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Tax evasion is a pervasive problem in many countries. In particular, some developing countries do not collect even half of what they would if taxpayers complied with the written letter of the law. The academic literature has not been oblivious to the need to explain why people pay (or do not pay) taxes. However, the empirical literature has not yet reached consensus. This paper reports the results of a large field experiment that tried to affect compliance by influencing property tax taxpayers’ beliefs regarding the levels of enforcement, reciprocity, and peer-effects of the tax system in a municipality in Argentina. Results indicate that those taxpayers that received the deterrence message have a higher probability (almost 5 percentage points) to comply than the taxpayers in the control group. No average effects are found for the other two treatments. However, this average effects masks important results. After receiving the reciprocity and the peer-effects messages, the probability of compliance increased for some taxpayers but it decreased for others according to their underlying distribution of beliefs. The evidence in this paper advances the state of knowledge, may help to reconcile some of the results in the literature, and provides the basis for advancing policies and research on tax compliance in developing countries.

In this paper, we compare participants in an artefactual field experiment in urban China with the survey population of migrants from which they were recruited. The experimental participants were more educated, more likely to lend money to friends, and worked fewer hours than the general population. They differ significantly from non-participants in terms of regression coefficients, such as the effects of wealth and marital status on the probability of being self-employed and distance migrated. We thus find that there was selection into our experiments on the basis of both observable characteristics and on unobserved differences in behavioral relations.

We conduct a remittance field experiment among Salvadoran migrants in the metro DC area. Migrants need to decide whether or not to remit funds to a recipient in El Salvador and if so how much. We maintain a (2×2) design in which the remittance budget has a value of $400 or $200, and the remitted funds arrive as cash or grocery vouchers that are non-transferable and applicable to basic necessities that do not include alcohol and cigarettes. Each migrant is randomly allocated to one of the resulting four treatments. We test across these treatments whether control over remittance spending in the form of grocery vouchers affects remittance behavior. We find the following. Our quantitative findings suggest that migrants prefer a remittance to arrive as cash than as groceries when stakes are high. This result is robust to inclusion of a wide set of covariates and is consistent with a conceptual framework in which migrants have preferences over how recipients spend remittances. Our qualitative findings suggest that migrants integrate amounts sent in the experiment with the external environment for sending remittances. We explore the mechanisms underlying the main effect and find that migrants who more recently sent a remittance and, in certain specifications, male migrants exhibit a greater preference for cash. Some implications of our findings are discussed.

This discussion paper resulted in a publication in the 'Journal of Economic Behavior & Organization' , 2014, 98, 29-40. We analyze one of the explanations why people participate in lotteries. Our hypothesis stipulates that part of the value that a unit of money buys in lotteries is consumed before the actual resolution in the form of emotions such as hope. In other words, a person holding a lottery ticket may prefer a delayed resolution of risk due to positive anticipatory emotions. This conjecture is tested in an experiment with real lottery tickets. We show that our theoretical considerations may contribute to explaining empirical puzzles associated with lottery participation, timing of resolution and the spreading of drawings. More specifically, we find that a substantial number of participants prefer delayed resolution, that anticipated thrill is the main variable explaining this choice, that emotions actually experienced during the waiting period are indeed predominantly positive and correlated with predictions. Finally, we find that a great majority prefers to 'spread' chances, that is, to obtain one ticket for each of two drawings rather than two for the same drawing.

We conducted a controlled field experiment on eBay and examined to what extent both social and competitive laboratory behavior is robust to institutionally complex real world markets with experienced traders, who selected themselves into these markets. EBay’s natural trading system provides bridges between lab and field environment that can be exploited to explore differences in behavior in the two environments. We find that many sellers do not make use of their commitment power as predicted by standard theories of both selfish and social behavior. However, a concern for equity strongly affects outcomes and reputation building in bilateral bargaining, while buyer competition effectively masks this concern and robustly yields equilibrium outcomes. The dichotomy of behaviors mirrors observations in laboratory research. Furthermore, we find that behavioral patterns in the field experiment mirror fully naturally occurring trading patterns in the market.

Many policy makers and economists argue that financial literacy is key to financial well-being. But why do many individuals remain financially illiterate despite the apparent importance of being financially informed? This paper presents results of a field study linking individual decisions to acquire personal financial information to a critical, and normally unobservable, characteristic: time preferences. We offered a short, free credit counseling and information program to more than 870 individuals. About 55 percent chose to participate. Independently, we elicited time preferences using incentivized choice experiments both for individuals who selected into the program and those who did not. Our results show that the two groups differ sharply in their measured discount factors. Individuals who choose to acquire personal financial information through the credit counseling program discount the future less than individuals who choose not to participate. Our results suggest that individual time preference may explain who will and who will not choose to become financially literate. This has implications for the validity of studies evaluating voluntary financial education programs and policy efforts focused on expanding financial education.

This study pursues the external validation of stated preference methods by comparing survey responses from verified voters with the outcome of a parallel public referendum on a conservation and preservation program to be funded by a local property tax surcharge. The majority of respondents were unaware of the upcoming referendum, and the experimental design allows us to control for referenda-related information effects as well as respondents’ perceptions regarding the consequentiality (i.e. the potential policy impact) of their survey votes. We find the survey under-predicts “yes” referendum votes at the precinct-level. These differences go away, however, if we focus only on respondents who perceived their survey vote to be consequential. Negative hypothetical bias among inconsequential survey respondents is also evident in the estimation of willingness to pay, and controlling for consequentiality increases construct validity.

"An extensive literature demonstrates the existence of framing effects in the laboratory and in questionnaire studies. This paper reports new evidence from a natural field experiment using a subject pool one might expect to be particularly resistant to such effects: experimental economists. We find that while the behaviour of junior experimental economists is affected by the description of the decision task they face, this is not the case for the more senior members of our subject pool." [author's abstract]

This paper develops and tests several models of pure Nash strategies of individuals who extract from a common pool resource when they are motivated by a combination of self-interest and other motivations such as altruism, reciprocity, inequity aversion and conformism. We test whether an econometric summary of subjects' strategies is consistent with one of these motivations using data from a series of common pool resource experiments conducted in three regions of Colombia. As expected, average extraction levels are less than that predicted by a model of pure self-interest, but are nevertheless sub-optimal. Moreover, we find that a model of conformism with monotonically increasing best response functions best describes average strategies. Our empirical results are inconsistent with models of altruism, reciprocity and inequity aversion.