Designing an effective small farmers scheme in France

The 2014 CAP introduced the Small Farmers Scheme (SFS), offering small farms the option of an unconditional annual lump-sum payment per farm replacing the standard first pillar direct payments. This paper assesses the acceptability in France of an extended version of the 2014 SFS for the post-2020 CAP: it includes conditions on farmers' environmental efforts and on salaried employment. The results of a discrete choice experiment conducted at the scale of France with 608 farmers receiving less than 15,000€ in first pillar payments show that an SFS with an environmental certification prerequisite is attractive to French small farmers, notably in the market gardening sector. We provide simula..

Experimental Economics

Do MTurkers Exhibit Myopic Loss Aversion?

We present results from a highly powered online experiment with 937 participants on Amazon Mechanical Turk (MTurk) that examined whether MTurkers exhibit myopic loss aversion (MLA). The experiment consisted of measuring MLA-compliant behavior in two between-subjects treatments that differed only regarding the risk profile of the risky asset employed. We found no statistically significant evidence of MLA-compliant behavior among MTurkers in both treatments.

Experimental Economics

Rational play in games: A behavioral approach

We argue in favor of a departure from the standard equilibrium approach in game theory in favor of the less ambitious goal of describing only the actual behavior of rational players. We investigate the notion of rationality in behavioral models of extensive-form games (allowing for imperfect information), where a state is described in terms of a play of the game instead of a strategy profile. The players' beliefs are specified only at reached decision histories and are modeled as pre-choice beliefs, allowing us to carry out the analysis without the need for (objective or subjective) counterfactuals. The analysis is close in spirit to the literature on self-confirming equilibrium, but it does..

Experimental Economics

Visual Convex Time Preferences

The original standard for measuring time preferences was Multiple Price List (MPL), where subjects are asked to choose between an amount of money in the present and a larger amount of money in the future. Convex Time Budget (CTB) was later introduced, allowing subjects to differentially allocate money between present and future. It improved precision of measurement but also increased the complexity of the task. In this paper we introduce the Visual Convex Time Preferences (VCTP), a new measure of time preferences synthesizing simplicity of MPL and precision of CTB. Results from the lab suggest that VCTP is robust and improves precision of time preferences measurement compared to the MPL. Sam..

Experimental Economics

Crime as Conditional Rule Violation

Most of the time most individuals do not commit crime. Why? One explanation is deonto-logical. People abide by legal rules just because these are the rules. In this perspective, the power of normativity is critical. It is supported by experimental evidence. To an im-pressive degree, participants even abide by arbitrary, costly rules, in the complete absence of enforcement. Yet do they also do that if they learn that some of their peers violate the rule? The experiment shows that rule following is conditional on social information. The more peers violate the rule, the more participants are likely to do so as well, and the more severely the violation. This main finding replicates in a vignette..

Experimental Economics

Willingness to pay or willingness to accept? An experimental study on secondhand smoke

The anomaly between willingness to pay (WTP) and willingness to accept (WTA) invokes a well-established discussion in the stated preference literature. The debate involves which of the two is a better welfare measure. Although a few studies have tried to provide some insights, many researchers settle for eliciting WTP rather than WTA. However, WTA is a better welfare measure in some circumstances, especially in situations involving spillover effects and property rights. We investigate one of such situations and provide insights into how individuals in heterogeneous healthcare systems (private (U.S.) and public (U.K.)) value the effects of a spillover. First, we use choice experiments and con..

Experimental Economics

The Effectiveness of Committee Quotas; The Role of Group Dynamics

Committee quotas have been introduced during the last years for combatting the underrepresentation of women in male-stereotyped environments. However, the unclear effect of evaluators’ gender and the gender differences in group dynamics in mixed-gender committees question the effectiveness of the policy. I provide experimental evidence in both directions; a) how the gender composition of the committees affects the probability of female candidates of being recruited in a hiring process, and b) how men and women behave in group dynamics as a mechanism explaining the outcome of the policy. I designed a laboratory experiment in which groups of three subjects have to jointly select two candidat..

