Papers - All

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*: 21 Downloads*: 33

Many forest ecosystems provide multiple goods and services to both local users (e.g. firewood, water) and to other external beneficiaries (biodiversity conservation, carbon sequestration). This calls for alternative approaches in the governance of these local ecosystems. Even if local users solve the commons dilemma they face regarding the optimal provision of the direct benefit, there might still be a need for introducing mechanisms that also address the externality that involves those outside of the group. This paper addresses the analysis of different types of mechanisms, endogenously emerged from groups vs. externally imposed to them, when facing the typical tragedy of the commons. During 2000_2002 we conducted a series of economic experiments in several rural communities in Colombia. The sub-set reported here of 53 sessions with 265 actual users of local ecosystems, were focused specifically on the effect of external and self-governing rules for inducing cooperative behavior within groups. A group extraction or 'commons' game was used to explore how rules, formal and informal, emerge and how individual behavior responds to regulatory mechanisms aimed at solving the dilemma. Three treatments were compared to a baseline design: Two external regulations (high and low penalties, and only 20% of the players monitored), and a self-governed system where individuals were allowed to have in each round a few minutes of non-binding face-to-face communication. Surprisingly, both external regulations generated very similar results regardless of the level of the penalty, and they induced behaviors very similar to those achieved by the self-governed treatment. The experimental results suggest that individuals do not seem to follow entirely the conventional economic prediction of a minimizer of expected costs of regulations against the benefits from over extracting the resource, and that humans can develop norms based on non-enforceable rules of cooperation. Instead, other elements related to social norms and subjective valuation of the benefits and costs of the regulations might be in play.

Manuela Angelucci, Silvia Prina, Heather Royer, Anya Samek

Cited by*: 0 Downloads*: 33

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.

Joseph Henrich, Richard McElreath

Cited by*: 32 Downloads*: 33

Evidence shows that real-effort investments can affect bilateral bargaining outcomes. This paper investigates whether similar investments can inhibit equilibrium convergence of experimental markets. In one treatment, sellers' relative effort affects the allocation of production costs, but a random productivity shock ensures that the allocation is not necessarily equitable. In another treatment, sellers' effort increases the buyers' valuation of a good. We find that effort investments have a short-lived impact on trading behavior when sellers' effort benefits buyers, but no effect when effort determines cost allocation. Efficiency rates are high and do not differ across treatments.

Daniel Houser, John A List, Anya Samek

Cited by*: 0 Downloads*: 32

Young children have long been known to act selfishly and gradually appear to become more generous across middle childhood. While this apparent change has been well documented, the underlying mechanisms supporting this remain unclear. The current study examined the role of early theory of mind and executive functioning in facilitating sharing in a large sample (N = 98) of preschoolers. Results reveal a curious relation between early false-belief understanding and sharing behavior. Contrary to many commonsense notions and predominant theories, competence in this ability is actually related to less sharing. Thus, the relation between developing theory of mind and sharing may not be as straightforward as it seems in preschool age children. It is precisely the children who can engage in theory of mind that decide to share less with others.

Pablo Celhay, Paul Gertler, Paula Giavagnoli, Christel Vermeersch

Cited by*: 0 Downloads*: 32

We show that fixed costs of adjustment as opposed to low returns likely explain why better quality care practices diffuse slowly in the medical industry. Using a randomized field experiment conducted in Argentina, we find that temporary financial incentives paid to health clinics for the early initiation of prenatal care 'nudged' providers to test and develop new data driven strategies to locate and encourage likely pregnant women to seek care in the first trimester of pregnancy. These innovations raised the rate of early initiation of prenatal care by 34% while the incentives were being paid in the treatment period. We follow health clinics over time and find that this increase persisted for at least 24 months after the incentives ended. In the absence of incentives, even though it is in the clinics' interest to stimulate early initiation of care, the presence of hard to change habits and cost of experimentation made it too expensive to develop and implement new methods to increase early initiation of care. Despite the large increases in early initiation of prenatal care, we find no effects on health outcomes.

