with the incumbent, new entrants adopt more precise signals and use finer grading cutoffs to differentiate from the incumbent. Third, our measured differentiated grading cutoffs map consistently into prevailing market prices, suggesting that the market recognizes differences across multiple grading criteria.

Stephan Meier

Cited by*: 2 Downloads*: 20

Framing a decision situation differently has affected behavior substantially in previous studies. This paper tests a framing effect in a field experiment at the University of Zurich. Each semester, every student has to decide whether to contribute to two social funds. Students were randomly informed that a high percentage of the student population contributed (or, equivalently, that a low percentage did not contribute), while others received the information that a relatively low percentage contributed (or a high percentage did not contribute). The results show the influence of framing effects is limited. People behave in a conditional cooperative way if informed either about the number of contributors or about the equivalent number of non-contributors. The positive correlation between group behavior and individual behavior is, however, weaker when the focus is on the defectors. The field experiment also shows gender differences in social comparison.

Christina M Fong, Erzo FP Luttmer

Cited by*: 2 Downloads*: 4

We investigate determinants of private and public generosity to Katrina victims using an artifactual field experiment. In this experiment, respondents from the general population viewed a short audiovisual presentation that manipulated respondents' perceptions of the income, race, and deservingness of Katrina victims in one of two small cities. Respondents then decided how to split $100 between themselves and a charity helping Katrina victims in this small city. We also collected survey data on subjective support for government spending to help the Katrina victims in the cities. We find, first, that our income manipulation had a significant effect on giving; respondents gave more when they perceived the victims to be poorer. Second, the race and deservingness manipulations had virtually no effect on average giving. Third, the averages mask substantial racial bias among sub-groups of our sample. For instance, the subgroup of whites who identify with their ethnic or racial group strongly biased their giving against blacks. Finally, subjective support for government spending to help Katrina victims was significantly influenced by both our race and deservingness manipulations, but not by the income manipulation. White respondents supported significantly less public spending for black victims and significantly more for victims who were described in more flattering terms, such as being helpful and law-abiding.

John Horowitz, John A List, Kenneth E McConnell

Cited by*: 2 Downloads*: 14

The notion of diminishing marginal value had a profound impact on the development of neoclassical theory. Early neoclassical scholars had difficulty convincing contemporaries of the new paradigm's value until political economists used the critical assumption of diminishing marginal value to link utility and demand. While diminishing marginal value remains a key component of modern economic intuition, there is little direct verification of this behavioral property. This paper reports experiments on a myriad of subject pools to examine behavior in both price and exchange settings. We report results from nearly 900 subjects across 19 treatments and find strong evidence of diminishing marginal value.

Aradhna Krishna, Tayfun Sonmez, M. Utku Unver

Cited by*: 2 Downloads*: 14

No abstract available

Juan-Camilo Cardenas

Cited by*: 2 Downloads*: 22

No abstract available

Maria P Espinosa, Javier Gardeazabal

Cited by*: 2 Downloads*: 43

A disadvantage of multiple-choice tests is that students have incentives to guess. To discourage guessing, it is common to use scoring rules that either penalize wrong answers or reward omissions. These scoring rules are considered equivalent in psychometrics, although experimental evidence has not always been consistent with this claim. We model students' decisions and show, first, that equivalence holds only under risk neutrality and, second, that the two rules can be modified so that they become equivalent even under risk aversion. This paper presents the results of a filed experiment in which we analyze the decisions of subjects taking multiple-choice exams. The evidence suggests that differences between scoring rules are due to risk aversion as theory predicts. We also find that the number of omitted items depends on the scoring rule, knowledge, gender, and other covariates.

Paul Glewwe, Albert Park, Meng Zhao

Cited by*: 2 Downloads*: 19

About 10% of primary school students in developing countries have poor vision, yet in virtually all of these countries very few children wear glasses. There has been almost no research on the impact of poor vision on school performance in developing countries, and simple OLS estimates are likely to be biased because students who study more often are likely to develop poor vision faster. This paper presents results from a randomized trial in Western China that began in the summer of 2004. The trial involves over 19,000 students in 165 schools in two counties of Gansu province. The schools were randomly divided (at the township level) into 103 schools that received eyeglasses (for students in grades 4-6) and 62 schools that served as controls. The results indicate that, after one year, making eyeglasses available increased average test scores by 0.11 to 0.15 standard deviations (of the distribution of the test scores). For those students who accepted the glasses, average test scores increased by 0.15 to 0.22 standard deviations.

Maurizio Bovi

Cited by*: 2 Downloads*: 29

To learn the people's expectations formation process, we examine shocks and survey expectations on individual and aggregate income. Data show that shocks have permanent effects on both expectations, which do not diverge systematically because agents revise forecasts. Actually, only expectations on GDP dynamics are revised. These latter overreact to shocks and are more volatile than expectations on personal stances. Disagreement is persistently high. Astonishingly, there is even less consensus when expectations deal with the same fundamental. Lastly, we elaborate a test on whether - and find evidence that - cross sectional disagreement and time series volatility in expectations are equal.

