Friday, August 23, 2013

Daily income targets

My colleague Pascaline Dupas has a new working paper "Daily Needs, Income Targets and Labor Supply: Evidence from Kenya" joint with Jonathan Robinson.
The abstract reads

Many studies suggest that daily income earners behave as if they have daily income targets. Less work has examined the determinants of the targets themselves. Using data on labor supply, shocks, and self-reported cash needs from 257 bicycle taxi drivers in Western Kenya, we provide evidence that many individuals treat their daily cash need as the day's target. We conjecture that in a physically demanding job, workers may have an incentive to quit early and so set a personal rule of “earning enough for the day's need” as an internal commitment device to provide effort. This heuristic is more common among less educated workers and has substantial welfare costs: greater variance in hours worked is associated with worse health, and we estimate that workers would earn 5% more by working a set number of hours each day (more if their wage elasticity were positive).

Thursday, August 22, 2013

RCT registry

The American Economic Association offers a registry for randomized control trials here

One important point:

FAQ: Who will have access to the information I provide?

Answer: If you decide, key information can be hidden until the time where the trial is completed. You can also upload confidential documents for record keeping, and those will never be shared unless you explicitly authorize it.

FAQ: How can I see whether a trial has been changed?

Answer: All edits are preserved and can be accessed on the "History" tab of any trial.

I have to admit, I am not completely convinced of the use of such a registry... I hope to blog more on that at some later point, but welcome comments and suggestions

Wednesday, August 21, 2013

I like it

The NYtimes reposts on ‘Like’ This Article Online? Your Friends Will Probably Approve, Too, Scientists Say

Apparently research suggests: "If you “like” this article on a site like Facebook, somebody who reads it is more likely to approve of it, even if the reporting and writing are not all that great.

But surprisingly, an unfair negative reaction will not spur others to dislike the article."

And here I thought a weaker version of "Nothing unites more than common enemies" could have been at work... (Not sure who actually said that first...)

The original article is by Lev Muchnik, Sinan Aral and Sean J. Taylor, "Social Influence Bias: A Randomized Experiment" Science 9 August 2013: Vol. 341 no. 6146 pp. 647-651

The abstract is:
"Our society is increasingly relying on the digitized, aggregated opinions of others to make decisions. We therefore designed and analyzed a large-scale randomized experiment on a social news aggregation Web site to investigate whether knowledge of such aggregates distorts decision-making. Prior ratings created significant bias in individual rating behavior, and positive and negative social influences created asymmetric herding effects. Whereas negative social influence inspired users to correct manipulated ratings, positive social influence increased the likelihood of positive ratings by 32% and created accumulating positive herding that increased final ratings by 25% on average. This positive herding was topic-dependent and affected by whether individuals were viewing the opinions of friends or enemies. A mixture of changing opinion and greater turnout under both manipulations together with a natural tendency to up-vote on the site combined to create the herding effects. Such findings will help interpret collective judgment accurately and avoid social influence bias in collective intelligence in the future."

Tuesday, August 20, 2013

Psychology and Economics: SITE conference

Segment 8: Psychology and Economics 11.0

August 26, 27 and 28, 2013

Organized by Vincent Crawford, University of Oxford and University of California, San Diego; David Laibson, Harvard University; Ulrike Malmendier, University of California at Berkeley; John Beshears, Graduate School of Business, Stanford University and B. Douglas Bernheim, Economics Department, Stanford University.

(note that John Beshears, who is moving to HBS, helps organize all "behavioral" SITE conference, this one, and the experimental economics one: We will miss him!)

Monday, August 26

9.00 - 9.30 Breakfast

9:30 - 9.45 Welcome by B. Douglas Bernheim, Stanford University

9.45 - 10.20 Hierarchy-Preserving Preferences presented by Benjamin Ho, Vassar College, and co-authored with Wenwen Xie and Xinyue Zhou, Department of Psychology, Sun Yat-Sen University, and Stephan Meier, Graduate School of Business, Columbia University

10.20 - 10.55 The Size of the LGBT Population and the Magnitude of Anti-Gay Sentiment are Substantially Underestimated presented by Katherine Baldiga, The Ohio State University, and co-authored with Lucas Coffman, also The Ohio State University, and Keith Marzilli Ericson, Boston University

