Publications from the iLEE project
iLEE1
"Microfoundations of Social Capital"
By Christian Thöni, Jean-Robert Tyran and Erik Wengström (paper) (supplementary online materials). Forthcoming: Journal of Public Economics
Abstract: Research on social capital routinely relies on survey measures of trust which can be collected in large and heterogeneous samples at low cost. We validate such survey measures in an incentivized public goods experiment and show that they are importantly related to cooperation behavior in a large and heterogeneous sample. We provide evidence on the microfoundation of this relation by use of an experimental design that enables us to disentangle preferences for cooperation from beliefs about others’ cooperation. Our analysis suggests that the standard trust question used in the World Values Survey is a proxy for cooperation preferences rather than beliefs about others’ cooperation. In contrast, the “fairness question”, a recently proposed alternative to the standard trust question, seems to operate through beliefs rather than preferences.
"Who Cooperates? Evidence from a Large-Scale Experiment"
By Jean-Robert Tyran and Erik Wengström
Abstract (presented at various seminars, e.g. Marseille, AEA meetings): We have developed iLEE, a new technology to “bring the lab to your living room”, i.e. to conduct controlled and incentivized experiments over the internet. Moreover, the technology allows us to match the experimental data with detailed register data while maintaining full subject-subject and subject-experimenter anonymity. I explain the iLEE technology and illustrate its use. We present results from a public goods experiment conducted with about 2200 participants from all walks of life (ages 18-80) in Denmark. We show that (i) participants cooperate at levels exceeding what is usually found in the laboratory, (ii) most participants are conditional cooperators, and (iii) cooperation depends in important ways on socio-demographics, psychometrics like personality and IQ, and survey measures of attitudes and values.
"Income and Ideology: How Personality Traits, Cognitive Abilities, and Education Shape Political Attitudes"
By Rebecca Morton, Jean-Robert Tyran and Erik Wengström (paper).
Abstract: We find that cognitive abilities, educational attainment, and some personality traits indirectly affect ideological preferences through changes in income. The effects of changes in personality traits on ideology directly and indirectly through income are in the same direction. However, the indirect effects of cognitive abilities and education often offset the direct effects of these variables on ideological preferences. That is, increases in cognitive abilities and education significantly increase income, which reduces the tendency of individuals to express leftist preferences. These indirect effects are in some cases sizeable relative to direct effects. The indirect effects of cognitive abilities through income overwhelm the direct effects such that increasing IQ increases rightwing preferences. For ideological preferences over economic policy the indirect effects of advanced education also overwhelm the direct effects, such that individuals with higher education are more likely to express rightwing preferences than those with lower education
"Personality Traits and the Gender Gap in Ideology"
By Rebecca Morton, Jean-Robert Tyran and Erik Wengström (paper)
Abstract: What explains the gender gap in ideology, i.e. the observation that women tend to be more leftist than men? We provide new evidence showing that personality traits play a key role. Using a novel high-quality data set, we show that the mediating (i.e. indirect) effects of gender operating through personality traits by far dominate the direct e¤ects of gender. They also dominate other potential differences between the sexes like income or education as explanatory factors. Our findings suggest that women tend to be more leftist than men mainly because they have different personalities, which, in turn, shape their expressed ideology. Taking such mediating effects of personality traits into account explains over three quarters of the observed gender gap in general ideological preferences.
"Framing and Misperceptions in a Public Goods Experiment"
By Toke Fosgaard, Lars G. Hansen and Erik Wengström (paper)
Abstract: Earlier studies have found that a substantial part of the contributions in public good games can be explained by subjects misperceiving the game's incentives. Using a large-scale public good experiment, we show that subtle changes in how the game is framed substantially affect such misperceptions and that this explains major parts of framing effect on subjects' behavior. When controlling for the different levels of misperception between frames, the framing effect on subjects' cooperation preferences disappears. This suggests that merely changing how tax-, fine- or subsidy systems are framed, without reducing complexity, could reduce welfare loss from misperception of incentives.
