Economics: Research Guide

We study the association of the perseverance-of-effort (PoE) and the consistency-of-interests (CoI) components of the psychological measure of grit, with economic measures of impatience and decreasing impatience (time inconsistency), respectively, in the general population. We find that impatience is associated with grit through the PoE component. No association of time inconsistency with grit is found. Predicting participants’ financial and health outcomes and behaviors, we find that both impatience and grit are predictive for both outcomes, but this is not the case for time inconsistency. Our findings suggest that it can be beneficial for empirical studies of intertemporal decisions to i..

Punishment institutions for curtailing free-riding in social dilemmas rely on information about individuals’ behavior collected through monitoring. We contribute to the experimental study of cooperation-enhancing institutions by examining how cooperation and efficiency in a social dilemma change in response to varying how monitoring and punishment are jointly organized. Specifically, we evaluate - against a no-monitoring baseline - combinations of two imperfect monitoring regimes (cen-tralized vs. decentralized) and three punishment regimes (self- vs. peer- vs. del-egated punishment) in a repeated public goods game. As hypothesized, we find that delegated punishment outperforms other punis..

We study how the heterogeneity in responses to performance pay can be explained by personality traits. We utilize data from behavioral experiments and surveys on personality traits with physicians, medical students, and non-medical students. Performance pay is introduced at a within-subject level and complements either fee-for-service or capitation. We find that the payment system matters regarding the behavioral impact of personality traits. More conscientious and more agreeable individuals provide higher quality of care under capitation. Although performance pay further improves the quality, more conscientious and agreeable individuals respond less to capitation-based performance pay. Othe..

We present and conduct a novel experiment on a dynamic beauty contest game motivated by the canonical New-Keynesian model. Participants continuously provide forecasts for prices spanning multiple future periods. These forecasts determine the price for the current period and participants’ payoffs. Our findings are threefold. First, the observed prices in the experiment deviate more from the rational expectations equilibrium prices under strategic complementarity than under strategic substitution. Second, participants’ expectations respond to announcements of future shocks on average. Finally, participants employ heuristics in their forecasting; however, the choice of heuristic varies with..

Despite its importance, relatively little attention has been devoted to studying the effects of exposing individuals to digital choice interfaces. In two pre-registered lottery-choice experiments, we administer three information-search technologies that are based on well-known heuristics: in the ABS (alternative-based search) treatment, subjects explore outcomes and corresponding probabilities within lotteries; in the CBS (characteristic-based search) treatment, subjects explore outcomes and corresponding probabilities across lotteries; in the Baseline treatment, subjects view outcomes and corresponding probabilities all at once. We find that (i) when lottery outcomes comprise gains and loss..

How people recall the SARS-CoV2 pandemic is likely to prove crucial in future societal debates on pandemic preparedness and appropriate political action. Beyond simple forgetting, previous research suggests that recall may be distorted by strong motivations and anchoring perceptions on the current situation. Here, based on four studies across 11 countries (total N = 10, 776), we show that recall of perceived risk, trust in institutions and protective behaviours depended strongly on current evaluations. While both vaccinated and unvaccinated individuals were affected by this bias, people who identified strongly with their vaccination status — whether vaccinated or unvaccinated — tended to..

Healthy food choices are a canonical example used to illustrate the importance of time preferences in behavioral economics. However, the literature lacks a direct demonstration that they are well-predicted by incentivized time preference measures. We offer direct evidence by combining a novel, two-question, incentivized time preference measurement with data from a field experiment that includes grocery purchases and consumption. Our present-focus measure is highly predictive of food choice, capturing a number of behaviors consistent with self-control problems, which provides direct evidence for the common assumption that important aspects of nutrition are driven by time preferences.

We investigate how preferences have been affected by exposure to the COVID-19 crisis. Our main contributions are: first, our participant pool consists of a large general population sample; second, we elicited a wide range of preferences (risk, time, ambiguity, and social preferences) using different incentivized experimental tasks; third, we elicited preferences before the onset of the crises and in three additional waves during the crises over a time period of more than a year, allowing us to investigate both short-term and medium-term preference responses; fourth, besides the measurement of causal effects of the crisis, we also analyze within each wave during the crisis, how differential e..

