Correction to: Framing effects on risk-taking behavior: evidence from a field experiment in multiple choice tests

Experimental Economics -     

Reducing ambiguity in lotteries: evidence from a field experiment

Ambiguity about the chances of winning represents a key aspect in lotteries. By means of a controlled field experiment, we exogenously vary the degree of ambiguity about the winning chances of lotteries organized to incentivize the contribution for a public good. In one treatment, people have been simply informed about the maximum number of potential participants (i.e. the number of lottery tickets released). In a second treatment, this information has been omitted as in all traditional lotteries. Our general finding shows that simply reducing the degree of ambiguity of the lottery leads to a sizable and significant increase (67%) in the participation rate. This result is robust to alternative prize configurations.     

Externalities in knowledge production: evidence from a randomized field experiment

Experimental Economics - Are there positive or negative externalities in knowledge production? We analyze whether current contributions to knowledge production increase or decrease the future...     

Race and gender effects on employer interest in job applicants: new evidence from a resume field experiment

We sent nearly 9000 fictitious resumes to advertisements for job openings in seven major cities in the United States across six occupational categories. We randomly assigned names to the resumes that convey race and gender but for which a strong socio-economic connotation is not implicated. We find little evidence of systematic employer preferences for applicants from particular race and gender groups.     

File sharing as conditional cooperation: evidence from a framed field experiment

In this project, we investigate downloading and sharing behaviour in a novel ‘piracy game’ modelled after standard public good games. We find that willingness to share correlates positively with the sharing by others. By contrast, actual behaviour in the ‘piracy game’ is not correlated with self-reported behaviour.     

Peer effects in computer assisted learning: evidence from a randomized experiment

We conduct a large scale experiment to investigate peer effects in computer assisted learning (CAL). Identification relies on three levels of randomization. We find an average 0.17 standard deviation improvement in math scores among primary school students. This average effect is the same for students treated individually or in pairs, implying that peer effects double the learning benefit from a given equipment. Among paired students, poor performers benefit more from CAL when paired with good performers and vice versa. Average performers benefit equally irrespective of who they are paired with. This suggests that the treatment is dominated by knowledge exchange between peers. We also find that CAL treatment reduces the dispersion in math scores and that the beneficial effects of CAL can be strengthened if weak students are systematically paired with strong students.     

The identifiable victim effect in charitable giving: evidence from a natural field experiment

We design a natural field experiment to enhance our understanding of the role of the identifiable victim effect in charitable giving. Using direct mail solicitations to 25 797 prior donors of a nonprofit charity, we tested the responsiveness of donors to make a contribution to either an identifiable or a statistical victim. Unlike much previous research, which has used only laboratory experiments, we find that the campaign letter focusing on one identifiable victim did not result in significantly larger donations than the campaign letter focusing on the statistical victim. In addition to the role of the identifiable victim, we investigate the degree to which each of our campaign letters affected donors’ payments to other concurrent and future campaigns and whether there is decreasing marginal returns to campaigning in the sense that receiving a letter crowds out donors’ payments to other future and concurrent campaigns. We find some evidence of crowding out, indicating that charitable giving could be a zero-sum game; however, the treatment letters did not have different effects on other payments.     

Labour market discrimination against former juvenile delinquents: evidence from a field experiment

In view of policy action to integrate ex-offenders into society, it is important to identify the underlying mechanisms of the negative relationship between criminal record on the one hand and later employment and earnings on the other hand. In this study, we identify hiring discrimination against former juvenile delinquents in a direct way. To this end, we conduct a field experiment in the Belgian labour market. We find that labour market discrimination is indeed a major barrier in the transition to work for former juvenile delinquents. Labour market entrants disclosing a history of juvenile delinquency get about 22% less callback compared to their counterparts without a criminal record. This discrimination is heterogeneous by the occupation for which one applies.     

The effects of group composition in a strategic environment: Evidence from a field experiment

Recent theoretical and empirical studies have explored the effect of group membership and identity on individual decision-making. This line of research highlights that economic models focusing on the individual as the sole entity in the decision-making environment potentially miss critical features. This study takes this literature in a new direction by overlaying a field experiment onto a setting where groups have arisen naturally. Our experimental laboratory is large open air markets, where we are able to examine the effects of group membership on seller׳s collusive behavior as measured by prices and surplus allocations. This permits us to explore strategic implications of group composition. Empirical results illustrate the importance of group composition on pricing decisions, and show that deviations from Nash equilibrium are crucially related to group membership.     

