RePEc: Research Papers in Economics

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  • #057
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    JEL-Codes:
    C91, D03, D83
    Keywords:
    Overconfidence, motivated cognition, self-deception, persuasion, information sampling, experiment.

    Strategically delusional

    Alice Solda, Changxia Ke, Lionel Page and William von Hippel

    We aim to test the hypothesis that overconfidence arises as a strategy to influence others in social interactions. We design an experiment in which participants are incentivised either to form accurate beliefs about their performance at a test, or to convince a group of other participants that they performed well. We also vary participants’ ability to gather information about their performance. Our results provide, the different empirical links of von Hippel and Trivers’ (2011) theory of strategic overconfidence. First, we find that participants are more likely to overestimate their performance when they anticipate that they will try to persuade others. Second, when offered the possibility to gather information about their performance, they bias their information search in a manner conducive to receiving more positive feedback. Third, the increase in confidence generated by this motivated reasoning has a positive effect on their persuasiveness.

  • #056
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    JEL-Codes:
    D91, H75, I24
    Keywords:
    Relative age, education, behavioural traits, online experiment

    Long-lasting effects of relative age at school

    Lionel Page, Dipanwita Sarkar and Juliana Silva-Goncalves

    We investigate the long lasting effects on behaviour of relative age at school. We conduct an online incentivised survey with a sample of 1007 adults, who were born at most two months before or after the school entry cut-off date in four Australian states. We find those who were among the oldest in the classroom throughout their school years display higher self-con fidence, are more willing to enter in some form of competition, declare taking more risk in a range of domains in their life and are more trusting of other people, compared to those who were among the youngest.

  • #055
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    Keywords:
    asset transfer, sustainable livelihoods, occupational choices, dietary diversity

    Moving from Extreme Poverty to Sustainable Livelihoods: Evidence from Randomized Controlled Trials in Bangladesh

    Jinnat Ara

    Do asset transfer programs to the extremely poor enable sustainable livelihoods? The study aims to explore whether transfer of capital and skills helps the ultra-poor to achieve sustainable livelihoods. CFPR-TUP program provides grant-based support services in rural Bangladesh with a view to reducing extreme poverty. Longitudinal data from randomized controlled trials shows significant positive impact of the intervention on educational outcomes of children, occupational transition, income, financial market participation, asset holdings, food security, food consumption, dietary diversity, and consumption expenditure. The trajectory of improvement from extreme poverty to sustainable livelihoods continues in the long-term, seven years after the end of the intervention.

  • #054
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    JEL-Codes:
    C92, D82, D84, G14

    How much information is incorporated in financial asset prices? Experimental Evidence

    Lionel Page and Christoph Siemroth

    We propose a new estimation method and use experimental data from multiple double auction experiments in the literature to directly estimate how much information is incorporated in financial market prices. We find that public information is almost completely reflected in prices, but that surprisingly little private information—less than 50%—is incorporated in prices. Our estimates therefore suggest that while semi-strong informational efficiency is consistent with the data, financial market prices may be very far from strong-form efficiency. We compare our estimates with beliefs of economists surveyed at the Econometric Society Meetings, and find that economists and finance researchers alike expect market prices to reflect considerably more private information than what we estimated.

  • #053

    How success breeds success

    Ambroise Decamps, Changxia Ke and Lionel Page

    We study whether and how success increases the chance of subsequent success using a real-effort laboratory experiment. We identify the causal effect of winning in a simple dynamic contest (best-of-three) using the random component of a stochastic contest success function that determines the winner of each round. We find a positive effect of an initial success on subsequent performance. Replacing either the first round or the last round of the contest with a die selecting the winner at random, we disentangle two competing explanations of the positive effect: strategic thinking and psychological effect of winning. Our results clearly support the existence of a psychological effect of winning. On the contrary, we do not find evidence that strategic thinking can explain the effect of winning. Varying the amount of feedback provided in contest, we find that the psychological effect is likely driven by improved self-confidence after experiencing a success. We suggest that contest models need to venture beyond the framework of games with complete information to explain behaviour in dynamic contests.

  • #051
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    JEL-Codes:
    C70; C91; D63; D64

    Driving a Hard Bargain is a Balancing Act: How social preferences constrain the negotiation process

    Yola Engler and Lionel Page

    We investigate the haggling process in bargaining. Using an experimental bargaining game, we find that a first offer has a significant impact on the bargaining outcome even if it is costless to reject. First offers convey information on the player's reservation value induced by his social preferences and they are most often accepted when they are not above the equal split. However, offers which request much more than the equal split induce punishing counter-offers triggered by the responder's social preferences. The bargaining outcome is therefore critically influenced by the balance of toughness and kindness signalled through the offers made in the haggling phase.

  • #050
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    JEL-Codes:
    C91, C92, D81, G10, G12
    Keywords:
    Behavioural finance, countercyclical risk aversion, time-varying risk aversion, feedback loops, financial bubbles.

    Countercyclical risk aversion and self-reinforcing feedback loops in experimental asset markets

    Anthony Newell and Lionel Page

    We design an asset market experiment in which participants are primed in a boom or bust market condition before trading. We find that pricing bubbles are significantly reduced in the markets in the bust priming condition and that mispricing of assets is larger in the boom condition. We also find that participants exhibit weaker predictive ability in the boom priming condition compared to the bust priming condition. These findings lend weight to the idea that traders’ risk attitude are time varying and that market dynamics may affect these risk attitudes, creating the possibility of feedback loops on market conditions themselves.

  • #049
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    JEL-Codes:
    D23, D83, D86, L14
    Keywords:
    contract theory, informativeness principle, quasi-experiment, outcome bias, behavioural economics.

