In an artefactual field experiment, we implemented a crowdfunding campaign for an institute’s summer party and compared donation and contribution framings. We found that the use of the word ‘donation’ generated higher revenue than the use of ‘contribution.’ While the individuals receiving the donation framing gave substantially larger amounts, those receiving the contribution framing responded more strongly to reward thresholds and suggestions. An additional survey experiment on MTurk indicated that the term ‘donation’ triggers more positive emotional responses and that emotions are highly correlated with giving. It appears that making a donation is perceived as a more voluntary act and is thus more successful at generating warm glow than making a contribution. We surmise that this extends to other funding mechanisms.

Economists model self-control problems through time-inconsistent preferences. Empirical tests of these preferences largely rely on experimental elicitation using monetary rewards, with several recent studies failing to find present bias for money. In this paper, we compare estimates of present bias for money with estimates for healthy and unhealthy foods. In a within-subjects longitudinal experiment with 697 low-income Chinese high school students, we find strong present bias for both money and food, and that individual measures of present bias are moderately correlated across reward types. Our experimental measures of time preferences over both money and foods predict field behaviors including alcohol consumption and academic performance.

Previous literature demonstrates that beliefs about the determinants of income inequality play a major role in individual support for income redistribution. This study investigates how people form beliefs regarding the extent to which work versus luck determines income inequality. Specifically, I examine whether people form self-serving beliefs to justify supporting personally advantageous redistributive policies. I use a laboratory experiment where I directly measure beliefs and manipulate the incentives to engage in self-deception. I first replicate earlier results demonstrating that (1) people attribute income inequality to work when they receive a high income and to luck when they receive a low income and (2) their beliefs about the source of income inequality influence their preferences over redistributive policies. However, I do not find that people’s beliefs about the causes of income inequality are further influenced by self-serving motivations based on a desire to justify favorable redistributive policies. I conclude that, in my experiment, self-serving beliefs about the causes of income inequality are driven primarily by overconfidence and self-image concerns and not to justify favorable redistributive policies.

We examine the effectiveness of accountability systems that rely on patient reporting in Kenyan health clinics. Patients and health care providers from public and private health clinics participate in a lab-in-the field experiment focusing on the relationship of trust between patient and provider. Patients decide whether to trust providers, providers have discretion over their reciprocity, and patients can complain. We compare the effectiveness of: (1) a client reporting system where patients’ complaints are disclosed to the providers’ professional peers, possibly leading to non-monetary penalties, (2) a system where complaints lead to monetary penalties, and (3) a system that, like a standard complaint box, attaches no tangible consequences to complaints. Overall, our findings suggest that citizen reporting systems that leverage peer pressure and reputational concerns can improve service delivery.

The Stochastic Becker-DeGroot-Marschak (SBDM) mechanism is a theoretically elegant way of eliciting incentive-compatible beliefs under a variety of risk preferences. However, the mechanism is complex and there is concern that some participants may misunderstand its incentive properties. We use a two-part design to evaluate the relationship between participants’ probabilistic reasoning skills, task complexity, and belief elicitation. We first identify participants whose decision-making is consistent and inconsistent with probabilistic reasoning using a task in which non-Bayesian modes of decision-making lead to violations of stochastic dominance. We then elicit participants’ beliefs in both easy and hard decision problems. Relative to Introspection, there is less variation in belief errors between easy and hard problems in the SBDM mechanism. However, there is a greater difference in belief errors between consistent and inconsistent participants. These results suggest that while the SBDM mechanism encourages individuals to think more carefully about beliefs, it is more sensitive to heterogeneity in probabilistic reasoning. In a follow-up experiment, we also identify participants with high and low fluid intelligence with a Raven task, and high and low proclivities for cognitive effort using an extended Cognitive Reflection Test. Although performance on these tasks strongly predict errors in both the SBDM mechanism and Introspection, there is no significant interaction effect between the elicitation mechanism and either ability or effort. Our results suggest that mechanism complexity is an important consideration when using elicitation mechanisms, and that participants’ probabilistic reasoning is an important consideration when interpreting elicited beliefs.

