Papers - Michael K Price

Andreas Lange, John A List, Michael K Price

Cited by*: 3 Downloads*: 7

The tontine, which is an interesting mixture of group annuity, group life insurance, and lottery, has a peculiar place in economic history. In the seventeenth and eighteenth centuries it played a major role in raising funds to finance public goods in Europe, but today it is rarely encountered outside of a dusty footnote in actuarial course notes or as a means to thicken the plot of a murder mystery. This study provides a formal model of individual contribution decisions under a modern variant of the historical tontine mechanism that is easily implemented by private charities. Our model incorporates desirable properties of the historical tontine to develop a mechanism to fund the private provision of a public good. The tontine-like mechanism we derive is predicted to outperform not only the voluntary contribution mechanism but also another widely used mechanism: charitable lotteries. Our experimental test of the instrument provides some evidence of the beneficial effects associated with implementing tontine-like schemes. We find that the mechanism has particular power in cases where agents are risk-averse or in situations where substantial asymmetries characterize individual preferences for the public good.

Matilde Giaccherini, David H Herberich, David Jimenez-Gomez, John A List, Giovanni Ponti, Michael K Price

Cited by*: None Downloads*: None

This paper uses a field experiment to estimate the effects of prices and social norms on the decision to adopt and efficient technology. We find that prices and social norms influence the adoption and decision along different margins: while prices operate on both the extensive and intensive margins, social norms operate mostly through the extensive margin. This has both positive and normative implications, and suggests that economics and psychology may be strong complements in the diffusion process. To complement the reduced form results, we estimate a structural model that points to important household heterogeneity: whereas some consumers welcome the opportunity to purchase and learn about the new technology, for others the inconvenience and social pressure of the ask results in negative welfare. As a whole, our findings highlight that the design of optimal technological diffusion policies will require multiple instruments and a recognition of household heterogeneity.

Andreas Lange, John A List, Michael K Price

Cited by*: 0 Downloads*: 0

Auction theory represents one of the richest areas of research in economics over the past three decades. Yet, whether, and to what extent, the introduction of secondary resale markets influences bidding behavior in sealed bid first-price auctions remains under researched. This study begins by examining field data from a unique data set that includes nearly 3,000 auctions (over 10,000 individual bids) for cutting rights of standing timber in British Columbia from 1996-2000. In comparing bidding patterns across agents who are likely to have resale opportunities with those who likely do not, we find evidence that is consistent with theory. Critical evaluation of the reduced-form bidding model, however, reveals that sharp tests of the theoretical predictions are not possible because several other differences may exist across these bidder types. We therefore use a laboratory experiment to examine if the resale opportunity by itself can have the predicted theoretical effect. We find that while it does have the predicted effect, a theoretical model based on risk-averse bidders explains the overall data patterns more accurately than a model based on risk-neutral bidders. Beyond testing theory, the paper highlights the inferential power of combining naturally occurring data with laboratory data.

John A List, Michael K Price

Cited by*: 8 Downloads*: 7

One fact that has emerged in modern societies is that people help others. Whether it is donating a few dollars to help feed the poor or volunteering time to help rebuild someone's life after a natural disaster, people around the globe commonly lend a hand. This study provides an overview of that support, summarizing gifts of both time and money around the globe. We also highlight research that indicates useful ways in which we can enhance the charitable pie. Our discussion revolves around both individual giving and corporate philanthropy, but we focus on empirical insights from recent charitable fundraising field experiments in the Western World. We present information that is useful for policymakers, fundraising practitioners, and academicians.

John A List, Michael K Price

Cited by*: 15 Downloads*: 27

We explore collusion by using the tools of experimental economics in a naturally occurring marketplace. We report that competitive price theory adequately organizes data in multilateral decentralized bargaining markets without conspiratorial opportunities. When conspiratorial opportunities are allowed and contract prices are perfectly observed, prices (quantities) are considerably above (below) competitive levels. When sellers receive imperfect price signals, outcomes are intermediate to those of competitive markets and collusive markets with full information. Finally, experienced buyers serve as a catalyst to thwart attempts by sellers to engage in anticompetitive pricing: in periods where experienced agents transact in the market, average transaction prices are below those realized in periods where only inexperienced agents execute trades.

