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on Experimental Economics |
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Issue of 2024‒07‒29
thirty papers chosen by |
| By: | Arno Apffelstaedt (University of Cologne); Gönül Doğan (University of Cologne); Fabian Hoffmann (University of Cologne) |
| Abstract: | We introduce a novel concept, group image concerns, showing that individuals change their behavior and are willing to incur personal costs to cultivate a positive image of their groups. We develop an experimental method to identify and quantify group image concerns, and conduct a series of laboratory and online experiments to measure them in three distinct domains. In the first two experiments focused on charitable behavior, participants donate more when their contributions are publicly associated with their group, despite their individual identity remaining private. They also pay significant amounts to keep low donations from other group members private and to make high donations public. These findings emerge for students in the laboratory, using university affiliation as their group identity, as well as for online participants from the general U.S. population, using religious affiliation as their group identity. Additional online experiments explore group image concerns among Democrats and Republicans regarding their group’s knowledge of the U.S. national anthem, as a measure of patriotism, and among U.S. students concerning their university’s reputation for intelligence in solving matrix completion tasks. We isolate group image concerns from individual image concerns and benchmark them against individual image concerns in our laboratory experiment. Our results establish group image concerns as an important driver of individual behavior and a significant source of utility across various domains. |
| Keywords: | social identity and behavior, image concerns, experiments, charitable and prosocial behavior, intelligence, political identity, religious identity, real effort |
| JEL: | D01 D91 C92 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:324&r= |
| By: | Christina Gravert |
| Abstract: | This paper presents new evidence on the question: Why don’t consumers switch electricity contracts? By conducting a large-scale survey experiment with 3% of the Danish working-age population, I have gathered data on respondents’ factual knowledge of the retail electricity market, their beliefs, preferences, and intentions to switch providers. Crucially, I can link their intentions with actual switching behaviors using nationwide smart meter data. My findings reveal a enormous gap between switching intentions and actions. This gap is exacerbated by my experimental interventions which 1) provide information about savings and switching costs and 2) decrease switching costs by offering free access to a switching service. A majority of consumers leaves money on the table by not switching, despite their stated intentions to switch. The low switching rates of on average 1.2% per month cannot be explained by biased beliefs or high switching costs. Demographics do not explain switching behavior, but personality traits such as risk aversion, trust, and a tendency to avoid procrastination matter. These results raise the fundamental question: Why should consumers actively choose electricity contracts? Instead, policymakers should consider implementing smart defaults, for which I find strong support from consumers. |
| Keywords: | consumer inertia, electricity markets, switching, field experiment |
| JEL: | C83 D03 D12 D83 L13 L43 L94 L98 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11139&r= |
| By: | Karen Ortiz-Becerra (University of San Diego) |
| Date: | 2022–11–03 |
| URL: | https://d.repec.org/n?u=RePEc:boc:econ22:08&r= |
| By: | William G. Morrison; Bradley J. Ruffle |
| Abstract: | We report on a laboratory experiment to investigate whether the price paid for insurance explains dishonesty in reporting an insurance claim. In the experiment, participants earn money in a realeffort task, but risk losing some of this income through one of four randomly assigned and privately observed loss amounts. Prior to observing and reporting their loss, participants indicate their reservation price for an insurance policy that pays an indemnity equal to their stated loss. Participants are insured if their randomly assigned premium is less than or equal to their stated reservation price. This mechanism provides data on each participant’s consumer surplus from the purchase of insurance. After receiving their cash earnings minus their assigned loss amount in private, participants report their loss. Our results indicate that the propensity to dishonestly report an inflated loss neither increases in the amount paid for insurance nor decreases in the consumer surplus associated with an insurance purchase. |
| Keywords: | experimental economics; insurance; dishonesty; claim buildup; known reporting distribution |
| JEL: | C91 D82 G22 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:mcm:deptwp:2024-05&r= |
| By: | Wang, Lei; Jiang, Dingjing; Zhang, Siqi; Rozelle, Scott D. |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343987&r= |
| By: | Cecilia Castaldo; Matilde Giaccherini; Giacomo Pallante; Alessandro Palma |