Abhijit Banerjee, Esther Duflo, Leigh Linden

Cited by*: 2 Downloads*: 54

This note presents the results obtained after the first year of a two-year randomized evaluation of a computer assisted learning (CAL) program in Vadodara, India. The CAL program, implemented by a NGO, took advantage of the donation of four computers to each municipal primary school in Vadodara by the state government. The program provided each child in the fourth standard with two hours of shared computer time in which students played educational games that reinforced mathematics competencies ranging from the standard 1 to the standard 3 level. We find the program to be quite effective. On average, it increased math scores by 0.37 standard deviations. The program effect is slightly higher at the bottom of the distribution but persists throughout the distribution. The program had no apparent spillover on language competencies.

John A List, Sally Sadoff, Mathis Wagner

Cited by*: 2 Downloads*: 33

Experimental economics represents a strong growth industry. In the past several decades the method has expanded beyond intellectual curiosity, now meriting consideration alongside the other more traditional empirical approaches used in economics. Accompanying this growth is an influx of new experimenters who are in need of straightforward direction to make their designs more powerful. This study provides several simple rules of thumb that researchers can apply to improve the efficiency of their experimental designs. We buttress these points by including empirical examples from the literature.

Juan-Camilo Cardenas

Cited by*: 2 Downloads*: 58

The use of experimental settings to observe human behaviour in a controlled environment of incentives, rules and institutions, has been widely used by the behavioural sciences for some time now, particularly by psychology and economics. In most cases the subjects are college students recruited from one to two hour decision making exercises in which, depending on their choices, they earn cash averaging US$ 20. In such exercises players face a set of feasible actions, rules and incentives (payoffs) involving different forms of social exchange with other people, and that in most cases involve some kind of externalities with incomplete contracts, such as in the case of common-pool resources situations. Depending on the ecological and institutional settings, the resource users face a set of feasible levels of extraction, a set of rules regarding the control or monitoring of individual use, and sometimes ways of imposing material or non-material costs or rewards to those breaking or following the rules. We brought the experimental lab to the field and invited about two hundred users of natural resources in three Columbian rural villages to participate in such decision making exercises and through these and other research instruments we learned about the ways they solve - or fail to - tragedies of the commons with different social institutions. Further, bringing the lab to the field allowed us to explore some of the limitations of existing models about human behavior and its consequences for designing policies for conserving ecosystems and improving social welfare.

Santosh Anagol, Vimal Balasubramaniam, Tarun Ramadorai

Cited by*: 2 Downloads*: 24

Winners of randomly assigned initial public offering (IPO) lottery shares are significantly more likely to hold these shares than lottery losers 1, 6, and even 24 months after the random allocation. This effect persists in samples of wealthy and highly active investors, suggesting along with additional evidence that this type of "endowment effect" is not solely driven by portfolio inertia or wealth effects. The effect decreases as experience in the IPO market increases, but persists even for the most experienced investors. These results suggest that agents' preferences and/or beliefs about an asset are not independent of ownership, providing field evidence derived from the behavior of 1.5 million Indian stock investors which is in line with the large laboratory literature documenting endowment effects. We evaluate the extent to which prominent models of endowment effects and/or investor behavior can explain our results. A combination of inattention and non-standard preferences (realization utility) or non-standard beliefs (salience based probability distortions) appears most consistent with our findings.

Omar Al-Ubaydli, John A List

Cited by*: 2 Downloads*: 88

This is a review of the literature of field experimental studies of markets. The main results covered by the review are as follows: (1) Generally speaking, markets organize the efficient exchange of commodities; (2) There are some behavioral anomalies that impede efficient exchange; (3) Many behavioral anomalies disappear when traders are experienced.

Eric Floyd, John A List

Cited by*: 2 Downloads*: 49

The gold standard in the sciences is uncovering causal relationships. A growing literature in economics utilizes field experiments as a methodology to establish causality between variables. Taking lessons from the economics literature, this study provides an "A-to-Z" description of how to conduct field experiments in accounting and finance. We begin by providing a user's guide into what a field experiment is, what behavioral parameters field experiments identify, and how to efficiently generate and analyze experimental data. We then provide a discussion of extant field experiments that touch on important issues in accounting and finance, and we also review areas that have ample opportunities for future field experimental explorations. We conclude that the time is ripe for field experimentation to deepen our understanding of important issues in accounting and finance.

Ori Heffetz , John A List

Cited by*: 1 Downloads*: 14

A hallmark result within behavioral economics is that individuals' choices are affected by current endowments. A recent theory due to Koszegi and Rabin (2006) explains such endowment effect with a model of expectations-based reference-dependent preferences. Departing from past work, we conduct complementary experiments to disentangle expectations - verified probabilistic beliefs held by subjects - from other features of endowment - such as "assignment" to a good - hence allowing us to compare the effect of expectations with that of other variations. While mere assignment can affect choices, we do not find a large role in the effect for Koszegi-Rabin expectations.