The abstracts are sorted alphabetically according to the presenting author's name.
Gulnaz Anjum (with Adam Chilton and Zahid Usman)
United Nations Endorsement and Support for Women's Rights: Evidence from an Experiment in Pakistan
Abstract: The United Nations is the organization charged with developing and promoting international human rights law. One of the primary ways that the United Nations tries to achieve that goal is by regularly reviewing the human rights practices of member states and then recommending new policies that a specific member state should implement. Although considerable resources are expended as part of this review process, a number of obstacles have prevented empirical researchers from assessing whether the United Nations' review process actually causes countries to improve their human rights practices. In order to bring new evidence to this debate, we conducted a survey experiment in Pakistan that was designed to test whether respondents were more likely to support policies aimed at improving women's rights when they learned that the reforms were proposed by the United Nations. Our results indicate that the respondents who were randomly informed of the United Nations endorsement not only expressed higher support for the policy reforms, but also were more likely to express willingness to "mobilize" in ways that would help the reforms be implemented. Our experiment provides qualified support for the claim that the United Nations' endorsement of policies makes it easier for human rights advocates to lobby for these policies' adoption.
Socialistic Budget Lapsing and Investment Decisions
Abstract: The purpose of this study is to examine the effect of socialistic budget lapsing, where unused funds a reallocated to other divisions, on investment decisions of managers when investment outcomes are either relatively certain or relatively uncertain. We define socialistic budget lapsing as budget lapsing where unused funds are reallocated to other divisions that are in need of funds, i.e., a form of corporate socialism. We expect and find in a laboratory experiment that higher uncertainty leads to less investment in absence of socialistic budget lapsing, which in line with the argument that managers build up reserves when things might go wrong. In presence of socialistic budget lapsing, however, investment levels increase significantly. More specifically, uncertainty in investments does hardly play a role for the investment decisions when socialistic budget lapsing is in place, indicating that this functions like an insurance against possible losses. Supplementary analyses reveal that participants considered the socialistic budget lapsing mechanism to be fairer when uncertainty was high, but felt that it is unfair when uncertainty is low. Socialistic budget lapsing can thus be an effective way to induce high levels of investments in firms when otherwise managers would avoid investments.
Thomas Demuynck (with Christian Seel)
Revealed Preference with Limited Consideration
Abstract: We derive revealed preference tests for models where individuals use consideration sets to simplify their consumption problem. Our basic test provides necessary and sufﬁcient conditions for consistency of observed choices with the existence of consideration set restrictions. The same conditions can also be derived from a model in which the consideration set formation is endogenous and based on subjective prices. By imposing restrictions on these subjective prices, we obtain additional refined revealed preference tests. We illustrate and compare the performance of our tests by means of a dataset on household consumption choices.
The Global Preference Survey
Abstract: This paper introduces the Global Preference Survey, a globally representative dataset on risk and time preferences, positive and negative reciprocity, altruism, and trust. The survey module combines survey instruments that were best predictors of preferences revealed in incentivized choice experiments. It provides a parsimonious way to measure preferences, without the cost of incentives, and contributes a survey methodology for measuring preferences consistently across studies.
We collected preference data as well as a rich set of covariates for 80,000 individuals, drawn as representative samples from 76 countries around the world, representing 90 percent of both the world's population and global income. The global distribution of preferences exhibits substantial variation across countries, which is partly systematic: certain preferences appear in combination and follow distinct geographic and cultural patterns. The heterogeneity in preferences across individuals is even more pronounced and systematically varies with age, gender, and cognitive ability. Around the world, our preference measures are predictive of a wide range of individual-level behaviors including savings and schooling decisions, labor market and health choices, prosocial behaviors, and family structure.
As an illustration we investigate whether patience is a key driving factor behind the accumulation of the proximate determinants of economic development, as is hypothesized in the context of a development accounting framework. We find a significant reduced-form relationship between patience and development in terms of contemporary income as well as medium- and long-run growth rates, with patience explaining a substantial fraction of development differences across countries. Consistent with the idea that patience affects national income through accumulation processes, patience also strongly correlates with human and physical capital accumulation, investments into productivity, and institutional quality.
