If I don't do it someone else will: markets and morals

 Here's a paper reporting an experiment that suggests that people are more willing to ignore the negative externalities they impose on others in a market in which they have little effect on quantities consumed. (They interpret this as being a moral question, hence the title.)

Ziegler, Andreas GB, Giorgia Romagnoli, and Theo Offerman. "Morals in multi-unit markets." Journal of the European Economic Association, Volume 22, Issue 5, October 2024, Pages 2225–2260, https://doi.org/10.1093/jeea/jvae001

"Abstract: We examine how the erosion of morals, norms, and norm compliance in markets depends on the market power of individual traders. Previously studied markets allow traders to exchange at most one unit and provide market power to individual traders by de-activating two forces: (i) the replacement logic, whereby immoral trading is justified by the belief that others would trade otherwise and (ii) market selection, by which the least moral trader determines aggregate quantities. In an experiment, we compare single-unit to (more common) multi-unit markets, which may activate these forces. Multi-unit markets, in contrast to single-unit markets, lead to a complete erosion of morals. This is associated primarily with a deterioration in norm compliance: the observed level of immoral trade is in contrast with the prevailing social norm. The replacement logic is the main mechanism driving this finding.

HT: Stephanie Wang

Income inequality, risk, and repugnance by Hauge, Kverndokk, and Lange

Two recent papers by  Karen Hauge, Snorre Kverndokk, and Andreas Lange report on the roles played by inequality and risk in causing repugnance to markets.

First, an experiment, motivated by a hypothetical market in kidneys (expressed in abstract terms), that finds that income inequality boosts repugnance to trade.

Hauge, Karen E., Snorre Kverndokk, and Andreas Lange. "Opposition to markets: Experimental evidence." Journal of Economic Behavior & Organization 227 (2024): 106743.

Abstract: We experimentally investigate reasons for opposing market institutions. The experiment shows that opposition to implementing market institutions varies by background characteristics and shows that distributional concerns are a reason for opposing trade institutions. We find no evidence that the opposition to trade is due to risk preferences or paternalistic motives. A main driver of the opposition to trade is the information about background conditions: veils of uncertainty increase the support for the trade institution.

"This paper reports experimental evidence to better understand potential opposition to market institutions, i.e. for allowing people to trade. For this, we abstract from repugnancy concerns that relate to the specific characteristics of the good or service in question, and rather reduces the setting to the payoff dimension and thus the involved risks and distributional concerns. While we use a neutral framing, organ trade, in particular, trade in kidneys, inspires the set-up of the experiment. Trading kidneys for payment is illegal worldwide, apart from in Iran.1 While it is obvious that persons with kidney issues would substantially benefit from a transplant, healthy donors expose themselves to risk (e.g., Lentine and Patel 2012). Currently, there is not a large income gap between donors and recipients in the US (Gill et al., 2012). Nevertheless, studies suggest that - at a given price - the poor would have larger incentives to donate and therefore, are more exposed to potential risks (Moniruzzaman, 2012; Parada-Contzen and Vásquez-Lavín, 2019) and thus potentially more vulnerable in terms of Satz (2010).2 To illustrate this in the experiment, we vary both the initial income of players (rich/poor) as well as their condition (healthy/sick) which combined affect their potential prospects with and without trade. 

...

"In our experiment, a share of 20 % of respondents across all treatments oppose the trade institution although it is constructed such that personal expected payoff is unaffected or improved. We find that the major reasons individuals vote against trade are the unfair distributions of gains from trade. Importantly, the opposition towards trade is partly self-serving: opposition is lower among those that benefit the most from implementing a market institution. Specifically, we find a significantly smaller opposition to trade institutions when participants are behind the veil of ignorance and do not know their income level, their (abstractly defined) health condition, and thus, how trade affects their payoff. Similarly, we find that distributing gains from trade more evenly, thus benefiting the poor to a larger extent, reduces opposition to trade among the poor."

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And here's a related survey study:

Hauge, Karen Evelyn, Snorre Kverndokk, and Andreas Lange. "On the opposition to market institutions on moral grounds." Humanities and Social Sciences Communications 11, no. 1 (2024): 1-8.

