Essays in Behavioural Economics and Incentive Design PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Essays in Behavioural Economics and Incentive Design PDF full book. Access full book title Essays in Behavioural Economics and Incentive Design by V. Chaudhary. Download full books in PDF and EPUB format.
Author: V. Chaudhary
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: V. Chaudhary
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Paul J. Healy
Publisher:
ISBN:
Category : Electronic dissertations
Languages : en
Pages : 366
Get Book Here
Book Description
Author:
Publisher:
ISBN: 9789185169931
Category :
Languages : en
Pages : 131
Get Book Here
Book Description
Author: Kinga Posadzy
Publisher: Linköping University Electronic Press
ISBN: 9176854213
Category :
Languages : en
Pages : 16
Get Book Here
Book Description
The objective of this thesis is to improve the understanding of human behavior that goes beyond monetary rewards. In particular, it investigates social influences in individual’s decision making in situations that involve coordination, competition, and deciding for others. Further, it compares how monetary and social outcomes are perceived. The common theme of all studies is uncertainty. The first four essays study individual decisions that have uncertain consequences, be it due to the actions of others or chance. The last essay, in turn, uses the advances in research on decision making under uncertainty to predict behavior in riskless choices. The first essay, Fairness Versus Efficiency: How Procedural Fairness Concerns Affect Coordination, investigates whether preferences for fair rules undermine the efficiency of coordination mechanisms that put some individuals at a disadvantage. The results from a laboratory experiment show that the existence of coordination mechanisms, such as action recommendations, increases efficiency, even if one party is strongly disadvantaged by the mechanism. Further, it is demonstrated that while individuals’ behavior does not depend on the fairness of the coordination mechanism, their beliefs about people’s behavior do. The second essay, Dishonesty and Competition. Evidence from a stiff competition environment, explores whether and how the possibility to behave dishonestly affects the willingness to compete and who the winner is in a competition between similarly skilled individuals. We do not find differences in competition entry between competitions in which dishonesty is possible and in which it is not. However, we find that due to the heterogeneity in propensity to behave dishonestly, around 20% of winners are not the best-performing individuals. This implies that the efficient allocation of resources cannot be ensured in a stiff competition in which behavior is unmonitored. The third essay, Tracing Risky Decision Making for Oneself and Others: The Role of Intuition and Deliberation, explores how individuals make choices under risk for themselves and on behalf of other people. The findings demonstrate that while there are no differences in preferences for taking risks when deciding for oneself and for others, individuals have greater decision error when choosing for other individuals. The differences in the decision error can be partly attributed to the differences in information processing; individuals employ more deliberative cognitive processing when deciding for themselves than when deciding for others. Conducting more information processing when deciding for others is related to the reduction in decision error. The fourth essay, The Effect of Decision Fatigue on Surgeons’ Clinical Decision Making, investigates how mental depletion, caused by a long session of decision making, affects surgeon’s decision to operate. Exploiting a natural experiment, we find that surgeons are less likely to schedule an operation for patients who have appointment late during the work shift than for patients who have appointment at the beginning of the work shift. Understanding how the quality of medical decisions depends on when the patient is seen is important for achieving both efficiency and fairness in health care, where long shifts are popular. The fifth essay, Preferences for Outcome Editing in Monetary and Social Contexts, compares whether individuals use the same rules for mental representation of monetary outcomes (e.g., purchases, expenses) as for social outcomes (e.g., having nice time with friends). Outcome editing is an operation in mental accounting that determines whether individuals prefer to first combine multiple outcomes before their evaluation (integration) or evaluate each outcome separately (segregation). I find that the majority of individuals express different preferences for outcome editing in the monetary context than in the social context. Further, while the results on the editing of monetary outcomes are consistent with theoretical predictions, no existing model can explain the editing of social outcomes.
Author: Florian Hett
Publisher:
ISBN: 9783832536787
Category : Microeconomics
Languages : en
Pages : 0
Get Book Here
Book Description
This thesis deals with the empirical identification of incentive effects in various settings.The central chapter looks at the financial crisis of 2007-2009 and the incentive effects caused by policy interventions in financial markets. A hypothesis controversially discussed by academics as well as policy makers is that public bailouts for banks destroy market discipline, that is the incentives for decentralized monitoring by market participants. In turn, this might induce stronger risk-taking by banks and finally make future crises more likely and severe. The thesis describes a new methodology to identify this effect and shows that market discipline strongly deteriorated during the crisis period. In additional chapters, this thesis empirically identifies incentive effects in dynamic contest situations.
