Experimental Economics sessions at Stanford (SITE) this summer

Here's the preliminary program for this summer's experimental economics at Stanford. 

Session 13: Experimental Economics

Thu, Aug 22 2024, 8:00am - Fri, Aug 23 2024, 5:00pm PDT

John A. and Cynthia Fry Gunn Building, 366 Galvez Street, Stanford, CA 94035

ORGANIZED BY

Christine Exley, University of Michigan

Judd Kessler, University of Pennsylvania

Muriel Niederle, Stanford University

Alvin Roth, Stanford University

Lise Vesterlund, University of Pittsburgh

This workshop will be dedicated to advances in experimental economics combining laboratory and field-experimental methodologies with theoretical and psychological insights on decision-making, strategic interaction and policy. We would invite papers in lab experiments, field experiments and their combination that test theory, demonstrate the importance of psychological phenomena, and explore social and policy issues. In addition to senior faculty members, invited presenters will include junior faculty as well as graduate students.

Thursday, August 22, 2024

9:30 AM - 10:00 AM PDT

Check-In & Breakfast

10:00 AM - 10:30 AM PDT

Flexible Pay and Labor Supply: Evidence from Uber’s Instant Pay

Presented by: Keith Chen (University of California, Los Angeles)

Co-author(s): Katherine Feinerman (University of California, Los Angeles) and Kareem Haggag (University of California, Los Angeles)

Modern tech platforms provide workers real-time control over when they work, and increasingly, flexible pay: the option to be paid immediately after work. We investigate the labor supply effects of pay flexibility and the implications of present-biased preferences among gig-economy workers. Using granular data from a nationwide randomized controlled trial at Uber, we estimate the effects of switching from a fixed weekly pay schedule to Instant Pay, a system that allows on-demand, within-day withdrawals. We find that flexible pay substantially increased both drivers’ work time and earnings (ITT 2%; TOT: 18-37%). Furthermore, the response is significantly higher when drivers are further away from the end of their counterfactual weekly pay cycle, aligning with predictions of hyperbolic discounting models. We discuss welfare and broader implications in contexts in which workers have the ability to flexibly supply labor.

10:30 AM - 10:45 AM PDT

Eviction as Bargaining Failure: Hostility and Misperceptions in the Rental Housing Market

Presented by: Charlie Rafkin (Massachusetts Institute of Technology)

Co-author(s): Evan Soltas (Massachusetts Institute of Technology)

Court evictions from rental housing are common but could be avoided if landlords and tenants bargained instead. Such evictions are inefficient if they are costlier than bargaining. We test for two potential causes of inefficient eviction — hostile social preferences and misperceptions — by conducting lab-in-the-field experiments in Memphis, Tennessee with 1,808 tenants at risk of eviction and 371 landlords of at-risk tenants. We detect heterogeneous social preferences: 24% of tenants and 15% of landlords exhibit hostility, giving up money to hurt the other in real-stakes Dictator Games, yet more than 50% of both are highly altruistic. Both parties misperceive court or bargaining payoffs in ways that undermine bargaining. Motivated by the possibility of inefficient eviction, we evaluate the Emergency Rental Assistance Program, a prominent policy intervention, and find small impacts on eviction in an event-study design. To quantify the share of evictions that are inefficient, we estimate a bargaining model using the lab-in-the-field and event-study evidence. Due to hostile social preferences and misperceptions, one in four evictions results from inefficient bargaining failure. More than half would be inefficient without altruism. Social preferences weaken policy: participation in emergency rental assistance is selected on social preferences, which attenuates the program’s impacts despite the presence of inefficiency.

10:45 AM - 11:00 AM PDT

Workplace Hostility

Presented by: Manuela Collis (University of Toronto)

Co-author(s): Clémentine Van Effenterre (University of Toronto)

We conduct a choice experiment with 2,048 participants, recruited among upper-year students, recent graduates, and alums from a large public university, to understand how much individuals value a workplace free of hostility and whether this can be offset with hybrid or solo work arrangements. In the experiment, we ask respondents to choose between two job offers for thirteen distinct and realistic scenarios. Our experiment shows that people are willing to forgo a significant portion of their earnings to avoid hostile work environments—15 to 30 percent of their wage. Women report a stronger preference for inclusive workplaces and environments free of sexual harassment. We also find that women value hybrid work twice as much in the presence of sexual harassment and value teamwork more in non-inclusive environments. Based on these findings, we introduce a model of compensating differentials to understand how the presence of hostility shapes the demand for alternative work arrangements and to implement policy counterfactuals.

11:00 AM - 11:30 AM PDT  Coffee Break

11:30 AM - 12:00 PM PDT

Why Exclude Test Scores from Admission Decisions?