Abstract

"From a liberal viewpoint, voluntary trade appears to be something that should meet universal approval. If no one is obliged to trade, establishing a market institution could only make all better off. Nonetheless, specific market institutions meet substantial skepticism and criticism. This paper extends the extant literature by surveying the moral opposition towards trade in multiple dimensions and linking this to policy support measures. We provide survey results on moral opposition to trade in organs, sex services, surrogate mothers, trade in carbon permits, goods produced in poor countries, and food from countries where people suffer from hunger. These cover the potential reasons for opposing trade institutions: moral concerns, paternalism regarding risk-taking, and distributional concerns. Beyond this, we measure support for policies on unemployment benefits, risk prevention, equality goals within society, and redistribution. The survey of Amazon Mechanical Turk workers from the U.S. reveals significant moral opposition to trade in diverse dimensions. About a third of the participants strongly oppose trade in body items, sex services, and food imports from countries where a large proportion of the population suffers from hunger and malnutrition. Fewer participants strongly oppose trading CO2 permits, importing from developing countries, or allowing surrogate mothership. Besides other correlates (e.g., gender, education, being conservative), individuals’ attitudes towards imposing risks on others are identified as an important correlate of the opposition to trade for all the contexts of trade: those who are averse to exposing others to risk for their own advantage are more likely to oppose trading institutions. This measure of social preferences also relates to support for policies on risk prevention, equality goals within society, and redistribution. We discuss potential mechanisms behind this explanatory power of the newly identified measure."

Behavioral market design (in the JEP)

 The Fall 2024 Journal of Economic Perspectives has three papers on behavioral market design:

Symposium: Behavioral Incentive Compatibility

6.	Evaluating Behavioral Incentive Compatibility: Insights from Experiments
	David Danz, Lise Vesterlund, and Alistair J. Wilson
	Full-Text PDF | Additional Information

 

Incentive compatibility is core to mechanism design. The success of auctions, matching algorithms, and voting systems all hinge on the ability to select incentives that make it in the individual's interest to reveal their type. But how do we test whether a mechanism that is designed to be incentive compatible is actually so in practice, particularly when faced with boundedly rational agents with nonstandard preferences? We review the many experimental tests that have been designed to assess behavioral incentive compatibility, separating them into two categories: indirect tests that evaluate behavior within the mechanism, and direct tests that assess how participants respond to the mechanism's incentives. Using belief elicitation as a running example, we show that the most popular elicitations are not behaviorally incentive compatible. In fact, the incentives used under these elicitations discourage rather than encourage truthful revelation.

 

7.	Behavioral Incentive Compatibility and Empirically Informed Welfare Analysis: An Introductory Guide
	Alex Rees-Jones
	Full-Text PDF | Additional Information

A growing body of research conducts welfare analysis that assumes behavioral incentive compatibility—that is, that behavior is governed by pursuit of incentives conditional on modeled imperfections in decision-making. In this article, I present several successful examples of studies that apply this approach and I use them to illustrate guidance for pursuing this type of analysis.

 

8.	Designing Simple Mechanisms
	Shengwu Li
	Full-Text PDF | Additional Information

It matters whether real-world mechanisms are simple. If participants cannot see that a mechanism is incentive-compatible, they may refuse to participate or may behave in ways that undermine the mechanism. There are several ways to formalize what it means for a mechanism to be "simple." This essay explains three of them, and suggests directions for future research.

Regulation of Organ Transplantation and Procurement (Chan and Roth in the JPE)

 Here's a new paper (in final form, online ahead of print) on how organ transplants are regulated.  The paper uses an experiment to make several points about the design of current regulations.  One of them is that transplant centers are incentivized to be risk averse, since they are measured only by the outcomes of the transplants they perform, and not on the outcomes for patients they decline to transplant (so they are reluctant to transplant risky kidneys or risky patients).

Regulation of Organ Transplantation and Procurement: A Market-Design Lab Experiment by Alex Chan and Alvin E. Roth, Journal of Political Economy, online ahead-of-print .

