Discussion Paper No. 86
November 4, 2021
Online Fundraising, Self-Image, and the Long-Term Impact of Ask Avoidance
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We provide the first field evidence for the role of pure self-image, independent of social image, in charitable giving. In an online fundraising campaign for a social youth project run on an opera ticket booking platform we document how individuals engage in self-deception to preserve their self-image. In addition, we provide evidence on stark adverse long-run effects of the fundraising campaign for ticket sales. "Avoiding the ask," opera customers who faced more insistent online fundraising buy fewer tickets in the following season. Our results suggest that fundraising management should not decide in isolation about their campaigns, even if very successful. Rather broader operational concerns have to be considered.
Keywords:
online fundraising; quasi-experiment; self-image;
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Discussion Paper No. 85
A Model of Ideological Thinking
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This paper develops a theory in which heterogeneity in political preferences produces a partisan disagreement about objective facts. A political decision involving both idiosyncratic preferences and scientific knowledge is considered. Voters form motivated beliefs in order to improve their subjective anticipation of the future political outcome. In equilibrium, they tend to deny the scientific arguments advocating the political orientations that run counter to their interests. Collective denial is the strongest in societies where contingent policy is the least likely to be implemented, either because of voters' intrinsic preferences or because of rigidities in the political process. The theory predicts that providing mixed evidence produces a temporary polarization of beliefs, but that disclosing unequivocal information eliminates the disagreement.
Keywords:
beliefs; ideology; cognition; disagreement; polarization;
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Discussion Paper No. 84
Risk, Time Pressure, and Selection Effects
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Time pressure is a central aspect of economic decision making nowadays. It is therefore natural to ask how time pressure affects decisions, and how to detect individual heterogeneity in the ability to successfully cope with time pressure. In the context of risky decisions, we ask whether a person's performance under time pressure can be predicted by measurable behavior and traits, and whether such measurement itself may be affected by selection issues. We find that the ability to cope with time pressure varies significantly across decision makers, leading to selected subgroups that differ in terms of their observed behaviors and personal traits. Moreover, measures of cognitive ability and intellectual efficiency jointly predict individuals' decision quality and ability to keep their decision strategy under time pressure.
Keywords:
risk; cognitive ability; selection; time pressure;
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Discussion Paper No. 83
Blaming the Refugees? Experimental Evidence on Responsibility Attribution
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Do people blame refugees for negative events? We propose a novel experimental paradigm to measure discrimination in responsibility attribution towards Arabic refugees. Participants in the laboratory experience a positive or negative income shock, which is with equal probability caused by a random draw or another participant's performance in a real effort task. Responsibility attribution is measured by beliefs about whether the shock is due to the other participant's performance or the random draw. We find evidence for reverse discrimination: Natives attribute responsibility more favorably to refugees than to other natives. In particular, refugees are less often held responsible for negative income shocks. Moreover, natives with negative implicit associations towards Arabic names attribute responsibility less favorably to refugees than natives with positive associations. Since neither actual performance differences nor beliefs about natives' and refugees' performance can explain our finding of reverse discrimination, we rule out statistical discrimination as the driving force. We discuss explanations based on theories of self-image and identity concerns.
Keywords:
refugees; discrimination; responsibility attribution;
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Discussion Paper No. 82
Suspicious Success - Cheating, Inequality, Acceptance, and Political Preferences
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Supporters of left-wing parties typically place more emphasis on redistributive policies than right-wing voters. I investigate whether this difference in tolerating inequality is amplified by suspicious success - achievements that may arise from cheating. Using a laboratory experiment, I exogenously vary cheating opportunities for stakeholders who work on a real effort task and earn money according to their self-reported performances. An impartial spectator is able to redistribute the earnings between the stakeholders, although it is not possible to detect cheating. I find that the opportunity to cheat leads to different views on whether to accept inequality. Left-wing spectators substantially reduce inequality when cheating is possible, while the treatment has no significant effect on choices of right-wing spectators. Since neither differences in beliefs nor differences in norms about cheating can explain this finding, it seems to be driven by a difference in preferences. These results suggest that redistributive preferences will diverge even more once public awareness increases that inequality may be to a certain extent created by cheating.