Author: Ashling M Scott
Publisher:
ISBN:
Category :
Languages : en
Pages : 112
Get Book Here
Book Description
Economic theory hinges on the fact that humans are rational. However, in the wild, research demonstrates human behavior often deviates from rationality. This deviation may result in suboptimal behavior. Researchers in behavioral economics and psychology have tried understand these irrational behaviors and clarified many of the ways humans are likely to be biased. Yet, we are still exploring ways to help people overcome their behavioral biases. This dissertation explores behavioral biases in three different contexts: technology, human cooperation, and banking. This dissertation demonstrates a behavioral bias in A/B testing in technology and quantifies the amount to which this bias is a problem. Second, this dissertation proposes a light institutional intervention of giving more information to study the impacts on trust. Third, this dissertation explores the effects of offering a new financial product to overcome behavioral biases around opening bank accounts and savings. Overall, these papers demonstrate behavioral biases can lead to suboptimal outcomes such as making the wrong business decision or missing out on the benefits of cooperation, or failure to open a bank account and save. Luckily, there are some ways we can overcome biases (Chapter 3), but not all interventions work in the ways we would expect (Chapter 2). The first chapter introduces the behavior of ''p-hacking", where decision makers stop experiments earlier or later than proper statistical validity requires, possibly because they are overly eager to obtain significant results. Such behavior may result in invalid test conclusions and financial losses. We investigate whether online A/B experimenters ``p-hack'' by stopping their experiment based on the p-value of the effect. Our data comes from a leading platform and contains 2,101 A/B tests that track the magnitude and significance level of the effect on every day of the experiment. We estimate the causal effect of reaching a particular p-value on stopping behavior by applying a regression discontinuity design to hazard modeling. Experimenters indeed p-hack, especially for positive lift values. Moreover, experimenters p-hack more if the lift is mildly positive rather than strongly positive. A latent class analysis shows that approximately 57% of experimenters p-hack at the 90% confidence threshold. A false discovery rate (FDR) analysis estimates that p-hacking increases false discoveries by 27.5%, while the overall rate of false-discoveries is 38%. This chapter is coauthored with Ron Berman, Leo Pekelis, and Christophe Van den Bulte. In the second chapter, I introduce an information signal and role organization that may engender more trusting behavior. Trust is an essential ingredient for unlocking economic surplus. However, consider the prisoner's dilemma--all parties gain from cooperation, yet each party has an incentive to deviate. How can we organize society to unlock the possible gains from trust in such situations? We've all had experiences that indicate it is possible. Studies have shown prosocial individuals are more trustworthy. We can take advantage of this fact and suggest pairing prosocial individuals with less prosocial individuals who will trust them if their type is known. In this case, it takes information, timing, and only one pro-social individual to unlock the trust surplus. I find information actually decreases overall trust and does not impact . Consequently, too much information might negatively influence cooperation and trust by changing our biases. In the final chapter coauthored with Paul Gertler, Sean Higgins, and Enrique Siera, I explore whether a financial incentive can nudge people into opening a bank account and saving. Despite the benefits of saving in formal financial institutions, take-up of no-fee formal savings accounts is low among the poor. Surprisingly, even after opening a savings account, use of the account is often low. In a large randomized experiment across 110 bank branches throughout Mexico, we provide a temporary incentive to both open and use a savings account: we offer prize-linked savings accounts with cash-prize lotteries, where lottery tickets are awarded as a function of savings balances. We find that 41% more accounts are opened in treatment branches than in control branches on average, and the number of accounts opened in treatment branches increases steadily over time while the lotteries were being offered. Although the incentive to save is temporary as lotteries are only offered for two months, the new accounts continue to be used over time. After five years, clients who opened accounts in response to the lottery continue saving and making transactions at the same rates as those who opened accounts in control branches during the same months.