    Fooled by performance randomness: over-rewarding luck

    Romain Gauriot and Lionel Page

    We provide evidence of a violation of the informativeness principle whereby lucky successes are overly rewarded. We isolate a quasi-experimental situation where the success of an agent is as good as random. To do so, we use high quality data on football (soccer) matches and select shots on goal which landed on the goal posts. Using non scoring shots, taken from a similar location on the pitch, as counterfactuals to scoring shots, we estimate the causal effect of a lucky success (goal) on the evaluation of the player’s performance. We find clear evidence that luck is overly influencing managers’ decisions and evaluators’ ratings. Our results suggest that this phenomenon is likely to be widespread in economic organizations.

  • #048
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    JEL-Codes:
    C91, D81, D83
    Keywords:
    search; decision under uncertainty; information; optimal stopping; real option

    Optimal hesitation, an experiment

    Ambroise Descamps, S´ebastien Massoni and Lionel Page

    We investigate how people make choices when they are unsure about the value of the options they face. At any moment in time they can make a decision or choose to wait and acquire more information before making their mind. We design a laboratory experiment to study whether human behaviour is able to approximate the optimal solution to this problem. We find that participants deviate from the optimal strategy in a systematic manner: they acquire too much information when it is costly and not enough when it is cheap. With time, participants tend to learn, without converging towards equilibrium. This deviation costs participants between 10% and 25% of their potential payoffs. We examine various explanations to our results, and find that the most likely one is that participants exhibit a confirmation bias.

  • #047
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    JEL-Codes:
    A13, D72
    Keywords:
    social preferences, voting behavior, online survey

    Assessing the unidimensionality of political opinions. An indirect test of the persuasion bias

    Lionel Page

    In an influential paper, DeMarzo, Vayanos, and Zwiebel propose a model of persuasion bias whereby people are overly influenced by repetitive information. Such a persuasion bias leads political opinions to be unidimensional with individuals converging to a single "left-right" dimension on every issues. Using a large dataset on political opinions on a wide range of issues just before a presidential election in France, I test whether political opinions are indeed unidimensional. I find that political opinions are far from being unidimensional and I discuss what it means for the persuasion model.

  • #046

    Nash at Wimbledon: Evidence from Half a Million Serves

    Romain Gauriot, Lionel Page and John Wooders

    Minimax and its generalization to mixed strategy Nash equilibrium is the cornerstone of our understanding of strategic situations that require decision makers to be unpredictable. Using a dataset of nearly half a million serves from over 3000 matches, we examine whether the behavior of professional tennis players is consistent with the Minimax Hypothesis. The large number of matches in our dataset requires the development of a novel statistical test, which we show is more powerful than the tests used in prior related studies. We find that win rates conform remarkably closely to the theory for men, but conform somewhat less neatly for women. We show that the behavior in the field of more highly ranked (i.e., better) players conforms more closely to theory.

  • #045

    Investigating gender differences under time pressure in financial risk taking

    Zhixin Xie, Lionel Page and Ben Hardy

    We investigate the nature of gender differences in financial risk taking under time pressure. Motivated by the large gender imbalance on financial trading floor we investigate gender differences under pressure and whether testosterone plays a role in gender differences in risk attitude under pressure. We find that testosterone exposure affects both outcome and probability sensitivity in men. We also find that testosterone exposure makes men relatively more risk seeking and optimistic when having to make risky decision under time pressure.

  • #044
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    JEL-Codes:
    C71, C92, D72, D74
    Keywords:
    Shapley Value, (Non) Binding Agreement, Balance of Power, Communication

    Too big to prevail: Coalition formations in the presence of a superpower

    Changxia Ke, Florian Morath, Anthony Newell and Lionel Page

    In this study we investigate the effect of players' power on the formation of coalitions to divide a prize when the assumption that coalition formation involves binding agreements on how to split the prize is relaxed. In our experimental setup with one powerful ('strong') player and three standard ('weak') players, we vary the strong players voting rights in one dimension and manipulate the timing of agreement and communication on the prize division in the other dimension (i.e., whether binding agreement on prize division and furthermore whether non-binding communication on prize-split intentions at the stage of coalition formation is available). We predict and find: first, with binding agreement, the results of the game and the players average payoff are (surprisingly closely) in line with the relative power of the players as measured by their Shapley value. Second, when binding agreement on the division of the prize is not possible at the stage of coalition formation, the strong player's likelihood to be part of the winning coalition and his average payoff stays high if he is not 'too strong' but it decreases significantly if his voting rights increase further. Third, communication at the coalition formation stage mitigates this negative effect of the absence of binding agreements for powerful players.

  • #043
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    Keywords:
    sports economics; professional team sports; efficiency wages

    Striking strikers. A case of player mispricing in Association Football

    Lionel Page, Markus Schaffner and Marie Beigelman

    We investigate whether variations in players' market values across positions in Association Football (soccer) reflect variations in contribution to the team on-field performance. Using data from the British Premier League, we find that the marginal effect of strikers' (and to some extent goal keepers') market value on team performance is lower than for other players. This suggests that strikers are overpriced relative to other players. The market value of these players is less related to their on-field performance than for players placed in defence or in mid-field.

  • #042

    The impact of endogenous occupational attainment on native-migrant wage distributions

    Dipanwita Sarkar and Michael Kidd

    This paper examines distributional differences in native-migrant wages when occupational attainment is treated as endogenous. We evaluate differential treatment of immigrants both within occupation and that arising from differential access to occupations. The distributional approach we employ is innovative in that it enables one to capture the interaction between changing occupational distributions and consequent changes in the level of human capital skills within occupation. Our results find strong support for the existence of discrimination in general, and employment discrimination in particular. However, the mechanisms differ across occupations giving rise to heterogeneity both across earnings distributions and occupations.

