Papers - All

Maria De Paola, Francesca Gioia, Vincenzo Scoppa

Cited by*: 7 Downloads*: 12

We conducted a field experiment involving 720 Italian undergraduate students to investigate the existence of gender differences in performance in competitive settings and whether performance is affected by one's opponent gender. The experimental design was aimed at disentangling gender differences in taste for competition from other differences in psychological attitudes, such as self-confidence and risk aversion. Students were invited to undertake a midterm exam under a tournament scheme having as a prize some bonus points to add to the final grade. Students competed in pairs of equal predicted ability but different gender composition. We find that females are as likely as males to take part in the competition and to obtain a good performance. The gender of one's competitor does not play any role in shaping students' behavior. Men and women perform similarly both in the competitive and in the non-competitive environment.

Travis Lybbert

Cited by*: 4 Downloads*: 12

Potential poverty traps among the rural poor suggest a need to reduce poor farmers' vulnerability by stabilizing crop yields and limiting yield losses. Advances in biotechnology will help address this need directly with crops that tolerate climate fluctuation or resist biotic stresses. Evaluating ex ante how farmers will value these "poor" seeds is important for delivery design, but also challenging. This paper describes an experimental economic approach to understanding farmers' valuation of such seeds. Using data from a survey and experiment, I assess Indian farmers' valuation of changes in the mean, variance, and skewness of payoff distributions. These farmers value increases in expected value, but seem indifferent about higher moment changes in payoff distributions. Farmer traits such as wealth and risk exposure affect their valuation of these changes only mildly. While various limitations to the experimental approach must qualify practical implications of these findings, the experiment demonstrates the viability of conducting valuation experiments with open-ended questions in developing countries.

Jonathan E Alevy, Oscar Cristi, Oscar Melo

Cited by*: 1 Downloads*: 12

Field experiments were conducted with farmers in the Limari Valley of Chile to test extant theory on right-to-choose auctions. Water volumes that differed by reservoir source and time of availability were offered for sale by the research team. The auctions were supplemented by protocols to elicit risk and time preferences of bidders. We find that the right-to-choose auctions raise significantly more revenue than the benchmark sequential auction. Risk attitudes explain a substantial amount of the difference in bidding between auction institutions, consonant with received theory. The auction bidding revealed distinct preferences for water types, which has implications for market re-design.

Steven D Levitt, John A List, Chad Syverson

Cited by*: 7 Downloads*: 12

Productivity improvements within establishments (e.g., factories, mines, or retail stores) are an important source of aggregate productivity growth. Past research has documented that learning by doing-productivity improvements that occur in concert with production increases-is one source of such improvements. Yet little is known about the specific mechanisms through which such learning occurs. We address this question using extremely detailed data from an assembly plant of a major auto producer. Beyond showing that there is rapid learning by doing at the plant, we are able to pinpoint the processes by which these improvements have occurred.

Stefan Luckner, Christof Weinhardt

Cited by*: 9 Downloads*: 12

The results of recent studies on prediction markets are encouraging. Prior experience demonstrates that markets with different incentive schemes predicted uncertain future events remarkably accurately. In this paper, we study the impact of different monetary incentives on prediction accuracy in a field experiment. In order to do so, we compare three groups of traders, corresponding to three treatments with different payment schemes, in a prediction market for the FIFA World Cup 2006. Somewhat surprisingly, our results show that performance-related payment schemes do not necessarily increase the prediction accuracy. Due to the risk aversion of traders the competitive environment in a rank-order tournament leads to the best results in terms of prediction accuracy.

Douglas V DeJong, Robert Forsythe, Wilfred C Uecker

Cited by*: 13 Downloads*: 12

Using the data from sealed offer laboratory markets, we compare the price and quality choices of student subjects with those of businessmen subjects. The businessmen subjects were public accounting firm partners and corporate financial officers. This is of interest since the financial officer-auditor relationship is one particular application of the elementary principal-agent model which the laboratory environment was designed to test. Using several different performance measures we are unable to reject the null hypothesis that the average performance of the two subject pools were the same. However, the market using businessmen subjects generally exhibited greater variance than the market using students.

Kenneth Leonard, Melkiory Masatu

Cited by*: 0 Downloads*: 12

The most important issue facing experimental economists is the generalizability of lab results. This letter examines more than 1200 doctor/patient consultations, in which scrutiny and duration of treatment were varied. We show that scrutiny has an important but short-lived effect.

