|
on Experimental Economics |
| By: | Larissa Fuchs (University of Cologne); Matthias Heinz (University of Cologne); Pia Pinger (University of Cologne); Max Thon (University of Cologne) |
| Abstract: | Job advertisements are a key instrument for companies to attract talent. We conduct a field experiment in which we randomize the content of job advertisements for STEM jobs in one of the largest European technology firms. Specifically, we study how highlighting job flexibility and career advancement in job advertisements causally affects the firm’s pool of applicants. We find large treatment effects of entry-, but not for senior-level positions in the firm: highlighting job flexibility increases the total number of female and male applicants, while emphasizing career advancement only raises applications by men. Both effects are entirely driven by applicants residing outside of the federal state in which the firm is located. In a survey experiment among STEM students, we find that the content of job advertisements shapes young professionals’ beliefs about the work environment at the firm. Most importantly, we find that students expect better career benefits, but lower work-life balance when career advancement are highlighted. Our study highlights how job advertisements affect the total number of applications as well as applicants’ quality, diversity, region of residence and beliefs. |
| Keywords: | beliefs, hiring, field experiments, survey experiment, job advertisements, gender |
| JEL: | M51 M52 D22 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:332 |
| By: | Uri Gneezy; Yoram Halevy; Brian Hall; Theo Offerman; Jeroen van de Ven |
| Abstract: | Researchers in behavioral and experimental economics often argue that only incentive-compatible mechanisms can elicit effort and truthful responses from participants. Others argue that participants make less-biased decisions when the stakes are sufficiently high. Are these claims correct? We investigate the change in behavior as incentives are scaled up in the Allais paradox, and document an increase , not decrease, in deviations from expected utility with higher stakes. We also find that if one needs to approximate participants’ behavior in real high-stakes Allais (which are often too expensive to conduct), it is better to use hypothetically high stakes than real low stakes, as is typically the practice today. |
| Keywords: | high stakes, real and hypothetical incentives, Allais paradox, Expected Utility |
| JEL: | C91 D81 |
| Date: | 2024–08–17 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-783 |
| By: | Huck, Steffen; Normann, Hans-Theo; Petros, Fidel |
| Abstract: | We use a laboratory experiment to investigate whether statements from a governmental institution expressing concerns about price increases trigger such increases by facilitating tacit collusion. Such statements on market conduct are disclosed after an exogenous and unexpected upward cost shock. The two potential channels affecting tacit collusion work through (i) a reduction of strategic uncertainty and (ii) an inducement of correlated beliefs. We find that issued statements of concern become a self-fulfilling prophecy, triggering price increases, and that a reduction in strategic uncertainty drives this adverse effect. Our results suggest that institutions should refrain from publishing such statements of concern |
| Keywords: | beliefs, coordination device, strategic uncertainty, tacit collusion |
| JEL: | C91 C72 L41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wzbmbh:301157 |
| By: | Harin, Alexander |
| Abstract: | Old problems of the mathematical description of the economical behavior of a man are briefly reviewed. They are the comparison of choices of a man between uncertain and sure games and the radically different behavior of a man in different domains. The proposed solution of the problems consists in the purely mathematical method and models and is briefly reviewed in the Appendix. In the present paper the main attention is paid to the analysis of the experimental support of this possible solution. The generally accepted random incentive experimental procedures are discussed. A “certain-uncertain” inconsistency between the certain type of the choices and the uncertain type of the incentives is revealed and analyzed. |
| Keywords: | utility; prospect theory; experiment; incentive; random-lottery incentive system; Prelec; probability weighting function; |
| JEL: | C1 C9 D8 D81 |
| Date: | 2024–08–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121756 |
| By: | Bischof, Daniel (Aarhus University); Allinger, Tim Lars; Le Corre Juratic, Morgan (Aarhus University); Frederiksen, Kristian Vrede Skaaning |
| Abstract: | Social scientists have long debated the question of how much social desirability biases affect the information they can gather from online survey responses. However, it remains unclear how and to what extent we can measure it. Reviewing relevant literature focusing on this problem, we argue that the most promising way to measure social desirability bias is manipulating it globally through an experimental design placed at the very start of a survey. This approach---if successful---allows researchers to achieve three crucial goals that other approaches fall short in achieving simultaneously: 1) assuring that social desirability rather than confounders is measured, 2) allowing for checking whether social desirability was actually manipulated, and 3) allowing for measuring social desirability pressures in an infinite number of outcomes throughout the survey. Employing both novel treatment designs and designs already used in established research, we demonstrate with pre-registered survey experiments in the United States (N = 5, 000) and Denmark (N = 3, 000) that this approach is much too risky for researchers to pursue. Specifically, we show that some treatment designs repeatedly fail to achieve manipulation (i.e., respondents do not believe their answers are being observed), whereas others achieve manipulation but do not affect outcomes which we know for a fact are marred by social desirability (i.e., respondents do not care even if they know they are being observed). We end the paper by providing advice for scholars regarding which approaches are then most feasible to pursue judging by to what extent they achieve the three crucial goals reported above. |