10.55 - 11.25 Coffee

11.25 - 12.00 A Two-Way Street: Multiple Price Lists, the Common Ratio Effect and Preference Reversals presented by David Eil, George Mason University, and co-authored with Marco Castillo, also George Mason University

12.00 - 12.35 Loss Aversion Motivates Tax Sheltering: Evidence from U.S. Tax Returns presented by Alex Rees-Jones, Cornell University

12.35 - 2.00 Lunchtime discussion

2.00 - 2.35 Reference Points, Social Norms, and Fairness in Contract Renegotiations presented by Klaus M. Schmidt, University of Munich, and co-authored with Björn Bartling, University of Zurich

2.35 - 3.10 Bad Habits and Endogenous Decision Points presented by Peter Landry, Duke University

3.10 - 3.40 Coffee

3.40 - 4.15 Bid Takers or Market Makers? The Effect of Auctioneers on Auction Outcomes presented by Bradley Larsen, Massachusetts Institute of Technology, and co-authored with Devin G. Pope, University of Chicago Booth School of Business, Nicola Lacetera, University of Toronto; , and Justin R. Sydnor, Wisconsin School of Business, University of Wisconsin at Madison

4.15 - 4.50 Awards Unbundled: Evidence from a Field Experiment with Health Trainees presented by Nava Ashraf, Harvard Business School, and co-authored with Oriana Bandiera, STICERD, London School of Economics, and Scott Lee, Harvard Medical School and Harvard Business School

4.50 - 5.20 Rational Inattention, Entropy, and Choice: The Posterior-Based Approach presented by Andrew Caplin, New York University, and co-authored with Mark Dean, Brown University

7.00 Continued discussion and dissemination of technical knowledge during dinner

Tuesday, August 27

9.00 - 9.30 Breakfast

9.30 - 10.05 X-CAPM: An Extrapolative Capital Asset Pricing Model presented by Nicholas C. Barberis, Yale School of Management, and co-authored with Lawrence Jin, also Yale University, and Robin Greenwood and Andrei Shleifer, both Harvard University

10.05 - 10.40 Monthly Budgeting Heuristics: Evidence from 'Extra' Paychecks presented by C. Yiwei Zhang, The Wharton School, University of Pennsylvania

10.40 - 11.10 Coffee

11.10 - 11.45 Voting to Tell Others presented by Ulrike Malmendier, University of California at Berkeley, and co-authored with Stefano DellaVigna, also University of California at Berkeley, and John List, University of Chicago

11.45 - 12.20 The Behavioral Effects of Monetary Contracts: Using Peer Comparisons and Financial Incentives to Reduce Electricity Demand in Urban Indian Households presented by Anant Sudarshan, Kennedy School of Government, Harvard University and Institute for Financial Management and Research, Chennai

12.20 - 12.55 Expectations-Based Reference-Dependent Life-Cycle Consumption presented by Michaela Pagel, University of California at Berkeley

12.55 - 2.15 Lunchtime discussion

2.15 - 3.15 Keynote Address: Antonio Rangel, California Institute of Technology
Combining Response Times and Choice Data Using a Neuroeconomic Model of Decision Process Improves Out-of-Sample Predictions by John A. Clithero and Antonio Rangel, both California Institute of Technology

3.15 - 3.45 Coffee

3.45 - 4.20 Holding the Hunger Games Hostage at the Gym: An Evaluation of Temptation Bulding presented by Katherine Milkman, The Wharton School, University of Pennsylvania, and co-authored withKevin Volpp, also The Wharton School, University of Pennsylvania, and Julia Minson, John F. Kennedy School of Government, Harvard University

4.20 - 4.55 Poverty Impedes Cognitive Function presented by Anandi Mani, University of Warwick, and co-authored with Sendhil Mullainathan, Harvard University; and Eldar Shafir and Jiaying Zhao, both Princeton University

4.55 - 5.30 Financial Markets where Traders Neglect the Informational Content of Asset Prices presented by Erik Eyster, London School of Economics, and co-authored with Dmitri Vayanos, also London School of Economics, and Matthew Rabin, University of California at Berkeley