"Framing of Social Dilemmas : Disentangling
the Importance of Beliefs, Cooperation Preferences, and Game Form
Misperceptions"
By Toke Fosgaard, Lars G. Hansen, and Erik Wengström
Abstract (presented at ESA Chicago): In a large scale internet experiment we investigate the effects of moving from a ‘give’ to a ‘take’ framing of a classical public good social dilemma. Our experimental design allows us to decompose the framing effect on contributions into parts caused by changes in preferences for cooperation, changes in beliefs about other group members’ contributions and changes in game perception. These are the key causal mechanisms of framing that have been suggested in the literature. We find a small framing effect on mean contributions but a substantial shift in the underlying distribution: the ‘give’ frame induces a substantial reduction in the variance of contributions. We find that framing effects via beliefs are substantially more important than other mechanisms suggested in the literature but also that a substantial part of the framing effect on contributions remains unexplained.
"Giving more when it’s for Real: Evidence of a Negative Hypothetical Bias in Public Goods Experiments" (paper)
By Jean-Robert Tyran and Erik Wengström
Abstract: This paper addresses the effects of providing financial incentives in two versions of the public good game; a standard one-shot public good game and a strategy-method game enabling elicitation of cooperation strategies. The experiment was conducted over the internet with a heterogeneous subject pool. Providing incentives significantly increases contributions in the standard public good game. This indicates that the strengthening of the social motivations dominates over the incentive to free ride. Cooperation profiles, elicited using the strategy method, are unaffected by incentives. We believe this is driven by two factors. First, the incentive effect in the standard public good game is partly driven by a shift in beliefs. Second, the discrepancy between the two versions of the public good game is due to a hot-cold empathy gap.
iLEE2
"The Demographic Distribution of Fairness Ideals"
By Alexander W. Cappelen, Erik Ø. Sørensen, Bertil Tungodden and
Jean-Robert Tyran
(presented at Nordic Conference for Behavioral and Experimental
Economics, Lund 2011)
Abstract: Using a large and quasi-representative sample of Danish citizens, we examine the distribution of social preferences in the population using a real effort task and a series of dictator decisions. We find that young males are considerably less altruistic than females, but this difference diminishes as giving increases with age. Making redistribution costly decreases redistribution, and this sensitivity seems to increase with age. We propose a model that can distinguish between changes in the distribution of fairness ideals and changes in the weight attached to social concerns relative to private pecuniary interests.
"Fairness, Generosity and Greed"
By Alexander W. Cappelen, Ulrik H. Nielsen, Erik Ø. Sørensen, Bertil Tungodden and Jean-Robert Tyran
(presented at Nordic Conference for Behavioral and Experimental Economics, Lund 2011)
Abstract (work in progress): We analyze a large and quasi-representative sample of the Danish population to investigate how the heterogeneity in sharing behavior in a dictator game can be explained by the heterogeneity of participants’ characteristics. In addition to standard socio-economic variables, we consider psychometric data, decision times, and cross-validate choices with behavior in a public goods game.
"At least, I didn't lose money"
By Thomas A. Stephens and Jean-Robert Tyran
Abstract (work in progress): This paper shows that loss aversion systematically biases evaluations of housing transactions when losses are salient. We present respondents with housing transactions that involve real losses, and present the transaction once with a nominal gain (when inflation is high) and once with a nominal loss (when inflation is low). Thinking about transactions in terms of monetary gains or losses is salient, natural and a useful heuristic when inflation is low, but misleading when inflation is high. A nominal gain may thus mask the true (real) loss and induce relatively favorable evaluations despite real losses. We find that evaluations are systematically less favorable when the real loss is salient, i.e. when presented as a nominal loss. We show that cognitive effort (time spent on the task) and cognitive ability are key determinants of the framing effect. We show that the bias is less pronounced when the evaluation task is made more transparent, and that those with lower cognitive ability benefit the most from a more transparent presentation of the evaluation tasks.