Presented by: Yucheng Liang (Carnegie Mellon University)

Co-author(s): Wenzhuo Xu (Carnegie Mellon University)

One major argument in support of test-optional and test-blind college admission policies is that standardized test scores inaccurately reflect students’ abilities and are biased against those with fewer resources. This argument goes against standard economic reasoning as information, even if noisy or biased, never has negative value. In an experiment, we show that participants responsible for admitting students for an educational opportunity are indeed willing to exclude invalid or biased test scores from their admission criteria. This result is primarily driven by procedural fairness concerns and an underestimation of the scores’ usefulness. However, this underestimation can be mitigated through experience in making admission decisions both with and without these test scores.

12:00 PM - 12:30 PM PDT

Mechanism Design for Personalized Policy: A Field Experiment Incentivizing Exercise

Presented by: Rebecca Dizon-Ross (University of Chicago)

Co-author(s): Ariel Zucker(University of California, Santa Cruz)

Personalizing policies can theoretically increase their effectiveness. However, personalization is difficult when individual types are unobservable and the preferences of policymakers and individuals are not aligned, which could cause individuals to mis-report their type. Mechanism design offers a strategy to overcome this issue: offer a menu of policy choices, and make it incentive-compatible for participants to choose the “right” variant. Using a field experiment that personalized incentives for exercise among 6,800 adults with diabetes and hypertension in urban India, we show that personalizing with an incentive-compatible choice menu substantially improves program performance, increasing the treatment e↵ect of incentives on exercise by 80% with-out increasing program costs relative to a one-size-fits-all benchmark. Personalizing with mechanism design also performs well relative to another potential strategy for personalization: assigning policy variants based on observables.

2:00 PM - 2:30 PM PDT

What Money Shouldn’t Buy: Aversion to Monetary Incentives for Health Behaviors

Presented by: Florian H. Schneider (University of Copenhagen)

Co-author(s): Pol Campos-Mercade (Lund University and Institute for Future Studies), Armando Meier (University of Basel) and Roberto A. Weber (University of Zurich)

We study attitudes towards offering monetary payments for health behaviors, aiming to understand how such attitudes may influence the use of monetary incentives as a policy instrument. We develop the Policy Lab, an experimental paradigm in which participants decide whether to provide a set of others with monetary incentives for vaccination. In two studies with representative samples of the Swedish population (N=2,010) and one with Swedish policymakers (N=2,008), a majority of participants oppose using direct financial incentives. Despite the widespread perception that such incentives are an effective policy instrument, opposition to their use is driven by perceptions that they are coercive and unethical. Policymakers are, if anything, slightly more opposed to the use of direct financial incentives. We also document that opposition to incentives extends beyond vaccination to other health domains. Our findings suggest that public opposition to the use of monetary incentives as a policy instrument may create barriers to their adoption.

2:30 PM - 3:00 PM PDT

Goals, Expectations, and Performance

Presented by: Alexandra Steiny Wellsjo (University of California, San Diego)

Co-author(s): Avner Strulov-Shlain (University of Chicago)

People and organizations often set goals to self-motivate and achieve better outcomes in challenging tasks. But goals, and their effectiveness, might depend on what people expect to happen. Do goals reflect expectations or do goals set expectations? How do goals and expectations affect performance? We run an online real-effort task to answer these two questions by introducing exogenous variation in goals and expectations. First, we find that goals mostly reflect expectations rather than affect them. Second, practicing an easier version of a task leads to higher expectations and higher performance. Eliciting a goal leads to higher performance as well. However, controlling for expectations, changing the difficulty of the goal has no discernible effect. These results suggest that people should come in optimistic and set a goal, but they cannot fool themselves into expecting and doing more simply by choosing a higher goal.

3:00 PM - 3:30 PM PDT

Coffee Break

3:30 PM - 4:00 PM PDT

Understanding Expert Choices Using Decision Time

Presented by: Stefano DellaVigna (University of California, Berkeley)

Co-author(s): David Card (University of California, Berkeley), Chenxi Jiang (University of California, Berkeley), and Dmitry Taubinsky (University of California, Berkeley)

Laboratory experiments find a robust relationship between decision times and perceived values of alternatives. This paper investigates how these findings translate to experts’ decision making and information acquisition in the field. In a stylized model of expert choice between two alternatives, we show that (i) less-commonly chosen al- ternatives are more likely to be chosen later than earlier; (ii) decision time is higher when the likelihood of choosing each alternative is closer to fifty percent; and (iii) the ultimate quality of the chosen alternative may increase or decrease with decision time, depending on whether earlier or later signals are more informative. We test these pre-dictions in the editorial setting, where we observe proxies for paper quality and signals available to editors. We document that (i) the probability of a positive decision rises with decision time; (ii) average decision time is higher when our estimated probability of a positive decision is closer to fifty percent; and (iii) paper quality is positively (negatively) related to decision time for papers with Reject (R&R) decisions. Structural estimates show that the additional information acquired in editorial delays is modest, and has little impact on the quality of decisions.