We design a novel experiment to study how subjects update their beliefs about the beliefs of others. Three players receive sequential signals about an unknown state of the world. Player 1 reports her beliefs about the state; Player 2 simultaneously reports her beliefs about the beliefs of Player 1; Player 3 simultaneously reports her beliefs about the beliefs of Player 2. We say that beliefs exhibit higher-order learning if the beliefs of Player k about the beliefs of Player $k-1$ become more accurate as more signals are observed. We find that some of the predicted dynamics of higher-order beliefs are reflected in the data; in particular, higher-order beliefs are updated more slowly with private than public information. However, higher-order learning fails even after a large number of signals is observed. We argue that this result is driven by base-rate neglect, heterogeneity in updating processes, and subjects’ failure to correctly take learning rules of others into account.

We develop a new experimental paradigm to study how emotions affect decision-making. We use it to investigate the impact of short-term fluctuations in incidental happiness on economic decisions. Experimental subjects watch an NFL football game in a sports bar. At various commercial breaks, we measure subjects’ happiness and observe their decisions regarding charitable giving, willingness to pay for a consumer good, risk taking, and trust. We find that events in the game impact the incidental happiness of our subjects, and these changes lead to predictable changes in choices. We provide a simple model that rationalizes how subjects’ behavior varies with incidental happiness and provides insight into how mood can be tractably included in economics models. Our experimental paradigm can be leveraged by other researchers interested in exploring the impact of emotions on behavior.

We conduct laboratory experiments for the multi-unit Vickrey auction with and without advice to subjects on strategy-proofness. The rate of truth-telling among the subjects without advice stays at 20%, whereas the rate increases to 47% among those who have received advice. By conducting similar experiments for the pay-your-bid auction, which is not strategy-proof, we confirm that the increase in truth-telling is due significantly to the net advice effect (i.e., the effect beyond the so-called experimenter demand effect). Moreover, we find that providing advice improves efficiency in the Vickrey auction, particularly in the early periods, when the subjects are less experienced. In general, subjects tend to overbid in Vickrey auction experiments. Our results indicate the possibility that providing simple advice decreases such overbidding by promoting a better understanding of the strategy-proofness of the Vickrey auction. Strategy-proof mechanisms are sometimes criticized because players often fail to recognize the benefit of telling the truth. However, our observations show that introducing advice on the property of strategy-proofness helps them behave “correctly.”

This article presents a laboratory experiment about capital structure irrelevance. The equity and debt issued by a firm are traded in two double-auction markets. In the Public treatment a signal carrying information about the firm’s value is known to all traders, while in the Private treatment, it is only disclosed to some randomly chosen participants. In treatment Public the conditions for capital structure irrelevance hold. The experimental results support the irrelevance of the capital structure but reject the rational expectations (risk-neutral) valuation. Treatment effects are significant and information is more efficiently embedded in prices in the Public treatment. The results from treatment Private on prices support the prior information over the rational expectations equilibrium. The analysis of the final portfolios of informed and uninformed participants suggests incomplete adjustment towards the prior information equilibrium predicted holdings.

I study the effect of task difficulty on workers’ effort. I find that task difficulty has an inverse-U effect on effort and that this effect is quantitatively large, especially when compared to the effect of conditional monetary rewards. Difficulty acts as a mediator of monetary rewards: conditional rewards are most effective at the intermediate or high levels of difficulty. The inverse-U pattern of effort response to difficulty is inconsistent with many popular models in the literature, including the Expected Utility models with the additively separable cost of effort. I propose an alternative mechanism for the observed behavior based on non-linear probability weighting. I structurally estimate the proposed model and find that it successfully captures the behavioral patterns observed in the data. I discuss the implications of my findings for the design of optimal incentive schemes for workers and for the models of effort provision.

Substantial productivity increases have been reported when incentives are framed as losses rather than gains. Loss-framed contracts have also been reported to be preferred by workers. The results from our meta-analysis and real-effort experiment challenge these claims. The meta-analysis’ summary effect size of loss framing is a 0.16 SD increase in productivity. Whereas the summary effect size in laboratory experiments is a 0.33 SD, the summary effect size from field experiments is 0.02 SD. We detect evidence of publication biases among laboratory experiments. In a new laboratory experiment that addresses prior design weaknesses, we estimate an effect size of 0.12 SD. This result, in combination with the meta-analysis, suggests that the difference between the effect size estimates in laboratory and field experiments does not stem from the limited external validity of laboratory experiments, but may instead stem from a mix of underpowered laboratory designs and publication biases. Moreover, in our experiment, most workers preferred the gain-framed contract and the increase in average productivity is only detectable in the subgroup of workers (~ 20%) who preferred the loss-framed contracts. Based on the results from our experiment and meta-analysis, we believe that behavioral scientists should better assess preferences for loss-framed contracts and the magnitude of their effects on productivity before advocating for greater use of such contracts among private and public sector actors.