Richard Martin, John Randal

Cited by*: 20 Downloads*: 32

No abstract available

Michael E Levine, Charles R Plott

Cited by*: 11 Downloads*: 32

No abstract available

Erwin Bulte, John A List, Qin Tu

Cited by*: 0 Downloads*: 32

A vibrant literature has emerged that explores the economic implications of the sex ratio (the ratio of men to women in the population), including changes in fertility rates, educational outcomes, labor supply, and household purchases. Previous empirical efforts, however, have paid less attention to the underlying channel via which changes in the sex ratio affect economic decisions. This study combines evidence from a field experiment and a survey to document that the sex ratio importantly influences female bargaining power: as the sex ratio increases, female bargaining power increases.

Dmitry Taubinsky, Alex Rees-Jones

Cited by*: 15 Downloads*: 31

This paper shows that accounting for variation in mistakes can be crucial for welfare analysis. Focusing on consumer underreaction to not-fully-salient sales taxes, we show theoretically that the efficiency costs of taxation are amplified by 1) individual differences in under reaction and 2) the degree to which attention is increasing with the size of the tax rate. To empirically assess the importance of these issues, we implement an online shopping experiment in which 2,998 consumers-matching the U.S. adult population on key demographics-purchase common household products, facing tax rates that vary in size and salience. We find that: 1) there are significant individual differences in underreaction to taxes. Accounting for this heterogeneity increases the efficiency cost of taxation estimates by at least 200%, as compared to estimates generated from a representative agent model. 2) Tripling existing sales tax rates roughly doubles consumers' attention to taxes. Our results provide new insights into the mechanisms and determinants of boundedly rational processing of not-fully-salient incentives, and our general approach provides a framework for robust behavioral welfare analysis.

Uri Gneezy, John A List

Cited by*: 262 Downloads*: 31

Recent discoveries in behavioral economics have led scholars to question the underpinnings of neoclassical economics. We use insights gained from one of the most influential lines of behavioral research -- gift exchange -- in an attempt to maximize worker effort in two quite distinct tasks: data entry for a university library and door-to-door fundraising for a research center. In support of the received literature, our field evidence suggests that worker effort in the first few hours on the job is considerably higher in the "gift" treatment than in the "non-gift treatment." After the initial few hours, however, no difference in outcomes is observed, and overall the gift treatment yielded inferior aggregate outcomes for the employer: with the same budget we would have logged more data for our library and raised more money for our research center by using the market-clearing wage rather than by trying to induce greater effort with a gift of higher wages.

Marianne Bertrand, Sendhil Mullainathan

Cited by*: 20 Downloads*: 31

We perform a field experiment to measure racial discrimination in the labor market. We respond with fictitious resumes to help-wanted ads in Boston and Chicago newspapers. To manipulate perception of race, each resume is assigned either a very African American sounding name or a very White sounding name. The results show significant discrimination against African-American names: White names receive 50 percent more callbacks for interviews. We also find that race affects the benefits of a better resume. For White names, a higher quality resume elicits 30 percent more callbacks whereas for African Americans, it elicits a far smaller increase. Applicants living in better neighborhoods receive more callbacks but, interestingly, this effect does not differ by race. The amount of discrimination is uniform across occupations and industries. Federal contractors and employers who list Equal Opportunity Employer' in their ad discriminate as much as other employers. We find little evidence that our results are driven by employers inferring something other than race, such as social class, from the names. These results suggest that racial discrimination is still a prominent feature of the labor market.

Ernst Fehr, Lorenz Goette

Cited by*: 62 Downloads*: 31

Abstract: Most previous studies on intertemporal labor supply found very small or insignificant substitution effects. It is not clear, however, whether these results are due to institutional constraints on workers' labor supply choices or whether the behavioral assumptions of the standard life cycle model with time separable preferences are empirically invalid. We conducted a randomized field experiment in a setting in which workers were free to choose their working times and their efforts during working time. We document a large positive wage elasticity of overall labor supply and an even larger wage elasticity of labor hours, which implies that the wage elasticity of effort per hour is negative. While the standard life cycle model cannot explain the negative effort elasticity, we show that a modified neoclassical model with preference spillovers across periods and a model with reference dependent, loss averse preferences are consistent with the evidence. With the help of a further experiment we can show that only loss averse individuals exhibit a significantly negative effort response to the wage increase and that the degree of loss aversion predicts the size of the negative effort response.

