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Essays on Field Experiments in Behavioral Economics
Full text linkThis dissertation contributes to the literature of using field experiments to test and develop theories of consumer behavior. In Chapter One, my coauthors and I partner with the YMCA to analyze how public recognition for exercise affects consumer's utility. We find that while it motivates positive behavior change, it creates highly unequal payments, with low performers losing a lot of utility from having their exercise habits publicly shared. In Chapter Two, my coauthor and I use an online shopping experiment to study how consumers (mis)react to sales taxes. We find evidence consistent with the theory that consumers using heterogeneous rules of thumb to compute the opaque tax when the stakes are low, but using costly mental effort at higher stakes. The results allow us to differentiate between various economic theories of limited attention. In Chapter Three, my coauthor and I partner with an online apparel retailer to study the consequences of offering a one-time price discount to consumers, with a particular focus on consumer beliefs. We find that the net effect was no significant difference in revenue, order frequency or profit from the two groups in our experiment. We further find that price discounts do not change the perceived value of the brand or quality of the product, which contradicts many existing economic theories
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Essays on Present-Focus, Beliefs, and Misprediction
No full textIn this dissertation, I study the present-focus model---a behavioral economics model which, via time-discounting preferences, allows for the possibility of time-inconsistent behavior. Specifically, I study two key implications of the model: that present-focused agents may mispredict their future behavior and that these agents may desire tools to change their future behavior. Throughout, I also make clear that the present-focus model is inseparable from beliefs. In an uncertain world, when we make a statement about the present-focus model, we are also making a statement about the accuracy of beliefs or the effect that beliefs have on behavior. We must first understand beliefs before we can hope to learn anything about present-focus.In Chapter 1, which is coauthored with Luisa Cefala and Nicholas Swanson, we study the booming industry of Earned Wage Access (EWA)---a financial technology which gives workers access to their wages as they are earned, rather than having to wait until payday. The nascent technology holds promise as a relatively cheap means of providing workers with short-termliquidity, but critics worry that present-focus could cause workers to abuse EWA. We partnered with an EWA fintech company to assess these concerns, using a combination of a survey-based experiment and administrative app data. We find that, on average, workers under-predict how much they will use EWA during their next pay period. Additionally, workers are willing to pay a premium for an incentive to reduce their future EWA use. Taken together, our evidence suggests the average worker is both present-focused and partially aware of this fact, though we document heterogeneity in the degree of present-focus across workers. Using workers' EWA misprediction and willingness to pay for our experimental incentive, we estimate a model of present-focus with partial sophistication. We conclude with a discussion about why our results may be an upper-bound on the extent of naivete and suggest steps which could be taken to help workers better predict their future EWA use.Chapter 1 explained how the control version of our experiment allowed us to estimate a model of present-focus. However, to estimate this model, we made the assumption that workers' misprediction of their future EWA use was solely due to naivete of present-focus. In Chapter 2, which is also coauthored with Luisa Cefala and Nicholas Swanson, we explore the veracity of that assumption. Specifically, we present results from two treatment arms of our experiment---both of which were designed to exogenously shift respondents' beliefs about future work hours, in order to understand if hours misprediction affected misprediction of EWA use. Analysis of our treatments provides strong evidence of a positive relationship between hours and EWA misprediction---i.e., workers' over-optimism about how much they will work induces them to raise their prediction of EWA use and, thus, lowers the level of EWA under-prediction we would see in the absence of incorrect hours beliefs. This shows how misprediction in one domain can trickle down into misprediction in another domain, which could potentially bias estimates of naivete. Importantly, this conclusion holds regardless of whether misprediction is solely attributable to naive present-focus. With that said, our treatments do provide suggestive evidence that EWA misprediction is partly driven by reasons other than naivete. In sum, by exploring the relationship between misprediction across domains, our research makes clear that one must be careful when using misprediction to measure naivete of present-focus.An important prediction of the present-focus model is that (partially) sophisticated agents will demand commitment contracts. While a large literature has designed and documented take-up of such contracts, we still lack an empirical understanding of which factors affect the take-up rate. In Chapter 3, which is coauthored with Woojin Kim, we designed and ran a survey-based experiment in order to understand how uncertainty and risk affect commitment take-up. Specifically, we measure how respondents' beliefs about the distribution of their future actions and their perceived chances of successfully completing a commitment contract affect the take-up rate. To do so, we experimentally manipulate these beliefs by changing aspects of the contracts and by injecting uncertainty. Overall, we document a commitment take-up rate of about 34\%, but find little evidence to suggest that sophisticated present-focus is the driver of this take-up. Respondents appear to consider the amount of effort a contract takes to complete and their perceived chances of successfully completing a contract when making their take-up decision. In the vein of rational inattention, we find that lowering the ``stakes'' of the contract reduces how ``seriously'' respondents consider their chances of success, leading to higher take-up rates for the same probability of success. Our work has implications for policymakers who want to design and market commitment contracts so as to maximize take-up rates
