Gergely Hajdu

The experience of waiting is ubiquitous in all areas of life. In many instances, waiting is followed by decisions where moral conduct is crucial. With a lab-in-the-field study we analyze the effect of (un)expected waiting time on moral behavior.  Passengers who had just joined the check--in line at the Ben Gurion Airport guessed how long they would have to wait to check in. Once they completed check-in we measured their moral behavior by the die-under-the-cup task. Specifically, they had to roll a die privately and report the score, knowing that the higher score they report, the more money they would get. We find that both expected and unexpected waiting erode moral behavior, with unexpected waits being more influential. For comparison, an expected 100--minute delay or an unexpected 25--minute delay both result in the same average increase of one dot in reported values. One possible explanation of the effects is that longer (un)expected waiting times lead people to feel entitled to compensation. Our trust in the estimated effects is corroborated by finding no selections on observables, and we argue that the setup provides variations that are as good as random. The study highlights that managing waiting time expectations can potentially play an important role in mitigating subsequent immoral behavior.

Choosing between payment based on one’s own performance or others’ is inherent in most delegation decisions. We propose and test that such self-reliance dilemma could result in motivated reasoning about own and others’ performances. Participants in an experiment face this dilemma and learn about it either before or after reporting their beliefs. We find that learning about the dilemma decreases participants’ beliefs about their counterpart’s performance advantage (CPA) by an average of 17%. Furthermore, it causes an average overestimation of one’s own performance and increases the fraction of participants who falsely believe they outperformed their counterpart. Organizations should, therefore, carefully manage delegation decisions and implement measures to curb overconfidence.

People tend to think more favorably about a product when they own it compared to when they do not own it. Going beyond the effect of ownership, we study in the lab how choosing a product affects beliefs about the values of products in the choice set. Using a between-subject design, we compare a person who chooses a product from a binary choice set to a person who receives the same product exogenously. To deal with the endogeneity in choices, we construct information that is both sufficiently clear to make choices predictable and sufficiently unclear to leave room for belief distortions. We find that making a choice increases the difference in beliefs between the two alternatives, and the effect is driven by pessimism about not chosen products: participants who do not choose a product believe it is worse than participants who do not receive it, while beliefs about chosen and received products are similar. When participants choose a product but their attention is shifted towards product evaluation, pessimism disappears suggesting that the effect of choice is driven by attention. As choices are often made under uncertainty, the mechanism we identify may play a role in a potentially wide range of settings. Our findings also have policy implications: active choice policies may be more effective tools than opt-out defaults. 

After purchasing a product, people usually receive information and update their beliefs about both chosen and non-chosen products. This, in turn, can affect future buying and selling decisions. In this paper, we study how choosing a product affects learning about products after the choice has been made. We design an experiment where participants learn about the fundamental quality of financial investments by observing price changes in multiple rounds. Using a between-subject design, we compare beliefs of participants who choose some of the investments themselves (Choice condition) to participants who receive investments exogenously (Allocation condition). We find that learning is stickier after making a choice: participants respond less to price changes in the Choice condition than in the Allocation condition. This result holds for both own and non-owned investments and for both good news and bad news. We also show that participants in the Choice condition do not pay more attention to the investments; neither when they choose, nor after they have made the choice. We estimate a structural model and demonstrate that learning is not significantly different from the Bayesian benchmark after exogenous product allocation, while it is too sticky after making a choice.

I investigate whether people distort beliefs about third parties – such as the ability of scientists to offset one’s environmental impact – to excuse self interested behavior. In a laboratory experiment, participants choose how much money to take. The money is either taken from passive participants or comes from another source. Which one it is depends on the success of a third party in solving a riddle. I use a between-subject design with two treatment conditions that only differ in whether it is the success or the failure that results in taking the chosen amount from passive participants. After choosing the amount, participants report beliefs about the success of the third party. Indeed, beliefs are 13 percentage points higher when it is the failure that results in taking the chosen amount from passive participants. With monetary incentives for correct guesses the inference is inconclusive. Nevertheless, the difference in beliefs decreases to 6 percentage points and becomes statistically insignificant. The results suggest that people use belief-based excuses about third-party success. 

Choices we make are often informative about our moral character. People do not interpret their choices in isolation; rather, they contextualize them within narratives comprising stories about others’ moral actions and characters. In this paper, we model decision problems wherein agents care about their self-image and — in addition to choosing their actions — they choose their beliefs about others’ behavior in a flexible way. We establish a hypothesis testing equilibrium (HTE) in which agents can hold self-serving beliefs about others’ behavior, provided these beliefs are both rationalizable and sufficiently plausible based on the information available to them. We show that in the absence of full information about others’ behavior, agents can excuse self-interested behavior and acclaim moral behavior in equilibrium. Under conditions of full information, HTE coincides with the classical self-signaling equilibrium with agents having accurate beliefs. We analyze how increased visibility of behavior in the society affects overall morality and show that it is detrimental when saints (high moral types) are praised, whereas it is desirable when sinners (low moral types) are punished.

Jury decisions and hiring decisions by company boards are just some examples of sequential public voting where members might care to look similar in their preferences to other members. We argue that such social-image concerns can result in inefficiencies where even the majority voting rule doesn’t necessarily select the majority preferred option. We model binary decisions in three-member groups with public and sequential votes aggregated using the majority rule. Each member is randomly drawn from the population and has a private binary type which is her individually preferred decision. One of the members may have image concerns that compel her to vote differently than her type. We show that when the proportion of types in the population is close to equal, then this member is more likely to vote against her own type if she votes second than if she votes first. This ranking, however, can flip if the population share of the majority type is close to 1. That is, simultaneous voting can be worse than sequential voting.

We analyze the consequences of managers' health shocks on their employee pool. Drawing on literature in psychology, we hypothesize that a division leader's previous illness experience may affect their attitudes towards their employees. Using Hungarian administrative linked employer-employee panel data and an event-study approach combined with matching, we compare the separation rate of employees assigned to managers before and after the managers' illness episodes. We find that the separation rate increases by 8% after a manager's illness episode, predominantly driven by dismissals rather than voluntary departures. Since illness experience does not significantly affect the overall number of employees, this suggests that the organizational change is characterized by restructuring rather than downsizing, further supporting our hypothesis. Given that such workplace dynamics can be costly for the firm, and dismissals often harm employee well-being and future employment prospects, our findings have important financial and welfare implications.