Juan-Camilo Cardenas, John K Stranlund, Cleve E Willis

Cited by*: 14 Downloads*: 12

A large, but inconclusive, literature addresses how economic heterogeneity affects the use of local resources and local environmental quality. One line of thought, which derives from Nash equilibrium provision of public goods, suggests that in contexts in which individual actions degrade local environmental quality, wealthier people in a community will tend to do more to protect environmental quality. In this paper we report on experiments performed in rural Colombia that were designed to explore the role that economic inequality plays in the 'provision' of local environmental quality. Subjects were asked to decide how much time to devote to collecting firewood from a local forest, which degrades local water quality, and how much to unrelated pursuits. Economic heterogeneity was introduced by varying the private returns to these alternative pursuits. Consistent with the Nash equilibrium prediction, we found that the players with more valuable alternative options put less pressure on local water quality. However, the subjects with less valuable alternative options showed significantly more restraint relative to their pure Nash strategies. Furthermore, they were willing to bear significantly greater opportunity costs to move their groups to outcomes that yielded higher average payoffs and better water quality than the Nash equilibrium outcome.

Nick Drydakis

Cited by*: 0 Downloads*: 12

A field experiment was contacted in order to unbiased test whether female ethnic minorities; Albanians, face housing discrimination by owners when they seek to rent a unit in Greece three years after the national adoption of the European anti-discrimination legislation. Replicated the commonest process to rent a unit in Greece; telephone contact, we investigated a big sample represented by 122 areas. Rationally classified them in three status groups, according to their average rent levels, we found that discrimination increased monotonically with areas' status. The estimated probability of Albanians to receive an invitation to investigate a unit was lower by 0.231 in low status areas, followed by 0.324 in medium status areas, and by 0.419 in high status areas than that of Greeks. Adjusted for intra-class correlation the estimated differentials were found to be statistically significant. Similarly, we estimated an insignificant rent penalty against Albanians of 0.010 in low status areas, and significant penalties of 0.015 in medium status areas and of 0.023 in high status areas against Albanians. Consequently, a taste and/or statistical discrimination implied against Albanian seekers. Interestingly, the study enabled to estimate further that good rental housings are in significant degree unavailable to Albanians restricted their freedom in selecting a place to live. Specifically, Albanian seekers faced significantly less probabilities to investigate newer, busheled and units placed in floor than Greeks. Whilst, Albanians in order to have access to good units they had to pay more than Greeks. Finally, we estimated that female owners practiced significantly more availability constraints to Albanians than male owners. The current research contributes to two areas that have attracted scarce research attention in Greece: the experimental investigation of housing discrimination and discrimination by ethnicity. The results of this study have implications for understanding some of the enduring patterns of ethnic discrimination in the housing market.

Carlos A Alpizar, Steven Buck

Cited by*: 0 Downloads*: 12

In this paper, we distinguish between horizontal and vertical trust. We investigate how these measures of trust, as well as measures of trustworthiness and risk aversion are related to the probability of rural farmers of having had a loan from a bank. Using experimental and survey data from 191 farmers of the Amazon region of Ecuador, we find that: (1) controlling for risk aversion, women do not trust differently than men in each trust game, however, women compared to men do trust outside professionals more than community members, and (2) isolated rural farmers with stronger preferences for trusting outside professionals experience higher levels of bank loan uptake.

Antoni Bosch-Domenech, Jose Garcia-Montalvo, Rosemarie Nagel, Albert Satorra

Cited by*: 0 Downloads*: 12

This paper develops a finite mixture distribution analysis of Beauty-Contest data obtained from diverse groups of experiments. ML estimation using the EM approach provides estimates for the means and variances of the component distributions, which are common to all the groups, and estimates of the mixing proportions, which are specific to each group. This estimation is performed without imposing constraints on the parameters of the composing distributions. The statistical analysis indicates that many individuals follow a common pattern of reasoning described as iterated best reply (degenerate), and shows that the proportions of people thinking at different levels of depth vary across groups.

Niklas Bengtsson, Per Engstrom

Cited by*: 0 Downloads*: 11

Results in behavioral economics suggest that material incentives can crowd out effort, if agents are mission-oriented rather than self-interested. We test this prediction on a sample of nonprofit organizations in Sweden. Swedish nonprofit organizations receive tax funds annually to promote global development issues through information campaigns. Traditionally, the contract with the main principal (the Swedish foreign aid agency) has been based on trust and self-regulation. We designed an experimental policy intervention, effectively replacing the trust-based contract with an increased level of monitoring from the principal, along with a threat to cut future funds if irregularities were detected. Our findings are inconsistent with (strong) motivational crowd-out. Overall, using both self-reported and observed measures of outreach, we find that the intervention improved efficiency. Graphical analysis shows that non-monitored organizations exhibit a distinct tendency to maximize expenditure; in contrast, organizations in the treatment group are more likely to return unused grants to Sida. Additionally, we find no crowding out of private contributions and no evidence of a "discouraged NGO"-syndrome.