| Date: | 2024–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:ew95m |
| By: | Brian Jabarian |
| Abstract: | In this article, we explore the transformative potential of integrating generative AI, particularly Large Language Models (LLMs), into behavioral and experimental economics to enhance internal validity. By leveraging AI tools, researchers can improve adherence to key exclusion restrictions and in particular ensure the internal validity measures of mental models, which often require human intervention in the incentive mechanism. We present a case study demonstrating how LLMs can enhance experimental design, participant engagement, and the validity of measuring mental models. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.12032 |
| By: | Alexander W. Bartik; Elizabeth Rhodes; David E. Broockman; Patrick K. Krause; Sarah Miller; Eva Vivalt |
| Abstract: | We provide new evidence on the causal effect of unearned income on consumption, balance sheets, and financial outcomes by exploiting an experiment that randomly assigned 1000 individuals to receive $1000 per month and 2000 individuals to receive $50 per month for three years. The transfer increased measured household expenditures by at least $300 per month. The spending impact is positive in most categories, and is largest for housing, food, and car expenses. The treatment increases housing unit and neighborhood mobility. We find noisily estimated modest positive effects on asset values, driven by financial assets, but these gains are offset by higher debt, resulting in a near-zero effect on net worth. The transfer increased self-reported financial health and credit scores but did not affect credit limits, delinquencies, utilization, bankruptcies, or foreclosures. Adjusting for underreporting, we estimate marginal propensities to consume non-durables between 0.44 and 0.55, durables and semi-durables between 0.21 and 0.26, and marginal propensities to de-lever of near zero. These results suggest that large temporary transfers increase short-term consumption and improve financial health but may not cause persistent improvements in the financial position of young, low-income households. |
| JEL: | D14 E21 H53 G50 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32784 |
| By: | Rueß, Stefanie; Schneider, Gerald; Vogler, Jan |
| Abstract: | Does the priming of street-level bureaucrats with negative news stories on immigration influence their decisions regarding unemployment benefits? Previous research has established that regional-level peer pressure on public employees and the national-level salience of immigration debates intensify bureaucratic discrimination. By synthesizing the media framing and bureaucratic discrimination literatures, we expect that the priming of street-level bureaucrats with a news frame about welfare fraud committed by ethnic minorities leads to discriminatory practices. To investigate the validity of our theoretical propositions, we conducted a preregistered conjoint experiment with a large dataset, namely a representative survey of German street-level bureaucrats working in unemployment offices. We observe negative discrimination against Romanian claimants after exposure to a negative article, even when they provide internally consistent applications, but not toward Moroccan claimants. These effects are particularly pronounced among caseworkers leaning to the political right and living in federal states whose populations exhibit strong anti-immigration attitudes. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cexwps:301151 |
| By: | Jeroen Hinloopen; Stephen Martin; Leonard Treuren |
| Abstract: | Antitrust laws prohibit collusion by private firms, yet many types of interfirm coopera tion are legal. Using laboratory experiments, we study spillovers from legal cooperation in one market to tacit collusion in a different market. Subjects sequentially play two homogeneous goods Bertrand games once against the same opponent. We vary whether subjects can form binding price agreements in the first market. We find that allowing subjects to coordinate their prices in the first market significantly increases prices in the second market, elevating the incidence of non-competitive market prices by more than 60 percent. This shows that repeated interaction and communication are not necessary to achieve non-competitive prices, as long as subjects can form binding agreements in a different market. Additional treatments suggest that commitment and multimarket contact are both necessary and sufficient for spillovers from legal cooperation to tacit collusion to emerge. |
| Date: | 2023–06 |
| URL: | https://d.repec.org/n?u=RePEc:ete:msiper:746847 |
| By: | Soane, Emma |
