Papers - All

John A List, Fatemeh Momeni

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Corporate Social Responsibility (CSR) has become a cornerstone of modern business practice, developing from a "why" in the 1960s to a "must" today. Early empirical evidence on both the demand and supply sides has largely confirmed CSR's efficacy. This paper combines theory with a large-scale natural field experiment to connect CSR to an important but often neglected behavior: employee misconduct and shirking. Through employing more than 3,000 workers, we find that our usage of CSR increases employee misbehavior - 20% more employees act detrimentally toward our firm by shirking on their primary job duty when we introduce CSR. Complementary treatments suggest that "moral licensing" is at work, in that the "doing good" nature of CSR induces workers to misbehave on another dimension that hurts the firm. In this way, our data highlight a potential dark cloud of CSR, and serve to forewarn that such business practices should not be blindly applied.

Eric Cardella, Michael J. Seiler

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When selling a home, an important decision facing the homeowner is choosing an optimal listing price. This decision will depend in large part on how the chosen list price impacts the post negotiation final sale price of the home. In this study, we design an experiment that enables us to identify how different types of common list price strategies affect housing negotiations. Specifically, we examine how rounded, just below, and precise list prices impact the negotiation behavior of the buyer and seller and, ultimately, the final sale price of the home. Our results indicate that the initial list price strategy does play an important role in the negotiation process. Most notably, a high precise price generates the highest final sale price, smallest percentage discount off the list price, and the largest fraction of the surplus to the seller, while just below pricing leads to the lowest final price, largest percentage discount, and smallest fraction of the surplus to the seller. This pattern seems to be largely driven by sellers making persistently higher and more precise counter-offers throughout the negotiation process when the initial list price is high precise. Interestingly, these effects generally attenuate with negotiating experience. Importantly, our experimental results are generally consistent, both in direction and magnitude, with the limited transactions-based empirical studies relating to real estate listing prices.

Luca Fumarco

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In this study, I show that with the appropriate experimental strategy, a correspondence test can be adapted to investigate disability discrimination in the rental housing market. I focus on discrimination against blind tenants assisted by guide dogs in Italy and obtain very robust results. The utilization of three fictitious household tenants (that is, a married couple, a married couple with a blind wife who owns a guide dog, and a married couple where the wife is normal sighted and owns a pet dog) allows me to investigate whether discrimination is due to the blindness or to guide dog alone. I find that apartment owners discriminate blind tenants because of the presence of the guide dog alone. According to the Italian law, this is indirect discrimination, which in the US corresponds to the refusal to provide reasonable accommodation.

Michael J. Seiler, Eric Walden

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In this study, we use functional magnetic resonance imaging (fMRI) to understand how homeowners process non-financial information when considering strategic mortgage default. We find that borrowers initially attempt to inhibit their knee-jerk reaction to retaliate against a lender who has engaged in egregious lending practices when compared to a financially conservative lender. Moreover, when defaults are rare, borrowers are less likely to default because violating the social norm results in feelings of disgust. Finally, when a lender refuses a loan modification, the borrower is found to seek retribution. Interestingly, granting even a modest loan modification removes the desire of homeowners to seek retribution towards their lender no matter what their impression of the lender may be. The results carry a number of policy implications.

Leonardo Becchetti, Vittorio Pelligra, Tommaso Reggiani

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In this paper, we study by means of a framed field experiment on a representative sample of the population the effect on people's charitable giving of three, substantial and procedural, elements: information provision, belief elicitation and threshold on distribution. We frame this investigation within the 5X1000 tax scheme, a mechanism through which Italian taxpayers may choose to give a small proportion (0.5%) of their income tax to a voluntary organization to fund its activities. We find two main results: (i) providing information or eliciting beliefs about previous donations increases the likelihood of a donation, while thresholds have no effect; (ii) information about previous funding increases donations to organizations that received fewer donations in the past, while belief elicitation also increases donations to organizations that received most donations in the past, since individuals are more likely to donate to the organizations they rank first.

James Andreoni, Michael Kuhn, John A List, Anya Samek, Charles Sprenger

Cited by*: 0 Downloads*: 119

Time preferences have been correlated with a range of life outcomes, yet little is known about their early development. We conduct a field experiment to elicit time preferences of nearly 1,000 children ages 3-12, who make several inter temporal decisions. To shed light on how such primitives form, we explore various channels that might affect time preferences, from background characteristics to the causal impact of an early schooling program that we developed and operated. Our results suggest that time preferences evolve substantially during this period with younger children displaying more impatience than older children. We also find a strong association with race: black children, relative to white or Hispanic children, are more impatient. Interestingly, parents of black children are also much more impatient than parents of white and Hispanic children. Finally, assignment to different schooling opportunities is not significantly associated with child time preferences.

