Economic Theory Commons^™

The Implications Of Covid-19 On Fear Of Financial Collapse, Alexis Reekie

Student Scholar Symposium Abstracts and Posters

By disrupting the general value paradigm, the typical hierarchy of values, individuals directly affected by the COVID-19 virus have realized an overall shift in perspective, indicating a need to understand the effects of the COVID-19 virus on one’s outlook regarding economic anxiety and fear of financial collapse. The possibility of a global health crisis reaching levels of devastation are certainly great and worth investigating. Throughout this research paper I worked to determine the correlation between fear of financial crises and individuals who have been affected by the COVID-19 virus. Utilizing the Chapman Survey of American Fears (FEAR survey) questions pertaining …

Life Satisfaction And Tax Morale In Azerbaijan: Mediating Role Of Institutional Trust And Financial Satisfaction, Orkhan Nadirov, Khatai Aliyev, Bruce Dehning, Ilaha Sharifzada, Rafiga Aliyeva

Accounting Faculty Articles and Research

This paper examines the relationship between life satisfaction (measured as the self-reported satisfaction of each individual with their past life and goal achievements) and tax morale (measured as the likelihood of an individual’s intrinsic motivation to pay taxes). Using a large-scale survey dataset from Azerbaijan, it is documented that life satisfaction is positively associated with tax morale. Life satisfaction plays a significant role in increasing tax compliance practices. It is also important to note that there is a positive mediating effect of life satisfaction on tax morale through financial satisfaction and institutional trust. In line with our hypotheses, the results …

Prosocial Option Increases Women’S Entry Into Competition, Alessandra Cassar, Mary L. Rigdon

ESI Publications

We provide evidence that women enter competitions at the same rate as men when the incentive for winning includes the option to share part of the rewards with the losers (i.e., when the incentive system is socially oriented). Using an experiment (with N = 238 subjects from three laboratories), we find that about 16% more men than women choose to compete in the standard tournament; this gender gap is eliminated in the socially oriented incentive treatment. While men’s choice to compete remains unchanged, at around 52% in both conditions, women increase their entry rate from 35% in the standard tournament …

Futurological Fodder: On Communicating The Relationship Between Artificial Intelligence, Robotics, And Employment, Michael E. Samers Dr

Geography Faculty Publications

This article examines the debate concerning the employment implications of the so-called ‘Fourth Industrial Revolution’ (FIR) or the increasing presence of artificial intelligence and robotics in workplaces. I analyze three ‘genres’ associated with this debate (academic studies including neo-classical and heterodox/post-human approaches, the ‘gray literature’, and popular media) and I argue that together they represent ‘futurological fodder’ or discourses and knowledges that ‘perform’ the FIR and its purported consequences. I contend further that these genres involve a complex mix of ethics and politics, and I conclude with a reflection on the political implications of the FIR debate.

Helminth Infection Is Associated With Dampened Cytokine Responses To Viral And Bacterial Stimulations In Tsimane Forager-Horticulturalists, India A. Schneider-Crease, Aaron D. Blackwell, Thomas S. Kraft, Melissa Emery Thompson, Ivan Maldonado Suarez, Daniel K. Cummings, Jonathan Stieglitz, Noah Snyder-Mackler, Michael Gurven, Hillard Kaplan, Benjamin C. Trumble

ESI Publications

Background

Soil-transmitted helminths (STHs) and humans share long co-evolutionary histories over which STHs have evolved strategies to permit their persistence by downregulating host immunity. Understanding the interactions between STHs and other pathogens can inform our understanding of human evolution and contemporary disease patterns. Methodology

We worked with Tsimane forager-horticulturalists in the Bolivian Amazon, where STHs are prevalent. We tested whether STHs and eosinophil levels—likely indicative of infection in this population—are associated with dampened immune responses to in vitro stimulation with H1N1 and lipopolysaccharide (LPS) antigens. Whole blood samples (n = 179) were treated with H1N1 vaccine and LPS and …

A Reassessment Of The Potential For Loss-Framed Incentive Contracts To Increase Productivity: A Meta-Analysis And A Real-Effort Experiment, Paul J. Ferraro, J. Dustin Tracy

