Published & Forthcoming Papers:
+ Stable Randomization
with Marina Agranov and Paul J. Healy
The Economic Journal, Conditionally Accepted
You randomize here?/ You will randomize there, too./ It’s a stable trait.
[30-min presentation]
We provide a unifying experimental framework in which to study randomization behavior in games and individual choice questions. In each decision, subjects face twenty simultaneous repetitions of the same choice, whereby randomizing constitutes making different choices across the twenty repetitions. We find very high rates of randomization, even in questions that offer a first-order stochastically dominant option. Randomization is highly correlated across domains, while more individuals randomize in games than in analogous decision problems. Experimental treatments test theories of randomization behavior, ruling out most theoretically-based explanations. Results suggest that dominated randomization stems, in part, from a failure of contingent reasoning.
We provide a unifying experimental framework in which to study randomization behavior in games and individual choice questions. In each decision, subjects face twenty simultaneous repetitions of the same choice, whereby randomizing constitutes making different choices across the twenty repetitions. We find very high rates of randomization, even in questions that offer a first-order stochastically dominant option. Randomization is highly correlated across domains, while more individuals randomize in games than in analogous decision problems. Experimental treatments test theories of randomization behavior, ruling out most theoretically-based explanations. Results suggest that dominated randomization stems, in part, from a failure of contingent reasoning.
+ When Choices are Mistakes
with John Rehbeck
American Economic Review, Forthcoming
You like a choice rule/but then you violate it./Was it a mistake?
[slides]
Using a laboratory experiment, we identify whether decision-makers consider it a mistake to violate canonical choice axioms. To do this, we incentivize subjects to report axioms they want their decisions to satisfy. Then, subjects make lottery choices which might conflict with their axiom preferences. In instances of conflict, we give subjects the opportunity to re-evaluate their decisions. We find that many individuals want to follow canonical axioms and revise their choices to be consistent with the axioms. In a shorter online experiment, we show correlations of mistakes with response times and measures of cognition.
Using a laboratory experiment, we identify whether decision-makers consider it a mistake to violate canonical choice axioms. To do this, we incentivize subjects to report axioms they want their decisions to satisfy. Then, subjects make lottery choices which might conflict with their axiom preferences. In instances of conflict, we give subjects the opportunity to re-evaluate their decisions. We find that many individuals want to follow canonical axioms and revise their choices to be consistent with the axioms. In a shorter online experiment, we show correlations of mistakes with response times and measures of cognition.
+ Preferences for the Resolution of Uncertainty and the Timing of Information
Journal of Economic Theory, September 2020
If it has happened/ you want to know it sooner./ Otherwise, you’ll wait.
[60-min presentation]
We present results from a laboratory experiment designed to elicit preferences over the resolution of uncertainty and timing of non-instrumental information acquisition in a rich choice set. Treatments vary whether the uncertainty is framed as a compound lottery or information structure. We find that individuals prefer to delay uncertainty resolution when the choice is framed as a compound lottery and prefer to expedite uncertainty resolution when framed as an information structure. Preferences are strict, as individuals are willing to pay for information in one treatment and they pay to avoid information in the other. We find no evidence of an aversion to gradual resolution in either context.
We present results from a laboratory experiment designed to elicit preferences over the resolution of uncertainty and timing of non-instrumental information acquisition in a rich choice set. Treatments vary whether the uncertainty is framed as a compound lottery or information structure. We find that individuals prefer to delay uncertainty resolution when the choice is framed as a compound lottery and prefer to expedite uncertainty resolution when framed as an information structure. Preferences are strict, as individuals are willing to pay for information in one treatment and they pay to avoid information in the other. We find no evidence of an aversion to gradual resolution in either context.
+ Timing of Communication
with Puja Bhattacharya and Arjun Sengupta
The Economic Journal, August 2020
Promises are good/ but cooperation fades./ Reports are better.
[Instructions] [30-min presentation]
Using an experiment, we demonstrate that a communication regime where a worker communicates about his intended effort is less effective in i) soliciting truthful information, and ii) motivating effort, than a regime where he communicates about his past effort. Our experiment uses a real-effort task, which additionally allows us to demonstrate the effects of communication on effort over time. We show that the timing of communication affects the dynamic pattern of work. In both treatments, individuals are most cooperative closest to the time of communication. Our results reveal that the timing of communication is a critical feature that merits attention in the design of mechanisms for information transmission in strategic settings.
Using an experiment, we demonstrate that a communication regime where a worker communicates about his intended effort is less effective in i) soliciting truthful information, and ii) motivating effort, than a regime where he communicates about his past effort. Our experiment uses a real-effort task, which additionally allows us to demonstrate the effects of communication on effort over time. We show that the timing of communication affects the dynamic pattern of work. In both treatments, individuals are most cooperative closest to the time of communication. Our results reveal that the timing of communication is a critical feature that merits attention in the design of mechanisms for information transmission in strategic settings.
+ Teams Promise But Do Not Deliver
with Puja Bhattacharya, John Kagel, and Arjun Sengupta
Games & Economic Behavior, September 2019
People will promise./ It makes them cooperate./ But don’t trust a group!