  • #041
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    JEL-Codes:
    D40, D82, D83
    Keywords:
    Search, location, spatial analysis

    Disappointment looms around the corner: Visibility and local businesses' market power

    Jeanne DALL'ORSO, Romain GAURIOT and Lionel PAGE

    We investigate how restaurants can use high visibility locations to charge higher prices or offer lower quality to customers who are imperfectly informed and face search costs. We use a large dataset of user reviews in 10 large cities in North America and Europe. We find that prime locations in terms of visibility such as touristic locations or street intersections are associated with substantial lower customer satisfaction. This result can be explained by economic models of search. Restaurants with greater visibility face a larger number of uninformed customers and have therefore less need to rely on quality or low price to attract customers.

  • #040
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    JEL-Codes:
    I24, J15, J31
    Keywords:
    Immigrant assimilation, tertiary education, stochastic frontier

    Does Host-Country Education Mitigate Immigrant Inefficiency? Evidence from Earnings of Australian University Graduates

    Dipanwita Sarkar and Trevor Collier

    transferability of skills remains a dominant argument in explaining lower earnings of immigrants. Acquisition of host-country education plays a critical role in overcoming this disadvantage. Using a stochastic frontier approach to compare earnings of native and foreign-born graduates from Australian universities, the authors evaluate the importance of host-country education in reducing earnings inefficiency of immigrants. Although immigrants are found to be initially more inefficient than natives, they assimilate towards the earnings frontier over time. Substantial variation in inefficiency and assimilation patterns exist across immigrants with differing residency status and ethnicity. Non-English background increases inefficiency for immigrants, but more so for non-residents. Consistent with the tightening of selection criteria in Australia, recent immigrant cohorts are found to be more efficient.

  • #039
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    JEL-Codes:
    C25; C70; C91; D63; D64

    Guilt-Averse or Reciprocal? Looking at Behavioural Motivations in the Trust Game

    Yola Engler, Rudolf Kerschbamer and Lionel Page

    For the trust game, recent models of belief-dependent motivations make opposite predictions regarding the correlation between back-transfers and secondorder beliefs of the trustor: While reciprocity models predict a negative correlation, guilt-aversion models predict a positive one. This paper tests the hypothesis that the inconclusive results in previous studies investigating the reaction of trustees to their beliefs are due to the fact that reciprocity and guilt-aversion are behaviorally relevant for different subgroups and that their impact cancels out in the aggregate. We find little evidence in support of this hypothesis and conclude that type heterogeneity is unlikely to explain previous results.

  • #038

    Do agents maximise? Risk taking on first and second serves in tennis

    Jeffrey Ely, Romain Gauriot and Lionel Page

    We investigate whether expert players with high incentives are able to optimally determine their degree of risk taking in contest. We use a large dataset on tennis matches and look at players risk taking on first and second serves. We isolate a specic situation, let serves, where second serves and first serves occur in a way which is as good as random. This creates the setting of a quasi-experiment which we can use to study players' serving strategies on first and second serves in comparable serving situations. We find that players, both men and women, are able to adopt serving strategies which meet the requirements of optimality arising from simple assumptions about risk-return trade-offs in serves.

  • #037
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    JEL-Codes:
    A13, D72
    Keywords:
    social preferences, voting behavior, online experiment

    Zoon politikon or homo oeconomicus ? How do people vote?

    Lionel Page and Paul Antoine-Chevalier

    Why people vote and how they decide to allocate their vote is still a challenging question for economic analysis. We investigate the extent to which voting decisions are determined by political values, economic interest or even simply candidates' individual characteristics. To do so, we use a large scale online survey recording social preferences and political choices of voters for candidates in the 2007 French Presidential election. We find that political values matter but that the effect of differences in political position is much smaller than the effect of the voters' perceived economic interest. We also find that the individual characteristics of the candidates play a significant role.

  • #036
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    JEL-Codes:
    D02, D03, D7, H8, Z10, Z18
    Keywords:
    Social Identity, European Integration, Currency Union, Difference-in-Difference

    Can a Common Currency Foster a Shared Social Identity across Different Nations? The Case of the Euro

    Franz Buscha, Daniel Muller and Lionel Page

    Fostering the emergence of a "European identity" was one of the declared goals of the euro adoption. Now, years after the physical introduction of the common currency, we assess whether there has been an effect on a shared European identity. We use two different datasets in order to assess the impact of the euro adoption on the fostering of a self-declared "European Identity". We find that the effect of the euro is statistically insignificant although it is precisely estimated. This result holds important implications for European policy makers. It also sheds new light on the formation of social identities.

  • #035
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    JEL-Codes:
    C91; C92; D63; D64
    Keywords:
    Social Preferences; Other-Regarding Preferences; Intentions; Reciprocity; Trust Game;

    Why did he do that? Using counterfactuals to study the effect of intentions in extensive form games.

    Yola Engler, Rudolf Kerschbamer and Lionel Page

    We investigate the role of intentions in two-player two-stage games. For this purpose we systematically vary the set of opportunity sets the first mover can chose from and study how the second mover reacts not only to opportunities of gains but also of losses created by the choice of the first mover. We find that the possibility of gains for the second mover (generosity) and the risk of losses for the first mover (vulnerability) are important drivers for second mover behavior. On the other hand, efficiency concerns and an aversion against violating trust seem to be far less important motivations. We also find that second movers compare the actual choice of the first mover and the alternative choices that would have been available to him to allocations that involve equal material payoffs.

  • #034
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    JEL-Codes:
    C91, D03, D90
    Keywords:
    time preference, discounted utility, instantaneous utility, choice list

    Recent developments in the experimental elicitation of time preference

    Stephen L. Cheung

    This methodological survey reviews recent developments in the design of experiments to elicit individuals' time preferences, with a focus on the measurement or control for potentially non-linear utility. While the objective of a time preference experiment is usually to estimate parameters of a discount function, assumptions concerning the nature of utility may have an important influence upon these estimates. The survey classifies experiment designs on two dimensions: whether they assume an equivalence between utility under risk and over time, and whether they result in an estimate of the curvature of utility.

