Papers - All

Irma Machielse, Danielle Timmermans, Peter Wakker

Cited by*: 3 Downloads*: 28

This paper presents a field study into the effects of statistical information concerning risks on willingness to take insurance, with special attention being paid to the usefulness of these effects for the clients (the insured). Unlike many academic studies, we were able to use in-depth individual interviews of a large representative sample from the general public (N = 476). The statistical information that had the most interesting effects, "individual own past-cost information," unfortunately enhanced adverse selection, which we could directly verify because the real health costs of the clients were known. For a prescriptive evaluation this drawback must be weighted against some advantages: a desirable interaction with risk attitude, increased customer satisfaction, and increased cost awareness. Descriptively, ambiguity seeking was found rather than ambiguity aversion, and no risk aversion was found for loss outcomes. Both findings, obtained in a natural decision context, deviate from traditional views in risk theory but are in line with prospect theory. We confirmed prospect theory's reflection at the level of group averages but falsified it at the individual level.

Daniel Bergan, Alan S Gerber, Dean S Karlan

Cited by*: 36 Downloads*: 27

We conducted a field experiment to measure the effect of exposure to newspapers on political behavior and opinion. Before the 2005 Virginia gubernatorial election, we randomly assigned individuals to a Washington Post free subscription treatment, a Washington Times free subscription treatment, or a control treatment. We find no effect of either paper on political knowledge, stated opinions, or turnout in post-election survey and voter data. However, receiving either paper led to more support for the Democratic candidate, suggesting that media slant mattered less in this case than media exposure. Some evidence from voting records also suggests that receiving either paper led to increased 2006 voter turnout.

Frode Alfnes, Maren E Bachke, Mette Wik

Cited by*: 1 Downloads*: 27

Most charity organizations depend on contributions from the general public, but little research is conducted on donor preferences. Do donors have geographical, recipient, or thematic preferences? We designed a conjoint analysis experiment in which people rated development aid projects by donating money in dictator games. We find that our sample show strong age, gender, regional, and thematic preferences. Furthermore, we find significant differences between segments. The differences in donations are consistent with differences in donors' attitudes toward development aid and their beliefs about differences in poverty and vulnerability of the recipients. The method here used for development projects can easily be adapted to elicit preferences for other kinds of projects that rely on gifts from private donors.

Steffen Andersen, Erwin Bulte, Uri Gneezy, John A List

Cited by*: 16 Downloads*: 27

No abstract available

Amanda Agan, Sonja Starr

Cited by*: 22 Downloads*: 27

"Ban-the-Box" (BTB) policies restrict employers from asking about applicants' criminal histories on job applications and are often presented as a means of reducing unemployment among black men, who disproportionately have criminal records. However, withholding information about criminal records could risk encouraging statistical discrimination: employers may make assumptions about criminality based on the applicant's race (or other observable characteristics). To investigate BTB's effects, we sent approximately 15,000 fictitious online job applications to employers in New Jersey and New York City both before and after the adoption of BTB policies. These applications varied the race and felony conviction status of the applicants. We confirm that criminal records are a major barrier to employment: employers that ask about criminal records were 63% more likely to call back an applicant if he has no record. However, our results support the concern that BTB policies encourage statistical discrimination on the basis of race: we find that the race gap in callbacks grows dramatically at the BTB-affected companies after the policy goes into effect. Before BTB, white applicants to employers with the box received 7% more callbacks than similar black applicants, but BTB increases this gap to 45%.

Dean S Karlan, Martin Valdivia

Cited by*: 15 Downloads*: 27

Most academic and development policy discussions about microentrepreneurs focus on credit constraints and assume that subject to those constraints, the entrepreneurs manage their business optimally. Yet the self-employed poor rarely have any formal training in business skills. A growing number of microfinance organizations are attempting to build the human capital of microentrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty- to sixty-minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find little or no evidence of changes in key outcomes such as business revenue, profits, or employment. We nevertheless observed business knowledge improvements and increased client retention rates for the microfinance institution.

