Discussion Paper No. 475
December 13, 2023
Should Individuals Choose their Own Incentives? Evidence from a Mindfulness Meditation Intervention
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Abstract:
Traditionally, incentives to promote behavioral change are assigned rather than chosen. In this paper, we theoretically and empirically investigate the alternative approach of letting people choose their own incentives from a menu of increasingly challenging and rewarding options. When individuals are heterogeneous and have private information about their costs and benefits, we theoretically show that leaving them the choice of incentives can improve both adherence and welfare. We test the theoretical predictions in a field experiment based on daily meditation sessions. We randomly assign some participants to one of two incentive schemes and allow others to choose between the two schemes. As predicted, participants sort into schemes in (partial) agreement with the objectives of the policy maker. However, in contrast to our prediction, participants who could choose complete significantly fewer sessions than participants that were randomly assigned. Since the results are not driven by poor selection, we infer that letting people choose between incentive schemes may bring in psychological effects that discourage adherence.
Keywords:
monetary incentives; dynamic incentives; field experiment; mental health;
JEL-Classification:
C09; D03; D08; I01;
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Discussion Paper No. 474
Breaking the Silence: Group Discussions, and the Adoption of Welfare-Improving Technologies
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Social pressure and stigma can hinder the adoption of available technologies, especially in the context of sensitive health issues. We run a field experiment on the take-up of menstrual products in Bangladesh and test a discussion-based intervention in a work setting. We vary participation in group discussions designed to break the silence around menstruation, where colleagues share their personal experiences. We find positive effects on the willingness to pay for a known menstrual product (sanitary pads) and on the adoption of a new technology (anti-bacterial menstrual underwear). Our results show changes in restrictive social norms around purchasing the products and lower perceived stigma around menstruation in general.
Keywords:
social norms; social pressure; stigma; technology adoption; group discussions; menstrual health management; menstrual hygiene; adverse health behavior;
JEL-Classification:
D91; I12; I15; O12;
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Discussion Paper No. 473
Gendered Access to Finance: The Role of Team Formation, Idea Quality, and Implementation Constraints in Business Evaluations
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We analyze gender discrimination in entrepreneurship finance. Access to finance is crucial for entrepreneurial success, yet constraints for women are particularly pronounced. We structurally unpack whether loan officers evaluate business ideas and implementation constraints differently for male and female entrepreneurs, both as individual entrepreneurs or in entrepreneurial teams. In a lab-in-the-field experiment with Ugandan loan officers, we document gender discrimination of individual female entrepreneurs, but no gender bias in the evaluation of entrepreneurial teams. Our results suggest that the observed bias is not driven by animus against female entrepreneurs but rather by differential beliefs about women’s entrepreneurial ability or implementation constraints in running a business. Policies aimed at team creation for start-up enterprises may have an additional benefit of equalizing access to finance and ultimately stimulating growth.
Keywords:
access to finance; gender bias; entrepreneurship; lab-in-the-field;
JEL-Classification:
C930; G210; J160; L250; L260; O160;
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Discussion Paper No. 472
December 9, 2023
Are Women Less Effective Leaders than Men? Evidence from Experiments Using Coordination Games
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We study whether one reason behind female underrepresentation in leadership is that female leaders are less effective at coordinating followers’ actions. Two experiments using coordination games investigate whether female leaders are less successful than males in persuading followers to coordinate on efficient equilibria. In these settings, successful coordination hinges on higher-order beliefs about the leader’s capacity to convince followers to pursue desired actions, making beliefs that women are less effective leaders potentially self-confirming. We find no evidence that such bias impacts actual leadership performance, precisely estimating the absence of a gender leadership gap. We further show that this result is surprising given experts’ priors.
Keywords:
gender; coordination games; leadership; experiment;
JEL-Classification:
D23; C72; C92; J1;
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Discussion Paper No. 471
Motivated Procrastination
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Traditionally, economic models have attributed procrastination to present bias. However, procrastination may also arise when individuals derive anticipatory utility from holding motivated, overly optimistic beliefs about the workload they need to complete. This study provides a rigorous empirical test for this notion of `motivated procrastination'. In a longitudinal experiment over four weeks, individuals have to complete a cumbersome task of unknown length. They are exposed to exogenous variation in i) their expectation regarding their workload and ii) scope for motivated reasoning. We find that scope for motivated reasoning allows workers to hold substantially more optimistic beliefs and identify a causal link between the exogenous variation in beliefs and the deferral of work to the future. This systematic belief-based delay of work (motivated procrastination) turns out to be robust to accounting for decision-makers' time preferences and emotional responses, and looms largest for decision makers who tend to not acquire information that may include negative news.