7.00 Continued discussion and dissemination of technical knowledge during dinner

Wednesday, August 28

9.00 - 9.30 Breakfast

9.30 - 10.05 Self-Enhancing Transmission Bias and Active Investing presented by David Hirshleifer, Merage School of Business, University of California at Irvine, and co-authored with Bing Han, Rotman School of Business, University of Toronto

10.05 - 10.40 Deception under Competitive Intermediation presented by Takeshi Murooka, University of California at Berkeley

10.40 - 11.10 Coffee

11.10 - 11.45 The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation presented by Hunt Allcott, New York University, and co-authored with Todd Rogers, Kennedy School of Government, Harvard University

11.45 - 12.20 Value Computation and Value Modulation: A Dual-Process Theory of Self-Control presented by Juan Carrillo, University of Southern California, and co-authored with Isabelle Brocas, also University of Southern California

12.20 - 12.55 Meaningful Theorems: Revealed Reference-Dependent Preference presented by Vincent Crawford, University of Oxford and University of California at San Diego, and co-authored with Laura Blow, The Institute for Fiscal Studies, and Ian Crawford, University of Oxford

12.55 - 2.15 Lunchtime discussion, box lunch

Monday, August 19, 2013

Welcome back, SITE conference: Experimental Economics

The vacations are over, my blog is back.

I hope to post regularly once more.

To begin, the program of the experimental SITE conference, that will happen on
August 23, 24 and 25, 2013.

Organized by Lise Vesterlund, University of Pittsburgh and Lucas Coffman, The Ohio State University; John Beshears, Graduate School of Business, Stanford University, and Charles Sprenger, Alvin Roth and Muriel Niederle, all Stanford University.

Friday, August 23

8:15 - 8:45 Breakfast

8:45 - 9:00 Welcome

9:00 - 10:00 Decisions Under Uncertainty and Ambiguity
Stochastic Choice and Hedging presented by Pietro Ortoleva, Columbia University and co-authored with Marina Agranov, California Institute of Technology

No Two Experiments are Identical presented by Yoram Halevy, University of British Columbia and co-authored with Larry Epstein, Boston University

10:00 - 10:30 Coffee

10:30 - 12:00 Foundations of Game Theory and Strategy
Epistemic Foundations for the Failure of Nash Equilibrium presented by P.J. Healy, The Ohio State University

A Generalized Winner's Curse: An Experimental Investigation of Complexity and Adverse Selection presented by Gary Charness, University of California, Santa Barbara and co-authored with Dan Levin, The Ohio State University and David Schmeidler, Tel Aviv University

Endogenous Depth of Reasoning presented by Antonio Penta, University of Wisconsin, Madison and co-authored with Larbi Alaoui, Universitat Pompeu Fabra and Barcelona GSE

12:00 - 2:00 Lunchtime discussion

2:00 - 3:00 Communication and Influence (Lab)
Interpersonal Influence presented by Lucas Coffman, The Ohio State University and co-authored with Paul Niehaus, University of California, San Diego

Less Is More: Communication Costs and Team Performance presented by Zachary Grossman, University of California, Santa Barbara, and co-authored with Gary Charness, also University of California, Santa Barbara, and David Cooper, Florida State University

3:00 - 3:30 Coffee

3:30 - 4:30 Shorter Session 1
Habits of Virtue: Creating Norms of Cooperation and Defection in the Laboratory presented by Alexander Peysakhovich, Harvard University and co-authored with David G. Rand, Yale University

Intuitive Generosity and the Inability to Draw Inference from Decision Time presented by María P. Recalde, University of Pittsburgh, and co-authored with Lise Vesterlund, University of Pittsburgh and Arno Riedl, Maastricht University

Backward Induction in the Finitely Repeated Prisoner's Dilemma: Experimental Evidence presented by Sevgi Yuksel, New York University and co-authored with Matthew Embrey, Maastricht University and Guillaume R. Fréchette, New York University

Rationality and Consistent Beliefs: Theory and Experimental Evidence presented by Terri Kneeland, University of British Columbia

4:30 - 6:00 Informal Exchange

6:00 Continued discussion and dissemination of technical knowledge during dinner

Saturday, August 24

8:30 - 9:00 Breakfast

9:00 - 10:00 Developments in Fairness
Poverty and Decision-Making: Evidence from Choice Experiments Around Payday presented by Stephanie W. Wang, University of Pittsburgh and co-authored with Leandro S. Carvalho, Center for Economic and Social Research, University of Southern California and Stephan Meier, Columbia Business School

