- Correcting Consumer Misperceptions about CO2 Emissions with Taisuke Imai, Davide D. Pace and Peter Schwardmann, CESifo working paper 10138.
[.pdf] AbstractPolicy makers put great emphasis on the role of information about carbon emissions in achieving sustainable decisions by consumers. We conduct two studies to understand the optimal targeting of such information and its effects. First, we conduct an incentivized and representative survey among US consumers (N = 1,022) to investigate awareness of climate impact and willingness to mitigate it. We find a large variation in the perceptions of the carbon emissions of different consumption behaviors, with an overall tendency to underestimate these emissions. We also find a positive but highly concave willingness to mitigate climate impact. We combine elicited misperceptions and willingness to mitigate in a structural model that delivers sharp predictions about where to best target information campaigns. In an experiment with actual consumption decisions (N = 2,081), we then test for the effect of CO2 information on the demand for beef, a product predicted to be a productive target for information. Correcting misperceptions has no effect on the demand for beef, both in absolute terms and compared to a predictably less productive target of information, i.e. the demand for poultry. Our dataset allows us to hone in on the underlying reason for this null effect.
- Anticipatory Anxiety and Wishful Thinking, with Jan Engelmann, Maël Lebreton, and Nahuel Salem, Peter Schwardmann, Tinbergen working paper 042/2019 (now superseded). (Revision requested at the American Economic Review).
[.pdf] AbstractWe test the hypothesis that anxiety about adverse future outcomes leads to wishful thinking. Across four experiments (N=1,116), participants perform pattern recognition tasks in which some patterns may result in an electric shock or a monetary loss. Participants engage in significant wishful thinking, as they are less likely to correctly identify patterns that may lead to a shock or loss. Wishful thinking increases with greater ambiguity of the visual evidence and is only disciplined by higher accuracy incentives when accuracy depends on participants’ cognitive effort. Wishful thinking is heterogeneous across and stable within individuals.
- Curbing carbon: An experiment on information and uncertainty about CO2 emissions, with Davide Pace, Tinbergen Working paper 059/2020. (Revision requested at Nature Climate Change).
[.pdf] AbstractWe investigate how consumers respond to uncertainty about CO2emission size. In an incentivized online experiment, participants can acquire a valuable good that emits an unknown amount of CO2. We find that beliefs about emission size are strongly predictive of purchases, even exceeding the effect of substantial changes in the price of the good. Moreover, information that makes beliefs more precise causes a 26% reduction in overall emissions, even though average beliefs are unchanged. The reduction occurs as the marginal willingness to pay for emission reduction declines with emission size, so people who are too optimistic about emissions are more responsive to information. We also test for the formation of self-serving beliefs. Contrary to theories of motivated reasoning, increasing the surplus from buying the product does not change patterns of attention or belief formation about emissions. Overall, the results suggest that information about CO2impact can be an important policy lever, and that willingness-to-pay for emission reductions should take into account the size of emissions.
- Fair Shares and Selective Attention, with Dianna Amasino and Davide Pace, Tinbergen Institute Discussion paper 21-066. (Revision Requested at American Economic Journal: Microeconomics).
[.pdf] AbstractAttitudes towards fairness and redistribution differ along socio-economic lines, resulting in political conflict. To understand the formation of such views and find levers to affect them, we study the role of attention. In a large online experiment, we investigate how subjects allocate their visual attention to the contributions of merit and luck in the generation of a surplus and how they decide on its division. We find that subjects who randomly obtained an advantaged position pay less attention to information about true merit and retain more of the surplus. Both the attentional and behavioral patterns persist, although with smaller effect sizes, when dictators subsequently divide money between pairs of advantaged and disadvantaged subjects in the role of a benevolent judge. Moreover, attention has a substantial causal effect: forcing subjects to look for one second more at merit information relative to overall outcomes reduces the effect of having an advantaged position on allocations by about 40%. The evidence is consistent with a habit formation effect of attention in fairness decisions. These findings open a new window on socio-economic cleavages in attitudes towards redistribution, and suggest that attention-based policy interventions may be effective in reducing polarized views on inequality.
- Self-serving Bias in Redistribution Choices: Accounting for Beliefs and Norms., with Dianna Amasino and Davide Pace, CRC Discussion paper 380. (Revision Requested at Journal of Economic Psychology).
[.pdf] AbstractPeople with higher-incomes tend to support less redistribution than lower-income people. This has been attributed not only to self-interest, but also to psychological mechanisms including differing beliefs about the hard work or luck underlying inequality, differing fairness views, and differing perceptions of social norms. In this study, we directly measure each of these mechanisms and compare their mediating roles in the relationship between status and redistribution. In our experiment, participants complete real-effort tasks and then are randomly assigned a high or low pay rate per correct answer to exogenously induce (dis)advantaged status. Participants are then paired and those assigned the role of dictator decide how to divide their joint earnings. We find that advantaged dictators keep more for themselves than disadvantaged dictators and report different fairness views and beliefs about task performance, but not different beliefs about social norms. Further, only fairness views play a significant mediating role between status and allocation differences, suggesting this is the primary mechanism underlying self-serving differences in support for redistribution.
- Top Down or Bottom-Up? Disentangling the Channels of Attention in Risky Choice, with Alejandro Hirmas and Jan Engelmann, Tinbergen Institute Discussion paper 21-031.
[.pdf] AbstractEconomists have become increasingly interested in using attention to explain behavioral patterns both on the micro and macro level. This has resulted in several disparate theoretical approaches. Some, like rational inattention, assume a “top-down” model of executive optimization. Others, like salience theory, assume a “bottom-up” influence where attention is driven by contextual factors. This distinction is fundamental for the economic implications of attention, but so far there is little understanding of their relative importance. We propose a multi-attribute random utility model that unifies prior theoretical approaches by distinguishing between the impact of top-down and bottom-up attention. We accomplish this by separating agent-specific and decision specific variation in attention and verify our framework in an eye-tracking experiment on risky choice. We find that both top-down and bottom-up attention are connected to important choice variables: both are associated with the weighting of the attributes of choice options, while top-down attention is additionally associated with measures of loss aversion. We discuss the insights regarding the nature of attention and its role in economic theory.
Eternal working papers
(Unless you have an idea to lift this to a new level)
- Inconvenient truths: determinants of strategic ignorance in moral dilemmas, SSRN working paper.
[.pdf] AbstractPeople often have incomplete information about the consequences of their actions for the payoffs of others. In an experimental allocation game I investigate how the choice to learn about such consequences depends on the costs and benefits of altruistic actions. The results show an asymmetric pattern: while the size of others’ potential benefit has little effect, ignorance and selfish behavior go up when information is more `inconvenient’, i.e. the fair/efficient alternative is more costly to the decision maker. Thus, in situations of payoff uncertainty, subsidizing fair choices affects prosocial behavior both directly and by increasing the willingness to confront negative consequences of one’s actions.