Papers - All

Per Fredriksson , John A List, Daniel L Millimet

Cited by*: 8 Downloads*: 1

Empirical evidence suggesting that a considerable amount of horizontal strategic interaction exists amongst governments is important in light of recent devolutionary trends of many important public programs. The empirical approach in these studies typically relies on estimating reaction functions in a uni-dimensional policy framework, where a nonzero slope estimate is interpreted as evidence in support of strategic interactions. While this framework is a useful representation within certain contexts, it is potentially too restrictive; for example, in models of resource competition, localities may use multiple instruments in their recruiting pursuits, leading to potential strategic interactions across policy instruments. In this study, we first develop a simple theoretic construct that includes resource competition in a world of three-dimensional policy choice. The model suggests that while a zero-sloped reaction function may exist for any particular policy, this does not necessarily imply the absence of strategic interactions. We examine the implications of the model empirically using US state-level panel data over the period 1977-1994. The results suggest that important cross-policy strategic interactions exist, lending support in favor of the multi-dimensional framework, and indicate that uni-dimensional frameworks may present lower bound estimates of the degree of strategic interaction.

Jay R Corrigan, Matthew C Rousu

Cited by*: 16 Downloads*: 1

Recent evidence suggests that participants' misunderstanding of experimental auction mechanisms can systematically bias auction results. We present a simple technique for testing whether field auction participants fully understand the demand-revealing nature of the auction mechanism and, by extension, whether auction bids provide an unbiased estimate of participants' willingness to pay.

Michael Greenstone, John A List, Chad Syverson

Cited by*: 14 Downloads*: 1

The economic costs of environmental regulations have been widely debated since the U.S. began to restrict pollution emissions more than four decades ago. Using detailed production data from nearly 1.2 million plant observations drawn from the 1972-1993 Annual Survey of Manufactures, we estimate the effects of air quality regulations on manufacturing plants' total factor productivity (TFP) levels. We find that among surviving polluting plants, stricter air quality regulations are associated with a roughly 2.6 percent decline in TFP. The regulations governing ozone have particularly large negative effects on productivity, though effects are also evident among particulates and sulfur dioxide emitters. Carbon monoxide regulations, on the other hand, appear to increase measured TFP, especially among refineries. The application of corrections for the confounding of price increases and output declines and sample selection on survival produce a 4.8 percent estimated decline in TFP for polluting plants in regulated areas. This corresponds to an annual economic cost from the regulation of manufacturing plants of roughly $21 billion, about 8.8 percent of manufacturing sector profits in this period.

Craig E Landry, Andreas Lange, John A List, Michael K Price, Nicholas G Rupp

Cited by*: 3 Downloads*: 1

An important dialogue between theorists and experimentalists over the past few decades has raised the study of the interaction of psychological and economic incentives from academic curiosity to a bona fide academic field. One recent area of study within this genre that has sparked interest and debate revolves around the "hidden costs" of conditional incentives. This study overlays randomization on a naturally-occurring environment in a series of temporally-linked field experiments to advance our understanding of the economics of charity and test if such "costs" exist in the field. This approach permits us to examine why people initially give to charities, and what factors keep them committed to the cause. Several key findings emerge. First, there are hidden benefits of conditional incentives that would have gone undetected had we maintained a static theory and an experimental design that focused on short run substitution effects rather than dynamic interactions. Second, we can reject the pure altruism model of giving. Third, we find that public good provision is maximized in both the short and long run by using conditional, rather than unconditional, incentives.

Omar Al-Ubaydli, John A List

Cited by*: 2 Downloads*: 1

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.

John A List, David Lucking-Reiley

Cited by*: 29 Downloads*: 1

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John A List, Daniel L Millimet, Thanasis Stengos

Cited by*: 32 Downloads*: 1

We explore the importance of modeling strategies when estimating the emissions-income relationship. Using U.S. state-level panel data on nitrogen oxide and sulfur dioxide emissions, we estimate several environmental Kuznets curves using the standard parametric framework as well as a more flexible semiparametric alternative. Formal statistical comparisons of the results overwhelmingly reject the parametric approach. Moreover, the differences, particularly for sulfur dioxide, are economically significant.

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.

John A List, Daniel M Sturm

Cited by*: 3 Downloads*: 1

In this paper we explore to what extent secondary policy issues are influenced by electoral incentives. We develop a political agency model in which a politician decides on both a frontline policy issue, such as the level of public spending, and a secondary policy issue, such as environmental policy. The model shows under which conditions the incumbent finds it worthwhile to manipulate the secondary policy to attract additional votes to his platform. We test the predictions of the model using state-level panel data on Gubernatorial environmental policy choices over the years 1960-2000. In contrast to the popular view that choices on secondary policy instruments are largely determined by lobbying, we find strong effects of electoral incentives on environmental policy.