Keywords:
cheating; inequality; fairness; political preferences; redistribution;
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Discussion Paper No. 81
Unleashing Animal Spirits - Self-Control and Overpricing in Experimental Asset Markets
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One explanation for overpricing on asset markets is a lack of traders' self-control. Self-control is the individual capacity to override or inhibit undesired impulses that may drive prices. We implement the first experiment to address the causal relationship between self-control abilities and systematic overpricing on financial markets. Our setup can detect some of the channels through which individual self-control restrictions could transmit into irrational exuberance in markets. Our data indicate a large direct effect of restricted self-control abilities on market overpricing. Low self-control traders report stronger emotions after the market.
Keywords:
G02; G11; G12; D53; D84;
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Discussion Paper No. 80
Does Having Insurance Change Individuals Self-Confidence
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Recent research in contract theory on the effects of behavioral biases implicitly assumes that they are stable, in the sense of not being affected by the contracts themselves. In this paper, we provide evidence that this is not necessarily the case. We show that in an insurance context, being insured against losses that may be incurred in a real-effort task changes subjects' self-confidence. Our novel experimental design allows us to disentangle selection into insurance from the effects of being insured by randomly assigning coverage after subjects revealed whether they want to be insured or not. We find that uninsured subjects are underconfident while those that obtain insurance have well-calibrated beliefs. Our results suggest that there might be another mechanism through which insurance affects behavior than just moral hazard.
Keywords:
D84; D82; C91;
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Discussion Paper No. 79
Global Evidence on Economic Preferences
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This paper studies the global variation in economic preferences. For this purpose, we present the Global Preference Survey (GPS), an experimentally validated survey dataset of time preference, risk preference, positive and negative reciprocity, altruism, and trust from 80,000 individuals in 76 countries. The data reveal substantial heterogeneity in preferences across countries, but even larger within-country heterogeneity. Across individuals, preferences vary with age, gender, and cognitive ability, yet these relationships appear partly country specific. At the country level, the data reveal correlations between preferences and bio-geographic and cultural variables such as agricultural suitability, language structure, and religion. Variation in preferences is also correlated with economic outcomes and behaviors. Within countries and subnational regions, preferences are linked to individual savings decisions, labor market choices, and prosocial behaviors. Across countries, preferences vary with aggregate outcomes ranging from per capita income, to entrepreneurial activities, to the frequency of armed conflicts.
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Discussion Paper No. 78
The Axiomatic Foundation of Logit
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Multinomial logit is the canonical model of discrete choice but widely criticized for requiring functional form assumptions as foundation. The present paper shows that logit is behaviorally founded without such assumptions. Logit's functional form obtains if relative choice probabilities are independent of irrelevant alternatives and invariant to utility translation, to relabeling options (presentation independence), and to changing utilities of third options (context independence). Reviewing behavioral evidence, presentation and context independence seem to be violated in typical experiments, though not IIA and translation invariance. Relaxing context independence yields contextual logit (Wilcox, 2011), relaxing presentation independence allows to capture "focality" of options.
Keywords:
stochastic choice; logit; axiomatic foundation; behavioral evidence; utility estimation;
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Discussion Paper No. 77
Specification Testing in Random Coefficient Models
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In this paper, we suggest and analyze a new class of specification tests for random coefficient models. These tests allow to assess the validity of central structural features of the model, in particular linearity in coefficients, generalizations of this notion like a known nonlinear functional relationship, or degeneracy of the distribution of a random coefficient, i.e., whether a coefficient is fixed or random, including whether an associated variable can be omitted altogether. Our tests are nonparametric in nature, and use sieve estimators of the characteristic function. We provide formal power analysis against global as well as against local alternatives. Moreover, we perform a Monte Carlo simulation study, and apply the tests to analyze the degree of nonlinearity in a heterogeneous random coefficients demand model. While we find some evidence against the popular QUAIDS specification with random coefficients, it is not strong enough to reject the specification at the conventional significance level.
Keywords:
nonparametric; specification; testing; random coefficients; unobserved heterogeneity; sieve estimation; characteristic function; consumer demand;
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