"Risk Preferences across time"
By Erik Wengström and Jean-Robert Tyran
Abstract (work in progress)
iLEE3
"Forgiven and Forgotten. A Large-Scale Experiment on Trust and Reputation"
By Dirk Engelmann, Florian Spitzer and Jean-Robert Tyran
(presented e.g. at ESA 2011, Nordic meetings Lund)
Abstract: We study finitely repeated trust games in an internet-based experiment with a large heterogeneous sample of the Danish population. First movers choose only once their strategy, where they can condition on the reputation of the second mover, whereas second movers are matched 40 times with different first-mover strategies. The reputation of the second mover indicates whether she has abused trust in the recent past, where the length of this past is varied across treatments. Short histories ("forgetting") might provide insufficient incentives to honor trust, whereas long histories could have negative effects because deviators are excluded from efficient interactions for too long before they are rehabilitated. First movers who trust only if the second mover has a clean past are "unforgiving". We analyze the interplay of forgiving and forgetting in shaping trust.
"Incentive and Sorting Effects of Performance Pay"
By Alexander Rabas, Rupert Sausgruber and Jean-Robert Tyran
(presented at Nordic Conference for Behavioral and Experimental
Economics, Lund 2011)
Abstract: Do steep incentives for performance yield higher output than flat incentives? This may be the case for two reasons. Steep incentives may induce workers to provide more effort or attract more able workers. We conduct an online experiment with a large heterogeneous sample to isolate these effects. Subjects work independently of each other in a real effort task under either flat or steep incentives. Some subjects work under an exogenously assigned scheme while others work under their chosen alternative. We find that output is higher under steep incentives, and that this is mostly due to sorting. We measure participants' cognitive skills, personality, social preferences, risk preferences, productivity
beliefs and over-confidence to explain differences in the sorting choice, for instance, between men and women.
"Correlates and Consequences of Distributional Preferences"
By Morten Hedegaard, Rudolf Kerschbamer and Jean-Robert Tyran
(work in progress)
Abstract: We investigate the correlates and consequences of distributional preferences in an experiment carried out over the internet with a large, heterogeneous subject pool. First, we find substantial heterogeneity in the distribution of distributional preferences and, in line with previous literature, we find that a concern for maximizing efficiency seems more important than aversion to inequality. Second, we find that gender, age, subjects’ expectation of being treated fairly, cognitive reflection and IQ correlate with distributional preferences. Third, we investigate the link between distributional preferences and contributions in the standard public good game. We find that subjects who are efficiency maximizers, inequality averse and have maximin preferences contribute more than those who are selfish, even after controlling for beliefs. Finally, we find that taking distributional preferences into account explains almost half of the difference between observed behavior in the public goods game and the prediction of standard economic theory.
iLEE4
"Ethical versus Selfish Motivations and Turnout in Small and Large Elections"
By Rebecca Morton and Jean-Robert Tyran (paper)
Abstract: We evaluate voter motivations using both small and large electorates with a diverse subject pool via two virtual laboratory experiments. We find little support for selfish instrumental turnout; that is, abstention does not increase with electorate size and voters who are in the minority abstain more than those in the majority. Expressive motivations, related to pro-social behavior, appear to explain the majority of voter turnout. Most of these voters make selfish voting choices. A smaller significant number of voters make ethical choices, which are best explained by instrumental ethical motivations or large expressive ethical utility. However, we also find a signiifcant minority of voters appears to engage in bandwagon voting, which offsets the possible moral bias in electoral outcomes from ethical voting. Moreover, the percentage of ethical voting is unrelated to electorate size, so although we find a slight moral bias in electoral outcomes, it does not increase in electorate size.
"Does Shared Responsibility Breed Unfairness?"