ESI Working Papers

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 …

Beware The Gini Index! A New Inequality Measure, Sabiou M. Inoua

ESI Working Papers

The Gini index underestimates inequality for heavy-tailed distributions: for example, a Pareto distribution with exponent 1.5 (which has infinite variance) has the same Gini index as any exponential distribution (a mere 0.5). This is because the Gini index is relatively robust to extreme observations; while a statistic’s robustness to extremes is desirable for data potentially distorted by outliers, it is misleading for heavy-tailed distributions, which inherently exhibit extremes. We propose an alternative inequality index: the variance normalized by the second moment. This ratio is more stable (hence more reliable) for large samples from an infinite-variance distribution than the Gini index …

The Efficiency Of U.S. Public Space Utilization During The Covid-19 Pandemic, Seth G. Benzell, Avinash Collis, Christos Nicolaides

Economics Faculty Articles and Research

The COVID-19 pandemic has called for and generated massive novel government regulations to increase social distancing for the purpose of reducing disease transmission. A number of studies have attempted to guide and measure the effectiveness of these policies, but there has been less focus on the overall efficiency of these policies. Efficient social distancing requires implementing stricter restrictions during periods of high viral prevalence and rationing social contact to disproportionately preserve gatherings that produce a good ratio of benefits to transmission risk. To evaluate whether U.S. social distancing policy actually produced an efficient social distancing regime, we tracked consumer preferences …

Dynamic Resource Allocation With Cost Externality, Hao Zhao, David Porter

ESI Working Papers

The inter-temporal resource allocation efficiency of a property rights-based common-pool resource system is challenged by a cost externality when one user’s extraction raises the extraction cost for others. This paper builds a dynamic resource allocation model to illustrate the efficiency loss from a standard property rights market. We then create a novel inter-temporal allocation mechanism that preserves dynamic efficiency. Our dynamic resource allocation mechanism includes an optimal planning stage where the agents collectively determine a binding extraction target for each period and a market stage where agents can exchange their extraction rights assigned within each period. The theoretical model demonstrates …

Conflict In The Pool: A Field Experiment, Loukas Balafoutas, Marco Faravelli, Roman Sheremeta

ESI Working Papers

We conduct a field experiment on conflict in swimming pools. When all lanes are occupied, an actor joins the least crowded lane and asks one of the swimmers to move to another lane. The lane represents a contested scarce resource. We vary the actor’s valuation (high and low) for the good through the message they deliver. Also, we take advantage of the natural variation in the number of swimmers to proxy for their valuation. Consistent with theoretical predictions, a swimmer’s propensity to engage in conflict increases in scarcity (incentive effect) and decreases in the actor’s valuation (discouragement effect). We complement …

Anything For A Cheerio: Brown Capuchins (Sapajus [Cebus] Apella) Consistently Coordinate In An Assurance Game For Unequal Payoffs, Lauren M. Robinson, Mayte Martínez, Kelly L. Leverett, Mattea S. Rossettie, Bart J. Wilson, Sarah F. Brosnan

ESI Publications

Unequal outcomes disrupt cooperation in some situations, but this has not been tested in the context of coordination in economic games. To explore this, we tested brown capuchins (Sapajus [Cebus] apella) on a manual version of the Stag Hunt (or Assurance) Game, in which individuals sequentially chose between two options, Stag or Hare, and were rewarded according to their choices and that of their partner. Typically, coordination on Stag results in an equal highest payout, whereas coordinating on Hare results in a guaranteed equal but lower payoff and uncoordinated play results in the lowest payoff when playing …

Uncertainty And Reputation Effects In Credence Goods Markets, Eric Schniter, J. Dustin Tracy, Vojtěch Zíka

ESI Working Papers

Credence-goods experiments have focused on stylized settings in which experts can perfectly identify the buyer’s best option and that option works without fail. However, in nature, credence goods involve uncertainties that complicate assessing the quality of service and advice. We introduce two sources of uncertainty. The first is diagnostic uncertainty; experts receive a noisy signal of buyer type so might make an ‘honest’ mistake when advising what is in buyers’ best interests. The second is service uncertainty; the services available to the buyers do not always work. Both sources of uncertainty make detection of expert dishonesty more difficult, so are …

Data For "Uncertainty And Reputation Effects In Credence Goods Markets", Eric Schniter, J. Dustin Tracy, Vojtěch Zíka