Donald P Green

Cited by*: 0 Downloads*: 1

This essay summarizes the results of a large-scale randomized experiment conducted during the 2000 election campaign by the NAACP National Voter Fund, which sought to mobilize African-American voters. Focusing solely on the direct mail and phone banking components of the NAACP-NVF campaign, this study examines the voting behavior of 980,208 participants residing in single-voter households, 1.7 percent of whom were randomly assigned to a control group. The experiment permits us to estimate (1) the extent to which the National Voter Fund's phone calls and direct mail increased voter turnout and (2) the approximate cost per vote. Within this sample, the NVF's two pieces of GOTV mail, three live phone calls, and two recorded phone calls had modest effects, generating approximately 7,100 additional votes at $158 per vote. The upper bound of a 90 percent confidence interval puts these figures at 16,214 additional votes at $69 per vote.

Iwan Barankay, Magnus Johannesson, John A List, Richard Friberg, Matti Liski, Kjetil Storesletten

Cited by*: 1 Downloads*: 1

No abstract available

John A List, Jason F Shogren

Cited by*: 24 Downloads*: 1

Examining panel data on bidding behavior in over forty second-price auction markets with repeated trials, we observe that (i) posted prices influence the behavior of the median naive bidder; (ii) posted prices do not affect the behavior of the median experienced bidder or the bidder for familiar goods; and (iii) anticipated strategic behavior wanes after two trials. The results suggest that while affiliation might exist in auctions for new goods, the repeated trial design with nonprice information removes the correlation of values and provides the experience that bidders need to understand the market mechanism.

Craig Gallet, John A List

Cited by*: 0 Downloads*: 1

This paper uses market share data to infer the nature of rivalry in the U.S. cigarette industry over the 1934-94 period. Unlike previous studies, which measure rivalry from various constructs of market share instability, we examine the time-series properties of market shares to determine whether or not rivalry is evident. Our empirical results imply that a majority of firm-level market shares are martingales, suggesting market shares have been unstable from 1934-94. This result leads us to conclude that rivalry in the cigarette industry has remained strong.

Michael J. Seiler, Eric Walden

Cited by*: 0 Downloads*: 1

Great debate is being waged between whether strategic mortgage defaulters follow a herd for social reasons or mimic others' behavior for informational gain. Using functional magnetic resonance imaging (fMRI), the latest neurological technology allowing for observation of brain activity during strategic mortgage default decision-making, we find that when defaulters learn of peer default behavior, they acknowledge the social component of the decision, but feel freer to make their own decisions. Alternatively, when observing the behavior of a maven (real estate expert), borrowers still consider the social aspect of the decision (although to a lesser extent), but ultimately follow the maven who presumably possesses a greater information set. Alarmingly, borrowers only significantly follow the herd when mavens advocate strategic default, not when they recommend against it.

Robert Berrens , Alok Bohara, Joe Kerkvliet, John A List

Cited by*: 22 Downloads*: 1

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Richard Carson , Theodore Groves , John A List

Cited by*: 0 Downloads*: 1

Researchers, using contingent valuation (CV) to value changes in nonmarket goods, typically believe respondents always answer questions truthfully or they answer truthfully only when it is in their interest to do so. The second position, while consistent with economic theory, implies that interpreting survey responses depends critically on the incentive structure provided. We derive simple tests capable of distinguishing the two views. Our theoretical model for examining the incentive structure of a single binary choice relaxes the usual expected utility assumption. We test our theory using a field experiment involving voting to provide a public good. Experimental results are consistent theoretical predictions and cast doubt on the relevance of a large experimental literature using inconsequential questions and non-incentive-compatible mechanisms to make inferences about CV. The framework put forth should help in understanding the role played by theoretical conditions for preference elicitation and lend insight into the hypothetical bias literature.

Eli Beracha, Michael J. Seiler

Cited by*: 0 Downloads*: 0

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.

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

Cited by*: 0 Downloads*: 0

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.

David M Harrison, Mark A. Lane, Michael J. Seiler

Cited by*: 4 Downloads*: 0

This study examines the herding behavior of individuals in the context of their willingness to strategically default on a mortgage based on the (falsely) observed behavior of those around them. We find that homeowners are easily persuaded to follow the herd and adopt a strategic default proclivity consistent with that of their peers. Herding behavior is stronger when a Maven, or thought leader, is involved and weaker when the person finds strategic default to be morally objectionable. Homeowners appear to herd more for informational gains rather than for social reasons, and do not herd differentially based on signal strength. In a robustness check using a sample of real estate professionals, the strong mimetic herding result continues to hold.

John A List

Cited by*: 5 Downloads*: 0

Walrasian tatonnement has been a fundamental assumption in economics ever since Walras' general equilibrium theory was introduced in 1874. Nearly a century after its introduction, Vernon Smith relaxed the Walrasian tatonnement assumption by showing that neoclassical competitive market theory explains the equilibrating forces in "double-auction" markets. I make a next step in this evolution by exploring the predictive power of neoclassical theory in decentralized naturally occurring markets. Using data gathered from two distinct markets- the sports card and collector pin markets-I find a tendency for exchange prices to approach the neoclassical competitive model prediction after a few market periods.