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This paper studies a dynamic principal–agent setting in which the principal needs to dynamically schedule an agent to work or be suspended. When the agent is directed to work and exert effort, the arrival rate of a Poisson process is increased, which increases the principal's payoff. Suspension, on the other hand, serves as a threat to the agent by delaying future payments. A key feature of our setting is a switching cost whenever the suspension stops and the work starts again. We formulate the problem as an optimal control model with switching and fully characterize the optimal control policies/contract structures under different parameter settings. Our analysis shows that, when the switching cost is not too high, the optimal contract demonstrates a generalized control-band structure. The length of each suspension episode, on the other hand, is fixed. Overall, the optimal contract is easy to describe, compute, and implement. This paper was accepted by Ilia Tsetlin, behavioral economics and decision analysis. Funding: The work of P. Cao is financially supported by the National Natural Science Foundation of China [Grants 72122019 and 71771202]. The work of F. Tian is financially supported by the Hong Kong Research Grants Council (RGC) funding (RGC Early Career Scheme 2022/23) [Grant 27500822]. Supplemental Material: The e-companion and data are available at https://doi.org/10.1287/mnsc.2023.4845. [ABSTRACT FROM AUTHOR]

People often need to plan how to allocate their attention across different tasks. In this paper, we run two experiments to study a stylized version of this attention-allocation problem between strategic tasks. More specifically, we present subjects with pairs of 2 × 2 games, and for each pair, we give them 10 seconds to decide how they would split a fixed time budget between the two games. Then, subjects play both games without time constraints, and we use eye-tracking to estimate the fraction of time they spend on each game. We find that subjects' planned and actual attention allocation differ and identify the determinants of this mismatch. Further, we argue that misallocations can be relevant in games in which a player's strategy choice is sensitive to the time taken to reach a decision. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: Work on this project was provided by the National Science Foundation [Grant SES 1724550] "Collaborative Research: Attention in Games and Decisions," awarded to A. Schotter and E. R. Schotter. The work of M. Ribeiro and M. Zou was supported by the Center for Experimental Economics Social Science at New York University. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4834. [ABSTRACT FROM AUTHOR]

The rapid adoption of artificial intelligence (AI) technologies by many organizations has recently raised concerns that AI may eventually replace humans in certain tasks. In fact, when used in collaboration, machines can significantly enhance the complementary strengths of humans. Indeed, because of their immense computing power, machines can perform specific tasks with incredible accuracy. In contrast, human decision makers (DMs) are flexible and adaptive but constrained by their limited cognitive capacity. This paper investigates how machine-based predictions may affect the decision process and outcomes of a human DM. We study the impact of these predictions on decision accuracy, the propensity and nature of decision errors, and the DM's cognitive efforts. To account for both flexibility and limited cognitive capacity, we model the human decision-making process in a rational inattention framework. In this setup, the machine provides the DM with accurate but sometimes incomplete information at no cognitive cost. We fully characterize the impact of machine input on the human decision process in this framework. We show that machine input always improves the overall accuracy of human decisions but may nonetheless increase the propensity of certain types of errors (such as false positives). The machine can also induce the human to exert more cognitive efforts, although its input is highly accurate. Interestingly, this happens when the DM is most cognitively constrained, for instance, because of time pressure or multitasking. Synthesizing these results, we pinpoint the decision environments in which human-machine collaboration is likely to be most beneficial. This paper was accepted by Jeannette Song, operations management. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4744. [ABSTRACT FROM AUTHOR]

Exhibiting altruism toward and cooperativeness with others is a key ingredient for successful work relationships and managerial decision making. Rising political polarization creates a hazard because it ruptures this fabric and impedes the interaction of employees, especially across political isles. This paper's focus is to examine various behavioral-, belief-, and norm-based layers of (non)strategic decision making that are plausibly affected by polarization. I quantify this phenomenon via five preregistered studies in the context of Donald J. Trump, comprising 15 well-powered behavioral experiments and a diverse set of over 8,600 participants. To capture the pervasiveness of polarization, I contrast the findings with various political and nonpolitical identities. Overall, I consistently document strong heterogeneous effects: ingroup-love occurs in the perceptional domain (how close one feels toward others), whereas outgroup-hate occurs in the behavioral domain (how one helps/harms/cooperates with others). The rich setting also enables me to examine the mechanisms of observed intergroup conflict, which can be attributed to one's grim expectations regarding cooperativeness of the opposing faction, rather than one's actual unwillingness to cooperate. For the first time, the paper also tests whether popular behavioral interventions (defaults and norm-nudges) can reduce the detrimental impact of polarization in the contexts studied here. The tested interventions improve prosociality but are ineffective in closing the polarization gap. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: This work was supported by Deutsche Forschungsgemeinschaft [Grant EXC 2126/1– 390838866]. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/mnsc.2023.4701. [ABSTRACT FROM AUTHOR]