ESI Data Sets

Credence-goods experiments have focused on stylized settings in which experts can perfectly identify the buyer’s best option and that option works without fail. However, in nature credence goods involve uncertainties that complicate assessing the quality of service and advice. We introduce two sources of uncertainty into a credence goods experiment. The first is diagnostic uncertainty; experts receive a noisy signal of buyer type so might make an ‘honest’ mistake when advising what is in buyers’ best interests. The second is service uncertainty; the services available to the buyer do not always work. Both sources of uncertainty make detection of expert …

Keeping A Clean Reputation: More Evidence On The Perverse Effects Of Disclosure, Cary Deck, J. Dustin Tracy

ESI Working Papers

When a principal relies on an agent, a conflict of interest can encourage the agent to provide biased advice. Conventional wisdom suggests that such behavior can be reduced through disclosure requirements. However, disclosure has been shown to exacerbate self-serving bias and can actually lead to greater harm for the principal in one-shot interactions. But in many naturally occurring settings, agents form reputations, a mechanism that could diminish the incentive to provide biased advice. We test for bias in the advice agents provide when faced with reputation concerns, and examine the impact of disclosure in such an environment. In controlled laboratory …

The Economic Impact Of Lockdowns: A Theoretical Assessment, Gabriele Camera, Alessandro Gioffré

ESI Working Papers

The sudden appearance of the SARS-CoV-2 virus and the onset of the COVID-19 pandemic triggered extreme and open-ended “lockdowns” to manage the disease. Should these drastic interventions be the blueprint for future epidemics? We construct an analytical framework, based on the theory of random matching, which makes explicit how epidemics spread through economic activity. Imposing lockdowns by assumption prevents contagion and reduces healthcare costs, but also disrupts income-generation processes. We characterize how lockdowns impact the contagion process and social welfare. Numerical analysis suggests that protracted, open-ended lockdowns are generally suboptimal, bringing into question the policy responses seen in many countries.

Making It Public: The Effect Of (Private And Public) Wage Proposals On Efficiency And Income Distribution, Lara Ezquerra, Joaquín Gómez-Miñambres, Natalia Jiminez, Praveen Kujal

ESI Working Papers

The implications of (public or private) pre-play communication and information revelation in a labour relationship is not well understood. We address these implications theoretically and experimentally. In our baseline experiments, the employer offers a wage to the worker who may then accept or reject it. In the public and private treatment, workers, moving first, make a non-binding private or public wage proposal. Our theoretical model assumes that wage proposals convey information about a worker’s minimum acceptable wage and are misreported with a certain probability. It predicts that, on average, wage proposals lead to higher wage offers and acceptance rates, with …

An Experimental Study Of Within- And Cross-Cultural Cooperation: Chinese And American Play In The Prisoner’S Dilemma Game, Michael Kuroda, Jieran Li, Jason Shachat, Lijia Wei, Bochen Zhu

ESI Working Papers

We study whether cross- and within-culture groups have different cooperation rates in the Prisoner’s Dilemma Game. In an experiment, university students in China and America engage in a single iteration of the game, complete belief elicitation tasks regarding their opponents’ play and take a survey including attitudinal measurements regarding their in- and out-group attitudes. Cooperation rates are higher across the two countries are higher in both cross-culture and in within-culture interactions, although not significantly. We also find that Chinese participants cooperate less than American ones. Further, female Chinese participants are more cooperative than Chinese male ones. In the cross-culture treatment, …

Economics Of Majoritarian Identity Politics, Rohit Ticku, Raghul S. Venkatesh

ESI Working Papers

Majoritarian identity politics has become salient in representative democracies. Why do parties engage in identity politics and what are its consequences? We present a model of electoral competition in which parties capture voter groups based on their identity, and compete over an economic policy platform for the support of non-partisan voters. In addition, the party that caters to majoritarian interests makes a costly investment in polarizing identity. The investment provides subsequent payoffs to voters who have a preference for identity. When voter preferences over policy platforms are idiosyncratic in nature, greater investment in polarizing identity (i) increases both parties’ rents …

Group-Identity And Long-Run Cooperation: An Experiment, Gabriele Camera, Lukas Hohl

ESI Working Papers

We stress-test the limits of the power of group identity in the context of cooperation by constructing laboratory economies where participants confront an indefinitely repeated social dilemma as strangers. Group identity is artificially induced by random assignment to color-coded groups, and reinforced by an initial cooperation task played in-group and in fixed pairs. Subsequently subjects interact in-group and out-group in large economies, as strangers. Indefinite repetition guarantees full cooperation is an equilibrium. Decision-makers can discriminate based on group affiliation, but cannot observe past behaviors. We find no evidence of group biases. This suggests that group effects are less likely to …