[Published Version][Instructions] [20-min presentation]
Individuals and two-person teams play a hidden-action trust game with pre-play communication. We replicate previous results for individuals that non-binding promises increase cooperation rates, but this does not extend to teams. While teams promise to cooperate at the same rate as individuals, they consistently renege on those promises. Additional treatments begin to explore the basis for team behavior. We rule out explanations hypothesizing that concern for partnerâs payoffs is the basis for team outcomes, as absent within-team communication, promise fulfillment rates increase compared to individuals. Rather, the results are consistent with the idea that communication between teammates provides support for self-serving behavior.
Individuals and two-person teams play a hidden-action trust game with pre-play communication. We replicate previous results for individuals that non-binding promises increase cooperation rates, but this does not extend to teams. While teams promise to cooperate at the same rate as individuals, they consistently renege on those promises. Additional treatments begin to explore the basis for team behavior. We rule out explanations hypothesizing that concern for partnerâs payoffs is the basis for team outcomes, as absent within-team communication, promise fulfillment rates increase compared to individuals. Rather, the results are consistent with the idea that communication between teammates provides support for self-serving behavior.
+ Dynamic Risk Preferences Under Realized and Paper Outcomes
Journal of Economic Behavior & Organization, May 2019
More risk after wins/but play safe after losses./Realized and paper.
[Published Version]
We conduct a large-scale test of dynamic risk preferences. While most of the literature on dynamic risk restricts attention to positively skewed gambles, subjects in our experiment tend to choose negatively skewed lotteries. This allows us to study dynamic risk preferences in an environment that the literature has not analyzed. We find evidence of the reinforcement effect—individuals take on more risk after a gain and take on less risk after a loss. Furthermore, we exogenously vary whether these outcomes are “realized” or on paper, according to the distinction put forth by Imas (2016). We find little difference in the responses to realized and paper outcomes in environments of negatively skewed risk.
We conduct a large-scale test of dynamic risk preferences. While most of the literature on dynamic risk restricts attention to positively skewed gambles, subjects in our experiment tend to choose negatively skewed lotteries. This allows us to study dynamic risk preferences in an environment that the literature has not analyzed. We find evidence of the reinforcement effect—individuals take on more risk after a gain and take on less risk after a loss. Furthermore, we exogenously vary whether these outcomes are “realized” or on paper, according to the distinction put forth by Imas (2016). We find little difference in the responses to realized and paper outcomes in environments of negatively skewed risk.
Working Papers:
+ Revealed Incomplete Preferences
with Luca Rigotti
Preferences complete?/Ask the question directly./Tastes are imprecise.
The theoretical literature has characterized and explored the implications of incomplete preferences, but incompleteness is difficult to identify empirically. We design an experiment to detect incomplete preferences in a domain of monetary gambles with subjective uncertainty. To do this, we use subjects’ choices to estimate their preferences, and pay them based on their estimated preferences rather than the choices they make. We find 39% of subjects express incompleteness. We provide evidence on the extent of incompleteness and the nature of gambles that are incomparable, and demonstrate how incompleteness is distinct from indifference. Incompleteness remains at approximately the same levels for individuals with certain beliefs and in an environment with objective uncertainty, suggesting that most incompleteness can be attributed to imprecise tastes rather than imprecise beliefs. We compare these choices to an environment where we force individuals to decide, as in standard experiments. Forced choice leads to more inconsistencies in preferences.
+ Distinguishing Common Ratio Preferences from Common Ratio Effects Using Paired Valuation Tasks
with Christina McGranaghan, Ted O’Donoghue, Jason Somerville, and Charles D. Sprenger
Choices are noisy./New test shows no CRP,/questions the S-curve.
The empirical observation of the common ratio effect (CRE) is often interpreted as evidence of an underlying common ratio preference (CRP). However, prior research has demonstrated that, in the presence of noise, expected utility can generate a CRE in standard paired choice tasks. We expand on that research to describe how the existence or absence of a CRE may reveal little about whether there exists an underlying CRP. We then propose an alternative approach to test for the existence of a CRP using paired valuation tasks that is robust to heterogeneity and noise. We implement this approach in an online experiment with 900 participants, and we find no evidence of a systematic CRP. To reconcile our findings with existing evidence, we present the same participants with standard paired choice tasks, and we demonstrate how appropriately chosen experimental parameters can generate a CRE even in our population that has no systematic CRP.
+ A Systematic Test of the Independence Axiom Near Certainty
with Ritesh Jain
Under Review
Independence fails/Not from certainty effect./It’s the opposite!
A large literature has documented violations of expected utility consistent
with a preference for certainty (the âcertainty effectâ). We design a laboratory experiment to investigate the role of the certainty effect in explaining violations of the independence axiom. We use lotteries spanning over the entire probability simplex to detect violations systematically. We find that violations of independence consistent with the reverse certainty effect are much more common than violations consistent with the certainty effect. Results hold as we test robustness along two dimensions: varying the mixing lottery and moving slightly away from certainty.
Works in Progress:
+ Procedures in Risky Choice: Experimental Evidence with En Hua Hu and Ryan Oprea
Procedural choice/to deal with complexity./Violate EU.
+ Compromises in Risk with Paul J. Healy and Samantha Stelnicki
How to compromise/when optimal risk differs?/Third parties decide.
+ Procedural Paternalism with Gonzalo Arrieta and Muriel Niederle
People intervene/because they discount the cost./Beliefs misaligned.
+ Optimal Dynamic Flexibility with Marissa Lepper
Lofty goals can help,/but backfire once they’re broken./Flexibility.
+ Using Response Times to Understand Preferences for Randomization with Ian Krajbich
Indifference is slow./Does randomization help?/No, just more options.