The Value of Information and the Role of Fairness in Bargaining presented by Judd B. Kessler, The Wharton School and co-authored with Muriel Niederle, Stanford University

10:30 - 11:30 Communication and Influence (Field)
Can a Small Nudge Affect Job Choice? Experimental Evidence from Teach for America presented by Clayton Featherstone, University of Pennsylvania, and co-authored with Judd B. Kessler, also University of Pennsylvania and Lucas C. Coffman, The Ohio State University

Fundraising Through Online Social Networks: a Field Experiment on Peer-to-Peer Solicitation presented by Ragan Petrie, George Mason University and co-authored with Marco Castillo, also George Mason University, and Clarence Wardell, Tweenate, LLC

11:30 - 1:30 Lunchtime discussion

1:30 - 2:30 State Dependent Choice
Time and State Dependence in an Ss Decision Experiment presented by Ryan Oprea, University of California, Santa Barbara, and co-authored with Jacopo Magnani and Aspen Gorry, both University of California, Santa Cruz

Rational Inattention and State Dependent Stochastic Choice presented by Andrew Caplin, New York University, and co-authored with Mark Dean, Brown University

2:30 - 3:00 Coffee

3:00 - 4:00 Prosociality and Effort Provision
Why Do People Volunteer? An Experimental Analysis of Preferences for Time Donations presented by Alexander L. Brown, Texas A&M University, and co-authored with Jacob Williams and Jonathan Meer, both also Texas A&M University

Revisiting Gift-Exchange: Theoretical Considerations and a Field Test presented by Rosario Macera Parra, Universidad Catolica de Chile, and co-authored with Constanca Esteves-Sorenson, Yale University School of Management

4:00 - 4:15 Short Break and Informal Exchange

4:15 - 5:15 Shorter Session 2
Symmetry in Cold-to-Hot and Hot-to-Cold Valuation Gaps presented by Geoffrey Fisher, California Institute of Technology and co-authored with Antonio Rangel, also California Institute of Technology

The Realization Effect: Risk-Taking After Realized Versus Paper Losses presented by Alex Imas, Carnegie Mellon University

Is Response Time Predictive of Choice? An Experimental Study of Threshold Strategies presented by Isabel Trevino, New York University and co-authored with Andrew Schotter, also New York University

Correlation Neglect in Belief Formation presented by Florian Zimmermann, University of Bonn and co-authored with Benjamin Enke, also University of Bonn

6:00 Continued discussion and dissemination of technical knowledge during dinner

Sunday, August 25

9:00- 9:30 Breakfast

9:30 - 10:30 Sustained Cooperation
Dissolution of Partnerships in Infinitely Repeated Games presented by Alistair J. Wilson, University of Pittsburgh and co-authored with Hong Wu, University of Pittsburgh

Long-Term Commitment and Cooperation presented by Frédéric Schneider, Zurich, and co-authored with Roberto Weber, also University of Zurich

10:30 - 11:00 Coffee

11:00 am - 12:00 Inequality and Group Behavior
Inequality and Relative Ability Beliefs presented by Jeffrey Butler, EINAUDI

Equilibrium Tax Rates and Income Redistribution: A Laboratory Study presented by Marina Agranov, California Institute of Technology, and co-authored with Thomas R. Palfrey, also California Institute of Technology

12:00 Lunchtime discussion

Monday, August 12, 2013

Opting out and wanting back in

The NYTimes magazine has an article on "The Opt-Out Generation Wants Back In"

"After one emotional session with a friend, her 12-year-old daughter asked what all the fuss was about. O’Donnel told her: “This is the perfect reason why you need to work. You don’t have to make a million dollars. You don’t have to have a wealthy lifestyle. You just always have to be able to at least earn enough so you can support yourself.”

Nine years ago, O’Donnel was promoting a very different message. She was a spokeswoman of sorts for a group of women — highly educated, very accomplished, well-paid professionals with high-earning spouses — who in the early 2000s made headlines for leaving the work force just when they were hitting their stride. They were a small demographic to be sure (another, larger, group who left the work force at that time — poor mothers who couldn’t afford child care — went without notice), but they garnered a great deal of media attention."

