Economic Theory Commons^™

Revisiting Kin And Ethnic Favoritism In The Bribery Experiment, Mahsa Akbari, Duman Bahrami-Rad, Erik O. Kimbrough

Economics Faculty Articles and Research

We report a conceptual replication of Akbari et al. (2020), who study the impact of co-ethnicity and kinship on behavior in an experimental “bribery game”. In the game, player A can offer a bribe to B, who can help A by inefficiently transferring resources from passive third-party C. We replicate the finding that by varying the relatedness of A, B and C, we can substantially modulate the willingness of A to offer the bribe and the willingness of B to reciprocate the bribe by harming C. The findings are consistent with theories of kin altruism and ethnic favoritism.

Ecological Influences On Informal Property Rights: Experimental Evidence, Erik O. Kimbrough

Economics Faculty Articles and Research

This paper explores the possibility that informal property right systems evolve unique features as a function of the characteristics of the resources over which they are established. We develop an experimental environment that allows us to test this hypothesis by comparing the emergence of property in (virtual) land when resource yields are either high- or low-variance and renewable or non-renewable. Previous research suggests that high-variance resources may lead to relatively insecure claims to property. Intuition suggests that this may be amplified when those resources are renewable. The experiments confirm that informal property rights adapt to resource characteristics in a manner …

On The Stability Of Norms And Norm-Following Propensity: A Cross-Cultural Panel Study With Adolescents, Erik O. Kimbrough, Erin L. Krupka, Rajnish Kumar, Jennifer M. Murray, Abhijit Ramalingam, Sharon Sánchez‑Franco, Olga L. Sarmiento, Frank Kee, Ruth F. Hunter

Economics Faculty Articles and Research

Norm-based accounts of social behavior in economics typically reflect tradeoffs between maximization of own consumption utility and conformity to social norms. Theories of norm-following tend to assume that there exists a single, stable, commonly known injunctive social norm for a given choice setting and that each person has a stable propensity to follow social norms. We collect panel data on 1468 participants aged 11–15 years in Belfast, Northern Ireland and Bogotá, Colombia in which we measure norms for the dictator game and norm-following propensity twice at 10 weeks apart. We test these basic assumptions and find that norm-following propensity is …

Connecting Higher Education To Workplace Activities And Earnings, Hung Chau, Sarah H. Bana, Baptiste Bouvier, Morgan R. Frank

Economics Faculty Articles and Research

Higher education is a source of skill acquisition for many middle- and high-skilled jobs. But what specific skills do universities impart on students to prepare them for desirable careers? In this study, we analyze a large novel corpora of over one million syllabi from over eight hundred bachelors’ granting US educational institutions to connect material taught in higher education to the detailed work activities in the US economy as reported by the US Department of Labor. First, we show how differences in taught skills both within and between college majors correspond to earnings differences of recent graduates. Further, we use …

God Games: An Experimental Study Of Uncertainty, Superstition, And Cooperation, Aidin Hajikhameneh, Laurence R. Iannaccone

Economics Faculty Articles and Research

This paper uses a novel lab experiment to test claims about the origins and functions of religion. We modify the standard public goods game, adding a computer-based agent that adjusts earnings in ways that might depend on players' contributions. Our treatments employ three different descriptions of the adjustment process that loosely correspond to monotheistic, atheistic, and agnostic interpretations of the computer's role. The adjustments neither mask players' contributions nor magnify their impact. Yet players in all three adjustment treatments contribute much more than those who play the standard public goods game. Players' contributions and survey responses show that adjustments induce …

Optimal Patent Licensing—Two Or Three-Part Tariff, Swapnendu Banerjee, Arijit Mukherjee, Sougata Poddar