 Abstract: We conduct a lab experiment that shows that current rules regulating transplant centers (TCs) and organ-procurement organizations (OPOs) create perverse incentives that inefficiently reduce both organ recovery and beneficial transplantations. We model the decision environment with a two-player multiround game between an OPO and a TC. In the condition that simulates current rules, OPOs recover only the highest-quality kidneys and forgo valuable recovery opportunities, and TCs decline some beneficial transplants. Alternative regulations that reward TCs and OPOs together for health outcomes in their entire patient pool lead to behaviors that increase organ recovery and appropriate transplants.

Here's what transplants look like in our experimental environment:

And our results are robust to big changes in parameters:

Stanford celebrates Susan Athey

 This  from Stanford Report:

What motivates Susan Athey. The economist weighs in on incremental innovation, data-driven impact, and how economics is evolving to include a healthy dose of engineering. 

"Today, Athey, the Economics of Technology Professor at Stanford GSB, is using her expertise to promote the public good. In 2019, she founded the Golub Capital Social Impact Lab, which uses digital technology and social science research to improve the effectiveness of social sector organizations.

...

"For more than a decade, Athey’s professional passions have been linked to their potential for impact. She chose to return to Stanford — after six years teaching at Harvard — because of the opportunity for cross-disciplinary collaboration. And she has helped make such collaboration possible. In 2019, she was a founding associate director of the Stanford University Human-Centered Artificial Intelligence Institute. She is also a leader of the Business and Beneficial Technology pillar within Stanford GSB’s newly launched Business, Government, & Society Initiative, which brings together academics, practitioners, and policymakers to address issues such as technology, free markets, and sustainability.

"Athey’s Golub Capital Social Impact Lab epitomizes interdisciplinary work, putting students from computer science, engineering, education, and economics backgrounds to work helping partner organizations leverage digital tools and expertise that are generally only available to — or affordable for — large technology companies.

“I like building things that demonstrate how a class of problems can be solved,” Athey says. “If there is a problem worth solving, and I can solve it myself in a particular case, I know there are other people like me who are going to encounter the same problem. Part of the motivation and theory of change of the lab is that we will solve particular problems for particular social-impact organizations but also create the research that will guide others in solving similar problems.”

...

"Athey says some parts of economics are evolving to include a healthy dose of engineering. In the Microsoft Research interview, she described stereotypical economics research as evaluating existing programs and often finding that “stuff doesn’t work.”

“There’s a lot of negativity,” she says. With help from data and machine learning techniques, “my prediction is that economists are going to become more [like] engineers. Instead of complaining that nothing works, we’re going to start building things that do work to achieve economic outcomes…. We’re going to realize that nothing works if it’s one size fits all, but that a lot of things work if they are actually personalized and appropriately delivered.”

Incentives matter for getting participation in clinical trials by low income households

 Here's a study that casts some light (via a randomized experiment) on the importance of incentives to get representative participation in clinical trials.

Nonrepresentativeness in Population Health Research: Evidence from a COVID-19 Antibody Study By Deniz Dutz, Michael Greenstone, Ali Hortaçsu, Santiago Lacouture, Magne Mogstad, Azeem M. Shaikh, Alexander Torgovitsky, and Winnie van Dijk, AER: Insights 2024, 6(3): 313–323, https://doi.org/10.1257/aeri.20230195

Abstract: "We analyze representativeness in a COVID-19 serological study with randomized participation incentives. We find large participation gaps by race and income when incentives are lower. High incentives increase participation rates for all groups but increase them more among underrepresented groups. High incentives restore representativeness on race and income and also on health variables likely to be correlated with seropositivity, such as the uninsured rate, hospitalization rates, and an aggregate COVID-19 risk index."