Author: Christian Johannes Meyer
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 152
Get Book Here
Book Description
This dissertation presents three independent chapters that build on the tools of behavioral economics to study issues related to labor markets in low-income countries and charitable giving. In the first chapter, I investigate whether present bias correlates with savings and job search behavior in a population of low-skill workers in Ethiopia. I conduct a field experiment with 460 women who begin employment in the ready-made garment industry. Most are rural-urban migrants without work experience for whom the job represents a stepping stone into the labor market. Almost all workers plan to use their jobs to save money and to look for higher-wage employment, but many fall short of their intentions. I propose self-control problems as a candidate explanation. I elicit a measure of present bias in a tightly-controlled experiment and match results to highfrequency survey data that I collect over a period of three months. Present bias is a significant predictor of job search effort, controlling for liquidity and a broad range of covariates. Present-biased workers spend 57 percent less time on job search per week. As a result of reduced search, present-biased workers generate fewer offers and stay in their jobs significantly longer. In contrast, I find no significant correlation between present bias and savings behavior. I discuss implications for the design of commitment devices in this context. In the second chapter, co-authored with Egon Tripodi, we study incentivized voluntary contributions to charitable activities. Motivated by the market for blood donations in Germany, we consider a setting where different incentives coexist and agents can choose to donate without receiving monetary compensation. We use a model that interacts image concerns of agents with intrinsic and extrinsic incentives to donate. Laboratory results show that a collection system where compensation can be turned down can improve the efficiency of collection. Image effects and incentive effects do not crowd each other out. A significant share of donors turn down compensation. Heterogeneity in treatment effects suggests gender-specific preferences over signaling. In the third chapter, also co-authored with Egon Tripodi, we use a field experiment to study how social image concerns affect pledges to engage in a charitable activity. We work with two different blood banks and a municipal government in Germany to offer sign-ups for human whole blood donations. Motivated by a simple signaling framework, we randomly vary the type of organization to donate to and the visibility of the pledge to donate. Our setting also provides natural variation in the group of people that form the "audience" for social image concerns. We find evidence for strong social image concerns when subjects are asked in public whether they would like to pledge a donation with a well-known charity. Almost all subjects renege on their pledge, with no detectable differences between treatments. We discuss avenues for further research and end on a cautionary note for organizations looking to harness pledges to encourage individuals to do good.
Author: Uri Gneezy
Publisher: Yale University Press
ISBN: 0300271433
Category : Business & Economics
Languages : en
Pages : 318
Get Book Here
Book Description
An informative and entertaining account of how actions send signals that shape behaviors and how to design better incentives for better results in our life, our work, and our world Incentives send powerful signals that aim to influence behavior. But often there is a conflict between what we say and what we do in response to these incentives. The result: mixed signals. Consider the CEO who urges teamwork but designs incentives for individual success, who invites innovation but punishes failure, who emphasizes quality but pays for quantity. Employing real-world scenarios just like this to illustrate this everyday phenomenon, behavioral economist Uri Gneezy explains why incentives often fail and demonstrates how the right incentives can change behavior by aligning with signals for better results. Drawing on behavioral economics, game theory, psychology, and fieldwork, Gneezy outlines how to be incentive smart, designing rewards that are simple and effective. He highlights how the right combination of economic and psychological incentives can encourage people to drive more fuel-efficient cars, be more innovative at work, and even get to the gym. “Incentives send a signal,” Gneezy writes, “and your objective is to make sure this signal is aligned with your goals.&rdquo
Author: Edward Gilbert Augenblick
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
This dissertation is the combination of three distinct papers on Behavioral Economics and Market Design. In the first paper, I theoretically and empirically analyze consumer and producer behavior in a relatively new auction format, in which each bid costs a small amount and must be a small increment above the current high bid. I describe the set of equilibrium hazard functions over winning bids and identify a unique function with desirable conditions. Then, I examine bidder behavior using two datasets of 166,000 auctions and 13 million individual bids, captured with a real-time collection algorithm from a company called Swoopo. I find that players overbid significantly in aggregate, yielding average revenues of 150% of the good's value and generating profits of €18 million over four years. While the empirical hazard rate is close to the predicted hazard rate at the beginning of the auction, it deviates as the auction progresses, matching the predictions of my model when agents exhibit a sunk cost fallacy. I show that players' expected losses are mitigated by experience. Finally, I estimate both the current and optimal supply rules for Swoopo using high frequency data, demonstrating that the company achieves 98.6% of potential profit. The analysis suggests that over-supplying auctions in order to