Papers - Framed

Andreas Lange, John A List, Michael K Price

Cited by*: 35 Downloads*: 33

This study explores the economics of charitable fund-raising. We begin by developing theory that examines the optimal lottery design while explicitly relaxing both risk-neutrality and preference homogeneity assumptions. We test our theory using a battery of experimental treatments and find that our theoretical predictions are largely confirmed. Specifically, we find that single and multiple prize lotteries dominate the voluntary contribution mechanism both in total dollars raised and the number of contributors attracted. Moreover, we find that the optimal fund-raising mechanism depends critically on the risk postures of potential contributors and preference heterogeneity.

John A List, Azeem M Shaikh, Yang Xu

Cited by*: 33 Downloads*: 278

Empiricism in the sciences allows us to test theories, formulate optimal policies, and learn how the world works. In this manner, it is critical that our empirical work provides accurate conclusions about underlying data patterns. False positives represent an especially important problem, as vast public and private resources can be misguided if we base decisions on false discovery. This study explores one especially pernicious influence on false positives-multiple hypothesis testing (MHT). While MHT potentially affects all types of empirical work, we consider three common scenarios where MHT influences inference within experimental economics: jointly identifying treatment effects for a set of outcomes, estimating heterogenous treatment effects through subgroup analysis, and conducting hypothesis testing for multiple treatment conditions. Building upon the work of Romano and Wolf (2010), we present a correction procedure that incorporates the three scenarios, and illustrate the improvement in power by comparing our results with those obtained by the classic studies due to Bonferroni (1935) and Holm (1979). Importantly, under weak assumptions, our testing procedure asymptotically controls the familywise error rate - the probability of one false rejection - and is asymptotically balanced. We showcase our approach by revisiting the data reported in Karlan and List (2007), to deepen our understanding of why people give to charitable causes.

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.

Abhijit Banerjee, Angus Deaton, Esther Duflo

Cited by*: 28 Downloads*: 482

What are the determinants of the health and of well-being? Income and wealth are clearly part of the story, but does access to health-care have a large independent effect, as the advocates of more investment in health-care, such as the World Health Organization's Commission on Macroeconomics and Health (Commission on Macroeconomics and Health (2001)), have argued? This paper reports on a recent survey in a poor rural area of the state of Rajasthan in India intended to shed some light on this issue, where there was an attempt to use a set of interlocking surveys to collect data on health and economic status, as well as the public and private provision of health care.

Erwin Bulte, Andreas Kontoleon, John A List, Ty Turley, Maarten Voors

Cited by*: 27 Downloads*: 78

We use a sample of subsistence farmers in Sierra Leone as respondents to compare behavior in a context-free experiment (a standard public goods game) and behavior in the field (a real development intervention). There is no meaningful correlation in behavior across contexts. This casts doubt on the prospect of using lab experiments as "predictors" of behavior in real life.

Abhijit Banerjee, Shawn Cole, Esther Duflo, Leigh Linden

Cited by*: 25 Downloads*: 14

This paper presents the results of two randomized experiments conducted in schools in urban India. A remedial education program hired young women to teach students lagging behind in basic literacy and numeracy skills. It increased average test scores of all children in treatment schools by 0.28 standard deviation, mostly due to large gains experienced by children at the bottom of the test-score distribution. A computer-assisted learning program focusing on math increased math scores by 0.47 standard deviation. One year after the programs were over, initial gains remained significant for targeted children, but they faded to about 0.10 standard deviation.

Glenn W Harrison, John A List

Cited by*: 23 Downloads*: 10

There has been a dramatic increase in the use of experimental methods in the past two decades. An oft-cited reason for this rise in popularity is that experimental methods provide the necessary control to estimate treatment effects in isolation of other confounding factors. We examine the relevance of experimental findings from laboratory settings that abstract from the field context of the task that theory purports to explain. Using common value auction theory as our guide, we identify naturally occurring settings in which one can test the theory. In our treatments the subjects are not picked at random, as in lab experiments with student subjects, but are deliberately identified by their trading roles in the natural field setting. We find that experienced agents bidding in familiar roles do not fall prey to the winner's curse. Yet, when experienced agents are observed bidding in an unfamiliar role, we find that they frequently fall prey to the winner's curse. We conclude that the theory predicts field behavior well when one is able to identify naturally occurring field counterparts to the key theoretical conditions.

Abhijit Banerjee, Angus Deaton, Esther Duflo

Cited by*: 23 Downloads*: 44

There is surprisingly little information about the delivery of health care in rural India, and about the relationship, if any, between health care and health status. Some, such as the Commission on Macroeconomics and Health of the World Health Organization (2001), have argued that better health care is the key to improving health as well as economic growth in poor countries, but there is little systematic evidence that gives us a sense of how easy it is to impact the quality of health care delivery in developing countries and through these improvements to impact the health of the population. This paper reports on a recent survey in a poor rural area of the state of Rajasthan in India intended to shed some light on this issue, where we use a set of interlocking surveys to collect data on health and economic status, as well as the public and private provision of health care.