The effects of information and competition on racial discrimination: Evidence from a field experiment

We study racial discrimination by simultaneously selling identical products on eBay in pairs of auctions posted under different racially identifying names. We detect significant price differences, which are indicative of in-group biases. White names receive higher prices for distinctively white products, and black names receive higher prices for distinctively black products. But price differences only emerge for sellers who have low eBay feedback scores in less competitive markets. Because the price differences dissipate as sellers accumulate credible reputations, the patterns in the data are indicative of statistical discrimination. Overall, the results suggest that mechanisms designed to reduce informational asymmetries and increased competition are both effective at reducing discrimination in online auctions.     

The effect of risk-taking behavior on profitability: Evidence from futures market

We explore how futures traders make a tradeoff between risk and return by examining their risk-taking in the action. By applying a novel measure to their trade-by-trade transactions to capture their tendency in risk-taking, we find a general tendency to reduce risk-taking by cutting positions when facing losses or gains, and the tendency is stronger in the case of losses. However, great variations exist among traders in the risk-taking tendency and the results for trading are opposite for profitable and unprofitable traders. For the unprofitable, more risk-taking by trading more actively leads to greater losses. This is concrete evidence for the prevailing belief in the literature that trading too much, arguably due to overconfidence, is hazardous to investor's wealth. Contrary to that belief, however, we find fresh evidence that more active trading by the profitable traders leads to greater profits, suggesting their trades are likely based on ability and skills.     

The effects of home access to technology on computer skills: Evidence from a field experiment

Computer skills are important for educational and labor market success. This paper examines whether disparities in access to home computers are limiting the acquisition of computer skills. To address problems with selection bias, I use data from a randomized field experiment providing free computers for home use to community college students. I find that the treatment group of low-income students receiving free computers has significantly higher levels of computer skills than the control group of low-income students not receiving free computers. The “intent-to-treat” estimates indicate an increase in high-level computer skills of 17% points, and the LATE estimates indicate a range of 19–23% points. The results are robust to estimation strategy, measurement of the dependent variable, and inclusion of different sets of controls. The benefits appear to be the strongest among young, minority, low-income, and female students.     

Competition and commercial banks risk-taking: evidence from Sub-Saharan Africa region

This study investigates the relationship between competition and the risk-taking attitude of banks. We test how this relationship manifests in the Sub-Saharan African(SSA) region’s commercial banks in light of the competition-fragility view, using the generalized methods of moments. We studied 440 commercial banks in 37 SSA countries over the period 2006–2015. The results provide evidence that supports a positive relationship between competition and banks’ overall risk as well as their credit risk but suggests that off-balance sheet risk reduces with competition. We, therefore, conclude that the propensity to undertake higher risk in a competitive banking environment largely accounts for fragility as argued in the competition-fragility view.     

Heterogeneous treatment effects and mechanisms in information-based environmental policies: Evidence from a large-scale field experiment

Policymakers often rely on non-pecuniary, information-based programs to achieve social objectives. Using data from a water conservation information campaign implemented as a randomized controlled trial, we estimate heterogeneous household responses. Understanding such heterogeneity is important for improving the cost-effectiveness of non-pecuniary programs, extending them to other populations and probing the mechanisms through which the treatment effects arise. We find little evidence of heterogeneous responses to purely technical information or to traditional conservation messages that combine technical information and moral suasion. In contrast, norm-based messages that combine technical information, moral suasion and social comparisons exhibit strong heterogeneity: households that are wealthier, owner-occupied and use more water are more responsive. These subgroups tend to be least responsive to pecuniary incentives. We find no evidence that any subgroup increases their water use in response to the messages. By targeting the messages to subgroups known to be most responsive, program costs could be reduced by over 50% with only a 20% reduction in the treatment effect. Combining theory and data, we also shed light on the mechanisms through which the treatment effects arise, which has implications for program design and future research on the program's welfare effects.     

Framing of economic news and policy support during a pandemic: Evidence from a survey experiment

We examine how news outlets’ communication of macroeconomic information affects policy support during the COVID-19 crisis. In our survey experiment based on a representative sample from Germany, respondents are exposed to an expert forecast of GDP growth. Individuals either receive no information, the baseline forecast, or real-world media frames of the same forecast. We find that positive framing of economic growth increases policy support. This effect is stronger for respondents with more pessimistic macroeconomic expectations. Negatively framed economic news are perceived as more credible and hence less surprising in times of recession, not translating into political opinion.     

