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Session 5: Experimental Economics

August 12-13, 2019 | Koret-Taube Conference Center, 366 Galvez St, Stanford

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 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.

Organizers: Christine Exley (Harvard Business School), Muriel Niederle (Stanford), Kirby Nielsen (Stanford), Alvin Roth (Stanford) and Lise Vesterlund (University of Pittsburgh)

In this Session

Aug 12 | 8:45 am to 9:15 am

Check-in | Breakfast

Aug 12 | 9:15 am to 9:30 am

Day 1 Remarks

Aug 12 | 9:30 am to 10:00 am

Sleepless in Chennai: The Consequences of Increasing Sleep among the Urban Poor

Presented by: Frank Schilbach (MIT)
Aug 12 | 10:00 am to 10:30 am

Noise, Cognitive Function, and Worker Productivity

Presented by: Josh Dean (University of Chicago)

I investigate the relationship between noise and worker productivity with two experiments in Kenya. I first randomize exposure to engine noise during a textile training course. An increase of 10 dB reduces productivity by approximately 5%. I then randomize engine noise during tests of cognitive function and effort. The same noise change impairs cognitive function but not effort, suggesting the importance of cognitive function as a mechanism. Finally, I demonstrate individuals neglect the effects of noise by showing performance pay does not increase willingness to pay for quiet working conditions. Individuals are thus unlikely to act to mitigate these effects.

Aug 12 | 10:30 am to 11:00 am


Aug 12 | 11:00 am to 11:30 am

Searching for a Risk Parameter

Presented by: Emanuel Vespa (University of California, Santa Barbara)
Aug 12 | 11:30 am to 12:00 pm

Choice, Deferral and Consistency

Presented by: Georgios Gerasimou (University of St Andrews)

We report on three novel choice experiments with real goods and money lotteries where subjects in one treatment are forced to choose some item from every menu, while in the other treatment they are not forced to choose, and can instead incur a small cost to defer choice. Our first finding is that subjects in the latter treatment often opt for costly choice deferral, even when doing so is not associated with payoff-relevant informational gains. With choice consistency proxied by the subjects’ degree of conformity with standard no-cycle conditions (WARP, Congruence, Binary Congruence) on their active choices, our main finding is that subjects who are forced to choose behave less consistently in this sense than subjects who are not. This suggests that forced-choice experimental designs can potentially lead researchers to overestimate the fraction of subjects that do not maximize a stable and transitive preference relation.

Aug 12 | 12:00 pm to 12:30 pm

Interntemporal Choice Experiments and Large-Stakes Behavior

Presented by: Charles Sprenger (UC San Diego)
Aug 12 | 12:30 pm to 2:00 pm

Lunch Discussion

Aug 12 | 2:00 pm to Aug 14 | 2:30 pm

Not Playing Favorites: An Experiment on Parental Preferences for Educational Investment

Presented by: Rebecca Dizon-Ross (University of Chicago)
Co-Author(s): James Berry ( University of Delaware) and Maulik Jagnani (Cornell University)

How do parents choose to allocate investments across children? Do they maximize the returns to their investments (total household earnings), or equalize across their children because of an aversion to cross-sibling inequality? In this paper, we conduct the first experiment that identifies parents’ preferences for investing in their children’s education. The experiment exogenously varies the short-run returns to educational investments to identify the degree to which parents care about (a) maximizing total household earnings, (b) minimizing cross-sibling inequality in “outcomes” (i.e., childlevel earnings), and (c) minimizing cross-sibling inequality in “inputs” (i.e., the investments each child receives). We find that while parents care about both maximizing total household earnings and minimizing inequality in inputs, they place a high value on equality of inputs. Parents choose exactly equal inputs 35% of the time and forego
40-50% of their potential experimental earnings due to inequality aversion in inputs. In contrast, we find no evidence that parents are averse to inequality in outcomes.

