Do procedures matter in fairness allocations? Experimental evidence in mixed gender pairings

Does the procedure of entitlement affect fairness perceptions? We use a dictator game to study the question in mixed gender pairs. In our experiments, we vary the process of entitlement across treatments. Allocators in our dictator game can inherit an amount without any effort, earn an amount with effort, or inherit an amount earned by a randomly matched partner's effort. We find subjects allocate lower amounts to their paired partners when they are dividing an amount that has been earned through their own effort and allocate relatively higher amounts when dividing an amount that has been earned through the paired member's real effort. Results also suggest that female proposers are more sensitive towards variations in entitlement processes.Procedural justice; Gender;Dictator game.

Potential Competition in the Presence of Sunk Entry Costs: An Experiment

I study the effect of sunk entry-costs on potential competition in a multi-market framework, where potential entrants have different home market profits. Although sunk-entry-costs are supposed to increase entry barriers, my experimental results suggest that firms view entry costs differently depending on their home market profits. I find that subjects are reluctant to enter, and compete in another market if they are already earning monopoly rents. Subjects instead, collude tacitly and earn monopoly rents in home markets, thereby weakening the effect of potential competition. In contrast, subjects who earn small secure returns in their home markets aggressively enter the contestable market whenever there are scopes for earning net profits. The threat of entry and the effects of potential competition are strong in the latter situation, forcing the monopoly incumbents to lower prices to limit-pricing levels

Social Identity, Behavior, and Personality:Evidence from India

Hierarchies in social identities have been found to be integrally related to divergences in economic status. In India, caste is one such significant social identity where continued discriminatory practices towards the lower castes have resulted in poor outcomes for them. While there is considerable work on such divergence on many economic outcomes along caste lines, there is no work on behavioral preferences and personality traits that can also be adversely affected by such identity hierarchies, and that are important determinants of educational attainments and labor market performances. We combine rich data from incentivized tasks and surveys conducted among a large sample of university students in a Seemingly Unrelated Regression framework and find that the historically marginalized Scheduled Castes and Scheduled Tribes (SCSTs) and Other Backward Classes (OBCs) fare worse than the upper castes along several dimensions of economic behavior such as competitiveness and confidence and personality traits such as grit, locus of control, and conscientiousness. Further, we find that parental investments only have limited compensatory effects on these gaps. This suggests a need for redesigning the structure of affirmative action policies in India as well as targeting interventions with an aim to improving soft skills among the disadvantaged

Selection into skill accumulation: evidence using observational and experimental data

This paper combines unique survey and experimental data to examine the determinants of self-selection into a vocational training program. Women residing in selected disadvantaged areas in New Delhi, India were invited to apply for a 6-month long free training program in stitching and tailoring. A random subset of applicants and non-applicants were invited to participate in a set of behavioral experiments and in a detailed socio-economic survey. We find that applicants and non-applicants differ both in terms of observables (captured using survey data) and also in terms of a number of intrinsic traits (captured via the behavioral experiments). Overall our results suggest that there is valuable information to be gained by dissecting the black box of unobservables using behavioral experiments.Labor Market Training Programs, Selection, Survey Data, Field Experiments, Risk, Competition

Is There A Plausible Theory for Risky Decisions?

A large literature is concerned with analysis and empirical application of theories of decision making for environments with risky outcomes. Expected value theory has been known for centuries to be subject to critique by St. Petersburg paradox arguments. More recently, theories of risk aversion have been critiqued with calibration arguments applied to concave payoff transformations. This paper extends the calibration critique to decision theories that represent risk aversion solely with transformation of probabilities. Testable calibration propositions are derived that apply to four representative decision theories: expected utility theory, cumulative prospect theory, rank-dependent expected utility theory, and dual expected utility theory. Heretofore, calibration critiques of theories of risk aversion have been based solely on thought experiments. This paper reports real experiments that provide data on the relevance of the calibration critiques to evaluating the plausibility of theories of risk aversion. The paper also discusses implications of the data for (original) prospect theory with editing of reference payoffs and for the new dual-self model of impulse control. In addition, the paper reports an experiment with a truncated St. Petersburg bet that adds to data inconsistent with risk neutrality