  • #033
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    JEL-Codes:
    C91, D81
    Keywords:
    ambiguity aversion, decision under uncertainty, Ellsberg experiments

    Ambiguity aversion is the exception

    Martin G. Kocher, Amrei Marie Lahno and Stefan T. Trautmann

    An extensive literature has studied ambiguity aversion in economic decision making, and how ambiguity aversion can account for empirically observed violations of expected utility-based theories. Almost all relevant applied models presume a general dislike of ambiguity. In this paper, we provide a systematic experimental assessment of ambiguity attitudes in different likelihood ranges and in the gain domain, the loss domain and with mixed outcomes. We draw on a unified framework with more than 500 participants and find that ambiguity aversion is the exception, not the rule. We replicate the usual finding of ambiguity aversion for moderate likelihood gains. However, when introducing losses or lower likelihoods, we observe either ambiguity neutrality or even ambiguity seeking behavior. Our results are robust to different elicitation procedures.

  • #032
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    JEL-Codes:
    D20; O30
    Keywords:
    Innovation; Scientific Collaboration; Team Formation; Nobel Laureates

    The First Cut is the Deepest: Repeated Interactions of Coauthorship and Academic Productivity in Nobel Laureate Teams

    Ho Fai Chan, Ali Sina Onder and Benno Torgler

    Despite much in-depth investigation of factors influencing this evolution in various scientific fields, our knowledge about how efficiency or creativity is linked to the longevity of collaborative relationships remains very limited. We explore what Nobel laureates' coauthorship patterns reveal about the nature of scientific collaborations looking at the intensity and success of scientific collaborations across fields and across laureates' collaborative lifecycles in physics, chemistry, and physiology/medicine. We find that more collaboration with the same researcher is actually no better for advancing creativity: publications produced early in a sequence of repeated collaborations with a given coauthor tend to be published better and cited more than papers that come later in the collaboration with the same coauthor. Thus, our results indicate that scientific collaboration involves conceptual complementarities that may erode over a sequence of repeated interactions.

  • #031
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    JEL-Codes:
    J01, J15, J44
    Keywords:
    alphabetic order effect, citations, coauthorships, endogenous teams, contests

    Endogenous selection into single and coauthorships by surname initials in economics and management

    David Ong, Ho Fai Chan, Benno Torgler and Yu (Alan) Yang

    Many prior studies suggest that alphabetic ordering confers professional advantages on authors with earlier surname initials. However, these studies assume that authors select into coauthorships without regard to the incentives identified. We consider the alternative and develop a model of endogenous selection into single and coauthorships for economics, which uses alphabetical ordering. We then tested it with authorship data from economics, with management (which does not use alphabetical ordering) as a benchmark. We predicted that lower "quality" authors with earlier surnames would be less desirable as coauthors, while higher quality authors with later surnames would have a lower desire to coauthor. Both types of authors are therefore more likely to single author. Furthermore, higher quality authors with earlier surnames should have more and better coauthoring options. Consistent with our predictions, we found citation ranks were increasing on surnames for single-authored works and decreasing for coauthored in economics, both absolutely and compared to management. Also as predicted, this effect is driven by lower-tier journals in which there is likely a thinner market for coauthors. Furthermore, comparing citation ranks of first-authors of alphabetical and nonalphabetical papers shows that the "larger share" effect of being first is dominated by the "smaller pie" effect of selection from second authors who will accept a smaller share.

  • #030
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    Keywords:
    Daylight saving time, Risk-taking behaviour, Cognitive performance, Field experiment

    The Implications of Daylight Saving Time: A Field Experiment on Cognitive Performance and Risk Taking

    Markus Schaffner, Jayanta Sarkar, Benno Torgler and Uwe Dulleck

    To explore the effects of daylights saving time (DST) transition on cognitive performance and risk-taking behaviour immediately before and one week after the shift to DST, this study examines two Australian populations living in similar geographic surroundings who experience either no DST transition (Queensland) or a one-hour DST desynchronization (New South Wales). This exogenous variation creates natural control (QLD) and treatment (NSW) groups that enable isolation and identification of the DST transition's effect on the two outcome variables. Proximity to the border ensures similar socio-demographic and socio-economic conditions and thus permits comparison of the cognitive performance and risk-taking behaviour of affected versus unaffected individuals. The results suggest that exposure to the DST transition has no significant impact on either cognitive performance or risk-taking behaviour.

  • #029
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    Keywords:
    Month of birth; Non-cognitive skills; Risk preferences; Self-confidence; Professional aspirations

    The older the bolder? Does relative age among peers influence children's confidence and risk attitudes?

    Lionel Page, Dipanwita Sarkar and Juliana S. Goncalves

    Relative age at school has been found to have long lasting consequences on a wide range of economic and social outcomes. We investigate the roots of these differences and study whether the relative age position of children at school plays a role in shaping their behavioural traits. We run a controlled experiment in high schools across two states in Australia. More than 600 students who are the very oldest or very youngest in their classroom participated. We elicit their preferences for competition, overconfidence, risk and ambiguity aversion, and professional aspirations. Overall, we find only mild evidence of an effect of relative age on the traits investigated.

  • #028

    Does success breed success? A quasi-experiment on strategic momentum in dynamic contests

    Romain Gauriot and Lionel Page

    We investigate whether professional agents react to changes of incentives during dynamic contests as predicted by contest theory. Using a large data set of point by point ball tracking data from tennis matches over the period 2005-2009, we exploit the randomised variation in point results that occurs when balls bounce very close from the court's line to estimate the causal effect of winning a point on the chance to win the next point. In line with predictions from contest theory, we find evidence of a substantial momentum effect for male players. We do not find any significant effect for female players, suggesting the possible existence of gender differences in how agents react to incentives in contests.

