Publications
"Promise keeping and reliance damage" (with Christoph Vanberg) (Previously titled "Promises and Opportunity Cost")
European Economic Review, Volume 152, February 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, March 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.
"Timing of Communication", with Puja Bhattacharya, and Kirby Nielsen.
The Economic Journal, Volume 130, Issue 630, August 2020, Pages 1623–1649
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 Kirby Nielsen, Puja Bhattacharya, and John Kagel
Games & Economic Behavior, Volume 117, September 2019, Pages 420–432
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.
Working Papers
"Promises and Guilt" (with Puja Bhattacharya)
revise and resubmit, Journal of Economic Behavior and Organization
Abstract: Using a laboratory experiment, we provide evidence that guilt aversion is a reason behind promise-keeping. In the experiment, we vary promisor’s second-order expectations to test for guilt aversion while simultaneously keeping the promissory link intact, thereby overcoming some of the methodological constraints of previous experimental studies. The design also opens up a richer set of message strategies that a trustee can use to persuade the trustor. We find the use of a conditional promise-a promise to choose the non-selfish action only if the trustor chooses a particular action - avoids moral obligation that arise from sending a promise. Surprisingly, conditional promises increase the number of efficient outcomes more than the conventional promissory language.
"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.
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.
Work in Progress
"Inverse Relationship between labor productivity and labor demand," with Krishna Savani and Siran Zhan
"Time Management," with Krishna Savani