We conducted a large-scale personalized field experiment to examine how match quality, recognition, and social impact influence domain experts' contributions to Wikipedia. Forty-five percent of the experts expressed willingness to contribute in the baseline condition, whereas 51% (a 13% increase over the baseline) expressed interest when they received a signal that an article matched their expertise. However, none of the treatments had a significant effect on actual contributions. Instead experts contributed longer and better comments when the actual match between a recommended Wikipedia article and an expert's expertise, measured by cosine similarity, was higher, when they had higher reputation, and when the original article was longer. These findings suggest that match quality between volunteers and tasks is critically important in encouraging contributions to digital public goods and likely to volunteering in general. This paper was accepted by David Simchi-Levi, behavioral economics and decision analysis. Funding: This work was supported by the National Science Foundation through [Grant SES-1620319] awarded to Carnegie Mellon University and the University of Michigan. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4852. [ABSTRACT FROM AUTHOR]

We measure the willingness to compete of entrepreneurs and salaried workers in an experiment. Participants can choose between a piece rate and a tournament scheme in either private or public. We find that in the private condition, entrepreneurs are less competitive than salaried workers, but in the public condition, this ordering is reversed. Survey data suggest that perceived norms of appropriate behavior, along with beliefs about the instrumental value of competitiveness for professional success, can explain why entrepreneurs are more competitive when decisions are publicly observable. We also find that the latter condition improves the quality of experimental decisions. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: Financial support from the Deutsche Forschungsgemeinschaft (German Research Foundation) under Germany´s Excellence Strategy [Grant EXC 2126/1–390838866], the University of Cologne through the Hans Kelsen Prize and the Austrian Science Fund through the Special Research Area [Grant SFB F63] is gratefully acknowledged. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4838. [ABSTRACT FROM AUTHOR]

Models of statistical discrimination typically assume that employers make rational inference from (education) signals. However, there is a large amount of evidence showing that most people do not update their beliefs rationally. We use a model and two experiments to show that employers who are conservative, in the sense of signal neglect, discriminate more against disadvantaged groups than Bayesian employers. We find that such non-Bayesian statistical discrimination deters high-ability workers from disadvantaged groups from pursuing education, further exacerbating initial group inequalities. Excess discrimination caused by employer conservatism is especially important when signals are very informative. Out of the overall hiring gap in our data, around 40% can be attributed to Bayesian statistical discrimination, a further 40% is due to non-Bayesian statistical discrimination, and the remaining 20% is unexplained or potentially taste-based. This paper was accepted by Marie Claire Villeval, behavioral economics and decision analysis. Funding: F. Mengel thanks the European Research Council for financial support [Starting Grant 805017]. P. Campos-Mercade acknowledges funding from the Danish National Research Foundation [Grant DNRF134 (CEBI)]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4824. [ABSTRACT FROM AUTHOR]

We exploit a unique data set from the Israeli Professional Football Leagues that provides high-frequency direct measures of players' effort to estimate effort peer effects in a high-skill collaborative team task. Using two complementary identification strategies, we find robust evidence of substantial positive peer effects. Our findings highlight that effort spillovers play an important role in team production and that even a change in just one worker's effort can substantially influence team effort and thus performance. Moreover, we present suggestive evidence that behavioral considerations are a relevant mechanism for creating peer effects even in highly skilled teams of workers. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4811. [ABSTRACT FROM AUTHOR]

Do people have well-defined social preferences waiting to be applied when making decisions? Or do they have to construct social decisions on the spot? If the latter, how are those decisions influenced by the way in which information is acquired and evaluated? These temporal dynamics are fundamental to understanding how people trade off selfishness and prosociality in organizations and societies. Here, we investigate how the temporal dynamics of the choice process shape social decisions in three studies using response times and mouse tracking. In the first study, participants made binary decisions in mini-dictator games with and without time constraints. Using mouse trajectories and a starting time drift diffusion model, we find that, regardless of time constraints, selfish participants were delayed in processing others' payoffs, whereas the opposite was true for prosocial participants. The independent mouse trajectory and computational modeling analyses identified consistent measures of the delay between considering one's own and others' payoffs (self-onset delay, SOD). This measure correlated with individual differences in prosociality and predicted heterogeneous effects of time constraints on preferences. We confirmed these results in two additional studies, one a purely behavioral study in which participants made decisions by pressing computer keys, and the other a replication of the mouse-tracking study. Together, these results indicate that people preferentially process either self or others' payoffs early in the choice process. The intrachoice dynamics are crucial in shaping social preferences and might be manipulated via nudge policies (e.g., manipulating the display order or saliency of self and others' outcomes) for behavior in managerial or other contexts. This paper was accepted by Yan Chen, behavioral economics and decisions analysis. Funding: F. Chen acknowledges support from the National Natural Science Foundation of China [Grants 71803174 and 72173113]. Z. Zhu acknowledges support from the Ministry of Science and Technology [Grant STI 2030-Major Projects 2021ZD0200409]. Q. Shen acknowledges support from the National Natural Science Foundation of China [Grants 71971199 and 71942004]. I. Krajbich acknowledges support from the U.S. National Science Foundation [Grant 2148982]. This work was also supported by the James McKeen Cattell Fund. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4732. [ABSTRACT FROM AUTHOR]