Glenn W Harrison, Morten I Lau, Elisabet E Rutstrom

Cited by*: 378 Downloads*: 31

We estimate individual risk attitudes using controlled experiments in the field in Denmark. The experiments were carried out across Denmark using a representative sample of 253 people between 19 and 75 years of age. Risk attitudes are estimated for various individuals differentiated by socio-demographic characteristics. Our results indicate that the average Dane is risk averse, and that risk neutrality is an inappropriate assumption to apply. We also find that risk attitudes vary significantly with respect to several important socio-demographic variables such as age and education. However, we do not find any effect of sex on risk attitudes. Copyright The editors of the "Scandinavian Journal of Economics" 2007 .

Juan-Camilo Cardenas

Cited by*: 5 Downloads*: 30

This paper explores how wealth and inequality can affect self-governed solutions to commons dilemmas by constraining group cooperation. It reports a series of experiments in the field where subjects are actual commons users. Household data about the participants? context explain statistically the usually observed wide variation found within and across groups in similar experiments. Participants wealth and inequality reduced cooperation when groups were allowed to have face-toface communication between rounds. There are implications for a greater awareness of nonpayoff asymmetries affecting cooperation in heterogeneous groups, apart from heterogeneity in the payoffs structure of the game.

Glenn W Harrison, Morten I Lau, Elisabet E Rutstrom, Melonie B Williams

Cited by*: 219 Downloads*: 30

We estimate individual discount rates with respect to time streams of money using controlled laboratory experiments. These discount rates are elicited by means of field experiments involving real monetary rewards. The experiments were carried out across Denmark using a representative sample of 268 people between 19 and 75 years of age. Individual discount rates are estimated for various households differentiated by socio-demographic characteristics such as income and age. Our conclusions are that discount rates are constant over the 12-month to 3-year horizons used in these experiments, and that discount rates vary substantially with respect to several socio-demographic variables. Hence we conclude that it would be reasonable to assume constant discount rates for specific household types, but not the same rates across all households.

Steven D Levitt, John A List

Cited by*: 51 Downloads*: 30

We can think of no question more fundamental to experimental economics than understanding whether, and under what circumstances, laboratory results generalize to naturally occurring environments. In this paper, we extend Levitt and List (2006) to the class of games in which financial payoffs and doing the right thing are not necessarily in conflict. We argue that behaviour is crucially linked to not only the preferences of people, but also the properties of the situation. By doing so, we are able to provide a road map of the psychological and economic properties of people and situations that might interfere with generalizability of laboratory result from a broad class of games.

Esther Duflo, Emmanuel Saez

Cited by*: 320 Downloads*: 30

This paper analyzes a randomized experiment to shed light on the role of information and social interactions in employees' decisions to enroll in a Tax Deferred Account (TDA) retirement plan within a large university. The experiment encouraged a random sample of employees in a subset of departments to attend a benefits information fair organized by the university, by promising a monetary reward for attendance. The experiment multiplied by more than five the attendance rate of these treated individuals (relative to controls), and tripled that of untreated individuals within departments where some individuals were treated. TDA enrollment five and eleven months after the fair was significantly higher in departments where some individuals were treated than in departments where nobody was treated. However, the effect on TDA enrollment is almost as large for individuals in treated departments who did not receive the encouragement as for those who did. We provide three interpretations-differential treatment effects, social network effects, and motivational reward effects-to account for these results.

Alan S Gerber, Donald P Green

Cited by*: 5 Downloads*: 30

No abstract available

John A List

Cited by*: 136 Downloads*: 30

The role of the market in mitigating and mediating various forms of behavior is perhaps the central issue facing behavioral economics today. This study designs a field experiment that is explicitly linked to a controlled laboratory experiment to examine whether, and to what extent, social preferences influence outcomes in actual market transactions. While agents drawn from a well-functioning marketplace behave in accord with social preference models in tightly controlled laboratory experiments, when observed in their naturally occurring settings their behavior approaches what is predicted by self-interest theory. In the limit, much of the observed behavior in the marketplace that is consistent with social preferences is due to reputational concerns: suppliers who expect to have future interactions with buyers provide higher product quality only when the buyer can verify quality via a third-party certifier. The data also speak to theories of how reputation effects enhance market performance. In particular, reputation and the monitoring of quality are found to be complements, and findings suggest that the private market can solve the lemons problem through third party verification.