Ginger Z Jin, Andrew Kato

Cited by*: 6 Downloads*: 27

Economists accept consumer frauds as an equilibrium outcome of information costs. This paper empirically investigates what information is costly, what contribute to the information costs, and what institutions are more effective in reducing the information costs. We focus on one of the most complained about markets - Internet auctions. In a field experiment, we obtain actual baseball cards from both online and retail markets whose quality are then professionally graded and compared to the prices paid by online buyers for goods with similar claims. The experiment allows us to obtain a key variable - true quality - on top of price and seller ratings used in the existing literature. Our findings indicate that some naive buyers in the online ungraded market are misled by non-credible claims of quality. They pay higher prices but do not receive better quality and in fact are defrauded more often. In comparison, claim-driven frauds do not exist in retail or graded markets where buyers can observe card quality either through careful quality examination before purchase or a third-party grading service. Online seller reputation is found to be effective for identifying good-faith sellers. But conditional on completed auctions, reputable sellers do not provide better quality. More disturbingly, the price increase from making non-credible claims more than compensates for the lower likelihood of sale for sellers with low reputations. We attribute the naivete to misleading signals in the online ungraded market and two loopholes in the eBay rating system, namely universal rating and costless switching of anonymous identities. These loopholes reduce the precision and accessibility of seller information, and therefore add difficulties for naive buyers to become sophisticated. We also point out that naive buyers could impose several negative externalities on the other good-faith players in the market.

John A List, Michael K Price

Cited by*: 15 Downloads*: 27

We explore collusion by using the tools of experimental economics in a naturally occurring marketplace. We report that competitive price theory adequately organizes data in multilateral decentralized bargaining markets without conspiratorial opportunities. When conspiratorial opportunities are allowed and contract prices are perfectly observed, prices (quantities) are considerably above (below) competitive levels. When sellers receive imperfect price signals, outcomes are intermediate to those of competitive markets and collusive markets with full information. Finally, experienced buyers serve as a catalyst to thwart attempts by sellers to engage in anticompetitive pricing: in periods where experienced agents transact in the market, average transaction prices are below those realized in periods where only inexperienced agents execute trades.

Peter A Riach, Judith Rich

Cited by*: 21 Downloads*: 27

Pairs of carefully-matched, written applications were made to advertised job vacancies in England to test for sexual discrimination in hiring. Two standard resumes were constructed for each occupation to control for all relevant supply-side variables, such as qualifications, experience and age. Consequently any differential response recorded can be attributed to demand-side discrimination. Statistically significant discrimination against men was found in the `female occupation' - secretary, and against women in the `male occupation' - engineer. Statistically significant, and unprecedented, discrimination against men was found in two `mixed occupations' - trainee chartered accountant and computer analyst programmer.

Frank W Marlowe

Cited by*: 1 Downloads*: 27

Most hypotheses proposed to explain human food sharing address motives, yet most tests of these hypotheses have measured only the patterns of food transfer. To choose between these hypotheses we need to measure people's propensity to share. To do that, I played two games (the Ultimatum and Dictator Games) with Hadza hunter-gatherers. Despite their ubiquitous food sharing, the Hadza are less willing to share in these games than people in complex societies are. They were also less willing to share in smaller camps than larger camps. I evaluate the various food-sharing hypotheses in light of these results.