Aug 12 | 2:30 pm to 3:00 pm

Estimating Social Preferences and Gift Exchange with a Piece-Rate Design

Presented by: Stefano DellaVigna (UC Berkeley)
Co-Author(s): John A. List (University of Chicago), Ulrike Malmendier (UC Berkeley) and Gautum Rao (Harvard University)

We design two field experiments to estimate the nature and magnitude of workers’ social preferences towards their employers. Unlike previous gift-exchange field experiments, we vary piece rates in addition to gift treatments. This piece-rate design allows us to estimate the elasticity of effort to motivation and in turn identify aspects of the workers’ social preferences. The first experiment measures productivity—units of output produced in a fixed amount of time. The second experiment measures a form of labor supply—the willingness to work for extra time. Using the piece-rate treatments, we document that productivity is rather unresponsive to motivation, while labor supply is very responsive. In terms of social preferences, we document, first, that workers provide effort for their employer, but are insensitive to the return to the employer. This result is consistent with models of ’warm glow’ or social norms, rather than pure altruism towards the employer. Second, while we do not detect any effect of the gifts in the productivity experiment, we find sizable positive impacts in the labor-supply experiment. We show that, at least in part, this different response to gifts is explained by different elasticities of productivity and labor supply, highlighting the importance of the piece-rate design.

Aug 12 | 3:00 pm to 3:30 pm


Aug 12 | 3:30 pm to 4:00 pm

What Is Complex?

Presented by: Ryan Oprea (UC Santa Barbara)
Aug 12 | 4:00 pm to 4:30 pm

Asymmetric Naıvete: Beliefs about Self-Control

Presented by: Anastasia Fedyk (Haas School of Business, UC Berkeley)

Do individuals anticipate time-inconsistency in others? This paper jointly investigates beliefs about one’s own and others’ present bias. In an online laboratory experiment, participants engaged in a real-effort task display little awareness of their own present bias but anticipate present bias in others. Structurally, I estimate a present bias parameter β of 0.82. Participants perceive others’ β to be 0.87, indicating substantial sophistication, contrasted with 1.03 for themselves, indicating full naıvete. A field survey in the classroom further confirms that individuals appear to be aware of present bias in others but are overoptimistic about themselves. This wedge in beliefs can inform equilibrium outcomes in a variety of collaborative, competitive, and hierarchical settings, ranging from tournament incentive schemes to household consumption decisions.

Aug 12 | 4:30 pm to 5:00 pm

Mistakes and Overconfidence in Detecting Lies

Presented by: Marta Serra-Garcia (UC San Diego)
Aug 12 | 6:00 pm

Dinner Off-Site

Aug 13 | 9:00 am to 9:30 am


Aug 13 | 9:30 am to 10:00 am

Correlation Neglect in Student-to-School Matching

Presented by: Alex Rees-Jones (The Wharton School, University of Pennsylvania)
Aug 13 | 10:00 am to 10:30 am

Asymmetric Information Undermines Coasian Bargaining in Common (Oil) Pool Resources

Presented by: Catherine Eckel (Texas A & M University)
Co-Author(s): Alexander L. Brown (Texas A & M University) and Steven N. Wiggins (Texas A & M University)

This paper provides an experimental analysis of bargaining under imperfect information, molded by the circumstances found in oil field unitization. The purpose of the study is to test whether differences in regulation are causally related to variation in the rate of oil-field unitization observed across states. We design lab experiments that implement the information conditions implied by differences in state regulatory environments. This allows us to isolate the effect of regulation on the pattern of negotiated shares and contractual failure in unitization. The results show that regulatory differences alone can account for much of the observed variation in unitization rates, and suggest a new interpretation of how imperfect information molds sharing rules and undermines unitization contracting. The analysis then reexamines the field data and shows how the analysis
sheds new light on field evidence.

Aug 13 | 10:30 am to 11:00 am


Aug 13 | 11:00 am to 11:30 am

Stereotypes and Belief Updating

Presented by: Katherine Coffman (Harvard Business School)
Co-Author(s): Manuela Collis (Harvard Business School) and Leena Kulkarni (Harvard University)

We explore how beliefs respond to noisy information about own ability across a range of tasks, with a particular focus on how gender stereotypes impact belief updating. Participants in our experiments take tests of their ability across different domains. Absent feedback, beliefs of own ability are strongly influenced by gender stereotypes. We then provide noisy feedback about own absolute performance to participants and elicit posterior beliefs. Gender stereotypes have significant predictive power for posterior beliefs, both through their influence on prior beliefs (as predicted by a Bayesian model) but also through their influence on updating. Both men and women’s beliefs are more responsive to information in gender congruent domains than gender incongruent domains. This is primarily driven by differential reactions to exogenously-received good news about own ability: both men and women react more to good news when it arrives in a gender congruent domain than when it arrives in a gender incongruent domain. Our results have important implications for understanding how feedback shapes gender gaps in self-assessments.