Andreas Leibbrandt

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This paper combines experimental with field data from professional sellers to study whether social preferences are related to performance in natural markets. The data show that sellers who are more pro-social in a laboratory experiment are also more successful in natural markets: they achieve higher prices, have superior trade relations and better abilities to signal trustworthiness to buyers. These findings suggest that social preferences play a significant role for outcomes in natural markets.

Anya Samek, Roman Sheremeta

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Recognizing donors by revealing their identities is important for increasing charitable giving. We conducted a field experiment to examine how different recognition methods impact giving, and found that all forms of recognition that we examined had a positive impact on increasing donations, whereby recognizing only highest donors (positive recognition) and recognizing only lowest donors (negative recognition) had the most pronounced effect. We argue that selective recognition (both positive and negative) creates tournament-like incentives. Recognizing the highest donors activates the desire to seek a positive prize of prestige, thus increasing the proportion of donors who contribute large amounts. Recognizing the lowest donors activates the desire to avoid a negative prize of shame, thus decreasing the proportion of donors who do not contribute or contribute very little. Therefore, selective recognition is an effective tool that can be used in the field by charities to increase donations.

Michael J. Seiler

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Defaulting on a mortgage is widely viewed as being immoral, but no prior study has examined the intervening roles of financial outcome and default intent. We find that the public is significantly more accepting of a defaulting borrower who earns a zero or negative return on his investment than one who earns a positive return. This moral viewpoint changes significantly when the default is strategic in nature. Defaulters are judged significantly less harshly by those who more so blame the lender for the current financial crisis, those who have previously strategically defaulted, and males. When asked to suggest a "morally appropriate" settlement offer to lenders to resolve the distressed debt, beyond the financial outcome and default intent remaining significant, we further find that those who more so blame the lender, those view their home as more of an investment rather than a consumption good, those who have previously strategically defaulted, those with lower income levels, and minorities suggest significantly lower settlement offers.

Guodong Gao, Tianshu Sun, Ginger Zhe Jin

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While much research has examined the role of technology in moderating online user connections, how IT motivates offline interactions among users is much less understood. Using a randomized field experiment involving 80,000 participants, we study how mobile messaging can leverage recipients' social ties to encourage blood donation. There are three main findings: first, both behavior intervention (in the form of reminder message) and economic reward (in the form of individual or group reward) increase donations, but only the messages with group reward are effective in motivating more donors to donate with their friend(s); second, group reward tends to attract different types of donors, especially those who are traditionally less active in online social setting; and third, across all treatments, message recipients donate a greater amount of blood if their friends are present. Structural estimation further suggests that rewarding group donors is four times more cost-effective than rewarding individual donors. Based on the structural estimates, we perform policy simulations on the optimal design of mobile messaging. The method of combining structural model and randomized field experiment opens new frontiers for research on leveraging IT to mobilize a user's social network for social good.

Matthew Cypher, S McKay Price, Spenser Robinson, Michael J. Seiler

Cited by*: 0 Downloads*: 5

Using a sample of CCIM designees and candidates in an experimental setting, this study examines the impact of broker signaling in commercial real estate transactions. It also explores the effect of certainty of closure in commercial real estate transactions. Findings suggest brokers are able to influence transaction pricing. Moreover, detailed analysis reveals that when a signal is above a reference point implied by previous transactions, the strength of the signal matters; privately communicated signals from reliable sources have significantly greater impact than signals which are made widely available. Additionally, we find an approximately 10% premium in transactions with lower certainty of closure than one with high certainty. The latter result varies by transactional participant type; owner/developers require a larger premium than institutional sellers.

Michael J. Seiler

Cited by*: 0 Downloads*: 5

We test the disjunctive hypothesis as it relates to mortgage contracts and find that a liquidated damages clause shifts one's view of a mortgage from a promise to perform to either a promise to perform or pay compensatory damages. However, when a strategic mortgage default is responsible for the breach, the perceived immorality of this action overwhelms the liquidated damages clause effect in support of the disjunctive thesis. We also find that people's conscious "experimentally stated preference" moral stance on installment loan (mortgages, auto loans, credit card debt and even cell phone contracts) default significantly differs from their subconscious "experimentally revealed preference" moral stance indicating a difference between what people say they believe and what they actually believe.