David S Brookshire, Donald L Coursey, Howard Kunreuther

Cited by*: 0 Downloads*: 27

No abstract available

Benjamin A Olken

Cited by*: 6 Downloads*: 26

This paper examines the accuracy of beliefs about corruption, using data from Indonesian villages. Specifically, I compare villagers' stated beliefs about the likelihood of corruption in a road-building project in their village with a more objective measure of 'missing expenditures' in the project, which I construct by comparing the project's official expenditure reports with an independent estimate of the prices and quantities of inputs used in construction. I find that villagers' beliefs do contain information about corruption in the road project, and that villagers are sophisticated enough to distinguish between corruption in the road project and other types of corruption in the village. The magnitude of their information, however, is small, in part because officials hide corruption where it is hardest for villagers to detect. This may limit the effectiveness of grass-roots monitoring of local officials. I also find evidence of systematic biases in corruption beliefs, particularly when examining the relationship between corruption and variables correlated with trust. For example, ethnically heterogeneous villages have higher perceived corruption levels but lower actual levels of missing expenditures. The findings illustrate the limitations of relying solely on corruption perceptions, whether in designing anti-corruption policies or in conducting empirical research on corruption.

Christopher Blattman, Julian C. Jamison, Margaret Sheridan

Cited by*: 0 Downloads*: 26

We show that a number of "non cognitive" skills and preferences, including patience and identity, are malleable in adults, and that investments in them reduce crime and violence. We recruited criminally-engaged men and randomized half to eight weeks of cognitive behavioral therapy designed to foster self-regulation, patience, and a noncriminal identity and lifestyle. We also randomized $200 grants. Cash alone and therapy alone initially reduced crime and violence, but effects dissipated over time. When cash followed therapy, crime and violence decreased dramatically for at least a year. We hypothesize that cash reinforced therapy's impacts by prolonging learning-by-doing, lifestyle changes, and self-investment.

Esther Duflo, Pascaline Dupas, Michael Kremer, Samuel Sinei

Cited by*: 15 Downloads*: 26

We report results from a randomized evaluation comparing three school-based HIV/AIDS interventions in Kenya: 1) training teachers in the Kenyan Government's HIV/AIDS-education curriculum; 2) encouraging students to debate the role of condoms and to write essays on how to protect themselves against HIV/AIDS; and 3) reducing the cost of education. Our primary measure of the effectiveness of these interventions is teenage childbearing, which is associated with unprotected sex. We also collected measures of knowledge, attitudes, and behavior regarding HIV/AIDS. After two years, girls in schools where teachers had been trained were more likely to be married in the event of a pregnancy. The program had little other impact on students' knowledge, attitudes, and behavior, or on the incidence of teen childbearing. The condom debates and essays increased practical knowledge and self-reported use of condoms without increasing self-reported sexual activity. Reducing the cost of education by paying for school uniforms reduced dropout rates, teen marriage, and childbearing.

Shagata Mukherjee, Michael K Price

Cited by*: 0 Downloads*: 26

This study takes a first step to advance our understanding of the strategic interaction between the constituent components of default in microfinance and how to mitigate them. We conduct controlled microfinance field experiments in rural India to provide a systematic analysis of the relationship between gender, group liability and moral hazard. By varying the contract structure across different microfinance games, our experiment decomposes the two moral hazard (ex-ante and ex-post) channels and find that their effect on default are counteractive rather than additive for women clients. The study facilitates heterogeneity analysis of gender on moral hazard across comparable matrilineal and patrilineal societies in two neighboring states of India. We find that matrilineal women are less risk averse and are more likely to invest in the risky project (ex-ante moral hazard) than women in patrilineal societies. Moreover, we find a reversal of gender effect on strategic default (ex-post moral hazard) across the two societies, suggesting the importance of social norms and gender roles on financial behavior. Our results indicate that policymaking in microfinance should be designed by considering the heterogeneity of diverse societies, gender roles, norms and the underlying socio-economic factors that motivate financial behavior among borrowers.

Steffen Andersen, Seda Ertac, Uri Gneezy, Moshe Hoffman, John A List

Cited by*: 37 Downloads*: 26

One of the most robust findings in experimental economics is that individuals in one-shot ultimatum games reject unfair offers. Puzzlingly, rejections have been found robust to substantial increases in stakes. By using a novel experimental design that elicits frequent low offers and uses much larger stakes than in the literature, we are able to examine stakes' effects over ranges of data that are heretofore unexplored. Our main result is that proportionally equivalent offers are less likely to be rejected with high stakes. In fact, our paper is the first to present evidence that as stakes increase, rejection rates approach zero.