Experimental Economics

A Critical Perspective on the Conceptualization of Risk in Behavioral and Experimental Finance

Risk is one of the key aspects in financial decision-making and therefore an integral part of the behavioral economics and finance literature. Focusing on the conceptualization of the term "risk", which researchers have addressed from numerous angles, this comment aims to offer a critical perspective on the interactions between risk preferences (a latent trait), risk perceptions (how individuals judge whether something is risky), and risk-taking behavior as distinct concepts, and hence to guide future research on (individual-level) decision-making processes in this direction.

Experimental Economics

Reference Points and the Tradeoff between Risk and Incentives

We conduct laboratory experiments to investigate basic predictions of principal-agent theory about the choice of piece rate contracts in the presence of output risk, and provide novel insights that reference dependent preferences affect the tradeoff between risk and incentives. Subjects in our experiments choose their compensation for performing a real-effort task from a menu of linear piece rate and fixed payment combinations. As classical principal-agent models predict, more risk averse individuals choose lower piece rates. However, in contrast to those predictions, we find that low-productivity risk averse workers choose higher piece rates when the riskiness of the environment increases. ..

Experimental Economics

The impact of asset purchases in an experimental market with consumption smoothing motives

We investigate the effect of preannounced market intervention on an asset price as well as participants' welfare in an experimental framework where participants have consumption smoothing motives to trade the asset. The results show that, on one hand, the preannounced intervention results in significantly larger overpricing of the asset relative to the rational expectations equilibrium level in periods prior to the intervention compared with the treatment without it. The participants' welfare, measured by the discounted sum of the payoffs at the beginning of the experiment, on the other hand, are not significantly worsened by the intervention.

Experimental Economics

A Causality-based Graphical Test to obtain an Optimal Blocking Set for Randomized Experiments

Randomized experiments are often performed to study the causal effects of interest. Blocking is a technique to precisely estimate the causal effects when the experimental material is not homogeneous. We formalize the problem of obtaining a statistically optimal set of covariates to be used to create blocks while performing a randomized experiment. We provide a graphical test to obtain such a set for a general semi-Markovian causal model. We also propose and provide ideas towards solving a more general problem of obtaining an optimal blocking set that considers both the statistical and economic costs of blocking.

Experimental Economics

Going... going... wrong: a test of the level-k (and cognitive hierarchy) models of bidding behaviour

In this paper, we design and implement an experiment aimed at testing the level-k model of auctions. We begin by asking which (simple) environments can best disentangle the level-k model from its leading rival, Bayes-Nash equilibrium. We find two environments that are particularly suited to this purpose: an all-pay auction with uniformly distributed values, and a first-price auction with the possibility of cancelled bids. We then implement both of these environments in a virtual laboratory in order to see which theory can best explain observed bidding behaviour. We find that, when plausibly calibrated, the level-k model substantially under-predicts the observed bids and is clearly out-perfor..

Experimental Economics

The Supply of Motivated Beliefs

When people choose what messages to send to others, they often consider how others will interpret the messages. In many environments, particularly in politics, people are motivated to hold particular beliefs and distort how they process information in directions that favor their motivated beliefs. This paper uses two experiments to study how message senders are affected by receivers' motivated beliefs. Experiment 1, conducted using an online sample of social media users, analyzes the effect of incentivizing senders to be perceived as truthful. These incentives cause senders to send less truthful messages. When incentivized, senders send more false information when it aligns with receivers' p..

Experimental Economics

Passive or Active? Behavioral changes in different designs of search experiments

While search experiments are available in several designs, accumulating experimental evidence suggests that individual search behavior depends on design details. This paper reports the first classification and comparison of several search experiment designs widely accepted in search studies. These designs can be categorized as passive, quasi-active, and active. We found individual- and aggregate-level significant differences in the results across designs, despite identical models. In the passive design, subjects tended to be more reluctant to search than in the active design, and risk-averse subjects quickly terminated their search. Our results highlight the importance and potentials of desi..

