Stefan Schmidt

• A Flag to Wave:  Status-Seeking Behavior in Groups
  (solo-authored; pre-registered at AEA RCT Registry)

Abstract:  This paper experimentally studies the interplay of social status concerns and social identity in determining status-seeking behavior within inter-group contests. In contrast to previous literature that has focused on social status attached to individuals, I test whether the widely observed inclination to seek social status is affected by identity concerns or the decision-making process within groups when social status is assigned to a group identity. Results from a laboratory study reveal marked reactions in status-seeking behavior in the form of effort provision and monetary investments into inter-group status contests. Treatment analyses further show that group identities have a strong impact on the quality of status-seeking behavior, driven by an urge to retaliate against an expected status threat towards the in-group status by competing out-groups. Further, I find that the diffusion of responsibility within group decision-making processes does not drive status-seeking behavior.

• Social Identity and Behavioral Biases
  (with Zvonimir Bašić and Eugenio Verrina)

Abstract:  Selection bias (i.e., selection neglect) is often embedded in environments where social identity is salient. For example, a person who only consumes media exhibiting a certain political leaning might suffer from selection bias. Yet, the information on this media will also be transmitted by news presenters and guests that are showing likemindedness with the individual; thus, they can be perceived as in-group members. In this study, we investigate how social identity and selection bias together affect belief formation. We design a novel paradigm where subjects guess a computer-generated number. For each estimation task, subjects observe the guesses of multiple senders who have privately received signals about the correct number. We manipulate whether i) the senders are neutral or belong to an in-group/out-group, and whether ii) the information structure contains no bias, or is designed to induce selection bias. We show that subjects suffer from selection bias, yet importantly, the bias is exacerbated when the observed signals predominantly come from in-group members. In contrast, if the observed signals come from out-group members, subjects become much better in correcting for the bias. Moreover, we show social identity alone does not suffice to cause a bias, but it indeed is the combination of selection bias and social identity that drives our results. Our findings offer insight into the nature of selection bias, and suggest that in many real-world cases, the error in belief formation is much worse than if it were only induced by selection bias.

• One size fits all? The interplay of incentives, effort provision, and personality

(with Zvonimir Bašić, Stefania Bortolotti, Daniel Salicath, Sebastian O. Schneider, Matthias Sutter; pre-registered at AEA RCT Registry)

Abstract:   Incentives are supposed to increase effort, yet individuals react differently to incentives. We examine this heterogeneity by investigating how personal characteristics, preferences, and socio-economic background relate to incentives and performance in a real effort task. We analyze the performance of 1,914 high-school students under a Fixed, Variable, or Tournament incentive scheme. Ability and beliefs about relative performance play a decisive role for productivity when incentive schemes are exogenously imposed. Yet, when given the choice to select the incentive scheme, also personality traits, economic preferences and socio-economic background matter. Algorithmic assignment of incentive schemes could improve productivity, as we show.

• Preferences on immigration and beliefs about the speed of immigrants’ integration into society
  (with Matthias Sutter and Frederik Schwerter, pre-registered at AEA RCT Registry)

Abstract:  This project studies the role of beliefs regarding immigrants’ speed of integration as a determinant of immigration preferences. We conduct a representative survey in Germany and relate immigration preferences to individuals’ beliefs regarding immigrants’ speed of integration pertaining to Germany’s culture and economy. Also, we test the effects of correcting misperceptions about immigrants’ integration process on immigration preferences via two information treatments. Our results show that subjects that believe immigrants integrate quickly are more favorable towards immigration, while beliefs of slower integration speed are associated with stronger aversion towards immigration. In further analyses, we show that (i) the relationship between beliefs about the speed of integration and immigration preferences is especially driven by dimensions of cultural integration (ii); the provision of hard information and anecdotal evidence on the speed of integration causally affects immigration preferences; (iii) correcting misperceptions has highly heterogeneous effects conditional on initial beliefs and concerns on cultural diversity.