Essays on behavioral and experimental economics

• Main Author: Liu, Fang
• Other Authors: Yohanes Eko Riyanto
• Format: Thesis-Doctor of Philosophy
• Language: English
• Published: Nanyang Technological University 2022
• Subjects: Social sciences::Economic theory::Microeconomics
• Online Access: https://hdl.handle.net/10356/155054
• Institution: Nanyang Technological University

There are three essays on the experimental and behavioral economics consisting of this thesis. The first essay investigates how payment modes and the lockdown during the Covid-19 pandemic interact and influence charitable donation behavior in a laboratory experiment where subjects must use either cash or contactless mobile payment to make a real donation to Singapore Red Cross. We showed that contactless mobile payment induced more donations than cash payment after the lockdown, while cash payment generated more donations than contactless mobile payment before the lockdown. People's familiarity with payment modes is crucial in explaining the payment mode effect. The pandemic makes people more accustomed to contactless mobile payment, leading to larger donations under mobile payment than cash. The second essay studies how framing and winning a competition affect cheating behaviors theoretically and experimentally. Does winning experience lead to more unethical behaviors? Do winners' decisions to cheat depend on a proper reference point? To answer these questions, we designed and conducted a laboratory experiment in which we investigated lying behaviors among subjects in the loss frame and the gain frame, with and without winning experience, respectively. We found that winning experience led to more unethical behaviors in the loss frame but less in the gain frame. People's sense of deservingness is key to understanding this finding. The experience of winning a competition increased one's deservingness in the loss frame but evoked one's "desert guilt," which is the feeling of being guilty of earning more than what they deserved by cheating in the gain frame. In addition, we found that winners were more likely to cheat in the loss frame than in the gain frame. However, we didn't see significant evidence showing that the loss frame induced more unethical behaviors among subjects without winning experience. In the third essay, we conducted a controlled laboratory experiment to investigate how the interplay between competition and performance-related incentives affects innovation. We identified the pure ranking incentive from rewarding competition financially to better understand competition incentives. Our findings support that the pure ranking incentive significantly motivated exploratory behaviors and innovation under a partially performance-based compensation scheme that tolerates early failures, while the incentive of ranking for rewards tended to reduce such innovation-enhancing effect. Under the pay-for-performance contract, we did not find that competition significantly affected innovation. Subjects' attitudes to risk help us explain the above results: more risk-averse subjects' exploratory behaviors were facilitated when either type of competition incentive was introduced into the compensation scheme with tolerance for early failures. In contrast, competition stifled innovative activities of more risk-averse subjects under the compensation scheme without tolerance for early failures.