  • #027
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    JEL-Codes:
    C92, D72, H41
    Keywords:
    Global Public Goods, Delegation, Cooperation, Experiment

    Providing global public goods: Electoral delegation and cooperation

    Martin G. Kocher, Fanagfang Tan and Jing Yu

    This paper experimentally examines the effect of electoral delegation on providing global public goods shared by several groups. Each group elects a delegate who can freely decide on each group member's contribution (including the contribution of herself) to the global public good. Our results show that people mostly vote for delegates who assign equal contributions for every group member. However, in contrast to standard theoretical predictions, unequal contributions across groups drive cooperation down over time, and it decreases efficiency by almost 50% compared to the benchmark. This pattern is not driven by delegates trying to exploit their fellow group members, as indicated by the theory - quite to the opposite, other-regarding preferences and a re-election incentives guarantee that delegates assign equal contributions for all group members. Since the source of the resulting inefficiency is the polycentric nature of global public goods provision together with other-regarding preferences, we use the term P-inefficiency to describe our finding.

  • #026
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    JEL-Codes:
    I24, I25, I28
    Keywords:
    Education, Incentives, Achievement, Indigenous, Program Evaluation, Policy

    Impact Evaluation of an Incentive Program on Educational Achievement of Indigenous Students

    Uwe DUlleck, Juliana Silva-Goncalves and Benno Torgler

    This paper reports on an evaluation of the Fogs Artie program, designed to improve educational outcomes of Australian Indigenous students. In 2012, all Indigenous students enrolled in 21 high schools in Queensland were offered in-kind incentives conditional on their achievement of a specific target for academic grades, behaviour and attendance, coupled with information sessions on the importance of educational achievement. Using a differences-in-differences strategy, we find that the program improved behavioural and academic grades and reduced the number of unexplained absences for female students, but not for male students. In contrast, the program improved scores on a standardized national assessment test for male students. Moreover, we find that the program is only effective for students belonging to intact families.

  • #025
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    JEL-Codes:
    H26, B40, B52, C63, D03, Z19
    Keywords:
    tax compliance, tax morale, tax evasion, biology, genetics, neurobiology, demography, human drives, agent-based modelling

    Can Tax Compliance Research Profit from Biology?

    Benno Torgler

    Historically, tax compliance has been a highly interdisciplinary avenue of research to which economics, psychology, law, sociology, history, political science, and accountancy have made valuable contributions. It is less well understood, however, whether we can glean useful insights into tax compliance by moving beyond the social sciences. In particular, the literature pays little attention to the relevance of biology. This paper attempts to remedy this shortcoming by examining the potential opportunities and limitations of introducing biological concepts into tax compliance research.

  • #024
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    JEL-Codes:
    L83, D12, R22, Z19
    Keywords:
    outcome uncertainty, soccer, football, consumer demand, attendance, season ticket holders.

    Any Given Sunday: How Season Ticket Holders' Time of Stadium Entrance Is Influenced by Outcome Uncertainty

    Dominik Scheyer, Sascha L. Schmidt and Benno Torgler

    This paper constitutes a unique micro-level exploration of the relation between game outcome uncertainty and the behavior of highly committed season ticket holders of a major Bundesliga soccer team. Specifically, we look at 3,113 season ticket holders attending all 17 home games in the 2012-13 season and explore whether outcome uncertainty had an impact on their stadium arrival time. We find strong evidence that increased uncertainty about the expected outcome prompts these spectators to enter the stadium earlier. Moreover, season ticket holders travelling from outside the hosting city or paying higher season ticket prices exhibit a stronger reaction to uncertainty compared with season ticket holders in the standing section. We also find that younger spectators are less likely to arrive late when uncertainty increases.

  • #023
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    JEL-Codes:
    D03, D72, D83, H70
    Keywords:
    Power, religion, voting, referenda, trust, rules of thumb

    The Power of Religious Organizations in Human Decision Processes: Analyzing Voting Behavior

    Benno Torgler, Davis Stadelmann and Marco Portmann

    In Switzerland, two key church institutions - the Conference of Swiss Bishops (CSB) and the Federation of Protestant Churches (FPC) - make public recommendations on how to vote for certain referenda. We leverage this unique situation to directly measure religious organizations' power to shape human decision making. We employ an objective measure of voters' commitment to their religious organization to determine whether they are more likely to vote in line with this organization's recommendations. We find that voting recommendations do indeed matter, implying that even in a secularized world, religion plays a crucial role in voting decisions.

  • #022
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    JEL-Codes:
    D40, L10
    Keywords:
    behavioural economics, expected utility theory, experiments, expectations, probabilities

    Expectation Formation in an Evolving Game of Uncertainty: Theory and New Experimental Evidence

    Gigi Foster, Paul Frijters, Markus Schaffner and Benno Torgler

    We examine the nature of stated subjective probabilities in a complex, evolving context in which true event probabilities are not within subjects' explicit information set. Speci cally, we collect information on subjective expectations in a car race wherein participants must bet on a particular car but cannot influence the odds of winning once the race begins. In our setup, the actual probability of the good outcome (a win) can be determined based on computer simulations from any point in the process. We compare this actual probability to the subjective probability participants provide at three di erent points in each of 6 races. We fi nd that the S-shaped curve relating subjective to actual probabilities found in prior research when participants have direct access to actual probabilities also emerges in our much more complex situation, and that there is only a limited degree of learning through repeated play. We show that the model in the S-shaped function family that provides the best fi t to our data is Prelec's (1998) conditional invariant model.