We study whether money managers impose their risk preferences onto investments for clients paternalistically and whether they impose them more, the more their client’s risk preference differs from their own. We conduct an online experiment, where participants make an investment decision for themselves and on behalf of another participant (as money managers). When investing for another (the client), we use the strategy method to elicit decisions for every possible investment the other participant could have made for their own payoff, such that money managers have complete information of their client’s risk preference. With this, we systematically manipulate the difference in risk preferen..

Worrisome topics, such as climate change, economic crises, or the COVID-19 pandemic are increasingly present and pervasive because of digital media and social networks. Do worries triggered by such topics affect the cognitive capacities of the youth? In an online experiment during the COVID-19 pandemic (N=1503), we test how the cognitive performance of university students responds when exposed to topics discussing current mental health issues related to social restrictions or future labor market uncertainties linked to the economic contraction. Moreover, we study how such response is affected by a performance goal. We find that the labor market topic increases cognitive performance when the ..

Predictive coding (PC) is a theory in cognitive/computational neuroscience which explains cortical functions with a hierarchical process of minimising prediction errors. It provides a neuronal scheme for implementing Bayesian inference in the brain to recover the hidden state of the world from sensory input (passive inference) and to select actions to reach the goals the agent has (active inference). Since its discovery, predictive coding has been found to be a unifying theory explaining more and more cognitive functions, including perception, attention, and action planning. In this literature thesis, I review and discuss how PC can be used also as a powerful tool to understand working memor..

An increasingly common phenomenon in modern work and school settings is individuals taking on too many tasks and spending effort without commensurate rewards. Such an imbalance of efforts and rewards leads to myriad negative consequences, such as burnout, anxiety, and disease. Here, we develop a model to explain how such effort-reward imbalances can come about as a result of biased social learning dynamics. Our model is based on a phenomenon that on some US college campuses is called "the floating duck syndrome." This phrase refers to the social pressure on individuals to advertise their successes but hide the struggles and the effort put in to achieve them. We show that a bias against revea..

We report novel results from changes in the marginal per capita return (MPCR) in a oneshot public good game where participants make a single provision decision. Data was collected using three “data collection processes”: an online experiment conducted on Prolific, an online experiment conducted with a subject pool of university students, and an experiment implemented following the conventional procedures of the economic laboratory with university students. In three between-subject treatment conditions, we confront participants from each of these three samples with either a low MPCR of 0.4, a high MPCR of 0.8 holding constant the individual endowment, or a high MPCR of 0.8 reducing the in..

Artificial Intelligence (AI) increasingly becomes an indispensable advisor. New ethical concerns arise if AI persuades people to behave dishonestly. In an experiment, we study how AI advice (generated by a Natural-Language-Processing algorithm) affects (dis)honesty, compare it to equivalent human advice, and test whether transparency about advice source matters. We find that dishonesty-promoting advice increases dishonesty, whereas honesty-promoting advice does not increase honesty. This is the case for both AIand human advice. Algorithmic transparency, a commonly proposed policy to mitigate AI risks, does not affect behaviour. The findings mark the first steps towards managing AI advice res..

We study the age-dependent malleability of patience via educational interventions designed to foster financial decision-making capabilities and to induce a more future-oriented mindset. We conduct a field experiment covering both youths and adults in Uganda and aggregate evidence from earlier experiments to study the generalizability of effects. In our field experiment, we find heterogenous effects by age: adults' patience and discount factors are unaffected by the intervention after 15 months follow-up, but we observe large effects on patience and estimated discount factors and field saving behavior for youth. In the meta-analysis, we find that the results are generalizable across contexts.