Classical Theory Of Competitive Market Price Formation, Sabiou M. Inoua, Vernon L. Smith

ESI Working Papers

We offer an information theory of market price formation, formalizing and elaborating on an old, implicit, classical tradition of supply and demand based on buyers’ and sellers’ mone-tary valuations of commodities (formally their reservation prices) and competition as a multilat-eral higgling and bargaining process. The early laboratory market experiments, as it turns out with hindsight, established the remarkable stability, efficiency, and robustness of the old view of competitive price discovery, and not the neoclassical price theory (based on individual utility and profit maximization for given prices). Herein, we present a partial-equilibrium version of the the-ory in which wealth is implicitly …

Ecología Y Economía: Políticas Extractivistas Y El Desarrollo Sostenible Desde La Nueva Ruralidad, Daniel Ricardo Avila Suarez, Edgar Santiago Barreto Garzón

Economía

En Colombia, las políticas extractivistas se han consolidado como un modelo de desarrollo que se expresa en las políticas de extracción de materias primas evidenciadas en los planes de desarrollo del año 2002 al 2018. Estas políticas consideran fundamental el crecimiento para el desarrollo económico, donde el concepto de desarrollo sostenible es el eje sobre el que giran los hacedores de política. Lo anterior puede analizarse desde otra perspectiva en un escenario caracterizado por la nueva ruralidad como un modo alternativo al paradigma dominante de desarrollo, que permite interpretar las relaciones de estas políticas con el concepto de biodesarrollo, manifestado …

The Happiness Study: Identifying Social And Economic That Make The U.S. Happier, Tatum Garrison

Undergraduate Honors Theses

As happiness is essential to overall well-being, understanding factors that affect it will inform policies designed to maximize people’s happiness within each state. This will have broad implications for economic research and policy. The wealth and general population income of a state determines an initial level of individual happiness. However, once a level of wealth is achieved, individual happiness does not increase proportionally. This paper examines the relationship of a state’s happiness, measured by computing a score based on an individual's health, wellbeing, and work environment, with economic factors such as GDP and median household income, and social factors including …

Do Wealth And Inequality Associate With Health In A Small-Scale Subsistence Society?, Adrian V. Jaeggi, Aaron D. Blackwell, Christopher Von Rueden, Benjamin C. Trumble, Jonathan Stieglitz, Angela R. Garcia, Thomas S. Kraft, Bret A. Beheim, Paul L. Hooper, Hillard Kaplan, Michael Gurven

ESI Publications

In high-income countries, one’s relative socio-economic position and economic inequality may affect health and well-being, arguably via psychosocial stress. We tested this in a small-scale subsistence society, the Tsimane, by associating relative household wealth (n = 871) and community-level wealth inequality (n = 40, Gini = 0.15–0.53) with a range of psychological variables, stressors, and health outcomes (depressive symptoms [n = 670], social conflicts [n = 401], non-social problems [n = 398], social support [n = 399], cortisol [n = 811], body mass index [n = 9,926], blood pressure [n = 3,195], self-rated health [n = 2523], morbidities [n = …

Trustors’ Disregard For Trustees Deciding Intuitively Or Reflectively: Three Experiments On Time Constraints, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti

ESI Working Papers

Human decisions in the social domain are modulated by the interaction between intuitive and reflective processes. Requiring individuals to decide quickly or slowly triggers these processes and is thus likely to elicit different social behaviors. Meanwhile, time pressure has been associated with inefficiency in market settings and market regulation often requires individuals to delay their decisions via cooling-off periods. Yet, recent research suggests that people who make reflective decisions are met with distrust. If this extends to external time constraints, then forcing individuals to delay their decisions may be counterproductive in scenarios where trust considerations are important. In three Trust …

Standard Vs Random Dictator Games: On The Effects Of Role Uncertainty And Framing On Generosity, Ernesto Mesa-Vázquez, Ismael Rodriguez-Lara, Amparo Urbano

ESI Working Papers

We show that generosity is affected when we vary the level of role uncertainty, i.e., the probability that the dictator’s decision will be implemented. We also show that framing matters for generosity in that subjects are less generous when they are told that their choices will be implemented with a certain probability, compared with a setting in which they are told that their choices will not be implemented with certain probability.

