Papers - All

John A List, Anya Samek

Cited by*: 2 Downloads*: 14

Almost a third of US children ages 2-19 are deemed overweight or obese, and part of the problem is the habitual decision to consume high calorie, low nutrient foods. We propose that the school lunchroom provides a 'teachable moment' to engage children in making healthful choices. We conduct a field experiment with over 1,500 participants in grades K-8 and evaluate the impact of small non-monetary incentives on the selection of milk in the school lunchroom. At baseline, only 16% of children select white milk relative to 84% choosing chocolate milk. We find a significant effect of incentives, which increase white milk selection by 2.5 times, to 40%. One concern with incentives is that they may decrease intrinsic motivation to eat healthy, called 'crowd-out of intrinsic motivation.' However, we do not find evidence of 'crowd-out'; rather, we see some suggestive evidence of the positive habit forming effect of incentives.

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.

Timothy Cason, Anya Samek, Roman Sheremeta

Cited by*: 2 Downloads*: 4

Motivated by problems of coordination failure observed in weak-link games, we experimentally investigate behavioral spillovers for order-statistic coordination games. Subjects play the minimum- and median-effort coordination games simultaneously and sequentially. The results show the precedent for cooperative behavior spills over from the median game to the minimum game when the games are played sequentially, but not when they are played simultaneously. Moreover, spillover occurs even when group composition changes, although the effect is not as strong. We also find that the precedent for uncooperative behavior does not spill over from the minimum game to the median game. These findings suggest guidelines for increasing cooperative behavior within organizations.

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.

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.

Ginger Z Jin, Andrew Kato

Cited by*: 2 Downloads*: 18

Every new method of trade offers an opportunity for economic agents to compare its costs and benefits relative to the status quo. Such comparison motivates sorting across market segments and reshapes the whole marketplace. The Internet provides an excellent example: it introduces substantial search cost savings over brick and mortar retail stores but imposes new obstacles for sellers to convey quality. Using sports card trading as a case study, we provide empirical evidence on (1) the sorting of product quality between the online and offline segments, (2) the changes for retail outlets after the Internet came into place, and (3) how supporting industries such as professional grading and card manufacturing adapted to take advantage of the new market.

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.

Dean S Karlan, Jonathan Zinman

Cited by*: 2 Downloads*: 20

Information asymmetries are important in theory but difficult to identify in practice. We estimate the empirical importance of adverse selection and moral hazard in a consumer credit market using a new field experiment methodology. We randomized 58,000 direct mail offers issued by a major South African lender along three dimensions: 1) the initial "offer interest rate" appearing on direct mail solicitations; 2) a "contract interest rate" equal to or less than the offer interest rate and revealed to the over 4,000 borrowers who agreed to the initial offer rate; and 3) a dynamic repayment incentive that extends preferential pricing on future loans to borrowers who remain in good standing. These three randomizations, combined with complete knowledge of the Lender's information set, permit identification of specific types of private information problems. Specifically, our setup distinguishes adverse selection from moral hazard effects on repayment, and thereby generates unique evidence on the existence and magnitudes of specific credit market failures. We find evidence of both adverse selection (among women) and moral hazard (predominantly among men), and the findings suggest that about 20% of default is due to asymmetric information problems. This helps explain the prevalence of credit constraints even in a market that specializes in financing high-risk borrowers at very high rates.

Lewis Glinert, Aileen Heinberg, Angela Hung, Arie Kapteyn, Annamaria Lusardi, Anya Samek

Cited by*: 2 Downloads*: 15

In this paper, we developed and experimentally evaluated four novel educational programs delivered online: an informational brochure, a visual interactive tool, a written narrative, and a video narrative. The programs were designed to inform people about risk diversification, an essential concept for financial decision-making. The effectiveness of these programs was evaluated using the RAND American Life Panel. Participants were exposed to one of the programs, and then asked to answer questions measuring financial literacy and self-efficacy. All of the programs were found to be effective at increasing self-efficacy, and several improved financial literacy, providing new evidence for the value of programs designed to help individuals make financial decisions. The video was more effective at improving financial literacy scores than the written narrative, highlighting the power of online media in financial education.

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.

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.

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

Omar Al-Ubaydli, John A List

Cited by*: 2 Downloads*: 4

Economists are increasingly turning to the experimental method as a means to estimate causal effects. By using randomization to identify key treatment effects, theories previously viewed as untestable are now scrutinized, efficacy of public policies are now more easily verified, and stakeholders can swiftly add empirical evidence to aid their decision-making. This study provides an overview of experimental methods in economics, with a special focus on developing an economic theory of generalizability. Given that field experiments are in their infancy, our secondary focus pertains to a discussion of the various parameters that they identify, and how they add to scientific knowledge. We conclude that until we conduct more field experiments that build a bridge between the lab and the naturally-occurring settings of interest we cannot begin to make strong conclusions empirically on the crucial question of generalizability from the lab to the field.

Juan-Camilo Cardenas

Cited by*: 2 Downloads*: 22

No abstract available

Sam Asher, Lorenzo Casaburi, Plamen Nikolov, Maoliang Ye

Cited by*: 2 Downloads*: 8

We study how gradualism -- increasing required levels ("thresholds") of contributions slowly over time rather than requiring a high level of contribution immediately -- affects individuals' decisions to contribute to a public project. Using a laboratory binary choice minimum-effort coordination game, we randomly assign participants to three treatments: starting and continuing at a high threshold, starting at a low threshold but jumping to a high threshold after a few periods, and starting at a low threshold and gradually increasing the threshold over time (the "gradualism" treatment). We find that individuals coordinate most successfully at the high threshold in the gradualism treatment relative to the other two groups. We propose a theory based on belief updating to explain why gradualism works. We also discuss alternative explanations such as reinforcement learning, conditional cooperation, inertia, preference for consistency, and limited attention. Our findings point to a simple, voluntary mechanism to promote successful coordination when the capacity to impose sanctions is limited.

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.