Alexander G James, John A List, James J Murphy, Michael K Price

Cited by*: None Downloads*: None

We partnered with Alaska's Pick.Click.Give. Charitable Contributions Program to implement a statewide natural field experiment with 540,000 Alaskans designed to explore whether targeted appeals emphasizing donor benefits through warm glow impact donations. Results highlight the relative import of appeals to self. Individuals who received such an appeal were 4.5 percent more likely to give and gave 20 percent more than counterparts in the control group. Yet, a message that instead appealed to recipient benefits had no effect on average donations relative to the control group. We also find evidence of long-run effects of warm glow appeals in the subsequent year.

Alec Brandon, Paul J Ferraro, John A List, Robert D Metcalfe, Michael K Price, Florian Rundhammer

Cited by*: 4 Downloads*: 95

This study examines the mechanisms underlying long-run reductions in energy consumption caused by a widely studied social nudge. Our investigation considers two channels: physical capital in the home and habit formation in the household. Using data from 38 natural field experiments, we isolate the role of physical capital by comparing treatment and control homes after the original household moves, which ends treatment. We find 35 to 55 percent of the reductions persist once treatment ends and show this is consonant with the physical capital channel. Methodologically, our findings have important implications for the design and assessment of behavioral interventions.

Daniel Henderson , John A List, Daniel L Millimet, Christopher Parmeter , Michael K Price

Cited by*: 1 Downloads*: 4

Nonparametric estimators provide a flexible means of uncovering salient features of auction data. Although these estimators are popular in the literature, many key features necessary for proper implementation have yet to be uncovered. Here we provide several suggestions for nonparamteric estimation of first-price auction models. Specifically, we show how to impose monotonicity of the equilibrium bidding strategy; a key property of structural auction models not guaranteed in standard nonparametric estimation. We further develop methods for automatic bandwidth selection. Finally, we discuss how to impose monotonicity in auctions with differering number of bidders, reserve prices, and auction-specific characteristics. Finite sample performance is examined using simulated data as well as experimental auction data.

Shagata Mukherjee, Michael K Price

Cited by*: 0 Downloads*: 26

This study takes a first step to advance our understanding of the strategic interaction between the constituent components of default in microfinance and how to mitigate them. We conduct controlled microfinance field experiments in rural India to provide a systematic analysis of the relationship between gender, group liability and moral hazard. By varying the contract structure across different microfinance games, our experiment decomposes the two moral hazard (ex-ante and ex-post) channels and find that their effect on default are counteractive rather than additive for women clients. The study facilitates heterogeneity analysis of gender on moral hazard across comparable matrilineal and patrilineal societies in two neighboring states of India. We find that matrilineal women are less risk averse and are more likely to invest in the risky project (ex-ante moral hazard) than women in patrilineal societies. Moreover, we find a reversal of gender effect on strategic default (ex-post moral hazard) across the two societies, suggesting the importance of social norms and gender roles on financial behavior. Our results indicate that policymaking in microfinance should be designed by considering the heterogeneity of diverse societies, gender roles, norms and the underlying socio-economic factors that motivate financial behavior among borrowers.

John A List, Anya Samek, Michael K Price

Cited by*: 0 Downloads*: 2

No abstract available

John A List, Robert D Metcalfe, Michael K Price, Florian Rundhammer

Cited by*: 0 Downloads*: 51

The literature has shown the power of social norms to promote residential energy conservation, particularly among high usage users. This study uses a natural field experiment with nearly 200,000 US households to explore whether a financial rewards program can complement such approaches. We observe strong impacts of financial rewards, particularly amongst low-usage and low-variance households, customers who typically are less responsive to normative messaging. Our data thus suggest important policy complementarities between behavioral and financial incentives: whereas non-pecuniary interventions disproportionally affect intense users, financial incentives are able to affect substantially low-user, "sticky households."

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

Cited by*: 18 Downloads*: 17

This study develops theory and conducts an experiment to provide an understanding of why people initially give to charities, why they remain committed to the cause, and what factors attenuate these influences. Using an experimental design that links donations across distinct treatments separated in time, we present several insights. For example, we find that previous donors are more likely to give, and contribute more, than donors asked to contribute for the first time. Yet, how these previous donors were acquired is critical: agents who are initially attracted by signals of charitable quality transmitted via an economic mechanism are much more likely to continue giving than agents who were initially attracted by non-mechanism factors.

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

Cited by*: 4 Downloads*: 0

Several recent laboratory experiments have shown that the use of explicit incentives--such as conditional rewards and punishment--entail considerable "hidden" costs. The costs are hidden in the sense that they escape our attention if our reasoning is based on the assumption that people are exclusively self-interested. This study represents a first attempt to explore whether, and to what extent, such considerations affect equilibrium outcomes in the field. Using data gathered from nearly 3000 households, we find little support for the negative consequences of control in naturally-occurring labor markets. In fact, even though we find evidence that workers are reciprocal, we find that worker effort is maximized when we use conditional--not unconditional--rewards to incent workers.