Is There a Plausible Theory for Decision under Risk? A Dual Calibration Critique

Can any prominent theory of decision under risk rationalize both small-stakes risk aversion and largestakes risk aversion? Do some prominent theories fail to rationalize patterns of same-stakes risk aversion? How do reference payoffs enter in the answer to these questions? What would be the characteristics of a theory of decision under risk that would be immune to calibration critique? We offer a theoretical duality analysis that addresses these questions. We report dual propositions and corollaries that calibrate the implications of nonlinear transformation of probabilities or payoffs (or both). We also report several experiments that provide data on the empirical relevance of the two types of calibration patterns

Is There a Plausible Theory for Decision under Risk? A Dual Calibration Critique

Theories of decision under risk that assume decreasing marginal utility of money have been critiqued with concavity calibration arguments. Since that critique uses varying payoffs and fixed probabilities, it cannot have implications for calibration of nonlinear probability transformation, which is another way to model risk aversion. The concavity calibration critique also has no implication for theories with variable reference points. This paper introduces a new type of (varying-probabilities, fixed-payoffs) calibration that applies to nonlinear transformation of probabilities. It also applies to theories with constant or variable reference points. The two types of calibrations yield dual paradoxes: a pattern of risk aversion that conforms to the (resp. dual) independence axiom implies implausible risk aversion for theories with functionals that are linear in payoffs (resp. probabilities). Functionals that are nonlinear in both payoffs and probabilities are subject to both types of calibration critique. The dual calibrations make clear why plausibility problems with theories of decision under risk may be fundamental. They are fundamental if their empirical relevance can be demonstrated. This paper reports seven experiments that provide data on the empirical relevance of the dual calibration critique of decision theory

Is There a Plausible Theory for Decision under Risk?

Theories of decision under risk that model risk averse behavior with decreasing marginal utility of money have previously been critiqued with calibration analyses. This paper introduces a dual calibration critique that applies to decision theories that represent risk aversion with nonlinear transformation of probabilities or nonlinear transformation of payoffs or both types of transformations. The dual calibration critique makes clear how plausibility problems with theories of decision under risk are fundamental. Testable calibration propositions are derived that apply to dual theory of expected utility, cumulative prospect theory, rank dependent utility theory, and expected utility theory. Heretofore, calibration critiques have been based on thought experiments. This paper reports real experiments that provide data on the empirical relevance of the calibration critique to evaluating the plausibility of theories of decision under risk

Can Gender Differences in Distributional Preferences Explain Gender Gaps in Competition?

We design a lab experiment to specifically examine whether a preference for favorable inequality and behindness aversion, as well as egalitarian preferences, affect competitive choices differently among males and females. Using data on approximately 2,000 subjects, we find that selection into competitive environments is negatively related to egalitarian preferences, with smaller negative impacts of being egalitarian on females’ choice to compete. Further, behindness aversion and preference for favorable inequality affect willingness to compete in opposite ways. The willingness to compete is negatively affected by behindness aversion, while a preference for favorable inequality positively influences willingness to compete. Interestingly, when we disaggregate behavior along gender lines, we find that compared to behindness averse males, behindness averse females are more likely to enter the competitive environment. In contrast, there is no significant gender difference in the impact of preference for favorable inequality on competition. Our results suggest that the observed gender difference in competitiveness can stem from male-female differences in distributional preferences and selected personality traits developed during one’s lifetime

Letting the briber go free: an experiment on mitigating harassment bribes

This paper examines the effectiveness of using asymmetric liability to combat harassment bribes. Basu (2011) advocates legal immunity for bribe-givers, while retaining culpability for bribe-takers. Results from our experiment indicate that while this policy has the potential to significantly reduce corrupt practices, weak economic incentives for the bribe-giver, or retaliation by bribe-takers can mitigate the positive disciplining effect of such an implementation. As a result, asymmetric liability on its own may face challenges in the field