Keywords:
anticipatory utility; beliefs; memory; motivated cognition; procrastination; real effort; task allocation;
JEL-Classification:
C91; D83; D84; D90; D91;
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Discussion Paper No. 470
Uncertainty about Carbon Impact and the Willingness to Avoid CO2 Emissions
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With a large representative survey (N=1,128), we document that consumers are very uncertain about the emissions associated with various actions, which may affect their willingness to reduce their carbon footprint. We experimentally test two channels for the behavioural impact of such uncertainty, namely risk aversion about the impact of mitigating actions and the formation of motivated beliefs about this impact. In two large online experiments (N=2,219), participants make incentivized trade-offs between personal gain and (uncertain) carbon impact. We find no evidence that uncertainty affects individual climate change mitigation efforts through risk aversion or motivated belief channels. The results suggest that reducing consumer uncertainty through information campaigns is not a policy panacea and that communicating scientific uncertainty around climate impact need not backfire.
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JEL-Classification:
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Discussion Paper No. 469
Narrative Persuasion
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Modern life offers nearly unbridled access to information; it is the harnessing of this information to guide decision-making that presents a challenge. We study how one individual may try to shape the way another person interprets objective information by proposing a causal explanation (or narrative) that makes sense of this objective information. Using an experiment, we examine the use of narratives as a persuasive tool in the context of financial advice where advisors may hold incentives that differ from those of the individuals they are advising. Our results reveal several insights about the underlying mechanisms that govern narrative persuasion. First, we show that advisors construct self-interested narratives and make them persuasive by tailoring them to fit the objective information. Second, we demonstrate that advisors are able to shift investors’ beliefs about the future performance of a company. Third, we identify the types of narratives that investors find convincing, namely those that fit the objective information well. Finally, we evaluate the efficacy of several potential policy interventions aimed at protecting investors. We find that narrative persuasion is difficult to protect against.
Keywords:
narratives; beliefs; financial advice; conflicts of interest; behavioral finance;
JEL-Classification:
D83; G40; G50; C90;
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Discussion Paper No. 468
November 30, 2023
The Effect of Incentives in Non-Routine Analytical Team Tasks
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Despite the prevalence of non-routine analytical team tasks in modern economies, little is understood regarding how incentives influence performance in these tasks. In a series of field experiments involving more than 5,000 participants, we investigate how incentives alter behavior in teams working on such a task. We document a positive effect of bonus incentives on performance, even among teams with strong intrinsic motivation. Bonuses also transform team organization by enhancing the demand for leadership. Exogenously increasing teams' demand for leadership results in performance improvements comparable to those seen with bonus incentives, rendering it as a likely mediator of incentive effects.
Keywords:
team work; bonus; incentives; leadership; non-routine; exploration;
JEL-Classification:
C92; C93; J33; D03; M52;
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Discussion Paper No. 467
November 29, 2023
Robotizing to Compete? Firm-level Evidence
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We investigate the impact of product market competition on firms’ automation investments. We use a rich combination of micro-data on Portuguese exporters and exploit a novel source of variation in the degree of competition they face – a tariff liberalization between the European Union and Central and Eastern European countries in the 1990s. We find that firms facing greater competition in export markets tend to reduce investments in automation technologies. These average negative effects are driven by the least productive firms, while the most efficient exporters in industries that are more prone to automation tend to robotize in order to compete. These findings suggest that an increase in the degree of product market competition widens disparities between firms.
Keywords:
automation; product market competition; firm heterogeneity; trade liberalization; workers; multi-product firms;
JEL-Classification:
D22; F16; J23; L25; O33;
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Discussion Paper No. 466
Commitment Requests Do Not Affect Truth-Telling in Laboratory and Online Experiments
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Using a standard cheating game, we investigate whether the request to sign a no-cheating declaration affects truth-telling. Our design varies the content of a no-cheating declaration (reference to ethical behavior vs. reference to possible sanctions) and the type of experiment (online vs. offline). Irrespective of the declaration's content, commitment requests do not affect truth-telling, neither in the laboratory nor online. The inefficacy of commitment requests appears robust across different samples and does not depend on psychological measures of reactance.
Keywords:
cheating; lying; truth-telling; compliance; commitment; no-cheating rule; no-cheating declaration; commitment request;
JEL-Classification:
C91; C93; D03;