Aaron Arndt, David M Harrison, Mark A. Lane, Michael J. Seiler, Vicky L Seiler

Cited by*: 0 Downloads*: 17

We investigate whether customers' overall impression of online property listings can be influenced by the real estate agent, and whether this influence depends on the customer's demographic characteristics. A sample of 1,594 potential homebuyers took an online audio/visual tour of a typically priced home in their area. Subjects were shown one of eight conditions in which we varied agent gender (male/female), agent attractiveness (attractive/less attractive), and pathos (used/not used). The results show that segments of customers are drawn to different real estate agents, but contrary to our expectations, customers were not necessarily drawn to similar agents or more attractive ones.

Eli Beracha, Michael J. Seiler

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In this study, we examine whether homebuyers favor homes associated with just below pricing strategies or those with rounded prices (e.g., $199,900 vs. $200,000). The inclination for just below pricing allows sellers that use just below pricing to set a higher asking price without driving away potential buyers. Rounded priced homes, on the other hand, sell significantly faster and at a smaller discount from list price compared with just below priced homes. We find that the just below pricing strategy yields the highest transaction price relative to the true underlying home value. This suggests sellers exploit buyers' preference for just below priced homes with a higher initial listing price that outweighs the lower discount and shorter time on market associated with similar round priced homes, making just below pricing the more effective pricing strategy.

Mark A. Lane, Michael J. Seiler, Vicky L Seiler

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This study is the first to examine the widely debated merits of staging a home for sale. We find that both homeowners and real estate agents believe staging conditions (furnishings and wall color) will significantly impact homeowners' willingness to pay for a property. Our results show that homeowners rationally do not significantly differ in their valuations based on staging conditions. However, staging conditions do influence the process, as we find a neutral wall color and good furnishings do significantly influence a buyers' perceived liability and overall opinion of the home. While these are a necessary condition for purchase, staging is not enough to result in a higher selling price.

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.

Cody Cook, Rebecca Diamond, Jonathan Hall, John A List, Paul Oyer

Cited by*: 0 Downloads*: 60

The growth of the "gig" economy generates worker flexibility that, some have speculated, will favor women. We explore one facet of the gig economy by examining labor supply choices and earnings among more than a million rideshare drivers on Uber in the U.S. Perhaps most surprisingly, we find that there is a roughly 7% gender earnings gap among drivers. The uniqueness of our data - knowing exactly the production and compensation functions - permits us to completely unpack the underlying determinants of the gender earnings gap. We find that the entire gender gap is caused by three factors: experience on the platform (learning-by-doing), preferences over where/when to work, and preferences for driving speed. This suggests that, as the gig economy grows and brings more flexibility in employment, women's relatively high opportunity cost of non-paid-work time and gender-based preference differences can perpetuate a gender earnings gap even in the absence of discrimination.

David Court, Benjamin Gillen, Jordi McKenzie, Charles R Plott

Cited by*: 0 Downloads*: 21

Successful field tests were conducted on two new Information Aggregation Mechanisms (IAMs). The mechanisms collected information held as intuitions about opening weekend box office revenues for movies in Australia. Participants were film school students. One mechanism is similar to parimutuel betting that produces a probability distribution over box office amounts. Except for "art house films", the predicted distribution is indistinguishable from the actual revenues. The second mechanism is based on guesses of the guesses of others and applied when incentives for accuracy could not be used. It tested well against data and contains information not encompassed by the first mechanism.

Ufuk Akcigit, Fernando Alvarez, Stephane Bonhomme, George M Constantinides, Douglas W Diamond, Eugene F Fama, David W Galenson, Michael Greenstone, Lars Peter Hansen, Uhlig Harald, James J Heckman, Ali Hortacsu, Emir Kamenica, Greg Kaplan, Anil K Kashyap, Steven D Levitt, John A List, Robert E Lucas Jr., Magne Mogstad, Roger Myerson, Derek Neal, Canice Prendergast, Raghuram G Rajan, Philip J Reny, Azeem M Shaikh, Robert Shimer, Hugo F Sonnenschein, Nancy L Stokey, Richard H Thaler, Robert H Topel, Robert Vishny, Luigi Zingales

Cited by*: 0 Downloads*: 207

No abstract available

Loukas Balafoutas, Nikos Nikiforakis, Bettina Rockenbach

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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.