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Essays on Marketing Strategies for the Credit Card Market
Full text linkCredit cards are an important vehicle for spending and borrowing. Collaborating with a leading commercial bank in China, this dissertation consists of two chapters that explore how the design of credit card products can influence consumer behavior, alongside its implications for marketing strategies and consumer welfare. The first chapter studies reward programs, often a prominent feature of credit cards. I combine proprietary consumer-level data and a survey to study the causal effect of rewards on consumption and consumers' subjective expectations. I leverage a fuzzy regression discontinuity (RD) design to show that a more generous reward design causes consumption increases across both reward-earning and non-reward-earning categories. Applying the fuzzy RD to the survey data, I find that consumers correctly understand the impact of reward design on reward-earning consumption but underestimate its effect on total consumption. Using a stylized model, I study the implications of this misperception for market structure and welfare. My calibration results show that consumer misperceptions incentivize banks to offer more generous rewards, which ultimately diminishes market efficiency and leads to a cross-subsidy from less to more sophisticated consumers.The second chapter, coauthored with Xiao Yin, investigates the extent to which consumers misperceive the interest costs associated with credit card debt using a combination of administrative data and surveys. Through a randomized controlled trial with an information treatment, our results show that consumers are imperfectly informed about the interest cost of unsecured debt, and the resulting misperception induces excess debt-taking by 26\%, mainly originating from spending on luxury goods. To understand the formation of interest rate misperception, we uncover selective information acquisition to be a potential channel. We demonstrate that consumers tend to actively seek information about their borrowing status when they expect creditworthiness to be high, and they disproportionately pay more attention to favorable information when interest rates are low
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Essays in Behavioral and Experimental Economics
Full text linkThis dissertation consists of three essays examining the implications of human psychology for economic behavior and market outcomes
Network Architecture and the Left-Right Spectrum
No full textWe study a model of opinion formation and analyze the link between network architecture and the “left-right spectrum” that frequently characterizes opinions and beliefs. We correct a key result of DeMarzo, Vayanos and Zwiebel (QJE, 2003) who claim that after some time, an agent’s position on a set of different issues will always be either “left” on all of those issues or “right” on all of those issues. We provide counterexamples to this claim and show that in the long-run an agent’s position can flip-flop between “left” on all issues and “right” on all issues indefinitely. However, we provide necessary and sufficient conditions for a stable left-right characterization of opinions to be possible in the long run. Roughly, a flip-flop will occur when agents give relatively little weight to the opinions of agents with similar political positions (including themselves). Following this intuition, we show that a simple sufficient condition is that agents become “stubborn” over time and give little weight to the opinions of others. Finally, we characterize classes of networks in which it is possible for agents to flip-flop between “left” and “right” indefinitely. We argue that qualitatively, these results are robust to alternative models of opinion formation.
Going Beyond Counting First Authors in Author Co-citation Analysis
Full text linkThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
Variations on the Author
Full text link“Variations on the Author” discusses two of Eduardo Coutinho’s recent films (Um Dia na Vida, from 2010, and Últimas Conversas, posthumously released in 2015) and their contribution to the general question of documentary authorship. The director’s filmography is characterized by a consistent yet self-effacing form of authorial self-inscription: Coutinho often features as an interviewer that rather than express opinions propels discourses; an interviewer that is good at listening. This mode of self-inscription characterizes him as an author who is not expressive but who is nonetheless markedly present on the screen. In Um Dia na Vida, however, Coutinho is completely absent form the image, while Últimas Conversas, on the contrary, includes a confessional prologue that moves the director from the margins to the center of his films. This article examines the ways in which these works stand out in the filmography of a director who offers new insights into the notion of cinematic authorship
Evaluating Behaviorally Motivated Policy: Experimental Evidence from the Lightbulb Market
No full textImperfect information and inattention to energy costs are important potential motivations for energy efficiency standards and subsidies. We evaluate these motivations in the lightbulb market using a theoretical model and two-randomized experiments. We derive welfare effects as functions of reduced-form sufficient statistics capturing economic and psychological parameters, which we estimate using a novel within-subject information disclosure experiment. The main results suggest that moderate subsidies for energy-efficient lightbulbs may increase welfare, but informational and attentional biases alone do not justify a ban on incandescent lightbulbs. Our results and techniques generate broader methodological insights into welfare analysis with misoptimizing consumers
Appropriate Similarity Measures for Author Cocitation Analysis
Full text linkWe provide a number of new insights into the methodological discussion about author cocitation analysis. We first argue that the use of the Pearson correlation for measuring the similarity between authors’ cocitation profiles is not very satisfactory. We then discuss what kind of similarity measures may be used as an alternative to the Pearson correlation. We consider three similarity measures in particular. One is the well-known cosine. The other two similarity measures have not been used before in the bibliometric literature. Finally, we show by means of an example that our findings have a high practical relevance.information science;Pearson correlation;cosine;similarity measure;author cocitation analysis
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