| Abstract: | We investigate the role of information strategy in shifting the purchasing preferences of “green” organic consumers towards a subset of “greener” products that foster adaptation to climate change. We focus on organic pasta, a widely consumed food, to conduct field experiment that involves consumers purchasing on the on-line shop of an Italian organic brand leader. Participants received one of two informational messages about an ancient durum wheat cultivar, renowned for its drought tolerance compared to modern durum wheat. The colloquial message results in 13% increase in the market share of “greener” pasta, despite its price premium. Conversely, the science-based message is effective only among consumers who prioritize environmental sustainability in their organic food purchases and rely on scientific information in their daily lives. Overall effects persist for at least three months and are more pronounced among women, young individuals, and those with higher levels of education. Potential moral licensing is detected among the “greenest” consumers who were already highly engaged. |
| Keywords: | field experiment, consumers, information, organic food, climate change adaptation |
| JEL: | C93 Q57 D12 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11161&r= |
| By: | Stefan Faridani |
| Abstract: | How many experimental studies would have come to different conclusions had they been run on larger samples? I show how to estimate the expected number of statistically significant results that a set of experiments would have reported had their sample sizes all been counterfactually increased by a chosen factor. The estimator is consistent and asymptotically normal. Unlike existing methods, my approach requires no assumptions about the distribution of true effects of the interventions being studied other than continuity. This method includes an adjustment for publication bias in the reported t-scores. An application to randomized controlled trials (RCTs) published in top economics journals finds that doubling every experiment's sample size would only increase the power of two-sided t-tests by 7.2 percentage points on average. This effect is small and is comparable to the effect for systematic replication projects in laboratory psychology where previous studies enabled accurate power calculations ex ante. These effects are both smaller than for non-RCTs. This comparison suggests that RCTs are on average relatively insensitive to sample size increases. The policy implication is that grant givers should generally fund more experiments rather than fewer, larger ones. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.13122&r= |
| By: | Rao, Xudong; Wang, Xingguo; Turvey, Calum G.; Zhang, Yuehua |
| Keywords: | Livestock Production/Industries, Risk And Uncertainty, Farm Management |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343709&r= |
| By: | Lu, Kelin |
| Abstract: | Intergenerational transfers are both common and markedly unequal. This study conducts a large-scale experiment to explore how Americans and Chinese perceive the fairness of unequal wealth transfers. In the experiment, workers and their parents completed assignments. Workers' payoffs originated from either (1) their own merit or luck or (2) earnings transferred from their parents, which were also earned through the parents' merit or luck. Impartial spectators made real distributive decisions that affected paired workers. Our findings reveal that Americans exhibit a pronounced aversion to intergenerational transfer inequalities compared to self-earned wealth, whereas the Chinese show only a mild aversion. Additionally, Americans demonstrate a preference for intergenerational meritocracy, accepting greater inequalities in transferred wealth when parental earnings result from merit rather than luck—a preference not evident among the Chinese. Further experiments suggest that attitudes toward unequal intergenerational wealth transfers are primarily driven by whether parents possess wealth to transfer , rather than the choice to transfer it. |
| Keywords: | Fairness, wealth inequality, social preference, intergenerational transfer |
| JEL: | D3 D6 D9 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121232&r= |
| By: | Dekker, Izaak; Bredeweg, Bert; Winkel, Wilco te; van de Poel, Ibo |
| Abstract: | AI-based interventions could enhance learning by personalization, improving teacher effectiveness, or optimize educational processes. However, they could also have unintended or unexpected side-effects, such as undermining learning by enabling procrastination, or reducing social interaction by individualizing learning processes. Responsible experiments are required to map both the potential benefits and the side-effects. Current procedures used to screen experiments by ethical review boards do not take the specific risks and dilemmas that AI poses into account. Previous studies identified sixteen conditions that can be used to judge whether trials with experimental technology are responsible. These conditions, however, were not yet translated into practical procedures, nor do they distinguish between the different types of AI applications and risk categories. This paper explores how those conditions could be further specified into procedures that could help facilitate and organize responsible experiments with AI, while differentiating for the different types of AI applications based on their level of automation. The four procedures that we propose are 1) A process of gradual testing 2) Risk- and side-effect detection 3) Explainability and severity, and 4) Democratic oversight. These procedures can be used by researchers, review boards, and research institutions to responsibly experiment with AI interventions in educational settings. |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:3dynw&r= |