"We analyze representativeness in a unique COVID-19 serological study. Unlike most studies, the Representative Community Survey Project (RECOVER)COVID-19 serological study experimentally varied financial incentives for participation. The study was conducted on households in Chicago (the target population). Randomly sampled households were sent a package that contained a self-administered blood sample collection kit and were asked to return the sample by mail to be tested for the presence of COVID-19 antibodies (“seropositivity”). Households in the sample were randomly assigned one of three levels of financial compensation for participating in the study: $0, $100, or $500.

"We find that households in neighborhoods with high shares of minority and poor households are grossly underrepresented at lower incentive levels. High incentives increase participation rates for all groups but increase them more among underrepresented groups. A $500 incentive restores representativeness in terms of neighborhood-level race and poverty status. Representativeness is also restored in health variables likely to be correlated with seropositivity, such as the uninsured rate, hospitalization rates, and an aggregate COVID-19 risk index. Since incentives were randomly assigned and only revealed after the household was contacted, the noncontact rates at $0 and $100 should be the same as at $500, implying that differential hesitancy to participate is responsible for much of the nonrepresentativeness that we find at lower incentives.

"We are not aware of studies that randomize financial incentives in population health studies. It is well appreciated that racial minorities and lower-income households participate in health research at lower rates.1  The impact of incentives on survey participation rates conditional on demographic characteristics has been studied in the survey methodology literature (see Groves et al. 2009; Singer and Ye 2013, and references therein). The incentives used in this literature are typically an order of magnitude smaller than the incentives in the RECOVER study."

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Some earlier related posts:

Monday, February 22, 2021

Ethical Payment in Human Infection Challenge Studies in the American Journal of Bioethics

Monday, March 1, 2021

Compensating challenge vaccine trial participants: further discussion in the American Journal of Bioethics

Thursday, October 29, 2020

Paying participants in challenge trials of Covid-19 vaccines, by Ambuehl, Ockenfels, and Roth

"we note that increasing hourly pay by a risk-compensation percentage as proposed in the target article provides compensation proportional to risk only if the risk increases proportionally with the number of hours worked. (Some risky tasks take little time; imagine challenge trials to test bulletproof vests.) "

Sunday, November 1, 2020

What do we know about the effects of payments to participants in challenge trials for vaccines, and other public spirited activities?

Designing Complex Experiments, by Susan Athey and Guido Imbens

 Here's a tantalizing set of slides about online experiments

Designing Complex Experiments: Some Recent Developments SUSAN ATHEY AND GUIDO IMBENS

This is from the 

NBER Summer Institute 2024

SI 2024 Methods Lecture: New Developments in Experimental Design and Analysis

the above link contains pointers to background papers.

Danny Kahneman, remembered by Stanford's Center for Advanced Study in the Behavioral Sciences

 Daniel Kahneman, 1934-2024: Nobel Prize Winner & CASBS Legend

"Daniel Kahneman, the Nobel laureate, professor emeritus of psychology and public affairs at Princeton University, and among the most distinguished and consequential cognitive and behavioral scientists of the past half-century, passed away on March 27, 2024. He was 90.

"Daniel Kahneman was a CASBS fellow during the 1977-78 academic year, occupying office (called “studies” at CASBS) #6. (Notably, this remarkable class included two other future Nobel Prize winners – Oliver Williamson (2009) and Robert B. Wilson (2020) – as well as future Supreme Court Justice Ruth Bader Ginsburg.)

"Kahneman’s 1977-78 year is legendary for two reasons. First, it is here, at CASBS, where Kahneman and his principal collaborator of nearly a decade, Amos Tversky – who had a visiting appointment at Stanford University’s psychology department that year[1] – completed a paper they painstakingly had been working on for years: “Prospect Theory: An Analysis of Decision under Risk.” The paper, published in March 1979 in the journal Econometrica, is a landmark in the annals of the social sciences. The paper presents a direct challenge to standard expected utility theory through the concept of loss aversion, describing how economic agents assess prospective losses and gains in an asymmetric manner. In other words, people frame transactions or outcomes in their minds subjectively, affecting the value (or utility) they expect to receive.

...