Bank ownership structure,regulations and risk-taking: evidence from commercial banks in Pakistan

This paper conducts the first empirical assessment of the theories concerning the influence of ownership structure on bank risk-taking in the presence of regulations in Pakistan. The sample used in this paper comprises a panel data of 26 banks in Pakistan, for the period from 2000 to 2014. The analysis provides evidence that increase in ownership concentration leads to an increase in bank risk-taking. Managerial ownership is associated with high risk-taking at low and high levels of managerial ownership while at intermediate level, managerial ownership has negative impact on bank risk-taking. Different types of ownership of banks in Pakistan have different impact on risk-taking. While government, family and institutional ownership have a positive impact on bank risk-taking, foreign ownership has a negative impact on bank risk-taking. Furthermore, the results show that capital regulations are important in influencing bank risk-taking with regard to higher ownership concentration. The findings of this paper suggest that the relation between bank risk-taking and capital regulations typically depends on the type of ownership.     

Does an economic incentive affect provider behavior? Evidence from a field experiment on different payment mechanisms

Aims: This study analyzed discrepancies in the quantity of medical services supplied by physicians under different payment systems for patients with different health statuses and illnesses by means of a field experiment.

Methods: Based on the laboratory experiment of Heike Hennig-Schmidt, we designed a field experiment to examine fee-for-service (FFS), capitation (CAP), and diagnosis-related group (DRG) payment systems. Medical students were replaced with 220 physicians as experimental subjects, which more closely reflected the clinical choices made by physicians in the real world. Under the three payment mechanisms, the quantity of medical services provided by physicians when they treated patients with different health statuses and illnesses were collected. Finally, relevant statistics were computed and analyzed.

Results: It was found that payment systems (sig. = 0.000) and patient health status (sig. = 0.000) had a stronger effect on physicians’ choices regarding quantity of medical services than illness types (sig. = 0.793). Additionally, under the FFS and CAP payment systems, physicians overserved patients in good and intermediate health while underserving patients in bad health. Under the DRG payment system, physicians overserved patients in good health and underserved patients in intermediate and bad health. Correspondingly, under FFS and CAP, the proportional loss of benefits was the highest for patients in bad health and the lowest for patients in good and intermediate health; while under DRGs, patients in good and intermediate health had the largest and smallest loss of benefits, respectively.

Limitations: In order to increase external effects of experiment results, we used the field experiment to replace laboratory experiment. However, the external effects still existed because of the blurring and abstraction of the parameters.

Conclusions: Medical treatment cost and price affected the quantity of medical services provided by physicians. Therefore, we proposed that a mix of payment systems could address the common interests of physicians and patients, as well as influence incentives from payment systems.     

Treatment effects of selection behavior in managed care plans: evidence from Medicaid

This paper tests whether capitated payments to Medicaid managed care plans induce to plans strategic undercutting of treatment for specific diagnostic groups. I focus on treatment (measured by length of stay and cost) in acute care hospitals in Massachusetts. I use a differences-in-differences-in-differences approach, where the third differences compare treatment patterns between managed care plans that receive capitated payments with those that do not. I find that the first reduce treatment significantly more to mental health patients than to patients in other disease groups, whereas the latter reduce hospital resource use more uniformly across disease groups. These results highlight the importance of using payment mechanisms in public programs that reflect the variability in costs of beneficiaries.Received: September 2002, Accepted: May 2003, JEL Classification: I11I thank Randall Ellis, Kevin Lang and Thomas McGuire and anonymous referees for valuable comments and suggestions. I also thank seminar participants at The Brookings Institution and Harvard/MIT/BU Health Economics Seminar. The Portuguese National Science Foundation (B.D. 5910/95) and NIMH (NIMH R01 MH59254) provided financial support. I am indebted to the Massachusetts Division of Health Care Finance and Policy for kindly providing the data to me for this project. I am responsible for any errors that may remain.     

Effects of supervision on tax compliance: Evidence from a field experiment in Austria

We conduct a field experiment on tax compliance, focusing on newly founded firms. As a novelty the effect of tax authorities’ supervision on timely tax payments is examined. Interestingly, results show no positive overall effect of close supervision on tax compliance.