Economics Faculty Articles and Research

We look into technology transfer by an insider patentee in a spatial duopoly model under three types of licensing contracts—(i) two-part tariff with fixed fee and per-unit royalty, (ii) two-part tariff with fixed fee and ad-valorem royalty and (iii) general three-part tariff with fixed fee, per-unit and ad-valorem royalties. Under two-part tariff contracts, the licenser is better off with the per-unit royalty contract but the general contract does better than the other contracts. In contrast to the existing literature, all three licensing contracts may make the consumers worse-off compared to no licensing, with the lowest consumer surplus achieved under the …

The Personality And Cognitive Traits Associated With Adolescents’ Sensitivity To Social Norms, Christopher Tate, Rajnish Kumar, Jennifer M. Murray, Sharon Sanchez-Franco, Olga L. Sarmiento, Shannon C. Montgomery, Huiyu Zhou, Abhijit Ramalingam, Erin Krupka, Erik Kimbrough, Frank Kee, Ruth F. Hunter

Economics Faculty Articles and Research

Little is known about the personality and cognitive traits that shape adolescents’ sensitivity to social norms. Further, few studies have harnessed novel empirical tools to elicit sensitivity to social norms among adolescent populations. This paper examines the association between sensitivity to norms and various personality and cognitive traits using an incentivised rule-following task grounded in Game Theory. Cross-sectional data were obtained from 1274 adolescents. Self-administered questionnaires were used to measure personality traits as well as other psychosocial characteristics. Incentivised rule-following experiments gauged sensitivity to social norms. A series of multilevel mixed effects ordered logistic regression models were employed to assess …

The Symbolic Work Of Prices, Akash Miharia, Jan Osborn, Bart J. Wilson

Economics Faculty Articles and Research

We posit that prices are signs, not just signals, that work in the same symbolic way as words. Both are complex, generative systems of shared meaning that rely on a web of intricate symbolic references. Just like the meaning of a word is a product of our social and linguistic action, the meaning of a price is a product of our relationship to the physical world phenomena of people in markets. The fundamental conception of both is to communicate and construct worlds with ourselves and others, enabling us to act in the world. Prices, like words, do symbolic work.

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 …

Examining The Impact Of Socioeconomic Variables On Covid-19 Death Rates At The State Level, James L. Doti

Economics Faculty Articles and Research

This study uses a step-wise regression model to identify the socioeconomic variables most significant in explaining COVID-19 death rates on a state-level basis. The regression tests cover the 1/1/2020 to 12/1/2020 period as well as the first and second halves of 2020. This study also uses the Oxford stringency index to measure more precisely the efficacy of governmental mandates at the state level. The results in this study rigorously showed that while the density variables were the most significant explanatory variables during the first half of the year, their significance fell during the second half. Use of the Oxford stringency …

Benefit-Cost Analysis Of Covid-19 Policy Intervention At The State And National Level, James L. Doti

Economics Faculty Articles and Research

This study analyzes the benefits of statewide policy intervention in reducing COVID-19 deaths and the costs of that intervention in lost jobs and lower real gross state product (RGSP). Policy interventions are measured by the Oxford stringency index which places a daily numerical value on the level of a state’s policy intervention.

Empirical evidence is provided that shows policy interventions have reduced COVID-19 deaths by 375,000 lives in 2020. On the cost side, it was found that policy intervention resulted in a loss of 7.3 million jobs and a decline of $410 billion in RGSP.

The study concludes by integrating …

A Model To Explain Statewide Differences In Covid-19 Death Rates, James L. Doti

Economics Faculty Articles and Research

COVID-19 death rates per 100,000 vary widely across the nation. As of September 1, 2020, they range from a low of 4 in Hawaii to a high of 179 in New Jersey. Although academic research has been conducted at the county and metropolitan levels, no research has rigorously examined or identified the demographic and socioeconomic forces that explain state-level differences. This study presents an empirical model and the results of regression tests that help identify these forces and shed light on the role they play in explaining COVID-19 deaths.