Individual preferences across contexts
Abstract: Economists focus on Dictator Game giving in monetary domain rather than in non-monetary domain although investigation of giving in non-monetary domain has economic value. This study aims to make a systematic comparison of generosity and rationalizability of individual preferences in a modified dictator game across monetary and non-monetary domains with positive and negative framing using laboratory experiments. The rationalizability of preferences is measured using the severity of Generalized Axiom of Revealed Preferences (GARP) violations as in previous studies (e.g. Andreoni and Miller, 2002; Davis et al. 2012). The results suggest that generosity and GARP violations (in amount and severity) are larger in non-monetary than in monetary domain and that the high level of generosity in non-monetary treatments cannot be fully explained by the high level of GARP violations.
Bart Golsteyn (with Lex Borghans and Ulf Zölitz)
School Quality and the Development of Cognitive Skills between Age Four and Six
Abstract: This paper studies the extent to which young children develop their cognitive ability in high and low quality schools. We use a representative panel data set containing cognitive test scores of 4-6 year olds in Dutch schools. School quality is measured by the school ’ s average achievement test score at age 12. Our results indicate that children in high-quality schools develop their skills substantially faster than those in low-quality schools. The results remain robust to the inclusion of initial ability, parental background, and neighborhood controls. Moreover, using proximity to higher-achieving schools as an instrument for school choice corroborates the results. The robustness of the results points toward a causal interpretation, although it is not possible to erase all doubt about unobserved confounding factors.
Florian Heine (with Martin Strobel)
Reward and Punishment in a Team Contest
Abstract: A team contest entails both public good situations within the teams as well as a contest across teams. In an experimental study, we analyse behaviour in such a team contest when allowing to punish or to reward other group members. Moreover, we compare two types of contest environment: One in which two groups compete for a prize and another one in which we switch off the between-group element of the team contest. Unlike what experimental studies in isolated public goods games indicate, we find that reward giving, as opposed to punishing, induces higher contributions to the group project. Furthermore, comparing treatment groups, expenditures on rewarding other co-players are significantly higher than those for punishing. This is particularly pronounced for the between-group contest.
Equilibrium and Matching under Price Controls
Abstract: The paper considers a one-to-one matching with contracts model in the presence of price controls. This set-up contains two important streams in the matching literature, those with and those without monetary transfers, as special cases and allows for intermediate cases with some restrictions on the monetary transfers that are feasible. An adjustment process that ends with a stable outcome is presented, thereby proving the existence of stable outcomes. The process contains the deferred acceptance algorithm of Gale and Shapley (1962) and the approximate auction mechanism of Demange, Gale, and Sotomayor (1986) as special cases. The paper presents a notion of competitive equilibrium, called Drèze equilibrium, for this class of models, an extension of the concept as developed by Drèze (1975) for economies with divisible commodities subject to price controls. It is shown that Dr`eze equilibrium allocations are equivalent to allocations induced by stable outcomes. One implication is the existence of Drèze equilibria. Another implication is the equivalence of a competitive equilibrium concept and the concept of stable outcomes that is valid with and without monetary transfers as well as when monetary transfers are limited.
Institutional Stability through Openness - an Experiment
Abstract: Does institutional openness enhance the stability - and thus the efficiency - of a social system? Does the effect depend on the availability of a redistribution mechanism? We propose a design for investigating these questions experimentally. Random pairs of strangers interact repeatedly in a Battle of the Sexes game, with the only available coordination device being a randomly generated focal point that systematically favors certain players. In a series of experimental treatments, we introduce the possibility for players to endogenously generate a new coordination device and voluntarily transfer money to one another.
Jona Linde (with Thomas de Haan)
'Good Nudge Lullaby': Choice Architecture and Default Bias Reinforcement
Because people disproportionally choose default options, both libertarian paternalists and marketeers try to present options they want to promote as the default. However, setting certain defaults and thereby inﬂuencing the decisions at hand, may also aﬀect choices in later, similar decision situations. In this paper we therefore explore experimentally whether the default bias can be reinforced by providing good defaults. We show that people who have faced better defaults in the past are more likely to choose default options than people who faced random defaults. This increased default bias hurts their performance. This malleability of the default bias can explain certain marketing practices and serves as a note of caution to libertarian paternalists.