| By: | Nie, Jingchun; Liu, Han; Reheman, Zulihumar; Shi, Yaojiang |
| Keywords: | Public Economics, Health Economics And Policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343608&r= |
| By: | Ann-Christin Posten (University of Limerick); Pınar Uğurlar (Özyeğin University, Istanbul); Sebastian Kube (University of Bonn); Joris Lammers (University of Cologne) |
| Abstract: | An effective way to foster cooperation is to monitor behaviour and sanction freeriding. Yet, previous studies have shown that cooperation quickly declines when sanctioning mechanisms are removed. We test if explicitly expressing trust in players’ capability to maintain cooperation after the removal of sanctions, i.e. vertical communication of trust, has the potential to alleviate this drop in compliance. Four incentivized public-goods experiments (N = 2423) find that the vertical communication of trust maintains cooperation upon the removal of centralized (Study 1), third-party (Study 2), and peer punishment (Study 3), and this effect extends beyond single interactions (Study 4). In all studies, vertical trust communication increases mutual trust among players, providing support to the idea that vertically communicating trust can be a self-fulfilling prophecy. Extrapolating our findings to natural environments, they suggest that authorities should carefully consider how they communicate the lifting of rules and sanctions. |
| Keywords: | Cooperation, Vertical Trust, Punishment, Public Good, Experiment |
| JEL: | H4 D91 C92 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:323&r= |
| By: | Sukhgeet Kaur; Michael G. Pollitt |
| Keywords: | Renewable energy, solar pumps, feeder level solarisation, energy water nexus, energy subsidies, irrigation water, electricity, groundwater depletion, Punjab |
| JEL: | Q1 Q20 Q25 Q42 Q58 O13 O38 P48 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2408&r= |
| By: | Park, Sihyun; Vecchi, Martina; Jaenicke, Edward C.; Fan, Linlin; Liu, Yizao; Zhou, Pei |
| Keywords: | Food Consumption/Nutrition/Food Safety, Health Economics And Policy, Consumer/ Household Economics |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343929&r= |
| By: | Luigi Guiso (Einaudi Institute for Economics and Finance (EIEF) and CEPR); Tullio Jappelli (University of Naples Federico II, CSEF, and CEPR) |
| Abstract: | We implement a survey experiment to study whether awareness of the consequences of hydrogeological risk affects people’s willingness to fight it. To do so, we leverage a representative panel of 5, 000 Italian individuals interviewed at quarterly frequency, starting in October 2023. We elicit survey participants’ willingness to contribute to a public fund to finance investment to secure areas exposed to hydrogeological risk under different information treatments. We find that disclosing information about the consequences of hydrogeological risk causes individuals to increase both support for public funding and individual willingness to pay for the policy. Compared to the control group, individuals exposed to the treatment were 9 percentage points more likely to contribute to the fund and more willing to contribute an additional €29. Applying the information treatment to the whole working age population could raise as much as €0.26 billion per year. We provide evidence that individual willingness to pay depends on individual knowledge that the success of the policy depends critically on the willingness to pay of other citizens. |
| Keywords: | Natural Disasters; Willingness to Pay; Insurance. |
| JEL: | H31 H2 H23 |
| Date: | 2024–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:723&r= |
| By: | Keyu Wu; Ernst Fehr; Sean Hofland; Martin Schonger |
| Abstract: | Ambiguous prospects are ubiquitous in social and economic life, but the psychological foundations of behavior under ambiguity are still not well understood. One of the most robust empirical regularities is the strong correlation between attitudes towards ambiguity and compound risk which suggests that compound risk aversion may provide a psychological foundation for ambiguity aversion. However, compound risk aversion and ambiguity aversion may also be independent psychological phenomena, but what would then explain their strong correlation? We tackle these questions by training a treatment group’s ability to reduce compound to simple risks, and analyzing how this affects their compound risk and ambiguity attitudes in comparison to a control group who is taught something unrelated to reducing compound risk. We find that aversion to compound risk disappears almost entirely in the treatment group, while the aversion towards both artificial and natural sources of ambiguity remain high and are basically unaffected by the teaching of how to reduce compound lotteries. Moreover, similar to previous studies, we observe a strong correlation between compound risk aversion and ambiguity aversion, but this correlation only exists in the control group while in the treatment group it is rather low and insignificant. These findings suggest that ambiguity attitudes are not a psychological relative, and derived from, attitudes towards compound risk, i.e., compound risk aversion and ambiguity aversion do not share the same psychological foundations. While compound risk aversion is primarily driven by a form of bounded rationality – the inability to reduce compound lotteries – ambiguity aversion is unrelated to this inability, suggesting that ambiguity aversion may be a genuine preference in its own right. |
