Coordination in Networks Formation: Experimental Evidence on Learning and Salience

We present experiments on repeated non-cooperative network formation games, based on Bala and Goyal (2000). We treat the one-way and the two-ways flow models, each for high and low link costs. The models show both multiple equilibria and coordination problems. We conduct experiments under various conditions which control for salient labeling and learning dynamics. Contrary to previous experiments, we find that coordination on non-empty Strict Nash equilibria is not an easy task for subjects to achieve, even in the mono-directional model where the Strict Nash equilibria is a wheel. We find that salience significantly helps coordination, but only when subjects are pre-instructed to think of the wheel network as a reasonable way to play the networking game. Evidence on learning behavior provides support for subjects choosing strategies consistent with various learning rules, which include as the main ones Reinforcement and Fictitious Play.Experiments, Networks, Behavioral game theory, Salience, Learning dynamics

Advocatus, et non latro? Testing the Supplier-Induced-Demand Hypothesis for Italian Courts of Justice

We explore the relationship between litigation rates and the number of lawyers, in a typical supplier-induced demand (SID) frame. Drawing on an original panel dataset for the 169 Italian courts of justice between 2000 and 2007, we first document that the number of lawyers is positively correlated with different measures of litigation rate. Then, using an instrumental variables strategy we find that a 10 percent increase of lawyers over population is associated with an increase between 1.6 to 6 percent in civil litigation rates. Thus, our empirical analysis supports the SID hypothesis for the Italian lawyers: following an increase in their relative number, lawyers may exploit their informational advantage to induce clients to access to courts even when litigation is unnecessary or ineffective.Lawyers, Litigiosity, Causality

Optimal Contracts and Contractual Arrangements Within the Hospital: Bargaining vs. Take-it-or-leave-it Offers

We study the impact of different contractual arrangements within the hospital on the optimal contracts designed by third party payers when severity is hospital's private information. We develop a multi-issue bargaining process between doctors and managers within the hospital. Results are then compared with a scenario where doctors and managers decide independently by maximizing their own profit, with managers proposing to doctors a take-it-or leave-it offer. Results show that, when the cost of capital is sufficiently low, the informational rent arising on information asymmetry is higher in a set up where managers and doctors decide together through a strategic bargaining process than when they act as two decision-making units.Strategic Bargaining; Optimal Contracts; Hospitals; Asymmetric Information

Behavioral aspects of policy formulation: experiments, behavioral insights, nudges

Policy formulation relies upon the interplay of knowledge-based analysis of issues with power-based considerations, such as the political assessment of the costs and benefits of proposed actions, and its effects on the partisan and electoral concerns of governments. Policy scholars have long been interested in how governments successfully create, deploy and utilise policy instruments, but the literature on policy formulation has, until now, remained fragmented. This comprehensive Handbook unites original scholarship on policy tools and design, with contributions examining policy actors and the roles they play in the formulation process

Paying incentives to be healthy only works in the long term if you pay to NOT do something

Monetary incentives to encourage people to live healthier lifestyles only work in the longer term when they are designed to stop negative behaviour, rather than promote positive choices, suggests new research from LSE

Book review: review of “behavioral economics and healthy behaviors: key concepts and current research”, edited by Yaniv Hanoch, Andrew J. Barnes, and Thomas Rice (2017)

Behavioral Economics and Healthy Behaviors: Key Concepts and Current Research”, edited by Yaniv Hanoch, Andrew J. Barnes, and Thomas Rice (2017). Routledge, Oxon, 236 pages, £25.5

Because I'm worth it: a lab-field experiment on the spillover effects of incentives in health

We conduct a controlled lab-field experiment to directly test the short-run spillover effects of one-off financial incentives in health. We consider how incentives affect effort in a physical activity task – and then how they spillover to subsequent eating behaviour. Compared to a control group, we find that low incentives increase effort and have little effect on eating behaviour. High incentives also induce more effort but lead to significantly more excess calories consumed. The key behavioural driver appears to be the level of satisfaction associated with the physical activity task, which ‘licensed’ highly paid subjects to indulge in more energy-dense food

Digit ratio (2D:4D) and altruism: evidence from a large, multi-ethnic sample

We look at the links between the Digit Ratio - the ratio of the length of the index finger to the length of the ring finger – for both right and left hands, and giving in a Dictator Game. Unlike previous studies with exclusively Caucasian subjects, we recruited a large, ethnically diverse sample. Our main results are as follows. First, for Caucasian subjects we estimate a significant positive regression coefficient for the right hand digit ratio and a significant negative coefficient for its squared measure. These results replicate the findings of Brañas-Garza et al. (2013), who also observe an inverted U-shaped relationship for Caucasian subjects. Second, we are not able to find any significant association of the right hand digit ratio with giving in the Dictator Game for the other main ethnic groups in our sample. Third, we find no significant association between giving in the Dictator Game and the left hand digit ratio

Like ripples on a pond: behavioral spillovers and their implications for research and policy

No behavior sits in a vacuum, and one behavior can greatly affect what happens next. We propose a conceptual frame within which a broad range of behavioral spillovers can be accounted for when applying behavioral science to policy challenges. We consider behaviors which take place sequentially and are linked, at a conscious or unconscious level, by some underlying motive. The first behavior leads to another behavior which can either work in the same direction as the first (promoting spillover), or push back against it (permitting or purging spillover). Looking through this conceptual lens at the existing evidence, we find pervasive evidence for all kinds of spillover effects across a variety of fields and domains. As a result, behavioral scientists, especially those seeking to inform policy, should try to capture all the ripples from one behavior to the next when a pebble of intervention is thrown in the pond, and not just at the immediate behavioral splash it makes