Experimental Economics

Reference Points and the Tradeoff between Risk and Incentives

We conduct laboratory experiments to investigate basic predictions of principal-agent theory about the choice of piece rate contracts in the presence of output risk, and provide novel insights that reference dependent preferences affect the tradeoff between risk and incentives. Subjects in our experiments choose their compensation for performing a real-effort task from a menu of linear piece rate and fixed payment combinations. As classical principal-agent models predict, more risk averse individuals choose lower piece rates. However, in contrast to those predictions, we find that low-productivity risk averse workers choose higher piece rates when the riskiness of the environment increases. ..

Experimental Economics

Contingent Reasoning and Dynamic Public Goods Provision

Individuals often possess private information about the common value of a public good. Their contributions toward funding the public good can therefore reveal information that is useful to others who are considering their own contributions. This experiment compares static and dynamic contribution decisions to determine how hypothetical contingent reasoning differs in dynamic decisions. The timing of individuals’ sequential contribution decisions is endogenous. Funding the public good is more efficient with dynamic than static decisions in equilibrium, but this requires decision-makers to understand that in the future they can learn from past events. Our results indicate that a substan..

Experimental Economics

Formalized Employee Search and Labor Demand

Firms often use social networks to find workers, limiting the pool of potential applicants. We conduct a field experiment subsidizing firms' formal vacancy posting. The subsidies increase non-network employee search and shift vacancies towards high-skilled positions. Post-treatment, firms continue searching for high-skilled workers despite reverting to network-based search. This change in skill requirements does not increase vacancy posting or hiring, suggesting substitutability between workers of different skill levels. Finally, we experimentally show that information asymmetries about applicants' skills do not limit firms' formal search. Our results highlight that exposure to different lab..

Experimental Economics

Using contests to promote coordinated control of invasive species: An experimental evaluation

We experimentally evaluate the effect of competing for a prize on the coordinated control of invasive species in the presence of externalities. We offered prizes (merit, monetary and a combination of both) to the best performer in a contest aimed at promoting the control of rodent pests, an invasive species that is responsible for large losses in stored grain. Only monetary prizes are capable of promoting behavioral change, with relatively large effects: households in villages where prizes were offered reported losses in storage that are 25% lower than in control villages. The effect is a non-linear function of prize, with only intermediate size prizes leading to reductions in storage losses..

Experimental Economics

Mission of the Company, Prosocial Attitudes and Job Preferences: A Discrete Choice Experiment

We conduct a discrete choice experiment to investigate how the mission of high-tech companies affects job attractiveness and contributes to self-selection of science and engineering graduates who differ in prosocial attitudes. We characterize mission by whether or not the company combines its profit motive with a mission on innovation or corporate social responsibility (CSR). Furthermore, we vary job design (e.g. autonomy) and contractible job attributes (e.g. job security). We find that companies with a mission on innovation or CSR are considered more attractive. Women and individuals who are more altruistic and less competitive feel particularly attracted to such companies.

Experimental Economics

The Effects of Forward Guidance: Theory with Measured Expectations

We study the effects of forward guidance with an approach that combines theory with experimental estimates of counterfactual expectation adjustments. Guided by the model, we conduct experiments with representative samples of the US population to study how households adjust their expectations in response to changes in the Fed’s projections about future interest rates. Respondents significantly downward-adjust their inflation expectations in response to learning about an increase in the Fed’s pro-jection about the federal funds rate three years in the future, and they expect inflation to respond most strongly immediately after the announcement. By contrast, respon-dents do not adjust their..

Experimental Economics

Motivated Risk Assessments

How do people assess risks associated with a hedonic but dangerous activity? I conduct a longitudinal field experiment (N=434) exploiting the conditions of the COVID-19 pandemic to investigate whether monetary incentives induce people to motivate their risk assessments. Each participant receives a café voucher with a random value: treated participants receive a 10EUR voucher, and the control group a 1.50EUR voucher. The results show that subjects who receive a high incentive not only visit cafés more often but also reduce their risk assessment relative to subjects with a low incentive. Importantly, the assessment updating happens in anticipation of the visit, suggesting that it justifies a..

