Johan de Jong

I am a Postdoc at Erasmus University Rotterdam, working in the fields of behavioral economics, experimental economics, and behavioral finance. I have a background in physics.

Email: j.a.dejong@ese.eur.nl

My CV in pdf

Peer-reviewed publications

"The Effect of Futures Markets on the Stability of Commodity Prices" (with Joep Sonnemans and Jan Tuinstra) 

Journal of Economic Behavior & Organization, 198, 176-211 (2022)

Do futures markets have a stabilizing or destabilizing effect on commodity prices? Empirical evidence is inconclusive. We try to resolve this question by means of a learning-to-forecast experiment in which a futures market and a spot market are coupled. The spot market exhibits negative feedback between forecasts and prices, while the futures market is of the positive feedback type, which makes it susceptible to bubbles and crashes. The coupling depends positively on the number of speculators on the futures market and negatively on storage prices, speculator risk aversion, and the volatility of futures prices. Our main result is that the spot price volatility changes non-monotonically with the strength of the coupling, resulting in a stabilizing effect on spot prices for weakly coupled markets and a destabilizing effect when the coupling with the futures market is strong.


"Using results from learning to forecast laboratory experiments to predict the effect of futures markets on spot market stability" (with Joep Sonnemans and Jan Tuinstra) 

In Handbook of Experimental Finance (pp. 250-266). Edward Elgar Publishing (2022)

In this chapter we first give a short overview of Learning to Forecast (LtF) experiments, thereby focusing on the differences between markets with positive and negative expecta- tions feedback. Subsequently, we discuss how the results of these experiments can be used to predict behavior for more complicated market environments that exhibit both types of feedback. In particular, we will consider the case where a futures market is connected to a spot market.

Under revision

"Bank choice, bank runs, and coordination in the presence of two banks" (with Jasmina Arifovic and Anita Kopányi-Peuker)

Accepted with minor revision at Journal of Economic Behavior & Organization

We investigate learning in a repeated bank choice game, where agents first choose a bank to deposit in and then decide to withdraw that deposit or not. This game has a single Nash equilibrium in pure strategies, characterized by all agents depositing in the bank that offers the highest return, even though it may be more vulnerable to bankruptcy if some agents withdraw early. We use an individual evolutionary learning algorithm to model under which circumstances and with which beliefs agents can learn the Nash equilibrium in the repeated game and compare the results to an experiment. We find participants coordinating on the Nash equilibrium in the presence of low or medium vulnerability banks, but efficient coordination fails when both banks are highly vulnerable (irrespective of whether participants have full or only partial information). 

Work in progress

"The initial deposit decision and the occurrence of bank runs"

Job market paper

In studies of bank runs the initial deposit decision is typically not taken into account. However, it is unlikely that people will entrust money to a bank that they expect to fail in the near future. The aim of this study is to investigate to what extent this mechanism prevents bank runs. It introduces an experiment in which participants first have to choose if they want to receive their endowments as a deposit in a `risky' bank that pays a high interest or a `safe' bank that pays a lower interest. After this decision they can withdraw the money from their account or leave it in to receive the interest. The availability of different deposit options leads to a very clear theoretical prediction: all choose to deposit in the risky bank with the high interest rate and consequently leave the deposit in the bank. In the experiment the first prediction is not confirmed: almost half of the participants choose to deposit in a safer alternative. However, in contrast to the control treatment in which participants are not offered a choice, only very few of those that choose the risky bank withdraw their deposits later.


"Ethnic diversity and collective action" (with Willem de Koster and Jan Stoop)

Work in progress

One of the more controversial findings in sociology in the last two decades is the negative relationship between ethnic heterogeneity and social cohesion in the neighborhood. The studies on this topic are diverse, but most make use of questionnaires to construct measures of trust or social cohesion. A disadvantage of these methods is that it is difficult or even impossible to identify causal effects. In this study we approach the problem using the toolbox of experimental economics. We first identify groups of 6 social-housing-corporation apartments that share one entrance. The rent for these apartments lies below the market price, leading to high demand and a large waiting list. We argue that as a consequence, people are unlikely to distinguish between similar apartments in the same street and would simply take the first one that becomes available. Next we invite the neighbors in the 6 apartments to take part in an experiment: if they manage to return 4 out of the 6 letters in one envelope, they will all receive a reward of 10 or 30 euros. We then compare the return rate in from very ethnically diverse groups of apartments with those that are quite homogeneous.


"Poverty and planning" (with Job Harms and Jan Stoop)

Work in progress

Modern society often asks much of our ability to plan future actions. Examples include canceling subscriptions on services one no longer needs, making appointments for mandatory maintenance checks of the car, and applying for social benefits. Characteristic of these situations is that it is often not possible to take action immediately, but if action is delayed beyond a certain deadline there are negative (financial) consequences. We aim to study the relationship between poverty and people's ability to plan. The first question we want to answer is whether there is a general difference in the planning abilities of people with low and high social economic status (SES). Our second question is whether planning abilities are affected by the current financial situation (i.e. economic scarcity vs abundance). To answer these questions we conduct a real-effort field experiment in Tilburg, a medium-sized city in the Netherlands. 800 high-SES and 800 low-SES households are randomly selected to receive an invitation for our experiment by mail. The task is simple: if they return a postcard, they receive a reward of 20 euros. We vary the planning effort needed to complete the task (return any time or in a particular week one month later) and the timing of the effort (in the week before or after salary or social benefits are received) and compare the number of surveys that are returned for the different treatments within the same group and between low- and high-SES groups.


"Poverty and participation" (with Willem de Koster, Jan Stoop, and Vivian Visser)

Work in progress

Getting citizens to participate in the policy-making process of the government is always a challenge. However, one of the dangers that threaten even successful participation projects is that some groups in society will be much more vocal in voicing their opinions than others. This may increase existing inequalities and that is often explicitly not the intention when including citizens in the process. Earlier studies showed that the problem is, for an important part, caused by differences in feelings of entitlement. This prevents in particular people from low social economic status (SES) groups from participating. For this study we work together with the city of Rotterdam. They regularly invite their citizens to give input for projects that affect their own neighborhoods. Our goal is to test interventions that can increase the feelings of entitlement and thus reduce the differences in participation between low-SES and high-SES groups.

Previous work

My publications in physics can be found here.

Teaching

Erasmus University Rotterdam

University of Amsterdam


Tinbergen Institute

In the media