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Showing results 1 to 10 of approximately 26.
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Working Paper
Social and private learning with endogenous decision timing
Firms often face choices about when to upgrade and what to upgrade to. We discuss this in the context of upgrading to a new technology (for example, a new computer system), but it applies equally to the upgrading of processes (for example, a new organizational structure) or to individual choices (for example, buying a new car). This paper uses an experimental approach to determine how people address such problems, with a particular focus on the impact of information flows. Specifically, subjects face a multi-round decision, choosing when (if ever) to upgrade from the status quo to either a ...
Working Paper
Social networks and vaccination decisions
We combine information on social networks with medical records and survey data in order to examine how friends affect one's decision to get vaccinated against the flu. The random assignment of undergraduates to residential halls at a large private university allows us to estimate how peer effects influence health beliefs and vaccination choices. Our results indicate that social exposure to medical information raises people's perceptions of the benefits of immunization. The average student's belief about the vaccine's health value increases by $5.00 when an additional 10 percent of her friends ...
Working Paper
Another hidden cost of incentives: the detrimental effect on norm enforcement
Monetary incentives are often considered as a way to foster contributions to public goods in society and firms. This paper investigates experimentally the effect of monetary incentives in the presence of a norm enforcement mechanism. Norm enforcement through peer punishment has been shown to be effective in raising contributions by itself. We test whether and how monetary incentives interact with punishment and how this in turn affects contributions. Our main findings are that free riders are punished less harshly in the treatment with incentives, and as a consequence, average contributions ...
Working Paper
Managing self-confidence: theory and experimental evidence
Evidence from social psychology suggests that agents process information about their own ability in a biased manner. This evidence has motivated exciting research in behavioral economics, but also garnered critics who point out that it is potentially consistent with standard Bayesian updating. We implement a direct experimental test. We study a large sample of 656 undergraduate students, tracking the evolution of their beliefs about their own relative performance on an IQ test as they receive noisy feedback from a known data-generating process. Our design lets us repeatedly measure the ...
Working Paper
Doing good or doing well? Image motivation and monetary incentives in behaving prosocially
This paper examines image motivation?the desire to be liked and well-regarded by others? as a driver in prosocial behavior (doing good), and asks whether extrinsic monetary incentives (doing well) have a detrimental effect on prosocial behavior due to crowding out of image motivation. ; By definition, image depends on one?s behavior being visible to other people. Using this unique property we show that image is indeed an important part of the motivation to behave prosocially. Moreover, we show that extrinsic incentives interact with image motivation and are therefore less effective in public ...
Working Paper
Blood donations and incentives: evidence from a field experiment
There is a longstanding concern that material incentives might undermine prosocial motivation, leading to a decrease in blood donations rather than an increase. This paper provides an empirical test of how material incentives affect blood donations in a large-scale field experiment spanning three months and involving more than 10,000 previous donors. We examine two types of incentive: a lottery ticket and a free cholesterol test. Lottery tickets significantly increase donations, in particular among less motivated donors. The cholesterol test leads to no discernable impact on usable blood ...
Report
An experimental investigation of why individuals conform
Social interdependence is believed to play an important role in how people make individual choices. This paper presents a simple model constructed on the premise that people are motivated by their own payoff as well as by how their actions compare with those of other people in their reference group. I show that conformity of actions may arise either from learning about the norm (social learning), or from adhering to the norm because of image-related concerns (social influence). To disentangle the two empirically, I use the fact that image-related concerns can be present only if actions are ...
Report
Estimating a structural model of herd behavior in financial markets
We develop a new methodology for estimating the importance of herd behavior in financial markets. Specifically, we build a structural model of informational herding that can be estimated with financial transaction data. In the model, rational herding arises because of information-event uncertainty. We estimate the model using 1995 stock market data for Ashland Inc., a company listed on the New York Stock Exchange. Herding occurs often and is particularly pervasive on certain days. In an information-event day, on average, 2 percent (4 percent) of informed traders herd-buy (sell). In 7 percent ...
Working Paper
The impact of group membership on cooperation and norm enforcement: evidence using random assignment to real social groups
Due to incomplete contracts, efficiency of an organization depends on willingness of individuals to take non-selfish actions, such as cooperating when there is no incentive to do so or punishing inefficient actions by others. Organizations also constitute a social boundary, or group. We investigate whether this social aspect of organizations has an important benefit? fostering unselfish cooperation and norm enforcement within the group?but also whether there is a dark side, in the form of hostility between groups. Our experiment provides the first evidence free from the confounding effect of ...
Speech
Implications of behavioral economics for monetary policy
Presentation at the Federal Reserve Bank of Boston Conference: ?Implications of Behavioral Economics for Economic Policy?, Boston, Massachusetts, September 28, 2007