Aug 13 | 11:30 am to 12:00 pm

Persistently Insecure: The Gender Gap in Confidence

Presented by: Judd Kessler (The Wharton School, University of Pennsylvania)
Aug 13 | 12:00 pm to 12:30 pm

Negotiation Ban: The effect of Negotiation on Wage Dispersion, with Rania Gihleb and Rachel Landsman

Presented by: Lise Vesterlund (University of Pittsburgh)
Aug 13 | 12:30 pm to 2:00 pm

Lunch Discussion

Aug 13 | 2:00 pm to 2:30 pm

Information Choice, Transparency, and Coordination: An Experimental Study

Presented by: Isabel Trevino (UC San Diego)
Aug 13 | 2:30 pm to 3:00 pm

Persistent Political Engagement: Social Interactions and the Dynamics of Protest Movements

Presented by: David Yang (Harvard University)
Co-Author(s): Davide Cantoni (University of Munich), Noam Yuchtman (LSE) and Y. Jane Zhang (Hong Kong University of Science and Technology)

What drives individuals to persistently engage in political movements? We test whether participation in one protest within a political movement increases subsequent protest attendance. We also examine the mechanisms underlying persistent political engagement, considering changes in individuals’: (i) political beliefs; (ii) political preferences; and, (iii) social interactions. To identify an effect of past protest participation, we randomly incentivize Hong Kong university students into participation in an antiauthoritarian protest. To identify the effects of social interactions, we cross-randomize the intensity of this treatment across major-cohort cells. We find that experimentally-induced protest attendance does not significantly change political beliefs or preferences one year later. However, experimentally-induced past participation is significantly associated with protest attendance one year later, with persistent political engagement greatest among individuals in the cells with highest treatment intensity. Evidence on the formation of new friendships indicates that social interactions supported sustained political engagement.

Aug 13 | 3:00 pm to 3:45 pm


Aug 13 | 3:45 pm to 4:00 pm

Learning from Unknown Information Sources

Presented by: Yucheng Liang (Stanford University)
Aug 13 | 4:00 pm to 4:15 pm

Do People Value More Informative News?

Presented by: Felix Chopra (University of Bonn)
Co-Author(s): Ingar Haaland (NHH Norwegian School of Economics) and Christopher Roth (Institute on Behavior & Inequality)

We examine how perceptions of media bias affect demand for news. Drawing on large representative samples of the US population with approximately 10,000 respondents, we measure and experimentally manipulate people’s beliefs about the extent to which newspapers strategically suppress information. Inconsistent with the “more-information-is-better principle,” we find that people who learn that a newspaper is less likely to strategically suppress information have a lower demand for news from this newspaper. Our results demonstrate that people have a demand for biased news, consistent with a desire to confirm pre-existing beliefs. We discuss the implications of our findings for the regulation of media markets.

Aug 13 | 4:15 pm to 4:30 pm

Internal Uncertainty in Belief Formation and Choice under Risk

Presented by: Thomas Graeber (Harvard University)
Co-Author(s): Benjamin Enke (Harvard University)
Aug 13 | 4:30 pm to 4:45 pm

Social Signaling and Childhood Immunization: A Field Experiment in Sierra Leone

Presented by: Anne Karing (Princeton University)

Individuals care about how they are perceived by others, and take visible actions to signal their type. This paper investigates social signaling in the context of childhood immunization in Sierra Leone. Despite high initial vaccine take-up, many parents do not complete the five immunizations that are required in a child’s first year of life. I introduce a durable signal - in the form of differently colored bracelets - which children receive upon vaccination, and implement a 22-month-long experiment in 120 public clinics. Informed by theory, the experimental design separately identifies social signaling from leading alternative mechanisms. In a first main finding, I show that individuals use signals to learn about others’ actions. Second, I find that the impact of signals varies significantly with the social desirability of the action. In particular, the signal has a weak effect when linked to a vaccine with low perceived benefits and a large, positive effect when linked to a vaccine with high perceived benefits. Of substantive policy importance, signals increase timely and complete vaccination at a cost of 1 USD per child, with effects persisting 12 months after the roll out. Finally, I structurally estimate a dynamic discrete-choice model to quantify the value of social signaling.

Aug 13 | 5:30 pm

Dinner On-Site