4:00 PM - 4:15 PM PDT

Choosing Between Information Bundles

Presented by: Menglong Guan (Penn State University)

This paper presents an experimental study on how people choose sets of information sources (referred to as information bundles). The findings reveal that subjects frequently fail to choose the more instrumentally valuable bundle in binary choices, largely due to the challenge of integrating the information sources within a bundle to identify their joint information content. The mistakes in choices can not be attributed to an inability to use information bundles. Instead, these mistakes are strongly ex-plained by subjects’ tendency to follow a simple but imperfect heuristic when valuing them, which I call “common source cancellation (CSC)”. The heuristic causes subjects to mistakenly disregard the common information source in two bundles and focus solely on the comparison of the sources that the two bundles do not share. As a result, choices between information bundles are made without adequately considering the joint information content of each bundle. Notably, CSC emerges as a robust explanation for the information bundle choices for all subjects, including those who make perfect use of information bundles to make inferences.

4:15 PM - 4:30 PM PDT

Persuasion through Simulation

Presented by: John J. Conlon (Stanford University)

Co-author(s): Spencer Y. Kwon (Brown University)

We describe and experimentally test a model where an agent facing a complex decision forms beliefs by sampling or “simulating” relevant scenarios. Crucially, simulation is subject to cuing: scenarios similar to the agent’s current context are more easily simulated, and a persuader can manipulate the agents’ beliefs by altering this context. Even objectively uninformative messages simply highlighting known scenarios can be persuasive if they facilitate simulation of otherwise neglected scenarios. Experimentally, participants’ beliefs (about a lottery outcome and about others’ actions in a dictator game) are highly susceptible to such persuasion through simulation. We then study a consumer choice setting where a firm can cue its potential customers with particular scenarios and designs products with such “advertising” in mind. The firm chooses to highlight a single most compelling scenario and produces excessively “specialized” goods, with utility concentrated in scenarios its ads target. When the firm produces multiple goods, it additionally needs to consider how their ads cue each other. This force generates endogenous brands: products that the firm chooses to associate or dissociate depending on which scenarios it wants its consumers to simulate.

Friday, August 23, 2024

10:00 AM - 10:30 AM PDT

Who You Gonna Call? Gender Inequality in External Demand For Parental Involvement

Presented by: Olga Stoddard (Brigham Young University)

Co-author(s): Kristy Buzard (Syracuse University) and Laura K. Gee (Tufts University)

Gender imbalance in time spent on children causes labor market gender inequalities. We investigate a novel source of this inequality: external demands for parental involvement. We pair a theoretical model with a large-scale field experiment with a near-universe of US schools. Schools receive an email from a two-parent household and are asked to contact one parent. Mothers are 1.4 times more likely than fathers to be contacted. We decompose this inequality into discrimination stemming from differential beliefs about parents’ responsiveness versus other factors, including gender norms. Our findings underscore how agents outside the household contribute to gender inequalities.

10:30 AM - 11:00 AM PDT

Precautionary Debt Capacity

Presented by: Olivia Kim (Harvard University)

Co-author(s): Deniz Aydin (Washington University in St. Louis)

Firms with ample financial slack are unconstrained... or are they? In a field experiment that randomly expands debt capacity on business credit lines, treated small-and-medium enterprises (SMEs) draw down 35 cents on the dollar of expanded debt capacity in the short-run and 55 cents in the long-run despite having debt levels far below their borrowing limit before the intervention. SMEs direct new borrowing to financing investment gradually over time and do not exhibit a measurable impact on delinquencies. Heterogeneity analysis by the risk of being at the credit line limit supports the SME motive to preserve financial flexibility.

11:00 AM - 11:30 AM PDT

Coffee Break

11:30 AM - 12:00 PM PDT

Pushing the Envelope: The Effects of Negotiating

Presented by: Zoë Cullen (Harvard University)

12:00 PM - 12:30 PM PDT

Gender Diversity Improves Academic Performance

Presented by: Xiaoyue Shan (National University of Singapore)

This paper uses a field experiment in a first-semester course at a Swiss university to examine the impact of gender diversity on academic performance. 2,580 students across six cohorts are randomly assigned into 645 study groups with varying gender composition. Results show that group gender diversity significantly raises students’ course performance, especially for men. Moving from homogeneous to gender-balanced groups increases course grade by about 15% standard deviations. Analyses of mechanisms reveal that diversity enhances peer-to-peer interaction and students’ mental health, self-esteem, self-confidence, and group satisfaction. Diversity appears to lower women’s study effort and leads them to hold significantly more traditional gender attitudes, which may have limited diversity’s impact on their performance. The findings of this paper highlight the value of gender diversity in improving student performance and well-being in higher education.

