Search

A model is presented where the welfare of contributors to a public good can increase when they face an adversary who ex post sabotages their efforts. It is a best response for the adversary to maximally sabotage the smallest effort, thus increasing a defector's marginal product of effort. This creates a kink in the individual contributor's payoff function around the equilibrium effort, which can lock contributors into exerting high effort. For a sufficiently large degree of complementarity between the contributors’ efforts, the adversary increases contributors’ welfare. This result is robust when departing from several simplifying assumptions of the model.

We investigate the effect of moral suasion on charitable giving. Participants in an online experiment choose between two allocations, one of which includes a donation to a well-known charity organization. Before making this choice, they receive one of several messages potentially involving a moral argument from another participant. We find that the use of consequentialist and deontological arguments has a positive impact on the donation rate. Men respond strongly to consequentialist arguments, while women are less responsive to moral suasion altogether. Messages based on virtue ethics, ethical egoism, and a simple donation imperative are ineffective.

We provide evidence on how workers on an online platform perceive algorithmic versus human recruitment through two incentivized experiments designed to elicit willingness to pay for human or algorithmic evaluation. In particular, we test how information on workers’ performance affects their recruiter choice and whether the algorithmic recruiter is perceived as more or less gender-biased than the human one. We find that workers do perceive human and algorithmic evaluation differently, even though both recruiters are given the same inputs in our controlled setting. Specifically, human recruiters are perceived to be more error-prone evaluators and place more weight on personal characteristics, whereas algorithmic recruiters are seen as placing more weight on task performance. Consistent with these perceptions, workers with good task performance relative to others prefer algorithmic evaluation, whereas those with lower task performance prefer human evaluation. We also find suggestive evidence that perceived differences in gender bias drive preferences for human versus algorithmic recruitment.

In many countries around the world, citizens can rely on state-organized income support in situations of financial need. Examples are minimum income schemes, which pay a subsistence income to alleviate poverty and enable participation in social life, and social insurance schemes, which offer compensatory support in case of unforeseen income shocks. The question of how to organize such schemes so that they remain supportive while activating benefit claimants is subject to an ongoing debate in society and policymaking. The four empirical studies included in this dissertation address various questions raised in this debate. What happens when a welfare office eliminates job search targets and stops monitoring benefit claimants? Are financial incentives, such as benefit sanctions or higher exemptions for earnings next to benefits, effective ways to change claimants’ behavior? How do people respond to a minimum income with few strings attached? Using large administrative datasets and two randomized field experiments in the Netherlands and Spain, the four studies yield important lessons for designing income support policies. Among these insights are: eliminating effort requirements and monitoring of job seekers does not reduce job finding—however, job seekers are more likely to find jobs with a permanent contract. Allowing claimants to keep a larger share of earnings on top of benefits can stimulate part-time work in addition to benefits, but does not affect chances of full-time employment. Issuing a warning instead of cutting benefits when violating job search targets may be more effective in promoting future search behavior. And lastly, generous and unconditional income support may lead to a reduction in work on average, but those that drop out of the labor force are primarily workers with care responsibilities at home.

The focus in welfare state support in the Netherlands has been shifted from workfare and activation policies to social investment strategies. The discourse on basic income and the related municipal experiments highlights this shift. We address the inspiration found in basic income and behavioural economic and motivational psychological theoretical insights for the design of the experiments and for new avenues of minimum income protection and providing participation opportunities for the disadvantaged. The emerging new paradigm also implies a shift in the cultural values and principles on which welfare state policies are implicitly founded. This means that in these endeavours particular social values are put more upfront, such as personal autonomy (capacitating people by providing opportunities and therewith ‘free choice’) and trust (activating people by putting trust in their self-management capacities) which in day-to-day policy practice means more tailor-made, demand-oriented integrated mediation and coaching while rewarding people instead of penalising them.

Transfers motivated by altruism, guilt, and norms of giving play an important role in supporting individuals who suffer losses due to risk. We present empirical evidence from an artefactual field experiment in Ethiopia in which we introduce formal insurance in a setting where donors make redistributive transfers to recipients who experience losses. We find that donors tend to reduce their transfers to recipients who are offered insurance, whether or not they take it up. When insurance is rejected by a recipient, transfer reductions are larger for donors who firmly expect that the recipient would take up insurance. The results are consistent with a framework in which the introduction of insurance erodes norms of giving by revealing differences in the extent to which individuals value precautionary behavior with respect to risk-taking. Welfare calculations show that when formal insurance is introduced, the welfare of those who fail to take it up may be reduced.

Households in developing countries commonly engage in risk sharing to cope with shocks. Despite this, the residual risk they remain exposed to — often due to aggregate events such as droughts and floods — is considerable. To mitigate these risks, governments, NGOs and multilateral organizations have introduced index insurance. To appreciate its welfare implications, however, it is necessary to assess how insurance interacts with pre-existing risk sharing. We ask to what extent the demand for index insurance — as compared to standard indemnity insurance — depends on the level of pre-existing risk sharing. We contribute by developing a simple theoretical framework which shows that, relative to a state of autarky, risk sharing between agents increases demand for index insurance and decreases demand for indemnity insurance. In an artefactual field experiment with Ethiopian farmers who share risk in real life, we test and confirm these predictions.