Does mental accounting matter for total consumption expenditures? We exploit a unique setting in which individuals exogenously received a new credit card, without requesting one. Using random variation in the time of receipt we show that individuals temporarily increase total consumption expenditure by making purchases with the new card without reducing spending on the others. We do not observe a corresponding increase in indebtedness. Total consumption expenditure rises even for the least liquidity-constrained individuals. The evidence is consistent with consumers treating methods of payment as nonfungible budget categories, as suggested by models of mental accounting and narrow bracketing.

Consumer satisfaction and customer experience are key predictors of an organization’s future market growth, long-term customer loyalty, and profitability but are hard to maintain in marketplaces with abundance of choice. Building on self-determination theory, we experimentally test a novel intervention that leverages consumer need for autonomy. The intervention is a message called a “freedom cue” (FC) which makes it salient that consumers can “choose as much as they wish.” A 4-week field experiment in a sporting gear store establishes that FCs lead to greater consumer satisfaction compared to when the store displays no FC. A large (N = 669) preregistered process-tracing experiment ..

We investigate the problem of identifying incomplete preferences in the domain of uncertainty by proposing an incentive-compatible mechanism that bounds the behavior that can be rationalized by very general classes of complete preferences. Hence, choices that do not abide by the bounds indicate that the decision maker cannot rank the alternatives. Data collected from an experiment that implements the proposed mechanism indicates that when choices cannot be rationalized by Subjective Expected Utility they are usually incompatible with general models of complete preferences. Moreover, behavior that is indicative of incomplete preferences is empirically associated with deliberate randomization.

This paper investigates how dictator giving varies by social context and worthiness of the recipient. We conduct lab-in-the-field experiments in Kamchatka, Russia, and Western Alaska, as well as a lab experiment with university students, in which we vary social distance and recipient characteristics across treatments. We ask what motivates individuals to share and whether offers from a dictator game, where dictators give from own-earnings, can tell us something more fundamental about social norms and sharing. Results indicate that subjects living in rural Indigenous communities, in both Russia and Alaska, who depend heavily on wild food harvests and possess strong sharing norms, are signific..

Many socially desirable actions are subject to risk and occur in situations where the others are not anonymous. Assessing whether lower subject-subject anonymity affects behavior when outcomes are risky is likely important but has not been studied in depth so far. Herein, we provide evidence on this issue. In a series of allocation tasks, all of them variations of the dictator game, we systematically vary the party who is exposed to risk and manipulate recipient anonymity by reducing the social and/or moral distance between the two parties. We propose a model that extends previous work by allowing not only for ex ante and ex post fairness but also for altruism. The model is consistent with o..

We study how cooperation in one-shot Public Goods Games with large group sizes is affected by the presence of a slight chance of severe adverse events. We find that cooperation is substantial, notwithstanding a low marginal return of contributions. The cooperation level is comparable to what is found in similar settings for small-sized groups. Furthermore, we find no appreciable effect of the threat of severe adverse events, whether their realization is independent across individuals, perfectly positively or negatively correlated. We conclude that cooperation in the Public Goods Game is unlikely to be affected by rare adverse events, independently of how risk is correlated across individuals..

Survey data is essential for marketing and scientific research. However, recent evidence suggests that men and women may underreport undesirable behavior to different degrees and for different motivations, making it difficult for marketers to trust consumer data. Two survey experiments were conducted to test priming effects aimed at minimizing social desirability bias, hypothesizing a gender difference in efficacy. Using digital piracy as an example of an underreported behavior, Study 1 shows that a positive cues condition, which is designed to provide respondents with convenient rationalizations, increases undesirable behavior reporting. Negative primes have a greater inhibitory effect on m..

We present novel evidence from a large panel of UK consumers who receive personalized reminders from a specialist price-comparison website about the precise amount they could save by switching to their best-suited alternative mobile telephony plan. We document three phenomena. First, even self-registered consumers with positive savings exhibit inertia. Second, we show that being informed about potential savings has a positive and significant effect on switching. Third, controlling for savings, the effect of incurring overage payments is significant and similar in magnitude to the effect of savings: paying an amount that exceeds the recurrent monthly fee weighs more on the switching decision ..

