Honesty and Self-Selection into Cheap Talk (with Urs Fischbacher and Maik T. Schneider), R&R at EJ, [link].
Abstract In many situations statements are non-binding and people can lie strategically for their own benefit – political campaigns and sales marketing are obvious examples. Since individuals differ with respect to their willingness to lie, the level of lying and thus the credibility of statements will crucially depend on who self-selects into such situations. We study self-selection into cheap talk in the concrete setting of a two-stage political competition model and test its key predictions in the lab. At the entry stage, potential candidates compete in a contest to become their party’s candidate in an election. At the election stage, the nominated candidates campaign by making promises to voters. Confirming the model’s key predictions, we find in the experiment that dishonest people over-proportionally self-select into the political race; and that this adverse selection effect can be prevented if the entry stage behavior is made transparent.
Buying Supermajorities in the Lab (with Maik T. Schneider), R&R at GEB, [link].
Abstract Many political decisions taken in legislatures or committees are subject to lobbying efforts. A seminal contribution to the literature on vote-buying is the legislative lobbying model pioneered by Groseclose and Snyder (1996), which predicts that lobbies will optimally form supermajorities in many cases. Providing the first empirical assessment of this prominent model, we test its central predictions in the laboratory. While the model assumes sequential moves, we relax this assumption in additional treatments with simultaneous moves. We find that lobbies buy supermajorities as predicted by the theory. Our results also provide supporting evidence for most comparative statics predictions of the legislative lobbying model with respect to lobbies’ willingness to pay and legislators’ preferences. Some of these results carry over to the simultaneous-move set-up but the predictive power of the model declines.
Negotiating Cooperation under Uncertainty: Communication in Noisy, Indefinitely Repeated Interactions (with Fabian Dvorak), [link].
Abstract Case studies of cartels and recent theory suggest that repeated communication is key for stable cooperation under imperfect monitoring, where actions can only be observed with noise. We report the results of a laboratory experiment on cooperation under different monitoring and communication structures, which confirm this. Pre-play communication boosts cooperation at the beginning of an interaction under all monitoring structures. However, repeated communication is necessary to maintain cooperation under imperfect monitoring, where bad signals about others’ actions can also occur after mutual cooperation. Subjects lack the foresight to discuss their responses to bad signals beforehand and thus need to renegotiate.
Delegation to a Group (with Moritz Janas), [link].
Abstract We study the choice of a principal to either delegate a decision to a group of careerist experts, or to consult them individually and keep the decision-making power. The experts have access to information of different levels of competence-dependent accuracy, at cost C>=0, and benefit from being perceived as competent. Our model predicts a trade-off between information acquisition and information aggregation. On the one hand, the expected benefit from being informed is larger in case the experts are consulted individually, so the experts, depending on C, either acquire the same or a larger amount of information than in case of delegation of decision-making. On the other hand, any acquired information is better aggregated in case of delegation, where experts can deliberate secretly. To test the key predictions, we run an experiment, varying C across treatments. The results confirm the predicted trade-off. However, we find that many experts overinvest in information, which makes delegation optimal even where theory predicts better outcomes in case the experts are consulted individually. Nevertheless, the principals in our experiment are very reluctant to delegate decisions.
Abstract We investigate the potential of transparency to influence committee decision-making. We present a model in which career concerned committee members receive private information of different type-dependent accuracy, deliberate and vote. We study three levels of transparency under which career concerns are predicted to affect behavior differently and test the model’s key predictions in a laboratory experiment.The model’s predictions are largely borne out – transparency negatively affects information aggregation at the deliberation and voting stages, leading to sharply different committee error rates than under secrecy. This occurs despite subjects revealing more information under transparency than theory predicts.