| Keywords: | ambiguity aversion, compound risk aversion, bounded rationality, reduction of compound lotteries |
| JEL: | C91 D01 D91 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11150&r= |
| By: | Brad C. Nathan; Ricardo Perez-Truglia; Alejandro Zentner |
| Abstract: | We provide evidence on the role of fairness for tax compliance: households are willing to pay more in taxes if they believe that other households are contributing their fair share. We conducted an information-disclosure natural field experiment in the context of property taxes in the United States. We induced exogenous shocks to households' perceptions about the average tax rate paid by other households. We find that a higher perceived average tax rate decreases the probability of filing a tax appeal. Translating our estimates into a money metric, we find that for each additional $1 contributed by the average household, a taxpayer is willing to pay an extra $0.43 in his or her own taxes. |
| JEL: | C93 H4 H70 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32588&r= |
| By: | Sukhgeet Kaur; Michael G. Pollitt |
| Keywords: | Agriculture, energy water nexus, entitlement, incentive, groundwater, irrigation, electricity consumption, paddy, subsidy, electricity pricing, discrete choice, Punjab |
| JEL: | O13 Q1 Q4 Q5 Q12 Q24 Q25 Q28 Q48 Q57 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2407&r= |
| By: | Sukhgeet Kaur; Michael G. Pollitt |
| Keywords: | Agriculture, energy water nexus, electricity, discrete choice, Punjab, India |
| JEL: | O13 Q1 Q4 Q5 Q12 Q24 Q25 Q28 Q48 Q57 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2406&r= |
| By: | Wang, Yixuan; Desai, Saumya; Kemmerling, Leonie; Trmcic, Aljosa; Wiedmann, Martin; Adalja, Aaron A. |
| Keywords: | Marketing, Food Consumption/Nutrition/Food Safety, Consumer/ Household Economics |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343665&r= |
| By: | Kane, Diamilatou; Ricker-Gilbert, Jacob; Bauchet, Jonathan; Gulati, Kajal |
| Keywords: | Consumer/ Household Economics, International Development, Food Consumption/Nutrition/Food Safety |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343939&r= |
| By: | Lemken, Dominic; Simonetti, Aline; Heinke, Gloria; Estevez, Ana |
| Keywords: | Marketing, Consumer/ Household Economics |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343537&r= |
| By: | Bert Van Landeghem (University of Sheffield and IZA Institute of Labor Economics); Thomas Dohmen (University of Bonn); Arne Risa Hole (Jaume I University); Annemarie Künn-Nelen (Maastricht University (ROA) and IZA) |
| Abstract: | This study examines jobseekers’ preferences for a variety of job attributes. It is based on a choice experiment involving 1, 852 clients of the Flemish Public Employment Service (PES). Respondents value flexibility (e.g., remote work and schedule flexibility), job security and social impact of the job, and require significant compensation for longer commute times. A majority (70%) would need very substantial wage increase beyond their acceptable baseline wage to compensate for less flexibility, job security or social impact. These findings enhance our understanding of labour supply decisions and can inform the design of salary packages and HR policies. |
| Keywords: | Reservation wage, job search, job amenities, compensating differentials, choice experiments |
| JEL: | J31 J32 J64 J16 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:322&r= |
| By: | Du, Qianqian; Mieno, Taro; Bullock, David S. |
| Keywords: | Production Economics, Research Methods/Statistical Methods, Research And Development/ Tech Change/Emerging Technologies |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:344051&r= |
| By: | Bosco, Davide; Gilli, Mario |
| Abstract: | We study effort provision and incentivisation in a Tullock group-contest with m ≥ 2 groups that differ in size. A novel algorithmic procedure is presented that, under a symmetry assumption, explicitly characterises the equilibrium. Endogenous, optimal incentivisation schemes are then determined. Four results ensue. First, strategic interactions endogenously come in mean-field form: individual effort provision responds to the aggregate effort and average egalitarianism across groups. Therefore, the game is aggregative. Second, individuals endlessly cycle between zero and positive effort provision at some incentivisation schemes: no pure-strategy equilibria exist in these cases. Third, group size determines whether the egalitarianism of endogenous schemes increases or decreases in the average egalitarianism across groups. Fourth, all groups provide effort at the endogenous schemes if incentivisation is properly restricted. |
| Keywords: | Public Economics |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:343508&r= |