Raymond C Battalio, Leonard Green, John H Kagel

Cited by*: 22 Downloads*: 70

No abstract available

Anne Rozan, Anne Stenger, Marc Willinger

Cited by*: 22 Downloads*: 39

We study the impact of new information about food safety on subjects' willingness-to-pay for food products, in an experimental setting. We elicit prices using either a second price auction or the Becker-DeGroot-Marschak procedure. There are three stages of bidding. In stage 1, subjects bid for products without any information. In stage 2, public information about health impact is provided. In stage 3, new certified products become available, and subjects bid then for non-certified and certified products. The introduction of certified products induces an asymmetric updating of initial bids, bids for non-certified products are lowered, but bids for certified products remain equal to the initial bids.

Jonathan E Alevy, Michael S Haigh, John A List

Cited by*: 21 Downloads*: 24

Previous empirical studies of information cascades use either naturally occurring data or laboratory experiments with student subjects. We combine attractive elements from each of these lines of research by observing market professionals from the Chicago Board of Trade (CBOT) in a controlled environment. As a baseline, we compare their behavior to student choices in similar treatments. We further examine whether, and to what extent, cascade formation is influenced by both private signal strength and the quality of previous public signals, as well as decision heuristics that differ from Bayesian rationality. Analysis of over 1,500 individual decisions suggests that CBOT professionals are better able to discern the quality of public signals than their student counterparts. This leads to much different cascade formation. Further, while the behavior of students is consistent with the notion that losses loom larger than gains, market professionals are unaffected by the domain of earnings. These results are important in both a positive and normative sense.

John A List

Cited by*: 21 Downloads*: 14

Walrasian tatonnement has been a fundamental assumption in economics ever since Walrasian 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.

John A List, Daniel L Millimet

Cited by*: 20 Downloads*: 35

Assumptions of individual rationality and preference stability provide the foundation for a convenient and tractable modeling approach. While both of these assumptions have come under scrutiny in distinct literatures, the two lines of research remain disjointed. This study begins by explicitly linking the two literatures while providing insights into perhaps the central issue facing behavioral economics today: to what extent does market experience mitigate various forms of individual irrationality? We find considerable evidence that the market is a catalyst for rationality. The study then focuses on aggregate market outcomes by examining empirically whether individual rationality is a prerequisite for market efficiency. Using field data gathered from more than 380 subjects of age 6-18 in multi-lateral bargaining markets at a shopping mall, we find that the market is a filter of irrationality--even when markets are populated solely by irrational buyers, aggregate market outcomes quickly converge to neoclassical predictions.

John A List, Jason F Shogren

Cited by*: 19 Downloads*: 20

This paper calibrates real and hypothetical willingness-to-accept estimates elicited for consumer goods in a multi-unit, random nth-price auction. Using a within-subject experimental design, we find that people understated their real willingness to accept in the hypothetical regimes, framed both as demand and non-demand revealing. After controlling for personspecific effects, however, hypothetical and real statements are equivalent on the margin.

Erwin Bulte, Aart de Zeeuw, Shelby Gerking, John A List

Cited by*: 19 Downloads*: 37

Standard applications of utility theory assume that utility depends solely on outcomes and not on causes. This study uses a field experiment conducted in the Netherlands to determine if alternative causes of an environmental problem affect willingness to pay to ameliorate it. We find evidence supporting the hypothesis that people are willing to pay significantly more to correct problems caused by humans than by nature (the "outrage effect"), but find no support for the hypothesis that "moral responsibility" matters. We also find support for the hypothesis that stated willingness to pay values obtained via "cheap talk" and "consequential" treatments are lower than without inclusion of these protocols.

Peter Bohm

Cited by*: 17 Downloads*: 25

No abstract available

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.

Daniel Jones, Sera Linardi

Cited by*: 16 Downloads*: 19

An extensive literature on reputation signaling in prosocial settings has focused on an intrinsic desire for positive reputation. In our paper, we provide experimental evidence that some individuals are averse to both positive and negative reputation and will therefore respond to visibility by signaling that they are an "average altruism type" relative to their audience. We formalize our hypotheses about "wallflower" behavior in a theoretical model. Our experimental results show that instead of uniformly increasing contributions, visibility draws contributions towards the middle of others' contributions. As a result, visibility is associated with higher levels of giving only when in scenarios where others are giving a large amount. We also observe heterogeneity in reputation concerns wallflower behavior is particularly strong for women and can be observed in several different settings.

John A List

Cited by*: 16 Downloads*: 19

Public policy decision making often requires balancing the benefits of a policy with the costs. While regulators in the United States and abroad rely heavily on benefit-cost analysis, critics contend that hypothetical bias precludes one of the most popular benefit estimation techniques--contingent surveys--from providing reliable economic values for nonmarket goods and services. This paper explores a new methodology to obtain the total value of nonmarket goods and services--random nth price auctions. The empirical work revolves around examining behavior of 360 participants in a competitive marketplace, where subjects naturally buy, sell, and trade commodities. The field experiment provides some preliminary evidence that hypothetical random nth price auctions can, in certain situations, reveal demand truthfully.

John A List

Cited by*: 16 Downloads*: 22

A vibrant literature has emerged that suggests willingness to pay and willingness to accept measures of value are quite different for inexperienced consumers but that value differences erode with market experience. One potential shortcoming of this literature is that market experience is endogenous. This study presents a framed field experiment that exogenously induces market experience. Empirical findings support the premise that market experience, alone, can eliminate an important market anomaly.