"Though Kahneman himself had expressed it in various ways over the years, he put it crisply in 2016:

"CASBS is where behavioral economics took shape. When Richard Thaler heard that Amos Tversky and I would be in Stanford, he finagled a visiting appointment down the hill to spend time with us. We spent a lot of time walking around the Center and became lifelong friends. Those long conversations that Dick had with Amos and me helped him construct his then heretical (and now well-established) view of economics, by using psychological observations to explain violations of standard economic theory.[5]

***********

Earlier:

Wednesday, March 27, 2024

Danny Kahneman (1934-2024)

Don't take "No" for an answer in deceased organ donor registration (a paper forthcoming after ten+ years)

 Here's a paper reporting a "field in the lab" experiment with actual organ donor registrations, that took over ten years to get published (after considerable revision and additional data collection).  But it has an important message for how to ask people to agree to donate their organs after they die, should they happen to be among those rare cases in which deceased organs can be donated.  The paper has two messages: one is that it doesn't increase donor registration to ask people to answer 'yes' or 'no', compared to just asking if they want to register at this time.  The second message is that people who have declined to register as a donor in the past may agree if asked again (so, don't take "no" for a final answer).

Here's the pre-publication version that will appear in AEJ:Policy.

Increasing Organ Donor Registration as a Means to Increase Transplantation: An Experiment With Actual Organ Donor Registrations  by Judd B. Kessler and Alvin E. Roth, AMERICAN ECONOMIC JOURNAL: ECONOMIC POLICY (FORTHCOMING)

Abstract: The U.S. has a severe shortage of organs for transplant. Recently — inspired by research based on hypothetical choices — jurisdictions have tried to increase organ donor registrations by changing how the registration question is asked. We evaluate these changes with a novel “field-in-the-lab” experiment, in which subjects change their real organ donor status, and with new donor registration data collected from U.S. states. A “yes/no” frame is not more effective than an “opt-in” frame, contradicting conclusions based on hypothetical choices, but other question wording can matter and asking individuals to reconsider their donor status increases registrations.

And here's the blog post about and link to the 2014 NBER working paper (which was itself a revision of an earlier version), and some of the press coverage it received at the time:

Tuesday, September 2, 2014

Don't take "No" for an answer: a reconsideration of how to do deceased donor registration

Congratulations to ESA Fellows

 The Economic Science Association (ESA) has decided that the stock of old experimenters is sufficient to start naming fellows.  (I heard of this when I saw an announcement from UC Santa Cruz celebrating Dan Friedman as an inaugural fellow:)

I was president of the ESA from 2011-2013, and the list includes many past presidents.

Here's the announcement:

The ESA Fellows program

The ESA was first established in 1986 as a society organized to promote experimental methods in economics. We can safely say that our endeavor has been a resounding success. Experiments are well established as a mainstream economic methodology. Numerous individuals have devoted their careers to accomplishing this remarkable feat.

We have instituted a designation of Fellow of the Economic Science Association to recognize the lifetime contributions of ESA members who have advanced the frontier of knowledge in economics through the use of laboratory and field experiments. The designation of an individual as an ESA fellow is intended as a permanent recognition of their contribution to experimental science and to economics. The contributions may be scientific in nature or consist of activities that have furthered the establishment and growth of the ESA. The ideal candidate should have made contributions in both areas. The appointment to fellow does not include a monetary award.

The Inaugural 2024 ESA Fellows are (in alphabetical order):

James Andreoni

Colin Camerer

Timothy Cason

Yan Chen

James Cox

Catherine Eckel

Ernst Fehr

Robert Forsythe

Daniel Friedman

Jacob Goeree

Elizabeth Hoffman

Charles Holt

John Kagel

Thomas Palfrey

Charles Plott

Alvin Roth

Andrew Schotter

Vernon Smith   

Covid vaccine boosters: promoting uptake is hard

 A recent study published in Nature shows that inexpensive nudges (to get Covid revaccinations) can have small but measurable effects (about 1 percentage point). The large scale study involving 18 coauthors planned to message 3,662,548 CVS Pharmacy patients  with reminders. The  experimental treatments included one message that also offered free rides to pharmacies. However that message did not further increase revaccinations.