A stepwise regression model we tested exhibits a high degree of …

Introduction To The Special Issue On The Economics Of Religion, Jared Rubin

Economics Faculty Articles and Research

"The economics and political science of religion have blossomed into full-fledged fields in the last decade and a half. What was once a field on the far outskirts of economics and political science now regularly publishes in its top journals (see Figure 1).¹ By 1998, the field was large enough for Iannaccone (1998) to write a survey of the shape of the field. The field was very much at its infancy at that time, and most of the best work was done by sociologists and/or published in sociology journals. This has changed significantly in the 22 years since Iannaccone's …

Mechanisms Study: Using Game Theory To Assess The Effects Of Social Norms And Social Networks On Adolescent Smoking In Schools—Study Protocol, Ruth F. Hunter, Felipe Montes, Jennifer M. Murray, Sharon C. Sanchez-Franco, Shannon C. Montgomery, Joaquín Jaramillo, Christopher Tate, Rajnish Kumar, Laura Dunne, Abhijit Ramalingam, Erik O. Kimbrough, Erin Krupka, Huiyu Zhou, Laurence Moore, Linda Bauld, Blanca Llorente, Olga L. Sarmiento, Frank Kee

Economics Faculty Articles and Research

This proof of concept study harnesses novel transdisciplinary insights to contrast two school-based smoking prevention interventions among adolescents in the UK and Colombia. We compare schools in these locations because smoking rates and norms are different, in order to better understand social norms based mechanisms of action related to smoking. We aim to: (1) improve the measurement of social norms for smoking behaviors in adolescents and reveal how they spread in schools; (2) to better characterize the mechanisms of action of smoking prevention interventions in schools, learning lessons for future intervention research. The A Stop Smoking in Schools Trial (ASSIST) …

Opportunity Cost, Inattention And The Bidder's Curse, David J. Freeman, Erik O. Kimbrough, J. Philipp Reiss

Economics Faculty Articles and Research

Auction winners sometimes suffer a “bidder’s curse”, paying more for an item at auction than the fixed price charged for an identical item by other sellers. This seemingly irrational behavior is puzzling because the information necessary to avoid overpaying would appear to be readily available to bidders, yet they seem to ignore it. To understand this behavior, we consider the bidders’ decisions whether to acquire information about the fixed price before bidding, in the presence of opportunity costs. Our theory introduces costly information acquisition into an auction model, with a fixed price aftermarket selling an identical good. When information about …

Rationing Social Contact During The Covid-19 Pandemic: Transmission Risk And Social Benefits Of Us Locations, Seth G. Benzell, Avinash Collis, Christos Nicolaides

Economics Faculty Articles and Research

To prevent the spread of coronavirus disease 2019 (COVID-19), some types of public spaces have been shut down while others remain open. These decisions constitute a judgment about the relative danger and benefits of those locations. Using mobility data from a large sample of smartphones, nationally representative consumer preference surveys, and economic statistics, we measure the relative transmission reduction benefit and social cost of closing 26 categories of US locations. Our categories include types of shops, entertainments, and service providers. We rank categories by their trade-off of social benefits and transmission risk via dominance across 13 dimensions of risk and …

The Effect Of Piracy Website Blocking On Consumer Behavior, Brett Danaher, Jonathan Hersh, Michael D. Smith, Rahul Telang

Economics Faculty Articles and Research

In this study, we ask what drives the success or failure of various supply-side anti-piracy enforcement actions such as piracy website blocking. We do this in the context of three court-ordered events affecting consumers in the United Kingdom: We first study Internet Service Providers’ blocking of 53 video piracy sites in 2014 and of 19 piracy sites in 2013, and we then study the blocking of a single dominant site, “The Pirate Bay,” in 2012.

