EconStor Collection:
http://hdl.handle.net/10419/51245
2024-03-19T12:35:45ZHigh incentives without high cost: The role of (perceived) stake sizes in dictator games
http://hdl.handle.net/10419/233116
Title: High incentives without high cost: The role of (perceived) stake sizes in dictator games
Authors: Hopp, Daniel
Abstract: The external validity of dictator games conducted in a lab is often questioned due to the use of small stake sizes that do not correspond to real-world settings. A potential solution to this problem is based on how participant perceptions of stake sizes are affected by their numerical representation. In this paper, I vary the stake size and its numerical representation to examine whether the illusion of large stakes can be created convincingly by implementing inflated numbers through an experimental currency. The share allocated to the recipient does not differ across treatments in this large-sample online experiment. This finding demonstrates that neither an increase in stake size nor a change in its numerical representation influence the share allocated to the recipient in a dictator game.2021-01-01T00:00:00ZBuy baits and consumer sophistication: Theory and field evidence from large-scale rebate promotions
http://hdl.handle.net/10419/234136
Title: Buy baits and consumer sophistication: Theory and field evidence from large-scale rebate promotions
Authors: Rodemeier, Matthias
Abstract: Can firms exploit behavioral biases to increase profits? Does consumer sophistication about these biases limit the scope of exploitation? To answer these questions, I run a series of natural field experiments with over 600,000 consumers and estimate novel sufficient statistics of consumer sophistication. The empirical application is a ubiquitous and widely regulated form of price discrimination: rebates that need to be actively claimed by consumers. These promotions are suspected of boosting sales even though many consumers eventually fail to claim the rebate-a phenomenon marketers refer to as "slippage." I show theoretically that consumers' subjective redemption probabilities can be inferred from how demand responds to rebates as opposed to simple price reductions. I identify these elasticities in three natural field experiments with a major online retailer, in which I randomize prices, redemption requirements, and reminders. Results reveal that claimable rebates in fact increase sales substantially even though 47% of consumers do not redeem the rebate. However, consumers exhibit a remarkable degree of sophistication: the demand response to a rebate is only 76% of the demand response to an equivalent price reduction. Structural estimates imply that consumers almost perfectly anticipate their inattention but vastly underestimate the hassle of redemption by 20 EUR per consumer. Exploiting this misperception increases the profitability of rebates by up to 260%.2021-01-01T00:00:00ZThe welfare effects of persuasion and taxation: Theory and evidence from the field
http://hdl.handle.net/10419/216821
Title: The welfare effects of persuasion and taxation: Theory and evidence from the field
Authors: Rodemeier, Matthias; Löschel, Andreas
Abstract: How much information should governments reveal to consumers if consumption choices have uninternalized consequences to society? How does an alternative tax policy compare to information disclosure? We develop a price theoretic model of information design that allows empiricists to identify the welfare effects of any arbitrary information policy. Based on this model, we run a natural field experiment in cooperation with a large European appliance retailer and randomize information regarding the financial benefits of energy-efficient household lighting among more than 640,000 subjects. We find that full information disclosure strongly decreases demand for energy efficiency, while partial information disclosure increases demand. More information reduces social welfare because the increase in consumer surplus is outweighed by the rise in environmental externalities. By randomizing product prices, we identify the optimal tax vector as an alternative policy and show that sizable taxes on energy-inefficient products yield larger welfare gains than any information policy. We also document an important policy interaction: information provision dramatically reduces attention to pecuniary incentives and thereby limits the effectiveness of taxes.2020-01-01T00:00:00ZNegative income shocks and the support of environmental policies: Insights from the COVID-19 pandemic
http://hdl.handle.net/10419/219994
Title: Negative income shocks and the support of environmental policies: Insights from the COVID-19 pandemic
Authors: Löschel, Andreas; Price, Michael; Razzolini, Laura; Werthschulte, Madeline
Abstract: This study explores whether negative income shocks from the COVID-19 pandemic affect the demand for environmental policy. By running a survey in Germany in May 2020, we show that there is a large and negative correlation between the COVID-19 income shocks and the willingness to support green policies. Importantly, this relation is separate from the effect of long-run income. Building on this first evidence, our study provides directions for future valuation studies. Specifically, our results provide a proof of concept that welfare analyses based on willingness-to-pay estimates to assess the benefit of an environmental good or the cost of an environmental damage may be downward biased if temporary changes in income are not considered.2020-01-01T00:00:00Z