WORK IN PROGRESS
Arbitrage Or Narrow Bracketing?
On Using Money to Measure Discounting with James Andreoni, Mike Kuhn, Silvia Saccardo and Yang Yang
If experimental subjects arbitrage against market interest rates when making intertemporal allocations of cash, the data will reveal nothing about subjects' discounting, only uncovering subjects' market interest rates. If subjects instead frame choices narrowly, they will plan to spend cash rewards when received, implying cash has properties similar primary rewards. We test arbitrage directly by forcing all transactions with subjects to go exclusively through their financial institutions via instant electronic transfers. If subjects wish to arbitrage, this should make it as easy and salient as possible. Our evidence contradicts arbitrage, and finds evidence of present bias, supporting the view that money payments in experiments can be treated as a primary reward.
Because of you I did not give up - Peers effects in perseverance with Leonie Gerhards
Various empirical papers have shown that peers affect productivity and behavior at work. In the present experiment we focus on one specific mechanism. We consider a situation in which individuals look at their peers' behavior to motivate themselves to endure in a task that requires perseverance. We find that peers increase their observers' perseverance, while being observed does not significantly alter behavior. In a second experiment we investigate (i) the motives to self-select into the role of an observing subject or that of a subject that is observed and (ii) which kind of peers individuals deliberately choose. Our findings provide first insights into the perception of peer situations and offer new empirical evidence on how peer groups emerge.
When nudges aren’t enough – A large scale field experiment on promoting public transport with Linus Olsson Collentine
We conduct two large-scale RCT field studies to explore potential causal effects of behavioural and economically based changes in strengthening an informational message aimed at promoting use of public transport. Participants were measured on rate of interest in participating in a free trial period for public transport, use of public transport during the trial period and habit formation after ten weeks. The results showed that an increased economic incentive strengthened the effect of the informational message in participation rates and use of public transport, as well as led to a higher degree of habit formation. The economic incentive more than doubled conversion rates from sendout to habitual public transport use. An added descriptive norm had no effect whether formulated positively or negatively.
Attention, Information or Emotions? What drives the response to medical adherence reminders? with Kai Barron, Mette Trier Damgaar and Lisa Norrgren
In this study, we focus on the effect of a popular nudge - namely reminders - on increasing medication adherence for expectant, young mothers in South Africa. We develop a simple theoretical model which captures three mechanisms which could drive response behavior: 1) emotions, 2) limited attention and 3) lack of information. We test our model in a text-message based field experiment with 30,000 women across South Africa.
Beliefs and actions: How a shift in confidence affects choices with Kai Barron
Confidence is often seen as the key to success. Empirical evidence about whether such beliefs causally map into actions is, however, sparse. In this paper, we experimentally investigate the causal effect of an increase in confidence about one’s own ability on two central choices made by workers in the labor market: choosing between jobs with different incentive schemes, and the subsequent choice of how much effort to exert within the job. An increase in confidence leads to an increase in self-selection into uncertain ability-contingent payment schemes. This is detrimental for low ability workers. Policy implications are discussed.
Lack of Ability or Lack of Luck? Gender Differences in Reactions to Negative Feedback with Teodora Boneva
We conduct a laboratory experiment to investigate how individuals react to negative feedback depending on whether the feedback provided attributes failure to a lack of luck, effort or ability. We find large gender differences in reactions to negative feedback when failure is attributed to a lack of ability, but no gender differences when failure is attributed to a lack of luck or a lack of effort. When failure is attributed to a lack of ability, women internalize the feedback and are less likely to compete in the next round, while men show the opposite reaction and start competing more.
Green nudges as policy instrument with Fredrik Carlsson, Olof Johansson-Stenman and Verena Kurz (R&R at Review of Environmental Economics and Policy)
This paper provides an overview of the policy instrument green nudges, i.e., nudges that are used with the purpose to reduce environmental externalities, in contrast to the predominant perspective of nudges as devices to combat internalities, i.e., to help people making good choices for themselves. We analyze both cognitive green nudges, meaning nudges that affect individual choices without directly affecting their experienced utility and moral green nudges where people’s choices are affected by strengthening individual moral norms. The review of existing empirical studies reveals that green nudges can have a large impact on behavior, and hence also for the environment and that such effects are expected to be larger in some contexts than in others. In the policy discussion, drawing on both the empirical overview and basic welfare-economic models, it is emphasized that while green nudges seem to have a large potential, they offer no panacea for solving environmental problems. They should instead be seen as a policy instrument among others in the regulator’s toolbox. In particular, the section discusses the potential role of nudging in the case that environmental externalities can be dealt with using optimal Pigovian taxes or if not. The role for nudging is larger where such taxes are not available or feasible.
Peer Evaluation in Tournaments with Martin Dufwenberg and Katja Görlitz
We want to win, but we also care about our reputation. We conduct a psychological game-theoretic analysis of the tradeoff between increasing ones chances of winning a tournament and not being identified as a cheater by fellow contestants. We extend the model by Dufwenberg & Dufwenberg (2018) on perceived cheating aversion to a multi-player setting with subjective performance evaluations. We then test the model predictions
in a lab experiment.