Behavioral and Experimental Economics
joint work with Philip Brookins and Sebastian Kube
Abstract: In a series of randomized field experiments, we investigate the interplay between self-chosen work goals, monetary incentives, and work performance. Employees are observed in a natural work environment where they have to do a simple but effort-intense task. Output is perfectly observable and in most of our treatments workers are paid for performance. A regular piecerate contract serves as a benchmark, while in some treatments workers are paid the same piecerate but asked in addition to choose a non-binding work goal. We observe that the use of personal work goals leads to a significant output increase. Strikingly, the positive effect of self-chosen goals can persist even without any additional monetary incentives, i.e., without the piecerate. However, then the impact of self-chosen goals depends on the exact size of the goals and the difficulty of the task. Our results suggest that work contracts where workers themselves set goals and expectations can help to improve performances; even in the absence of monetary incentives.
joint work with Sebastian Kube, and Jonas Radbruch
Abstract: Agents’ decisions to exert effort depends on the provided incentives as well as the potential costs for doing so. So far most of the attention has been on the incentive side. However, our lab experiments underline that both the incentive and cost side can be used separately to shape work performance. In our experiment, subjects work on a real-effort task. Between treatments, we vary the incentive scheme used for compensating workers. Additionally, by varying the available outside options, we explore the role of implicit opportunity costs of effort in determining workers’ performance. We observe that incentive contracts and opportunity costs interact in a non-trivial manner. Performance does significantly react to a change in implicit effort costs under low-powered piece-rate and target-based bonus contracts, but not under a high piece rate contract. In addition, comparisons between the incentive schemes depend crucially on the implicit costs.
joint work with David Rand and Gari Walkowitz
Abstract: We systematically investigate prisoner’s dilemma games and dictator games with valence framing. We find that give versus take frames influence subjects’ behavior and beliefs in the prisoner’s dilemma game but not in the dictator game.
joint work with Michael Babington and Carl Kitchens
Abstract: To test and replicate the superstar effect reported by Brown (2011) we empirically study contests where a single entrant has an endogenously higher probability of winning. Unlike the previous literature, we test for the presence of the superstar effect in several different contexts and across gender. Ultimately, we collect and explore data from four sources: men’s and women’s professional golf, and men’s and women’s professional alpine skiing. Our baseline study of men’s professional golf serves as a replication of Brown’s (2011) study, and serves as a useful comparison across gender. Empirically, we find little robust evidence of the superstar effect in any of our datasets. In our replication exercise, we approximate the findings of Brown (2011), however, we cannot reject the null that the presence of a superstar has no impact on high ranked competitors. In our other settings, we cannot reject the null that superstars have no influence on the performances of highly ranked competitors.
joint work with Christoph Engel
Abstract: Donors may often not be sure whether a recipient really deserves their help. Does this uncertainty deter generosity? We experimentally investigate a situation in which donors do not know the financial endowment of the recipient for certain, but still have some information on the distribution the endowments are drawn from. In the experiment we find that uncertainty does not deter generosity. In fact, under most specifications of uncertainty, dictators give more, compared with the donation the same dictator makes to a recipient they know to have the expected value of the endowment with certainty. They are particularly concerned about the possibility that a recipient leaves the lab with no payoff from the game
joint work with Andreas Glöckner, René Schlegelmilch, and Ilan Fischer
Abstract: Cooperation is crucial for achieving mutually beneficial strategic interactions. However, since many interactions have the structure of social dilemmas, cooperation is not easily achieved and its attainment remains both a theoretical and a practical challenge. In three studies we test predictions derived from Subjective Expected Relative Similarity theory (SERS), a theory which predicts cooperation whenever the similarity among opponents exceeds the similarity threshold, derived from the expected payoffs. We show that similarity predicts cooperation in Prisoner’s Dilemmas above and beyond the previously established factors general tendency to cooperate and beliefs. We show that similarity can be influenced by a minimal-group manipulation and that the direct effect of this manipulation on cooperation is mediated by changes in similarity. Furthermore, it is demonstrated that the tendency to cooperate is higher in environments with a lower similarity threshold, and hence depends on the game structure in the theoretically predicted manner. The results highlight the importance of similarity for cooperation in social dilemmas.
joint work with Jan Meise, Gari Walkowitz, and Eyal Winter
Abstract: We investigate strategic interactions of Israelis and Palestinians within a controlled laboratory experiment. In our first treatment we retrieve cooperation benchmarks prevailing within both subject pools. Then we measure cooperation levels and associated beliefs between Israelis and Palestinians. Treatment three assesses the influence of pre-play face-to-face encounter on cooperative behavior. Our findings are: The degree of expected and actual cooperation within the Palestinian subject pool is significantly higher as compared to the respective levels found in Israel. In line with previous findings, cooperation decreases if subjects are paired with subjects from the other subject pool. Previously detected subject pool differences are not offset. The drop in inter-subject pool cooperation can be outweighed by the introducing of face-to-face communication, which dramatically increases the cooperation rates. The differences in contributions between Palestinians and Israelis are associated with differences in subjects' beliefs. Face-to-face encounter increases and balances beliefs and therefore enhances cooperation.
joint work with Oliver Himmler and Tobias König
Delegation of Remuneration
joint work with Sebastian Kube
Reciprocity and the Timing of Discretionary Bonuses
joint work with Luke Boosey
Equity Compensation with ESPPs
joint work with John Hamman
Contracts as Signs of Trust
joint work with Erich Cromwell and Monika Ziolkowska