We show that blocking 53 sites in 2014 caused treated users to decrease piracy and to increase their usage of legal subscription sites between 7% …

Identity And The Self-Reinforcing Effects Of Norm Compliance, Mark A. Pickup, Erik O. Kimbrough, Eline A. Rooij

Economics Faculty Articles and Research

When making political and economic decisions (e.g., voting, donating money to a cause), individuals consider the expectations of groups with which they identify. These expectations are injunctive norms, shared beliefs about appropriate behavior for identity group members, and individuals' choices reflect trade‐offs between adherence to these norms and other preferences. We show that when those who identify moderately/strongly with the group pay a cost as a consequence of avoiding a norm violation, they subsequently view the norms as stronger than those that paid no cost. This is evident in their greater willingness to pay an additional cost to punish/reward other …

Kinship, Fractionalization And Corruption, Mahsa Akbari, Duman Bahrami-Rad, Erik O. Kimbrough

Economics Faculty Articles and Research

We examine the roots of variation in corruption across societies, and we argue that marriage practices and family structure are an important, overlooked determinant of corruption. By shaping patterns of relatedness and interaction, marriage practices influence the relative returns to norms of nepotism/favoritism versus norms of impartial cooperation. In-marriage (e.g. consanguineous marriage) generates fractionalization because it yields relatively closed groups of related individuals and thereby encourages favoritism and corruption. Out-marriage creates a relatively open society with increased interaction between non-relatives and strangers, thereby encouraging impartiality. We report a robust association between in-marriage practices and corruption both across countries and within …

Differences In Tsimane Children’S Growth Outcomes And Associated Determinants As Estimated By Who Standards Vs. Within-Population References, Melanie Martin, Aaron Blackwell, Hillard Kaplan, Michael Gurven

Economics Faculty Articles and Research

Anthropometric measures are commonly converted to age stratified z-scores to examine variation in growth outcomes in mixed-age and sex samples. For many study populations, z-scores will differ if calculated from World Health Organization (WHO) growth standards or within-population references. The specific growth reference used may influence statistical estimates of growth outcomes and their determinants, with implications for biological inference. We examined factors associated with growth outcomes in a sample of 152 Tsimane children aged 0–36 months. The Tsimane are a subsistence-scale population in the Bolivian Amazon with high rates of infectious disease and growth faltering. To examine the influence of …

Spanish California Missions: An Economic Success, Lynne Doti

Economics Faculty Articles and Research

Starting in 1769, the Spanish established missions in Alta California. A small band of soldiers, Franciscan priests and volunteers walked from Baja California to San Francisco Bay through semi-arid, scarcely populated land stopping occasionally to establish a location for a religious community. Usually two priests, a few soldiers and a few Indians from Baja California settled at the spot. Their only resources for starting an economy were themselves, a few animals and a nearby source of water. They attracted the local Indians to join the community and perform the work necessary to create a strong economy. After only a few …

Slow-Fast Analysis Of A Multi-Group Asset Flow Model With Implications For The Dynamics Of Wealth, Mark Desantis, David Swigon

Economics Faculty Articles and Research

The multi-group asset flow model is a nonlinear dynamical system originally developed as a tool for understanding the behavioral foundations of market phenomena such as flash crashes and price bubbles. In this paper we use a modification of this model to analyze the dynamics of a single-asset market in situations when the trading rates of investors (i.e., their desire to exchange stock for cash) are prescribed ahead of time and independent of the state of the market. Under the assumption of fast trading compared to the time-rate of change in the prescribed trading rates we decompose the dynamics of the …

Centrality And Cooperation In Networks, Boris Van Leeuwen, Abhijit Ramalingam, David Rojo Arjona, Arthur Schram

Economics Faculty Articles and Research

We investigate the effects of centrality on cooperation in groups. Players with centrality keep a group together by having a pivotal position in a network. In some of our experimental treatments, players can vote to exclude others and prevent them from further participation in the group. We find that, in the presence of exclusion, central players contribute significantly less than others, and that this is tolerated by those others. Because of this tolerance, teams with centrality manage to maintain high levels of cooperation.

