Papers - All

Manuela Angelucci, Silvia Prina, Heather Royer, Anya Samek

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How do peers influence the impact of incentives? Despite much work on incentives, little is known about the spillover effects of incentives. We investigate two mechanisms by which these effects can occur: through peers' actions and peers' incentives. In a field experiment on snack choice (grapes versus cookies), we randomize who receives incentives, the fraction of peers incentivized, and whether or not it can be observed that peers' choices are incentivized among over 1,500 children in the school lunchroom. Incentives increase the likelihood of initially choosing grapes. However, peer spillover effects can be large enough to undo these positive effects.

Avner Ben-Ner, John A List, Louis Putterman, Anya Samek

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An active area of research within the social sciences concerns the underlying motivation for sharing scarce resources and engaging in other pro-social actions. We develop a theoretical framework that sheds light on the developmental origins of social preferences by providing mechanisms through which parents transmit preferences for generosity to their children. Then, we conduct a field experiment with nearly 150 3-5 year old children and their parents, measuring (1) whether child and parent generosity is correlated, (2) whether children are influenced by their parents when making sharing decisions and (3) whether parents model generosity to children. We observe no correlation of independently measured parent and child sharing decisions at this young age. Yet, we find that apart from those choosing an equal allocation of resources between themselves and another child, children adjust their behaviors to narrow the gap with their parent's or other adult's choice. We find that fathers, and parents of initially generous children, increase their sharing when informed that their child will be shown their choice.

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

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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.

David H Reiley

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This paper tests the empirical predictions of recent theories of the endogenous entry of bidders in auctions. Data come from a field experiment, involving sealed-bid auctions for collectible trading cards over the Internet. Manipulating the reserve prices in the auctions as an experimental treatment variable generates several results. First, observed participation behavior indicates that bidders consider their bid submission to be costly, and that bidder participation is indeed an endogenous decision. Second, the participation is more consistent with a mixed-strategy entry equilibrium than with a deterministic equilibrium. Third, the data reject the prediction that the profit- maximizing reserve price is greater than or equal to the auctioneer's salvage value for the good, showing instead that a zero reserve price provides higher expected profits in this case.

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.

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

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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.

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.

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.

Antoni Bosch-Domenech, Rosemarie Nagel, Juan V Sanchez-Andres

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Alzheimer patients in the early stage of the disease were asked to participate in the Dictator game, a game in which each subject has to decide how to allocate a certain amount of money between himself and another person. The game allows the experimenter to view the influence of social norms and preferences on the decision-making process. When the data from the experiment are compared with the results of an identical experiment involving two control groups with similar ages and social background, one group with Mild Cognitive Impairment patients, the other with healthy subjects, it appears that the results from the three groups are statistically undistinguishable. This is an indication that Stage I AD patients are as capable of making decisions involving social norms and preferences as any person of their age, and that whatever brain structures are affected by the disease, they do not include, at this stage, the neural basis of cooperation-enhancing social interactions.

Juan-Camilo Cardenas

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The internalization of external costs arising from a group dilemma between the individual and social interests require the design of institutions through the market, the state or self-governance that are able to induce in the agents a change in their pecuniary and non-material incentives so that their choices are socially desirable. The conventional approach in the economic analysis of the enforcement of the law based mostly on the work of Becker is based on the postulate that those not complying with the law are rationally perceiving a greater benefit from doing so if compared to the expected cost of the sanction by the state, that is the value of the sanction for the law violator multiplied by the probability of detection. Through a series of economic experiments we explore this hypothesis for the case of a typical public good or resource extraction where there is a group externality, and an external regulation that is partially enforced. The results suggest that the strategic response by the agents to the different expected costs of the sanction confirm only partially the hypothesis in the sense that the differences are less than proportional to the differences to the expected costs for the regulated agents. Further, when the results here are compared to exact replications of the experiments with people in the field that face these kinds of dilemmas, the differences in individual behavior across levels of expected costs virtually vanish. It is suggested here that along with the material costs for violators, the individuals may incorporate additional elements in their cognitive process which are consistent with findings from experimental and behavioral economics studies.

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.

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.

Sandra Polania-Reyes

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Although social capital has been considered of the utmost importance for development it remains a complex and elusive concept. Different dimensions of social capital form part of the puzzle: cooperation is an individual other-regarding preference; social norms stem from beliefs about others' behavior; and the formation of such beliefs is mediated by attributes of the social network. To disentangle social capital we conduct an artefactual field experiment with 714 households at the inset of a Conditional Cash Transfer program in an urban context. To our knowledge this is the first paper that disentangles cooperation from coordination by conducting a minimum effort coordination game with Pareto ranked equilibria. Willingness to cooperate is teased out using a public goods game. By controlling for the density of network information we capture the role of connections, which is the third element of the mixture. We also look at the relation between our experimental data and traditional survey measures of social capital. Our identification strategy allows us to assess whether exposure to the program could be helping individuals overcome strategic uncertainty and select the most efficient equilibrium in the coordination game. The regressions suggest that the program helps overcome the coordination failure through different channels. In particular, the evidence suggests there is a spillover effect of the monetary incentive as it facilitates a social norm, which itself allows individuals to overcome the coordination failure. We rule out confounding factors such as individual socio-economic characteristics, social capital accumulation, willingness to cooperate and connectivity.

Charles Godward , John A List, Mark Thompson

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John A List, Fatemeh Momeni

Cited by*: 0 Downloads*: 82

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.