attract a larger userbase is costly in the short run, creating a large structural barrier to entrants. I support this conclusion using auction-level data from five competitors, which establishes that entrants collect relatively small or negative daily profits. The second paper (joint with Scott Nicholson) addresses the impact of making multiple previous choices on decision making, which we call "choice fatigue." We exploit a natural experiment in which different voters in San Diego County are presented with the same contest decision at different points on the ballot, providing variation in the number of previous decisions made by the voters. We find that increasing the position of a contest on the ballot increases the tendency to abstain and to rely on decision shortcuts, such as voting for the status-quo or the first candidate listed in a contest. Our estimates suggest that if an average contest was placed at the top of the ballot (when voters are "fresh"), abstentions would decrease by 10%, the percentage of "no" votes on propositions (a vote for the status-quo) would fall by 2.9 percentage points, and the percentage of votes for the first candidate would fall by .5 percentage points. Interestingly, if this occurred, our results suggests that 22 (6.25%) of the 352 propositions in our dataset would have passed rather than failed. Implications of the results range from the dissemination of information by firms and policy makers to the design of electoral institutions and the strategic use of ballot propositions. The third paper (joint with Jesse Cuhna) paper presents evidence from a field experiment on the impact of inter-group competition on intra-group contributions to a public good. We sent political solicitations to potential congressional campaign donors that contained either reference information about the past donations of those in the same party (cooperative treatment), those in the competing party (competition treatment), or no information (the control group). The donation rate in the competitive and cooperative treatment groups was 85% and 42% above that in the control, respectively. Both treatments contained a monetary reference point, which influenced the distribution of donations. While the cooperative treatment induced more contributions concentrated near the mentioned reference point, the competitive treatment induced more contributions at nearly twice the level of the given reference point, leading to a higher total contributed amount. This suggests that both cooperative and "pro-social" motives can drive higher contribution rates and total contributions, but the elicitation of competitive behavior can be more profitable in certain fundraising situations.
Author: Peter McGee
Publisher:
ISBN:
Category :
Languages : en
Pages : 102
Get Book Here
Book Description
Abstract: Behavioral economics is the branch of the discipline that attempts to incorporate and explain data that appear to be at odds with traditional economic theory by appealing to psychological and cognitive phenomena. This dissertation addresses consumer decision making in various settings and examines the effects of factors outside the scope of standard economic models. Chapter 1 looks at the effect of an individual uncertainty over what a good is worth to them in the context of an auction. In a laboratory experiment with uncertainty over final values, 28% and 17% percent of bids in private-value English and first-price auctions, respectively, were above the subject's expected value of item - - behavior that cannot be explained by risk preferences. In both auction formats, a subset of bidders repeatedly bids above the expected value of the item. Prices in English are 13% percentage points higher in auctions with more than one bidder making bids at odds with elicited risk preferences ("overbidders") than in auctions with no bidders making such bids, but there are no differences between the prices in first-price auctions with different numbers of overbidders. In contrast to earlier findings with certain values, the revenues in English and first-price auctions with more than one overbidder are not statistically different from one another. Chapter 2 examines the impact of theoretically unimportant incentives on auction behavior. Bidding one's value in a second-price, private-value auction is a dominant solution (Vickrey, 1961). However, repeated experimental studies find much more overbidding than underbidding, resulting in overbidding on average. Our experimental work introduces manipulations against which the dominant strategy is immune, yet they affect bidding in a predictable way. Our finding suggests that although subjects fail to discover the dominant strategy, they nevertheless respond sensibly to the "steepness" of payoffs out of equilibrium. These results lend support to existing models such as QRE which assume that less than fully rational players will respond to out of equilibrium incentives in a systematic way, even though the full effect of our manipulations is not explained by these models. We suggest a new model that can explain these results. Chapter 3 delves search behavior. That consumers search more in response to an increase in prices than to a decrease in prices has been documented and motivated a great deal of theoretical research. Models generating this asymmetric consumer search do so by assuming imperfect consumer information about the price distribution and/or heterogeneous costs of search. I demonstrate that such assumptions are unnecessary by showing that subjects search asymmetrically after price distribution shifts in a laboratory experiment in which subjects know the price distribution and face a common cost of search. Subjects who experience an upward shift in the price distribution are 6 percentage points more likely to search than subjects who experience either no shift in prices or a downward shift. An alternative model of reference-dependent preferences in which consumers view potential purchases as "losses" or "gains" relative to a reference price generates asymmetric search.
