Papers - Framed

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.

Aileen Heinberg, Angela Hung, Arie Kapteyn, Annamaria Lusardi, Anya Samek, Joanne Yoong

Cited by*: 2 Downloads*: 3

In this paper, we design and field a low-cost, easily-replicable financial education program called "Five Steps," covering five basic financial planning concepts that relate to retirement. We conduct a field experiment to evaluate the overall impact of "Five Steps" on a probability sample of the American population. In different treatment arms, we quantify the relative impact of delivering the program through video and narrative formats. Our results show that short videos and narratives (each takes about three minutes) have sizable short-run effects on objective measures of respondent knowledge. Moreover, keeping informational content relatively constant, format has significant effects on other psychological levers of behavioral change: effects on motivation and self-efficacy are significantly higher when videos are used, which ultimately influences knowledge acquisition. Follow-up tests of respondents' knowledge approximately eight months after the interventions suggest that between one-quarter and one-third of the knowledge gain and about one-fifth of the self-efficacy gains persist. Thus, this simple program has effects both in the short run and medium run.

Aradhna Krishna, Tayfun Sonmez, M. Utku Unver

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No abstract available

John Horowitz, John A List, Kenneth E McConnell

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The notion of diminishing marginal value had a profound impact on the development of neoclassical theory. Early neoclassical scholars had difficulty convincing contemporaries of the new paradigm's value until political economists used the critical assumption of diminishing marginal value to link utility and demand. While diminishing marginal value remains a key component of modern economic intuition, there is little direct verification of this behavioral property. This paper reports experiments on a myriad of subject pools to examine behavior in both price and exchange settings. We report results from nearly 900 subjects across 19 treatments and find strong evidence of diminishing marginal value.

Uri Gneezy, Alex Imas, John A List

Cited by*: 2 Downloads*: 6

We introduce a simple, easy to implement instrument for jointly eliciting risk and ambiguity attitudes. Using this instrument, we structurally estimate a two-parameter model of preferences. Our findings indicate that ambiguity aversion is significantly overstated when risk neutrality is assumed. This highlights the interplay between risk and ambiguity attitudes as well as the importance of joint estimation. In addition, over our stakes levels we find no difference in the estimated parameters when incentives are real or hypothetical, raising the possibility that a simple hypothetical question can provide insights into an individuals preferences over ambiguity in such economic environments.

Abhijit Banerjee, Esther Duflo, Leigh Linden

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This note presents the results obtained after the first year of a two-year randomized evaluation of a computer assisted learning (CAL) program in Vadodara, India. The CAL program, implemented by a NGO, took advantage of the donation of four computers to each municipal primary school in Vadodara by the state government. The program provided each child in the fourth standard with two hours of shared computer time in which students played educational games that reinforced mathematics competencies ranging from the standard 1 to the standard 3 level. We find the program to be quite effective. On average, it increased math scores by 0.37 standard deviations. The program effect is slightly higher at the bottom of the distribution but persists throughout the distribution. The program had no apparent spillover on language competencies.

Lewis Glinert, Aileen Heinberg, Angela Hung, Arie Kapteyn, Annamaria Lusardi, Anya Samek

Cited by*: 2 Downloads*: 15

In this paper, we developed and experimentally evaluated four novel educational programs delivered online: an informational brochure, a visual interactive tool, a written narrative, and a video narrative. The programs were designed to inform people about risk diversification, an essential concept for financial decision-making. The effectiveness of these programs was evaluated using the RAND American Life Panel. Participants were exposed to one of the programs, and then asked to answer questions measuring financial literacy and self-efficacy. All of the programs were found to be effective at increasing self-efficacy, and several improved financial literacy, providing new evidence for the value of programs designed to help individuals make financial decisions. The video was more effective at improving financial literacy scores than the written narrative, highlighting the power of online media in financial education.

John A List, Jan Stoop, Daan van Soest, Haiwen Zhou

Cited by*: 2 Downloads*: 3

Both private and public organizations constantly grapple with incentive schemes to induce maximum effort from agents. We begin with a theoretical exploration of optimal contest design, focusing on the number of competitors. Our theory reveals a critical link between the distribution of luck and the number of contestants. We find that if there is considerable (little) mass on good draws, equilibrium effort is an increasing (decreasing) function of the number of contestants. Our first test of the theory implements a laboratory experiment, where important features of the theory can be exogenously imposed. We complement our lab experiment with a field experiment, where we rely on biological models complemented by economic models to inform us of the relevant theoretical predictions. In both cases we find that the theory has a fair amount of explanatory power, allowing a deeper understanding of how to effectively design tournaments. From a methodological perspective, our study showcases the benefits of combining data from both lab and field experiments to deepen our understanding of the economic science.

