Blood Donations and Incentives: Evidence from a Field Experiment

There is a longstanding concern that material incentives might undermine prosocial motivation, leading to a decrease in blood donations rather than an increase. This paper provides an empirical test of how material incentives aect blood donations in a large-scale eld experiment spanning three months and involving more than 10,000 previous donors. We examine two types of incentive: a lottery ticket and a free cholesterol test. Lottery tickets signicantly increase donations, in particular among less motivated donors. The cholesterol test leads to no discernable impact on usable blood donations. If anything, it creates a small negative selection eect in terms of donations that must be discarded.prosocial behavior, blood donations, material incentives, eld experiment

Blood Donations and Incentives: Evidence from a Field Experiment

There is a longstanding concern that material incentives might undermine prosocial motivation, leading to a decrease in blood donations rather than an increase. This paper provides an empirical test of how material incentives affect blood donations in a large-scale field experiment spanning three months and involving more than 10,000 previous donors. We examine two types of incentive: a lottery ticket and a free cholesterol test. Lottery tickets significantly increase donations, in particular among less motivated donors. The cholesterol test leads to no discernable impact on usable blood donations. If anything, it creates a small negative selection effect in terms of donations that must be discarded.prosocial behavior, blood donations, material incentives, field experiment

How Robust are Nominal Wage Rigidities?

Several studies indicate that firms are reluctant to cut nominal wages during periods of relatively high nominal per capita GDP growth. It has been argued, however, that in an environment with a low nominal per capita GDP growth, i.e., when nominal wage cuts become customary, firms would no longer hesitate to cut nominal pay. To examine this argument we use data from Switzerland where nominal GDP growth has been very low between 1991 and 1997. It turns out that the rigidity of nominal wages is a robust phenomenon that does not vanish but even increases as inflation decreases. Nominal wage rigidity constitutes a considerable obstacle to real wage adjustments. Our estimates indicate that wage rigidity is almost complete for full-time workers who stay with the same employer, but we find little evidence of nominal rigidities for workers who switch employers. We also find evidence that, in the absence of downward nominal rigidity, real wages would indeed be quite responsive to unemployment.

A Behavioral Account of the Labor Market: The Role of Fairness Concerns

In this paper, we argue that important labor market phenomena can be better understood if one takes (i) the inherent incompleteness and relational nature of most employment contracts and (ii) the existence of reference-dependent fairness concerns among a substantial share of the population into account. Theory shows and experiments confirm, that even if fairness concerns were only to exert weak effects in one-shot interactions, repeated interactions greatly magnify the relevance of such concerns on economic outcomes. We also review evidence from laboratory and field experiments examining the role of wages and fairness on effort, derive predictions from our approach for entry-level wages and incumbent workers' wages, confront these predictions with the evidence, and show that reference-dependent fairness concerns may have important consequences for the effects of economic policies such as minimum wage laws.fairness, contracts, wages, effort, experiments

Financial literacy and subprime mortgage delinquency: evidence from a survey matched to administrative data

The exact cause of the massive defaults and foreclosures in the U.S. subprime mortgage market is still unclear. This paper investigates whether a particular aspect of borrowers' financial literacy—their numerical ability—may have played a role. We measure several aspects of financial literacy and cognitive ability in a survey of subprime mortgage borrowers who took out mortgages in 2006 or 2007 and match these measures to objective data on mortgage characteristics and repayment performance. We find a large and statistically significant negative correlation between numerical ability and various measures of delinquency and default. Foreclosure starts are approximately two-thirds lower in the group with the highest measured level of numerical ability compared with the group with the lowest measured level. The result is robust to controlling for a broad set of sociodemographic variables and not driven by other aspects of cognitive ability or the characteristics of the mortgage contracts. Our results raise the possibility that limitations in certain aspects of financial literacy played an important role in the subprime mortgage crisis.

LOSS AVERSION AND LABOR SUPPLY

In many occupations, workers’ labor supply choices are constrained by institutional rules regulating labor time and effort provision. This renders explicit tests of the neoclassical theory of labor supply difŽ cult. Here we present evidence from studies examining labor supply responses in “neoclassical environments” in which workers are free to choose when and how much to work. Despite the favorable environment, the results cast doubt on the neoclassical model. They are, however, consistent with a model of reference-dependent preferences exhibiting loss aversion and diminishing sensitivity.labor supply, loss aversion, neoclassical environments

Active Decisions and Pro-social Behavior: A Field Experiment on Blood Donation

In this paper, we propose a decision framework where people are individually asked to either actively consent or dissent to some pro-social behavior. We hypothesize that confronting individuals with the choice of engaging in a specific pro-social behavior contributes to the formation of issue-specific altruistic preferences while simultaneously involving a commitment. The hypothesis is tested in a large-scale field experiment on blood donation. We find that this "active-decision" intervention substantially increases the actual donation behavior of people who have not fully formed preferences beforehand.active decision, pro-social behavior, field experiment, blood donation

Robustness and Real Consequences of Nominal Wage Rigidity

"Recent studies found evidence for nominal wage rigidity during periods of relatively high nominal GDP growth. It has been argued, however, that in an environment with low nominal GDP growth, when nominal wage cuts become customary, workers’ cuts would erode and, hence, firms would no longer hesitate to reduce nominal pay. If this argument is valid nominal wage rigidity is largely irrelevant because in a high-growth environment there is little need to cut nominal pay while in a low-growth environment the necessary cuts would occur. To examine this argument we use data from Switzerland where nominal GDP growth has been very low for many years in the 1990s. We find that the rigidity of nominal wages is a robust phenomenon that does not vanish in a low growth environment. In addition, it constitutes a considerable obstacle to real wage adjustments. In the absence of downward nominal rigidity, real wages would indeed be quite responsive to unemployment.

Micro Evidence on the Adjustment of Sticky-Price Goods: It's How Often, not How Much

We use a unique panel data set to analyze price setting in restaurants in Switzerland 1977-93, for items known to have sticky prices. The macroeconomic environment during this time period allows us to examine how firms adjust prices at low (0%) and fairly high (7%) inflation. Our results indicate that firms strongly react to inflation in the timing of their price adjustment: hazard of price changes is increasing with time and becomes steeper at higher inflation rates. However, we find little evidence that the amount by which they change the price responds to the inflation rate.sticky prices; inflation; nominal inertia

The Limits of Social Recognition: Experimental Evidence from Blood Donors

Does social recognition motivate prosocial individuals? We run large-scale experiments at Italy's main blood donors association, testing social recognition in social media and peer groups. We experimentally disentangle visibility concerns and peer comparisons, and study how exposure to different social norms affects giving. In three studies, we find that a simple ask to donate is at least as effective as offering social recognition. A survey experiment with blood donors indicates that social recognition backfires when offered to people that are already perceived as good citizens. Our results suggest that increasing visibility of good actions can backfire when perceived as image-seeking