| Abstract: | The capability to vary risk-taking is an important aspect of performance in organizations where behavioral adjustments are required to suit changing objectives. Incentive schemes are one way to influence risk-taking. Yet, evidence indicates incentives do not have their intended effects and may encourage excessive risk-taking. To examine this issue, we draw on compensation activation theory that proposes individual motives are activated by specific features of compensation schemes and expressed in behaviors. We extend compensation activation theory by focusing on (1) responses to a sequence of tasks designed to activate risk-taking and (2) the effects of incentive schemes on these relationships. We conducted a laboratory experiment with 173 participants who were allocated randomly to one of three bonus schemes. The linear scheme has a linear relationship between returns from risk-taking and rewards. The bonus cap scheme operates similarly up to a point where no further rewards are paid. The outcome-adjusted scheme, with a two-year hypothetical time frame, requires realized gains for the first year of investment and no losses in next year. Results support our hypotheses that these incentive schemes have differential effects on the strength and direction of relationships between risk-taking across a sequence of tasks. The linear scheme strengthens the relationships between risk-taking across sequential tasks. Conversely, the bonus cap scheme weakens the relationships between risk-taking across sequential tasks. The outcome-adjusted scheme creates variability by decreasing risk-taking when the connections between risk-taking and rewards are less salient and increasing risk-taking when connections between risk-taking and rewards are more salient. We contribute to the literature concerning compensation activation and incentives by deepening our understanding of the roles played by tasks and incentives in activation processes and by explaining the variability of risk-taking in terms of changes in connections between behavior and rewards. |
| Keywords: | risk-taking; activation; incentives; variability; Taylor & Francis deal |
| JEL: | G32 J50 |
| Date: | 2024–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124339 |
| By: | Christopher Blattman; Horacio Larreguy; Benjamin Marx; Otis Reid |
| Abstract: | We study a large-scale intervention designed by civil society organizations to reduce vote buying in Uganda’s 2016 elections. We study this intervention in light of a model where incumbents benefit from a first-mover and valence advantage, vote buying and campaigning are complementary, and voter reciprocity increases the effectiveness of vote buying. The intervention undermined reciprocity as well as the valence advantage of incumbents. As a result, challengers not only campaigned more intensively but also bought more votes in treated locations. Consistent with incumbents being first movers in markets for votes and facing more frictions to adjust their strategies than challengers, their response to the intervention was limited. The intervention ultimately failed to reduce vote buying, but led to short-run electoral gains for challengers and increased service delivery in treated locations. |
| Keywords: | elections, voting behaviour, field experiment, Africa |
| JEL: | C93 D72 O55 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11247 |
| By: | Yoichi Hizen; Kazuya Kikuchi; Yukio Koriyama; Takehito Masuda |
| Abstract: | We experimentally study voter turnout in two-tier elections when the electorate consists of multiple groups, such as states. Votes are aggregated within the groups by the winner-take-all rule or the proportional rule, and the group-level decisions are combined to determine the winner. We observe that, compared with the theoretical prediction, turnout is significantly lower in the minority camp (the Titanic effect) and significantly higher in the majority camp (the behavioral bandwagon effect), and these effects are stronger under the proportional rule than under the winner-take-all rule. As a result, the distribution of voter welfare becomes more unequal than theoretically predicted, and this welfare effect is stronger under the proportional rule than under the winner-take-all rule. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.00265 |
| By: | Doux Baraka Kusinza (University of Namur); Catherine Guirkinger (University of Namur) |
| Abstract: | In the literature, polygamy is frequently associated with intra-household inefficiencies, commonly attributed to a lack of cooperation between co-wives. In this paper, we challenge this claim by investigating the extent to which co-wives are inclined to cooperate when mutual gains are at stake. Additionally, we examine whether the lack of voice in intra-household decision- making contributes to explaining commonly observed inefficiencies. Using public good games in northern Benin, we find that co-wives are not more prone to cooperate with their husband than with each other. Moreover, when they share mutual interests, they tend to coalesce and play against their husband’s interests. These findings are particularly strong in the case of women with low levels of agency. We argue that co-wives with low agency have more incentive to unite to collectively improve their access to household resources since, individually, they are marginalized. Finally, the comparison of monogamous and polygamous households reveals that efficiency levels and the determinants of cooperative behavior are similar in both types of households (at least when household members themselves set the rules regarding the allocation of the public good). |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nam:defipp:2403 |
| By: | Livia Alfonsi; Vittorio Bassi; Imran Rasul; Elena Spadini |