Experimental Economics

Paving the Road for Replications: Experimental Results from an Online Research Repository

Are users of a bibliographic database interested in learning about replications? Can we motivate them to learn? To answer these questions, we performed an experiment on a RePEc (Research Papers in Economics) website: Using randomized stratification, we allocated 324 replications and their corresponding original studies to clusters; we then drew from those clusters to select treatment and control groups. We added brightly colored tabs to the relevant webpages to alert visitors to the existence of a replication study or to the original study of a replication. We monitored traffic over three phases lasting several months: a) no treatment, b) treatment on one group, c) treatment on both groups. ..

Experimental Economics

Studying Information Acquisition in the Field: A Practical Guide and Review

We review the emerging literature on information acquisition in field settings. We first document an increase in studies on information acquisition and review relevant studies in different subfields of economics, including macroeconomics, political economy, labor economics, health economics, and finance. We next provide an overview of empirical techniques to measure information acquisition and discuss the advantages and disadvantages of different methods. We then discuss how one can design studies to test the predictions of different theories of information acquisition. We conclude by highlighting possible directions for future research.

Experimental Economics

An online sequential test for qualitative treatment effects

Tech companies (e.g., Google or Facebook) often use randomized online experiments and/or A/B testing primarily based on the average treatment effects to compare their new product with an old one. However, it is also critically important to detect qualitative treatment effects such that the new one may significantly outperform the existing one only under some specific circumstances. The aim of this paper is to develop a powerful testing procedure to efficiently detect such qualitative treatment effects. We propose a scalable online updating algorithm to implement our test procedure. It has three novelties including adaptive randomization, sequential monitoring, and online updating with guaran..

Experimental Economics

Market Experiments with Multiple Assets: A survey

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Experimental Economics

Optimal mixed payment system and medical liability. A laboratory study

In a controlled laboratory environment, we test the role of medical malpractice liability on physicians’ service provision under fee-for-service, capitation, and mixed payment. We find that the introduction of medical liability causes a significant deviation from patient-optimal treatment that it is not mitigated by the use of a standard mixed payment system. Specifically, we find that the presence of medical liability pressure involves a proper optimal calibration of mixed payment system. Our findings have relevant policy implications for the correct calibration and implementation of the mixed payment system.

Experimental Economics

Preferences For The Far Future

Both research and anecdotal evidence suggest that people care about long-run environmental outcomes, but often fail to act sustainably, endangering environmental stability. For a large population sample, we show that people substantially value the environment intrinsically, i.e., even after their own and their kin’s lifespan. Willingness-to-pay for very long-run environmental benefits not experienced by the respondent is similar to that of short-run benefits, experienced by the respondent. However, adding a cooperation problem through uncertainty about other people’s preferences significantly decreases participants’ willingness-to-pay for both time frames, with respondents being pessim..

Experimental Economics

The Impact of "Grow to Sell" Agricultural Extension on Smallholder Horticulture Farmers: Evidence from a Market- Oriented Approach in Kenya

This paper evaluates the impact of a market-oriented agricultural extension program called Smallholder Horticulture Empowerment and Promotion (SHEP) in Kenya. The SHEP approach prioritizes practical training for farmers to act as producers in a market by encouraging decentralized decision-making. Using a cluster randomized controlled trial (RCT) over a two-year period, we find that, on average, SHEP increased horticultural income significantly by 70% and the positive effect was more pronounced in vulnerable households whose head of household is female, less educated or older. The effect is not relevant to horticultural experience prior to the intervention. Our findings suggest that a market-..

Experimental Economics

Physician’s Allocation Preferences under Scarcity and Uncertainty

Physicians are no strangers to situations where they have to decide with resource restrictions and uncertainty on the relative needs of future beneficiaries of the scarce resources. We propose a lab experiment to understand if such an environment affects physician’s resource allocation decisions and how. When there are incentives to over-treat, we find that a patient tended by a constrained physician under uncertainty obtains higher benefits and receives allocations closer to her optimum than patients from physicians with no constraints or deciding under uncertainty alone. In addition, we observe a redistribution of resources when physicians decide with resource restrictions and uncer..

Experimental Economics

Airport Privatisation in Canada and Australia: experiments in structures of ownership and control

Experimental Economics