Research

Should policymakers intervene to reduce social segregation? The answer depends on the effect of increased contact among those who would not seek it out on their own. We conduct a field experiment in the context of political segregation in Brazil to measure the joint distribution of aversion to cross-partisan interactions and the treatment effects of actual interactions on outgroup hostility. To do so, we randomize participants into interactions offering incentives of twice the daily minimum wage for compliance. We find evidence of a segregation trap: the most hostile partisans avoid interactions because they incorrectly believe they will be unpleasant and unproductive. Actual interactions correct these beliefs and lead to large, long-lasting reductions in hostility. Importantly, these effects are largest among partisans with high levels of baseline hostility and aversion to outgroup interactions, and lead to an increase in demand for future interactions. In a cost-benefit analysis, we find that current policy interventions targeting volunteer participants are outperformed by incentive-based interventions at any level of budget. Finally, we show that a lower-cost intervention that substitutes a video for actual interactions can produce similarly beneficial effects.

Optimal behavior often requires planning future actions when choosing what to do today. We propose that individuals’ ability or willingness to plan ahead is limited, leading to systematic decision errors. In an online experiment, participants face sequential consumption–savings problems with two periods, or equivalent one-period versions with identical information, available actions, and payment timing. Participants are 18 p.p. less likely to spend optimally in the two-period decision problem and, on average, overspend early on. In treatments where subjects actively search for information, we show that timing shapes attention: in one-quarter of sequential problems, participants ignore future actions entirely, behaving like there is no tomorrow, and even those who look ahead prioritize information about the present.

We study exploding offers by considering the strategic interaction between a low-tier firm and a set of workers within a large job market. Each worker has a private value for the firm and may receive offers from preferred top-tier firms according to an exogenous stochastic process. We show that workers receive exploding offers whenever their probability of receiving a top-tier offer is relatively small with respect to their risk aversion, and that there is a level of risk aversion beyond which a worker only receives offers that expire as soon as possible---independently of what all other firms are doing. In markets in which exploding offers are prevalent and workers' and the firm's preferences satisfy a weak form of positive correlation, workers' expected welfare is maximized if and only if exploding offers are banned. However, any minimal offer length that falls short of banning exploding offers may lead to workers falling through the cracks - competitive workers are not approached by the strategic firm but end up receiving no top offer. 

Expectations are a critical factor in determining actions in a great variety of economic interactions. Hence, being able to measure beliefs is important in many economic environments. In this article, we review the approaches that have been used to measure beliefs and make comparisons of their effectiveness. We also discuss belief elicitation when the truth is not verifiable. We find that introspection (non-incentivized responses) seems to do as well as rather complex incentivized methods. We conjecture that simple and easy-to-comprehend incentivized methods are superior to introspection, in fact there are very few studies making such comparisons; this is an avenue for future research. We also discuss ways in which relatively complex methods could be made easier for usage in experimental work.

Negative stereotypes and discrimination often motivate members of minorities to hide markers of their minority status. Motivated by a theory of strategic hiding, we propose a mechanism for the persistence of negative stereotypes: Negative stereotypes disproportionately lead higher-ability minority members to hide their minority status. If employers neglect selection into hiding, this reinforces their negative stereotypes. We test these predictions in a field experiment in the context of discrimination against the Roma in the Czech Republic, conducted in partnership with local NGOs and a major national employer. To study selection into hiding, we invite Roma jobseekers with diverse educational backgrounds and job experience to submit applications and measure how jobseekers of different ability levels conceal ethnic markers in résumés and recorded answers to interview questions. To measure the impact of selective hiding on stereotypes, we recruit employers to evaluate applications filled out by Roma and majority jobseekers, randomly revealing jobseekers’ minority status in a treatment group. We additionally demonstrate the self-reinforcing cycle of negative stereotypes and study policy responses in a laboratory experiment.

How should managers address political and racial conflict in the workplace? We address this question by combining a field experiment embedded into a job training program and a survey experiment with firm managers in Brazil. We establish the causal effect of political and racial conflict on productivity and turnover by randomizing job training participants into either homogeneous or diverse teams. We then evaluate the impact of a cross-randomized deliberation intervention that is currently implemented in a multinational company. In the manager experiment, we survey firms’ policies to navigate political and racial conflict, and elicit incentivized beliefs about the impact of the deliberation intervention. We then randomize an information treatment that provides information on the productivity impact of the intervention. We measure the effect of correcting managers’ beliefs on their demand for the intervention.

When people make important economic decisions and form their opinions of policy proposals, they have to decide how to evaluate complex systems of direct, indirect and feedback effects. We study whether and how individuals form simplified mental representations of such complex systems. Participants in an online experiment take part in a “transfer game” with three fictitious players and a fixed set of rules that determine how money moves between players over several rounds. In each game, participants predict how many coins one player will end up with and earn a bonus based on prediction accuracy. A key feature of the design is that participants do not see the full set of transfer rules directly. Instead, they can consult a simple calculator that reveals the consequence of a specific transfer rule they choose to look up. By observing both participants’ predictions and the information they choose to look up, we study how people simplify complex environments by focusing on some effects and ignoring others, and how these simplifications depend on the complexity of the environment, information costs, and incentives for accuracy.