Legalized Same-Sex Marriage And Coming Out In America: Evidence From Catholic Seminaries, Avner Seror, Rohit Ticku

ESI Working Papers

We study the effect of legalization of same-sex marriage on coming out in the United States. We overcome data limitations by inferring coming out decisions through a revealed preference mechanism. We exploit data on enrollment in seminary studies for the Catholic priesthood, hypothesizing that Catholic priests' vow of celibacy may lead gay men to self-select as a way to avoid a heterosexual lifestyle. Using a differences-in-differences design that exploits variation in the timing of legalization across states, we find that city-level enrollment in priestly studies fell by about 15% exclusively in states adopting the reform. The celibacy norm appears to …

An Investigation Of Health Insurance Policy And Behavior In A Virtual Environment, J. Dustin Tracy, Kevin A. James, Hillard Kaplan, Stephen Rassenti

ESI Publications

We introduce a new experimental approach to measuring the effects of health insurance policy alternatives on behavior and health outcomes over the life course. In a virtual environment with multi-period lives, subjects earn virtual income and allocate spending, to maximize utility, which is converted into cash payment. We compare behavior across age, income and insurance plans—one priced according to an individual’s expected cost and the other uniformly priced through employer-implemented cost sharing. We find that 1) subjects in the employer-implemented plan purchased insurance at higher rates; 2) the employer-based plan reduced differences due to income and age; 3) subjects in …

The Influence Of Food Recommendations: Evidence From A Randomized Field Experiment, Kamal Bookwala, Caleb Gallemore, Joaquín Gómez-Miñambres

ESI Working Papers

We report results from a randomized field experiment conducted at two food festivals. Our primary aim is to assess the impact of two types of recommendations commonly observed in food settings: most popular and chef’s choice. Subjects select a cupcake from a binary menu. The two options, offered by the same bakery, are the best seller in the bakery and the baker’s recommended cupcake. Our treatments manipulate whether the recommendation is disclosed in tandem with the cupcakes in the menu. We find that the most popular is the only recommendation that statistically significantly increased consumers’ demand relative to …

Very Low Prevalence And Incidence Of Atrial Fibrillation Among Bolivian Forager-Farmers, Christopher J. Rowan, Michael A. Eskander, Edmond Seabright, Daniel Eid Rodriguez, Edhitt Cortez Linares, Raul Quispe Gutierrez, Juan Copajira Adrian, Daniel Cummings, Bret Beheim, Kirsten Tolstrup, Abinash Achrekar, Thomas Kraft, David E. Michalik, Michael I. Miyamoto, Adel H. Allam, L. Samuel Wann, Jagat Narula, Benjamin C. Trumble, Jonathan Stieglitz, Randall C. Thompson, Gregory S. Thomas, Hillard S. Kaplan, Michael D. Gurven

ESI Publications

Background: Atrial fibrillation is the most common arrhythmia in post-industrialized populations. Older age, hypertension, obesity, chronic inflammation, and diabetes are significant atrial fibrillation risk factors, suggesting that modern urban environments may promote atrial fibrillation.

Objective: Here we assess atrial fibrillation prevalence and incidence among tropical horticulturalists of the Bolivian Amazon with high levels of physical activity, a lean diet, and minimal coronary atherosclerosis, but also high infectious disease burden and associated inflammation.

Methods: Between 2005–2019, 1314 Tsimane aged 40–94 years (52% female) and 534 Moseten Amerindians aged 40–89 years (50% female) underwent resting 12-lead electrocardiograms to assess atrial fibrillation prevalence. …

Negative Shocks Predict Change In Cognitive Function And Preferences: Assessing The Negative Affect And Stress Hypothesis, Francesco Bogliacino, Cristiano Codagnone, Felipe Montealegre, Frans Folkvord, Camilo Gómez, Rafael Charris, Giovanni Liva, Francisco Lupiáñez-Villanueva, Giuseppe A. Veltri

ESI Publications

In the context of the current COVID-19 pandemic, households throughout the world have to cope with negative shocks. Previous research has shown that negative shocks impair cognitive function and change risk, time and social preferences. In this study, we analyze the results of a longitudinal multi-country survey conducted in Italy (N = 1652), Spain (N = 1660) and the United Kingdom (N = 1578). We measure cognitive function using the Cognitive Reflection Test and preferences traits (risk, time and social preferences) using an experimentally validated set of questions to assess the differences between people exposed to a shock compared to …