Megastudy shows that reminders boost vaccination but adding free rides does not. by 

Katherine L. Milkman, Sean F. Ellis, Dena M. Gromet, Youngwoo Jung, Alex S. Luscher, Rayyan S. Mobarak, Madeline K. Paxson, Ramon A. Silvera Zumaran, Robert Kuan, Ron Berman, Neil A. Lewis Jr, John A. List, Mitesh S. Patel, Christophe Van den Bulte, Kevin G. Volpp, Maryann V. Beauvais, Jonathon K. Bellows, Cheryl A. Marandola & Angela L. Duckworth, Nature (2024)

Abstract: Encouraging routine COVID-19 vaccinations is likely to be a crucial policy challenge for decades to come. To avert hundreds of thousands of unnecessary hospitalizations and deaths, adoption will need to be higher than it was in the autumn of 2022 or 2023, when less than one-fifth of Americans received booster vaccines1,2. One approach to encouraging vaccination is to eliminate the friction of transportation hurdles. Previous research has shown that friction can hinder follow-through3 and that individuals who live farther from COVID-19 vaccination sites are less likely to get vaccinated4. However, the value of providing free round-trip transportation to vaccination sites is unknown. Here we show that offering people free round-trip Lyft rides to pharmacies has no benefit over and above sending them behaviourally informed text messages reminding them to get vaccinated. We determined this by running a megastudy with millions of CVS Pharmacy patients in the United States testing the effects of (1) free round-trip Lyft rides to CVS Pharmacies for vaccination appointments and (2) seven different sets of behaviourally informed vaccine reminder messages. Our results suggest that offering previously vaccinated individuals free rides to vaccination sites is not a good investment in the United States, contrary to the high expectations of both expert and lay forecasters. Instead, people in the United States should be sent behaviourally informed COVID-19 vaccination reminders, which increased the 30-day COVID-19 booster uptake by 21% (1.05 percentage points) and spilled over to increase 30-day influenza vaccinations by 8% (0.34 percentage points) in our megastudy. More rigorous testing of interventions to promote vaccination is needed to ensure that evidence-based solutions are deployed widely and that ineffective but intuitively appealing tools are discontinued.

A proposal to assess public opinion in Europe on compensation for organ donors

 Here's a paper that proposes doing an experiment. Concerning compensation for organ donors. In Europe.  With the hope of influencing policy and reducing the shortage of transplants.  (A very worthy cause, that brings to mind Titian's painting of Sisyphus...)

Ambagtsheer, Frederike, Eline Bunnik, Liset HM Pengel, Marlies EJ Reinders, Julio J. Elias, Nicola Lacetera, and Mario Macis. "Public Opinions on Removing Disincentives and Introducing Incentives for Organ Donation: Proposing a European Research Agenda." Transplant International 37 (2024): 12483.

Abstract: The shortage of organs for transplantations is increasing in Europe as well as globally. Many initiatives to the organ shortage, such as opt-out systems for deceased donation and expanding living donation, have been insufficient to meet the rising demand for organs. In recurrent discussions on how to reduce organ shortage, financial incentives and removal of disincentives, have been proposed to stimulate living organ donation and increase the pool of available donor organs. It is important to understand not only the ethical acceptability of (dis)incentives for organ donation, but also its societal acceptance. In this review, we propose a research agenda to help guide future empirical studies on public preferences in Europe towards the removal of disincentives and introduction of incentives for organ donation. We first present a systematic literature review on public opinions concerning (financial) (dis)incentives for organ donation in European countries. Next, we describe the results of a randomized survey experiment conducted in the United States. This experiment is crucial because it suggests that societal support for incentivizing organ donation depends on the specific features and institutional design of the proposed incentive scheme. We conclude by proposing this experiment’s framework as a blueprint for European research on this topic.

Fairness, efficiency and strategy proofness in assigning indivisible objects: two new papers

 Here are two new papers on the burgeoning literature of matching people to scarce indivisible resources.

First, an experiment by Claudia Cerrone, Yoan Hermstrüwer,  and Onur Kesten.