Olivier Marie (with Ulf Zölitz)
High Achievers? Cannabis Access and Academic Performance
Abstract: This paper investigates how legal cannabis access affects student performance. Identification comes from an exceptional policy introduced in the city of Maastricht which discriminated legal access based on individuals' nationality. We apply a difference-in-difference approach using administrative panel data on over 54,000 course grades of local students enrolled at Maastricht University before and during the partial cannabis prohibition. We find that the academic performance of students who are no longer legally permitted to buy cannabis increases substantially. Grade improvements are driven by younger students, and the effects are stronger for women and low performers. In line with how THC consumption affects cognitive functioning, we find that performance gains are larger for courses that require more numerical/mathematical skills. We investigate the underlying channels using students' course evaluations and present suggestive evidence that performance gains are driven by improved understanding of material rather than changes in students' study effort.
Overbidding in Auctions - the Role of Spite
Abstract: An extensive amount of literature is providing evidence for overbidding in auctions. Still, most common explanations - like risk aversion, joy of winning, anticipated regret etc. – are not sufficient for explaining this observation, which is why some papers are arguing that spite is the only explanation left. Hence, we investigate in a theoretical and experimental approach the effect of spite on bidding behavior. As the theoretical predictions are especially interesting for the second-price all-pay auction we experimentally investigate spite in that particular auction. Our results suggest that in line with the theoretical predictions, spiteful subjects do overbid in the lab.
Which HR-officer's characteristics affect firm's willingness to hire older workers?
Abstract: To face the burden of an ageing population, many industrialized countries have taken policy measures to postpone retirement and increase the labor force participation of older generations. Nevertheless, several studies which use field experiments that focus on the hiring rate of pairs of workers who only differ with age, have shown that age discrimination is a major limitation for older generations to find a new job. Although these studies show convincingly that hiring officers of firms are not prepared to hire older job applicants, their experimental design limits them in the exploration of the underlying mechanisms why older workers are less often offered a job. This paper contributes to the existing literature by making use of a vignette study and employer survey data to investigate employer's willingness to hire older job applicants, and to assess the extent to which the hiring probability is related to the hiring officer's own age, other personal characteristics of the HR-officer, and his/her views about older workers' productivity, wage costs, and skills compared to that of younger workers. Our results show that the probability of being hired decreases substantially with the age of the job applicant. Other things equal, a 35 years-old applicant without experience has a 72% probability of being hired when HR officers have to choose between two applicants, while a 60 years-old applicant has only a 28% probability of being hired. Our estimates show that the hiring probability of older job applicants depends significantly on the age and gender of the HR-officer: young and male HR-officers are less likely to hire older job applicants. Moreover, we find that this significant interaction effect between the age of the job applicant and the age of the HR-officer does not disappear when we control for several organizational characteristics and the HR-officer's views about older workers' relative productivity, skills, and wage costs, thereby ruling out several of the most frequently mentioned explanations for the heterogeneity in age discriminatory hiring practices of firms.
Epistemic Game Theory
Abstract: In this talk I will give a gentle introduction to the blooming field of epistemic game theory. First, I will informally discuss the idea of common belief in rationality -- the key idea in epistemic game theory upon which most other concepts in the area are based. I will then show how to formalize common belief in rationality within a precise language. Finally, I will demonstrate which epistemic conditions must be added to common belief in rationality to arrive at Nash equilibrium.