Intertemporal choices are affected by both discount rate and utility curvature. We investigate how the two aspects of time preference are affected by the size of the total budget using an intertemporal allocation task. At the aggregate level as well as at the individual level, we find magnitude effects both on the discount rate and on intertemporal substitutability (i.e., utility curvature). Individuals are more patient when dealing with larger budgets and also regard larger budgets to be more fungible. The latter effect suggests that the degree of asset integration is increasing in the stake.

We examine motives for ‘overbidding’ in contests between individuals using a “two-headed” approach to decision-making. In “two-headed” contests, subject pairs send suggested bids and messages to a partner. Content analysis of the messages provides insight into an individual’s bidding motives. In addition, we elicit measures of preferences, beliefs, and impulsiveness. We find that beliefs about others’ bids and messages that emphasize winning (i.e., utility of winning) are the most robust predictors of ‘overbidding’. Our results suggest that analyzing communication provides a rich window into an individual’s thought process when making decisions, and can complement insights from elicited values from common decision tasks (Replication materials, including data, do files, and software, are available at https://sites.google.com/view/david-bruner/research).

Corporate boards, experts panels, parliaments, cabinets, and even nations all take important decisions as a group. Selecting an efficient decision rule to aggregate individual opinions is paramount to the decision quality of these groups. In our experiment we measure revealed preferences over and efficiency of several important decision rules. Our results show that: (1) the efficiency of the theoretically optimal rule is not as robust as simple majority voting, and efficiency rankings in the lab can differ from theory; (2) participation constraints often hinder implementation of more efficient mechanisms; (3) these constraints are relaxed if the less efficient mechanism is risky; (4) participation preferences appear to be driven by realized rather than theoretic payoffs of the decision rules. These findings highlight the difficulty of relying on theory alone to predict what mechanism is better and acceptable to the participants in practice.

This paper experimentally investigates the provision of real-time feedback about school assignments during the preference reporting period in three widely employed mechanisms: deferred acceptance, top trading cycles, and the Boston mechanism. Adaptive models predict that greater sensitivity to tentative assignments during the reporting period will produce more equilibrium assignments in all three mechanisms. Consistent with adaptive predictions, real-time assignment feedback consistently increased equilibrium assignments but did not increase truthful reporting. These findings suggest that providing feedback about assignments during the preference reporting period could help student assignment mechanisms more reliably achieve policy goals.

We exploit testing data to gain better understanding on framing effects on decision-making and performance under risk. In a randomized field experiment, we modified the framing of scoring rules for penalized multiple-choice tests. In penalized multiple-choice tests, right answers are typically framed as gains while wrong answers are framed as losses (Mixed-framing). In the Loss-framing proposed, both non-responses and wrong answers are presented in a loss domain. According to our theoretical model, we expect the change in the framing to decrease students’ non-response and to increase students’ performance. Under the Loss-framing, students’ non-response reduces by a 18%-20%. However, it fails to increase students’ scores. Indeed, our results support the possibility of impaired performance in the Loss-framing.

Does political polarization lead to dysfunctional behavior? To study this question, we investigate the attitudes of supporters of Donald Trump and of Hillary Clinton towards each other and how these attitudes affect spiteful behavior. We find that both Trump and Clinton supporters display less positive attitudes towards the opposing supporters compared to coinciding supporters. More importantly, we show that significantly more wealth is destroyed if the opponent is an opposing voter. This effect is mainly driven by Clinton voters. This provides the first experimental evidence that political polarization leads to destructive behavior.

When alternative market institutions are available, traders have to decide both where and how much to trade. We conducted an experiment where traders decided first whether to trade in an (efficient) double-auction institution or in a posted-offers one (favoring sellers), and second how much to trade. When sellers face decreasing returns to scale (increasing production costs), fast coordination on the double-auction occurs, with the posted-offers institution becoming inactive. In contrast, under constant returns to scale, both institutions remain active and coordination is slower. The reason is that sellers trade off higher efficiency in a market with dwindling profits for biased-up profits in a market with vanishing customers. Hence, efficiency alone might not be sufficient to guarantee coordination on a single market institution if the surplus distribution is asymmetric. Trading behavior approaches equilibrium predictions (market clearing) within each institution, but switching behavior across institutions is explained by simple rules of thumb, with buyers chasing low prices and sellers considering both prices and trader ratios.