Claudia Cerrone, Yoan Hermstrüwer, Onur Kesten, School Choice with Consent: an Experiment, The Economic Journal, Volume 134, Issue 661, July 2024, Pages 1760–1805,   https://doi.org/10.1093/ej/uead120

Abstract: Public school choice often yields student assignments that are neither fair nor efficient. The efficiency-adjusted deferred acceptance mechanism allows students to consent to waive priorities that have no effect on their assignments. A burgeoning recent literature places the efficiency-adjusted deferred acceptance mechanism at the centre of the trade-off between efficiency and fairness in school choice. Meanwhile, the Flemish Ministry of Education has taken the first steps to implement this algorithm in Belgium. We provide the first experimental evidence on the performance of the efficiency-adjusted deferred acceptance mechanism against the celebrated deferred acceptance mechanism. We find that both efficiency and truth-telling rates are higher under the efficiency-adjusted deferred acceptance mechanism than under the deferred acceptance mechanism, even though the efficiency-adjusted deferred acceptance mechanism is not strategy proof. When the priority waiver is enforced, efficiency further increases, while truth-telling rates decrease relative to variants of the efficiency-adjusted deferred acceptance mechanism where students can dodge the waiver. Our results challenge the importance of strategy proofness as a prerequisite for truth telling and portend a new trade-off between efficiency and vulnerability to preference manipulation.

##########

And here's a theoretical paper by Xiang Han (韩翔)

Xiang Han, On the efficiency and fairness of deferred acceptance with single tie-breaking, Journal of Economic Theory, Volume 218, 2024, https://doi.org/10.1016/j.jet.2024.105842. (https://www.sciencedirect.com/science/article/pii/S0022053124000486)

Abstract: As a random allocation rule for indivisible object allocation under weak priorities, deferred acceptance with single tie-breaking (DA-STB) is not ex-post constrained efficient. We first observe that it also fails to satisfy equal-top fairness, which requires that two agents be assigned their common top choice with equal probability if they have equal priority for it. Then, it is shown that DA-STB is ex-post constrained efficient, if and only if it is equal-top fair, if and only if the priority structure satisfies a certain acyclic condition. We further characterize the priority structures under which DA-STB is ex-post stable-and-efficient. Based on the characterized priority domains, and using a weak fairness notion called local envy-freeness, new theoretical support is provided for the use of this rule: for any priority structure, among the class of strategy-proof, ex-post stable, symmetric, and locally envy-free rules, each of the above desiderata—ex-post constrained efficiency, ex-post stability-and-efficiency, and equal-top fairness—can be achieved if and only if it can be achieved by DA-STB.

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.

Why High Incentives Cause Repugnance, by Robert Stüber

 Here's a nice experiment in the EJ:

Robert Stüber,Why High Incentives Cause Repugnance: a Framed Field Experiment, The Economic Journal, 2024;, ueae018, https://doi-org.stanford.idm.oclc.org/10.1093/ej/ueae018 

"Abstract: Why are high monetary payments prohibited for certain goods, thereby causing shortages in their supply? I conduct (i) a framed field experiment with a general population sample and (ii) a survey experiment with this sample and with ethics committees. In the experiment, participants can prohibit others from being offered money to register as stem-cell donors. I document that, whereas the majority of participants do not respond to changes in the incentives (63%) or become more in favour of the offer with higher incentives (20%), a minority of 17% prohibit high incentives. I show that this minority wants to protect individuals who are persuaded by high incentives. I also show that a lottery scheme reduces their objections to high incentives. Finally, I document that the public is much more supportive of high incentives than are ethics committees."

"In the experiment, participants can prohibit a transaction that involves another person signing up as a potential stem-cell or bone-marrow donor for money.1 Participants initially make a decision for two distinct amounts of compensation: one low (€10) and one high (€500). The main outcome is participants’ willingness to pay for prohibiting or permitting the offer. I find that the majority of participants (63%) do not respond to changes in the incentives or become more in favour of the offer with higher payment (20%). A clear minority (17%) reveal a stronger preference for preventing the offer when the payment is €500 rather than €10. This finding is mirrored in a second outcome, in which separate participants make simple binary decisions to prohibit the offer or not.

