With Puja Bhattacharya. Conditionally accepted, Economic Inquiry.
Abstract. We conduct an experiment to examine promise-keeping in a trust game. The design allows the trustor to buy insurance that partially protects her investment, signaling expectations about whether the trustee will honor a promise. Contrary to expectation-based guilt aversion, we find little evidence that differences in expectations are associated with differences in promise-keeping. Our design allows for richer communication strategies that can be used to persuade the trustor. Conditional promises, commitments to act non-selfishly only if the trustor takes a specified action, avoid the obligation typically created by promises. Surprisingly, conditional promises generate more efficient outcomes than conventional promises.
Promise keeping and reliance damage
With Christoph Vanberg. European Economic Review, 152, 104344 (2023).
Abstract. This paper experimentally investigates the hypothesis that promise-keeping behavior is affected by the “reliance damage” that a counterpart would suffer as a result of a breach. Reliance damage is defined as the difference between the counterfactual benefit that the counterpart would have obtained had they not relied on the promise and that which they would obtain following a breach. We discuss two motivational mechanisms that could drive such an effect. One is that people intrinsically dislike causing reliance damage per se. The other is that people dislike causing regret in another person. We experimentally test these ideas in the context of an experimental trust game. Our evidence is consistent with the hypothesis that promise keeping is affected by reliance damage, and that the underlying mechanism involves a desire not to cause regret in others.
The cancellation heuristic in intertemporal choice shifts people's time preferences
With Krishna Savani. Scientific Reports, 12, 4627 (2022).
Abstract. Building on past research in risky decision making, the present research investigated whether the cancellation heuristic is evident in intertemporal choice. Specifically, the cancellation heuristic posits that whenever choice options are partitioned into multiple components, people ignore seemingly identical components and compare the non-identical components. We nudged people to employ the cancellation heuristic by partitioning both the smaller earlier reward and the larger later reward into a seemingly identical component and a non-identical component. Given diminishing marginal utility, we hypothesized that people would perceive an identical difference between the smaller earlier reward and the larger later reward as being subjectively greater when both amounts are smaller in magnitude, thereby increasing the relative attractiveness of the larger later reward in the partition condition. We conducted four studies, including two incentive-compatible lab experiments, an incentive-compatible lab in-the-field experiment, and a survey study, using choices among both gains and losses. We consistently found that this choice architecture intervention significantly increased people’s likelihood of choosing the larger later reward. Furthermore, we provide evidence of the underlying mechanism—people’s intertemporal decisions shifted to a greater extent in the cancellation condition, particularly if their marginal utility diminished faster. The findings indicate that two features of human psychology—diminishing marginal utility and the cancellation heuristic—can be simultaneously utilized to nudge people to make decisions that would be better for them in the long run.
With Puja Bhattacharya and Kirby Nielsen. The Economic Journal, 130(630), 1623–1649 (2020).
Abstract. Using an experiment, we demonstrate that a communication regime where a worker communicates about his intended effort is less effective in i) soliciting truthful information, and ii) motivating effort, than a regime where he communicates about his past effort. Our experiment uses a real-effort task, which additionally allows us to demonstrate the effects of communication on effort over time. We show that the timing of communication affects the dynamic pattern of work. In both treatments, individuals are most cooperative closest to the time of communication. Our results reveal that the timing of communication is a critical feature that merits attention in the design of mechanisms for information transmission in strategic settings.
Teams promise but do not deliver
With Puja Bhattacharya, John Kagel and Kirby Nielsen. Games and Economic Behavior, 117, 420–432 (2019).
Abstract. Individuals and two-person teams play a hidden-action trust game with pre-play communication. We replicate previous results for individuals that non-binding promises increase cooperation rates. But this does not extend to teams. While teams make non-binding promises to cooperate at the same rate as individuals, they consistently renege on those promises. Additional treatments begin to explore the basis for the team outcome, ruling out explanations that team payoff structures drive behavior. Analysis of within team discussions provide insight into the decision-making processes of first and second movers.
What is a Fair Contribution? Nominal Choice Shifts Contribution Norms in a Public Goods Game
With Krishna Savani.
Abstract. In a public goods game with heterogeneous endowment, we investigate whether allowing individuals to make a nominal choice in the process that determines their endowment influences the group’s contribution norms. We hypothesized that individuals in the choice condition would be more likely than those in the baseline condition to believe that group members are entitled to their endowment. We found that contributions move from an equity norm in the baseline condition toward an equality norm in the choice condition. This shift in contribution norms is sustained by smaller contributions by high endowment individuals receiving lower punishment in the choice condition.
Procedural Fairness and Inequality of Opportunity: An Experimental Investigation
With Moumita Deb, Joerg Oechssler, Stefan Trautmann and Christoph Vanberg.
Abstract. We experimentally examine individuals’ attitudes toward unequal outcome distributions arising from procedures characterized by unequal ex-ante opportunities. Specifically, we elicit participants’ willingness to accept the realized allocations from simple two-player lottery games in which players face systematically different probabilities of winning. We hypothesize that ex post acceptance of such unequal outcomes may be influenced by two dimensions: (1) whether participation in the game is based on explicit ex ante consent versus exogenous assignment, and (2) whether individual outcome realizations are statistically independent or correlated. Our experimental results indicate that neither dimension exerts a statistically significant effect on ex-post acceptance. Acceptance rates are lower when chances are unequal, but we observe surprisingly high acceptance rates even in our biased treatments. This suggests that outcome generating mechanisms involving randomness may be perceived as fair even when they are substantially biased.
Permanent working paper
Abstract. This paper investigates the effect of ascribed social status on an individual's willingness to compete. We hypothesized that gender difference in competition may be explained by a difference in social status. That is, those who enjoy a higher status in society may be more willing to compete than those who enjoy lower status. Thus even in the absence of discrimination from a competitive labor market, we would observe income disparity and lower labor participation for lower status individuals. We first manipulate social status in the lab and then measure each individual's willingness to compete in a mixed group of two high status and two low-status individuals. We find no difference in the choice to compete between low and high-status individuals. A possible reason why we do not observe any difference is that status assignment had a different impact on the choice to compete for men and women.
Time Management
With Krishna Savani.
An Experimental Test of Location Invariance
With Lorenz Hartmann and David Kelsey.
Ambiguity in Strategic Interactions
With David Kelsey.
Freedom and the Act of Choice