We investigated lying as a collective‐risk social dilemma. Misreporting resulted in increased individual earnings but when total claims reached a certain threshold, all group members were at risk of collective sanction, regardless of their individual behavior. Due to selfishness and miscoordination, most individuals earned less than the reservation payoff from honest reporting in the group. However, preferences for truth‐telling lowered the risk of collective sanction in this setting compared to a social dilemma game in which players could make direct claims without lying. The risk of sanctions decreased with risk aversion and a smaller group size.

Artificial Intelligence (AI) increasingly becomes an indispensable advisor. New ethical concerns arise if AI persuades people to behave dishonestly. In an experiment, we study how AI advice (generated by a Natural-Language-processing algorithm) affects (dis)honesty, compare it to equivalent human advice, and test whether transparency about advice source matters. We find that dishonesty-promoting advice increases dishonesty, whereas honesty-promoting advice does not increase honesty. This is the case for both AI and human advice. Algorithmic transparency, a commonly proposed policy to mitigate AI risks, does not affect behaviour. The findings mark the first steps towards managing AI advice re..

Observed individual behavior in the presence of ambiguity shows insufficient responsiveness to changes in subjective likelihoods. Despite being integral to theoretical models and relevant in many domains, evidence on the causes and determining factors of such likelihood insensitive behavior is scarce. This paper investigates the role of beliefs in the form of ambiguity perception – the extent to which a decision-maker has difficulties assigning a single probability to each possible event – as a potential determinant. Using an experiment, I elicit measures of ambiguity perception and likelihood insensitivity and exogenously vary the level of perceived ambiguity. The results provide strong..

Using field and laboratory experiments, we demonstrate that the complexity of incentive schemes and worker bounded rationality can affect effort provision, by shrouding attributes of the incentives. In our setting, complexity leads workers to over-provide effort relative to a fully rational benchmark, and improves efficiency. We identify contract features, and facets of worker cognitive ability, that matter for shrouding. We find that even relatively small degrees of shrouding can cause large shifts in behavior. Our results illustrate important implications of complexity for designing and regulating workplace incentive contracts.

We analyze how the impact of image motives on behavior varies with two key features of the choice mechanism: single versus multiple decisions, and certainty versus uncertainty of consequences. Using direct elicitation (DE) versus multiple-price-list (MPL) or equivalently Becker-DeGroot-Marschak (BDM) schemes as exemplars, we characterize how image-seeking inflates prosocial giving. The signaling bias (relative to true preferences) is shown to depend on the interaction between elicitation method and visibility level: it is greater under DE for low image concerns, and greater under MPL/BDM for high ones. We experimentally test the model’s predictions and find the predicted crossing effect.

$S$ equilibrium synthesizes a century of game-theoretic modeling. $S$-beliefs determine choices as in the refinement literature and level-$k$, without anchoring on Nash equilibrium or imposing ad hoc belief formation. $S$-choices allow for mistakes as in QRE, without imposing rational expectations. $S$ equilibrium is explicitly set-valued to avoid the common practice of selecting the best prediction from an implicitly defined set of unknown, and unaccounted for, size. $S$-equilibrium sets vary with a complexity parameter, offering a trade-off between accuracy and precision unlike in $M$ equilibrium. Simple "areametrics" determine the model's parameter and show that choice sets with a relativ..

Dark personality traits have been linked to behaviors commonly understood as unethical, such as fraud, bribe-taking, and marital infidelity. Presumably, more "light" personality traits may be associated with lesser tendencies to be unethical, but many individuals also possess both light and dark trait characteristics. This paper reports results from a preregistered study of over 2400 participants who completed validated short-form personality instruments to assess dark and light personality trait measures—the dark tetrad and a light "triad" of 3 personality dimensions were measured. Furthermore, participants completed 3 tasks of interest that contribute to an understanding or one's ethics:..