Laura Gee, Michael Schreck

Cited by*: 0 Downloads*: 11

Charitable giving has been about 2% of US GDP since the turn of the century. A popular fundraising tool is donation matching where every dollar is matched by a third party. But field experiments find that matching does not always increase donations. This may occur because individuals believe that peer donors will exhaust the matching funds. We develop a theory of how beliefs about peers' donations affect one's own likelihood of donation. We test our theory using novel "threshold match" treatments in field and laboratory experiments. These treatments form small groups and offer a flat matching bonus if a threshold number of donations is received. One "threshold match" treatment more than doubles the donation rate in the field relative to no match. To better understand the mechanism behind this huge increase, we use a lab study to replicate the field results and further show that beliefs about peers' donations matter. Our theoretical, lab, and field results combined suggest people are more likely to donate when they believe they are more pivotal to securing matching money. Beliefs about others matter, and they should be taken into account when trying to increase donations.

Charles Bellemare

Cited by*: 5 Downloads*: 11

We present results from a field experiment testing the gift-exchange hypothesis inside a tree-planting firm paying its workforce incentive contracts. Firm managers told a crew of tree planters they would receive a pay raise for one day as a result of a surplus not attribuable to past planting productivity. We compare planter productivity - the number of trees planted per day - on the day the gift was handed out with productivity on previous and subsequent days of planting on the same block, and thus under similar planting conditions. We find direct evidence that the gift had a significant and positive effect on daily planter productivity, controlling for planter-fixed effects, weather conditions and other random daily shocks. Moreover, reciprocity is the strongest when the relationship between planters and the firm is long term.

John A List, Daniel Rondeau

Cited by*: 31 Downloads*: 11

This study designs a natural field experiment linked to a controlled laboratory experiment to examine the effectiveness of matching gifts and challenge gifts, two popular strategies used to secure a portion of the $200 billion annually given to charities. We find evidence that challenge gifts positively influence contributions in the field, but matching gifts do not. Methodologically, we find important similarities and dissimilarities between behavior in the lab and the field. Overall, our results have clear implications for fundraisers and provide avenues for future empirical and theoretical work on charitable giving.

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.

Steven D Levitt, John A List, David H Reiley

Cited by*: 12 Downloads*: 11

The minimax argument represents game theory in its most elegant form: simple but with stark predictions. Although some of these predictions have been met with reasonable success in the field, experimental data have generally not provided results close to the theoretical predictions. In a striking study, Palacios-Huerta and Volij (2007) present evidence that potentially resolves this puzzle: both amateur and professional soccer players play nearly exact minimax strategies in laboratory experiments. In this paper, we establish important bounds on these results by examining the behavior of four distinct subject pools: college students, bridge professionals, world-class poker players, who have vast experience with high-stakes randomization in card games, and American professional soccer players. In contrast to Palacios-Huerta and Volij's results, we find little evidence that real-world experience transfers to the lab in these games--indeed, similar to previous experimental results, all four subject pools provide choices that are generally not close to minimax predictions. We use two additional pieces of evidence to explore why professionals do not perform well in the lab: (1) complementary experimental treatments that pit professionals against preprogrammed computers, and (2) post-experiment questionnaires. The most likely explanation is that these professionals are unable to transfer their skills at randomization from the familiar context of the field to the unfamiliar context of the lab.

Roland Fryer , Steven D Levitt, John A List, Sally Sadoff

Cited by*: 43 Downloads*: 11

Domestic attempts to use financial incentives for teachers to increase student achievement have been ineffective. In this paper, we demonstrate that exploiting the power of loss aversion--teachers are paid in advance and asked to give back the money if their students do not improve sufficiently--increases math test scores between 0.201 (0.076) and 0.398 (0.129) standard deviations. This is equivalent to increasing teacher quality by more than one standard deviation. A second treatment arm, identical to the loss aversion treatment but implemented in the standard fashion, yields smaller and statistically insignificant results. This suggests it is loss aversion, rather than other features of the design or population sampled, that leads to the stark differences between our findings and past research.

Yan Chen, Xin Li, Jeffrey K MacKie-Mason

Cited by*: 13 Downloads*: 11

We implemented the first web-based online field experiments of fund-raising. We embedded our experiment in the Internet Public Library to test four mechanisms: Voluntary Contribution (VCM), Premium, Seed Money and Matching. Although the gift size is not significantly different across mechanisms, the Seed and Matching mechanisms each generate significantly higher user click-through response rate than the Premium mechanism. Because this is one of the earliest embedded, web-based field experiments, we report our methodology findings in some detail. Cookies work better as participant assignment techniques than pop-up windows and elicitation of geographic information. Participant clickstream data that nominally demonstrate a desire to donate is a poor predictor of actual giving.

Timothy R Berry, William T Harbaugh, Kate Krause

Cited by*: 47 Downloads*: 11

In this paper we examine the extent to which consumption choices by 7 and 11-year-old children and college undergraduates satisfy the axioms of revealed preference. We find that choices by even the 7-year-olds are considerably more likely to obey revealed preference axioms than would be true if they were choosing randomly. 11-year-olds do better still, while college students do no better than 11-year-old children. We also find that mathematical ability is not correlated with choosing rationally. We argue that this evidence suggests that the ability to choose rationally is not innate, but that it does develop quickly.