Omar Al-Ubaydli, Peter Boettke

Cited by*: 2 Downloads*: 21

The work of Friedrich Von Hayek contains several testable predictions about the nature of market processes. Vernon Smith termed the most important one the "Hayek hypothesis:" equilibrium prices and the gains from trade can be achieved in the presence of diffuse, decentralized information, and in the absence of price-taking behavior and centralized market direction. Vernon Smith tested this by surveying data on laboratory experimental markets and found strong support. We repeat this exercise using field experimental market data. Using field experiments allows us to test several other predictions. Generally speaking, we find support for Hayek's theories.

Omar Al-Ubaydli, John A List

Cited by*: 2 Downloads*: 88

This is a review of the literature of field experimental studies of markets. The main results covered by the review are as follows: (1) Generally speaking, markets organize the efficient exchange of commodities; (2) There are some behavioral anomalies that impede efficient exchange; (3) Many behavioral anomalies disappear when traders are experienced.

Eric Floyd, John A List

Cited by*: 2 Downloads*: 49

The gold standard in the sciences is uncovering causal relationships. A growing literature in economics utilizes field experiments as a methodology to establish causality between variables. Taking lessons from the economics literature, this study provides an "A-to-Z" description of how to conduct field experiments in accounting and finance. We begin by providing a user's guide into what a field experiment is, what behavioral parameters field experiments identify, and how to efficiently generate and analyze experimental data. We then provide a discussion of extant field experiments that touch on important issues in accounting and finance, and we also review areas that have ample opportunities for future field experimental explorations. We conclude that the time is ripe for field experimentation to deepen our understanding of important issues in accounting and finance.

Alexander W Cappelen, John A List, Anya Samek, Bertil Tungodden

Cited by*: 2 Downloads*: 44

We present results from the first study to examine the causal impact of early childhood education on social preferences of children. We compare children who, at 3-4 years old, were randomized into either a full-time preschool, a parenting program with incentives, or to a control group. We returned to the same children when they reach 7-8 years old a conducted a series of incentivized experiments to elicit there social preferences. We find that early childhood education has a strong causal impact on social preferences several years after the intervention: attending preschool makes children more egalitarian in their fairness view and the parenting program enhances the importance children place on efficiency relative to fairness. Our findings highlight the importance of taking a broad perspective when designing and evaluating early childhood education programs, and provide evidence how differences in institutional exposure may contribute to explaining heterogeneity in social preferences in society.

Sam Asher, Lorenzo Casaburi, Plamen Nikolov, Maoliang Ye

Cited by*: 2 Downloads*: 8

We study how gradualism -- increasing required levels ("thresholds") of contributions slowly over time rather than requiring a high level of contribution immediately -- affects individuals' decisions to contribute to a public project. Using a laboratory binary choice minimum-effort coordination game, we randomly assign participants to three treatments: starting and continuing at a high threshold, starting at a low threshold but jumping to a high threshold after a few periods, and starting at a low threshold and gradually increasing the threshold over time (the "gradualism" treatment). We find that individuals coordinate most successfully at the high threshold in the gradualism treatment relative to the other two groups. We propose a theory based on belief updating to explain why gradualism works. We also discuss alternative explanations such as reinforcement learning, conditional cooperation, inertia, preference for consistency, and limited attention. Our findings point to a simple, voluntary mechanism to promote successful coordination when the capacity to impose sanctions is limited.

Abigail Barr, Truman G Packard

Cited by*: 1 Downloads*: 9

Exploiting new data from a survey and behavioral experiment conducted in Peru we analyze individuals' preferences for securing income in old age. We identify a group that is unrationed by the mandate to save in Peru's pension system, and draw insights from their affiliation and contribution behavior. Among the unrationed, those who are more tolerant of risk, have more children, and have a greater share of housing in their accumulated assets are less likely to affiliate and/or contribute to the formal pensions system. Further, the less risk tolerant choose private individual retirement accounts over a publicly administered pension system.