Big Data In Economics, Matthew Harding, Jonathan Hersh

Economics Faculty Articles and Research

Big Data refers to data sets of much larger size, higher frequency, and often more personalized information. Examples include data collected by smart sensors in homes or aggregation of tweets on Twitter. In small data sets, traditional econometric methods tend to outperform more complex techniques. In large data sets, however, machine learning methods shine. New analytic approaches are needed to make the most of Big Data in economics. Researchers and policymakers should thus pay close attention to recent developments in machine learning techniques if they want to fully take advantage of these new sources of Big Data.

'To Sell Or Not To Sell': Licensing Versus Selling By An Outside Innovator, Swapnendu Banerjee, Sougata Poddar

Economics Faculty Articles and Research

We study various modes of technology transfer of an outside innovator in a spatial framework when the potential licensees are asymmetric. In addition to different licensing options, we also look into the option of selling the property rights of innovation and find the optimal mode of technology transfer. For licensing we find the optimal policy is to offer pure royalty contracts to both licensee firms when cost differentials between the firms are relatively small compared to the transportation cost, otherwise offer a fixed fee licensing contract to the efficient firm only. Interestingly, we show the innovator is always better-off selling …

A Portable Method Of Eliciting Respect For Social Norms, Erik O. Kimbrough, Alexander Vostroknutov

Economics Faculty Articles and Research

Recent models of prosociality suggest that cooperation in laboratory games may be better understood as resulting from concern for social norms than from prosocial preferences over outcomes. Underlying this interpretation is the idea that people exhibit heterogeneous respect for shared norms. We introduce a new, abstract task to elicit a proxy for individual norm-following propensity by asking subjects to choose from two actions, where one is costly. We instruct subjects that “the rule is” to take the costly action. Their willingness to incur such a cost reveals respect for norms. We show that choices in this task are similar across …

Cooler Heads Prevail: An Experimental Study On The “Cooling” Effect Of The Strategy Method On Agent Resentment, Jing L. Davis

Economics Faculty Articles and Research

This study investigates whether agents’ resentment of controls in a gift-exchange game can be effectively mitigated using the strategy method where agents’ effort choices are elicited contingent on all possible contract choices by principals. The results suggest that allowing agents to contemplate contract choices prospectively results in less resentment and that agents exert higher effort than without this “cooling” process.

Preference Conformism: An Experiment, Enrique Fatas, Shaun P. Hargreaves Heap, David Rojo Arjona

Economics Faculty Articles and Research

This paper reports on an experiment designed to test whether people’s preferences change to become more alike. Such preference conformism would be worrying for an economics that takes individual preferences as given (‘de gustibus es non disputandum’). So the test is important. But it is also difficult. People can behave alike for many reasons and the key to the design of our test, therefore, is the control of the other possible reasons for observing apparent peer effects. We find evidence of preference conformism in the aggregate and at the individual level (where there is heterogeneity). It appears also to be …

Testing The Boundaries Of The Double Auction: The Effects Of Complete Information And Market Power, Erik O. Kimbrough

Economics Faculty Articles and Research

We report boundary experiments testing the robustness of price convergence in double auction markets for non-durable goods in which there is extreme earnings inequality at the competitive equilibrium (CE). Following up on a conjecture by Smith (1976a), we test whether the well-known equilibrating power of the double auction institution is robust to the presence of complete information about traders’ values and costs and the presence of symmetric market power. We find that complete information is insufficient to impede convergence to CE prices; however, introducing market power consistently causes prices to deviate from the CE, whether or not subjects possess complete …

Individualism, Collectivism, And Trade, Aidin Hajikhameneh, Erik O. Kimbrough

Economics Faculty Articles and Research

While economists recognize the important role of formal institutions in the promotion of trade, there is increasing agreement that institutions are typically endogenous to culture, making it difficult to disentangle their separate contributions. Lab experiments that assign institutions exogenously and measure and control individual cultural characteristics can allow for clean identification of the effects of institutions, conditional on culture, and help us understand the relationship between behavior and culture, under a given institutional framework. We focus on cultural tendencies toward individualism/collectivism, which social psychologists highlight as an important determinant of many behavioral differences across groups and people. We design an …