By Raymond Duch, Ulrik H. Nielsen and Jean-Robert Tyran
Abstract: (work in progress) We investigate whether a coalition government’s decision to implement unpopular policies depends on how much the voters hold individual coalition members responsible for the policy. We use a modified dictator game with multiple dictators (parties) and multiple recipients (voters). The parties decide on how to distribute (policy) a fixed sum of money between the voters and themselves. The voters cannot directly affect the parties’ decisions, but they are given the opportunity to punish the parties. We ask: Do coalition governments in which power is dispersed implement more unfair policies than coalitions in which a strong party dominates? Is this effect due to voters holding the strong party responsible for the implemented policies? Do the parties correctly anticipate the voters’ punishment behavior?
"Voter Reasoning, Heuristics and the Coalition-directed Vote"
By Raymond Duch and Jean-Robert Tyran (paper)
Abstract: In contexts in which the election results in a multi-party governing coalition, the rational voter assesses what parties are likely to coalesce and the policies they are likely to agree on in potential coalition governments. We present evidence, from experiments and observational survey data collected in Denmark, Germany and the U.K., that voters acquire the heuristics that allow them to anticipate the kinds of coalitions that form after an election. Overall levels of knowledge depend on the complexity of the coalition context -- on most indicators Denmark has the highest levels of political knowledge; Germany tends to fall in the middle; and Britain is consistently at the bottom. We find that the heuristics national electorates employ for understanding coalition politics also varies by country: We recover four dimensions of coalition reasoning heuristics using experimental vingettes embedded in British, Danish and German internet surveys: 1) voters understand the basic arithmetic of majority coalition formation (a majority of seats are necessary); 2) voters anticipate the formation of minimum winning coalitions; 3) voters recognise that formateur status increases a party's likelihood of entering the governing coalition; and 4) voters anticipate that parties that are proximate on the ideological scale will more likely agree to a coalition. The Danish electorate exhibits more sophisticated coalition heuristics than is the case for the German electorate; and the British electorate has very under-developed coalition reasoning heuristics. We also demonstrate that those who acquire these heuristics are more likely to exercise a rational economic vote.
"Risk Taking on Behalf of Others"
By Ola Andersson, Håkan Holm, Erik Wengström and Jean-Robert Tyran
Abstract: (work in progress, presented at seminars in Innsbruck and Oslo):
This paper studies risk-taking on behalf of others in a large sample of the Danish population. Two web-based and incentivized experiments are conducted using a variant of the well-known multiple price list format. We find that people act responsibly with other peoples’ money if they do not have strong incentives to divert from this principle. Yet, people do tend to take excessive risks on behalf of others when facing hedged reimbursement contracts or competition for reimbursement. We find that the tendency to take excessive risk on behalf of others is mitigated by pro-social preferences.
"The Gambler's Fallacy"
By Sigrid Suetens and Jean-Robert Tyran
Abstract: (work in progress)
"Do Choice Sets and Entitlements Matter for Giving in Dictator Games?"
By Alexander W. Cappelen, Ulrik H. Nielsen, Erik Ø. Sørensen, Bertil Tungodden and Jean-Robert Tyran (paper) (supplementary online materials)
Abstract: Choice sets and entitlements shape perceptions of fair economic behavior and have been shown to affect giving in dictator games in experimental laboratory studies using student samples. We replicate the finding that choice sets matter for dictator giving in a heterogeneous sample of adults under fully anonymous conditions and that the effect does not depend on subject characteristics. We fail to induce strong entitlements to earned money using a “minimal” work task and conclude that a task that does not involve sustained effort does not seem to create sufficient entitlements to affect dictator giving.
"Does Inflation Distort Investment Choices?"
By Thomas A. Stephens and Jean-Robert Tyran
Abstract: (work in progress) We investigate the effect of nominal framing on investment decisions. We present subjects with a series of stylized investment decisions in which given real returns are presented as nominal gains or losses. In each decision, subjects choose how much to invest, and how to allocate their investment between a relatively risky and a relatively safe option. We find that subjects' decisions are driven by both real returns and nominal framing.