| By: | Emily Quiroga; Michael Tanner |
| Abstract: | The study on risk preferences and its potential changes amid natural catastrophes has been subject of recent study, producing contradictory findings. An often proposed explanation specifically distinguishes between the opposite effect of realized and unrealized losses on risk preferences. Moreover, higher-order risk preferences and its relation to post-disaster behaviors remain unexplored, despite potential theoretical implications. We address these gaps in the literature by conducting experiments with 600 individuals post Turkeys 2023 catastrophic earthquake, specifically heavily affected individuals who are displaced, those who are not and a control group. Results indicate higher risk-taking in heavily affected individuals when compared to unaffected individuals. Our results are specifically driven by affected females. We find no pre existing differences in risk preferences between earthquake and control areas using 2012 data. Within the heavily affected group of individuals, higher house damage, our proxy for realized losses, increases risk aversion. Regarding higher-order risk preferences for individuals heavily affected by the earthquake, we find that prudence is positively associated with selfprotective behaviors after the earthquake, specifically internal migration and/or displacement. While precautionary savings shows initially no correlation to prudence, a positive association emerges when considering that prudence is also related to occupational choices, with individuals with stable incomes and who save being more prudent. Our results contribute insights into how disasters influence risk preferences, specifically aiming to address contradictory findings in the literature, while presenting novel evidence on the relationship between prudence and post-natural disaster behaviors. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.15905&r= |
| By: | Cristian Chica; Yinglong Guo; Gilad Lerman |
| Abstract: | Algorithmic price collusion facilitated by artificial intelligence (AI) algorithms raises significant concerns. We examine how AI agents using Q-learning engage in tacit collusion in two-sided markets. Our experiments reveal that AI-driven platforms achieve higher collusion levels compared to Bertrand competition. Increased network externalities significantly enhance collusion, suggesting AI algorithms exploit them to maximize profits. Higher user heterogeneity or greater utility from outside options generally reduce collusion, while higher discount rates increase it. Tacit collusion remains feasible even at low discount rates. To mitigate collusive behavior and inform potential regulatory measures, we propose incorporating a penalty term in the Q-learning algorithm. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.04088&r= |
| By: | Sandoval M, Luis A.; Lopez, María J.; Mejia, William A.; Morales, Sarahi D.; Mamani Escobar, Brenda A. |
| Keywords: | Institutional And Behavioral Economics, Marketing, Environmental Economics And Policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343714&r= |
| By: | Miao, Yiyuan; Swallow, Brent M.; Goddard, Ellen W.; Sheng, Jiping |
| Keywords: | Food Consumption/Nutrition/Food Safety, Marketing, Environmental Economics And Policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343830&r= |
| By: | François t'Serstevens; Roberto Cerina; Giulia Piccillo |
| Abstract: | The alleged liberal bias and high costs of fact-checker ratings (Nieminen & Rapeli, 2019) have prevented their ability to limit the spread of fake news. Wisdom-of-the-crowd-based approaches, recognized as a credible alternative to traditional fact-checking methods, have gained prominence for their independence from alleged biases, real-time availability and cost-effectiveness (Allen, Arechar, Pennycook, & Rand, 2021). Instead of fact-checking, this paper utilises a large-scale crowd-sourcing experiment on tweets related to US politics and COVID-19. The objectives of this paper are twofold. First, it develops a method to compute consensus-based post-accuracy indices that are representative of the broader crowds despite their initial non-representative reviewing sample. The computed metrics indicate that Democrat and Republican reviewers have a non-overlapping definition of fake news. Though less accurate than state-of-the-art models, the presented methods provide a deeply explicable, impartial estimate usable for automated content moderation. Second, using the aforementioned accuracy indices, this paper identifies the characteristics of fake news sharers and generates state-wide indices of fake news sharing in the United States. This paper’s findings suggest the tweet author’s political alignment did affect the likelihood of spreading fake news, with Republicans sharing more fake news than Democrats even if an equal number of Republicans and Democrats were in the reviewing sample. The model parameters are subsequently extended to make state-wide fake news-sharing estimates. The resulting state indices and their transparent methodology, provide policymakers with a tool to estimate where fake news policies are most needed. |
| Keywords: | fake news, representative inference, content moderation, wisdom of the crowds |
| JEL: | C10 C90 D90 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11138&r= |