Experimental/Behavioral Economics
Paper Session
Tuesday, Jan. 5, 2021 3:45 PM - 5:45 PM (EST)
- Chair: Inacio Bo, University of York
Are Economists' Preferences Psychologists' Personality Traits? A Structural Approach
Abstract
This paper proposes a method for empirically mapping psychological personality traits to economic preferences. Careful modelling of random components of decision making is crucial to establishing the long supposed but empirically elusive link between economic and psychological systems for understanding differences in individuals’ behaviors. I use factor analysis to extract information on individuals' cognitive ability and personality and embed it within a Random Preference Model to estimate distributions of risk and time preferences, of their individual-level stability, and of people's propensity to make mistakes. I explain up to 50% of the variation in both average risk and time preferences and in individuals' capacity to make consistent rational choices using four factors related to cognitive ability and three of the Big Five personality traits. True differences in desired outcomes are related to differences in personality whereas actual mistakes in decisions are related to cognitive skill.Comparison of Decisions Under Unknown Experiments
Abstract
We take the perspective of an econometrician who wants to determine which of two experiments provides higher expected utility but only knows the decisions under each experiment. To compare these decisions, the econometrician must make inferences about what the experiment might have been for each set of decisions. We provide a necessary and sufficient condition that identifies when every experiment consistent with one set of decisions has a higher value of information than every experiment consistent with the other set of decisions.Revealing Choice Bracketing
Abstract
In a decision problem comprised of multiple intermediate choices, subjects may fail to take into account the interdependencies between their choices. We design and deploy a novel experiment to understand how people make decisions in such problems. We provide revealed preference tests of three models of choice bracketing: broad, narrow, and partial- narrow. We apply these tests in three experiments to determine how subjects bracket in portfolio allocation under risk, social allocation, and induced-utility shopping experiments. Our results suggest that ~70% of subjects are best described by narrow bracketing, 0-24% by broad bracketing, and very few are well described by the intermediate case.Pick-an-Object Mechanisms
Abstract
We introduce a new family of mechanisms for one-sided matching markets, denoted pick-an-object (PAO) mechanisms. When implementing an allocation rule via PAO, agents are asked to pick an object from individualized menus. These choices may be rejected later on, and these agents are presented with new menus. When the procedure ends, agents are assigned the last object they picked. We characterize the allocation rules that can be sequentialized by PAO mechanisms, as well as the ones that can be implemented in a robust truthful equilibrium. We justify the use of PAO as opposed to direct mechanisms by showing that its equilibrium behavior is closely related to the one in obviously strategy-proof (OSP) mechanisms, but includes commonly used rules, such as Gale-Shapley DA and Top Trading Cycles, which are not OSP-implementable. We run laboratory experiments comparing truthful behavior when using PAO, OSP, and direct mechanisms to implement different rules. These indicate that individuals are more likely to behave in line with the theoretical prediction under PAO and OSP implementations than their direct counterparts.JEL Classifications
- D9 - Micro-Based Behavioral Economics
- C9 - Design of Experiments