  • #021
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    JEL-Codes:
    A11, A13, Z18, Z19
    Keywords:
    Academic Performance, Scholarly Importance, Market for Economists, Social Importance of Economists, External and Internal Influence, Book Prizes, TED Talks

    Do the Best Scholars and Economists Attract the Highest Speaking Fees?

    Ho Fai Chan, Bruno S. Frey, Jana Gallus, Markus Schaffner, Benno Torgler and Stephen Whyte

    External prominence (measured by the number of pages indexed on search engines or TED talk invitations) can be capitalized on the speakers' market while research performance (measured by publication and citation indicators) cannot. There is thus a clear distinction between the capitalization of external and internal prominence. Success through authorship of books is also positively correlated with speaking fees, however once we control for external prominence the statistical significance disappears. We find that academics profit from having been awarded a major book prize.

  • #020
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    JEL-Codes:
    A11, A13, Z18, Z19
    Keywords:
    Academia, Scholarly Importance, Role of Economics, Social Importance of Economists, External and Internal Influence, Academic Performance, Awards.

    External Influence as an Indicator of Scholarly Importance

    Ho Fai Chan, Bruno S. Frey, Jana Gallus, Markus Schaffner, Benno Torgler and Stephen Whyte

    The external influence of scholarly activity has to date been measured primarily in terms of publications and citations, metrics that also dominate the promotion and grant processes. Yet the array of scholarly activities visible to the outside world are far more extensive and recently developed technologies allow broader and more accurate measurement of their influence on the wider societal discourse. Accordingly we analyze the relation between the internal and external influences of 723 top economics scholars using the number of pages indexed by Google and Bing as a measure of their external influence. Although the correlation between internal and external influence is low overall, it is highest among recipients of major key awards such as the Nobel Prize or John Bates Clark medal, and particularly strong for those ranked among the top 100 researchers.

  • #019
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    JEL-Codes:
    H26, C93, K42
    Keywords:
    : tax compliance, tax evasion, field experiment, deterrence, tax enforcement, supervision

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

    Katharina Gangl, Benno Torgler, Erich Kirchler and Eva Hofmann

    The tax compliance literature has mainly focused on individual tax evasion rather than firm tax evasion. In general, there is a lack of field experiments on the topic, and measuring tax compliance is challenging. To address this shortcoming in the literature, we conduct a field experiment on firm tax compliance looking at newly founded firms. As a novelty we explore how firms react to closer supervision by the tax administration, looking at timely paying which has no measurement biases. Interestingly, we observe a crowding-out effect of supervision on timely paying of taxes. On the other hand, for those who were non-compliant, supervision reduced the tax amount that was due.

  • #018
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    JEL-Codes:
    P16;P17;P21;P35;P51;P52;Z12
    Keywords:
    Religious identity, public goods, collectivism, individualism, local government, centralization, Russia, Israel

    Religious Identity, Public Goods and Centralization: Evidence from Russian and Israeli Cities

    Benno Torgler and Theocharis Grigoriadis

    In this paper, we analyze the effects of religious identity - defined both as personal identification with a religious tradition and institutional ideas on the provision of public goods - on attitudes toward central government. We explore whether citizens belonging to collectivist rather than individualist religious denominations are more likely to evaluate their central government positively. Moreover, we explore whether adherence to collectivist norms of economic and political organization leads to a positive evaluation of central government. Surveys were conducted in Russia and Israel as these countries provide a mosaic of three major world religions - Judaism, Eastern Orthodoxy and Sunni Islam. The information gathered also allows us to study whether attitudes towards religious institutions such as the Russian Orthodox Church, the Chief Rabbinate in Jerusalem, the Jerusalem Islamic Waqf, and the Greek-Orthodox Patriarchate of Jerusalem in Israel are able to predict positive attitudes toward centralized forms of governance. We find strong support for the proposition that collectivist norms and an institutional religious identity enhance positive attitudes towards central government.

  • #017
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    JEL-Codes:
    M52, J33, Z13
    Keywords:
    Nobel Prize, Nobel Laureates, Awards, Recognition, Educational Background, Theory, Empirics, Chemistry, Physics, Physiology or Medicine

    THE IMPLICATIONS OF EDUCATIONAL AND METHODOLOGICAL BACKGROUND FOR THE CAREER SUCCESS OF NOBEL LAUREATES: LOOKING AT MAJOR AWARDS

    Ho Fai Chan and Benno Torgler

    Nobel laureates have achieved the highest recognition in academia,reaching the boundaries of human knowledge and understanding. Owing to past research, we have a good understanding of the career patterns behind their performance. Yet, we have only limited understanding of the factors driving their recognition with respect to major institutionalized scientific honours. We therefore look at the award life cycle achievements of the 1901 to 2000 Nobel laureates in physics, chemistry and physiology or medicine. The results show that Nobelists with a theoretical orientation are achieving more awards than laureates with an empirical orientation. Moreover, it seems their educational background shapes their future recognition. Researchers educated in Great Britain and the US tend to generate more awards than other Nobelists although there are career pattern differences. Among those, laureates educated at Cambridge or Harvard are more successful in Chemistry, those from Columbia and Cambridge excel in Physics, while Columbia educated laureates dominate in Physiology or Medicine.

  • #016
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    Keywords:
    Experimental Economics, Programming, CORAL

    Programming for Experimental Economics: Introducing CORAL - a lightweight framework for experimental economic experiments

    Markus Schaffner

    The field of experimental economics is past its 50th anniversary and is celebrating its 2nd Nobel prize winner. By far the largest number of economic experiments are now conducted in computer labs, although there is a wide array of settings, ranging from pen-and-paper to elaborate field settings. The controlled environment of the computer lab remains a strong foothold for experimental research. On top of the high level of control, including the standardisation of recruitment protocol and software used, the ease of data collection singles out the lab environment as a key instrument for the testing of economic theory and market mechanics. A number of tools and procedures have developed over the recent decades shaping how experiments are conducted. Z-tree (Fischbacher, 2007) has been established as the quasi-standard tool to conduct experiments. This paper introduces a novel view on how to approach programming for experiments, specifically it introduces a number of innovations from professional software development into the programming of economic experiments. Finally the lightweight experimental software framework CORAL will be introduced.