Electric vehicles are regarded as energy transition technology towards more sustainable and environment-friendly transportation systems. Despite the benefits of reducing the dependence on fossil fuels and greenhouse gas emissions, the adoption of electric vehicles faces several obstacles ranging from financing issues, government policies, and public acceptance. This study aims to identify the economic, environmental, and social impact of the adoption of electric vehicles for public transportation. Using the Philippines as a case study, the findings highlight the economic advantage of investing in electric public transportation with high public acceptance. The results further identify significant decrease in air pollution, reduction of greenhouse gas emissions and encourage lowering the reliance on imported fossil fuels by shifting the public transport from conventional to electric transport system. This study recommends stricter implementation of government policies on modernized public transportation, stronger government support on financing mechanisms, establishment of charging stations in public and private terminals, and boosting programs for developing local-made electric vehicles. To make electric vehicle more environment-friendly, the government must accelerate the energy transition by increasing the electricity share from renewable sources and investing in more sustainable sources of energy.

In this paper, we present a game-theoretic analysis of social networks in the money laundering process. In our model, criminals compete against each other in a crime market, but collaborate with other criminals and “dishonest” workers in the attempt to launder their crime proceeds via covert money laundering ties. Our first result shows that in the equilibrium money laundering network, a core group of criminals spreads its total crime proceeds over as many money launderers as available, giving rise to a core-periphery network where the size of the core group depends on the relative profitability of crime versus the outside option wage. We then study the optimal decision of a law enforcement agency that aims to minimize the total criminal activity in this society. We derive an optimal sharing rule that shows how much of a given crime-fighting budget the agency should optimally spend on anti-crime and anti-money laundering policies, respectively. This budget-sharing rule can be quantified empirically using readily available estimates for the expected crime proceeds, outside option wages, and fines in a society. Our predictions for four European countries (Sweden, the Netherlands, Poland, and Spain) show that the optimal budget share spent on money laundering controls should be about 35%.

A central feature of social networks is information sharing. The Internet and related computing technologies define the relative costs of private information acquisition and forming links with others. This paper presents an experiment on the effects of changing costs.We find that a decline in relative costs of linking makes private investments more dispersed and gives rise to denser social networks. Aggregate investment falls, but individuals access to investment remains stable, due to increased networking. The overall effect is a significant increase in individual utility and aggregate welfare.

Use of technologies such as condoms must be agreed upon by both partners. In contexts where women have low bargaining power, many women may struggle to convince their partners to adopt. Introducing a version of the technology that is second-best from a social planner’s perspective, but more acceptable to men, may therefore improve adoption and welfare. We evaluate a field experiment introducing female condoms in the slums of Maputo, Mozambique. Female condoms offer marginally lower protection and higher unit cost than male condoms — which are already widely available — but lower discomfort and stigma to men. As predicted by our model, we find strongest adoption among women with low household bargaining power. The main margin of adoption is therefore from women previously having unprotected sex, rather than women substituting away from male condoms. We also observe an increase in the number of sex acts. A cost-benefit analysis shows how free provision of female condoms could be cost-effective. The findings highlight how policy should take into account the distribution of the costs and benefits of technology adoption, and of bargaining power, within the household

This paper develops a model of persuasive demand inducement in the expert–client relationship. The expert frames the decision on whether or not to buy expert services faced by a client with prospect-theoretic preferences, by making the client see this decision from the perspective of a particular reference point. When inducing a client to buy risky curative services, the expert should set a high reference point, and frame all outcomes as losses. When instead inducing a client to buy safe preventive services, as long as the client’s loss aversion is sufficiently high, the expert should set an intermediate reference point, framing high outcomes as gains and low outcomes as losses.

The common-enemy hypothesis of by-product mutualism proposes that organisms are more likely to cooperate when facing the common enemy of a harsher environment. Micro-foundations of this hypothesis have so far focused on the case where cooperation consists of the production of a pure public good. In this case, the effect of a harsher environment is ambiguous: not only a common-enemy effect is possible, but also an opposite, competing effect where the harsher environment reduces the probability of cooperation. This paper shows that unambiguous effects of a harsher environment are predicted when considering the realistic case where the collective good produced is excludable (in the sense that whether or not a player benefits from the collective good depends on whether or not he is contributing) and/or congestible (in the sense that the benefits the individual player obtains from the collective good are affected by the number of contributing players). In particular, the competing effect is systematically predicted for club goods, where defectors are excluded from the benefits of the collective good. A common-enemy effect is instead systematically predicted for charity goods, where cooperators are excluded from the benefits of the collective good. These effects are maintained for congestible club goods and for congestible charity goods. As the degree to which a collective good is excludable can be meaningfully compared across different instances of cooperation, these contrasting predictions for public good, charity goods and club goods yield testable hypotheses for the common-enemy hypothesis of by-product mutualism.

This study examines the gender gap in competitiveness in an educational setting and tests whether this gap depends on the difficulty of the task at hand. For this purpose, we administered a series of experiments during the final exam of a university course. We confronted three cohorts of undergraduate students with a set of bonus questions and the choice between an absolute and a tournament grading scheme for these questions. To test the moderating impact of task difficulty, we (randomly) varied the difficulty of the questions between treatment groups. We find that, on average, women are significantly less likely to select the tournament scheme. However, the results show that the gender gap in tournament entry is sizable when the questions are relatively easy, but much smaller and statistically insignificant when the questions are difficult.

While social network structures are thought to promote cooperation through reputation effects, as suggested by Raub and Weesie (1990), the option of partner choice may undermine these reputation effects in networks. This article approaches this dilemma by comparing the effects of partner choice and reputation diffusion in isolation as well as in combination in a controlled experimental setting. While we do not find that cooperation rates in the absence of partner choice are higher in the presence of reputation effects, we find that emerging cooperation levels near the end of the game are higher when initial cooperation levels are higher. This is more in line with predictions of models of cooperation that rely on learning heuristics rather than forward-looking rationality (i.e., Corten and Cook, 2009). Moreover, we find that the option of partner choice lowers cooperation rates in the absence of reputation effects. However, we do not find a similar effect in the presence of reputation effects. We position these findings in the larger literature on the conditions for cooperation in dynamic societies.