| Abstract: | The Covid-19 pandemic represents one of the most significant labor market shocks to the world economy in recent times. We present evidence from a field experiment to understand whether and why skilled and unskilled workers were differentially impacted by the shock, in the context of a low-income economy, Uganda. We leverage a panel of workers and firms, tracked from 2012 to 2022, including high frequency surveys over the pandemic. In 2013, workers were randomly assigned to receive six months of sector-specific vocational training, in one of eight high productivity sectors. We document that over the pandemic, employment and earnings margins follow V-shaped dynamics, whereby the outcomes of treated (skilled) workers are more severely impacted by lockdowns, they recover more quickly between lockdowns, and remain resilient to the shock as the economy recovers. Cumulatively over the pandemic, skilled workers spend 61% more time than controls employed in one of our study sectors, and their total earnings are 17% higher. We explore supply- and demand-side mechanisms through which the returns to skills are maintained through the crisis. We document that skilled workers are more exposed to the shock because they are more likely to be laid off during the first lockdown as firms respond to the rapid, severe and uncertain shock by immediately laying off higher earning workers. However, skilled workers recover quickly because of their greater accumulation of sector-specific experience pre-pandemic, and the certifiability of their skills that allows them to switch employers in the same sector during the crisis. Our findings have implications for understanding the returns to skills acquired through vocational training in good economic times and times of crisis. |
| JEL: | J24 O12 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32785 |
| By: | Schütze, Tobias; Schmidt, Ulrich; Spitzer, Carsten; Wichardt, Philipp C. |
| Abstract: | Financial decision making requires a sound handling of chance events. However, various studies have suggested that people are prone to illusion of control, i.e., the belief that prospects of a chancy event are better if they are involved in the randomisation process. This paper reports results from an experiment (N=420) suggesting that psychological characteristics moderate risk-taking behaviour under such circumstances. For example, we find that subjects high in sensation seeking buy more tickets of a risky lottery if they determine the winning numbers themselves and the random event lies in the future. The findings suggest that “illusion of control” effects are at least partly driven by underlying (idiosyncratic) emotions/preferences rather than an actual belief in control. Regarding applications, the results emphasise the importance of individual characteristics for the behaviour of decision makers in a financial context. |
| Keywords: | illusion of control, financial decision making, investment decisions, risk |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:300919 |
| By: | Eleonora Alabrese; Francesco Capozza; Prashant Garg |
| Abstract: | The study measures scientists’ polarization on social media and its impact on public perceptions of their credibility. Analyzing 98, 000 scientists on Twitter from 2016 to 2022 reveals significant divergence in expressed political opinions. An experiment assesses the impact of online political expression on a representative sample of 1, 700 U.S. respondents, who rated vignettes with synthetic academic profiles varying scientists’ political affiliations based on real tweets. Politically neutral scientists are viewed as the most credible. Strikingly, on both the ’left’ and ’right’ sides of politically neutral, there is a monotonic penalty for scientists displaying political affiliations: the stronger their posts, the less credible their profile and research are perceived, and the lower the public’s willingness to read their content. The penalty varies with respondents’ political leanings. |
| Keywords: | Twitter, trust in science, ideological polarization, affective polarization, online experiment |
| JEL: | A11 C93 D72 D83 D91 I23 Z10 Z13 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11254 |
| By: | John List |
| Abstract: | This document is meant to introduce my forthcoming book, titled “Experimental Economics: Theory and Practice, †which is to be published in 2025 by The University of Chicago Press. The document first contains the book’s outline followed by a Preface, which summarizes my inspiration for writing the book and my goals and aspirations for choosing the content contained in the book. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:feb:natura:00792 |
| By: | Böhm, Robert; Glowacki, Luke; Rusch, Hannes (RS: GSBE UM-BIC, Microeconomics & Public Economics, RS: GSBE other - not theme-related research); Thielmann, Isabel |
| Abstract: | The scale of violent intergroup conflict in humans is astonishingly large compared to other mammals. This capacity for war is closely linked to our exceptionally cooperative abilities. The parochial altruism model formally describes how within-group cooperation and between-group competition could be dynamically intertwined. However, whether this influential model correctly captures the fast-paced processes of preference adaptation in humans has not been systematically scrutinized yet. Here, we develop the psychometric toolkit required for this task and test key assumptions and predictions of the model in groups involved in real intergroup conflicts of varying intensities (total N = 1, 121). Conceptually corroborating the model, we find that our new measures which cleanly separate interindividual altruism from intergroup parochialism characterize individuals’ preferences better than previous metrics and improve behavioral predictions of contributions to conflict. However, our results also show that parochialism varies for different outgroups, a finding that is not anticipated by the model. Thus, the five studies we report here provide new methods for studying individual- and group-level social preferences in the context of intergroup conflict and present new evidence that can inform substantive theoretical improvement. |
| Date: | 2024–08–19 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2024009 |