Catherine C Eckel, Philip J Grossman

Cited by*: 30 Downloads*: 26

We report the results of a field experiment conducted in conjunction with a mailed fundraising campaign of a nonprofit organization. The experiment is designed to compare the response of donors to subsidies in the form of matching amounts or rebated amounts. Matching subsidies are used by many corporations as an employee benefit; the US federal tax system encourages giving using a rebate subsidy by making donations tax deductible. The design includes a control group and two levels of subsidy of each type. Our main result is that matching subsidies result in larger total donations to charities than rebate subsidies, a result that is qualitatively similar to the lab findings. The estimated price elasticities for the matching subsidy are very similar to (and insignificantly different from) the lab experiments, while rebate subsidies lead to lower contributions in the field than in the lab. Since rebates in the field involve substantial lags and additional complications as compared with the "instant rebates" of the lab, this latter difference is not unexpected. The matching results are an important step in validating lab estimates of responsiveness to subsidies of charitable giving.

Steven D Levitt, John A List, Sally Sadoff

Cited by*: 0 Downloads*: 25

Although backward induction is a cornerstone of game theory, most laboratory experiments have found that agents are not able to successfully backward induct. We analyze the play of world-class chess players in the centipede game, which is ill-suited for testing backward induction, and in pure backward induction games--Race to 100 games. We find that chess players almost never play the backward induction equilibrium in the centipede game, but many properly backward induct in the Race to 100 games. We find no systematic within-subject relationship between choices in the centipede game and performance in pure backward induction games.

Philip Oreopoulos, Uros Petronijevic

Cited by*: 3 Downloads*: 25

Recent studies show that programs offering structured, one-on-one coaching and tutoring tend to have large effects on the academic outcomes of both high school and college students. These programs are often costly to implement and difficult to scale, however, calling into question whether making them available to large student populations is feasible. In contrast, interventions that rely on technology to maintain low-touch contact with students can be implemented at large scale and minimal cost but with the risk of not being as effective as one-on-one, in-person assistance. In this paper, we test whether the effects of coaching programs can be replicated at scale by using technology to reach a larger population of students. We work with a sample of over four thousand undergraduate students from a large Canadian university, randomly assigning students into one of the following three interventions: (i) a one-time online exercise designed to affirm students' values and goals; (ii) a text messaging campaign that provides students with academic advice, information, and motivation; and (iii) a personal coaching service, in which students are matched with upper-year undergraduate coaches. We find large positive effects from the coaching program, as coached students realize a 0.3 standard deviation increase in average grades and a 0.35 standard deviation increase in GPA. In contrast, we find no effects from either the online exercise or the text messaging campaign on any academic outcome, both in the general student population and across several student subgroups. A comparison of the key features of the text messaging campaign and the coaching service suggests that proactively and regularly initiating conversations with students and working to establish trust are important design features to incorporate in future interventions that use technology to reach large populations of students.

Bruno Crepon, Julie Pernaudet

Cited by*: 0 Downloads*: 25

Disadvantaged youth are particularly at risk of under-investing in their health. Costs of healthcare and bias in health needs perceptions are likely to be key factors of underinvestment. Relying on a randomized experiment, we find that providing them with personalized information both on public health insurance and on their health status based on a medical diagnosis raises their curative and preventive investments. More specifically, they are more likely to consult a psychologist and to use contraception, while depression and risky sexual behaviors are key issues in this population. In order to distinguish between the two barriers, financial constraints and underestimation of health needs, we also test a program providing information on public health insurance only. This limited program improves their medical coverage in the same way as the combined program, but it does not translate into higher health investments. These findings highlight the importance of taking into account the role of subjective perceptions of health needs when considering health decisions among disadvantaged youth.