Endogenous response time data are increasingly becoming available to applied researchers of economic choices. However, the usefulness of such data for preference estimation is unclear. Here, we adapt a sequential sampling model—previously validated to jointly explain subjects' choices and response times in laboratory experiments—to model users' responses to video advertisements on mobile devices in a field setting. Our estimates of utility correlate positively with out-of-sample measures of ad engagement, thus providing external validation of the value of incorporating endogenous response time information into a choice model. We then use the model estimates to assess the effectiveness of manipulating attention toward an advertisement at the beginning of a decision. Counterfactual simulations predict that making an ad "nonskippable" (requiring users to watch some portion of the ad)—as is the practice of some online platforms (e.g., YouTube)—generates only modest increases in click-through rates and revenue. This paper was accepted by David Simchi-Levi, behavioral economics and decision analysis. Funding: R. Webb work was supported by Social Sciences and Humanities Research Council [Grant 430-2019-00246]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4738. [ABSTRACT FROM AUTHOR]

In a large-scale natural field experiment, we partnered with a microlending company in Kyrgyzstan that asked over 180,000 of its clients for donations to social projects as a form of corporate philanthropy. In a 2 × 2 design, we explored two main (preregistered) hypotheses about giving by the poor. First, based on a conjecture that the poor are more price sensitive than the rich and in contrast to previous studies, we hypothesize that matching incentives induce crowding in of out-of-pocket donations. Second, we hypothesize that our population cares about their proximity to the charitable project. We find evidence in favor of the former hypothesis but not the latter. Previous studies of charitable giving focus on middle- or high-income earners in Western countries, neglecting the poor, although the lowest-income groups are often shown to contribute substantial shares of their income to charitable causes. Our results challenge the evidence in the extant literature but are in line with our theoretical model. The implications for fundraising managers are that the optimal design of fundraising campaigns crucially depends on the targeted groups and that donation matching is successful in stimulating participation in poorer populations. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: Financial support was from the Deutsche Forschungsgemeinschaft [Grant 280092119] and the Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung [Grant 100018_189152]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4702. [ABSTRACT FROM AUTHOR]

Social reference points have been identified to be important determinants of individuals' welfare. We investigate the consequences of social reference points for risk taking in a laboratory experiment. In the main treatments, risk-taking subjects observe the predetermined earnings of peer subjects when making a risky choice. We exogenously manipulate peers' earnings and find a significant treatment effect: decision makers make less risk-averse choices in the case of larger peers' earnings. The treatment effect is consistent with an application of prospect theory to social reference points and cannot be explained by reference points based on counterfactual information, anchoring, and experimenter demand effects. In additional analyses, we show that diminishing sensitivity seems to play an important role in subjects' risky choices. We explore also whether inequity aversion and expectations-based reference points can account for our findings and conclude that they do not provide plausible alternative explanations for them. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: This research was financially supported by the Bonn Graduate School of Economics and the Center for Economics and Neuroscience in Bonn. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4698. [ABSTRACT FROM AUTHOR]

Reputation feedback systems assign feedback scores to traders with the aim of separating them according to reliability. There is now a substantial amount of literature on what these mechanisms do well and not so well. Conspicuously absent is a theoretical framework to guide thinking on improving these systems. Here we construct a prototype market, stylized and conceptual in nature, but also suitable for laboratory testing. We use the prototype to examine competing approaches to eliciting feedback from traders. Using entropy to benchmark informativeness, we show that the informativeness of feedback elicitation approaches depends on the ability to solve a coordination problem such that traders use a common mapping to turn experiences into ratings. In theory, different approaches can be about equally informative although the map to coordinate on is more ambiguous in some cases. We then test the approaches in the laboratory. The resulting data find that the most informative feedback is associated with the elicitation methods where the solution to the coordination problem is least ambiguous. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: Financial support from the Deutsche Forschungsgemeinschaft (German Research Foundation) through the Research Unit "Design & Behavior" [FOR 1371] is gratefully acknowledged. The authors thank the Dutch national e-infrastructure for support of the SURF Cooperative. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4694. [ABSTRACT FROM AUTHOR]

This study tests the hypothesis that competitive strategic interactions foster overconfidence. We experimentally compare a strategic environment in which players have an incentive to overstate their own ability to deter competitors and avoid competition with a nonstrategic environment in which these incentives are removed. Subsequently, we measure the participants' confidence. Overconfidence persists in the former environment but vanishes in the latter. We provide evidence for three mechanisms that contribute to the persistence of overconfidence. First, participants who win uncontested update their confidence as if they had won in an actual competition. Second, by contrast, participants who do not compete do not update their confidence, thus creating an asymmetry in updating. Third, inflated ability messages are "contagious" because they affect positively how their receivers update their confidence. We provide empirical evidence on the role of these mechanisms to explain the Dunning–Kruger effect and gender differences in confidence. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4688. [ABSTRACT FROM AUTHOR]