Economics - Research Publications

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    By chance or by choice? Biased attribution of others' outcomes when social preferences matter
    Erkal, N ; Gangadharan, L ; Koh, BH (SPRINGER, 2021-09-28)
    Decision makers in positions of power often make unobserved choices under risk and uncertainty. In many cases, they face a trade-off between maximizing their own payoff and those of other individuals. What inferences are made in such instances about their choices when only outcomes are observable? We conduct two experiments that investigate whether outcomes are attributed to luck or choices. Decision makers choose between two investment options, where the more costly option has a higher chance of delivering a good outcome (that is, a higher payoff) for the group. We show that attribution biases exist in the evaluation of good outcomes. On average, good outcomes of decision makers are attributed more to luck as compared to bad outcomes. This asymmetry implies that decision makers get too little credit for their successes. The biases are exhibited by those individuals who make or would make the less prosocial choice for the group as decision makers, suggesting that a consensus effect may be shaping both the belief formation and updating processes. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s10683-021-09731-w.
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    Welfare Receipt and the Intergenerational Transmission of Work-Welfare Norms
    Barón, JD ; Cobb-Clark, DA ; Erkal, N (Wiley, 2015)
    This article investigates the role of welfare receipt in shaping norms regarding work and welfare using unique Australian data from the Youth in Focus Project. We begin by incorporating welfare into a theoretical model of the transmission of work-welfare norms across generations. Consistent with the predictions of this model, we find evidence that youths' attitudes toward work and welfare may be influenced by socialization within their families. Young people are more likely to oppose generous social benefits and to believe that social inequality stems from individual characteristics if (i) their mothers support these views; (ii) their mothers were employed while they were growing up; and (iii) their families never received welfare. Finally, youths' work-welfare norms appear to be unrelated to their neighbors' welfare receipt suggesting that socialization occurs primarily within families rather than within neighborhoods.
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    Aggregative games and oligopoly theory: short‐run and long‐run analysis
    Anderson, S ; Erkal, N ; PICCININ, D (Wiley, 2020-06-18)
    We compile an IO toolkit for aggregative games and use inclusive best reply functions to deliver oligopoly comparative statics and ranking of firms' actions and profits. Aggregative games apply to additively separable direct and indirect preferences, as well as generalized quadratic forms. The aggregative game structure delivers immediate consumer welfare results if demand functions have the IIA property. We close the model with a monopolistically competitive fringe to show strong neutrality properties for long-run equilibria. These properties underscore a unifying principle in the literature on merger analysis, privatization, Stackelberg leadership, and cost shocks.
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    Monetary and Non-Monetary Incentives in Real-effort Tournaments
    Erkal, N ; Gangadharan, L ; Koh, BH (Elsevier, 2018-01-01)
    Results from laboratory experiments using real-effort tasks provide mixed evidence on the relationship between monetary incentives and effort provision. To examine this issue, we design three experiments where subjects participate in two-player real-effort tournaments with two prizes. Experiment 1 shows that subjects exert high effort even if there are no monetary incentives, suggesting that non-monetary incentives are contributing to their effort choices. Moreover, increasing monetary incentives does not result in higher effort provision. Experiment 2 shows that the impact of non-monetary incentives can be reduced by providing subjects with the option of leaving the laboratory early, using an incentivized timeout button, or working on an incentivized alternative activity. Experiment 3 revisits the relationship between monetary incentives and effort provision using the insights from Experiment 2. Using a design with an incentivized alternative activity, we show that participants increase effort in response to monetary incentives. Taken together, the findings from the three experiments suggest that results from real-effort tasks require a careful evaluation and interpretation of the motivations underlying the observed performance.
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    Welfare‐Reducing Mergers in Differentiated Oligopolies with Free Entry
    ERKAL, N ; Piccinin, D (Wiley, 2010)
    https://doi.org/10.1111/j.1475-4932.2009.00612.x
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    Propensities to engage in and punish corrupt behavior: Experimental evidence from Australia, India, Indonesia and Singapore
    Cameron, L ; Chaudhuri, A ; Erkal, N ; Gangadharan, L (ELSEVIER SCIENCE SA, 2009-08-01)
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    Buyer-supplier interaction, asset specificity, and product choice
    Erkal, N (ELSEVIER SCIENCE BV, 2007-10-01)
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