  • #015
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    JEL-Codes:
    F50, F23, G30
    Keywords:
    Global Attitudes, Intangible Assets, Internalization, Multinational Corporation, Geographic Diversification

    Business in troubled waters: Does adverse attitude affect firm value? forthcoming, Journal of Corporate Finance

    Jung Chul Park, Dipanwita Sarkar, Jayanta Sarkar and Keven Yost

    This paper investigates the relationship between US MNCs' valuations and anti-Americanism in countries where MNCs' foreign subsidiaries are located. We find that MNCs suffer value-destruction when they enter markets where people express severe anti-Americanism. However, we uncover that geographic diversification into these high anti-Americanism countries significantly increases firm value if the MNC has high levels of intangibles such as technological know-how and marketing expertise. Our findings are consistent with the notion that the advantages from internalizing the cross-border transfer of intangibles are greater when barriers to competition are higher.

  • #012

    Gender and other determinants of trust and reciprocity in an experimental labour market amongst Chinese students

    Uwe Dulleck, Jonas Fooken and Yumei He

    Due to economic and demographic changes highly educated women play an important role on the Chinese labour market. Gender has been shown to be an important characteristic that influences behaviour in economic experiments, as have, to a lesser degree, academic major, age and income. We provide a study looking at trust and reciprocity and their determinants in a labour market laboratory experiment. Our experimental data is based on two games, the Gift Exchange Game (GEG) and a variant of this game (the Wage Promising Game, WPG) where the employer's wage off er is non-binding and the employer can choose the wage freely after observing the workers e ffort. We find that women are less trusting and reciprocal than men in the GEG while this cannot be found in the WPG. Letting participants play the GEG and the WPG, allows us to disentangle reciprocal and risk attitudes. While in the employer role, it seems to be that risk attitude is the main factor, this is not con firmed analysing decisions in the worker role.

  • #011

    Tactical Voting and Voter's Sophistication in British Elections

    St'ephane Dupraz, Daniel Muller and Lionel Page

    Although tactical voting attracts a great deal of attention, it is very hard to measure as it requires knowledge of both individuals' voting choices as well as their unobserved preferences. In this paper, we present a simple empirical strategy to nonparametrically identify tactical voting patterns directly from balloting results. This approach allows us to study the magnitude and direction of strategic voting as well as to verify which information voters and parties take into account to determine marginal constituencies. We show that tactical voting played a significant role in the 2010 election, mainly for Liberal-Democratic voters supporting Labour. Moreover, our results suggest that voters seem to form their expectations based on a national swing in vote shares rather than newspaper guides published in the main media outlets or previous election outcomes. We also present some evidence that suggests that campaign spending is not driving tactical voting.

  • #010
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    JEL-Codes:
    D08;D81;D87
    Keywords:
    s risk preferences

    The role of psychological and physiological factors in decision making under risk and in a dilemma

    Jonas Fooken and Markus Schaffner

    We study the di fference in the result of two diff erent risk elicitation methods by linking estimates of risk attitudes to gender, age, personality traits, a decision in a dilemma situation, and physiological states measured by heart rate variability (HRV). Our results indicate that di fferences between the methods are reflected in a diff erent effect of gender and personality traits. Furthermore, HRV is linked to risk-taking in the experiment for one of the methods, suggesting that emotionally more stressed individuals display more risk aversion. However, we cannot determine if these are signifi cantly related to the diff erence on the results of the two methods. Finally, we find that risk attitudes are not predictive of the ability to decide in a dilemma, but personality traits are. There is also no apparent relationship between the physiological state during the dilemma situation and the ability to make a decision.

  • #009
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    Keywords:
    relative age effect, political selection, regression discontinuity design, school entry cut-off dates, leadership

    Political Selection and the Relative Age Effect

    Daniel Muller and Lionel Page

    We present substantial evidence for the existence of a bias in the distribution of births of leading US politicians in favor of those who were the eldest in their cohort at school. The result is robust to both parametric and nonparametric tests and is not driven by measurement error, redshirting or a sorting effect of highly educated parents. The magnitude of the effect we estimate is larger than what other studies on 'relative age effects' find for broader (adult) populations, but is in general consistent with research that looks at high-competition environments. The findings are in line with a multiplier effect of early human capital acquisition (Cunha and Heckman, 2007) whereby early skill accumulation lowers the cost of further investments.

  • #008

    Exit Polls, Turnout, and Bandwagon Voting: Evidence from a Natural Experiment

    Rebecca B. Morton, Daniel Mueller, Lionel Page and Benno Torgler

    We exploit a voting reform in France to estimate the causal eff ect of exit poll information on turnout and bandwagon voting. Before the change in legislation, individuals in some French overseas territories voted after the election result had already been made public via exit poll information from mainland France. We estimate that knowing the exit poll information decreases voter turnout by about 12 percentage points. Our study is the fi rst clean empirical design outside of the laboratory to demonstrate the e ffect of such knowledge on voter turnout. Furthermore, we fi nd that exit poll information signi ficantly increases bandwagon voting; that is, voters who choose to turn out are more likely to vote for the expected winner.