12:30 PM - 2:00 PM PDT  Lunch

2:00 PM - 2:30 PM PDT

Over- and Underreaction to Information

Presented by: Cuimin Ba (University of Pittsburgh)

Co-author(s): J. Aislinn Bohren (University of Pennslyvania) and Alex Imas (University of Chicago)

This paper explores the impact of the learning environment on how people react to information. We develop a model of belief-updating where people respond to complexity by forming a representation of the environment that channels attention to states that are most salient given the observed information. They then use this distorted representation to process the information using Bayes’ rule, subject to cognitive imprecision. The model predicts overreaction when environments are complex, signals are noisy, or priors are concentrated on less salient states; it predicts underreaction when environments are simple, signals are precise, or priors concentrated on salient states. Results from a series of pre-registered experiments provide support for these predictions and demonstrate their robustness across different learning environments and decision domains. We then provide evidence for the specific cognitive mechanisms by manipulating attention and salience directly. We also show that the proposed model is highly complete in capturing explainable variation in belief-updating; moreover, the interaction between psychological mechanisms is critical to explaining belief data in more complex settings. These results connect disparate findings in prior work: underreaction is typically found in laboratory studies, which feature simple learning settings, while overreaction is prevalent in financial markets, which feature more complex environments.

2:30 PM - 3:00 PM PDT

Numbers Tell, Words Sell

Presented by: Michael Thaler (University College London)

Co-author(s): Mattie Toma (University of Warwick) and Victor Yaneng Wang (University of Oxford)

3:00 PM - 3:30 PM PDT

Coffee Break

3:30 PM - 4:00 PM PDT

A competitive world

Presented by: Bertil Tungodden (NHH Norwegian School of Economics)

Co-author(s): Thomas Buser (University of Amsterdam), Alexander W. Cappelen (NHH Norwegian School of Economics), and Uri Gneezy (University of California, San Diego)

We elicit willingness to compete in large and representative samples in 62 countries covering all continents. We also shed light on the socialization of boys and girls around the globe by eliciting the importance adults attach to boys’ and girls’ willingness to compete. Globally, a clear majority of people are willing to compete against others and find it important that children are willing to compete. Nevertheless, the shares vary strongly across countries and we show that this variation is correlated with inequality: people in more unequal countries are more competitive and find it more important that children are willing to compete. We also document some near-universal patterns that replicate the main findings of the competitiveness literature at a global scale: in all but one country, men are more competitive than women, and in the vast majority of countries willingness to compete is positively associated with income and level of education. Despite the near-universal gender gap in competitiveness among adults, people in many – mostly Western – countries place greater importance on girls’ than boys’ willingness to compete.

4:00 PM - 4:15 PM PDT

Breaking the Spiral of Silence

Presented by: Yihong Huang (Harvard University)

Co-author(s): Yuen Ho (University of California, Berkeley)

The Spiral of Silence theory plays a crucial role in contemporary political discourse. According to this idea, people who hold views perceived as socially inappropriate tend to self-censor, generating a distribution of expressed views that is skewed towards appropriate opinions. If the attention paid to silence is limited, this can exacerbate self-censorship and create an equilibrium where only socially appropriate views are expressed and considered dominant. We experimentally test this hypothesis based on a simple model in which self-censorship and limited attention to silence interact to jointly establish equilibrium norms. In our experiment, UC Berkeley undergraduates discuss controversial political and socioeconomic issues. Students with socially inappropriate views self-censor to a significant degree. Given the limited attention students pay to silence, self-censorship amplifies over time. We experimentally increase the salience of silence, and show that this affects both beliefs about others’ views and public expression decisions. Because inference and expression amplify each other, different levels of attention to silence can produce divergent perceived social norms in equilibrium.

4:15 PM - 4:30 PM PDT

Social Media and Job Market Success: A Field Experiment on Twitter

Presented by: Jingyi Qiu (University of Michigan)

Co-author(s): Yan Chen (University of Michigan), Alain Cohn (University of Michigan), and Alvin Roth (Stanford University)

We conducted a field experiment on Twitter to examine how social media promotion affects job market outcomes in economics. We tweeted 519 candidates’ job market papers from our research account and randomly assigned half of these tweets to be quote-tweeted by prominent economists in their fields. We find that the quote-tweeted papers received 442% more views and 303% more likes on Twitter. Further- more, treatment group candidates received one more flyout, whereas treatment group women received 0.9 more job offers. Our results suggest that social media promotion can improve the visibility and success of job market candidates, especially women.