Daniel J Benjamin, James O Berger, Magnus Johannesson, Brian A Nosek, E. J Wagenmakers, Richard Berk, Kenneth A Bollen, Bjorn Brembs, Lawrence Brown, Colin F Camerer, David Cesarini, Christopher D. Chambers, Merlise Clyde, Thomas D Cook, Paul De Boeck, Zoltan Dienes, Anna Dreber, Kenny Easwaran, Charles Efferson, Ernst Fehr, Fiona Fidler, Andy P. Field, Malcom Forster, Edward I. George, Tarun Ramadorai, Richard Gonzalez, Steven Goodman, Edwin Green, Donald P Green, Anthony Greenwald, Jarrod D. Hadfield, Larry V. Hedges, Leonhard Held, Teck Hau Ho, Herbert Hoijtink, James Holland Jones, Daniel J Hruschka, Kosuke Imai, Guido Imbens, John P.A. Ioannidis, Minjeong Jeon, Michael Kirchler, David Laibson , John A List, Roderick Little, Arthur Lupia, Edouard Machery, Scott E. Maxwell, Michael McCarthy, Don Moore, Stephen L. Morgan, Marcus Munafo, Shinichi Nakagawa, Brendan Nyhan, Timothy H Parker, Luis Pericchi, Marco Perugini, Jeff Rouder, Judith Rousseau, Victoria Savalei, Felix D. Schonbrodt, Thomas Sellke, Betsy Sinclair, Dustin Tingley, Trisha Van Zandt, Simine Vazire, Duncan J. Watts, Christopher Winship, Robert L. Wolpert, Yu Xie, Cristobal Young, Jonathan Zinman, Valen E. Johnson

Cited by*: 1 Downloads*: 965

We propose to change the default P-value threshold for statistical significance for claims of new discoveries from 0.05 to 0.005.

Uri Gneezy, John A List, Jeffrey A Livingston, Xiangdong Qin, Sally Sadoff, Yang Xu

Cited by*: 1 Downloads*: 124

Tests measuring and comparing educational achievement are an important policy tool. We experimentally show that offering students extrinsic incentives to put forth effort on such achievement tests has differential effects across cultures. Offering incentives to U.S. students, who generally perform poorly on assessments, improved performance substantially. In contrast, Shanghai students, who are top performers on assessments, were not affected by incentives. Our findings suggest that in the absence of extrinsic incentives, ranking countries based on low-stakes assessments is problematic because test scores reflect differences in intrinsic motivation to perform well on the test itself, and not just differences in ability.

Omar Al-Ubaydli, John A List, Danielle LoRe, Dana L Suskind

Cited by*: 1 Downloads*: 7

No abstract available

Richard Engelbrecht-Wiggans, John A List, David H Reiley

Cited by*: 1 Downloads*: 4

My coauthors and I reply to the comments of Daniel Levin on our paper "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment." In his comment, Levin presents new theory and proposes a new equilibrium to explain annomalies reported in our earlier sportscard auction, such as higher first-unit bids under the uniform-price institution. We evaluate his theory and equilibrium in the context of both uniform-price and Vickrey auctions and point out our concerns. Where possible, we attempt to test the predictions of his theory with our existing data.

Alex Imas, Sally Sadoff, Anya Samek

Cited by*: 1 Downloads*: 104

There is growing interest in the use of loss contracts that offer performance incentives as upfront payments that employees can lose. Standard behavioral models predict a tradeoff in the use of loss contracts: employees will work harder under loss contracts than under gain contracts; but, anticipating loss aversion, they will prefer gain contracts to loss contracts. In a series of experiments, we test these predictions by measuring performance and preferences for payoff-equivalent gain and loss contracts. We find that people indeed work harder under loss than gain contracts, as the theory predicts. Surprisingly, rather than a preference for the gain contract, we find that people actually prefer loss contracts. In exploring mechanisms for our results, we find suggestive evidence that people do anticipate loss aversion but select into loss contracts as a commitment device to improve performance.

David Lucking-Reiley

Cited by*: 1 Downloads*: 11

I present experimental evidence on the effects of minimum bids in first-price, sealed-bid auctions. The auction experiments manipulated the minimum bids in a preexisting market on the Internet for collectible trading cards from the game Magic: the Gathering. I examine a number of outcomes, including the number of participating bidders, the probability of sale, the levels of individual bids, and the auctioneer's revenues. The benchmark theoretical model is one with symmetric, risk-neutral bidders with independent private values. The results verify a number of the predictions concerning equilibrium bidding. Many bidders behave strategically, anticipating the effects of the reserve price on others' bids.