Search

How society invests in human capital is important for economic growth and social welfare. The paper reports from the first experiment designed to elicit people’s preferences for how to prioritize educational resources, where 2,000 Americans trade off educational resources between quick and slow learners. I find that they give strong priority to slow learners and assign two thirds of the educational resources to this group. Both cost efficiency and the motivation of the learners causally affect the resource allocation. The findings provide important insights for the present policy debate on how to distribute educational resources in society.

We investigate the influence of self and social image concerns as potential sources of lying costs. In a standard die-rolling experiment, we exogenously manipulate self-awareness and observability, which mediate the focus of a person on their private and public selves, respectively. First, we show that an increase in self-awareness has no effect on reporting private information. This suggests that self-image concerns may be less important than previously hypothesized in the literature on lying costs. Second, we show that increasing subjects' observability, while still maintaining private information, significantly decreases the subjects' reports. We finally show in a survey experiment that respondents believe that the likelihood of a lie increases with the reported outcome and attribute negative traits to people who make high reports. This further supports reputational concerns as the explanation behind the results of our social image treatment.

Arguably, for many citizens the perceived expected disutility from sanctions is smaller than the monetary gain from tax evasion. Nevertheless most people pay their taxes most of the time. In a lab experiment, we show that the willingness to pay taxes even absent enforcement is indeed pronounced. Yet voluntary compliance is reduced if participants learn that income is heterogeneous. The effect is driven by participants with the lowest income. The reduction obtains irrespective of the tax regime. If the tax is proportional to income, or progressive, participants become more skeptical about the willingness of participants with high income to comply.

Experimental participants are more likely to follow an arbitrary rule the more others in their reference group do so as well. The effect is most pronounced for individuals who follow few rules when not knowing others’ behavior. Unlike what is observed for conditional cooperation, learning that only few others follow a rule does not reduce rule following. Keywords: conditional rule following, deontological motives, conditional cooperation, experiment JEL: A13, C91, D03, D63, K42

In a full-information, zero transactions costs world, the degree of protection afforded to an entitlement does not affect the likelihood of efficient trade. In reality, imperfect information is often inevitable. Specifically, a party will usually have incomplete information about fairness norms held by the other party – fairness norms that affect the other party’s willingness to pay (WTP) or willingness to accept (WTA). Importantly, these fairness norms may depend on how strongly the entitlement is protected. We experimentally test the effect of the degree of protection on the parties’ WTP and WTA and on the likelihood of efficient trade by varying the legal remedy for infringing upon the owner’s entitlement. We show that our participants can be divided into three groups corresponding to three different fairness norms: negative types whose WTP and WTA are decreasing in the strength of the legal remedy; positive types whose WTP and WTA are increasing in the strength of the legal remedy; and flat types whose WTP and WTA do not depend on the strength of the legal remedy. We find that type is role-dependent, such that a higher WTP and a lower WTA – the combination most conducive to efficient trade – is obtained with a weaker legal remedy.

For decades, experimental economics has been very interested in behavior that could be characterized as practicing solidarity (although the term is rarely used). Solidarity is a key concept in Catholic Social Teaching. This paper builds a bridge between these two endeavors that, thus far, had little contact with each other. Catholic Social Teaching is essentially normative. People are informed what they should do if they are good Christians. Experimental Economics is descriptive. Experimenters want to learn how much solidarity experimental participants exhibit when this is costly. But from a Catholic perspective it is interesting how strongly their norms are reflected in actual behavior. The many distinctions uncovered by behavioral economics may also help refine Catholic thinking. And behavioral economics is confronted with new questions, in particular regarding deontological motives.

Apparently judges’ decisions are not motivated by maximizing their own profit. The literature uses two strategies to explain this observation: judges care about the long-term monetary consequences for themselves, or individuals who are more strongly motivated by the common good self-select into the profession. We suggest that there is an additional explanation, the "office motive". In a lab experiment, we rule out both traditional explanations by design. Nonetheless authorities do a reliable job at overcoming a social dilemma. Calling the authorities "public official" or "judge" increases their sensitivity towards the degree by which individuals are selfish, and it reduces the effect of their social value orientation (making them more neutral). This suggests that the socially desirable effect is not driven by anger or sympathy with the victims, but follows from the desire to fulfill the expectations that come with the assigned task. We test three extensions: When given an opportunity to announce an explicit policy, judges become less sensitive to the objective degree of reproach, and more sensitive to their social value orientation. If judges are elected or experienced, they react more intensely to norm violations. Experienced judges are more affected by their social value orientation.

In the dictator game, the recipient's opportunity to send a message to the dictator increases giving. This paperreports two experimentswhich study how the timing of messages affects dictators' decisions (experiment 1) and which value recipients attach to communication opportunities (experiment 2). The first experiment shows that the effect of communication on dictator giving is equally strong when the recipient can send a message before or after the dictator has decided. However, recipients in a second experiment reveal a strong preference for pre-decision messages: Their willingnessto pay for pre-decision messages is higher than for post-decision messages. Revised version: April 2016