James Cox, John A List, Michael K Price, Vjollca Sadiraj, Anya Samek

Cited by*: 2 Downloads*: 123

The literature exploring other regarding behavior sheds important light on interesting social phenomena, yet less attention has been given to how the received results speak to foundational assumptions within economics. Our study synthesizes the empirical evidence, showing that recent work challenges convex preference theory but is largely consistent with rational choice theory. Guided by this understanding, we design a new, more demanding test of a central tenet of economics - the contraction axiom - within a sharing framework. Making use of more than 325 dictators participating in a series of allocation games, we show that sharing choices violate the contraction axiom. We advance a new theory that augments standard models with moral reference points to explain our experimental data. Our theory also organizes the broader sharing patterns in the received literature.

Andreas Loschel, Michael K Price, Laura Razzolini, Madeline Werthschulte

Cited by*: None Downloads*: None

This study explores whether negative income shocks from the COVID-19 pandemic affect the demand for environmental policy. By running a survey in Germany in May 2020, we show that there is a large and negative correlation between the COVID-19 income shocks and the willingness to support green policies. Importantly, this relation is separate from the effect of long-run income. Building on the first evidence, our study provides directions for future valuation studies. Specifically, our results provide a proof of concept that welfare analyses based on willingness-to-pay estimates to assess the benefits of an environmental good or the cost of an environmental damage may be downward biased if temporary changes in income are not considered.

Alec Brandon, John A List, Robert D Metcalfe, Michael K Price, Florian Rundhammer

Cited by*: None Downloads*: None

This study considers the response of household electricity consumption to social nudges during peak load events. Our investigation considers two social nudges. The first targets conservation during peak load events, while the second promotes aggregate conservation. Using data from a natural field experiment with 42,100 households, we find that both social nudges reduce peak load electricity consumption by 2 to 4% when implemented in isolation and by nearly 7% when implemented in combination. These findings suggest an important role for social nudges in the regulation of electricity markets and a limited role for crowd out effects.

Alec Brandon, John A List, Robert D Metcalfe, Michael K Price, Florian Rundhammer

Cited by*: None Downloads*: None

This study considers the response of household electricity consumption to social nudges during peak load events. Our investigation considers two social nudges. The first targets conservation during peak load events, while the second promotes aggregate conservation. Using data from a natural field experiment with 42,100 households, we find that both social nudges reduce peak load electricity consumption by 2 to 4% when implemented in isolation and by nearly 7% when implemented in combination. These findings suggest an important role for social nudges in the regulation of electricity markets and a limited role for crowd out effects.

John A List, William S Neilson, Michael K Price

Cited by*: 0 Downloads*: 101

Recent theoretical and empirical studies have explored the effect of group membership and identity on individual decision-making. This line of research highlights that economic models focusing on the individual as the sole entity in the decision-making environment potentially miss critical features. This study takes this literature in a new direction by overlaying a field experiment onto a setting where groups have arisen naturally. Our experimental laboratory is large open air markets, where we are able to examine the effects of group membership on seller's collusive behavior as measured by prices and surplus allocations. This permits us to explore strategic implications of group composition. Empirical results illustrate the importance of group composition on pricing decisions, and show that deviations from Nash equilibrium are crucially related to group membership.

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.

Alec Brandon, Christopher M Clapp, John A List, Robert D Metcalfe, Michael K Price

Cited by*: None Downloads*: None

Smart-home technologies have been heralded as an important way to increase energy conservation. While in vitro engineering estimates provide broad optimism, little has been done to explore whether such estimates scale beyond the lab. We estimate the causal impact of smart thermostats on energy use via two novel framed field experiments in which a random subset of treated households have a smart thermostat installed in their home. Examining 18 months of associated high-frequency data on household energy consumption, yielding more than 16 million hourly electricity and daily natural gas observations, we find little evidence that smart thermostats have a statistically or economically significant effect on energy use. We explore potential mechanisms using almost four million observations of system events including human interactions with their smart thermostat. Results indicate that user behavior dampens energy savings and explains the discrepancy between estimates from engineering models, which assume a perfectly compliant subject, and actual households, who are occupied by users acting in accord with behavioral economists' conjectures. In this manner, our data document a keen threat to the scalability of new user-based technologies.