"Ten years later, in her second round of research, things were different. While 23 percent of Hewlett’s women, post-recession, said their husbands were worried financially, and 30 percent said their husbands were “envious or angry” about their decision not to work, many of Stone’s high-earning husbands came, over time, to want their wives to stay home. “This round, I’m hearing more, ‘My husband really prefers that I be home,’ ” Stone said of her recent talks with those women. “They say, ‘It’s a big surprise: we’ve really gone to a very traditional household now.’ ”

Many of the women I spoke with were troubled by the gender-role traditionalism that crept into their marriages once they gave up work, transforming them from being their husbands’ intellectual equals into the one member of their partnership uniquely endowed with gifts for laundry or cooking and cleaning; a junior member of the household, who sometimes had to “negotiate” with her husband to get money for child care."

The whole article is here, the original article is here

Sunday, August 11, 2013

Playing Lottery

Tara Siegel Bernard in the NYtimes writes about "Win a Lottery Jackpot? Not Much Chance of That"

"When those exceedingly lucky people come forward to claim this week’s Powerball lottery jackpot, which swelled to $448 million on Wednesday, it’s hard not to think: Somebody is winning these things, right? It could be me.

This is exactly the sort of logic that, over the last year, led millions of people to spend $5.9 billion of their hard-earned dollars on Powerball alone. They spent nearly $69 billion on all lottery games in 2012, according to two lottery trade groups."


"“For emotionally significant events, the size of the probability simply doesn’t matter,” said Daniel Kahneman, the Nobel-prize winning psychologist. “What matters is the possibility of winning. People are excited by the image in their mind. The excitement grows with the size of the prize, but it doesn’t diminish with the size of the probability.”"

And I like especially the last sentence of this paragraph:

"Buying more tickets improves your odds, but not by much. So if you want the fantasy, just buy one. Buying more doesn’t make the fantasy any richer.

“The difference is like moving from a big house to a small house to make it less likely a meteor will strike your roof,” "

In case someone is ready to make that deal, just drop a comment...

Saturday, August 10, 2013

Monday, August 5, 2013

Placebo Buttons

David McRaney advertises his new book, "You are now less dumb" through an excellent post.
It starts with
"The Misconception: All buttons placed around you do your bidding.
The Truth: Many public buttons are only there to comfort you."

"According to a 2008 article in the New Yorker, close buttons don’t close the elevator doors in many elevators built in the United States since the 1990s. In some elevators the button is there for workers and emergency personnel to use, and it only works with a key. The key-only settings isn’t always active though, as the blog Design with Intent asserts. Each elevator is different. In some, the emergency function requires a long-press of several seconds longer than the average user attempts. The website, The Straight Dope, investigated the issue in 1986 by asking elevator companies and elevator repairmen directly. According to their investigation, “The grim truth is that a significant percentage of the close-door buttons in this world…don’t do anything at all.” The reasons cited were that the button was never wired up, or that it was set to a delay, or was deactivated by the owner, or it broke long ago and no one ever complained because the doors eventually close whether or not you press the buttons."

I also really like that one:

"In many offices and cubicle farms, the thermostat on the wall isn’t connected to anything. Landlords, engineers and HVAC specialists have installed dummy thermostats for decades to keep people from costing companies money by constantly adjusting the temperature. According to a 2003 article in the Wall Street Journal, one HVAC specialist surmised that 90 percent of all office thermostats are fake (others say it’s more like 2 percent). Some companies even install noise generators to complete the illusion after you turn the knob.

In a survey conducted in 2003 by the Air-Conditioning, Heating and Refrigeration News, 72 percent of respondents admitted to installing dummy thermostats.

    “We had an employee that always complained of being hot,” recalls Greg Perakes, an HVACR instructor in Tennessee. “Our solution was to install a pneumatic thermostat. We ran the main air line to it inside of an enclosed I-beam. Then we just attached a short piece of tubing to the branch outlet (terminating inside the I-beam without being attached to any valves, etc.).”

    The worker “could adjust her own temperature whenever she felt the need,” Perakes says, “thus enabling her to work more and complain less. When she heard the hissing air coming from inside the I-beam, she felt in control. We never heard another word about the situation from her again. Case solved.”

    - The Air-Conditioning, Heating & Refrigeration News, Mar. 27, 2003"