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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 ...
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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 ...
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Gender discrimination and social identity: experimental evidence from urban Pakistan
Gender discrimination in South Asia is a well-documented fact. However, gender is only one of an individual?s many identities. This paper investigates how gender discrimination depends on the social identities of interacting parties. We use an experimental approach to identify gender discrimination by randomly matching 2,836 male and female students pursuing bachelor?s-equivalent degrees in three different types of institutions?Madrassas (religious seminaries), Islamic universities, and liberal universities?that represent distinct identities within the Pakistani society. Our main finding is ...
Working Paper
A bureaucratic theory of flypaper effects
An analysis of two competing theories, the median voter model and the bureaucratic model, as they relate to how noncategorical grants to communities are spent.
Working Paper
Unpacking social interactions
As empirical work in identifying social effects becomes more prevalent, researchers are beginning to struggle with identifying the composition of social interactions within any given reference group. In this paper, we present a simple econometric methodology for the separate identification of multiple social interactions. The setting under which we achieve separation is special, but is likely to be appropriate in many applications.
Journal Article
Flat taxes and the limits to reform
A discussion of proposals to reform the federal income tax system, and an analysis of the economic and political issues surrounding flat-tax reform proposals.
Working Paper
Contracts with social multipliers
We develop a model of contracting in which individual effort choices are subject to social pressure to conform to the average effort level of others in the same risk-sharing group. As in related models of social interactions, a change in exogenous variables or contract terms generates a social multiplier. In this environment, small differences in fundamentals such as skill or effort cost can lead to large differences in group productivity. We characterize the optimal contract for this environment and describe the properties of equilibria, properties that agree with stylized facts on effort ...
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The empirical content of models with multiple equilibria in economies with social interactions
We study a general class of models with social interactions that might display multiple equilibria. We propose an estimation procedure for these models and evaluate its efficiency and computational feasibility relative to different approaches taken to the curse of dimensionality implied by the multiplicity. Using data on smoking among teenagers, we implement the proposed estimation procedure to understand how group interactions affect health-related choices. We find that interaction effects are strong both at the school level and at the smaller friends-network level. Multiplicity of ...
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Bayesian social learning, conformity, and stubbornness: evidence from the AP top 25
The recent nonexperimental literature on social learning focuses on showing that observational learning exists, that is, individuals do indeed draw inferences by observing the actions of others. We take this literature a step further by analyzing whether individuals are Bayesian social learners. We use data from the Associated Press (AP) U.S. College Football Poll, a weekly subjective ranking of the top twenty-five teams. The voters' aggregate rankings are available each week prior to when voters have to update their individual rankings, so voters can potentially learn from their peers. We ...