Field Experiments

Paper Session

Sunday, Jan. 8, 2017 3:15 PM – 5:15 PM

Hyatt Regency Chicago, Michigan 2
Hosted By: American Economic Association
  • Chair: Ragan Petrie, Texas A&M University

Does Informal Risk Sharing Induce Lower Efforts? Evidence From Lab-in-the-Field Experiments in Rural Mexico

Ingela Alger
,
Toulouse School of Economics and Institute for Advanced Study in Toulouse
Laura Juarez Gonzalez
,
Bank of Mexico
Miriam Juarez Torres
,
Bank of Mexico
Josepa Miquel-Florensa
,
Toulouse School of Economics

Abstract

How do informal transfers affect work incentives? The question matters in developing countries, where labor markets are intertwined with transfer networks. The tax-and-subsidy component of transfers would dilute work incentives, but their pro-social element could encourage people to work harder. Such crosscurrents are hard to disentangle because participation in informal networks is likely endogenous. We tackle this problem with a lab-in-the-field experiment. Participants work harder in the presence of transfers, and the observed behaviors are more compatible with warm glow than with altruistic preferences. This suggests that the impact of informal transfers extends beyond just the sharing of risk.

Intellectual Property Protection and Industry Development: The Case of the Mountain Bike Industry

Kenny Ching
,
University College London

Abstract

This work employs a novel empirical approach in revisiting a core question in innovation and industry studies: what is the impact of formal intellectual property protection on industry development? In 1996, the inventor of the Horst Link suspension system failed to secure patent protection in Germany through accidental conditions. This technology, however, was fully patented in the US. We leverage this natural experiment to explore the complete innovative and product histories of all entrants to the multibillion-dollar mountain bicycle industry from 1981 to 2014. We find that German mountain bike firms may have benefited from this historical accident. Our regression estimates suggest that German firms relative to their US counterparts are associated with a 5 to 10% boost in innovation rate post 1996. Failure rates of German firms were also less than that of US firms. As a result, we propose that selective relaxation of formal intellectual property protection has the potential to provide stimulatory effects to industry development.

Truth-Telling and the Regulator. Evidence from a Field Experiment with Commercial Fishermen

Moritz A. Drupp
,
University of Kiel and University of Freiburg
Menusch Khadjavi
,
Kiel Institute for the World Economy
Martin F. Quaas
,
University of Kiel

Abstract

Understanding what determines the truth-telling of economic agents towards their regulator is of major economic importance from banking to the management of common-pool resources such as European fisheries. By enacting a discard-ban on unwanted fish-catches without increasing monitoring activities, the European Union (EU) depends on fishermen’s truth-telling. Using a coin-tossing task in an artefactual field experiment, we test whether truth-telling in a baseline setting differs from behavior in two treatments that exploit fishermen’s widespread ill-regard of their regulator, the EU. Fishermen misreport coin tosses to their advantage more strongly in a treatment where they are faced with the EU flag. Yet, some fishermen are more honest in a control treatment where the source of EU research funding is revealed additionally. Our findings imply that lying is more extensive towards an ill-regarded regulator, and that regulators can affect truth-telling behavior by the nature and communication of their policy.

Conservation Spillovers and Behavioral Interventions: Experimental Evidence From Water and Energy Use

Gabriel Lade
,
Iowa State University
Katrina Jessoe
,
University of California-Davis
Edward Spang
,
University of California-Davis
Frank Loge
,
University of California-Davis

Abstract

This paper provides experimental evidence that behavioral interventions alter consumer behavior in unintended sectors. We use a randomized controlled trial to test the effect of social norms messaging about residential water use on households' energy consumption. A central and unexpected result from our experiment is that non-pecuniary water conservation instruments lead to statistically and economically significant reductions in energy use. This finding is novel not only because water conservation instruments spill over into the energy setting, but because the magnitude of the electricity response rivals that from home energy reports. We find an average decrease in electricity use of 1.3% to 1.5%. These effects are slightly lower but comparable to the average energy savings from the deployment of home energy reports that focus exclusively on electricity usage (Allcott, 2011; Ayres et al., 2013). We also report small increases in natural gas usage, where the average treatment effect ranges from 0.8% to 1.3%. <br />
<br />
We use two approaches to understand the mechanisms driving decreases in households' energy use. First, we take advantage of the high frequency nature of our water, electricity, and natural gas data to compare timing of the estimated treatment effects across hours of day. Second, we construct a model of water-related electricity and natural gas use for an average single family home in California disaggregated by individual appliance. Results imply that at most only one-third of the electricity savings can be attributed to a purely mechanical relationship, while the natural gas savings can be explained by this relationship. We attribute the remaining electricity savings to behavioral conservation spillovers. In our setting, the presence of such spillovers increases the conservation benefits and cost-effectiveness of water conservation instruments. The findings suggest that behavioral interventions may alter consumer choice more generally.

Bayesian Reasoning: Evidence From the Field

Constantinos Antoniou
,
University of Warwick
Chris P Mavis
,
University of Surrey

Abstract

We conduct a field test of Bayesian reasoning, examining whether agents form expectations by placing a larger weight on cues that are more informative with lower process variance. To test this notion we analyse subjective probabilities inferred from odds on the outcomes of tennis matches, exploiting exogenous variation in process variance related to the format with which tennis matches are played. Our results are consistent with “process variance neglect”, i.e., agents are not adjusting their ex-ante probabilities sufficiently according to process variance, and thus violate Bayes Rule. This result is robust to inferring subjective probabilities from odds offered by professional bookmakers or odds achieved on a person-to-person betting exchange. The resulting biases in expectations are costly.
JEL Classifications
  • C9 - Design of Experiments