Learning and competition in the lab, in France, and in India

 Three NBER working papers this week particularly caught my eye: a lab experiment, a natural experiment, and a field experiment.

The first is a reminder of why simple reinforcement learning models have as much predictive power as they do. It's an experiment that shows that even when others' experience is made clearly visible, there's a tendency to rely on 'own experience'.

Not Learning from Others by John J. Conlon, Malavika Mani, Gautam Rao, Matthew W. Ridley & Frank Schilbach  WORKING PAPER 30378 DOI 10.3386/w30378 August 2022

Abstract: We provide evidence of a powerful barrier to social learning: people are much less sensitive to information others discover compared to equally-relevant information they discover themselves. In a series of incentivized lab experiments, we ask participants to guess the color composition of balls in an urn after drawing balls with replacement. Participants' guesses are substantially less sensitive to draws made by another player compared to draws made themselves. This result holds when others' signals must be learned through discussion, when they are perfectly communicated by the experimenter, and even when participants see their teammate drawing balls from the urn with their own eyes. We find a crucial role for taking some action to generate one's `own' information, and rule out distrust, confusion, errors in probabilistic thinking, up-front inattention and imperfect recall as channels.

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The second is a careful study of affirmative action for women in French chess tournaments: a requirement that teams include a woman had many effects, including improvement in the quality of play by French women.

Trickle-Down Effects of Affirmative Action: A Case Study in France by José De Sousa & Muriel Niederle, WORKING PAPER 30367 DOI 10.3386/w30367 August 2022

Abstract: "The introduction of a quota in the French chess Club Championship in 1990, an activity many players engage in next to playing in individual tournaments, provides a quite unique environment to study its effects on three levels. We find that women selected by the quota improve their performance. We show large spillover and trickle-down effects: There are more and better qualified women. International comparisons confirm that the results are unique to France and that there are no substantial adverse effects on French male players. We discuss the properties of this quota and how to implement it in other environments."

The concluding paragraph:

"We speculate that one reason for the success of the French chess quota was due to the fact that it was an “output” rather than a “pure representation” quota. At least one ninth of the performance of teams in the Club Championship was determined by the performance of female players. Such an “output” based quota provides organization with different incentives than a pure representation quota does. We use economic departments to discuss the different gender quotas and how each of them might be implemented. We hope that future work will provide theoretical properties of various quotas as well as find other areas where output quotas are already, or could be, implemented."

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The third is about the difficulty of inducing competition in close quarters.

Does the Invisible Hand Efficiently Guide Entry and Exit? Evidence from a Vegetable Market Experiment in India by Abhijit Banerjee, Greg Fischer, Dean Karlan, Matt Lowe & Benjamin N. Roth, WORKING PAPER 30360 DOI 10.3386/w30360, August 2022

Abstract: "What accounts for the ubiquity of small vendors operating side-by-side in the urban centers of developing countries? Why don’t competitive forces drive some vendors out of the market? We ran an experiment in Kolkata vegetable markets in which we induced (via subsidizing) some vendors to sell additional produce. The vendors earned higher profits, even when excluding the value of the subsidy. Nevertheless, after the subsidies ended vendors largely stopped selling the additional produce. Our results are consistent with collusion and inertial business practices suppressing competition and efficient market exit."