  • #007
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    JEL-Codes:
    D03 D81 C93
    Keywords:
    Decision under risk, large losses, natural experiment

    Variation in risk seeking behavior following large losses: A natural experiment

    Lionel Page, David A. Savage and Benno Torgler

    This study explores people's risk attitudes after having suff ered large real-world losses following a natural disaster. Using the margins of the 2011 Australian floods (Brisbane) as a natural experimental setting, we find that homeowners who were victims of the floods and face large losses in property values are 50% more likely to opt for a risky gamble { a scratch card giving a small chance of a large gain ($500,000) { than for a sure amount of comparable value ($10). This finding is consistent with prospect theory predictions of the adoption of a risk-seeking attitude after a loss.

  • #006
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    JEL-Codes:
    J16, J24
    Keywords:
    Research Productivity, Human Capital, Graduate Education, Gender Differences

    Are all High-Skilled Cohorts Created Equal? Unemployment, Gender, and Research Productivity

    John P. Conley, Ali Sina Onder and Benno Torgler

    Using life cycle publication data of 9,368 economics PhD graduates from 127 U.S. institutions, we investigate how unemployment in the U.S. economy prior to starting graduate studies and at the time of entry into the academic job market affect economics PhD graduates' research productivity. We analyze the period between 1987 and 1996 and find that favorable conditions at the time of academic job search have a positive effect on research productivity (measured in numbers of publications) for both male and female graduates. On the other hand, unfavorable employment conditions at the time of entry into graduate school affects female research productivity negatively, but male productivity positively. These findings are consistent with the notion that men and women differ in their perception of risk in high skill occupations. In the specific context of research-active occupations that require high skill and costly investment in human capital, an ex post poor return on undergraduate educational investment may cause women to opt for less risky and secure occupations while men seem more likely to "double down" on their investment in human capital. Further investigation, however, shows that additional factors may also be at work.

  • #005
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    JEL-Codes:
    D03, D72, D83, H70
    Keywords:
    Bounded rationality, voting, referenda attention, rules of thumb

    Bounded Rationality and Voting Decisions Exploring a 160-Year Period

    David Stadelmann and Benno Torgler

    Using a natural voting experiment in Switzerland that encompasses a 160-year period (1848-2009), we investigate whether a higher level of complexity leads to increased reliance on expert knowledge. We find that when more referenda are held on the same day, constituents are more likely to refer to parliamentary recommendations in making their decisions. This finding holds true even when we narrow our focus to referenda with a relatively lower voter turnout on days on which more than one referendum was held. We also show that when constituents face a higher level of complexity, they listen to parliament rather than interest groups.

  • #004
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    JEL-Codes:
    A13, C23, M52
    Keywords:
    Awards, Incentives, Research, John Bates Clark Medal, Synthetic control method

    Does The John Bates Clark Medal Boost Subsequent Productivity And Citation Success?

    Ho Fai Chan, Bruno S. Frey, Jana Gallus and Benno Torgler

    Despite the social importance of awards, they have been largely disregarded by academic research in economics. This paper investigates whether a specific, yet important, award in economics, the John Bates Clark Medal, raises recipients' subsequent research activity and status compared to a synthetic control group of nonrecipient scholars with similar previous research performance. We find evidence of positive incentive and status effects that raise both productivity and citation levels.

  • #002
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    JEL-Codes:
    J7;C93;P36
    Keywords:
    labor market discrimination, artefactual field experiment, hukou

    Public Policy and Individual Labor Market Discrimination: An Artefactual Field Experiment in China

    Uwe Dulleck, Jonas Fooken and Yumei He

    We study discrimination based on the hukou system, a policy segregating migrants and locals in urban China. We hired household aids as participants in our artefactual field experiment and use a gift exchange game to study labor market discrimination. We fi nd that social discrimination based on hukou status also implies individual level discrimination. To identify whether discrimination is statistical or taste-based we introduce the wage promising game, a gift exchange game with a cheap talk wage promise. We find that discrimination is taste-based: Status is exogenous for our participants, migrants and locals behave similarly and discrimination increases when reasons for statistical discrimination are removed.

  • #001
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    JEL-Codes:
    H26, H41, K42, D31, D63, C91
    Keywords:
    tax compliance, psychic costs, stress, tax morale, cooperation, heart rate variability, biomarkers, experiment

    Tax Compliance and Psychic Costs: Behavioral Experimental Evidence Using a Physiological Marker

    Uwe Dulleck, Jonas Fooken, Cameron Newton, Andrea Ristl, Markus Schaffner and Benno Torgler

    Although paying taxes is a key element in a well-functioning civilized society, the understanding of why people pay taxes is still limited. What current evidence shows is that, given relatively low audit probabilities and penalties in case of tax evasion, compliance levels are higher than would be predicted by traditional economics-of-crime models. Models emphasizing that taxpayers make strategic, financially motivated compliance decisions, seemingly assume an overly restrictive view of human nature. Law abidance may be more accurately explained by social norms, a concept that has gained growing importance as a facet in better understanding the tax compliance puzzle. This study analyzes the relation between psychic cost arising from breaking social norms and tax compliance using a heart rate variability (HRV) measure that captures the psychobiological or neural equivalents of psychic costs (e.g., feelings of guilt or shame) that may arise from the contemplation of real or imagined actions and produce immediate consequential physiologic discomfort. Specifically, this nonintrusive HRV measurement method obtains information on activity in two branches of the autonomous nervous system (ANS), the excitatory sympathetic nervous system and the inhibitory parasympathetic system. Using time-frequency analysis of the (interpolated) heart rate signal, it identifies the level of activity (power) at different velocities of change (frequencies), whose LF (low frequency) to HF (high frequency band) ratio can be used as an index of sympathovagal balance or psychic stress. Our results, based on a large set of observations in a laboratory setting, provide empirical evidence of a positive correlation between psychic stress and tax compliance and thus underscore the importance of moral sentiment in the tax compliance context.