Abstract People benefit from being perceived as trustworthy. Examples include sellers trying to attract buyers, or candidates in elections trying to attract voters. In a laboratory experiment using exchange games, in which the trustor can choose the trustee, we study whether trustees can signal their trustworthiness by giving to charity. Our results show that donors are indeed perceived as more trustworthy and they are selected significantly more often as interaction partners. As a consequence of this sorting pattern, relative payoffs to donors and non-donors differ substantially with and without partner choice. However, we do not find donors to be significantly more trustworthy than non-donors. Our findings suggest that publicly observable generosity, such as investments in corporate social responsibility or donations to charity during a political campaign, can induce perceptions of trustworthiness and trust.
Abstract Do employees work harder if their job has the right mission? In a laboratory labor market experiment, we test whether subjects provide higher effort if they can choose the mission of their job. We observe that subjects do not provide higher effort than in a control treatment. Surprised by this finding, we run a second experiment in which subjects can choose whether they want to work on a job with their preferred mission or not. A subgroup of agents (roughly one third) is willing to do so even if this option is more costly than choosing the alternative job. Moreover, we find that these subjects provide substantially higher effort. These results suggest that some workers can be motivated by missions and that selection into mission-oriented organizations is an important factor to explain empirical findings of lower wages and high motivation in these organizations.
Abstract Non-governmental organizations and other non-profit organizations attract workers who strongly identify themselves with their missions. We study whether these “good guys” are more trustworthy, and how such pronounced group identities affect trust and trustworthiness within the groups and towards out-groups. We find that subjects who strongly identify themselves with a non-profit mission are more trustworthy in a minimal group setting but also harshly discriminate against out-groups when subjects are grouped by the missions they identify themselves with.
Charitable Giving as a Signal of Trustworthiness: Disentangling the Signaling Benefits of Altruistic Acts (with Wojtek Przepiorka), Evolution & Human Behavior (Impact Factor: 3.383), 34, 139-145, 2013, [link] [WP].
Abstract It has been shown that psychological predispositions to benefit others can motivate human cooperation and the evolution of such social preferences can be explained with kin or multi-level selection models. It has also been shown that cooperation can evolve as a costly signal of an unobservable quality that makes a person more attractive with regard to other types of social interactions. Here we show that if a proportion of individuals with social preferences is maintained in the population through kin or multi-level selection, cooperative acts that are truly altruistic can be a costly signal of social preferences and make altruistic individuals more trustworthy interaction partners in social exchange. In a computerized laboratory experiment, we test whether altruistic behavior in the form of charitable giving is indeed correlated with trustworthiness and whether a charitable donation increases the observing agents’ trust in the donor. Our results support these hypotheses and show that, apart from trust, responses to altruistic acts can have a rewarding or outcome-equalizing purpose. Our findings corroborate that the signaling benefits of altruistic acts that accrue in social exchange can ease the conditions for the evolution of social preferences.
The Effectiveness of Inputs in Primary Education: Insights from Recent Student Surveys for Sub-Saharan Africa (with Katharina Michaelowa and Annika Wechtler), Journal of Development Studies, 45, 1545-1578, 2009, [link].
Abstract With SACMEQ and PASEC there are now two large data bases available on student achievement, socio-economic background and school and teacher characteristics in both anglophone and francophone sub-Saharan Africa. A joint analysis of PASEC and SACMEQ in a common education production function framework allows us to estimate the impact of educational inputs on student achievement in 21 sub-Saharan African countries and to compare our results with those of earlier empirical studies for education systems in Africa and other world regions. In our analysis we focus on school equipment, teacher quality and class organisation. The issue of teacher and student incentives cannot be adequately addressed with the given data. Our results are based on a traditional retrospective analysis of student achievement in PASEC and SACMEQ countries. In contrast to the ‘nothing works’ result from most industrialized countries’ studies we find robust positive correlations of achievement test scores and the possession of textbooks and negative correlations with teaching in shifts. The most striking result is the weak or even absent correlation of achievement test scores and teacher education and professional training. However, some differences between francophone and anglophone education systems can be observed in this context if differences in the sampling methodology are duly taken into account.