"Why do some participants want to prevent high monetary incentives for signing up? I answer this question by randomly assigning participants to different treatments. In the main treatment, Reservation Price, participants again decide whether to permit an offer of €500 for becoming a stem-cell donor. However, they know that, even if they permit the offer, the offer will be made only if the individual potentially receiving the offer agrees to sign up as a donor for €10 in an independent decision made beforehand. If the individual is not willing to sign up for €10, no offer is made. Put differently, the treatment ensures that the €500 offer is made only to individuals with reservation prices of €10 or less. The offer therefore cannot attract individuals with high reservation prices. The treatment drastically reduces the resistance of individuals who prefer low incentives: the median person who was previously willing to pay €2.50 to prevent the €500 offer is now willing to pay €1.50 to permit it. "

Frans de Waal (1948-2024)

 The eminent primatologist Frans de Waal has passed away. Here's a memoriam from Emory University:

Emory primatologist Frans de Waal remembered for bringing apes ‘a little closer to humans’

I sometimes show the video below about his experiment with monkeys on fairness (and being treated unfairly) to my class on experimental economics (typically when I'm about to talk about the ultimatum game).

"Two capuchins were situated in enclosures next to one another. A researcher would ask them to do a task and if they succeeded give them a treat. The catch was one monkey was always rewarded with a piece of cucumber while the other monkey sometimes got a piece of cucumber and sometimes got a grape — a preferred treat among capuchin monkeys.

"A video de Waal filmed of one of the experiments created a media sensation.

Unequal pay for equal work: When the first monkey gives the researcher a rock, she is rewarded with a cucumber slice. But watch what happens when the first monkey sees the second monkey hand the researcher a rock — and get a much tastier grape instead.

"A monkey that received only cucumber appears perfectly happy until she sees her companion receive a grape. Then her behavior changes. She accepts the next piece of cucumber only to throw it back at the researcher, pounding the surface in front of the enclosure and shaking its Plexiglas walls.

“That video struck home with a lot of people,” Brosnan says. “Who hasn’t felt like that monkey that’s only getting cucumbers? Our research showed something about the evolution of the sense of human fairness.”

The ethics of field experiments in Economics, in the Financial Times

 The Financial Times has a column about the recent twitter (X) discussion concerning our paper Social Media and Job Market Success: A Field Experiment on Twitter, by Jingyi Qiu, Yan Chen, Alain Cohn, and Alvin E. Roth.

That twitter-up concerned whether it is ethical to do field experiments in economics, in which some argued that the benefits that might accrue to treated market participants may disadvantage untreated market participants, including those not involved in the experiment and from whom consent was not obtained. (The FT column has a paragraph in which Douglas MacKay*, a bio-ethicist from UNC considers ethical issues that might arise if the market "is a zero sum competition.") 

Here's the FT article, and the snippet that covers our paper.

When is it OK for economists to experiment on people? A recent study has raised ethical questions about research.  by Soumaya Keynes, Financial Times.

"While most economic debates are about as spicy as boiled potatoes, others generate a bit more heat. A recent stir fell into the second category, in response to a new study of junior academics angling for jobs in economics. 

...

"Alvin Roth, one of the authors of that experiment, says: “I can’t imagine economists thinking of a market as zero sum.” Perhaps a social media post could alert someone to a candidate so impressive that they persuade their university to make an extra position available. He points out that plenty of people share papers on social media, adding: “It seems to me that things that aren’t unethical to do shouldn’t be unethical to study to find out their effect.”

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Here's my earlier post, of the paper, with some thoughts on the ethics of experimenting.

Thursday, May 23, 2024

Social Media and Job Market Success: A Field Experiment on Twitter, by Qiu, Chen, Cohn, and Roth

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*And here is an interesting looking bibliography, including some papers by economists.

Ethics of Field Experiments: A Bibliography

Prepared and Managed by Emma Cohn and Douglas MacKay