Dokument: Three Essays in Experimental Economics

Titel:Three Essays in Experimental Economics
Weiterer Titel:Three Essays in Experimental Economics
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URN (NBN):urn:nbn:de:hbz:061-20210414-080428-9
Dokumententyp:Wissenschaftliche Abschlussarbeiten » Dissertation
Autor: Trieu, Chi [Autor]
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Dateien vom 07.04.2021 / geändert 07.04.2021
Beitragende:Prof. Dr. Schildberg-Hörisch, Hannah [Gutachter]
Prof. Dr. Hans-Theo Normann [Gutachter]
Dewey Dezimal-Klassifikation:300 Sozialwissenschaften, Soziologie » 330 Wirtschaft

Behavioral economics evolves around the psychological underpinnings of economic decision-making. Over the last decades, it has become an established field of economics and has shed new light on our understanding of important economic questions. Many empirical evidences that contribute to the advancement of the behavioral approach are established with data from experiments, either in the lab or in the field. Laboratory experiments and field experiments are the core elements of experimental economics, an empirical method that has been shown to be particularly suitable for testing behavioral predictions. Carefully designed experiments enable exogenous ceteris paribus manipulations over the decision-making environment. This strong asset allows rigorous measurement and causal identification of the otherwise hard to capture behavioral motives.

This dissertation, written when I was a doctoral researcher at the Düsseldorf Institute for Competition Economics, consists of three essays that lie at the intersection of behavioral economics and experimental economics. Employing laboratory experiments, my co-authors and I study three prevalent concepts in behavioral economics: fairness concerns, belief, and limited attention, each in their relevant institutional contexts. More precisely, we explore the behavioral mechanism of fairness perception and motivated beliefs under affirmative action policies, and of limited attention in the market of credence goods.

Chapter 2 examines the role of fairness perception in determining the consequences of affirmative action policies. Affirmative action prevails in many important decisions such as admission to universities, hiring, and promotion even though it remains a highly controversial policy. Recent empirical studies documented both positive and negative outcomes of affirmative action, and emphasized the importance of implementation features such as providing justifications or evidence of discrimination toward the favored group. We extend the literature by providing evidence that outcomes of an affirmative action policy are shaped by how fair it is perceived. Based on theories of redistributive justice, we design an experiment that allows for manipulation over the dimension of performance that affirmative action targets. Our treatments consist of three different affirmative action policies in the form of quota rules and a baseline treatment where affirmative action is not implemented. Each quota rule favors individuals whose performance is low, either due to bad luck (discrimination), low productivity, or choice of a short working time in competitions. We document substantial heterogeneity in the fairness perception of these policies. We find that higher fairness perceptions closely correlate with a higher willingness to compete, and less retaliation against winners. No policy harms overall efficiency or post-competition teamwork. Furthermore, individuals seem to internalize the norm behind the policies that are perceived as being fairest.

Chapter 3 investigates belief as a channel through which uncertainty about the favored group influences the outcomes of affirmative action. To better capture determinants of disadvantage in an increasingly diverse population, institutions implement several affirmative action policies targeting several disadvantaged groups. This implies an uncertainty as to whether an individual who belongs to one of these groups was actually favored. In a laboratory experiment, we study how this feature affects outcomes of affirmative action in the form of quotas, and compare it with two other conditions, namely affirmative action with a certain favored group and no affirmative action. We find that when a group is favored with certainty and the group identity that triggers affirmative action is made salient, affirmed individuals are wrongly perceived as less competent, both by themselves and by others. Consequently, their willingness to compete does not increase and they are selected less for teamwork. Affirmative action with uncertain favored groups does not distort belief about competence, and thus does not induce such unintended consequences. In contrast, it increases competition entry of the affirmed groups and enhances their chances of being selected for teamwork.

Chapter 4 studies how consumers' limited attention affects outcomes in an monopolistic market of credence goods. Many crucial markets, such as healthcare, repair services, and legal services are characterized as credence goods markets. They are distinguished by a distinct feature of asymmetric information between expert sellers and customers, that is, customers cannot observe the qualities they need while sellers can. Sellers might have incentives to provide unnecessarily high or low qualities, or to charge a higher price than the provided quality. Our study is motivated by contradictions between theoretical predictions and empirical evidence on market outcomes when customers can verify the type of quality they receive, as well as recent calls for more transparency in sellers' costs in some real-world markets. While theory predicts market efficiency with equal markups for different qualities, proper provided quality and customers' maximal willingness to pay, observations from laboratory experiments yield contradicting evidence of inefficiency. Our study presents both theoretical arguments and experimental evidence that customers' limited attention to sellers' costs can be an explanation. In our experimental context, we find that when costs are made salient to customers, the market becomes more efficient. Sellers are more likely to provide sufficient quality, and prices are significantly closer to equal markups. Furthermore, we find that social preference appears to play an important role in the market outcomes.

In summary, this dissertation aims to contribute to a deeper understanding of how behavioral factors affect economic decision-making, and how they could be relevant for efficient designs of institutions.
Fachbereich / Einrichtung:Wirtschaftswissenschaftliche Fakultät » Volkswirtschaftslehre
Dokument erstellt am:14.04.2021
Dateien geändert am:14.04.2021
Promotionsantrag am:28.09.2020
Datum der Promotion:10.02.2021
Status: Gast