Arno Riedl (with Florian Engl and Roberto A. Weber)
The Spillover Effect of Institutions on Cooperative Norms, Preferences, and Beliefs
Abstract: Institutions are an important means for fostering prosocial behaviors. For example, sanctioning institutions have been shown to be effective for supporting high levels of cooperation in social dilemmas. Moreover, institutions may directly shape individuals' preferences and beliefs. In many contexts, however, institutions are limited in scope and can govern prosocial behavior only in some domains. In other domains, society must rely on voluntary prosocial behavior of individuals. We use a laboratory experiment to study how the presence and nature of an institution that enforces prosocial behavior in one domain affect the behavior in other domains, beyond the reach of the institution. In addition, we study if and how the presence of an institution alters prosocial preferences and beliefs about others' behavior. Groups play two identical public good games, with one game potentially governed by an institution enforcing cooperation. We vary whether the institution is absent, imposed exogenously, or arises endogenously through voting by group members. We find that the presence of an institution in one game generally enhances cooperation in the other game. However, cooperation boosted by an exogenously imposed institution nevertheless decays over time, while the endogenously determined institution leads to stable spillover effects on voluntary cooperation levels. We also find that the presence of an institution strengthens beliefs about others' prosocial behavior and enhances prosocial preferences even towards strangers.
Christina Rott (with Orsola Garofalo)
Don't shoot the messenger! Experimental evidence on delegation of communication
Abstract: In organizations and institutions, decision-makers frequently let a spokesperson communicate their choices to those affected. How does the separation between making and communicating a choice affect fairness and reactions to harsh decisions? We conduct a laboratory experiment in which a decision-maker allocates a fair or unfair amount of money to herself, two receivers, and a third party. Either the decision-maker or the third party, i.e. the spokesperson, communicates the allocation chosen to the receivers, who then decide whether to punish or not. Receivers can punish in two different ways. In the aligned punishment, receivers are forced to target the decision-maker and spokesperson with the same amount of punishment, whereas in the independent punishment they are free to decide whom to punish. The percep-tion of the delegation of communication and content seems to depend strongly on the punishment form imposed. Decision-makers choose more often the unfair allocation when pun-ishment is aligned as opposed to independent, but in both cases, decision-makers who choose the unfair allocation are more likely to delegate the communication to the spokesperson. With independent punishment, receivers punish the decision-maker and the spokesperson more when the latter communicates the unfair allocation decision. That is because the spokesperson expresses more often "regret" than "need" with respect to decision-makers, which receivers seem to perceive as an attempt of shifting blame.
Eyewitness identifications: One of the worst or best tool of the justice system?
Abstract: In the history of eyewitness evidence, public opinion and legal practitioners have extolled it as the very best tool of the justice system but also rejected it as the very worst. Using a case example, we will investigate factors that can impact eyewitness identification performance and measures that can help witnesses to give reliable testimony. The role of the psychologist as an expert witness advising the courts in identification cases as well as pitfalls in the legal decision making process will be discussed.
Linking behavioral utility and neural subjective value in decision-making under risk.
Abstract: Uncertainty pervades our daily lives and requires people to balance their preferences for larger outcomes with the likelihood of obtaining these outcomes. Two theoretical approaches compete for explaining how decision makers compute "utility" and how brains assign subjective values to risky options during value-based decisions. One approach, developed by behavioral ecology and finance, suggests that subjective values are computed on the basis of summary statistics such as the mean, variance, and skewness of the outcome distributions. The other approach, developed by economics and psychology, suggests that subjective values are computed by adding together subjective outcome values which have been weighted by their objective probabilities (expected utility) or subjectively distorted probabilities (prospect theory). Behavioral neuroscience studies using one or the other approach report substantial evidence for both approaches. Surprisingly, however, we largely lack direct comparison of the two approaches, even though it is well-known that higher-level descriptive models of behavior do not necessarily reflect the underlying computational processes in the brain. Here, we show that both approaches identify the same brain regions as encoding subjective value. However, Bayesian model comparison reveals that the summary statistics approach from behavioral ecology and finance is best at explaining the activity of value-coding regions, even in the subjects whose choice behavior is best explained by the approach from economics and psychology. Our results demonstrate that "utility" inferred from choice behavior and "subjective value" in the brain are correlated but generated by different processes. While economic theory provides a useful normative framework for the neurobiology of value-based decision-making, behavioral ecology appears to provide more accurate models of subjective value in the brain. Our study highlights the need to move away from finding neural and behavioral correlates of a single approach and towards direct comparison of competing approaches.